Roy Cullen

[The Budget, February 29th, 2000]

Mr. Speaker, I listened to my colleague's comments with great interest. One of the key features of the budget was the commitment to a $58 billion tax reduction package. As we pointed out, the personal income taxes of Canadians will come down an average of 15%. If we combine that with the 10% which we implemented previously in the last two or three budgets, there is a total tax relief package of about 22%.

I know this will be a very positive development in the ridings of all members. Could the member give us an impression of what this kind of tax relief package will do for her constituents?

[The Budget, February 29th, 2000]

Mr. Speaker, the member for Brandon—Souris talked eloquently about some legacies of the Progressive Conservative government. I would like to talk briefly of the other legacies of the Progressive Conservative government that this government is eliminating. Try for example the 3% surtax in the income tax system and try the 5% surtax which the government will eliminate by 2004.

Canadians might be confused by some of the member's comments so I would like to clarify a couple of points.

First of all, the $58 billion in tax relief that we will implement is an absolute minimum. If the surpluses are larger than what we expect, we can actually exceed that number by a great deal. The other point is that the tax cuts that we are implementing, that we are legislating in this budget are worth a cumulative $43 billion over five years. It is not about a promise in the future; it is being legislated in this budget. It is $43 billion. The five year plan on personal income tax reduction will deliver $39.5 billion in personal income tax cuts. Of that, $35 billion is being legislated in this budget. This is not a promise. This is not a dream. This will happen. In fact, $58 billion is an absolute minimum and it does deserve repeating.

Members opposite keep talking about the health and social transfers to the provinces. Let me try, as many of my colleagues have tried, to clarify this. In 1993 the total transfers to the provinces were in the vicinity of $37 billion. In 1999-2000 they are $38.5 billion and they will continue to rise. We have restored the CHST to the provinces. With respect to any problems in the health care system or education, I think members should look to the Tory governments in those provinces.

[The Budget, February 29th, 2000]

Why wouldn't you?

[The Budget, February 29th, 2000]

Madam Speaker, I could speak to many of the items the member Regina—Lumsden—Lake Centre commented on.

Regarding the federal transfers, as I said earlier the federal transfers have gone from $37.4 billion in 1993-94 to $38.6 billion in this year alone. We are back to the days of the 1993 transfers.

With respect to Saskatchewan, in 2000-01 the federal transfers to Saskatchewan will exceed $1.2 billion. They will account for about 22% of the Saskatchewan government's estimated revenues. They will equate to about $1,174 per person and over the next five years will total about $6.3 billion. I think that is pretty fair.

With respect to the income tax cuts, the member should check the budget closely because it is targeted to middle and low income Canadians. For example, a one earner family of four with an income of under $35,000 will receive more in benefits than it pays in the year 2004. I could go on and on.

There is the agricultural aid. We can all empathize with the plight of the farmers on the prairies but in the last three or four budgets we have put in over $2 billion and $240 million was announced recently.

The member should be more candid and fair in his critique of the budget.

Would the member comment on the increase in the Canada child tax benefit which will increase to $9 billion a year? Will that not help children?

[The Budget, February 29th, 2000]

Mr. Speaker, when Reform members talk about paystubs they should at least have the courtesy of bringing into the House paystubs that reflect today's reality. They bring in and talk about paystubs that do not even implement the measures we brought in in 1999.

With the measures this year, and we do not need to go over them all again, the tax reductions are significant. On average Canadians will receive a tax cut of 15% and if that is combined with the past budgets it is an average of 22%. Some Canadians will receive a tax cut of 45%.

The member talks about the Canada pension plan. With respect, he still does not get it. I have explained it to him before and he still does not get it, but I will explain it briefly for the House. The Canada pension plan is a funded pension plan with employer and employee contributions. Those funds go into a separate pension plan. They do not come near consolidated revenue. Last year we implemented the measures that will keep the Canada pension plan on a sound footing into the future. The member needs to distinguish between CPP and other tax reductions.

[The Budget, February 29th, 2000]

Mr. Speaker, with respect to the budgeting process in Canada it is the most transparent and open process that exists. We implemented cross-country consultations where Canadians had the opportunity to come and present their views to the Standing Committee on Finance. The department and certainly this caucus reach out to talk to people. I do not know about members opposite.

Let me just give the House something that came out yesterday. This is a press release from the Canadian Taxpayers Federation which says that bracket creep is dead, taxes are coming down and the Minister of Finance listens to the people.

When the member opposite talks about transfers to the provinces and investments in health care, I do not know if he has forgotten already but he should recall that in the last budget the government made the largest single investment in health care that we have ever made of $11.5 billion. If we add the $2.5 billion in this year's budget, it fully restores and more the CHST levels from 1993 to an all time high of $30 billion. These are the facts. That includes tax points and cash. I would like the member to read the section on the transfers. It might inform him better.

[The Budget, February 29th, 2000]

Mr. Speaker, in my opinion, we are talking about two contradictory things, because the Bloc Quebecois member is insisting that the government increase its transfers to the provinces.

At the same time they argue that we should be reducing the debt. I can tell the House that our government is balanced in its approach. With respect to the debt, I think something Canadians should understand is that we do have a significant amount of debt.

What the hon. member is forgetting is that when the economy improves so does the percentage of the debt in relation to the size of the economy.

Since we have been in government the debt in relation to the GDP has been reduced from 71% to 63%. It will go further down and it will reach 50% in the next three or four years.

I liken it to when people first purchase a house and take a mortgage, those of us who have been able to do so. In the first stages they look at the mortgage in relation to their income. As their income grows, in those cases where it does, they are able to carry a higher mortgage

Yes, we are concerned with the debt, but we are managing the debt in the context of a growing economy and the capacity of the economy to sustain that debt. If we suddenly paid down a huge amount on the debt it could actually have a dampening effect on the economy. We want to continue the sustained growth in the last quarter of 4.3% real growth in the economy of Canada.

[The Budget, February 29th, 2000]

Mr. Speaker, I am especially pleased and honoured to participate in the debate on our government's first budget of the new millennium.

It is a budget that builds on the foundations we have put in place in past budgets. It also takes historic new action to turn our nation's better finances into better lives for Canadians. This budget makes use of hard won surpluses to raise the standard of living for all Canadians, to enhance their quality of life and to prepare our economy to succeed in the new century.

Each of the key measures we have taken directly relate to the needs and concerns reported to us by Canadians from across the country in the prebudget consultations.

They include of course a fourth consecutive increase in funds for health care and education, a $2.5 billion increase.

In addition, a five year tax reduction plan reintroducing indexing into the federal tax system reduces the intermediate tax rate and, overall, will cut taxes by at least $58 billion by 2004.

This will mean an annual tax saving of 15% on the average, and more for families with children: targeted spending to make our economy more innovative, and increase help for children and the environment.

While many of these measures speak clearly, confidently and concretely for themselves, some do not need further advocacy or explanation from me.

My colleagues will focus more fully on the benefits to Canadians of our five year tax reduction plan, including the reductions of the high tax burden at the middle income level and increased support for families and children.

Earlier the Leader of the Opposition cited a number of examples. Unfortunately I do not have enough information on some of the individuals he cited in terms of their marital status or whether they have children.

I would like to speak to Paul and Fran Darr of Calgary, Alberta. They are a retired couple with a total income of $28,000. I would like to tell them that with the measures we are putting in place in this budget their federal income taxes will be reduced by 45%. I am sure they will be pleased to hear that.

They need to check their facts with the Leader of the Opposition. I think they were living in the 1998-99 era and that some of the measures we put in place in 1998-99 were not even reflected in some of those figures. Canadians deserve the facts and those are the facts. Paul and Fran Darr will save 45% in federal income taxes by the year 2004.

Others in the House will elaborate on our targeted smart investments in health care, our knowledge and innovation and the environment. Others will elaborate on the fact that along with last year's budget we have fully restored Canada health and social transfers to the provinces which will reach a new peak of close to $31 billion in 2000-01.

However, there are a number of measures I want to highlight today. Some are major and some are less glamorous, but they all demonstrate how we are living up to our commitment to keep Canada as the best place in which to work, to live and to raise a family.

Let me begin with the budget's announcement that we are restoring full indexation to the tax system. I know this is not as glorious as the direct tax cut rates that we are delivering but it is vitally important. That is a fact. It is not just partisan politics. Just ask business groups and tax experts across the country. It is no accident or corporate conspiracy that they have universally and consistently called on the government to restore the protection against tax inflation that was virtually abandoned by the previous Tory government in 1986.

Last week, for example, the Canadian Institute of Chartered Accountants put reindexation at the top of its list of budget recommendations. As a chartered accountant myself, I can say that is right on.

In recent weeks just as many commentators and critics were warning that our government would not reindex the personal income tax system. They thought that because indexation can be more difficult to explain to the public than other types of tax relief and because once it is in place and there is no annual political bang for the buck, restoring it would not be in our best interest. Now there is political cynicism.

Maybe it was not the expedient thing to do but it was the right thing to do. That is why I want to especially congratulate our Prime Minister and the Minister of Finance for their courage. They have put the interests of Canadians, especially low income Canadians, such as seniors on fixed pensions, ahead of partisan political advantage. It is something every member of the House should be proud of.

Why is restoring indexation the right thing to do? It puts an end to bracket creep and gives people real and permanent tax relief. It protects taxpayers against hidden tax increases caused by inflation. Without indexation, if we were to receive a 2% pay raise it would just cover inflation. Our real income would not have grown at all. For many low income Canadians that unreal raise forces them onto the tax rolls while middle income earners find themselves pushed into a higher bracket. In other words, their incomes have not really gone up but their tax bite has. That is just not fair and that is why, now that the deficit is behind us, we are putting that protection back into the tax system and more money back into the pockets of Canadians.

Indexation will also stop the erosion of the value of benefits, such as the GST credit, the Canada child tax benefit and the old age credit. Without indexation, these credits, designed to help those in real need, are slowly eaten away by inflation year after year. Now these amounts will automatically increase to offset inflation keeping their real value and their ability to provide real help.

In the years ahead our decision to restore indexation will leave every Canadian better off. But the ultimate foundation for personal prosperity is a good job. To make sure those jobs are there for people we have to make sure that Canadian companies are internationally competitive. That is why our 2000 budget takes action to make the tax system more conducive to investment and innovation. For example, over the next five years the corporate tax rates that apply to the highest taxed sectors, such as high technology services, will be brought down to 21% from the current 28%. That means that all our different industrial sectors will share a level playing field.

The budget will also reduce the income inclusion rate for capital gains from three-quarters to two-thirds and will allow a $500,000 tax free rollover for qualifying investments in new small business ventures.

I realize this sounds very technical and complex. Let me just emphasize the goal here. A key to starting up new, innovative and high risk businesses is the availability of risk capital. The tax free rollover will give such businesses, especially high tech start-ups, greater access to capital from what are called angel investors.

Many employers share ownership plans and stock options to encourage employees to become participating owners of their businesses, most notably in the fast growing high technology industries. Tax rules that apply to stock options and employee share ownership plans have been under review to ensure that they remain appropriate as the economy evolves.

In this budget we announced that up to $100,000 in stock options granted annually by companies to employees will be taxed only when the shares are actually sold instead of when the options are exercised.

The objective here is a simple one that makes sense. Stock options are one way of encouraging employees to play a greater role in the development of the company in which they work. The high tech sector in particular will benefit from this measure, which will help it to attract the best innovators and entrepreneurs to Canada and keep them here, resulting in the creation of jobs for Canadians.

Another example of a budget measure that will make Canada more competitive is the new export distribution centre program. This will virtually eliminate the GST and the harmonized sales tax cashflow costs borne by export oriented businesses that add only limited value to products in Canada. These businesses will be able to import and buy inventory in this country without paying the GST or the HST. For these companies the new program will alleviate the cashflow burden because currently they have to pay the tax up front and then wait to claim it back when they file their sales tax returns.

Mr. Speaker, you can understand why, as an accountant and former corporate executive, I wanted to highlight some of the tax actions that would not normally grab the public eye or the ears of the opposition.

I now want to return to a broader issue and remind the House of the fiscal achievements that have made our budget 2000 action plan possible.

Just seven years ago, when we came to office, the yearly federal deficit was a huge $40 billion. We needed one-third of our annual revenues just to pay interest on the debt that two decades of deficits had built. Now financial results for the first nine months clearly indicate that a balanced budget or better will be recorded again this year, 1999-2000. That will mark our third consecutive balanced budget or better for the first time in nearly 50 years.

This underscores the soundness of the government's fiscal strategy using two year rolling budget plans that are based on prudent planning assumptions, backed by a contingency reserve, but also pursuing strategic investments to support economic growth and job creation.

Our bottom line is clear: The government is not prepared to risk a return to deficits. The benefits from maintaining sound public finances, sustained economic growth, more jobs and higher incomes for Canadians will not be put at risk. In fact, this year's budget commits the government to balanced budgets or better for the coming two years in the budget track, 2001 and 2002. This will mark five consecutive years of balanced budgets or surpluses.

Since Confederation there have been only two other occasions when the Government of Canada recorded balanced budgets for at least five consecutive years: in the 1920s and again in the later 1940s through to the early 1950s, the period of demobilization following World War II.

How does this fiscal progress stack up internationally?

According to the accounting standards used by our G-7 partners, this year, in 1999-2000, Canada will post its fourth budgetary surplus. No other G-7 nation, not even the United States, has accomplished such a turnaround between 1992 and 1999.

Let me say again that by the accounting standards used in most other countries, the federal government will post a financial surplus for the fourth consecutive year in 1999-2000. In fact, we are the only G-7 country to do so, including the United States.

Let me point out that this is not just a federal success story.

The financial situation of the provinces and territories will also have improved for the seventh year running in 1999-2000. As a result, the total deficit of the Canadian public sector will have dropped to its lowest level in over 20 years. This means that Canada is the G-7 country whose financial situation between 1992 and 1999 has improved the most.

It is this ability to turn around federal finances, thanks to the support of Canadians across the country, that now makes it possible for us to deliver dramatic new tax cuts and make key investments in health, education, children and the environment.

There is another benefit we are seizing; that is to make continuing progress on debt reduction. Under the debt repayment plan, we will again set aside a $3 billion contingency reserve each year to ensure that we continue to achieve balanced budgets even if economic problems arise. When the reserve is not needed it will automatically go to paying down the debt.

Through this approach, total public debt has declined by $6.4 billion over the last two years, producing a $300 million yearly saving in interest costs. Financial market debt will have fallen by almost $20 billion by this March 31.

More importantly, the federal debt to GDP ratio has declined each year since 1995-96. This ratio, which measures the size of debt in relation to the economy, is generally recognized as the most appropriate measure of the debt burden as it measures the ability of the government and the country's taxpayers to finance it.

In 1995-96 the debt to GDP ratio reached a post-war peak of 71.2%. By the end of this fiscal year it will have fallen to 61%. This ratio is expected to decline to 55% by 2001-02 and fall below 50% by 2004-05.

Achieving strong finances has not come easy. It has taken tough action, including careful control of program spending; that is all federal spending except debt interest charges. That is a commitment we will never abandon. The proof is in the budget figures.

Between 1997-98, when we first balanced the budget, and 2001-02, the increase in program spending should correspond to inflation combined with demographic growth. This is the standard used by most economic observers.

In fact, even allowing for the measures announced in today's budget, program spending next year will be $4 billion less than what it was when we took office. Expressed as a percentage of the economy, another key measure, federal program spending will continue to drop, reaching 11.6% in 2001-02, that is its lowest level in 50 years.

Since we have balanced the budget fully two-thirds of our new spending has been on priorities of Canadians such as health, higher education, access to skills and knowledge, and innovation. Having said that, there are areas where the government has responsibilities and obligations within Canada and outside its borders, responsibilities the official opposition party clearly shirks from. They include farmers, the homeless, the RCMP, the military, our national infrastructure, clean air and clean water, just to name a few.

The future of Canada and its people is looking brighter all the time. The deficit is eliminated. The debt burden is falling. Our unemployment rate is at the lowest level in more than 20 years and the disposable income of Canadians is on the rise. These favourable economic developments are setting the stage for a better quality of life for all Canadians. Balanced budgets have paved the way for tax cuts and increases in the Canada child tax benefit. They have made possible increased transfers to the provinces and territories for post-secondary education and health.

The measures in the 2000 budget will move Canada further along the path to greater prosperity, security and opportunity in the future. I ask all members of the House to put aside partisan rhetoric and look at the real results of this budget, at what it will deliver to Canadians, and support it wholeheartedly.

[The Budget, February 29th, 2000]

Mr. Speaker, I am quite surprised. The member for Kings—Hants is a member of the finance committee and I would have thought he might have read the budget. He covered so much terrain and there are many areas in which there is much misinformation. I would like to focus on a couple.

First of all, on the CHST and the transfers to the provinces, the member cited a 13% increase. As I indicated earlier and as the budget papers clearly portray, the cash portion of the transfers, which is only one part of the transfer as there are tax points as the member full well knows, is increasing with this budget by 25%. In fact, the CHST has been fully restored. If we throw in equalization, it is at a level of about $40 billion in transfers to the provinces.

He talked about making business more competitive. The budget reduces the corporate tax rate from 28% to 21% for the highly taxed sectors. That is a pretty bold move. It takes the 21% rate and for small businesses applies that immediately for income between $200,000 and $300,000.

He talked about access to capital and incubation of small companies. If he turns to the budget papers, he will realize that the budget introduces taxation benefits for stock options, the capital gains treatment of stock options. That will help businesses, start-ups and particularly those in the high technology sector. If he read the budget papers, he would realize that the government has introduced capital gains tax remission for companies that roll over their capital gains and put it into small businesses and start-ups and part of the invigorating part of our economy.

If he actually read the budget, he would discover that the capital gains tax inclusion rate has been reduced from three-quarters to two-thirds.

If he read the budget, he would understand that it puts close to $2.4 billion into defence.

I could go on and on but I think the member should read the budget before he comes to the House. Normally he is most informed on these issues. I was surprised today. Has the member read the budget?

[The Budget, February 29th, 2000]

Mr. Speaker, I wish to begin by saying that it is a great pity that Canadians listening to this debate do not have an accurate picture of budget 2000.

We have heard some speakers who are mired in the past and speakers who are speaking half-truths. For example, on the question of taxation we heard about examples from previous years, but did the speaker talk about what this budget actually delivers for Canadians?

I will give some examples. A one earner family of four with an income of $60,000 will see its taxes go down by 24%. Did we hear that? I do not recall hearing it. The elimination of the 5% deficit reduction tax on income of up to about $85,000 will help middle income Canadians. Did we hear that? I did not hear that. A one earner family of four earning $40,000 will see its net personal income taxes reduced by 48%. Forty-eight per cent. I did not hear that in this Chamber just a few moments ago. A two earner family of four with an income of $60,000 will see its net income taxes reduced by 27%. Twenty-seven per cent. These are the facts.

When we talk about transfers, the budget fully restores health and social transfers to the provinces. In fact, it moves them to new levels of $30 billion annually. With the equalization payments, it moves to $40 billion annually being transferred to the provinces.

It is no secret that the province of Quebec certainly with respect to equalization payments receives the lion's share. The Quebec government receives close to $5 billion in equalization payments. The CHST has fully restored the funding on the transfers for health, education and welfare.

I wonder if the Bloc Quebecois member would make a small comment on transfers. Does he have any exact figures, or is this a sort of make-believe story?