44th Parl. 1st Sess.
September 29, 2022 10:00AM
- Sep/29/22 4:16:50 p.m.
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Mr. Speaker, I will be splitting my time with the member for Lethbridge.
I am happy to be here today supporting our opposition motion, which states:
That, given that the cost of government is driving up inflation, making the price of goods Canadians buy and the interest they pay unaffordable, this House call on the government to commit to no new taxes on gas, groceries, home heating and pay cheques.
I want to bring the voices of my constituents from Kelowna—Lake Country to Ottawa, not the other way around. Over many months this year, I have sent out several surveys to hear how people are struggling with the government's 40-year-high inflation. I had thousands of responses. Robyn in Lake Country said, “People can't afford to eat, to get to work, to take care of the basics for their families in this economy.” Rollie in Kelowna wrote that the government must “slow down on their spending. They're putting people in the poor house. It's a real shame.”
Tax relief is what my constituents are asking for, and the vast majority agree. With the record gas prices we are seeing today in British Columbia, that relief is more desperately needed than ever.
Recently, as a member of the industry committee, I questioned Aaron Wudrick, director of domestic policy at the Macdonald-Laurier Institute. In response to my questioning about Canada's regulatory burden, high taxes and expensive housing affecting young adults, Mr. Wudrick said, “In short, they're discouraging.”
I agree with his assessment, especially after speaking with many young people in Kelowna—Lake Country and across B.C. over the summer. They feel hopeless. They feel hopeless when seeing the value of their paycheques decline, hopeless in finding the money they need to start a business and hopeless in finding an affordable apartment, let alone ever dreaming of owning a home of their own.
International students often pursue education in high-demand fields. They have lost hope in being able to afford to live in Canada. We have a labour crisis in everything from health care to farming to tourism. The government's high-spend, high-cost agenda will see us lose their ingenuity and entrepreneurship.
A recent Leger poll showed that 46% of young immigrants say they are now less likely to stay in Canada. When asked why they would not recommend Canada to future immigrants, the top two reasons given were the cost of living and the current government.
Higher taxes are not the solution either. How do we know? It is because under the last Conservative government, we oversaw the lowest federal tax burden in over half a century, nobody needed to wait month after month for passport renewals past deadlines and homes were half the price. Furthermore, it should come as no surprise that new taxes, as well as presently automatic tax increases, would have a significant impact on small business owners.
As the shadow minister for small business recovery and growth, I have had the opportunity to speak with numerous workers and owners of small businesses in Kelowna—Lake Country and across the country to hear their perspectives, the challenges facing them and what needs to be done, or not done, by the federal government to allow them not just to survive but to succeed. We have a 40-year-high inflation rate, labour shortages, supply chain issues, increasing business debt and federal tax increases on businesses, and they are already increasing costs at an unmanageable level for small businesses.
Small businesses have been hit particularly hard as a result of the volatile open-and-shut cycle over the last two and a half years, with 54% of businesses still reporting below-normal revenues. About 62% of small businesses are still carrying debt from the pandemic, according to the CFIB. It also notes that small business insolvencies are on the rise, with a reported one in six businesses considering closing their doors. Downtowns and business districts have been hollowed out, with small businesses in those areas struggling to even keep their doors open given limited customers.
I spoke to a BIA organization this week, a business improvement area organization, that often represents main streets. It is saying that now the heart of some of its issues deal with mental health and addiction crises. It also said its members are burdened with debt. They are having a very challenging time.
Many are barely hanging on. It is nothing short of cold-hearted to increase multiple taxes that would further hit their bottom lines. I know what a small business owner is going through, as I have been one myself. Small business owners have not forgotten the 2017 Liberal-proposed tax changes that party attempted to ram through on small businesses, which would have been devastating to entrepreneurship in our country. These tax changes would have had “significant, unintended effects on all SMEs, particularly middle-class, family businesses.” Those are the words that came from the Greater Vancouver Board of Trade back in 2018.
Thanks to the advocacy of small businesses, chambers of commerce, BIAs, boards of trades and Conservatives pressing the issue day in and day out, the government finally backed down. This just shows the government's mindset.
What are the main taxes that are going up soon? We have the payroll tax, the excise tax and the carbon tax, which affects the cost of everything. Dan Kelly at the CFIB put it well recently in explaining why a payroll tax is, in fact, a tax. As he put it, “1. They are mandatory, with penalties for not paying. 2. While there are benefits that come back to some of those paying premiums, they are not proportionate to the amount paid. 3. For the business that pays 60% of EI & 50% of CPP costs, they are unquestionably payroll taxes as the benefits are for workers, not employers.”
Regardless of what the government says and tries to obfuscate, even the Prime Minister has called these payroll taxes, and many other Liberals have as well. These taxes are going up every year, hitting the paycheques of workers and the bottom lines of small businesses, and should not be increasing during a time of 40-year-high inflation.
The excise tax is an escalator tax, which is a fancy bureaucratic word for “automatic”. It is a tax that does not have to come to Parliament to increase. It automatically goes up. The excise tax is on beer, wine, ciders and spirits. These industries raise concerns about this every year while the government ignores them, and 95% are small businesses.
Every year these taxes go up automatically, hitting our local producers with more taxes, as well as the retailers and restauranteurs who buy these products and who then have to pass on the price to people who buy them. This ultimately adds further to inflation. As Restaurants Canada said, the government introducing the automatic escalator in 2017 “made an already bad situation worse” for restaurants.
Recently at the industry committee, we heard from Beer Canada, which called excise tax increases “counterproductive and harmful” to their sector, and “simply not sustainable over the long term.” Let us not forget this escalator is tied to the CPI and, therefore, inflation, meaning it will go even higher next year, adding more to inflation. It is set to increase again on April 1.
On the carbon tax, after the government said it would cap it at $50 a tonne, it is now planning to bring it up to $150 a tonne, more than three times what was initially promised and at a rate that small businesses are still disproportionately paying into without the appropriate rebates to offset it. Carbon tax increases make the cost of fuel, food and goods shipped anywhere more expensive.
It is time for the government to recognize that adding taxes only increases costs and inflation. The government has provided no solutions to address inflation itself, and now, on top of 40-year-high inflation and interest rate hikes, small businesses' bottom lines are being further squeezed with higher costs for imported goods due to the Canadian dollar falling to the lowest point in almost two years.
Stop the pain. Stop the tax increases.
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- Sep/29/22 4:27:03 p.m.
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Mr. Speaker, the point is that people cannot afford food right now. They cannot afford to put fuel in their vehicles. We have reports of students living in homeless shelters. We know that the stats for food banks are up across the country. This is the state we are in right now. People cannot even afford their basic necessities. Now is not the time to increase anything, during this 40-year-high inflation, that will further stop people from being able to afford even the basic necessities.
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- Sep/29/22 4:27:52 p.m.
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Mr. Speaker, I thank my colleague for her speech.
I do not entirely agree with her and, more importantly, I do not share the same vision. I think it would be better to reduce our dependence on oil and accelerate the energy transition to protect our economy against sudden increases in the price of fossil fuels. We know full well that the price of gas has jumped 33.3% since last year, and that is an important driver of inflation.
I would like her to explain the reasons behind her decision.
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- Sep/29/22 4:29:24 p.m.
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Madam Speaker, I heard the member of the official opposition talk about inflation and copayments for pensions and employment insurance, but not once did she talk about profits. I would like to give the hon. member the opportunity right now. Oil and gas made $147 billion, yet not one word came out of this member about that.
Would she perhaps give some consideration to the runaway profits of the oil and gas sector, the food sector and the housing market, rather than simply being stuck on the taxation associated with it?
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- Sep/29/22 4:34:51 p.m.
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Madam Speaker, more and more Canadians are struggling to get by because their dollars are valued less and less due to inflation.
Let us talk about charities for a moment. Many charities have filled the gaps we have had in this country, but because Canadians are so hard done by right now, they do not even have enough left at the end of the month to donate where they normally would. This is then leaving an increased gap in social services and the ability to care for one another. That is shameful.
We have an affordability crisis that is actually destroying people's lives, but the government can play a role. It can if it chooses to. It is simple. It needs to axe the tax. It needs to stop its out-of-control spending, and it needs to be a responsible government that brings in investment rather than pushing it out.
There are other things, too. We have an opportunity in the realm of agriculture. We are incredible at producing food. We literally feed the world. My riding of Lethbridge does this incredibly well. The bounty that comes from there should be celebrated, but instead we have a government that wants to put policies in place that would reduce crop yield. We have a government that wants to punish our farmers and producers, those who bring life, rather than celebrate them or give them credit for the incredible superpower they hold.
There is another superpower too: energy. We have the third-largest oil reserve in the world, and we are the fifth-largest producer of natural gas. Just like food, the world needs energy. It is what keeps us going, and Canada has the potential to be the solution to the world's needs in this regard. We could be stepping up and taking our place on the world stage, but instead we are shrinking back. We could displace the reliance, currently in existence, on regimes that we should not be supporting, but instead we continue.
We have an opportunity to be the answer to Europe's need for LNG, as the chancellor of Germany asked us to be, but the Prime Minister responded by saying there is no business case. How is there is no business case? Of course there is a business case. There are people in need of energy, and we have energy. The government should figure out the infrastructure and make it happen. It simply takes political will.
The NDP and the Liberals love to rail against profitable organizations, but in their attempt to foster an environment of hostility and demonize those who would generate wealth, they forget about a few facts. One is that, in the generation of wealth, jobs are created. In the generation of wealth, taxes are paid and, ultimately, those taxes come full circle and help support the very social programs that we value. It is crucial to understand that without the generation of wealth, there is no safety net for those in need.
Let me say that again. Without the generation of wealth, there is no safety net for those in need. Therefore, instead of demonizing the businesses that are producing jobs, generating wealth and helping our country do well, let us celebrate them. I am confident that, if we can get government out of the way to provide the freedom for Canadians to reach their greatest potential, our nation would not only thrive but also be a leader among nations. It just takes a bit of political will.
We have the opportunity to foster an environment of entrepreneurship, to remove unnecessary boundaries and red tape, to scrap excess taxation, and to draw investment into our country. That is what Conservatives are calling on the government to do.
Yesterday, we gave the folks opposite an opportunity to vote with Conservatives and for Canadians. We asked them to do this by halting their plan to triple the carbon tax. Sadly, they chose themselves instead of the Canadian people, so today we are giving them another opportunity to stand with millions of Canadians. Millions of Canadians are struggling to get by. Millions of Canadians are struggling to feed their families, pay their rent, afford their mortgages and fuel their cars. That is real.
The folks across the way can pull out whatever sorts of charts, graphs and “statistics” they want. It is not going to convince Canadians that somehow they are better off just because the Liberals told them so.
Canadians know the reality. They feel the reality, day in and day out, when they have to make hard choices about where they will spend their last dollar.
In the midst of an affordability crisis, we are calling on the government today to stop their planned tax increases on the paycheques of Canadians so they can keep more of the money they earn.
Canadians and Conservatives are hoping that the government will finally demonstrate some compassion, do the right thing and vote in favour of this motion today. It is time to give Canadians back the control of their lives that they always should have had because the potential is within the people. The future of this country is within the people. They are the problem-solvers. They are the solution makers. They are the wealth generators. They are the ones who are going to take us toward a prosperous future. They are the ones who deserve for the government to get out of the way to allow them to move forward in the direction they wish to go.
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- Sep/29/22 4:44:06 p.m.
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Madam Speaker, there is something I want to be sure I understand. The argument being bandied about is that the carbon tax is going to triple.
The carbon tax will not be tripled right away. It will take around a decade for that to happen. My crystal ball is not showing me with any certainty what the inflation rate will be at that time. I want to understand. What is the urgency in all this?
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- Sep/29/22 4:48:09 p.m.
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Madam Speaker, thank you for keeping decorum in the House.
As I was saying, we cannot take these huge price increases and the hardship they cause lightly, especially when it comes to the price of food, electricity and housing. My thoughts are with the millions of seniors who were already struggling to make ends meet before prices started going up. They are now facing an impossible task, making choices or making cuts to their budgets.
The inflation crisis is one of the most worrisome issues in the world, and I acknowledge that people are trying to address it and find solutions. I am going to put on my CEGEP economics teacher cap and give an overview of inflation and the economy.
The aggregate demand and aggregate supply model is a useful tool for understanding the phenomenon of inflation. This model tells us that inflation is caused by an increase in aggregate demand, a decrease in total supply or a combination of the two. Analysts generally agree that the increase in prices we are experiencing is essentially a global phenomenon primarily attributed to a decrease in aggregate supply.
The supply chain problem led to a significant drop in supply. It is the same thing with the war in Ukraine. Crop failures due to droughts or floods are also reducing supply in the food sector. Labour shortages, which existed before the pandemic but have gotten worse since, are limiting business activity, leading to a decrease in total supply, and so on.
On the demand side, we have seen more of a change than a significant increase in demand. During the pandemic, people shifted their usual consumer choices to new sectors. Supply was unable to adapt quickly enough, so we saw new price increases and often shortages, resulting from the imbalance.
We are seeing the same type of imbalance in the real estate market, where the construction of new housing is insufficient to meet demand. Inflation in that sector is also driven by the increase in the price of building materials, which is itself explained by the current inflationary situation and the change in consumer habits during the pandemic, not to mention the impact of the war.
Even though the central bank's injection of money into the economy and the government's support to keep consumption going during lockdown were more generous than necessary, because they were not always well targeted, the effect of those interventions on the increase in global demand and on prices is generally secondary. The government's actions are not the main reason for the global inflationary crisis.
Unfortunately for us, and especially for those impacted the most by the current rate of inflation, there is no simple solution to a decrease in aggregate supply. The best solution is to support businesses as they adapt to the new reality. It is a long and complicated process, but as I said, even if the effect is not felt immediately, it is the best solution.
For example, let us look at the labour shortage. The government could provide support for the automation of some economic activities. The government could also change the tax system to entice young retirees who want to remain in the labour market, perhaps with part-time work. The government could provide support for companies that invest in resilience, for example by making decisions that cut their energy consumption. The government could also do this for households, of course.
That is the primary solution for addressing the supply side of the issue. Unfortunately, this government is doing very little about it. I am also disappointed that the official opposition, which says it is concerned about this issue, is not putting this solution forward. Both major Canadian parties seem to be short-sighted on this issue.
It is often said that the central bank is well positioned to use monetary policy to counter inflation. The Bank of Canada must ensure that the overall economy is in good shape. To that end, its main policy objective for the past 30 years has been to keep the average annual increase in prices within a range of 1% to 3%. Obviously, we are well past the upper limit now.
Although the central bank is extremely well equipped to control inflation when the economy is overheating because of an increase in aggregate demand, the situation is very different in the event of a supply crisis. That is because successively raising its key interest rate does not allow the central bank to influence supply. It simply reduces demand.
In other words, since production is insufficient to meet the demand, equilibrium prices rise, and all the Bank of Canada can do is lower demand to reduce the price increase. However, at the end of the day, there are not more goods and services on the market, only less room to manoeuvre and borrow to make consumption or investment choices.
Such a monetary policy could pose a risk. If, at the time of implementation, the economy is not in an overheated situation where overall supply is basically inelastic, the central bank's action could also slow down the economy or even plunge it into recession. Considering how much the labour market is changing, this could almost be described as a quantum leap. The signals of the economic context are difficult to pick up, and there is a real risk that the monetary policy will be too restrictive and therefore impede growth.
Again, there is not much that either monetary or fiscal policy can do to respond to a supply crisis. These policies aim to reduce demand in order to lower prices, but they do not allow for increased production in the short term.
I want to reiterate that the best government policy is to support businesses and help them adapt and become more resilient in order to push supply back up, even though that does not happen automatically.
If there is one lesson we can learn from the global supply-and-demand model, it is that we need to avoid falling into the very tempting trap of responding to a decrease in supply by giving everyone money. That kind of policy may appear to meet people's needs, but it will quickly fuel inflation. It is therefore a futile, ineffective policy, especially if it drives society as a whole into debt. It is a good solution, but not for a supply-side crisis.
Tax cuts would have exactly the same effect. It is tempting, but it is a short-sighted solution that would make the problem worse, not better. Indeed, such an expansionist policy would actually thwart the central bank's restrictive policy. That would be the worst possible situation. England is currently experiencing major difficulties that illustrate what happens when policies clash like that.
What can we do? As I said, there are no simple or easy solutions. We can help companies pivot. We also have a moral obligation to help the most vulnerable people and the hardest-hit sectors cope.
I am thinking of low-income families and single people, especially seniors who live on modest pensions that are not indexed. I am also thinking of sectors that are particularly affected by inflation, such as agriculture. We also need to reinvest in social housing to respond to the housing crisis.
For goodness' sake, though, we should not send cheques to everyone, lower taxes for everyone or, above all, abandon our climate efforts.
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- Sep/29/22 4:59:04 p.m.
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Madam Speaker, I would like to thank the member for his speech. I was interested to learn that he used to teach economics.
I apologize, but I will have to stop for a moment because I can hear the interpretation in my earpiece.
As the member mentioned, many economists have said that broad-based tax cuts would lead to inflation. People are frustrated about having to pay more for their rent and their groceries while rich CEOs rake in huge profits.
Would my colleague agree that a better strategy would be to tax companies that increase the prices that Canadians pay at the grocery store and at the pumps?
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- Sep/29/22 5:04:20 p.m.
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Madam Speaker, I thank my colleague for his intervention and for his speech. Since he taught economics at two CEGEPs, I would like to ask him something. We are familiar with the incendiary declarations that the Leader of the Opposition made regarding the central bank, before he became leader of his party. We know that the central bank is often a target.
In the 20th century, however, John Maynard Keynes started talking about the importance of these banks. He also suggested that inflation was not primarily a monetary phenomenon.
If I were to ask my dear colleague and friend to give our Conservative Party colleagues a quick economics lesson on central banks, what would he say, in a nutshell?
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- Sep/29/22 5:05:06 p.m.
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Madam Speaker, I thank my colleague and friend for the question, although when he mentioned the second CEGEP, I realized he was talking about UQAM. That is a serious mistake. I would have him know that the economics department at UQAM does good work.
Keynes' work certainly contributed to the establishment and creation of the first central banks and highlighted their importance. The other thing that came out of his work is the famous equation for the quantity theory of money. It does not happen automatically and instantaneously. It depends on several other factors. Keynes particularly drew attention to the perceptions or psychology of people and economic players in the phenomenon of inflation.
For example, the U.S. dollar is the global reserve currency. If a lot of money is printed, prices will rise much more slowly than in an economy where the currency is weaker, where foreign investors have less confidence in their currency. If they deviate slightly from established practice, prices can soar because confidence is lost more quickly in those economies. The central bank plays an important role, and it is important to respect its autonomy.
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