Mr. Speaker, it is always with great pleasure that I listen to my hon. colleague from the New Democratic Party, the member for Kamloops, Thompson and Highland Valleys. We never know quite what we will hear about.
The last time the member spoke on the budget, he was talking about sex with bears. Today he was talking about multi-armed Hindu goddesses. He is certainly a Renaissance member of parliament who can describe things in ways which certainly can connect not just with other members of parliament but with Canadians, and probably with bears.
The hon. member described the government as a multi-armed Hindu goddess. There is another kind of Hindu goddess, a multi-breasted Hindu goddess. Sometimes the multi-armed Hindu goddess looks at the taxpayer as a multi-breasted Hindu goddess. She seeks with those arms to attach her hands to the collective teat of the Canadian taxpayer. Her grip is so fervent and so ferocious that ultimately the taxpayer and Canadians suffer.
It is important to keep abreast of tax issues both in the House of Commons and with all Canadians. Tax issues are fundamentally important.
Bill C-72, which implements some of the budget's proposed changes to the tax act further complicates an already far too complicated tax code. I think all members of the House agree that the tax code is too complicated.
My colleague from the New Democratic Party was speaking of the complicated tax code. One of the Liberal members suggested that he hire a tax lawyer. It should not be necessary for a Canadian to hire a tax lawyer to deal with his or her own government, to effectively represent themselves.
Over the past 20 years the tax code has become increasingly complicated, increasingly Byzantine, to the extent now that in every budget Canadians can expect the tax code to become further complicated, more difficult to understand and to increase the need for Canadians to hire tax accountants just to read some of the books the hon. member from the New Democratic Party described. There are also clinics for people to learn how to, not evade taxes because that is illegal, but to avoid taxes or pay less taxes. Canadians, in some cases, are investing abroad in places like the Cayman Islands or looking for tax shelters in other jurisdictions.
All Canadians would benefit not just from reduced levels of taxation and more broadly based tax reduction but from a simplified tax code. This is an area that I would argue is tied in directly with productivity. One of the barriers to success, to entry for entrepreneurs and to entry to the free market is a complicated tax code. Currently the tax code is a barrier.
We need to ensure, relative to other jurisdictions, that Canadians are not paying disproportionately more because they are Canadians. Currently they are. The Mintz report on taxation, which was presented to the House of Commons finance committee I believe in early June, gave some very concrete examples of the discrepancies between Canadian business taxes and the U.S. business tax system, both in terms that we are paying more and in terms of some fundamental differences in the tax code that should be addressed so as not to disadvantage Canadian businesses and therefore Canadians.
The government speaks of the fundamentals of the Canadian economy and says the fundamentals are strong. I remind members and Canadians of what those fundamentals are. We have seen personal disposable income drop 9% in recent years. In the same period we have seen U.S. personal disposable income increase by 11%. We have the lowest productivity growth of any G-7 country. We have record high rates of personal bankruptcy.
We have a negative savings rate. Canadians are in fact going behind a bit every year. They are not saving but falling behind. They are digging into their pockets and into their savings in order to make ends meet and stay ahead of the game.
There have been some enhancements which are laudable to RESP flexibility for people to transfer funds to RESPs. Those types of changes do not benefit Canadians if they cannot afford to contribute to an RRSP in the first place. It is a difficult challenge to invest in RRSPs. I know mutual fund sales are off conservatively this year. I expect when the numbers are tabled we will see that RRSP contributions are also down this year.
The unused portions of RRSPs is mammoth in Canada. Canadians have not been able to exercise their RRSP contributions to the full extent. Why? They are paying too much taxes.
In 1993 the total federal tax take of the government was, I believe, $112 billion. This had risen to $150 billion by last year. This growth of approximately 25% in federal taxes has come directly from the pockets of Canadians at a time when they have seen federal spending on health care decline dramatically by $16 billion in round figures, although some say it is as high as $18 billion. They also see that the provinces have received less in transfers from the federal government.
There is one taxpayer and that taxpayer has borne the brunt of deficit reduction over the last several years. They deserve, at this time, an opportunity to reap some of the rewards for those sacrifices they have made.
It is no good for the government to be in the black if individual taxpayers are in the red. That is currently the case. We have the highest rate ever of personal bankruptcies. We have the highest rates of personal debt ever. This is a frightening statistic if we consider the impact for instance of global deflation trends which some say are threatening.
Wealth is a relative concept. It is not really a singular criterion. One's wealth or a country's wealth is a comparative figure. We compare the wealth of a country and the wealth of individuals in that country to the wealth of individuals in other countries. We are at a time when we are telling Canadians they have to invest more to save for their retirement, they have to protect their own retirement funds because the CPP is rather dubious in terms of its ability to provide the kinds of retirement incomes Canadians will need in the future.
We are telling Canadians to invest more and to take greater responsibility for their own retirements. At the same time we are forcing Canadians to invest 80% of their RRSP investments within Canada. This is perverse. The Dow Jones, which recently cracked the 10,000 mark, has performed extraordinarily well in recent years. Since 1993, when this government was elected, the Dow Jones has increased by 172%. The Standard and Poor's, S & P, is up by 180%, both U.S. markets of course.
The TSE is up only 60% since 1993. That may seem like a lot but in a relative sense it is not. Our domestic equities markets are grossly underperforming equities markets in the U.S. and elsewhere. Canadians in a relative sense have become poorer. This perverse policy of forcing Canadians to invest in one jurisdiction or another and denying them the opportunity to achieve geographic diversification is wrong.
At the same time we have seen the Canadian dollar decline by 16% relative to the U.S. dollar. Not only are the government's policies of reduced productivity, high taxes and disincentives for success denying Canadians growth in their own economy but its policy on RRSPs is actually denying Canadians growth for their retirement incomes anywhere. This is perversely wrong. If the government cannot get its act straight in terms of running this economy to benefit Canadians, it should not force Canadians to invest where they will not be able to maximize their returns where there are opportunities and where there are governments elsewhere that are doing a better job of creating opportunities.
The recent KPMG study commissioned by the government to study the cost of doing business in Canada has been lauded by the government and used as a tool to demonstrate its somehow good economic management of the country. The KPMG study effectively said that Canada is a cheap place to do business, that we have low real estate costs, that our labour costs in a relative sense are less. It said that basically doing business in Canada would cost less than doing business in some other jurisdictions.
If our economy were clicking on all cylinders, as the Minister of Finance has asserted in the House in recent weeks, the price of doing business in Canada would be quite a bit higher. With economic growth come economic cost increases and upward pressures. The reason the cost factors are not growing significantly in Canada is that we have not had the sustained economic growth that has been enjoyed by other jurisdictions.
The KPMG study points to a fundamental flaw of this government's policies and to the fact that we are not achieving that level of economic growth Canadians would be capable of achieving if the government were to make a significant step toward providing broad based tax relief to Canadians and toward providing Canadians with an opportunity to succeed in their own country.
The reason why young Canadians seeking greater opportunities are leaving Canada and going to the U.S. is that while they may recognize there may be greater costs, there are greater opportunities. They are willing to make that choice. Perhaps members opposite should stand along the borders, waving the KPMG report in the faces of Canadians as they leave and say please do not go, it is cheaper here.
This is like the Kmart or Zellers or Wal-Mart approach to economic development. We cannot get better in this country by devaluing our way to prosperity. During the summer when our dollar was hitting record lows the Prime Minister said it was good for tourism. The logical corollary of his argument was that if we reduced our dollar to zero we could give away all our goods and become the greatest exporting nation in the world. This is insane. We cannot devalue our way to prosperity. We need to significantly invest in Canadian productivity initiatives to ensure that Canadians have an opportunity to participate in the economic growth and are not inhibited by government policies that hold them back.
The government did not address some of those fundamental issues I described. It is looking at different fundamentals than the ones I see. When the government says fundamentals of the economy are strong it reminds me of what expatriate Canadian economist John Kenneth Galbraith said, to beware of governments that say the fundamentals are strong. Galbraith had a point. Usually when governments say the fundamentals are strong they are trying to hide something.
It is like a government where the industry minister says the productivity is very bad in Canada and we have to do something about it. In the same speech the industry minister says Canadians are paying 20% higher taxes than in the U.S. Then the finance minister says that is not so bad. Productivity is not bad. Canadians are not concerned about their standard of living. Perhaps this is an intentional effort by the government to create confusion, to try to distract Canadians from the real issues.
Canadians are concerned. Canadians are increasingly concerned about productivity. Canadians are increasingly concerned about their standard of living. That the dollar hit record lows this summer is directly correlated to the fact that our productivity growth has continued to underperform that of our trading partners. The dollar is linked very closely to productivity. There has be a secular decline in the dollar over the past 30 years. We need to do something now to avert further currency crises in this country. The best way to approach that is through productivity. The best way to approach productivity is through addressing some of the impediments to productivity, the structural impediments we have in the Canadian economy. Those include the highest income taxes of the G-7 countries.
There are structural impediments like interprovincial trade barriers which deny Canadians the ability to gain a competitive or comparative advantage within their country, a regulatory burden like a toll highway which is an interprovincial barrier in New Brunswick. The hon. member for Cumberland—Colchester has raised this point in the House. His interventions have taken a toll on this government.
There are issues of regulation. We have suggested as part of our prebudget submission that the government have a regulatory budget whereby regulations are costed. We take into account several costs, not just the cost to the government of introducing and enforcing a regulation but the cost to society, the cost to Canadians for complying with those regulations. Then those costs are compared, particularly the cost of compliance which is egregiously high for Canadians, to the actual dollar value of the benefit of that regulation.
Having a regulatory budget and choosing some departments each year to be scrutinized in this way would force governments to make the same types of decisions with Canadians' money that they make with their own in a fiscal budget. That would be one step in addressing the regulatory burden we have which by all accounts is excessive and does inhibit productivity and growth.
The government has no core industrial strategy. It has no agenda on an area as important as industrial strategy at a time when we are entering the 21st century. It is at a time when change is occurring at an ever increasingly rapid pace. It is at a time when we need government to take significant action on a number of fronts and provide meaningful visionary leadership on a number of issues, including tax reform. This government is on cruise control. It is a caretaker government.
I said in the House before that we had a budget surplus and a leadership deficit. I think in fact that is the case. It is a perilous time for Canada to suffer from this leadership deficit.
At this time we need governments to make strong decisions. We need the types of policies the previous government engaged in, for instance, policies like free trade, policies like the elimination of the manufacturers sales tax, and policies like deregulation of financial services, transportation and industry. Those were the types of visionary policies that were necessary then and were brought into being by a legislatively active government, not a government that would even consider proroguing halfway through its term because it did not have anything to do.
In fact since that time the challenges have become greater for Canadians. Since that time it has become even more important that we have governments taking strong steps and doing the right sorts of things.
The Economist magazine in its January edition last year indicated that the elimination of the deficit in Canada was largely due to structural changes made to the Canadian economy by the previous government. Those were the types of visionary changes I just described, whether it is free trade or elimination of the manufacturers sales tax. Unfortunately these types of policies are not forthcoming.
The government has seen fit to continue its huge tax grab on the EI fund, taking $19 billion from workers and employers. At the same time it is slashing benefits and punishing seasonal employment. The government does not consider the law of unintended consequences when it implements policies. It looked at seasonal workers and said that it would cut benefits to them. Many seasonal workers are not working at all now and are living on provincial social assistance.
It took people who were contributing, who were working, and denied them any opportunity to participate at all. Farms in the Annapolis Valley in Nova Scotia cannot find seasonal workers now because if they do seasonal work they will lose their benefits. Direct disincentives have been created for people to do what they want to do, to go out and work. The government did not replace it with a co-ordination effort to provide Canadians who were employed in seasonal work with an opportunity to work in various industry sectors.
There are serious issues. There are serious problems. A further complicated tax code is not the answer. I have not had one constituent ask me to complicate the tax code. Broad based tax relief is part of the answer as well as an industrial strategy which will make Canada a richer country, not a poorer country, in the 21st century.
