Mr. Speaker, I will be sharing my time with the member for Red Deer.
This is the most Liberal of budgets in structure and intent. It uses the language of tax cuts and reinvestment in the military to attempt to satisfy one group, and child care and the environment for another.
However, at its core, the budget is flawed and defective on two accounts.
First, it is built on an accounting shell game that seems out of step with the revolution in corporate good governance following scandals like Enron and WorldCom.
Second, it is focused on spending taxpayer money with very little attention to enhance economic growth, increase competitiveness and create national wealth necessary to sustain the spending. This is very Liberal and one of the essential points of differentiation between the government and the Conservative Party.
Let us have a peak at how the government constructs its numbers. It has for years been underestimating revenues and expenditures. Examples are personal income and GST revenues which are $17 billion higher each year than reported, that is $85 billion over five years, with social spending understated by $17 billion a year.
For this current budget the government freed up $6 billion in planning surplus room in the next five years by re-booking certain health care and equalization expenditures previously booked over the next five years in the current fiscal year.
There is another example. It re-spent $2.5 billion worth of environmental funds that were booked in previous years but never spent, without revising its accounts.
There is another example. The $12 billion to be saved from the expenditure program review will be diverted to other spending but treated as zero activity. In the real world, auditors would never allow this sleight of hand.
What the Prime Minister has not told us is that he has now spent the entire planning surplus in a budget that is back loaded heavily into the final year; the windfall surplus will not be used to pay down the crippling national debt. What will he do when the fiscal climate of the country changes and he has spent the entire planning surplus? The promisekeeper will be forced to break promises.
With regard to the second flaw, the budget spends a lot on health care, for example, trying to reverse time to make up for the money the Prime Minister himself cut out of the same health care system when he was finance minister. With the exception of some relatively modest expenditures on workplace training, I see no strategic focus in the budget on making the country more competitive to keep jobs here in Canada and to create new ones. The key elements of an economic growth agenda are education and competitive corporate taxes.
In Ontario, for example, the provincial government allocates roughly 43% of its budget to health care but only 6% to universities and colleges. It is in large measure lack of federal leadership that has made post-secondary education the poor second cousin in public policy and the country will pay a price for that lack of vision. As a reflection of Liberal priorities, the budget abandons education.
The government remains fixated on lowering the marginal tax rate on profits as its approach to the corporate tax regime. However the key to competitiveness for advanced technology manufacturers is ongoing investment in continuous innovation. This is where much of the future success of Canada must lie. The government should be acting here to also make the effective tax rate on investment more competitive but the budget is silent on this critical part of the puzzle.
Before I cede the floor, I would like to pay attention to a specific policy area where the budget fails to deliver the goods, and that is the Canada-U.S. relationship. This relationship is complex and huge and is the backbone of our prosperity. At its nerve centre is the border, which is also the Achilles heel of Canadian prosperity. If that border does not work effectively or is shut down, it causes businesses to fail and costs jobs here at home.
Continuing blindly along in neglect, the budget promises some extra money for border personnel. This is helpful but the Liberals will spend more money on the Gomery commission investigating irresponsible government than they will put into enhanced border security each year of the budget. The real priority remains infrastructure. The border is fragile and very vulnerable.
What leads me to suspend belief in the Prime Minister's budget promises is that $600 million was allocated to border infrastructure in 2001. By March 2004, not a penny had been disbursed on new infrastructure. In its place was a lot of talk, studies, round tables and panels. Without the political will to treat the border as the single most vital piece of hardware in our national economic security, budget amounts are meaningless.
I might add that I find it ludicrous that the government proceeded to assign budget allocations to the military, development assistance and the foreign service before having completed its long awaited international policy review. I can think of no better example of putting the cart before the horse. It is bad public policy to spend money in the absence of objectives and priorities.
The Minister of Finance had promised us accountability and transparency. We received neither in this budget. This is a classic Liberal election budget based on spending.