Out of control indeed, Mr. Speaker.
If one adjusts for inflation and population growth, budget 2003 involves the largest single year increase since the 1970s, the decade famous, or perhaps infamous would be a better way of describing it, for its poor policy decisions, which we are still paying for today and our grandchildren likely will have to pay for as well.
The Liberals have decided that our great-grandchildren must be on the hook too, so they have undertaken another round of largesse. The overall 11.5% increase means that government spending is growing three times faster than the economy. That is not a small point: three times faster than the economy. The economy has been going fairly strong, over 3%, so things are really out of control. That is not sustainable in the medium or long terms.
All this spending could also hurt the economy in the form of higher than necessary interest rates. The Bank of Canada has already signalled its concern that inflation is growing beyond acceptable limits and that higher interest rates are on the way. Canadians may well wonder why the Liberals are pumping a lot of cash into an economy that is already doing well in terms of growth and whether there will be any money when the economy is not doing so well.
Why are they overheating the economy with all this increase in spending? More than a massive spending spree, budget 2003 is a sloppy smorgasbord of spending. We see it in the papers today, with them saying “a little bit for everybody”. The Minister of Finance is known as the minister who cannot say no. I think we get to page 25 in the budget report before we run out of all the spending initiatives. It tries to do something for almost everybody. The laundry list of spending initiatives boggles the mind and has led many to suggest that the Minister of Finance, as I said, is the man who cannot say no. That is some criteria for a Minister of Finance, especially a Minister of Finance in a Liberal government that should have to say no pretty often because we know that it is probably addicted to spending.
Yet because of this shotgun approach, the budget's very effectiveness is now in question. In their effort to be all things to all people, the Liberals have spread the money around so thinly that there will not be much help for anybody, which is what the papers are full of today.
Let us deal with the tax cut issue for just a moment and raise the question about what working taxpayers get in return for shelling out all this dough to Ottawa. They do not get much in tax cuts, especially the kind that would actually impact on hard-pressed working families. Canada continues to have the highest rate of personal income tax in the G-7, whereas under U.S. President George Bush's latest tax cut round proposal, a family of four earning $40,000 annually would pay no income tax. He has revved it up there and other countries are accelerating their approaches as well. However, a similar Canadian family starts to pay taxes once income rises above $14,000. What a difference. We are being left in the dust again. The Liberals point to their so-called $100 billion tax plan. I suggest that this Liberal tax plan should be called the Liberal tax sham because that is really what it is. It is far less than is actually claimed.
Most Canadians would not call an increase in social spending a tax cut, but the Liberals did just that when they counted $7.8 billion in increases to the child tax benefit. The Liberals conveniently forgot that they increased payroll taxes by $28.4 billion, which significantly decreased Canadians' take home pay. When we asked Canadians if they saw a tax cut last year most said that they never noticed it on their pay slips. The reason they did not notice it is that other areas, such as CPP increases, have eaten it all up. There is nothing more. Somehow the Liberals seem to think that cancelling over $17 billion in potential tax increases was a tax cut. That has to be Liberal thinking at its best.
The bottom line is that a $100 billion Liberal tax cut is worth $46.6 billion to Canadians, or about $54 billion less than advertised. It is sham. It is a myth.
One looks in vain for significant new tax cuts in the budget. Even the good ones are rendered very inconsequential because they do not go far enough or are phased in too slowly. The so-called elimination of the federal capital tax and the airport security tax reduction are prime examples of this timid approach to cutting taxes.
The capital tax is particularly damaging to innovation because it discourages investment and must be paid whether or not a corporation makes a profit, almost like a property tax. Many were happy to hear that it will be eliminated, but it will not disappear for five years.
However, the capital tax is more than a bad tax. It is actually two bad taxes. Budget 2003 promises to phase out the capital tax known as the large corporations tax, which was introduced in April 1989 and increased in the 1995 budget. Let me point out that this tax, along with the other capital tax and a few others, was brought in to get rid of the deficit. As we know, the yearly deficit is gone but these kind of taxes have lived on forever under the former finance minister, the member for LaSalle—Émard.
Budget 2003 makes no changes in the tax known as part VI of the capital tax and referred to in the budget as the special capital tax, which applies to financial institutions and was also first introduced in May 1985.
Reducing the air security tax goes some way but is not good enough. The former minister of finance introduced this unnecessary and damaging tax in the December 2001 budget. I that see the member for Edmonton West is here. She should know that there are a number of airlines out west that are really being hamstrung by this airport security tax and want it completely removed, but what did we get instead? We got a 40% reduction in the airport security tax.
Many Canadians ask themselves why air travel is the only transportation industry with the only user pay system for national security requirements. It is really unthinkable that the Liberals were happy to raise the Canadian tax burden by $445 million a year at a time when the federal overtaxation netted the Liberal coffers a surplus of over $8 billion. In other words, Canadian taxpayers were being overcharged by $8 billion a year and the Liberals still added another $445 million with this airport security tax. The Liberals are content with reducing this tax by 40% when it should be gone completely.
On employment insurance, the employment insurance premium reduction is also a huge disappointment. The bulk of the reduction in EI premiums had already been announced in budget 2000. There is something familiar about this: re-announcing the same program over and over. Agriculture is a good example of that.
Yesterday's budget gave Canadians an extra 2¢ reduction in premiums for every $100 of insurable income. That $7.50 will not even cover the cost of one movie ticket a year for the average Canadian. Meanwhile the EI surplus continues to grow and has expanded by $2.8 billion over the first nine months of 2002-03. What is the minister's response? That he will lower the premium by 2¢.
However, it is worse than that. A surplus this size suggests that a decrease should be in the range of 30¢, to about $1.80 from the current $2.10. That would put premiums and benefits into balance with the cost of the program while keeping $15 billion aside for an economic downturn. The Liberal government is happy to continue overcharging Canadians for employment insurance. It adds to the general slush fund that the government uses with all this new spending.
Moreover, the budget claims to address transparency, and there was quite a bit of talk about this. There was a whole section on it. Let us just take a moment to examine what the Liberals would do with transparency in the EI process. In the rate setting they would do it by introducing public consultations to determine how to move to a new rate setting regime for 2005 so that EI revenues would line up with the expected program costs. The reality is that budget 2003 delays the move to a fairer system on the EI rate by an extra year. Some transparency. This is Enron style bookkeeping at its best.
The EI act actually requires the Employment Insurance Commission to set premiums on a break-even basis over the course of a business cycle. However, the Liberal government amended the act so that the government, not the EI commission, sets the premium rate for 2002-03. Another sham. However, budget 2003 will delay that move. The government is setting the rate for 2004, surprise, surprise. The plan is merely a stalling tactic: so much for the transparency.
The increase in RRSP contribution limits is an incentive to save and invest. However, without any income tax relief for hardworking Canadian families, I find it difficult to see how families struggling to get by on $35,000 a year will benefit. It is more of a priority for them to keep a roof over their heads and put food on the table. What I am saying is that it is fine to increase it, and we in the Canadian Alliance agree with that, but we say to leave Canadian workers and their families some money, to quit taxing them so hard. Then maybe they can take advantage of this and invest in RRSPs for their own retirement.
The finance minister makes much in his budget speech of the government's victory on slaying the deficit, claiming the goal has been accomplished by a balanced approach on spending and debt reduction. The truth is that a steady stream of high tax revenues from levies like the GST, employment premiums and for the past year air security taxes has let him, like his predecessor the former finance minister, continue overspending on pet projects and corporate welfare. Ottawa's public debt charge is forecast to eat up almost $40 billion or about 21¢ of every tax dollar. Canadians may well ask themselves why, for every dollar of debt reduction found in budget 2003, there is more than $2 in new spending.
Canadians want more spending on health care. The Canadian Alliance has heard that very clearly and has been calling on the Liberals to restore what the they took out of health care under the former finance minister for a long time. Canadians do not want their hard earned tax dollars wasted, something the Liberals do every day.
Based on the Liberal government's track record, I feel quite confident in predicting future Liberal spending boondoggles and scathing Auditor General's reports. Just look at its record. This is the government, after all, that brought Canadians the HRDC boondoggle. I think it was moving Hostess potato chips down the road from one riding to another in Ontario so that a Liberal member of Parliament maybe could benefit from it. That was the kind of sham that went on.
What about the gun registry fiasco? It was supposed to cost Canadian taxpayers $2 million. It is now $1 billion and running. It probably will be at least $2 billion by the time it is finished. This is the government we are supposed to trust? What about the sponsorship and the advertising scandals?
The minister is fond of saying that we have a new northern tiger under his whip over there in the Liberal government. I would say that to pay for this year's budget runaway spending, future federal surpluses already have begun to be spent, and good economic times factored in for Canada. Considering we are facing the spectre of war, a weak American economy and potential border difficulties, the Liberals are guilty of counting their chickens before they are hatched.
An economic downturn would cause this whole house of cards to collapse. The Minister of Finance likes to brag about Canada being called a true northern tiger, but he must know, and I am sure he does as do many in government and in the private sector, that despite recent economic good times, there is still considerable distance to make up for the bad public policy decisions made in the 1970s and 1980s, mostly by the same Liberal government that is sitting across the way today.
Prior to becoming the finance critic for the Canadian Alliance, I spent three years as the industry critic for our party. As the Minister of Finance knows, because he was the industry minister much of that time, the industry committee conducted three separate studies in terms of Canada's productivity and competitiveness and why we were slipping so badly. What our committee found out in those studies was a longstanding decline in Canada's competitive position in the world. It was not much of a surprise to most people. We basically knew that but we found out some reasons why. That longstanding decline goes back some 25 years. I think it would be about the same time that we had this massive run-up in spending under the Liberal government of the Trudeau regime in 1979 to 1984. Is that not interesting?
Let us look at how we fared based upon our major trading partner. Twenty-five years ago the United States was the number one country in terms of productivity and living standard. Canada was number two. Unfortunately this bad public policy has had the effect of dragging Canada down, so now we are 13th in terms of productivity and standard of living around the world, and our competitiveness has been greatly affected.
I will put it to the House that this was not an accident. Public policy of the very Liberal government that was in power during most of that time, and a subsequent government, had great influence in dragging down Canada in terms of standard of living. That is really what it comes down to. Our standard of living has declined to only 70% of that of the United States in that 25 year period.
Not only that, even in this tough time, in the last year the United States' economy has been bumping along and managed to squeeze out a 4% increase in productivity, again widening the gap with Canada. Why do I raise that as an issue? Because the fact of the matter is that the Canadian dollar just happens to be bumping along too, down in the range of 65¢, and has had a serious deterioration under the Liberal government.
The Canadian economic miracle is based largely upon the fact that we are a discount country with a discounted Canadian dollar. It is not so much that we are the best on the international scene. It is because we are cheap. However in the long run our standard of living has really suffered.
Budget 2003 has really failed Canadians. It fails because it spends too lavishly and banks on future economic success that is not guaranteed. It fails because it ignores hard-working Canadians, average Canadians who deserve real broad based tax breaks after all the years of Liberal tax hikes and half measures.
The budget fails because it pays little more than lip service to reducing the burden on our public debt, on the economy and on our fiscal situation. It does little to address the very real long term decline in our productivity, competitiveness and our standard of living.
Therefore, it gets a failing grade in the view of the Canadian Alliance. We will outline that further as our speakers continue this debate in the future.
