Jim Flaherty

[Business of Supply, May 28th, 2008]

Mr. Chair, if I have grandchildren, my children at home have not told me something, but I am sure I do not.

I take the member's question seriously. What is the vision for our country? We know what the vision of the official opposition is: carbon taxes, increasing the tax burden on poor Canadians and Canadians on fixed incomes.

This is the vision. It is called Advantage Canada. When we became the Government of Canada it became clear that the previous government did not have an economic plan so we created the economic plan. Here it is and it is designed to create a competitive advantage for Canada going forward, just as has been done in countries from Ireland to Singapore to the United Kingdom for Canada, a tax advantage.

Canada's tax advantage will reduce taxes for all Canadians and establish the lowest tax rate on new business investment in the G-7.

A knowledge advantage: Canada's knowledge advantage will create the best educated, most skilled and most flexible workforce in the world.

An entrepreneurial advantage: Reducing red tape and creating a more competitive business environment.

All of these advantages work together to create a--

[Business of Supply, May 28th, 2008]

Mr. Chair, what the member opposite fails to mention, which I am sure he forgot for the moment, is the 2% reduction in GST that applies to all Canadians whether they pay income tax or not. Every time they buy something in this country, as of January 1 this year there is a full two percentage points off, which has had a very desirable effect with respect to inflation.

It has also made it easier to purchase larger ticket items in Canada, particularly automobiles. The experts in the automotive sector have talked about that GST reduction, as well as the revaluation of prices, as being a significant impetus to the very strong car sales we have had in Canada, unlike the United States, in the first three months of this year.

More people are earning more money in Canada. We have a progressive tax system of course. We have four categories of taxation, as I am sure the member knows, and we get more people moving into higher taxation levels which will affect personal income tax.

The reduction of the business tax is entirely intentional. We made that clear in the announcement of the economic statement on October 30, 2007, that we have chosen a certain path.

We have chosen to brand Canada as a low business tax jurisdiction. We have chosen to move to a targeted 25% provincial-federal tax rate by 2012. We are doing our part at the federal level, moving to 15% by 2012. Alberta is already at 10%. British Columbia is going in that direction and we expect that Manitoba will also. The former premier of New Brunswick, Mr. McKenna, spoke recently in Halifax and urged all of the Atlantic provinces to go in that direction. Quebec has made some movement in that direction. As the member knows, I have been gently encouraging the Premier of Ontario to go in that direction as well.

I look forward to having further discussions with the other ministers of finance in Canada tomorrow and the next day in Montreal where one of the things we will talk about of course is how we brand Canada to attract foreign investment and to attract reinvestment in Canada and more high quality jobs for Canadians as we go forward.

[Business of Supply, May 28th, 2008]

Mr. Chair, the issue the member opposite raises with respect to older workers is one that was raised with me by the Bloc a couple of years ago when we were doing our budget consultations. Quite frankly, I thought the point that was made by the previous finance critic for the Bloc was a point that was well taken and we did move forward with the older workers program, which we have extended and augmented. This is designed specifically for members between the ages of 55 and 62, precisely what the hon. member describes as being necessary.

Do we have a plan? Yes, we do. Do we use the plan as a prism to decide what we will do in terms of fiscal and tax policy, a knowledge advantage, an entrepreneurial advantage and an infrastructure advantage? Yes, we do. It is called Advantage Canada and I commend it to the member opposite. It is a good read. We have been following it and implementing it as we move forward in our budgeting cycles. It is, as I say, the prism through which we view proposals with respect to various issues.

I compliment the member for Outremont on his view of government and government's role with respect to business. I share his view as he expressed it in 2002.

He spoke about a government whose members insist on appearing to be businesspeople, but do not let the free market determine which businesses will survive and which will not.

I agree with him. It is not for government to substitute its opinion for business. I am sure the member for Outremont agrees with what he said in 2002.

[Business of Supply, May 28th, 2008]

Mr. Chair, the member opposite seems to promote an allegation that is without a factual basis, which is that the jobs that are being created are not good jobs.

He should look at the article in The Globe and Mail of February this year written by Derek DeCloet, which states:

Those were not McJobs, either: 143,000 of them were in finance or real estate; 323,000 in education or health care; 228,000 in construction; 58,000 in natural resources. ...[these jobs] shouldn't be derided; they're the reason Canada is a wealthier country today than it has ever been.

If we add up those numbers, it is 752,000 net new jobs over that period of time.

In response to the previous question from the hon. member, I have the statistic that he was seeking, although it is not the exact period of time. From November 2002 to March 2008, the overall growth in all industries was over 1.6 million jobs, but in manufacturing the number was of course negative 362,900.

It is obvious, I think, to most people, looking at the Canadian economy, and in fact the economy in most western industrialized countries, that we are going through a period of adjustment in some industries. There is an adjustment in forestry and in manufacturing certainly.

[Business of Supply, May 28th, 2008]

Mr. Chair, we have had some job losses in the manufacturing sector but, as I have indicated, they have been made up by job gains in other sectors of the economy, which is why the net gain is a positive one with respect to our job situation in Canada, not only in Canada overall but in the regions of Canada, including Quebec.

[Business of Supply, May 28th, 2008]

Mr. Chair, I dare say that job losses in the challenged sectors of the economy, manufacturing, the auto sector and forestry, cover most regions of this country. Most Canadians would think it fair that the allocation of the community trust be on a per capita basis.

This is something that a number of the provinces argued for very strenuously with respect to transfers before we accomplished the fiscal balance that we did in 2007 by moving to those per capita transfers. Some of the smaller provinces, particularly with respect to post-secondary education, are concerned that this per capita transfer perhaps disadvantages them. I am sure that the hon. member will want to reflect on that.

Having said that, the support for manufacturing is very strong: $9 billion in tax relief by 2012-13; $1.3 billion in additional funding beginning this fiscal year to the provinces for post-secondary education and labour market training to create a more highly skilled workforce; more than $1.5 billion over three years to support Canada's leadership in science and technology; action to streamline the regulatory system; a 20%, at least, reduction in that paper burden by November of this year; and $33 billion for infrastructure with P3s to be levered to fund infrastructure from the federal level at the highest level since the second world war.

[Business of Supply, May 28th, 2008]

Mr. Chair, on the GIS, we increased the amount that could be earned to $3,500 in this year's budget. We also created a tax-free savings account which is an important vehicle for young Canadians, however, it is also a very important vehicle for older Canadians in that they will be able to put aside $5,000 a year and earn interest on that, or dividends, or capital gains, or any other type of gain, and not have that money taxed when it comes out.

I expect this will be very popular not only among young Canadians but also among older Canadians based on certainly what I have heard from Canadians across Canada since budget 2008 was announced.

In terms of the employment numbers, employment has been strong across the country. I am pleased to say that in this place. We have seen strength in employment in Atlantic Canada, certainly strength in Quebec and in Ontario, and the west. In fact, in many parts of the country, we are seeing labour shortages.

This is a reality as we go forward with economic growth. We are going to have to seek to have more people working in Canada and deal with the immigration issues that we are attempting to deal with in Bill C-50, so that the economy can grow and we will have the people power that the economy needs to grow.

[Business of Supply, May 28th, 2008]

Mr. Chair, the government is spending more on skills training than any government in the history of Canada. Anyone who needs retraining in Canada can get it. The employment situation in Quebec is good. It is about the best it has been in a generation in terms of the number of people employed. Even today, hot off the press, Bombardier launches a hiring blitz, looking for 700 new workers in Montreal, Quebec. That is growth in this economy.

[Business of Supply, May 28th, 2008]

Mr. Chair, with respect to the big oil companies, I am sure the member noticed that we took away their accelerated capital cost allowance which is actually a tax hike for big oil companies. We transferred that benefit to manufacturers in Canada which I described in my previous response.

If we were to listen to some of the members in this House, we would think they were not aware that there were more than 19,000 net new jobs in this country last month. This is despite the slowness in the United States economy. Since this government took office, employment has increased by 832,000 people. Full time jobs account for over 80% of the increase. This is dramatic success after two years and three months or so of Conservative government. Despite the slowdown in the economy in the United States and globally, our economic fundamentals are strong.

There are some single industry communities in particular which need help and that is why the Prime Minister announced the community development trust, $1 billion to particularly help those communities like Dalhousie, New Brunswick where the mill closed and other parts of the country where specific industries have shut down. So there is that specific assistance for those workers and those communities.

As the Bloc has advocated in this place, and the hon. member who preceded the current finance critic for the Bloc talked to me a couple of years ago, we needed to do something for older workers, which we did. The older workers assistance program for workers between the age of 55--

[Business of Supply, May 28th, 2008]

Mr. Chair, I thank the member for his question.

I am very proud of the fact that the economic fundamentals of this country are strong. I am very proud of the fact that the government anticipated the economic slowdown this year. I am very proud of the fact that our government anticipated that the U.S. housing sector would, in fact, go into recession and that we took steps in advance.

Yes, we had the very helpful advice of the industry committee of which the hon. member is a member. We had its strong advice with respect to the proposed accelerated capital cost allowance. We took its advice. The member for Edmonton—Leduc was chair of the committee. This was important advice. We brought in the two year writedown on the accelerated capital cost allowance and then extended it in budget 2008 going forward for three more years on a declining basis. This is a great help to industry in Canada.

Why is this important? Just as the industry committee had noted, and the member knows this through his very helpful participation in that committee, if we are going to have a sustainable forestry industry in Canada, and if we are going to have a sustainable auto sector and auto parts sector in Canada, they must be sophisticated technologically.

How can these companies afford to move forward and acquire the technology that they need? They can do it if we help them in the federal government and make sure that we make manufacturing and processing equipment more affordable. This is helped also by the appreciation of the Canadian dollar vis-à-vis the U.S. dollar because it makes a lot of this technology priced in U.S. dollars more affordable.

That is why we are seeing an increase in the acquisition of modern technology, machinery and equipment. Because we take the longer term view, we applaud business for taking advantage of this tax change, so they can get this machinery and equipment so that in the longer term they will be sustainable, competitive and be able to provide long term job security for Canadians.