44th Parl. 1st Sess.
April 29, 2022 10:00AM
- Apr/29/22 10:03:34 a.m.
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- Re: Bill C-8
Madam Speaker, it is always such an honour to rise in this place and speak on behalf of my community of South Shore—St. Margarets.
Today, we are debating the report stage of Bill C-8, an act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures, in other words, more government spending on COVID‑19. Let us look at the NDP and Liberal COVID spending to date in this bill. The fall fiscal update added another $70 billion in new spending, and this spending is on top of that. The $70 billion I mentioned does not even include the Liberal campaign promises, which would be tens of billions more if, and that is a big if, the NDP-Liberal government lives up to their campaign promises and their coalition. The bill is going to add $70 billion on top of what we saw in the public accounts, the $1.4 trillion of debt that Canadian taxpayers are now on the hook for. Let us think about that: $70 billion more, on top of the $1.4 trillion that has already been added until now.
It is said that one should know history so one does not repeat it. I guess the current government does not know history, because if it did, it would see that the son is repeating the mistakes of the father. To understand the context of what this bill and this spending's impact on the economy will be, let us take a look at what the father did. It tells us what the country will face in the coming years because of the fiscal mismanagement of the son and the father.
In the federal election of 1968, Pierre Trudeau reassured Canadians that a Liberal government would not raise taxes or increase spending. The government, he said during the election of 1968, is not Santa Claus. How did that work out?
When Pierre Trudeau became prime minister, real government spending increased from 17% of GDP to 24.3%. In other words, the federal government's share of the economy rose 42% under Trudeau senior. Every single area of the federal government's spending increased under Trudeau senior, except defence spending, where he cut spending in half as a percentage of the budget. When Pierre Trudeau took office, we spent more on national defence than we did on servicing the country's debt. When he left office in 1984, for every dollar the government spent on defence, we spent three dollars on paying just the interest on his national debt.
How did he do it? He created 114 agencies and commissions. He created seven new government departments, for a total of 464 Crown corporations with 213 subsidiaries. The annual deficit rose to almost $40 billion. That does not seem so unreasonable, given what we have seen with the spending in this place lately. However, that $40 billion was on a base budget, an annual Government of Canada budget, of $100 billion.
I raise this because, as the adage goes, “Like father, like son.” Pierre Trudeau once said, “We're going to build socialism here.” Well, he did, and his son just formalized it.
People who grew up in the 1930s, such as Pierre Trudeau, saw Roosevelt's New Deal of massive government infrastructure spending to pull the U.S. out of the Great Depression. They thought that this approach in the 1970s would stimulate us out of the “stagflation” of that time, which was, for those who do not remember, high inflation combined with high unemployment and a stagnant demand in the economy. It was disastrous.
It was so bad that at one point Pierre Trudeau brought in wage and price controls. He said, “Zap, you're frozen”, and froze all wages and prices. When those socialist wage and price controls came off, the floodgates of wage demands and price adjustments went up even faster. By the time Pierre Trudeau left office, 38¢ of every dollar collected in taxes by the Government of Canada was to pay interest, and only interest, on the debt. The biggest single government program was paying interest on Pierre Trudeau's debt. The government in 1984 spent more on debt interest payments than it spent on defence spending and health care combined. Trudeau's policies of massive spending led to a rapid rise in interest rates to try to reduce inflation. All that government spending simply made it worse.
In the early 1980s, banks were creating home mortgages at 21% annual interest rates. When Brian Mulroney took office in 1984, and I joined that government as a young staffer, we had to break the cycle of spending and deficits that were killing Canada's economy and jobs. By 1987, Mulroney was managing the government in an operating surplus position, reversing the structural deficits created by the Liberals. The deficits after 1987 were entirely as a result of paying interest on Pierre Trudeau's debt.
The government remained in an operating surplus through successive prime ministers until the current Liberal government came to office. The Mulroney government reined in spending and fundamentally restructured the economy with a new vision to deal with the economics of the day. There were fundamental changes, such as a complete restructuring of Canada's financial services industry; the first introduction anywhere in the world of free trade, which did not exist anywhere before then; the replacement of the 13.5% manufacturers' sales tax with the 7% goods and services tax; the elimination of the national energy program and the job-killing foreign investment review agency; and, yes, the privatization of 23 Crown corporations, which I was proud to be a part of, including Air Canada.
The Chrétien government continued this work with further cuts in government spending, although it took a different approach. It collapsed the separate unemployment insurance fund into the consolidated revenue fund, and then artificially kept payments high in order to build up a surplus that was not needed to pay unemployment insurance but was used to pay down the debt. It dropped the government spending on health care by 50%.
It took the governments that followed more than 25 years to break the back of Trudeau's disastrous spending, but he was a piker compared to his son, who has added more debt to Canada's national accounts in six years than all other governments since our founding in 1867. The son, in 2015, promised small stimulus deficits that would be balanced by 2019. Just like his father did in 1968, when he said he would not spend, the son promised the same thing in 2015. We know how that turned out.
The government spent $600 million on high school students living at home in its first round of COVID spending. The government also spent $11.8 billion on CERB for 15- to 24-year-olds who were living with their parents; $7 billion on spouses in households with more than $100,000 in earnings; $110 billion on the Canada wage subsidy. Some studies have found that the money did obviously go to struggling companies during COVID, but many were strong enough to withstand it on their own; 24% of that money went to companies whose revenue actually increased during COVID, and 49% to companies whose profits increased during COVID.
Spending more than $600 billion in two years, printing more than $3 billion a week in new money, has caused the structural inflation of almost 6% we now see. In the coming year or two, we will start to see wage inflation as a result of the way companies, both unionized and not, determine how their employees get pay raises, which is usually based on inflation. As publicly traded companies raise salaries at all levels, because consultants and their HR board committees will say they need to do so or risk losing their employees to other competitors, combined with the demands for CPI adjustments in union contracts, that is what is going to create wage inflation. We have not seen anything yet. Wage inflation will fuel further goods inflation as more dollars will flood the market chasing limited goods, which in turn leads to higher inflation.
The consequences of providing all these universal government COVID programs, pushing all this money into the economy at levels not needed, and now new social programs when the government is not even properly funding health care, will add to the structural deficit that the country has. The government has no plans to reduce the footprint of government in the economy, which means we are heading toward stagnation, a 1970s-type of situation.
I cannot support this bill, because Bill C-8 and the recently tabled budget will just make Canada's finances drastically worse. The NDP and the Liberals have not learned in their pact from what happened in the 1970s, and they had a pact in the 1970s, too. History is repeating. Like father, like son.
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- Apr/29/22 11:37:01 a.m.
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Madam Speaker, global inflation is having a significant impact on household budgets. While Canada's rate of inflation is below that of the U.S., Europe, the G7 and the OECD, we are continuing to focus on making life more affordable.
We are indexing important programs, such as the Canada child benefit, OAS and GIS, to the cost of living. We are implementing an economic growth plan that creates job, grows the economy and doubles the amount of residential construction so that millennials can afford their first home. We are doing this while unwinding Canada's pandemic deficits and reducing our debt-to-GDP ratio because that is the fiscally responsible thing to do.
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- Apr/29/22 11:39:36 a.m.
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Madam Speaker, the leader of the Conservative Party herself has already admitted that the extraordinary investments that were made over the course of the pandemic were necessary to protect Canadian families and Canadian workers.
Our plan has worked. In fact, we have maintained the lowest net debt-to-GDP ratio in the G7 while growing the economy and recovering 115% of jobs lost due to COVID-19. Canada was able to do this because of our prudent fiscal management. It is now time to unwind the pandemic deficits and continue to grow our economy while reducing our debt-to-GDP ratio. This is what good fiscal managers do, and it is going to allow us to make Canada and life—
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- Apr/29/22 12:37:40 p.m.
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- Re: Bill C-8
Mr. Speaker, what a pleasure it is to see you in the chair. It suits you well. We never know what will happen in the future, but I think you would really appreciate being on the other side in three years, just as the Conservatives would and as all Canadians would like to see, by the way.
We are therefore gathered here today to talk about Bill C-8, which deals with the economic update and implements some of the government's financial measures.
I want to say from the outset that my speech will deal exclusively with something that is currently affecting the financial situation of all Canadians, and that is inflation, of course.
For many months now, Canada has been grappling with its highest inflation rate in 31 years. It is important to remember that, at that time, there were also substantial interest rate hikes and we finally managed to bring inflation under control. However, we have not had an inflation rate of 6.7% in 31 years, and it is affecting all Canadian families. Everyone, without exception, has been directly affected by the high inflation rate.
Why do I want to talk about that today?
It is simply because I do not think there is anything at all in Bill C-8 that directly addresses the problem of inflation, which is having an impact on all Canadian families. The bill provides no relief for them. However, there are two things that the government could do but has failed to do.
Inflation affects everyone. However, as the report issued by the Royal Bank of Canada a few days ago indicates, unfortunately, the poorest among us are those who are hardest hit by inflation. Why? The reason is that essential goods, such as food, housing and transportation, are directly impacted by inflation.
A high-income person eats just as much as a person with a lower income. If the price of food goes up, those with a very high income will be much less affected than people with a low income. We are not talking about luxuries here, or the proverbial cherry on top, but about essential goods that have been drastically affected by inflation. That is why this affects every Canadian family and that is why the government should focus its financial and budgetary efforts on helping Canadians cope with inflation.
I must have asked the government dozens and dozens of questions about inflation, as has my colleague from Carleton, and as have all my colleagues on this side of the House.
The Minister of Finance generally tells us that it is not the government's fault, that this is happening all around the world. She says it is because of the health crisis we had, the supply problems affecting the entire globe, and the war in Ukraine. It is not Canada's fault; this is happening all around the world. To that, I say no.
Let us not forget that when Bill C‑8 was introduced and we were asking questions about inflation, this government told us that it was temporary. We were told that this problem would sort itself out, which brought to mind the sadly infamous and pitiful statement of the current Prime Minister, who said in 2015 that budgets balance themselves.
That is not true. A budget does not balance itself. Nor is it right to say that inflation resolves itself, as the government claimed just six months ago. As the Governor of the Bank of Canada says, it is here to stay, and we must get a handle on it.
The government needs to take two measures to directly address inflation, and this has nothing to do with what is happening in Ukraine, or with the supply chain or with the pandemic. The government needs to freeze price and tax increases and control spending. Why?
When people have concerns about their personal budget and are unsure whether they can buy something, invest in a place, or pay for an unexpected expense, they have to ask themselves questions and think twice. They cannot just spend as much as they would like, and they have to make choices.
This is exactly the approach that should be taken by the head of any family—father, mother or anyone taking care of a family. Sometimes the entire family deals with it, and that is what needs to happen. People take action, think twice and control their spending. That is the responsible way to govern. However, this government has done everything except control spending. Everything that has been done since 2015 shows a total lack of fiscal responsibility.
Let us not forget that in 2015 they got elected on a promise that they would run three small deficits and in 2019 there would be no deficit—zero deficit. That was the proposal, the solemn commitment from the Liberals in 2015. The reality is that we have not had three small deficits and then, poof, none at all. We have had one, two, three, four astronomical deficits each time. They just cannot help themselves. It increases year after year.
I cannot help but laugh at the budget tabled by the government, which states that, in five years, the deficit will be a tiny $8 billion. No one believes that, because these people have not governed properly since 2015.
Of course we understand there had to be extraordinary spending because of the pandemic. That is completely understandable. We will give the government that. However, just because the government was spending does not mean it could not keep that spending under control. That is the issue. Let me point out that, when our party was in government, it had to deal with the worst economic crisis ever, the 2008 crisis. That was the worst economic crisis since the 1920s and 1930s. Our government governed responsibly. Yes, there were deficits, but we had a plan. As a result of that plan, in 2015, under the Conservative government and thanks to the sound management of our finance ministers, we were the first G7 country to recover after the 2008 crisis. That is something to be proud of, and our management of public monies was realistic and responsible.
The current government went on a spending spree, even though economic growth was strong from 2015 to 2019 and money could have been set aside. We are not against the extraordinary spending and the very high deficits that happened because of the pandemic, but now that it has been done, the government needs to manage matters properly and accountably and keep things under control, which it is not doing. The more the government spends, the more that spurs inflation. The more money is injected into the economy, the more prices rise. The first thing to do is control spending.
The second thing to do is freeze increases. In an ideal world, we might ask for taxes to be waived. That might be nice, but it would not be realistic or responsible. Yes, there are some taxes that we do not agree with, such as the Liberal carbon tax, but at the very least, to give Canadian families a break, the government should not increase these taxes. It had a golden opportunity to give families a break on April 1, but it decided to go ahead as if it was business as usual, as if there were no inflation, as if money flowed like water and everyone had money jingling in their pockets, as if no family had any problems. Consequently, today, because of the Liberal carbon tax, the cost of transportation is spiralling upwards and not downwards, and that is unfortunate.
The government should have looked to President Macron and his management approach. I may perhaps surprise many people by saying that, but it is true. France had opportunities to freeze certain prices and it did so. The inflation rate in France is 4.1%; in Canada, it is 6.7%.
Those are some tangible things that the government could have chosen, and should choose, to do in order to give families a break. Every Canadian family has been affected by inflation. The hardest hit are the most vulnerable. This government must pay close attention to this situation and the reality on the ground. This government must do two things: control spending and stop scattering money willy-nilly, and immediately freeze all rate increases and tax hikes.
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