John McCallum

[Keeping Canada's Economy and Jobs Growing Act, October 5th, 2011]

Mr. Speaker, I would like to split my speech into two parts.

First, there are certain elements of this bill that we do not agree with, but I would also like to say that this budget is no longer adequate, it is no longer sufficient. What was perhaps sufficient 10 months ago is no longer sufficient because of the global economic crisis. As John Maynard Keynes said, “When the facts change, I change my mind. What do you do, sir?” What he said makes sense. When the facts change, a rational response would be to change the action plan. And the facts have changed dramatically, as I will explain in a few minutes.

On the first aspect of things, there are five elements of the bill that we take some exception to. The first is the same issue that I mentioned in my question to the minister, that is to say that the tax credits are all non-refundable. What that means is that the benefits from these tax credits are specifically not given to lower income Canadians. Therefore, we have a tax credit for art, but if people are low income Canadians they cannot get any money for that.

We have a tax credit for home caregivers. If they have low incomes or they quit their jobs and do not have an income to look after an aging parent, they do not get any money. The same applies to low income volunteer firefighters.

We on this side of the House feel that it is unconscionable to have benefits where that explicitly and deliberately excluded those who need it the most, those with the lowest income, those who are most vulnerable. For that reason alone, the Liberal Party will vote against the bill. There are other things we do not like, but that is so unconscionable and so unacceptable that that alone is sufficient reason to oppose the bill.

The second point has to do with softwood lumber. The budget bill would increase export duties on softwood lumber in both Ontario and in Quebec. It would damage this industry. The government, in negotiating an agreement with the United States, actually gave a billion dollars to our forestry competitors, perhaps thinking that that would solve the problem. However, it did not solve the problem. The U.S. has come back and has won a legal decision. Therefore, it seems that this is yet another example of the Conservatives making Canadian forestry producers pay for their mismanagement of the softwood lumber file.

The third point is the hiring credit for small businesses. The government has grossly exaggerated the importance of this. First, it gives with one hand and takes back with another. The thousand dollars is taxable. It never told us that. Also, the size of the business has to be so small that 600,000 small businesses will not qualify. This is a trivial little thing. It is not a bad thing, it is just tiny, and it is dwarfed by the increase of 5.6% in employment insurance premiums, which the government will be imposing as of January 1 of next year.

A fourth point, and the second to last one, is the gas tax transfer. As was previously stated, it would l be made permanent at $2 billion but it is not indexed. I spoke with many mayors on this subject and if it is not indexed, with population growth and inflation, the real value of the money will go down steadily over time. I think it would have been much better if the government had indexed the fund to inflation or to GDP growth, or something of that nature.

Finally, there is the phasing out of the voting subsidies. We do acknowledge that the Conservatives ran the election with this as a part of their platform and they won, so we are not making a fight about them introducing it. However, I do think it is important to remember the history of this. The former prime minister, Jean Chrétien, removed the ability of large corporations to give money and, in return, he instituted this public subsidy. This is a system that I think is practised in much of the western world, so I do not think there is anything wrong with it. All I would suggest is that, in light of the removal of the subsidy, the government might give some consideration to increasing the maximum amount that individuals are allowed to contribute.

Those are five reasons.

Those are five reasons why we take some exception to this bill. But there is also the fact that the world has changed.

I ask members to think back 10 months to when this budget was presented. What was the state of the Canadian and the world economy? The stock market was going up nicely. It has now slumped to a bear market. Nobody was thinking about a European banking crisis. Nobody was thinking about Greece defaulting on its debt. Things seemed to be going quite fine in Europe.

Now we have this huge crisis in Europe, a crisis involving the risk of default in a number of countries as well as risk to major European banks.

The U.S. was recovering nicely, as I recall, 10 months ago, and now the U.S. economy has clearly stalled. Now we have seen the dysfunctional politics in the U.S. Congress over the debt ceiling issue. We may have a half-decent plan from President Obama, but the chances of the politicians south of the border agreeing to do anything seem remote. Our Canadian economy actually had negative growth in the second quarter, and, with all of these events around the world, it is at risk of stalling as well.

For these reasons, it makes eminently good sense to change policy when the circumstances change. That is what Keynes said, as I quoted earlier.

Let me quote from three people or institutions that are normally fiscally conservative but that agree with what I just said.

First of all, let us hear the new head of the IMF. Her central proposal to countries was to focus on balancing the books and reducing debt in the medium run, but in the short run to take measures to support jobs and the economy. That is the IMF talking--the IMF, which traditionally has a slash-and-burn attitude to countries in fiscal difficulties.

The second example is from Sherry Cooper, chief economist of the Bank of Montreal. Chief economists are normally fairly fiscally conservative. She blasted the government for taking action to cut the economy at a time of global crisis and economic weakness. She likened the government to Herbert Hoover, who in the 1930s made the Depression even more depressed by taking fiscally austere measures.

The third example is The Economist magazine, a bastion of the free market and fiscal prudence. It said something similar to the IMF, that countries should take actions in the short term to support the economy and jobs while dealing with the balanced budget with a credible medium-term plan.

These three—the IMF, the chief economist of the Bank of Montreal and The Economist—are normally fiscally conservative. But they all agree that now is not the right time for budget cuts and increases in employment insurance premiums. I think this government should be listening.

What I am saying is that now is not the time to go forward with these increases in employment insurance that the government is proposing to take. A 5.6% increase in employment insurance is not an appropriate policy at a time like this. These are job-killing tax hikes. Yes, at some moment in the future we may have to increase employment insurance premiums, but now is not the time.

Similarly, the government is proposing $4 billion of cuts through its strategic review.

We are not opposed in principle to finding savings in government. We did that. I was the chair of something we called the expenditure review committee in 2005. We found $11 billion of savings in government, but those were good economic times. We did not find savings of $11 billion at a time when the economy was very weak and at a time when the world was in economic crisis.

Timing is everything. I am saying that now is not the time to increase employment insurance premiums. Now is not the time to proceed with this $4 billion per year of cuts.

I might say, while on the subject of the strategic review and the cuts, that I think the government is making a fundamental mistake because it is not applying what I would call a regional lens. Canada has one of the most centralized bureaucracies in the western world, with a huge concentration in the national capital region. I know from experience that cuts of jobs in the regions are sometimes even more damaging, both in terms of the jobs and in terms of the services provided, than cuts in the national capital region.

I know as well that if the system here in Ottawa has to do cuts, it prefers to cut in the regions and not in Ottawa. I will give one example. I was recently in Prince Edward Island, which was about to lose 60 jobs in an employment insurance processing operation run by Services Canada. This was devastating not only to the small community, which would lose 60 jobs, but also to those applying for employment insurance, because no longer would they have real people nearby to whom they could speak. They would have to call some 1-800 number, and I was told many would have to wait for literally hours on the phone before anyone answered.

It is okay to do expenditure review to improve the efficiency of government. It is a good thing to do, but only under certain conditions.

First, we do not do it when the economy is super weak and already at risk of going into recession, as is the case today.

Second, when we do it, we do it sensitively. We apply a regional lens and we do not make cuts that hurt the most vulnerable in our society, which is what the Conservatives have tended to do.

To conclude, there are a number of reasons why we take exception to this bill. The Liberals will be voting against it.

The world has changed dramatically since the budget was introduced, and what was appropriate six months ago is no longer appropriate because of the economic crisis.

[Keeping Canada's Economy and Jobs Growing Act, October 5th, 2011]

Mr. Speaker, as the minister said, it is true that BMO economist Douglas Porter said nice things about the government.

However, he neglected to say that Douglas Porter's boss, Sherry Cooper, the chief economist at BMO, blasted the government, likening it to Herbert Hoover who put contractionary measures in place during the Depression and made the Depression worse. Sherry Cooper says that the government should not make cuts and should not increase EI premiums at this time.

The government is planning a 5.6% increase in employment insurance premiums starting in January of next year. This is a job destroying tax coming in at a time when we are concerned about the risk of a recession and when the global economy is in great turmoil.

How does the minister justify raising employment insurance premiums by 5.6% at this time?

[Keeping Canada's Economy and Jobs Growing Act, October 5th, 2011]

Mr. Speaker, the tax credits that are contained in the budget are non-refundable. That means that the benefit of the tax credit is subtracted from the income tax a person pays. However, a person with a low income who pays little or no income tax would get absolutely no benefit. This means the government has deliberately excluded low income Canadians from any benefit contained within those tax credits. Therefore, in the case of the children's arts tax credit, children of low income households need not apply. They will not get anything. As well, low income volunteer firefighters would get nothing at all.

Regarding the family caregiver tax credit, people who have low incomes or who quit their jobs to stay home to look after someone who is sick and therefore no longer have an income would again receive nothing.

It is unconscionable that Canadians with the lowest income are deliberately excluded from these benefits. I know the minister is a decent fellow, coming from the Progressive Conservative wing of his party. I cannot understand how he could possibly support these tax credits which benefit all Canadians except those with the lowest incomes and the most vulnerable.

[Ethics, September 30th, 2011]

Mr. Speaker, whether it is millions of dollars in a local slush fund, useless advertising or fancy business cards that are against the rules, this government will stop at nothing to promote itself.

In 2009, the former industry minister spent $20,000 on photography services in the national capital region alone. How is such outrageous spending on shameful self-promotion justified?

[Business of Supply, September 29th, 2011]

Mr. Speaker, while the hon. gentleman might know a thing or two about Afghanistan, he clearly knows nothing about economics, because what he just said is absolute nonsense. He sounds like the Tea Party person.

I read the speech by the head of the IMF very carefully. She clearly said exactly what I said. She said that in the short run we must focus on jobs and the economy and that in the medium run we must focus on balancing the books and paying down debt. She said that those who had room, and I do not think Greece has room but Canada does, should take short-run action to support jobs and the economy. What he said on that is nonsense.

I have just read two recent articles today from The Economist and they say precisely what I said. I said that the political leaders could not get their act together. I said that it was a political issue and that to solve the eurozone they needed political action, which is what The Economist said.

However, The Economist has also set out in at least two articles that what we need also, in areas where there is room, for certain countries including Canada, is that they should take short-run action. That is the truth and I do not agree with anything that he said.

[Business of Supply, September 29th, 2011]

Mr. Speaker, this may not be true in the longer term. What we are advocating is more infrastructure. I agree with the member that this provides significant bang for the buck.

At the time of the election campaign, we wanted the corporate tax rate to be frozen at 18% for some time. It then went back down to 16.5% and our position became to put it back to 18%. We think that would have been competitive. Other things that we had in our platform were of higher priority.

I acknowledge that the election is over. I acknowledge that the Conservatives have a majority and there is not much likelihood that they will take what both of our parties advocated, in different ways, although the NDP's was more extreme than ours. That they will raise the corporate tax rate, whether to 18% or to something higher, I think is extraordinarily unlikely. I am not really making that a big part of the debate.

[Business of Supply, September 29th, 2011]

It is crazy to be witness to Conservative Party members saying that the private sector, history and natural resources have absolutely nothing to do with the recovery, but that every job is due to them.

I will get more to the point in today's situation. The budget was introduced in February of this year. We should think back to those long six month and how things have changed. It is now almost October, and even if the economic action plan in that budget of February 2011 was the right thing to do at that time, although I do not accept that, but even if it were, the whole world has changed in the last six months. Therefore, what was right in February 2011, is not right today in late September 2011. We should think back to February of this year. What was happening? The stock market was going up nicely. Now it has tanked by close to 20%.

Everybody thought the U.S. economy was proceeding fine in those days, but now we see what has happened to the U.S. Every indicator points to bad news. We have dysfunctional politics south of the border. We have the crazy situation about the debt limit and the incapacity in the United States to act politically. Therefore, what was one thing in February is totally different and far worse, both economically and politically, today.

Let us look at Europe. Nobody was talking about the eurozone ending. Nobody was talking about Greece defaulting. Nobody was talking about European banks defaulting. However, that is exactly what they are talking about now. It seems that the European leaders cannot get their act together, cannot agree on what to do, so we have a real possibility of a really dangerous situation, both in Europe and in the United States.

I will quote from an article in The Economist that came out just today. It is entitled “Be Afraid”. It states:

But governments are not just failing to act; they are exacerbating the mess.

My point is that if the government does not adopt something like what the NDP motion calls for, it will be not just failing to act, but exacerbating the mess.

I will proceed further to talk about three people and institutions that agree with what I have just said, and they can hardly be regarded as raving socialists.

First, the IMF went into countries, forced them to cut spending and were really mean to the small countries, et cetera. It is fiscal conservative. What does the IMF say? The new head of the IMF, Christine Lagarde, recently, in her opening speech to the annual meeting, said that what governments today should do is that they should have a medium term plan to balance the books and pay down debt, but, in the short run, they should take action to support jobs and the economy.

She is the head of the IMF. The government should do what she said. We certainly have the room. We should take action to support jobs and the economy in the short run, while having a plan to balance the books in the longer run.

We also have Sherry Cooper, the chief economist at Bank of Montreal. I used to be the chief economist at the Royal Bank and the golden rule for chief economists is to never ever criticize the federal government or the boss will get mad. Maybe her boss is mad at her but she spoke truth to power and said what was right. She said that the actions of the government were like the actions of Herbert Hoover during the Great Depression. We do not raise taxes or cut spending when times are super tough. That is what Herbert Hoover did and it caused the Great Depression. That is what the government seems to be poised on doing, unless it follows the advice that it is receiving today.

I will talk about The Economist. Everybody would agree that The Economist is a small “c” conservative magazine. It is not raving socialist. It is fiscally very conservative most of the time. It understands that times are different, times are tough, times are extremely dangerous, so it has been urging for a number of weeks now the same thing as the head of the IMF and the same thing as Sherry Cooper.

They are saying that, during these difficult and dangerous economic times, it is not the time for governments to cut. It is the time for governments to support the economy. They are complaining that the problem we have is not just that governments are failing to act but that they are exacerbating the mess.

I would conclude that these are unusual times and they are dangerous times from an economic point of view. I am not saying that the government's plan back in February was appropriate but it can make a case that it was. However, even if it were appropriate in February, it is not appropriate in September. Additional actions need to be taken unless the government wants to be part of the mess rather than part of the solution.

[Business of Supply, September 29th, 2011]

Mr. Speaker, it was not so long ago that I was talking about NDP economic policy. I used to use words like, “neanderthal”, “crazy” and “far left”, but I will confess that in the last little while, perhaps since the leadership of Jack Layton, its policies have become somewhat less neanderthal, somewhat less crazy, somewhat less far left and perhaps a little less crass.

I hope that my NDP colleagues will take those comments as a compliment, because that is how they were intended.

However, when I turn from the NDP to the Conservatives, I am afraid I will be a little harsher.

Perhaps before I do that, I should mention that the NDP motion makes a lot of sense and that the Liberals are happy to support it today.

As for the Conservatives, this triumphalist talk about the economic action plan, as if it has created every one of these 600,000 jobs, which is what the Minister of Finance said today in question period, “...the economic action plan which resulted in 600,000 jobs”.

Conservative parties usually have the motto “governments don't create jobs, the private sector creates jobs”. Here the Conservatives have put it on its head and claim responsibility that they have created every job. Does that mean that the Conservatives think that Canada's natural resources, the oil and metals in the ground that have helped our recovery, were created by the Conservative Party of Canada?

Do they think that the Conservative Party was behind Mr. Chrétien's measures in the 1990s?

Do the Conservatives think that Mr. Chrétien balanced the books and reduced the debt because of them? Do they think that Mr. Chrétien refused to deregulate banks and refused to allow bank mergers because of them, when they in fact were urging deregulation, which led to huge problems in the U.S. and the U.K?

[Business of Supply, September 29th, 2011]

Mr. Speaker, I would like to congratulate my colleague on his speech. I have a question to ask him about the government.

As we know, the budget was tabled eight months ago, in February. The Conservatives seem to think that nothing has changed. In fact, last February, the world was in fairly good economic shape. Now, the opposite is true. The global economy has been dealt a serious blow.

How can the Conservatives believe that a policy that was appropriate 10 months ago, is still appropriate today, when the circumstances have changed dramatically?

[Business of Supply, September 29th, 2011]

Mr. Speaker, the problem with the speakers on the government side is that they talk as though nothing has happened since the budget was first presented in February. Even if one assumes the budget in February was perfect for the conditions of the day, and I do not make that assumption, the fact is the world economy has worsened dramatically in the last six months. What may have been appropriate in February, some six to eight months ago, is no longer appropriate today given the weakening of the world economy. This is exactly what the IMF has said, what Sherry Cooper has said and what the economists have said.

Why do those members behave and speak as though the world is still tranquil and great when indeed it is not?

As well, I may have missed it, but is the government for or against this motion?