Jim Peterson

[Supply, March 15th, 1999]

Mr. Speaker, in a globalized world, we must look at what other countries do.

I would like to mention the six points our finance minister presented to the IMF. Among these was the suggestion that all western countries, countries with a strong economy, should recognize that the world economy is at risk and should lower their interest rates to stimulate growth within their economies and to encourage imports from Asian countries or from other countries that had problems because of the Asian crisis.

We worked together with other countries that have a strong economy. That is not a lack of independence. On the contrary, working in co-operation with our allies is a sign of independence.

I must repeat. When we took office in 1993, our interest rates were a lot higher than those in the United States. Thanks to our low inflation policy and our tax programs, we have managed to eliminate the deficit. Our interest rates have gone down and were really lower than American interest rates six months ago.

Because of the changes occurring worldwide, we have had to adjust our interest rates little by little, sometimes by increasing them and sometimes by lowering them.

Today, we can see the results of our independent monetary policy in terms of economic growth and jobs.

[Supply, March 15th, 1999]

When our government took office in 1993, Canadian interest rates were 2.5 points higher than in the United States. Today, our short and long-term interest rates are almost the same as in the United States.

In the meantime, we followed an independent monetary policy that everyone benefited from, because the huge decrease in our interest rates led to many more benefits, including a drop in the unemployment rate that now stands at 7.8%, down from 11.4%.

We also saved a lot on debt service charges. Our independent monetary policy greatly benefited to all Canadians and each and every region of the country.

There is another reason it is very important for us not to follow the course of the Bloc. When we have our own currency we have a buffer against changes in economic circumstances, against economic shocks. Canada, side-swiped by the Asian crisis, has seen commodity prices around the globe fall approximately 25%.

Canada is a net exporter of commodities while the United States is a net importer. Just because of global commodity prices the terms of trade with the United States have gone against Canada by about 6% and in favour of the United States by about 5%.

If we had the same currency, what would have been the result? It is very simple. We would have seen a cut-down in Canadian production. We could have seen workers leaving Canada and being able to move to the United States which is experiencing the upturn, but we know that is not feasible. We would have seen price declines, wage declines where there were no fixed wage contracts, and job losses.

In spite of commodity prices falling, the Asian crisis followed by Russia on August 17, and the flight to security of currencies everywhere, in spite of being hit by those crises our unemployment has continued to fall. Our currency, the Canadian dollar, has gone down a bit. It has gone down 7% vis-à-vis the American dollar.

We could look at other countries in the world that have suffered. South Africa's is down 34%; it has been sideswiped completely. Australia's is down about 15% and New Zealand's is down about 19%. Norway's is down a tremendous amount.

Thanks to the fact that Canada had put its economy in good order we were able to get through it. Thanks to the fact that we had a flexible independent monetary policy, jobs continued to increase in Canada and workers did not suffer. That was the great benefit we enjoyed as evidenced through the last nine or twelve month period.

I cannot help but asked myself if the Bloc is not being a little bit naughty in putting this motion before the House? Could it be their way of trying to create some kind of link with the United States? If another referendum were to be held, would that not make them somewhat closer to the United States?

Never before has such an idea been put forward in the House, and it is being put forward by the Bloc for the whole of Canada. Most of the time, their ideas only affect Quebec, not the whole of Canada.

Let me conclude by saying that the Bloc believes this motion will promote separatism in Quebec, because the people will feel that there is some kind of pre-agreement with the United States.

Never will we support such an assumption or such ideas. We will protect our economic independence and our independent monetary policy, while recognizing what is going on in the rest of the world.

[Supply, March 15th, 1999]

Excuse me.

The example which members give us is that of the European Union. The European Union is very different from the United States and Canada. There were 11 countries all trading with one another in 11 different currencies. Together they are roughly the same size economically as Canada and the United States.

Can we imagine the complexity of doing business in a market where there are 11 currencies and 11 different borders to cross in order to have the same economies of scale? A monetary union had transactional cost savings inherent in it.

Another advantage, and we have to look at it, is that with a single currency there is no possibility of the currency either going up or down against a foreign currency. Perhaps this causes difficulties when doing business over a long period of time. The costs from a supplier cannot be guaranteed for six months because the exchange rate may differ.

We could find ourselves producing goods or services in Canada which are not competitive. However there is a way around that. All businesses involved in international trade which need to deal with international currencies do what they call hedging. They buy a currency six months ahead if that is when they will need it. Or, they sell a currency six months or a year ahead, if that is when they will be selling their products, in order to ensure that their costs are ascertainable and fixed.

That is what we in Canada do with the United States. We do not have the huge problem of 11 different currencies; we have just two. If we were to go into a monetary union it would be very unlike the European Union which involves many countries. However there is a certain homogeny, a certain sameness about the countries. The United States vis-à-vis Canada is about 11 times as big economically. The inevitable result would be that we would lose our monetary policy independence.

The member of the Bloc Quebecois who just spoke said that Canada never had an independent monetary policy. This is not true.

[Supply, March 15th, 1999]

Mr. Speaker, first of all, I want to inform you that I will share my time with the hon. member for Scarborough East.

The motion introduced by the Bloc Quebecois proposes a monetary union between Canada and United States.

[Taxation, March 12th, 1999]

Mr. Speaker, I think an even more important question that we have is with the endorsement of Stockwell Day by members of the Reform Party.

Does that mean that they will support him for leader of the united alternative?

[Taxation, March 12th, 1999]

Mr. Speaker, on this issue we have seen from the Reform Party three different proposals within one week.

They range in cost from $4.5 billion a year to $56 billion per year, and not one of its proposals does what it purports to seek, that is tax equality among one and two earner families with children at home.

This is why we cannot afford to make tax policy on the fly. This is why we have referred it to the finance committee for sober and reasoned consideration.

[Taxation, March 12th, 1999]

Mr. Speaker, in spite of difficult fiscal circumstances we have recognized the need to support families with children.

This is why in the last budget there was $213 for a single earner family in the child tax benefit. This is why we have increased the child tax benefit by $2 billion, to a total now of $7 billion to support families with children.

As we move ahead with further tax cuts it is important to recognize whether we will have across the board tax cuts or whether we will target our tax cuts to particular family situations or a combination of both.

[Taxation, March 3rd, 1999]

Mr. Speaker, I wish to assure the House and all Canadians that it was never my intention to convey the impression that a person who stays at home does not work. This was never my intention. This is not what I meant and this has never been my belief.

The role of a partner who works in the home can be even far more demanding than the role of one who has to go outside the house to work.

Mr. Speaker, I thank you for this opportunity to clarify my words of yesterday.

[Taxation, March 2nd, 1999]

Mr. Speaker, when we took office, unemployment was at 11.4%. Today it is at 7.8%.

It is very simple mathematics. When a person is working they are able to pay taxes. The person who is unemployed does not pay taxes. We are very proud of our job creation record.

[Taxation, March 2nd, 1999]

Mr. Speaker, we have very generous limits right now and there have been suggestions that we be allowed to increase them in the future.

In terms of providing a secure and dignified retirement for Canadians, it was our government that came to grips with the Canada pension plan and together with the provinces put it on a solid footing.

The party across the way wanted to destroy the Canada pension plan and leave retired seniors to their own means.