Mr. Speaker, it is good to have this opportunity today to speak in the prebudget debate and to point out some of the differences that I believe exist in what the Canadian Alliance Party is offering to Canadians, what we have seen over the past number of years from the Liberal government and what has been proposed by it through the throne speech. I also want to address some of my remarks to a report that was put together by the finance committee as it travelled across Canada and heard witnesses from many sectors.
We have heard a lot lately. We have heard about the billion dollar fiasco with the gun registry. We heard about the HRDC scandal and Shawingate a while ago. We just heard about the GST fraud which came to light in the last few days. We talk in terms of billions of dollars.
My colleague from Elk Island, as we know, is a mathematician. He pointed something out to me on the weekend. He asked me what the difference was between $1 million and $1 billion. I said that it was a whole lot of zeroes. He said to me that if he had $1 million and spent $1 a second starting at midnight of January 1, that he would spend the $1 million by midnight on January 12. He said that it would take him 11 days to spend $1 million at $1 dollar a second.
He then said that if he had $1 billion and spent $1 a second, that it would take him from January 1 to September 9, 2034.
That is the difference between $1 million and $1 billion. When we talk about $1 billion here and $1 billion there, we are talking about incredible amounts of money that are unaccounted for and that have no priority for the way they are spent. The money is thrown around.
Today the Prime Minister got his wish and the Kyoto protocol was ratified by a vote in the House of Commons, a motion that I voted against. I am glad that I did because in years to come I will be able to say that I told them so, just like I have been able to do over the last couple of weeks on the gun registry. It has cost a billion dollars and it is not working.
We would like to point to four issues in the report that came from the Standing Committee on Finance: government spending; taxes and tax burden; ongoing productivity and competitiveness concerns; and debt burden.
With regard to spending, the Canadian Alliance strongly supports recommendation 2 of the report, which calls for a balanced budget; a cap of roughly 3% on increased spending, to keep that in line with the growth of population and inflation; paying down market debt; and an ongoing review of federal expenditures which is something we have called for ever since this party has been in place. Every program needs to be reviewed on a regular basis to make sure that it is still doing what it was intended to do and that the money is being spent wisely. The review of federal expenditures is a key part of what we are proposing needs to happen.
As I said, those have all been longstanding Canadian Alliance policies.
However, the recommendations in recommendation 2 can only work if they are carried out, which has not been the case to date. The significance of recommendation 2 pales when one considers the government's recent increase in federal spending. We note the concerns expressed by the Canadian Chamber of Commerce about the increased government spending levels, which it states that since the annual budget has been balanced the increase in spending since 1997-98 has gone up by 25%. This is, in our minds, out of control spending.
We also strongly urge the federal government to discontinue its new spending spree. I will quote Jack Mintz, a C.D. Howe economist. He stated:
Those who believe governments have inadequate revenues to spend on critical public services have it wrong. The problem is that governments misallocate tax dollars by designing ineffective public programs.
That is what we are saying, that every program should be analyzed on a continuing basis to make sure it is effective and, if not, should be discontinued.
Rather than increasing its spending every year as new priorities are identified, the Canadian Alliance recommends that the federal government show leadership and make the required spending cuts from lower priority areas so that the overall federal spending envelope does not grow faster than the population and inflation. We have seen that spending growth outpace the increase in population and inflation over the last number of years many times.
The second point we would like to make is on the issue of taxes and tax burden. Our tax burden in Canada remains too high. Even after implementing the tax changes announced in budget 2000, Canada will still have personal and corporate tax burdens far above the OECD average. Moreover, our overall tax burden remains over 10% higher than our closest trading partner, the United States. Currently, federal revenues remain at about 16% of GDP and are slightly higher now than they were in the mid-1990s.
We note that Canada's tax burden will increase even further in 2003 through payroll taxes, such as the Canada pension plan premiums that are set to increase by 0.5%, which works out to $964 million more out of the pockets of Canadian employers and employees.
The Canadian Alliance reiterates our call for the elimination of the capital tax. This is something that the committee has called for in the past number of years. We note that the finance committee once again has recommended this move, but we urge the federal government to immediately commit to rid Canada of this damaging tax on productivity and investment. This tax kills reinvestments and it kills jobs. As companies become successful the money they need to reinvest in research, employees and in development is taken through this capital tax.
Recommendation 4 on corporate taxes is somewhat disheartening to us as the goal appears to be guarding against an unacceptable divergence with the U.S. rates. Time and again many witnesses before the committee stressed the importance of creating a Canadian tax advantage rather than just attempting to keep up with our southern neighbours. Why can we not do better than them? Why are we always struggling to keep up with them?
Under the last point, the Canadian Alliance recommends that the federal corporate income tax rate on profits from the resource sectors should be brought in line with other sectors. This was just brought forward by the member from the government who indicated that when the last changes were made to corporate income tax the resource sectors were left out. Their rate remains higher. This issue needs to be addressed because they have already been put at a disadvantage. Today with the ratification of Kyoto it will place them at a bigger disadvantage.
We also want to talk a bit about productivity and competitiveness. The Canadian Alliance is deeply concerned with reports that tend to play down Canada's problems with productivity. Many witnesses expressed concern that the productivity gap between Canada and the United States remains wide and continues to grow. This is troublesome because it is our closest trading partner. Billions of dollars a day in trade go back and forth between our two countries and we are being put at a disadvantage through the productivity gap.
The report, however, appears to suggest that revised data has shown that the gap between Canada and the U.S. is smaller than previously thought. There is a well-documented 30 year decline in Canada's standard of living that can hardly be made up by revising data. Unfortunately, this is typical of the Liberals' denial of the role public policy has played in Canada's long term economic decline.
As we know, over the past 30 years our standard of living has continued to decline under this regime and previous ones.
According to the global competitiveness report, Canada tumbled five notches to eighth spot among the most competitive countries in the world; its worst ranking since 1996. Meanwhile, even with the current troubles in the U.S., the Americans managed to improve their productivity by 4% in the last quarter.
The most troubling matter is the government's longstanding refusal to acknowledge the failure of its own policies to encourage innovation and productivity. Liberal members, who comprise the majority of the committee, do not recognize the role that successive Liberal governments have played in hindering Canada's economic progress and development.
The last point concerns the debt burden. The Canadian Alliance believes that it is vitally important to control overall spending in order to accelerate debt repayment. Although our debt to GDP ratio has improved, our debt burden still remains very high and the interest costs to cover that debt continue to be a drag on Canadians. Twenty-three cents of very dollar go to service that debt, never mind paying down the principal.
To conclude, Canada has untapped potential for growth but Canadians need the proper environment to nurture our prosperity. The Canadian Alliance is confident that Canada can regain our prosperity and our competitiveness. However, strong government leadership is required to provide crucial fiscal responsibility. Canadians deserve a significant reduction in taxes and prudent management of government departments. Canadians deserve better.
