Jason Kenney

[The Economy, March 22nd, 1999]

Mr. Speaker, the facts according to the Alliance of Manufacturers and Exporters are that this finance minister is simply off base when he says Canadians should not worry about falling living standards. They pegged our productivity as having gone from fifth to seventh in the G-7 last year. The ultimate indication of economic growth is the stock exchange, which in the United States has increased by 30% and is stagnant in Canada.

While the finance committee says this government should let Canadians invest more of their RRSPs abroad, the finance minister says no. Why is he continuing with a policy of making Canadians poorer when others are getting wealthier?

[The Economy, March 22nd, 1999]

Mr. Speaker, the finance minister seems to continue to take this don't worry, be happy approach to Canada's falling standard of living, notwithstanding what the Conference Board of Canada says or the industry department or the government's own pollster or the Alliance of Manufacturers and Exporters. Let us look at the evidence. The Dow Jones hit 10,000 points. It grew by 30% last year, while the Toronto Stock Exchange shrunk by 3%.

Why are Canadians who are investing their money for their retirement getting poorer, while their American friends to the south are getting wealthier?

[The Economy, March 19th, 1999]

Mr. Speaker, let me get this straight. Last month the industry minister gave a speech in which he said “Canada's productivity is falling. We are $7,000 per person behind the United States”. Yesterday the industry department released another report saying that as of February of this year we are falling behind.

Yesterday the Alliance of Manufacturers and Exporters said that we have fallen from fifth to seventh in the G-7 in terms of productivity and this finance minister still stands and denies the cold, hard facts.

Why does he not agree that we have a problem and develop a solution in terms of tax relief and debt reduction to improve Canada's productivity?

[The Economy, March 19th, 1999]

Mr. Speaker, that may be what the finance minister says, but it is not what our manufacturers and exporters are saying. Yesterday they released a statement in response to the finance minister saying “The finance minister is simply off base when he says Canadians should not worry about falling living standards”. That is from the Alliance of Manufacturers and Exporters. It said that the current situation is not adequate to ensure continued growth in Canada's place in the international marketplace. It said that last year Canada had gone from fifth place in the G-7 in terms of productivity to last place.

Is the finance minister telling us that the Alliance of Manufacturers and Exporters is wrong when it says that Canada—

[The Economy, March 19th, 1999]

Mr. Speaker, yesterday at 2.15 in the afternoon the Prime Minister told us that Canada's productivity is still on the rise. But yesterday at 3 p.m. the industry department released a study called “The Productivity Gap between Canada and U.S. Firms—as of February 5, 1999”. That is the name of the study.

It showed that as recently as last month Canada's standard of living was still plunging. According to the report, the gap between Canada and the U.S. “has been widening”.

Why does the government continue to deny that Canada's standard of living is lower than in the United States by $7,000 per person per year?

[Movement Of Grain, March 18th, 1999]

Madam Speaker, that is a tough act to follow from an hon. gentlemen I regard as one of the most effective speakers of this place and a true quintessential prairie gentlemen, the member for Portage—Lisgar.

I am pleased to rise in debate on this emergency motion with respect to the strikes we are facing in the ports in Vancouver. I would like to broaden my comments to address the impact of the strike on the delivery of services by Revenue Canada at tax centres across the country.

We have heard plenty of evidence and testimony this evening about the kind of debilitating impact this strike action is having on the tens of thousands of Canadian grain farmers.

It truly amazes me, as somebody who grew up in a small prairie farming town, to see that the more than 120,000 grain farms across western Canada should be held hostage by 70 individuals picketing the terminals at the ports of Vancouver.

It is beyond belief that we have allowed a system to continue year after year and decade after decade which can see an entire industry, hundreds of communities, tens of thousands of families and an entire way of life, an entire regional economy, put at risk and damaged by the irresponsible actions of a few and the inaction of an irresponsible government.

Just by delaying the delivery of this grain to the ships waiting in port by even a few days incurs an enormous cost that gets passed on to prairie grain farmers, perhaps the people least equipped to deal with this kind of economic difficulty at this time. Prairie grain farmers are already suffering from the losing end of an international grain war and historic lows in commodity prices. Prairie grain farmers are suffering from historic highs in input costs and who are suffering from historic highs in government taxation.

Across the beautiful prairie provinces a sad story is unfolding as we see once proud and vibrant farm communities shrinking slowly and the lifeblood being sucked out of them as the agricultural economy suffers year after year.

Why is it that in one area where government could make a difference, by ensuring an unimpeded flow of goods to port and abroad, it does not take responsibility to ensure that happens? We clearly are limited in the authority we have to address the depression in commodity prices caused by European and American subsidies. There is one thing at least that we in parliament can clearly do to prevent this from happening, to end the imminent threat which is the cause of this motion tonight by whatever means legally necessary but, more important, to remove from a handful of union organizers the sword of Damocles which hangs permanently over the entire western grain industry. That solution would be to declare the jobs at these ports part of an essential service and to require binding arbitration if settlements cannot be reached so that we can never return to the economic pain being caused day by day as this strike drags out.

As other members of my caucus have remarked, this is not the first time we have seen a strike of this nature. Unless the government finds a more fundamental solution it will not be the last.

While this is an emergency debate, it ought not to be a debate just for the situation we face now. The solution the government seems to be headed for of back to work legislation ought not to be seen as a long term solution. It is a short term, knee-jerk response to a short term problem. We need to fundamentally change the nature of government labour relations when it comes to critical government regulated industries of this nature.

I hearken back to 1980-81 when then President Ronald Reagan had just assumed the office of the American presidency. He was faced with a strike of air traffic controllers across that country who refused to arbitrate or negotiate and who were clearly an essential service. They had shut down the entire American transportation infrastructure.

President Reagan made it very clear that they were in his view an essential service and if they did not go back to work within 48 hours they would be let go. The union organizers called his bluff, but ultimately President Reagan did what was best for Americans, their economy and their transportation infrastructure. He laid down the law and demonstrated what an essential service really means by taking drastic action.

We do not see that kind of strike action happening now in the United States because it has been declared an essential service. We ought to do the same thing in Canada where we are talking about small handfuls of people who can literally stop the momentum of an entire regional economy.

I want now to turn my attention to another problem which is growing in proportion. As we speak this evening there are probably PSAC organizers across the country planning pickets tomorrow for yet another day around regional tax centres operated by the Department of National Revenue.

When they do this, what happens? The processing of tax returns, tax rebates, the child tax benefit and all taxes and transfers administered by Revenue Canada simply shut down. This is a function that is absolutely essential to the operation of government. We are talking today about nearly a million tax returns being frozen in the system at Revenue Canada. This means delays of days and probably weeks. If this carries on, who knows how long the delays will be?

It is easy for us as parliamentarians to bemoan the frustration felt by Canadians and the inconvenience of all this, but we ought not to lose sight of the fact that hundreds of thousands of Canadians rely on the cheques that are being held hostage in those tax centres tonight. That is money that does not belong to the government, to the union bosses or to the bureaucrats. It belongs to the people to whom those cheques should have been issued days ago, and should be issued tomorrow, but will not be because this government refuses to act to ensure that those Canadians have the financial resources that belong to them.

We are talking about low income people, among others, who quite literally depend on the timely delivery of GST rebate cheques, their income tax refund, the child tax benefit or any other number of programs administered by the Department of National Revenue. They depend on those cheques not as discretionary income but as essential income. They depend on those cheques to pay the rent and to buy groceries. We are talking about money that is absolutely essential to the livelihood of many Canadian families.

We cannot allow this to continue unanswered. We cannot allow rogue action by a certain handful of union organizers to threaten the financial livelihood of vulnerable Canadians. I appeal to the government not to continue to delay, to prevaricate and to hope for a negotiated solution that apparently has not happened and will not happen in the bargaining units we are talking about, but to act with speed and with absolute dispatch.

I assure the government that on behalf of my constituents I will support any legal action to get those cheques moving out of those tax centres where they are today held hostage.

It is simply not good enough to solve the problem with back to work legislation and to find ourselves reliving this, repeating history yet again three or four or five years down the road. It is not good enough for the grain farmers who are hurting today. It is not good enough for the low income people and the seniors waiting for their cheques from Revenue Canada. We need a fundamental top to bottom change in the relationship of government to the essential services which we guarantee to Canadian people.

We stand here as parliamentarians in a position of enormous responsibility and authority. We have a fiduciary obligation to ensure that the basic essential services necessary to the peaceful conduct of the lives of private citizens are carried out by the departments, by the apparatus of the federal government.

It simply is not good enough to let these things happen over and over again. A great thinker once said that history repeats itself the first time as tragedy and the second time as farce. I think we are well beyond the stage of farce. This is the fourth or fifth time in my political lifetime that I recall points of crisis in labour-government negotiations of this nature.

In closing, I simply reiterate on behalf of my constituents and my colleagues in the opposition that it is time to get on the ball. It is time to stop prevaricating on the part of the government. I asked the Parliamentary Secretary to the Minister of National Revenue about the problem at the tax centres today and she said “We are concerned and we are looking at it”.

I am glad to see that they are concerned and they are looking, but that is not good enough for vulnerable Canadians. What they need is not concern. What they need is not looking. They need action, and we are here tonight demanding that the government act.

[Income Tax Amendments Act, 1998, March 18th, 1999]

Mr. Speaker, I thank the member for that difficult question. I have received literally hundreds of letters similar to the one to which the member referred which appeared in today's Vancouver Sun where she indicated that if she is homeless it is the Liberal Party that has made the contribution to her condition because of the increases in the tax burden.

This bill increases the inequity between single and double income families. We see from this year's budget documents in very concrete terms how that increase happens. The average differential in the taxes paid by single and double income families will go from 60% to 64% under this budget in large part because of the provisions of this bill. It will do that by raising the child care expense deduction without any commensurate relief for single income families who provide their child care at home.

I was doing a talk show on a Winnipeg station last week. A lady called and said she was a qualified engineer who had given up her $70,000 a year salary to stay at home full time and care for her children. She said this was a decision she and her husband had made because they felt it was best for their family. She said she did not regret it.

She went on to say, “Please tell the Secretary of State for Multiculturalism that I gave up my entire paycheque for child care, not just a portion of it, not just $7,000 or $8,000 which is reflected in the child care expense deduction, I gave up my whole paycheque to finance our child care at home”.

That is something we ought to keep in mind. That is why this parliament ought to adopt at least a refundable credit available to all parents, that does not discriminate against one family model or another, that does not pit single income families against double income families, but treats them all as being equal under the law.

[Income Tax Amendments Act, 1998, March 18th, 1999]

I thank the member from Etobicoke for his thoughtful questions.

With respect to the last question, perhaps he should ask his Liberal colleagues on the House of Commons finance committee who voted to recommend that the foreign content limit be raised to 30%. This is not simply a Reform idea. Apparently the wisdom of allowing Canadians greater flexibility in the management of their retirement savings has even struck a chord with his own Liberal colleagues. The answer to his question of why should we allow people to do this, it is because it is their money. That is why.

The member's question reflects the premise that it really belongs to the government and we allow Canadians to do what they will with their own money. No, we start from a different premise which is that it is their money and they have the prior right to decide how to allocate it.

I would like to give further consideration to the private member's bill put forward by my colleague from Medicine Hat which would in fact eliminate any limit on the foreign content. But I would at least go so far as to adopt the recommendation of the House of Commons finance committee.

With respect to the purportedly balanced budget that the member boasts about, I remind him that that budget came about because 75% of the deficit reduction came about because of increases in revenue. Only 3% came about through real program spending cuts in Ottawa's own budget. The balance was cuts to transfers to persons and transfers to provinces, cutting health care, raising taxes. That was the Liberal solution, not ours.

Finally, with respect to the brilliant, historic budget introduced last week by Stockwell Day, the provincial treasurer in Alberta, I was honoured to be in that legislature when that budget came down. It was day one in a common sense revolution to change and reform the tax system in Canada. That budget provides a generous exemption of $11,500 per person, or $23,000 for a family of two. It is not a flat tax because a family that earns $23,000 in income will be zero rated. They will not pay a dime in provincial income taxes.

Single moms are getting taxed by this government even if they are below the poverty line because the exemptions are so low and have not kept pace with inflation. But in Alberta a couple who earns $23,000 under the brilliant tax reform strategy proposed by the Alberta government will pay zero tax. On earnings of $46,000 they will pay 5.5% provincial tax, but on earnings of $92,000 they will pay 11% tax.

It has the advantage of being both progressive and simple. It has the advantage of being family friendly. It removes the tax discrimination against single income families perpetuated by this federal government by delinking from the federal system. At the same time it has the advantage of not penalizing people who are successful and earn more revenue.

I thank the hon. member for bringing that to our attention because the Alberta tax plan is an ideal model for federal tax reform.

[Income Tax Amendments Act, 1998, March 18th, 1999]

Mr. Speaker, I was just beginning to address the issue of the proposed increase in the bill for the child care tax deduction.

Let me explain what it is. We have had much debate in this place over the past two or three weeks about the lack of fairness toward single income families with children. One of the issues I wanted to bring to attention of this place was the unfair, unjustifiable discrimination against single income families that decided to do what they believed was best by their kids and raise them at home.

The child care tax deduction says to parents who have two incomes that if they pay someone else, a third party, whether a day care operator, a babysitter, a hockey summer camp or music summer camp, to take care of their kids for a period of time and are issued a receipt for the expenses incurred, the government will allow the spouse with the lower of the two incomes in those double income families to deduct the value of the child care receipt from their taxes.

This says that families that give up the second income and have the father or the mother stay at home full time to raise the children and give up tens of thousands of dollars in potential income are out of luck. They assume an enormous opportunity cost and in so doing voluntarily reduce their standard of living. In many instances they give up the second car, the larger house or the three week vacation. Those families do not qualify for the child care tax deduction, the value of which is increased in Bill C-72. It says to those families that they will be forced through the tax system to subsidize the day care choices of one kind of family, that is to say the double income family that pays for outside child care.

This deduction is absolutely, fundamentally unfair. We in the official opposition attempted to bring the issue to a head in the supply day motion on which we voted Tuesday last. Unfortunately, because apparently government members who agreed with us were whipped to vote against it, that motion did not pass.

However, at least we succeeded in having the government admit there might be some kind of problem. Virtually every economist and social scientist who has studied the matter agrees that there is discrimination against single income families with children in part due to the child care tax deduction in the bill.

The problem with the bill is that it raises the inequity. It increases the unfairness. It moves the deduction from $5,000 to $7,000. While we are trying to bring single income families in line with or in parity with their double income counterparts, the government is actually increasing the unfairness.

The government's own budget documents demonstrate this quite clearly. The budget documents tabled by the hon. Minister of Finance last month indicate that the tax inequity between single and double income families ranges between 60% and 115%. That is to say, single income families pay between 60% and 115% more. In some cases they pay twice as much in federal income taxes as do their double income counterparts.

This is for families that are generally on the lower end of the income scale. This is for the single income families that according to the Vanier Institute of the Family are 3.8 times more likely to be poor. This is simply inexcusable. I will vigorously oppose the bill because of the increase in the child care tax deduction.

One provision in the bill allows for a deduction for children between the ages of seven and sixteen. What does this mean? It means that a double income family, theoretically a wealthy double income family, could pay for a 15 or 16 year old child to go to an expensive hockey school or music summer camp and claim a full $4,000 tax deduction. At the same time the low income family, the single income family on the other side of town that is bringing in only $30,000 in income but has dad or mom full time at home with the kids, gets no commensurate deduction.

We do not propose, by objecting to this issue, to remove the deduction for child expenses completely. We propose to convert it into a refundable credit that would be available to all families regardless of their child care choice. Single income families would have the full advantage of a refundable credit equivalent to the maximum amount of the $7,000 deduction. This would amount to $1,200. Every child under seven, under the credit we are proposing, would benefit through their parents to the amount of $1,200 a year. This would be an important step to reducing the tax discrimination which was only increased in the last budget.

In closing, we are disappointed that notwithstanding the debate of the last couple of weeks the government is going precisely in the wrong direction. Instead of levelling the playing field, it is in fact increasing the inequity between these different kinds of families. That is very disappointing indeed.

[Income Tax Amendments Act, 1998, March 18th, 1999]

Mr. Speaker, I am pleased to rise on debate at second reading of Bill C-72, an act to amend the Income Tax Act. This bill follows on several policy and technical changes made by the government in last year's budget, the 1998 budget, and which are now being fully implemented in this bill.

The bill covers many different areas, including registered education savings plans, provisions with respect to RRSPs, the personal tax credit, the child care expense deduction, as well as the caregiver tax credit.

The official opposition will be opposing this bill on several grounds. Whenever the government brings before us a tax bill of this nature, which adds greater complexity to the tax code, we must ask why. Why is it that this parliament and this government cannot understand the fundamental need for root and branch tax reform and tax simplification?

Today we have a tax code that is over 1,300 pages long. It has thousands of associated pages of regulations, rulings and interpretation bulletins issued by the Department of Finance and the Department of National Revenue. This tax code which we are proposing to amend constitutes an enormous, destructive and wasteful burden on the productive capacity potential of our economy.

The Department of National Revenue employs over 43,000 full time personnel just to interpret, apply and enforce this Byzantine, out of control, costly and burdensome tax code. Untold tens of thousands of other Canadians are occupied full time in the interpretation and compliance with the Income Tax Act. That is to say that an enormous proportion of our national wealth is misdirected into complying with a tax code which no single individual can understand and which has grown beyond any reasonable level for a tax code in a free and democratic country.

The power to tax is the power to destroy. It is an enormous power with which we are entrusted in this parliament, the power to confiscate legally the fruits of the labour of people who work hard day in and day out to do better by themselves and their families. We use this enormous power, this Income Tax Act, to tell those families that they must give 10%, 20% or 30% of their family or individual incomes to this government to spend on its priorities rather than their own priorities.

Fundamentally, I want to make it clear that the official opposition opposes the continuing growth in complexity and cost of this destructive tax system.

This bill does precisely nothing to alleviate the enormous complexity and burden of the Income Tax Act but rather adds to it. I will refer to each of the provisions here that simply add additional regulations and legislative language which will make the code even more burdensome and more difficult to interpret and even more difficult to comply with.

I refer in particular to the proposed increase in the personal tax credit of $500 announced in the 1998 budget. The first half of that $500 increase in the basic personal amount for some low income taxpayers was implemented in legislation last year. The bill before us today would complete that increase to $500.

Let me point to an example of how ridiculously complicated this bill and the tax code are. This bill does not increase the basic exemption for all Canadians, treating them equally across the income spectrum; rather it will only be increased for incomes under a certain amount based on a certain complicated formula, all of which unnecessarily complicates what should be the simplest part of the tax system, the basic personal exemption. Based on any rational principle of taxation, the basic personal exemption should be clear, straightforward, and ought not to become a complex exemption, as has been done in this bill.

Let me also say with respect to the provisions for RRSPs, this bill permits Canadian residents to make tax free withdrawals to pay for full time training, as they can for instance under the status quo ante to pay for their mortgage on a principal residence.

With respect to RRSPs, this bill does not address the fundamental problem. This parliament has decided to allow Canadians to direct a relatively small portion of their annual income into a registered retirement savings plan, if they do not qualify for a registered pension plan. That is a sensible policy. We recognize that millions of Canadians do not and cannot rely on government or their private sector employers to provide them with retirement security.

The problem is that with the provision for RRSPs, we impose unreasonable regulations, restrictions and limitations on how much Canadians can save for the future in a tax sheltered vehicle such as an RRSP. How do we do that?

First, we limit the amount of Canadian taxpayers' taxable income which can be deferred through the RRSPs to 18% or $13,500, whichever is less. This is to say that a self-employed young Canadian, with no company pension plan and no real prospect of a Canada pension plan benefit because of the actuarial instability of the CPP, has to almost exclusively rely on the RRSP as his or her source of future retirement income. Yet the government says that it will limit quite severely the portion of the person's income which he or she can direct into that RRSP. That is a disincentive for self-employed Canadians to take full responsibility for their financial future and for their retirement.

This cap of $13,500 or 18%, whichever is less, has not increased over the past several years. This is a reflection of the government's pernicious policy of taxing people on inflation.

We have seen this government continue the Mulroney Conservative government policy of partial deindexation of the tax code. We have seen taxpayers having to pay about $12 billion in additional taxes than they otherwise would have paid were it not for partial deindexation and the consequent bracket creep.

So too we see the limit of $13,500 for maximum allowable RRSP contributions not keeping pace with inflation. In other words, had the RRSP maximum amount been held constant with inflation, and if the maximum amount for RRSP contributions were equivalent to the maximum amount that people can contribute to a registered pension plan, then it would be about $15,000 that they could put into their RRSP and not $13,500.

We should have seen an increase in the amount that people could save and defer taxes on through the RRSP for each of the last three or four years. However the government, through its nickel and diming of people and its tax policies, decided to freeze the maximum allowable contributions several years ago. Therefore, many hundreds of thousands of Canadians have not been able to defer taxation on their one and only source of future retirement income, namely their private retirement savings plans. For that reason we oppose the bill because it does not include the kind of increase in the RRSP allowable contribution amount which all people who are serious about their financial future would like to see.

I can say that I have not in my time as a member of parliament received a single letter, phone call, fax, e-mail, comment at a town hall or on an open line show suggesting that Canadians would like to see their taxes increased, but I have received dozens upon dozens asking that the maximum amount for RRSPs be increased, which the bill does not do.

I have also received dozens of messages from constituents asking that we allow Canadians to invest a larger portion of their RRSPs into foreign held equities and investments. Under the current law, which the bill fails to change, Canadian investors can only contribute 20% of their tax deferred RRSP savings in foreign investments. That means that at least 80% of their investments are stuck in domestic Canadian equities and bonds. We are again forcing Canadians to be irresponsible when it comes to their own financial future. One of the basic fundamental principles of sound investment is to diversify, which we do not allow Canadians to do because of the restrictive 20% foreign content limit on RRSPs.

Yet another one of the inadequacies in the Bill C-72 is its failure to respond to the outcry among Canadians to allow them to protect the value of their retirement savings and to generate better returns, which would consequently benefit the Canadian economy by raising the maximum allowable foreign content limit in the RRSP.

Let me address an aspect of the bill which I really find the most objectionable, that is the increase which it proposes in the child care expense deduction. The bill completes a change begun in legislation from last year's budget which increased the child care expense deduction from $5,000 for children under seven to $7,000, an increase of $2,000.

Let me explain what the child care tax deduction—