Mr. Speaker, on behalf of my constituents of Don Valley East, I am pleased to rise today to provide my comments on the Conservatives' federal budget introduced last week.
I am an accountant by trade and I like to compare numbers, especially when it comes to tax policy. I was therefore surprised when the finance minister seemed particularly sensitive to the criticism that he and the Conservative Party are “blowing the surplus”.
Usually a budget speech delivered by a federal finance minister is a well crafted and dignified message intended to assure not only Canadians but also financial markets at home and around the world that the Government of Canada is in full control of its finances and confident of its economic future.
The fact that the finance minister found it necessary to fend off critics even before he outlined his budget plan suggests that he is not confident of his numbers and that the prospect of the Conservatives running a deficit is a very real and distinct possibility.
Budget 2008 is the third budget delivered by the Conservatives. After three kicks at the can, one might expect the finance minister to have a better grip on the country's finances and purse strings. Yet, he continues to make some historical gaffes.
For example, I think Canadians will agree that the first disaster was the income trust scandal. Page 32 of the 2006 Conservative election platform entitled “Stand up for Canada” clearly states that a Conservative government would not attack retirement savings by ensuring that it would not impose any more taxes on them.
What is the first thing the finance minister did on October 31, 2006, barely six months after assuming office? He shocked thousands of Canadian investors, many of them seniors who relied on their income trusts for monthly income, by imposing a tax, breaking a campaign promise and wiping out more than $25 billion in savings overnight. Those seniors have not forgotten that, nor have they forgiven the finance minister, and I do not think they ever will.
Another jewel in the Conservative misstep in its platform was to enshrine property rights in the Constitution of Canada, which it has conveniently dropped.
The Conservatives like sound bites, but these sound bites are not intelligent bites and so the Conservatives have had to flip-flop constantly.
On page 16 of the Conservative election platform under the heading, “Real tax relief for Canadians”, it states, “A Conservative government will...eliminate the capital gains tax for individuals on the sale of assets when the proceeds” are delivered.
Canadians have been patiently waiting for years, and while the Conservatives have delivered three budgets, there is absolutely no mention of capital gains relief. Could it be that the Conservatives have broken yet another campaign promise?
Canadians are beginning to literally stand up and take notice. Last year the finance minister made history with his 2007 budget that came along with the curious title of “Aspire”. It was the most inflationary budget and the Minister of Finance was called the “biggest spending finance minister since Confederation”, by whom? By none other than Andrew Coyne, who at the time was with the National Post.
This year budget 2008 is entitled “Responsible Leadership”. Let us see what sort of leadership it is. The Conservative government inherited from the previous Liberal government a $17 billion federal surplus and now, in less than three years, the Conservatives have placed the country dangerously close to a federal deficit.
Let us look back at the economic situation 15 years ago. In 1993 the Liberal government inherited a $42 billion deficit and a massive federal debt from the Conservative government of Brian Mulroney. It took many painful years to turn the situation around and put Canada back on the path of prosperity. Part of the plan included a guarantee that no less than $3 billion a year would be taken from the surplus and used to pay down the federal debt.
Now the finance minister is telling us that he can no longer afford to pay off the debt in a balanced and predictable way. According to his predictions, he can only afford to pay $2.3 billion in 2008-09 and even less, $1.3 billion, in 2009-10. Is this what the Conservatives call responsible leadership?
The reason the Conservatives' debt reduction plan gradually decreased is precisely that the finance minister has in fact blown the surplus. As my distinguished colleague from Markham—Unionville has astutely pointed out, a $1.3 billion margin puts Canada perilously close to deficit financing. It takes a crisis like SARS or an ice storm to blow off this surplus.
How could the finance minister be so negligent? Canadians worked hard to get the country back on solid economic footing, and the finance minister and the Conservative government have spent like drunken sailors with nothing to show for it except a potential deficit.
To illustrate how incompetent the finance minister is, let us look at a practical example. In 2006 the finance minister cut the GST by 1% despite advice from economists all across the country that this was a foolish move. Then, to add insult to injury, he increased the income tax rate from 15% to 15.5% for the lowest income bracket and reduced the personal exemption rate.
For people in low and middle income brackets, the effect of the tax increase that these people lost was anywhere from $122 to $400. For the same people to take advantage of the GST cut, the low and middle income earners would have to spend $12,200 or $40,000. This is bizarre. The only people who could benefit from the GST cut are the wealthy ones.
Instead of helping the most deserving, the finance minister penalizes them, at a time when the federal treasury had $17 billion in surplus. Why did the finance minister squander away federal reserves without even stimulating the economy? Each 1% cut of the GST costs the federal treasury $6 billion a year, and since the Conservatives came to office, they have cut the GST twice, creating a federal shortfall of $12 billion a year.
Who pays for the shortfall? The Canadian taxpayer does, especially when the same economists have repeatedly told the Prime Minister and the finance minister that personal income tax cuts like the ones introduced by previous Liberal governments do far more for the economy than saving one or two cents on a cup of coffee.
Personal income taxes, especially those aimed at low and middle income taxpayers, do more for the economy because Canadians save money before tax. With more money at their disposal, low and middle income Canadians will likely spend or invest that money on their own behalf, therefore stimulating the economy.
Budget 2008 is a bare-bones budget. Of the $22 billion it projects as expenditures, only $1.4 billion is new money. This is smoke and mirrors. The money for infrastructure, claimed to be $33 billion over seven years, is really less than $4 billion because the other money has been there from the cities and communities agenda and a gas tax rebate introduced in the Liberal budget 2004-05.
The Conservative government lacks economic savvy, lacks vision, lacks leadership. The fact is Old Mother Hubbard has gone to the cupboard and found it bare. The Conservatives have blown the surplus and unfortunately, we the Canadian taxpayers will have to suffer the consequences. History repeats itself. Conservative times are deficit times and Conservative times are sorry times.
