Madam Speaker, I spent one and a half weeks with the finance committee in October, travelling across Canada and listening to the concerns of ordinary Canadians. We visited the cities of Regina, Montreal, Halifax and Charlottetown when I was with the committee. Being new to this process and perhaps somewhat naive politically, I was initially impressed that Canadians seemed to have an impact on this very important legislative process.
During my time with the committee, many Canadians sat before the five government members and four opposition MPs and expressed their views on Canada's fiscal policy and the alternatives we now face as a nation. I was fundamentally disappointed that their concerns were not reflected wholly in this committee's report. For this government to engage in an ostensibly consultative process with Canadians without really taking their opinions seriously makes Canadians skeptical and indeed cynical.
As a political representative, I am even skeptical and cynical of this process that led up to the publication of this vacuous government self-serving document.
The Liberals take every opportunity in this House to blame the debt and deficit on the former Conservative government. However, in the 1998 forecast of the Economist magazine which came out recently, the Canadian section caught my interest in reference to fiscal policy and deficit reduction. I quote:
Much of the credit for deficit reduction goes to the passage of time and successful reforms earlier this decade. The fiscal drag has been offset by falling interest rates and record exports boosted by the undervalued Canadian dollar to a consistently prosperous America.
The Economist refers directly to free trade and NAFTA, the same agreements that the Liberals fought while in opposition, the same agreements that the Liberals fought against during an election, the same agreements that the former Liberal leader John Turner argued against just last night on the CBC news.
These are the Liberals who have allowed greater trade restrictions within Canada than we have internationally, that have allowed the insane situation to exist where there is more trade barriers between Ontario and Newfoundland than there are between Canada and Chile. Today the government's inaction on interprovincial trade barriers is costing Canadians hundreds of thousands of jobs. An increase in interprovincial trade by 10% would create 200,000 jobs.
The Economist article continued and said:
The imposition of a national sales tax in 1991 and the deregulation of financial services, transport and energy are now widely accepted as having contributed to deficit reduction.
Again, Conservative initiatives of which I am very proud.
The Liberals are not responsible for the passage of time. The Liberals are not responsible for interest rates or increased exports. We all know the Liberals are not responsible for free trade or deregulation or the GST, even though the Prime Minister recently took credit for introducing it internationally. The Liberals have no problem taking credit for the remarkable turn-around this economy has made due to the reforms by the previous Conservative government.
The Liberals would also like Canadians to believe that they are responding to the public by increasing the Canadian health and social transfer payments to the provinces. The report, in fact, applauds the government's decision to increase the CHST floor to $12.5 billion. In fact, the Liberal government is so excited about this exercise that it has announced it twice. The first announcement, I remember it distinctly, was in the opening days of the election in my home province of Nova Scotia. Unfortunately for the Liberals, the voting public of Nova Scotia was not taken in by this smoke and mirrors announcement or fiscal shell game.
Nova Scotians understood, and they still understand today, that the finance minister is not actually increasing the transfer payments as he would like them to believe. He is simply pledging not to cut transfers further, as he has done so dramatically and drastically in previous budgets.
I should probably thank the Minister of Finance for his generosity or lack thereof. It helped me and other colleagues from Atlantic Canada become elected to this House by Atlantic Canadians who had become cynical with this government.
The Minister of Finance made the same announcement this week prior to the premiers' meeting in hopes of softening the blow that the Liberals had given to the provincial governments over the past four years. The minister forgot to mention the $7 billion cut his government had made that had forced the provincial governments to inflict draconian cuts on their constituents across Canada.
In the same section of this finance committee report, the committee recommends a national home care system. Certainly in my riding of Kings—Hants the promise of a national home care system sounds very seductive. With the reduction in transfer payments, local hospitals in my riding have been forced to close or reduce the numbers of beds. The Hants Community Hospital has been reduced from 128 beds to approximately 30 beds. Western Kings Memorial Hospital and Eastern Kings Memorial Hospital have suffered cutbacks or have been closed. In some cases the responsibility of providing health care has been shifted to community based boards that now struggle just to keep viable medical services in this area.
The federal government now has the gall to reduce funding to the provinces, forcing bed closures in communities across Canada and then recommends this glistening generality of a policy initiative called a national home care program to make up the difference.
Perhaps the government intends to put the same amount of resources into the home care program that it has committed to national day care or to the pharmacare program that it has spoken of in the past, or will this national home care program simply go into the annals of political rhetoric which Canadians have come to expect from this government.
There is a feeding frenzy going on right now in the Liberal caucus, a feeding frenzy which is akin to that of sharks when they smell blood. There is nothing that incites conflict more in the Liberal caucus than the smell of hard currency around the snouts of Liberal backbenchers.
I remind the members of the Liberal caucus that this feeding frenzy is highly premature. If the finance minister was not using the $12 billion to $13 billion surplus in the employment insurance fund to offset the deficit numbers, the arrival of this fiscal dividend would occur much later than the date that he is projecting.
Our leader has made this point clear on a number of occasions. The fact is that the Minister of Finance is balancing the budget on the backs of working and unemployed Canadians.
I agree with the report's recommendation that the government establish clear goals for long term sustainable debt to GDP ratio in Canada. Our party ran on a platform that included just that. In our policy document we promised to set a target of 50% debt-GDP ratio by 2005. The current Liberal strategy is to wait until the economy grows and see how the ratio falls. This is in direct opposition to a study released last month by the OECD which recommended the ratio be put in a clear downward trend with clear targets.
Canadians know the simple fact that this government has yet to learn. By paying off the debt all taxpayers will have less interest to pay and will benefit by reinvestment in programs in the future. By paying off the debt government funds can be reinvested in these programs.
Even European countries previously not known for fiscal fortitude required debt to GDP ratios of 60% simply to comply with the Maastricht agreement.
Our country is floundering now with debt to GDP ratio of approximately 70%, the highest of all G-7 nations. This is a competitiveness issue. A low debt to GDP ratio increases Canada's global competitiveness, strengthens our economy and creates jobs for Canadians.
Liberals obviously feel that the status quo is acceptable. While dilly-dallying and dithering in caucus over how to spend the dividend, Canadians wear the heavy yoke of government inaction. Unfortunately, it is those same ordinary Canadians who suffer by that Liberal government inaction.
The PC Party believes that we need to couple debt reduction with tax relief and strategic social investment. No one action should dominate another. Instead, the three should be used to complement each other and to strengthen the economy. New strategic investment is needed in areas that will create real returns for Canadians with measurable outcomes in terms of quality of life and international competitiveness.
At this time strategic investment in education in particular is extremely important and addressing the post-secondary student debt issue is extremely important. I was pleased to see that there are some members in this House who agree with me and there has been a committee report to that effect.
In October I met with the Canadian Academic Round Table. They had their annual meeting in my riding.
I learned there had been a 280% growth in student debt in Canada since 1989 and a 110% growth in tuition costs. We should consider the impact on the future competitiveness of Canada of creating a huge impediment for young Canadians to pursue higher education. We should consider that we are in a global economy and the knowledge based industry is leaving most other sectors.
For the first time as a country, Canada has an opportunity to invest in our competitive advantage and to ensure that young Canadians have an opportunity to participate in prosperous growth by having access to higher education. The government has created huge impediments to higher education and irrevocable damage to the future competitiveness of Canada.
The third part of our plan for economic prosperity is tax relief. Current tax levels in Canada run counter to our culture. Our current tax system penalizes initiative. Wood Gundy reported this month that Canada's personal income taxes as a share of GDP are the highest of all G-7 countries. From 1989 to 1993 the Conservative government reduced the percentage of personal income tax as a per cent of GDP from 14% to 13%.
Since 1993 the Liberals have hiked the ratio to over 14%. Let us make it clear that the PC government reduced the personal income tax to GDP ratio and the Liberals hiked it up.
I like to think of tax relief in terms of a Canadian family that budgets its money every year. Canadians and Canadian families have a better idea of how to spend their own money than the government. The finance minister feels that once the economic crisis which is being dealt with on the backs of ordinary Canadians is under control, the government has the right to dictate to taxpayers how their money should be spent. The government is fundamentally wrong in its judgment.
Higher taxes reduce disposable income in two ways. The obvious is the reduction in the paycheques of taxpayers. The second is the long term reduction in economic growth which results from weaker incentives to work and to invest and the reduction in the international competitiveness of Canadians.
The tax gap between Canada and the United States, as well as that with our other trading partners, continues to increase. The OECD report warned that unless significant measures were taken in Canada we were risking a serious brain drain. That has already begun. Based on the numbers in the House today I would expect that it is occurring quite rapidly.
Young Canadians are the brightest light in our country. We cannot afford to lose them to other countries. I see no serious mention of tax relief in this report. These taxes create a competitive disadvantage for Canadians relative to our closest neighbour and greatest trading partner, the United States, leading to lost opportunities and lost jobs.
Tax burdens are also related to all levels of employment. The Liberals boast of job creation since taking office, but Canada's unemployment rate has been consistently greater than 9% for 86 straight months. Canada's high tax burden has been shifted to the bottom of the wage scale through the payroll taxes the Liberal government continues to support, most recently with the CPP amendments.
The report gives additional resources to helping poor children once the fiscal dividend grows. Everybody in the House feels that child poverty is an important issue which needs to be addressed, but the Liberals have no credibility when they pontificate about programs for impoverished children in Canada.
The children are not the root of the problem. Poor children exist because of poor parents, unemployed parents and parents who have had the Canadian budget balanced on their backs over the past four years. The Liberals simply want to throw money at this problem because it is politically expedient and does not require a great deal of vision to do so.
We must address the tax system in Canada. High payroll taxes in particular create the single biggest impediment to job growth that we face as a nation. As a small business person I recognize that when payroll taxes increase I am not able to hire the number of people I would like to hire. A number of small business people in our caucus helped lead us to the consensus and the understanding that high payroll taxes are in fact killing jobs across Canada.
The basic personal exemption should be raised to $10,000, as we promoted during the election. This would take two million low income Canadians off the tax roll and provide them with a fresh start.
We can draw on other examples when determining what to do in the future to guide Canada victoriously into the 21st century. We can look at the Netherlands. In 1983 it had an unemployment rate in excess of 13%. By reducing payroll, by reducing income taxes and by reducing regulations which hinder the development of small business, the Netherlands has been able to reduce its unemployment rate to sub 7% levels. That is what leadership can achieve.
The report tabled by the Liberal finance committee is a biased and unfair representation of what we have heard from Canadians. It is a direct slap in the face to the process of consultation and an offence to many Canadians who took time out of their schedules to create reports and to make meaningful interventions to the committee. At the end of the report is my party's dissenting opinion.
The government and its report continue to ignore what Canadians already know. Debt and tax reduction will lead to a stronger, more self-reliant and competitive Canadian economy. We can reduce Canada's 9% unemployment rate, but not until we have the vision and the intestinal fortitude to implement policies which create a growth environment to benefit all Canadians.
