John McCallum

[The Budget, December 12th, 2001]

Mr. Speaker, first, I would like to compliment the hon. member opposite as being by far the most effective spokesperson for his party on economic affairs, which is not saying all that much, but it does make one wonder why he is sitting at the back rather than the front.

In my very brief time, I would just like to point out three errors he has made. First, he says we are planning deficit, when we are not. Second, he says we have done nothing to stimulate the economy, when we have. Third, we have adjusted the living standard issue.

On the first point, the contingency reserve is there for contingencies. I would challenge the him to think of anything that is more of an unexpected, uncontrollable contingency than the events of September 11 and its aftermath. We have eaten partly into the contingency reserve to deal with this mother of all contingencies. On that basis, we have absolutely no planning deficit.

On the second point, he said there was no stimulus. This very year we have $17 billion in tax cuts. We have $3 billion in health care spending. We have other things adding up to more than $20 billion, which is far more, relative to the size of the economy, than any stimulus that the United States has even contemplated, let alone done.

On Cape Breton, we have a $112 million fund to help the workers and give hope to that part of the country.

Finally, on living standards, productivity is key, and on productivity we have slashed the corporate tax rate. We have eliminated the income tax surtax. We have cut the capital gains rate to half. We have put money into R and D, and all of that supports productivity and living standards.

[The Budget, December 12th, 2001]

That is absolutely true. That is the largest tax cut of any of the G-7 countries. The contention is made that there is no real tax relief.

Take the increase in CPP premiums. We do not agree that is a tax increase. Even if that were subtracted from the $17 billion, it would still be the largest tax cut among G-7 countries because we were way ahead. The $17 billion dwarfs the $2 billion or $3 billion increase in the CPP premiums.

Whichever way it is skimmed, even if it is taken the worst way, from a Liberal point of view we have the biggest tax cut among G-7 countries.

On the point about EI, the $40 billion is not there. As the finance minister said today, since 1986 the auditor general has said we should put that into general revenue. What have we done with it? Part of it, $6.8 billion, is lower EI premiums, but that has also gone into things like $100 billion in lower taxes, $23 billion in health care, just the things that Canadians want and Canadians have set their highest priorities on.

There is no point asking about where is the $40 billion accumulated surplus because it does not exist, except on paper. I think it is time the opposition learned that simple fact.

[The Budget, December 12th, 2001]

Mr. Speaker, with all due respect I believe the member is utterly confused with respect to taxation.

The comment that there is no real tax relief is ridiculous, when in fact a year ago we had a $100 billion tax cut over five years. If it is limited to this year alone, it is a $17 billion tax cut this year.

[The Budget, December 12th, 2001]

By 1993 he had left a $42 billion deficit to the Liberal government. That is his idea of a big step, from $38 billion to $42 billion. Some big step.

Our big step under our finance minister and our Prime Minister was to take that $42 billion deficit, reduce it to zero and turn it into surpluses.

If that is the kind of big steps the Tories like, I do not think we want to go back in that direction.

Not only that, but the hon. member totally mangles his facts. He talks about callous cuts to health care when in fact we had a $23 billion increase in health care over five years and $3 billion this year alone. He criticizes the government for no tax cuts when we had $100 billion in tax cuts last year. Business groups, such as the BCNI and the Chamber of Commerce, exclusively recommended no tax cuts in this budget.

My last point is on perhaps the worst offence because I thought the hon. member knew something about how budgets were done. The projected deficits or surpluses are not made by the government; they are made by economists. Not only are the economists not predicting deficits, but as was indicated in the budget speech, even if we take the average of the four most pessimistic economic forecasts, the government is not going back into deficit this year, next year or the year after.

[The Budget, December 12th, 2001]

Thirty-eight.

[The Budget, December 12th, 2001]

Madam Speaker, the hon. member talks with pride about the big steps taken by the previous Tory government. His own leader mentioned the big step yesterday when he boasted that he inherited a $36 billion deficit in 1984 and by--

[Question No. 83, December 12th, 2001]

As required by Bill C-8, the four recently demutualized insurers have a common transition period during which they must remain widely held. No mergers by, or acquisitions of, demutualized firms are permitted during that period. The transition period ends on December 31, 2001.

After December 31, 2001, demutualized insurers with equity of under $5 billion will automatically be eligible to be closely held, however, transactions involving these companies will continue to require the approval of the Minister of Finance. As a matter of policy, those demutualized companies with over $5 billion in equity will continue to be widely held.

While companies are always free to hold commercial discussions with one another, the Minister will not consider any applications regarding mergers or acquisitions of these companies prior to January 1, 2002. More specifically, no applications will be considered under financial institutions statutes and no analysis of potential transactions will be undertaken before this date.

[The Budget, December 11th, 2001]

Mr. Speaker, I was not going to rise until the hon. member kept giving us these factual errors. I think the best place to look is page 114 of the budget document, which shows a chart of the federal transfer payments to the provinces. It is today at an all time high.

The error the hon. member makes is that like provincial premiers he fails to include in his transfer numbers the transfer of tax points, which the government made to the provinces some time ago. If he looks at the chart he will see them.

The fact of the matter is that total federal transfers to Ontario accounted for 22% of total Ontario expenditures five years ago and now it is 27%. In the case of the province of Quebec it is 30%. In the case of the maritime provinces it might be 40%. The fact of the matter, if we calculate these things right, is that the federal contribution has been on the rise.

[The Budget, December 11th, 2001]

Mr. Speaker, I am delighted to hear the suggestion from our hon. colleague from the Canadian Alliance that the Liberal government has been biased all these years in the direction of favouring growth in Alberta rather than in other parts of the country. I take that as a compliment. I am not sure it is quite true but we certainly have not been against Alberta. As he has suggested, possibly the good policies of the federal government over the years, as well as a spot of oil, have helped Alberta make a certain progress.

However it is also true that there has been some catch up, that over the last 20 years to 30 years, or indeed since the second world war, in terms of per capital income, GDP or living standards, the have not provinces of the maritimes have caught up to a significant degree and are closer to the national average living standards than they were 20 years or 30 years ago.

[The Budget, December 11th, 2001]

Mr. Speaker, let us suppose that, tomorrow, the federal government were to convert all cash transfers to Quebec into tax points—it will not do so, but let us suppose for a moment that it did—what would happen?

The Quebec government would say that today the federal contribution to health and education is nil. But the real contribution of these transferred tax points would be equal to what it is today. Thus, what separatists are asking us to do is to indicate that our contribution to the provinces is nil, according to them, even though, in terms of funds lost by the federal government, it would be the same thing.

This is why I say that this is a separatist idea, one that the federal government would be absolutely crazy to follow. And this is why I also say that we will not do so.