Hon. John McKay My hon. colleague says that's a fair comment.
Mr. Speaker, I want to start by talking about an article I read in The Globe and Mail this week by Brian Lee Crowley and Robert Murphy. Mr. Crowley is a well-known Atlantic Canadian. I would describe him, and I hope he would see the description the same way, as very much a fiscal conservative. In fact, he has been working with the Department of Finance. He wrote a book which talks about what the U.S. could learn from Canada's recent fiscal history, particularly the period of time in which the Liberal government was in power.
The article states:
Canada faced an even larger fiscal crisis in the mid-1990s than America does today, and our achievement dwarfs anything being proposed in Washington. By acting decisively, Canada resolved its crisis quickly and with surprisingly little pain. Since the memory of this momentous achievement is fading, or is unknown to the younger generation--
--and may I say colleagues opposite--
--it is worth recalling how it unfolded.
In the mid-1990s, the Canadian federal government had been in budget deficit for two decades. A third of all federal revenue was being frittered away on interest on the debt. A Wall Street Journal editorial from Jan. 12, 1995, declared that the country “has now become an honorary member of the Third World in the unmanageability of its debt problem … it has lost its triple-A credit rating and can’t assume that lenders will be willing to refinance its growing debt.”
May I add as a parenthetical comment that my predecessor in Scarborough East had a lot to do with trying to keep Canada's AAA credit rating in some of the worst part of the 1995-96 crisis.
Deliverance came the following month when the centre-left Liberal government tabled its historic budget. This document was a defining moment in Canada’s fiscal history.
More astonishing than the bold plans for a massive rollback was the fact that Ottawa actually did what the document said. Total spending fell by more than 7 per cent over two years, while program spending (excluding interest) fell by almost 10 per cent. As a share of the economy, federal spending fell from almost 22 per cent to 19 per cent during the same period. By January, 1998, federal employment was down 51,000 – about 14 per cent. Ottawa ran 11 consecutive budget surpluses beginning in 1997/98. With the federal government paying down its debt and the economy expanding, total public debt plummeted over the following decade.
The article went on in effect to prescribe medicine for the U.S. economy.
I do not pretend to, nor want to, engage in that debate, but it is worth remembering that Canada was there and we are no longer there. I want to point out again that there was an enormous political price to be paid by prime ministers Chrétien and Martin, the Liberal caucus and the Liberal Party. I came here in 1997. We came within four or five seats of actually losing a majority. Part of it had to do with the difficulties of the fiscal medicine we had to impose.
No budget is ever presented in a political vacuum and in 1997 it was a very difficult environment for us. The rewriting and reinventing of political history by the Prime Minister and the Minister of Finance is all part of a misinformation campaign by the Conservatives. The Conservatives inherited a $13 billion surplus and in a few short years turned it into Canada's largest deficit in history, having run deficits ever since. They even brag that this year they will have less of a deficit than they had last year, or they brag about how we compare to other countries. Certainly we are doing terrifically compared to Greece, Portugal, Spain or Italy. The Conservatives do not mention that maybe we are not quite so hot when we compare ourselves to Germany, Sweden or Norway, which is of course a better economy.
There is a good reason why this is studied as a political economy, because political decisions can be good and they can also be bad. The political courage shown by former prime ministers Chrétien and Martin and the Liberal caucus has brought Canada into a relative state of fiscal health and the Prime Minister has been dining out on it ever since. Gutless political decisions such as cutting the GST have, for the foreseeable future, killed any chance of ever going into a fiscal balance.
Politically gutless decisions such as ignoring Confederation partners and refusing to meet with them creates Confederation chaos, with premiers fighting with each other and with policy incoherence. Gutless political decisions that cater to the Conservatives' 35% base and ignore the rest are simply that, just creating anger and apathy.
How can a government say it knows how to manage the economy when the number of unemployed Canadians has risen 34% during its mandate? These 1.4 million unemployed Canadians are not impressed by the so-called management of the economy by the Conservatives. How can the Conservatives say that during the last four years there are more unemployed people in agriculture, construction and manufacturing trade and still say they know how to manage the economy?
Of course the answer is tax cuts. If people are unemployed, it is tax cuts. If they have just had their pension lopped off, the answer to that is tax cuts. If they are bankrupt, tax cuts are really going to work for them. If their industry has been devastated, tax cuts are going to be the answer. If they have cancer, that is tax cuts. For unrest in the Middle East, tax cuts. It is simply the Mitt Romney robo-answer to all our ills. Tax cuts will save us from everything. Do they never ask themselves the fundamental question of how we got ourselves into this mess in the first place?
So Crowley and Murphy are right in the sense that the U.S. could look to Chrétien and Martin for inspiration, but I am perfectly prepared to admit that the political and economic contexts are quite different.
This motion should be supported. However, it would be more supportable if its author did not go around creating his own chaos. Calling the premiers the Prime Minister's messengers and remaining mute on various issues that are of great national interest erodes his credibility when presenting a motion such as this. In his own trips, refusing to actually meet premiers again erodes his credibility with respect to the presentation of his motion. As the Conservatives rightly say, the NDP has opposed every free trade agreement. One cannot be a credible economic leader unless one deals with various opportunities to create trade in this country.
The Prime Minister does need to consult with the premiers, and he does need to do it much more quickly. He does need to do it, and therefore we in the Liberal caucus will be supporting this motion.
