Madam Speaker, it is always such an honour to rise in this place and speak on behalf of my community of South Shore—St. Margarets.
Today, we are debating the report stage of Bill C-8, an act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures, in other words, more government spending on COVID‑19. Let us look at the NDP and Liberal COVID spending to date in this bill. The fall fiscal update added another $70 billion in new spending, and this spending is on top of that. The $70 billion I mentioned does not even include the Liberal campaign promises, which would be tens of billions more if, and that is a big if, the NDP-Liberal government lives up to their campaign promises and their coalition. The bill is going to add $70 billion on top of what we saw in the public accounts, the $1.4 trillion of debt that Canadian taxpayers are now on the hook for. Let us think about that: $70 billion more, on top of the $1.4 trillion that has already been added until now.
It is said that one should know history so one does not repeat it. I guess the current government does not know history, because if it did, it would see that the son is repeating the mistakes of the father. To understand the context of what this bill and this spending's impact on the economy will be, let us take a look at what the father did. It tells us what the country will face in the coming years because of the fiscal mismanagement of the son and the father.
In the federal election of 1968, Pierre Trudeau reassured Canadians that a Liberal government would not raise taxes or increase spending. The government, he said during the election of 1968, is not Santa Claus. How did that work out?
When Pierre Trudeau became prime minister, real government spending increased from 17% of GDP to 24.3%. In other words, the federal government's share of the economy rose 42% under Trudeau senior. Every single area of the federal government's spending increased under Trudeau senior, except defence spending, where he cut spending in half as a percentage of the budget. When Pierre Trudeau took office, we spent more on national defence than we did on servicing the country's debt. When he left office in 1984, for every dollar the government spent on defence, we spent three dollars on paying just the interest on his national debt.
How did he do it? He created 114 agencies and commissions. He created seven new government departments, for a total of 464 Crown corporations with 213 subsidiaries. The annual deficit rose to almost $40 billion. That does not seem so unreasonable, given what we have seen with the spending in this place lately. However, that $40 billion was on a base budget, an annual Government of Canada budget, of $100 billion.
I raise this because, as the adage goes, “Like father, like son.” Pierre Trudeau once said, “We're going to build socialism here.” Well, he did, and his son just formalized it.
People who grew up in the 1930s, such as Pierre Trudeau, saw Roosevelt's New Deal of massive government infrastructure spending to pull the U.S. out of the Great Depression. They thought that this approach in the 1970s would stimulate us out of the “stagflation” of that time, which was, for those who do not remember, high inflation combined with high unemployment and a stagnant demand in the economy. It was disastrous.
It was so bad that at one point Pierre Trudeau brought in wage and price controls. He said, “Zap, you're frozen”, and froze all wages and prices. When those socialist wage and price controls came off, the floodgates of wage demands and price adjustments went up even faster. By the time Pierre Trudeau left office, 38¢ of every dollar collected in taxes by the Government of Canada was to pay interest, and only interest, on the debt. The biggest single government program was paying interest on Pierre Trudeau's debt. The government in 1984 spent more on debt interest payments than it spent on defence spending and health care combined. Trudeau's policies of massive spending led to a rapid rise in interest rates to try to reduce inflation. All that government spending simply made it worse.
In the early 1980s, banks were creating home mortgages at 21% annual interest rates. When Brian Mulroney took office in 1984, and I joined that government as a young staffer, we had to break the cycle of spending and deficits that were killing Canada's economy and jobs. By 1987, Mulroney was managing the government in an operating surplus position, reversing the structural deficits created by the Liberals. The deficits after 1987 were entirely as a result of paying interest on Pierre Trudeau's debt.
The government remained in an operating surplus through successive prime ministers until the current Liberal government came to office. The Mulroney government reined in spending and fundamentally restructured the economy with a new vision to deal with the economics of the day. There were fundamental changes, such as a complete restructuring of Canada's financial services industry; the first introduction anywhere in the world of free trade, which did not exist anywhere before then; the replacement of the 13.5% manufacturers' sales tax with the 7% goods and services tax; the elimination of the national energy program and the job-killing foreign investment review agency; and, yes, the privatization of 23 Crown corporations, which I was proud to be a part of, including Air Canada.
The Chrétien government continued this work with further cuts in government spending, although it took a different approach. It collapsed the separate unemployment insurance fund into the consolidated revenue fund, and then artificially kept payments high in order to build up a surplus that was not needed to pay unemployment insurance but was used to pay down the debt. It dropped the government spending on health care by 50%.
It took the governments that followed more than 25 years to break the back of Trudeau's disastrous spending, but he was a piker compared to his son, who has added more debt to Canada's national accounts in six years than all other governments since our founding in 1867. The son, in 2015, promised small stimulus deficits that would be balanced by 2019. Just like his father did in 1968, when he said he would not spend, the son promised the same thing in 2015. We know how that turned out.
The government spent $600 million on high school students living at home in its first round of COVID spending. The government also spent $11.8 billion on CERB for 15- to 24-year-olds who were living with their parents; $7 billion on spouses in households with more than $100,000 in earnings; $110 billion on the Canada wage subsidy. Some studies have found that the money did obviously go to struggling companies during COVID, but many were strong enough to withstand it on their own; 24% of that money went to companies whose revenue actually increased during COVID, and 49% to companies whose profits increased during COVID.
Spending more than $600 billion in two years, printing more than $3 billion a week in new money, has caused the structural inflation of almost 6% we now see. In the coming year or two, we will start to see wage inflation as a result of the way companies, both unionized and not, determine how their employees get pay raises, which is usually based on inflation. As publicly traded companies raise salaries at all levels, because consultants and their HR board committees will say they need to do so or risk losing their employees to other competitors, combined with the demands for CPI adjustments in union contracts, that is what is going to create wage inflation. We have not seen anything yet. Wage inflation will fuel further goods inflation as more dollars will flood the market chasing limited goods, which in turn leads to higher inflation.
The consequences of providing all these universal government COVID programs, pushing all this money into the economy at levels not needed, and now new social programs when the government is not even properly funding health care, will add to the structural deficit that the country has. The government has no plans to reduce the footprint of government in the economy, which means we are heading toward stagnation, a 1970s-type of situation.
I cannot support this bill, because Bill C-8 and the recently tabled budget will just make Canada's finances drastically worse. The NDP and the Liberals have not learned in their pact from what happened in the 1970s, and they had a pact in the 1970s, too. History is repeating. Like father, like son.
