Matthew Kellway

[National Defence, October 24th, 2011]

Mr. Speaker, there is no logical or reasonable explanation for the government's inflexibility on the F-35s. The government is stubbornly awarding a $30 billion contract for these jets without any kind of framework or bidding process. Not only was the process not transparent, but we now learn that the jets do not even work in the north.

Will Conservatives now admit that $150 million per piece is a bit expensive for a plane that does not even work?

[National Defence, October 24th, 2011]

Mr. Speaker, the list of flaws with the F-35 is a long one. It includes bulkhead cracks, airflow problems, poor parts reliability, wing roll-off issues, drive shaft stretching and compressing, actuators burning too fast, defective lift fan, clutch and generator problems. The F-35s cannot even land on our short Arctic runways or communicate in the Canadian north, and the price tag per plane is double the government's claim.

Is the associate minister still planning on buying 65 of these things?

[National Defence, October 17th, 2011]

Mr. Speaker, let us look at the government's recent track record on defence procurement.

Costs for Chinook helicopters have gone up by 70%, wasting billions. Untendered contracts for the F-35, costing Canadians untold billions, carry no guarantee of Canadian jobs. Instead of dealing with these issues, the defence department decided to blow $375,000 on office renovations.

Does the Associate Minister of National Defence really think that these problems will be solved by sprucing up the department's offices?

[Keeping Canada's Economy and Jobs Growing Act, October 6th, 2011]

Mr. Speaker, it appears that the government has not learned anything from that time. When I came into this House, we had a regurgitated budget that I think over 60% of Canadians effectively rejected in the election. We now have a continuation of the same prescriptions for this economy.

The problem, of course, is that our economic circumstances have taken a significant downward turn, even since June when the budget was passed. What concerns me is that the government seems to have paid no heed to these circumstances.

[Keeping Canada's Economy and Jobs Growing Act, October 6th, 2011]

Mr. Speaker, I heard my friends from across the aisle criticizing our party for a lack of sophistication on economic issues. However, what I think we just saw was an illustration of quite the opposite. Members on the other side of the House seem not only to not understand basic economics but they do not even seem to understand the budget documents that they are putting out.

In the report that I cited, the seventh report to Canadians on the economic action plan, the appendix, or the annex as they call it, for job creation spells out for us what the economic multipliers are of various forms of government investment. This is a way of governments investing in our economy to create jobs and, in doing so, create government revenues. This is basic math. It is basic economics. It is the economics of the Department of Finance. It is the economics of so many economists speaking for the big banks of Canada and for the Bank of Canada itself .

The party opposite should have a closer at economics and how to create jobs and increase economic growth in this country.

[Keeping Canada's Economy and Jobs Growing Act, October 6th, 2011]

Mr. Speaker, I wish to advise you that I will be splitting my time today with my colleague from Winnipeg Centre as part of what seems to be the all-party Winnipeg caucus here in the House today.

On this side of the House, we often refer to the Conservative government as being out of touch. That language is often dismissed by the government as rhetorical flourish, but if there was ever evidence of this point it is this bill, Bill C-13, and more broadly the approach of the government to the economy of this country.

Since the Canadian economy came crashing down around us in 2008, very many Canadians have been affected profoundly and in material ways. While in technical terms a recovery of sorts followed, and for some it was in material terms, what never dissipated was a sense of economic insecurity and worry.

In my riding of Beaches—East York, from the neighbourhoods where poverty and unemployment are deep and persistent, through East York and down to the beach, people from all walks of life and living in all sorts of circumstances are worried.

Those who have lived in the hope that they will someday enjoy some material comfort and security see those prospects becoming more remote. Those who have experienced material comfort and security wonder whether it will last. Those who have accumulated some savings wonder whether it will survive for its intended purpose, whether that be retirement or the kids' education.

The worry, of course, is not unfounded. In 2008 we were plunged into the worst recession in over 70 years. The recovery has been tentative and much slower than has historically been the case, with the persistent threat of a second significant economic contraction. Of course we are bombarded daily with news and images of economic catastrophes occurring or threatening to occur all around us, including with our biggest trading partners, the United States and Europe.

It was in this context of well-founded and widespread economic concern that I opened the paper the other day to read that our Minister of Finance had said he is prepared to let these circumstances persist until such time as the technocrats looking in the rear-view mirror tell him that we are, or more properly were, in economic trouble.

Now, what is it that we do not know here? We know that Canada is a small and very open economy, and therefore we are far from immune to global economic turmoil. We know that the largest economies in the world today, Europe and the United States, are in fact experiencing considerable turmoil.

We know also that they are our largest trading partners. With respect to the United States in particular, we know that there is a high correlation between its economic growth and our own. This is particularly the case in my own province of Ontario. For example, had the U.S. recovery from 2008 been a typical recovery, their GDP would be 2.5% higher, and Canadian exports would be 6.5% greater.

With European and U.S. economies struggling and our dollar remaining persistently high, it appears that we will be stuck with a massive current account deficit for some considerable time. Unemployment levels remain stubbornly high, particularly for youth, and are forecast to go higher.

We also know that things could get worse--much worse, in fact. In the quaint phraseology of the Governor of the Bank of Canada, “The risks...are skewed to the downside”.

According to a September 30 forecast from TD Economics:

In our view, there is a 40% recession risk in the United States over the next year.

This leads to the obvious conclusion that our own risk of a slip back into a recession remains heightened. Thankfully, not all economists are as technocratic and as out of touch as the government. In response to the minister's pledge to wait and see what happened, and note the past tense, BMO capital markets economist Douglas Porter said:

I think the risks of a downturn in North America are serious enough that the government should definitely have a Plan B.

That plan B is, of course, what we on this side of the House have been arguing for: government investment in infrastructure.

Mr. Porter went on to say:

Infrastructure spending is one of the most effective short-term stimulus measures a government can use, but it takes time to get it going and that’s why we should be studying a Plan B right now.

We know that economists can be just as adapt at fighting among themselves as we are in this chamber but there does seem to be near unanimous agreement with the value of infrastructure spending in economic circumstances such as those that we are experiencing today.

As was pointed out at the time of the debate over the budget, even the annex to the government's document entitled, “Canada’s Economic Action Plan Year 2: Built to keep our economy growing”, a seventh report to Canadians, confirms the potency of stimulus spending on infrastructure, particularly in comparison to other measures.

It is not as though we are lacking infrastructure in need of repair. Our cities are experiencing an infrastructure deficit in the order of $123 billion. In addition, the Federation of Canadian Municipalities has estimated new infrastructure requirements totalling $115 billion.

While economists, very gently and generously, urge the development of a plan B, it seems fair and responsible for us to call out first for a plan A, because Bill C-13 does not add up to a plan. What Bill C-13 amounts to is paralysis, not planning. Were it the case that the government was frozen with a plan in place, that would be one thing, but what is frozen in place here is policy confusion.

The central policy piece of the government's response to our economic circumstances is the cut to corporate tax rates. As a stimulus measure, that is, as a measure that is responsive to the economic circumstances of Canadians, we know that this measure does not work.

First, it does not create jobs. A study of almost 200 large Canadian corporations that benefited from corporate tax cuts starting in 2000, showed that by 2009 profits had increased by 50%. Their corporate tax remittances had decreased by 20%, or $12 billion a year, while creating jobs at a rate slower than the national average.

Second, corporate tax cuts do not stimulate investment. Capital spending in Canada has been declining as a share of GDP since the early 1980s despite corporate tax cuts that have reduced the combined federal-provincial tax rate from 50% to just less than 30% last year.

Third, the U.S. treasury loves our corporate tax rates. American corporations repatriating their profits to the United States are obligated to pay 35% corporate tax minus a credit for taxes already paid in Canada. The amount of tax revenue flowing to the U.S. treasury, which is the amount of tax revenue foregone by Canadian jurisdictions owing to our lower corporate tax rate, is estimated to be between $4 billion and $6 billion per year.

Finally, as a policy prescription for our current circumstances, corporate tax cuts miss the mark by a wide margin. In spite of the economic misery and insecurity faced by so many Canadians, corporate profits have continued to increase year over year. Corporations are now sitting on half a trillion dollars of cash, the world is awash with goods, keeping inflation numbers in check, and it is in this context of over-supply that the government is prescribing, of all things, expanding supply. It makes no sense.

The prescription for what ails us is very different. We need to boost demand. While corporate profits increased by 15% in the second quarter of this year, the real disposable income of Canada was shrinking. Real wage growth fell year over year by 1.3% in July. That includes a 2.3% decline in Ontario. Meanwhile, households are finally strapped, carrying record loads of debt.

This is why, in part, our party champions creating jobs through government investment in infrastructure, more profitable pensions for seniors, increasing EI benefit eligibility and free collective bargaining, all measures that are responsive to the needs of the Canadian economy and economic growth.

When we cast our eyes forward, it is clear that this country not only faces some economic challenges, but also some incredible opportunities. Seizing those opportunities for the benefit of Canadians to ensure health and prosperity for Canadians is the responsibility of our government. On this account, the government, like its predecessor, has failed miserably. For years, it has insisted on locking Canada into disadvantageous and disproportionate trading relationships.

Finally, I want to pick up on the words of the Governor of the Bank of Canada. He stated:

...Canada is like a ship. We can be tossed by the waves or pulled by the current, but we are still able to chart our course in even the stormiest of seas.

I do not see a course set here by the government. To the contrary, the government has left Canadians bobbing in stormy economic seas.

[National Defence, October 4th, 2011]

Mr. Speaker, we have submarines rusting in dry dock. We have helicopters being raided for spare parts. Yet, Conservatives insist on writing a blank cheque to the U.S. military. Even John McCain calls the F-35 program “a train wreck”.

Other governments are reducing their F-35 orders, switching to other fighter jets or investing in equipment they already have, so why are the Conservatives taking a flyer on the F-35s, even when they are in a tailspin?

[National Defence, October 4th, 2011]

Mr. Speaker, the government continues to pour money down the black hole of the F-35 program. That is despite multiple delays, multiple setbacks and massive cost overruns predicted, not only by our Parliamentary Budget Officer, but even by the Pentagon .

The out-of-touch government would rather blow billions of dollars than admit it has made a mistake.

We know the Prime Minister and the Minister of National Defence do not talk, but is the Prime Minister aware that the F-35 jets are an unaffordable sinkhole?

[Ethics, October 3rd, 2011]

Mr. Speaker, the Conservatives' use of the repatriation of fallen Canadian soldiers to cover the Minister of National Defence's abuse of government jets is appalling. Using fallen military men and women for political damage control tarnishes their sacrifice. It is an insult to the families of those soldiers.

When will the minister take responsibility for his own decisions and stop using fallen soldiers as an excuse for his abuse of government jets?

[Ethics, October 3rd, 2011]

Mr. Speaker, the Department of National Defence continues to spring leaks about the minister's misuse of DND assets. By now we have all heard that the minister takes government jets like most Canadians take the bus. Now we find out that the Prime Minister personally kept the Minister of National Defence out of the loop on the Afghan war.

Why is the Prime Minister defending a minister that he himself has so little confidence in?