Mr. Speaker, I appreciate the opportunity to participate in this prebudget debate. I would like to state at the outset that I will be splitting my time with my friend from Edmonton—Strathcona.
Members of the Conservative Party for years in opposition have tried to hold the government to account. There are two members in particular whom I want to highlight for their efforts over this past 11 years. The member for Medicine Hat, our finance critic, before the last election, and not after as the member just suggested, very closely identified what the surplus was. The second member I want to highlight is the member for Peace River, who is the vice-chair of the finance committee, who has done an excellent job in trying to hold the government to account.
I have to digress from my speech a little. As my colleague just mentioned, during the last election we in the Conservative Party presented a budget plan to Canadians that relied on a surplus figure that was larger than what the government said of the $1.9 billion. What did the finance minister say in response? He said that the Conservatives would drive the government into deficit, that they would lead it into economic ruin, that humpty dumpty would fall off the wall, that Chicken Little would say the sky was going to fall and that the sky would fall because there was no way it could afford that.
As my colleague correctly pointed out, lo and behold after the election and when the dust had settled, it was not $1.9 billion but $9.1 billion.
I echo my colleague's comments as well about the parliamentary secretary. I know him to be a fine parliamentarian. Quite frankly, with his knowledge of the Department of Finance, he should stand up in his caucus and say that it is time for the government to be completely transparent with Canadians about the surpluses, particularly before an election when it makes that decision.
To return to the substance of what I was going to say, I want to highlight two large issues in my speech. One is the issue of disposable income of Canadians and how it has not grown under the government. The second is the whole issue of productivity and the increasing productivity gap, particularly with our American counterparts.
With respect to the whole issue of disposable income, a recent Toronto-Dominion report was done by Don Drummond who as members of the House know is a very well respected economist. He found that for the past 15 years average Canadians received little or no increase in their take home pay. That is on page 2 of his report. The inflation adjusted GDP after tax incomes on a per worker basis real GDP per worker rose by 22% while real after tax incomes per worker squeaked out a cumulative 3.6% gain over the entire 15 year period. That is completely unacceptable and needs to be addressed.
With respect to the whole issue of businesses, a C.D. Howe report was released this month. It found that corporate tax rates were destructive to our long term growth and productivity and needed to be addressed. This is something our finance critic and our finance committee members have said for months and for years, that the tax rates need to be addressed and brought down.
We can read the headlines across the country which state that productivity growth slumps and StatsCan warns of the threat to our standard of living. Another states that Canada dives in economic ranking. We dropped from ninth to sixteenth on the competitiveness scale.
A lot of this can see abstract to Canadians. What does productivity mean? That means the rate at which we produce goods and services. What does that mean in the long term, productivity to disposable income? It means, will the children and grandchildren of Canadians have a better life than what they have? That is the hope of every generation, that their kids and their grandkids have a better life. That is what addressing productivity and disposable income means.
The fact is that individuals and businesses alike have suffered under the government's inability to address these major economic issues such as high personal and corporate income tax rates. Individuals and businesses have been struggling, but our major competitors across the world have begun to take over jobs and our customers because of this.
As he alluded to in his speech, our finance critic outlined the Conservative Party's perspective on the measures that should be included in the 2005 budget. He argued specifically for a reduction in taxes. He wrote a letter to the Minister of Finance. I hope the Minister of Finance takes his recommendations into account.
I also want to refer to another group, the Canadian Manufacturers and Exporters. It is a very responsible group that is concerned about manufacturers across Canada. It sent a letter to the Prime Minister shortly after the election.
I want to quote from that letter:
As you and your colleagues develop your priorities, it is important to recognize that, unless the highest possible priority is given to ensuring a strong and healthy economy, Canadian family incomes will fall further behind those of our neighbours to the south.
The fact is since the election the Liberals have spent time on everything but the economy. They have spent a lot of energy on areas of provincial jurisdiction, have invaded provincial jurisdiction, but they have spent very little time on economic and fiscal policies. They have been pushed aside by the government which is a dramatic mistake.
On behalf of my party I would like to propose some things the government should take a serious look at. We are trying to be very constructive. We have not said for certain whether we will support or oppose the budget. We will look carefully at what is in the budget and then decide.
First of all, we would like the government to look at reducing personal income tax rates. Referring to the report from Don Drummond again, I want to relate one of these facts:
The tax burden on individuals must also be reduced. The top marginal federal-provincial personal income tax rates is over 45%, which is nearly equivalent to sending half of a worker's earned income to the government, not to mention that it kicks in at relatively modest income levels.... And, more modest income levels get hit with a combination of taxes and clawbacks in benefit payments that can raise the effective marginal tax rate to 80%. It simply does not create sufficient incentives to work, save and invest.
That was very well said.
Personal income taxes need to be reduced. We hope the government will look at something we proposed in the last budget, a prepaid tax plan. Canadians could put away $5,000, pay the tax up front, allow that money to grow into a nest egg so they could use it for their children's education, their retirement, or to build or renovate their home. For a big project like that, when the money was taken out, no tax would be paid at the end. It is an inverse of an RRSP. This would be in addition to their RRSP. It would not replace their RRSP but it would be another alternative for Canadians to save for their major projects.
We need to reduce corporate income tax rates. The fact is we are simply falling behind our major competitors in this area.
The government should eliminate capital taxes. The Conservative Party has been recommending this for years. The finance committee has been recommending this for years. I think it was two budgets ago when the Liberals said they would eliminate them over a five year period, which is what the government often does in the fiscal arena. The fact is those capital taxes should just be eliminated.
We need to review our investment tax credit regimes. We need to review capital gains taxes. In our view and in my view specifically, a tax on capital gains should certainly be reduced if not eliminated. The people who invest are the people who create the jobs. Obviously jobs and economic growth are what we are after. We should reward those people, the entrepreneurs who take the initiative and take the risk.
Capital cost allowances should be reviewed particularly for the manufacturing sector. The member for Edmonton--Strathcona and I met with the manufacturing council of Edmonton. This was one of the issues it raised. This issue has been raised across the country.
We need to revamp our venture capital policies. To give the government some credit, its investment in R and D certainly has improved over the last 10 years. The fact is that while investment in R and D may be at a sufficient level, the rate at which we commercialize and how we commercialize is simply not up to speed. We need to revamp our venture capital policies to allow that.
We need to have a more competitive financial services sector, especially for small and medium size businesses. A group I was talking to in Victoria last week told me that access to capital is a major issue for small businesses. Obviously reducing taxes on small businesses is important as well.
We need to cut wasteful spending on things like the firearms registry and Technology Partnerships Canada which I raised in the House yesterday.
We need a debt repayment plan. We also need investment in infrastructure, which I believe my colleague will be talking about. Regulations in this country need to be streamlined particularly in areas which relate to our major sectors . The auto sector has raised constant concerns about disharmonious regulations between Canada and the United States.
We need to invest in labour training and education, and apprenticeship training like the programs that Sam Shaw is doing at the Northern Alberta Institute of Technology.
We need a different vision in Canada. We need one which says that those who invest, those who take risks, those who are entrepreneurs, who are willing to put their savings on the line to create jobs need to be respected and need to be rewarded for the risks that they take. This is the path to economic growth in this century. It is not a path of more bureaucracy, more government, more taxes and more debt. I encourage the government to listen to these suggestions, adopt them and if it does so, we will certainly constructively support the budget.
