Mr. Speaker, I want to thank the Minister of Finance on behalf of the official opposition for the unprecedented gesture of spending a significant portion of the government's budget speech talking about the opposition's fiscal plan. We appreciate the attention very much.
I hear the nervous nellies across the way. I can understand that reaction. Canadians will continue to be nervous when they see the details in this fiscal plan and understand that the government continues to be committed to its sincerely held conviction that politicians and bureaucrats know better than working families or entrepreneurs how to spend an extra dollar.
The document tabled in the House today has made the fundamental differences between the Liberal government and the Canadian Alliance opposition even more evident. It takes a huge portion of the taxpayer overpayment, which the government calls its surplus, and directs it to new spending in low priority areas. This is the very type of spending that has been roundly criticized and condemned in its mismanagement by the auditor general this week.
We are talking about a $52 billion spending increase above and beyond what had already been projected by the government, $27 billion of which is not even related to reintroducing the health care funding slashed by the government in 1995. The $27 billion of new spending to go into low priority areas is not going to be kept in the pockets of working families and entrepreneurs to create new wealth, growth, hope and opportunity for Canadians.
Let me say at the outset that the finance minister talked about the state of the Canadian economy. We can all be glad that Canadians are finally seeing growth, but growth that unfortunately is largely being driven by exports to the United States, exports that themselves have been fueled by unprecedented low currency rates. Today our currency is at only 65 cents against the U.S. dollar. Before this government's time, the 1970s, our dollar was at par with the U.S. dollar. Much of the growth we are experiencing is in fact a reflection of the impoverishment of our currency and standard of living.
In this respect I would like to reference the views of an eminent Canadian economist. In a speech earlier this year he said that Canadian living standards measured by real disposable income per capita fell by 2% through the decade of the 1990s while American living standards rose by 18% over the same period. As a consequence, Canadian living standards fell from an estimated 74% of U.S. levels in 1989 to 61% in 1999.
He went on to say that if we extrapolate this trend of the 1990s over the coming decade, Canadian living standards will have declined to a mere 50% of U.S. levels. He said:
I argue that there is a real danger of a continuation of Canada's relative income deterioration under status quo policies, to the detriment of Canada and Canadians.
By status quo policies, I mean a business as usual attitude in Ottawa, including a continuation of the Red Book promise to direct half of all federal surpluses into higher government spending.
Who said that? None other than the Liberal Party's candidate in the riding of Markham, Mr. John McCallum, who said there is a very real risk that we will continue to see a diminishment of our standard of living.
Unfortunately, that diminishment, which he and all other reputable private sector economists talk about, will continue under the fiscal direction outlined in the document before us today. There is too little tax relief and debt reduction too late. There is too much spending in this mini budget, with mini tax cuts and no real legislative long term plan for debt reduction.
As I said, this document outlines $52 billion in new spending by 2005. This money could be going to tax relief. The Canadian Alliance has tabled before Canadians a plan to provide $125 billion in tax relief over the next five years. This would constitute the single largest tax reduction in the history of Canada, increasing the after tax income of average families by over 40%. This is substantially more than that contemplated by the minister.
We would do that by getting our priorities straight. First of all, we would not further complicate the tax system by introducing four tax brackets as the minister proposes to do in this fourth rate budget. By reducing the marginal rates we would reduce the disincentives for people to work, save and invest.
We believe those at the low end of the income scale, such as the working poor, single mothers, seniors on fixed incomes, and all those struggling to get ahead deserve the biggest and best tax relief. This is precisely why, under the Canadian Alliance fair tax plan, we propose to increase the basic personal exemption from the paltry $7,700 proposed by the minister to $10,000 and to match it with a spousal exemption. This would help eliminate the unfairness against single income families.
The minister has chosen today to continue the unfair discrimination against single income families who choose to raise their children at home. The Canadian Alliance tax plan would level the playing field for all families with any choice of child care by introducing a generous $3,000 per child deduction. Under our plan a family of five would pay zero federal tax on their first $29,000 of income. A single mother who earns $16,000 a year and has two children would pay zero tax under the Canadian Alliance proposal. Under our proposal 1.4 million low income Canadians would be lifted off the tax rolls. These are the same Canadians the government will continue to force to pay taxes.
I know the minister would like us to believe this tiny reduction in the bottom rate from 17% to 16% will somehow help those at the lowest income level. For a single income mother who earns $16,000 a year and has two children the minister's plan means a cup of coffee in terms of a year's tax savings. Under the Canadian Alliance plan she would be paying no tax. It would be a 100% tax cut. That is fair.
Let us take the example of a couple with two children, with one parent earning a salary of $40,000. They would pay $317 less under the Alliance plan in this fiscal year and nearly $1,700 less than under the minister's tax and spend budget.
Our plan would provide greater tax relief for income earners at all levels. We do not apologize for that. We do not apologize for lifting 1.4 million taxpayers off the rolls. We do not apologize for giving a 100% tax cut to low income mothers and parents. We do not apologize for providing family tax fairness. We do not apologize for suggesting that those who work hard and innovate and get ahead and have high incomes in particular years should also get tax relief. These are the people who help create wealth and jobs. They help create the environment we need for long term and sustained economic prosperity.
The minister used the demagogic rhetoric of class warfare at the end of his speech. This millionaire who himself engages in the most aggressive form of tax avoidance through his steamship lines, with its ships flagged in such tax havens as Liberia and Panama, would stand in this place and play class warfare politics by suggesting that those who carry the biggest burden, those who are successful, ought not to see tax relief. That is disingenuous.
We see the consequences of this kind of class warfare rhetoric. We see it every year when 65,000 talented, bright, contributing Canadians, the equivalent of a Canadian city, leave to pursue economic opportunities elsewhere and find lower taxes.
This budget will fundamentally do nothing to bring Canada closer to catching up with such major competitors as the United States, neither in personal taxes nor in business taxes. The government fails to reduce the small business tax rate which the Canadian Alliance would reduce from 12% to 10%.
The budget fails to move fast enough to reduce the capital gains tax burden on investment and innovation. The government proposes to reduce the inclusion rate for capital gains from two-thirds to 50%, as do we. The difference is that a Canadian Alliance government would tax those gains at eventually the single low rate of 17%. That means an effective capital gains rate of nearly half of what the government proposes, a capital gains rate that would actually match those of our major economic competitors and would begin to approach the levels imposed by some of the European countries, including Germany and Ireland.
In our proposal we go much further in terms of capital gains. Why? We choose to leave that money in the pockets of taxpayers and not in Ottawa to be handed out by politicians or bureaucrats.
Let me move on to the question of debt. It is a question that my Liberal friends opposite are expert on. They are principally responsible for having created the $565 billion national mortgage that is a weight on this economy and on future generations. It is a debt that costs us still $40 billion a year in annual interest payments.
Canadians said they would like to see a legislated, politician-proof commitment to pay down the debt. What do they get in this budget from the government? More rhetoric, more maybes, more ifs, more possibilities and no legislative commitment for debt reduction.
The Liberals say that they will turn the contingency fund into a possible debt reduction fund. Before that happens, that money has to get through a cabinet populated by the likes of Brian Tobin, the Minister of Canadian Heritage and the Minister of Human Resources Development. One can call me a sceptic, but I believe that money will end up in new pork barrel spending the likes of which the auditor general has just criticized. It will not be used to pay down our national mortgage.
That is precisely why the Canadian Alliance has proposed an absolute rock bottom, solid minimum in the worst case year, in a politician-proof locked box, of $6 billion a year in debt reduction, to be matched by 75% of any unexpected surpluses and on top of that a very generous contingency reserve and prudence factor of $7 billion a year. In the fifth year of our plan, if the economy grows as the minister projects, we would see annual debt reduction of nearly $20 billion. That would be real action to eliminate the national debt within, we would hope, four to five decades and not the much longer period of time proposed by the government.
Again, on debt reduction, because the government instead decides to spend more through politicians and bureaucrats in Ottawa, we will not get nearly as much as Canadians demand and need to secure our economic future.
On so many other issues this budget falls short. When it comes to gas tax relief the vast majority of Canadians have said that they want meaningful, immediate and permanent relief in terms of fuel taxes. People are struggling to pay prices of 72 cents and 74 cents at the pump.
What do they get from the government? They get a one time election cheque being sent out to a hand selected small number of Canadians. What we really need, what the Alliance proposes to deliver, is a permanent elimination of the so-called deficit reduction surtax on fuel and the stopping of the odious practice of applying the GST on tax. We would deliver a permanent reduction of 3.5 cents per litre in the price per litre for all Canadians, not just for a hand picked few. We would not just hand out a one time election year cheque as the minister proposes to do in this budget.
We would also move much more quickly and aggressively to enhance the retirement security of Canadians by increasing the maximum amount people can contribute to their registered retirement savings plans. We would raise that immediately to $18,500, which the government will not do even within the fifth year of its plan. We understand that Canadians need a reliable income for their retirement and we will provide the tax room for them to create that future. We would also raise the foreign property content limit in RRSPs, which would allow Canadians to diversify their investments and have a safer retirement in the future.
We would also reduce the general corporate tax rate much more quickly than the government proposes and equalize it so that we no longer penalize the services sector.
This mini-budget, with its mini-tax cut, its huge spending and its non-existent debt reduction strategy, presents Canadians with a clear and stark choice as we move into the weeks ahead. It is a choice between visions of Canada.
There is the vision of Canada that says politicians in Ottawa know better how to direct the economic future of working families than those families themselves. It is a choice in regard to a government that believes the billions spent by the human resources minister in pork barrel politically controlled spending is somehow more creative than that money left in the pockets of working Canadian families.
It is a choice between a vision that says a $565 billion debt is an afterthought which can be tended to almost by accident and incidentally, and a vision that says the national debt is a disgrace and a burden on the future, which must be paid down legally, without any choice for government, in order to begin to reduce it.
It is essentially a choice between a government vision that does not apologize for the fact that Canada will continue to have the highest personal income taxes in the G-7 and will continue to see its standard of living, its competitiveness and the value of its currency deteriorate, as Mr. McCallum says, under the kind of spending plan proposed today, and the vision of the Canadian Alliance, which is one of a country that rewards risk taking, entrepreneurship and the kind of creative and dynamic economic activity that founded this great land.
We in the official opposition look forward to the debate around the misplaced priorities of the government, its return to pork barrel spending, its election driven and politically driven agenda, and the vision we present which allows greater freedom and greater opportunity for Canadians in all parts of the country at all income levels. We look forward to the debate that is about to come.
In closing, I would move:
That the motion be amended by deleting all the words after the word “that” and substituting the following:
That this House condemns the Government for failing to provide the vision and leadership that Canadians need as they face a new century with new challenges and opportunities, for burdening Canadians with personal income tax levels that are the highest among the world's largest economies, for allowing incomes and productivity to fall behind the United States and other countries, for creating a mountain of debt for their children and grandchildren to bear, for causing long waits for medical treatment by making deep cuts to health care which have yet to be fully restored, and that this House condemns the government for its arrogance in giving grants and contracts to political supporters, and in mismanaging billions of taxpayers' dollars in grants and contributions over its seven years in office.