Madam Speaker, colleagues will have to clap a little louder because I am far away from the Speaker and she has to be able to hear it. I will be splitting my time today with the member for Vancouver Quadra.
It is with great pleasure today that I rise to speak to this motion presented by the member for Thunder Bay—Superior North, that, in the opinion of the House, the government should recognize the important role Canadian small businesses play in creating employment in their communities by lowering the small business income tax rate in order to encourage job creation.
First, I want to commend the member for his recognition of the important role that the small business community plays in Canada. I started my first small business when I was 19 years old, as a university student. I was in the business of renting compact refrigerators to university students. I made more money in the last year of my undergraduate degree in finance than I did in my first year as a member of Parliament, which shows that, for Canadians, cold beer is more important than good representation.
I come from a multi-generational family of small business people and so I understand the importance of it.
It is really important for this motion to be here because it enables us to talk about the importance of priorities. I think the government has made some decisions that reflect the wrong priorities to create a sustainable economy, an economy where we not only protect and create the jobs of today but, more importantly, we create the jobs of tomorrow.
In terms of the government's set of priorities, last January the government actually increased taxes on small businesses by increasing the EI premiums. At a time when we have unemployment rates in Canada that are stubbornly high, at a time when we have seen hundreds of thousands of full-time jobs lost and replaced by part-time work, at a time, in my part of Nova Scotia where in the counties of Hants County, Kings County and Annapolis County we have lost 11,000 full-time jobs since September 2008, when we have seen the unemployment rate go from 5% to 12%, we need to be focused on the kinds of tax reform measures that can actually create jobs today and create the jobs of tomorrow. I think that is where the government misses it.
The reality is the further corporate tax cut that the government proposed, and has since implemented, will only benefit the top 5% of Canadian companies. It will not benefit small businesses. I know government has done a very effective job of, in some ways, convincing or fooling the small-business community to make it believe it would benefit from this. However, I would remind the House that only 5% of Canadian businesses will actually benefit from further corporate tax cuts.
We in the Liberal Party do not have some ideological aversion to cutting corporate taxes. In fact, when we were in government, we cut corporate taxes, but we did it when we were in surplus, at a time when we had surplus budgets which enabled us to cut corporate taxes and still balance the budgets, invest in health care and education transfers to the provinces, and invest in research, development and technology, and the jobs of tomorrow.
It is important to look at these priorities because today, at a time when we are in deficit, these choices are even more important. It is important also right now because the Conservatives inherited a $13 billion surplus. They spent their way through that surplus and put Canada into deficit even before the economic downturn. They increased spending in their first three budgets by 18%, three times the rate of inflation. Their record of waste and mismanagement includes: increasing government advertising by 300%; increasing ministerial office budgets by 14% last year; we all know of the G20 billion-dollar boondoggle, including the fake lakes and now the RCMP are investigating; and the first act of the government after the election was to expand its cabinet.
Therefore, the Conservatives are not even leading by example. They are not setting an example to Canadians. In fact, they are telling Canadians to tighten their belts and yet they will not control their own spending.
In terms of broader economic policy, we need a credible plan to eliminate the deficit and smart government policies to help create the jobs in the economy of tomorrow. It is important to recognize that while the macro numbers are very good in Canada, if we look at the overall numbers for the Canadian economy alone, they mask some real challenges in many of our regions.
We have what is commonly referred to as the Dutch disease in Canada. The commodity boom that is fueling the growth in many sectors, such as oil, gas, natural resources, minerals, the extractive sectors in Canada, is driving our dollar higher. As that occurs, it is crowding out many manufacturing and value-added jobs.
We are very fortunate to have the natural resource wealth we have in Canada, the mineral and oil and gas wealth, but at the same time we must recognize the increase in commodity prices. I think most people believe that the secular trend for commodities is going to go up over the next 5 or 10 years, and perhaps longer, as the growth for commodities continues to grow, and as India, China and other emerging economies demand those commodities. We must recognize that there is a real impact on other sectors of high commodity prices and the high Canadian dollar as a result of that.
Therefore, we need to have smart tax policy to help create jobs in the small-business sector and in other sectors tomorrow, particularly, the green economy and the areas of research and development and commercialization. In fact, it is time we have meaningful tax reform in Canada. We have not had tax reform in Canada since 1971 with the Carter Commission, which, among other things, eliminated an inheritance tax and brought in a capital gains tax.
Our tax reform should be based on prosperity and evidence, not on politics and ideology. My quarrel with the Conservative government's tax policies is that so often, in fact without exception, its tax policies are based on either politics or ideology. Cutting the GST is an example when it took office. I have no doubt that cutting the GST is popular, but from an economic perspective it was probably the dumbest tax move it could have made in terms of doing nothing for productivity and prosperity.
Conservatives were more interested in buying votes than building productivity or prosperity. They did nothing to create jobs. I acknowledge it was politically popular, but we need to be focused on jobs and opportunity of the future when we are dealing with a high deficit and the need to reform taxes, not just politics and ideology.
It is notable that one of the things we should consider in terms of tax reform is what we do with the capital gains tax. The capital gains tax in Canada locks up capital and forces investors to make decisions based on tax reasons and not on legitimate economic or investment reasoning. The Conservatives promised in their 2006 platform to eliminate the capital gains tax for individuals on the sale of assets when the proceeds are reinvested within six months. The Conservatives have never followed-through on that promise.
However, cutting the capital gains tax or eliminating the capital gains tax would actually unleash a lot of capital, which would enable more money to be reinvested in small business, venture capital, early-stage technology investments, and potentially create a lot of jobs and economic activity. In fact, I would posit one of the smartest tax moves one could make is reforming the capital gains tax to encourage more investment in Canada.
In terms of greening the economy, the eco-energy retrofit tax credit, that the previous Liberal government established, made a lot of sense, encouraging Canadians to renovate and green their homes with that tax credit. The Conservatives eliminated that tax credit and then brought it back on the eve of an election, but only for one year.
To explain how these kinds of tax tinkerings can affect real jobs, I will refer to a company in my riding. Sustainable Housing, which had grown to about 50 employees under the previous government's tax credit that enabled the company to make long-term plans, hire people, have 50 people conduct energy audits, help people renovate their homes and help them design new energy systems, whether it is geothermal or new heat pumps or new hyper-efficient furnaces or solar panels or insulation or new windows or doors. They were helping people assess or audit their homes to determine what to do to cut their energy consumption. The company had about 50 employees. When the Conservatives got rid of that program, it went down to about 20 employees.
Now that the Conservatives have promised to bring back the program for one year, those companies are not quite sure what to do because companies cannot make long-term investment decisions based on one-year election promises. I would urge the Conservatives to think about that and to consider extending those kinds of programs for a longer period of time.
The benefits of tax measures that help homeowners and companies as well to become more eco-efficient and energy efficient would last long into the future. The reality is that if there had been more of a focus within the stimulus packages on measures that would help companies and families invest in energy efficiency, those benefits would last decades longer--
