You may very well say, what has that to do with the budget? I will tell you. Our veterans who were unfortunately disabled in world war I, world war II or in Korea, receive the highest pension of any country in the whole damn world, and I am happy for the veterans of Canada. Then the Leader of the NDP mentioned the Carter Commission. Let me tell you there is not a veteran in Canada who does not understand the implications, because it was the Carter Commission that said a buck is a buck so the veterans pensions should be taxed. That is the sort of thing the Leader of the NDP supports and that is what I am against.
He said he was in favour of some things in the budget. I could not make a note of them all, but one of the things he was in favour of was assistance for working mothers. Perhaps he is right when he suggests that there should have been such a provision a long time ago, but the fact is that there is one now and the Minister of Finance (Mr. Benson) deserves credit for that.
Then, there is the matter of small businesses and corporations. The Leader of the NDP hates the word "corporations". He does not like the idea that the corporation tax in the province of Ontario, for example, is now 52 per cent, the highest corporation tax anywhere in the world. The minister thinks it should be reduced to 46 per cent. The Leader of the NDP does not appreciate the fact that our corporations have to do business in competition with U.S. corporations. I wonder if he understands that in that great socialistic country, the democracy of England, instead of there being a 52 per cent corporation tax
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The Budget-Mr. Whicher
today the corporation tax in England is about 36 per cent. That is what the socialist government is doing over there. The NDP should realize that corporations,, like invididuals, have to face competition and therefore should not be overtaxed.
Who is the prime minister of England today?
The fact is that the interest paid by corporations is deductible. This should have been done a long time ago, but now it has been done by the Finance Minister. It is a wonderful thing so far as corporations are concerned.
If I wanted to be critical of the budget I would say that it is too bad the Minister of Finance could not have taken off the 11 per cent tax on building supplies. However, we appreciate the fact that it brings in a large sum of money, approximately $300 million, and getting money such as that is not easy. As a matter of fact, I remember the time when a cabinet minister resigned over the government's housing policy, some members of the opposition, and indeed some members on our side of the House, criticized the government for its housing policy. All of us know that there are some people in Canada who have poor housing, housing that is not fit for human habitation. But let us remember something that has not been brought out, namely, that the housing in Canada is the best housing anywhere in the world.
These are the things that we should be talking about. We should mention the fact that this coming year, in 1972, the government of Canada, through private organizations and through the National Housing Corporation, will build an extra 220,000 units. This is something of which the government should not be ashamed and which will benefit Canadians a great deal.
Every day we hear criticism of this Canada of ours. It almost makes a person sick. I say, go to Europe, go to Asia, go to the United States or to Australia, go where you want to and come back to your rec room and look at the map of Canada. There is not one single Canadian who has any pride in his heart who will not say that he is glad to be back home because this is the best place in the world in which to live. I have forgotten who wrote this poem but it comes to my mind now: breathes there the man with soul so dead, who never to himself has said, this is my own, my native land. I say to you that more Canadians should repeat those lines because we have something here of which we should be proud.
Of course, if you look at the whole of Canada you will find there are many things that are wrong. Look at the standard of living we have; it is the second best in the world. Look at the schools and hospitals that we have, and the many great buildings we have. I say that many of them would make Buckingham Palace look like a shack. Look at the way we look after our sick and our disabled. After many years, we have free hospitalization; we have free medical care across Canada. We have some of the greatest parks in the whole world. We even have
the freedom to criticize, although in many respects much of that criticism is irresponsible. This is a great country and more of us should stand up for it. More of us should appreciate the fact that over the years governments have done a reasonably good job, regardless of their political stripe. It is for all of us the best country in the world in which to live. In my opinion this budget which the Minister of Finance has introduced has made it even more so. As has been repeated many times, it has eliminated taxes for one million citizens in Canada, and I do not care whether that amounts to $2 or $100 per person. If you want to be fair, you should give credit to the government for that.
If you are going to criticize when things are wrong, at least be man enough to give a loud hurray if you cannot shout for joy for a government that has eliminated taxes for so many people. If you are not able to jump for joy because of some physical disability, give one little hurray for the 4,700,000 people for whom the Minister of Finance has reduced taxes. After all, this was not done by the NDP or by the Progressive Conservatives. It was done by the man whom most of you have been criticizing for the past couple of years. Give him a pat on the back if you want to be fair.
There is one more thing to remember. The NDP Leader throws these figures around. He mentioned the figure five million as the number of people for whom personal income tax had been reduced or eliminated. To set the record straight, let me say that it is not five million at all, it is 5,700,000, and these people appreciate that reduction. Then we have a tax change of only 1 per cent for another two million people, and the tax is increased for 1,300,000. After much study and much deliberation by the Minister of Finance, his staff, the Standing Committee on Finance of the House of Commons and the Finance Committee of the Senate and, most of all, by the people of Canada, the Minister of Finance has done an excellent job. I will be most happy to support him when the vote comes.
Mr. S. J. Korchinski (Mackenzie):
Mr. Speaker, having listened to the hon. member for Bruce (Mr. Whicher), all I can say is that he was prepared to show his willingness to spout off. I am very much impressed with the budget presented by the Minister of Finance (Mr. Benson), and particularly with the total over-all cash requirements that the government faces. According to my estimate, the government will have to borrow some $417 million, and it also has a total of $1,770,000,000 in commitments made within the last year that have not been covered, making a total of some $2,200,000,000.
Tell us about Bill C-176.
Bill C-176 represents another area for which the government may have to find some money. This is money that the government will have to borrow on the open market. Where do we go from here?
June 28, 1971
Last winter interest rates varied between 8 per cent and 10 per cent. In most cases, they were around 9J per cent. Can the smart alecs opposite tell me how high interest rates will rise in the foreseeable future? I come from a community, Mr. Speaker, that has been subjected to great governmental pressures as well as to pressures from the banking community. The people of that community are very conscious of the effect of interest rates. Can hon. members opposite tell me that, as a result of this budget, interest rates within a year will not be far higher than they are today? I beg them to tell me how interest rates can be set at a level which we in the west can tolerate?
Do hon. members opposite realize that the Farm Credit Corporation has borrowed $1,200,000,000, and the Farm Improvement Loan fund $300 million, making a total of $lg billion? If this trend continues the government will have to float bonds, loans, and resort to other devices to finance its operations. Regardless of how the government manipulates affairs, we in the west will be affected. I can foresee interest rates returning to the 8 per cent, 9 per cent and 10 per cent levels. I challenge anybody on the government side to tell me that I am wrong. I don't hear one peep from the government side.
You are all wrong, Stan.
We in the west were paying 9J per cent and 10 per cent, while you were sitting here and swallowing all that government guff. I am a resident of Saskatchewan, Mr. Speaker, and I want to put some facts on the record. The income level, of the people of Saskatchewan has been reduced to the point where they are damn well fed up, particularly with politics. Their only concern is to get enough to raise their standard of living.
I refer hon. members to page 79 of the Budget Papers which sets out certain startling statistics. The result of the recent provincial election in Saskatchewan was not based on the popularity of the NDP, or on the fact that the P.C.'s were largely negative. These figures tell the story more than anything else.
In Saskatchewan in 1965, private and public investment totalled $773 million; in 1966, $928 million; in 1967, $964 million; in 1968, $943 million; in 1969, $755 million; in 1970, $623 million and in 1971, $649 million. Compare those figures with the figures for Alberta or Manitoba. In Manitoba, in 1965, private and public investment totalled $537 million; in 1966, $656 million; in 1967, $719 million; in 1968, $820 million; in 1969, $901 million; in 1970, $893 million, and in 1971, $862 million. In Alberta, comparable figures were $1,320 million in 1965; $1,564 million in 1966; $1,675 million in 1967; $1,723 million in 1968; $1,914 million in 1969; $1,954 million in 1970, and $1,997 in 1971. In other words, progress was being made in those two provinces and, while this is not an indication of provincial maladministration, in Saskatchewan private and public investment had been going down. These figures indicate a lack of income in that particular area. What we have to do is analyse the situation in that province in relation to the rest of the country.
The Budget-Mr. Korchinski
[DOT] (4:20 p.m.)
I have indicated that in the last year public and private investment was only about two-thirds of what it amounted to three or four years before, it was in the doldrums. But what else can be expected? The people of Saskatchewan did not want one particular political party more than another, but simply wanted a change. However, the NDP need not feel that they are the answer to the dilemma because the dilemma still exists. It is now up to them to find answers to the problems.
There are other indications that we must watch. For example, I understand that the financial requirements of Canada were such that last year we borrowed $4 billion. I suppose that is nothing unusual but it represents about $20 a head. I wonder whether this is what young Canadians look forward to, the young hippies or slippies or whatever they call themselves, and the young students. I wonder if they want to inherit this kind of indebtedness.
There is another thing, Mr. Speaker, and it is not easy to say what I want to say now but I believe that I must comment on the unfairness of the bilingual and bicultural commission. I do not believe it was ever intended that it should be a bilingual and bicultural commission. I believe it was only meant to be bilingual and I will give my support to that, but I do not believe that this is a bicultural country. I have hesitated to bring this matter up as I felt there were others better qualified than I to deal with it. Mr. Speaker, I think you understand what I am trying to say. I did not want to have to make these statements, but I strongly believe that this is a multicultural nation. It may have been a mistake to call this a bilingual and bicultural commission, but we have made mistakes in the past and we should correct this one before it goes too far. In all sincerity, I ask the government to set up an entirely new commission to study the contribution that other cultures have made to our way of life. It is not simply a question of struggling with races- it is very difficult to express-but I think it is a continuation of silly things if you like, of the way we live.
I make these statements in a way that I think many people will be able to understand, Mr. Speaker, because I really want these other cultures to continue in this country. I have no opportunity to speak on this subject except in the budget debate. I ask this government to look at Book IV of the report of the B and B Commission, on which they spent millions of dollars, and they will see whether or not other cultures have made a contribution to Canada. On the government side, there are many concerned members, some of whom have not had an opportunity to assert themselves. If the government had so wished, it could have used the millions of dollars needed to produce the report on bilingualism and bicul-turalism to push the cause of multiculturalism.
[DOT] (4:30 p.m.)
I am not suggesting that it should not push bilingualism. I am willing to concede the need for bilingualism. I simply think that the government, headed by the Prime Minister (Mr. Trudeau), has been very lax on that particular point. I must tell the Prime Minister that his main
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The Budget-Mr. Tolmie
concern seems to be with French Canada, something which might not be acceptable to all members. I must tell him that he ought to consider members of other ethnic groups when considering appointments to cabinet. For instance, how many years has the hon. member for Park-dale (Mr. Haidasz) been here? He has been here since 1953. How much more capable a man do you need, Mr. Speaker? What more do you want? He speaks English, French and Polish, and does everything well. However, he does not fit in with the attitude of the Prime Minister. I must say that the Prime Ministers' attitude must be considered as anti-ethnic. That is my assessment of the situation. He has never proved to me that he is willing to appoint members of certain ethnic groups to cabinet or other positions. He has never felt that people coming from certain other groups have the necessary qualifications. I must say these things, Mr. Speaker, because, although my time in this House might be limited, I am going to say those things that I want to say while I am here.
Mr. D. R. Tolmie (Welland):
Mr. Speaker, before briefly alluding to the budget itself, I think it only just and proper that a few minutes be taken to recount some of the solid achievements of this government in the economic sphere. I believe that those achievements have brought great benefits to literally millions of Canadians.
Benefits like unemployment and inflation. The hon. member's speech ought to last only a couple of minutes.
With our preoccupation with unemployment and inflation, with criticism, sometimes unwarranted and intemperate, of government economic policies, the government's real concern for the Canadian people has not received proper publicity. The government has been castigated as a heartless ogre which unfeelingly, in a mechanical, rigid way, needlessly threw thousands of Canadians out of work with all the resultant human misery and suffering in a vain battle against inflation. The image which some are deliberately trying to create and foster is that of an arrogant, ruthless government working with cool precision but no warmth or compassion for the Canadian people. This assessment of government economic policies is blatantly wrong.
What are the true facts. What is this government's record in the economic realm. What evidence is there of this gross lack of compassion and feeling for the little man? Time does not permit a recital of government accomplishments, but here are a few items which should torpedo the unfair portrayal of this government and prove to the contrary that our government in a few short years has shown more concern for the welfare of Canadians generally than perhaps any other government since confederation.
Have we forgotten, for example, what this government has done for our war veterans? Do hon. members not know that Canada and France are the only two countries in the western world that have ministers of veterans affairs? I think that has been alluded to in previous
speeches. We recently increased disability pensions by 10 per cent and allowances by 15 per cent.
Have we forgotten what this government is doing in the field of housing. National housing loans have been increased and made more available to the low income earner. A concerted effort to provide low cost public housing has been made. A special $200 million low cost housing program was commenced and federal support for housing now has passed the $1 billion figure. Certainly, this evinces a concern for the people of Canada. Surely, much more can be done; we realize that. However, the government is aware of the essential need for housing and is continually revising and trying to bolster those policies and trying to implement proper policies for the benefit of all Canadians in the field of housing.
Have we forgotten, for example, what this government has recently done for the unemployed by the passage of the Unemployment Insurance Act. Coverage will become universal. Benefit rates will be substantially increased with the maximum benefit of $100 per week. Benefits will be extended to those who suffer loss of income due to sickness, pregnancy and retirement.
What about our senior citizens? Has this government ignored their plight? Recently, for those in need, the government increased the guaranteed supplement for single pensioners from $105 a month to $135 and for married pensioners up to $255 a month. I feel, however, that the government should take a hard look at the flat rate pension of $80 a month with a view to an increase; and, certainly there should be a fair cost of living increase included in the basic pension.
What about our youth seeking summer work? I realize there has been criticism of the summer youth programs, but the fact remains that the government instituted a program. It acted promptly to meet a pressing problem. Certainly, there were mistakes; but the net result is good and this program is providing work and hope for thousands of young Canadians. The initial student program, a $58 million project which has since been increased, is designed to involve as many as half a million students in meaningful jobs, travel and other activities this summer.
What about the consumer? Has this government shown a callous disregard for their interests? Amendments to the Bills of Exchange Act will, for the first time, provide a legal defence if a financial institution sues for non-payment but the original seller of the goods has defaulted on his part of the bargain. The consumer packaging and labelling bill is designed to facilitate choice among consumer products by providing better information and to help reduce confusion in the market place. It will control packing practices, including proliferation of package sizes, which can confuse or mislead consumers. The weights and measures bill and the Hazardous Products Act will give additional protection to the consumer. All these measures indicate a deep concern for the health and welfare of the consumer-in effect, every Canadian.
Have we forgotten what this government has done in the war against pollution of our environment. The
June 28. 1971
Canada Water Act will provide an effective, co-ordinated and flexible vehicle for the federal government to act within its sphere to manage the water resources of Canada jointly with the provinces. The act is designed to permit the federal government to mount a systematic attack on water pollution problems jointly whenever possible and unilaterally if necessary. Amendments to the Fisheries Act re-define the anti-pollution powers of the Department of Fisheries and the much praised and widely heralded Arctic waters pollution prevention bill establishes a 100 mile wide shipping safety control zone off the Canadian coast. Within that zone, the federal government can take action to prevent the threat of pollution.
* (4:40 p.m.)
Many other measures have been taken against pollution, including amendments to the Canada shipping Act. These are primarily designed to prevent ships from polluting our waters. At the present time, ships plying our Great Lakes and canal systems are in most cases indiscriminately dumping human waste and raw sewage into our waters. This has been a scandalous practice for years and to my own personal knowledge has caused unsightly, offensive and dangerous pollution of Lake Erie and the Welland Canal. The new regulations making treatment of wastes mandatory before dumping into the water is a step in the right direction, but a relatively feeble one. The continued practice of dumping even treated wastes into our lakes will continue to add to lake pollution, fostering plant growth which eventually develops into the destructive blight of algae. These regulations pertaining to lake shipping, to be really effective, should prevent dumping of any waste or sewage, treated or not. Container tanks with dockside discharge should be mandatory. I am aware of the jurisdictional problems with foreign vessels, but with the will and determination these are not insurmountable. Pleasure boats in Ontario are being forced to have container tanks. Why not huge ships which are plying our waters for profit and at the same time desecrating a water resource, the heritage of all Canadians?
What has this heartless government done for those in our society who for many reasons, some beyond their control, find themselves incarcerated within our penal system? Have we forgotten about them? The Criminal Records Act, in which I am personally interested, will assist the rehabilitation of the offender by helping to erase the stigma and civil disability of a record. I believe the mechanics of investigation and procedure can be improved upon. I was delighted to see a Senate committee set up to study the operation of this act. I hope it makes cogent recommendations to achieve more effectiveness and increased efficiency in the administration of this act. The 10-year Canadian penitentiary service plan designed to emphasize the rehabilitative aspect as opposed to the custodial, inaugurated a system of maximum, medium and minimum security prisons and much progress has been made in a more enlightened attitude toward our penal system. We still, however, have gaping anomalies and retrogressive practices. As this is a budget
The Budget-Mr. Tolmie
debate, apart from the humanitarian aspect, there is a tremendous financial one.
In 1970, there were 7,400 inmates in federal penitentiaries. It costs at least $6,000 a year to maintain an inmate. One can see the enormous cost, running into the millions, to the Canadian taxpayer. Great Britain, with over twice the population, has half the prison population we do. If for no other reason than purely financial, we should impose more suspended sentences, grant more probation and even more parole. Prison construction is costly, especially maximum security institutions. The question now arises, how many maximum security prisons should we have and what type of design? In my opinion, we should have fewer and they should be designed to promote the rehabilitation of the inmate as opposed to the preoccupation with security. From a budgetary standpoint alone, we would gain. Millions would be saved in construction and millions saved by having inmates return sooner to society better able to cope, and once again become productive citizens. I am glad to see that a committee will be studying the whole problem of maximum security prisons and will report this November.
My theme in these remarks has been that the present government, although certainly not perfect, contrary to the critics' allegations of a cold, impersonal machine-like approach, devoid of feeling and compassion, has demonstrated its deep concern for the individual as shown by its progressive policies. I have mentioned a few, in the realm of veterans affairs, senior citizens, housing, the consumer, our youth, pollution and penal reform. This liberal, progressive and equitable trend reached its summit in the new budget proposals and tax reform. Certainly, I am not going to recapitulate the budget proposals. Suffice it to say that this budget has been acclaimed by nearly every segment of society; business, the middle class and low-income families. The fact that now one million low-income and elderly taxpayers will pay no personal income tax; five million will pay less and 1.3 million with higher incomes will pay more, along with the introduction of the capital gains tax, all indicates the most radical, comprehensive and progressive reform in our tax system since its establishment in 1917.
What is really important about the budget is, of course, the fairer distribution of the tax load, but more important is the climate it is generating across this country. The economy has to be stimulated if we are going to relieve the miseries of unemployment. The government has helped by its own expansionary policies. The increased money in the hands of the individual and the corporations through lower taxes will help, but the sense of confidence in government, confidence in ourselves and our economy will release hundreds of millions from the private sector now hoarded and conserved against the uncertainties and vagaries of present economic conditions. This new feeling of optimism and stability created by our budget will restore confidence to business, the investor and the consumer, with a resultant decrease in unemployment and tolerable inflation.
I would be remiss not to congratulate the Minister of Finance (Mr. Benson). Largely by his decisions, a mood of buoyancy and hope pervades this land; by this budget
June 28. 1971
The Budget-Mr. Marshall
and these tax reform decisions he has ushered in a new era and started an economic recovery which will redound to the benefit of every Canadian.
Mr. Jack Marshall (Humber-Sl. George's-St. Barbel:
Mr. Speaker, each time this government introduces some new piece of legislation or announces some scheme, there is such a fanfare raised in this House from the benches of the government that it seems a new era of justice, equality and goodness is being delivered to all Canadians in the field that the legislation or scheme concerns. However, when we separate the propaganda from the facts, we inevitably find that all is not as beautiful as it has been said to be.
On June 18, the Minister of Finance (Mr. Benson) introduced a budget and tax reform proposals. For the past several days in this House, we have heard the trumpetings of government members as they tried to make up for the lack of substance in the minister's statement with a compensating dose of noise.
One of the illusions which the government is under is that the budget, together with the tax reform legislation, will do all that any tax-reform budget combination can do toward the alleviation of poverty. More than once in the past 10 days the budget and the proposed tax reform have been heralded by the Liberals as being the maximum effort that could be expended by any finance minister as part of his role in the fight against poverty. On Tuesday, June 22, one hon. member said, as recorded at page 7245 of Hansard:
1 suggest that the government has done everything it can in the way of tax reform with respect to poverty.
This member was deluding himself when he said this. Either he was letting his own idle wishes obscure the facts or he was trying to cover up his naivete in the field of poverty and welfare by merely reciting loyally the official government propaganda line. We should all be aware that poverty means that an individual or a family does not have sufficient income to meet the basic needs of life; the need for adequate food, clothing, shelter and medical care. It means that the children of the poor do not attend school as long as other children. They suffer from poorer health and live in poorer housing.
The poor may be divided into two categories. The minority are unable to earn a living because of such things as age, chronic sickness or disability. The majority are those who are poor because they have difficulty in finding or holding a steady job. Their difficulties may arise from disadvantages, such as lack of education or training, lack of information about job opportunities, inability to move to known job opportunities, and poor physical or mental health stemming from economic deprivation.
The Economic Council of Canada has stated that income is more likely to be below the poverty line when one or more of the following characteristics are present: the head of the family has no formal education beyond elementary school; the family lives in a rural area; the family lives in the Atlantic provinces; the head of the
family is not a member of the labour force; no member of the family worked during the year; the head of the family is 65 years of age or over. Whatever their characteristics, however, the poor share the same problems. For example, the preliminary report in the United States of the President's commission on income maintenance programs documented a strong correlation between poverty and ill health. The report states that poor families have four times more disabling heart disease and six times more nervous disorders and mental illness than the population at large. The poor also have three times as many orthopedic ailments and eight times as many visual defects. Nearly one-half of poor, pregnant women receive no prenatal care, and a child born to poor parents is twice as likely as the average newborn to die before his first birthday. Fifty per cent of poor children are not immunized adequately, and 64 per cent have never seen a dentist. Since poor health among children and teenagers reduces their educability, their future employability and productivity is also reduced, thus contributing to the cycle linking poverty, unemployment and ill health.
I could continue for some time to document the problems faced by the poor and the traps that bind them. However, it should be evident, even from this limited discussion, that any attack on poverty, if it is to be successful, must be a many-pronged one which would include efforts to improve education, housing and health as well as income. Nevertheless, the most important and first ingredient in a solution to the poverty problem is to raise the incomes of the poor to a reasonable level. An inadequate income is a common denominator shared by all poor, and measures to guarantee a sufficient income to the poor must be considered the all-important first step towards relieving poverty.
There are many and wide ranging estimates of the extent of poverty in Canada. Perhaps the best known figures on the number of poverty stricken Canadians are those based on the Economic Council of Canada's poverty line concept. In 1969, the poverty line was set at $1,894 for unattached individuals, $3,157 for families of two, $3,788 for families of three, $4,420 for families of four, and $5,051 for families of five or more. These income limits, originally developed as long ago as 1961, were selected on the basis that urban families with incomes below these limits usually spent 70 per cent or more of their income on the basic necessities of food, shelter and clothing and were thus left with very little discretionary income. These limits have been adjusted by the rise in the consumer price index since 1961, but have not been revised to take into account changing consumption patterns.
Using these figures, the Dominion Bureau of Statistics reports that 17.3 per cent of all families and 35.5 per cent of all unattached individuals in Canada in 1969 were below the poverty line. Poverty affected a total of 842,000 families and 577,000 unattached individuals, altogether involving a total number of persons that in all likelihood does not fall much, if at all, below the 1961 total of over four and one half million as estimated by the Economic Council of Canada. Other sources give different approxi-
June 28, 1971
mations of the extent of poverty in Canada. However much we debate the actual figures, there is no denying that the number of poverty stricken Canadians is substantial-too substantial, in fact, to be ignored.
There are many reasons why we should mobilize all our resources to remove these low income Canadians from this degrading state. First and most obvious is the human reason, the untold misery and suffering of these people saddled with poverty. Secondly, there is the economic cost of poverty, the lost output to society. The 1961 census figures show that poverty may have cost the country as much as $2.3 billion in that year in loss of output that would otherwise have been achieved if the poor had been properly employed. More recently, in May 1971 Dr. Clarence Barber put the loss of output figure at $5 billion.
Thirdly, and perhaps most relevant considering that this is the budget debate, one can speak of a pecuniary reason, namely the cost in the form of higher tax rates to the rest of society in providing the various transfer payments to the poor. The measure most loudly hailed by the Liberal government as being the salvation of the poor is the proposed raising of personal income tax' exemptions from $1,000 to $1,500 for single persons, from $2,000 to $2,850 for married couples, and from $500 for those taxpayers over 70 to $650 for all taxpayers over age 65.
There is little dispute that this is a welcome, though long overdue, improvement. But is it going to be effective against poverty? These exemptions will not even give the poor the same benefits from personal income tax exemptions that they enjoyed in 1949, for inflation has eroded more than the extra dollars they have been granted as tax exemptions in the intervening years. If the personal exemptions, which were last raised in 1949, had been increased solely to match the increase in the consumer price index, personal exemptions would now stand at over $1,700 for a single person and at more than $3,400 for a married couple. Through these changed exemptions the lot of the poor will not even be restored to its 1949 level, let alone improved. How many poverty stricken Canadians will be removed from the tax rolls as a result of this change? Are we to believe one hon. member when he said that what we have done has been to assure that virtually no one who can be described as being in a condition of poverty has to pay income tax? It does not take much knowledge of poverty in Canada to come to the conclusion that the hon. member's statement is completely erroneous.
In the first place, the income tax exemptions that will be effective in 1972 do not even reach the Economic Council of Canada's poverty line for 1969. To see this is so it is only necessary to turn to table 5 of the summary of 1971 tax reform legislation. For example, a family of four with an income of less than $4,420 is under the 1969 poverty line, yet a family with an income of just $4,000 in 1972 will pay $73 in tax. Furthermore, there are between four and five million Canadians living in poverty in Canada now. The tax reforms will remove one million from the tax rolls. This will go only part of the
The Budget-Mr. Marshall
way towards removing from the tax roll all Canadians below the poverty line.
Next, let us consider the tax reform that will make child care expenses deductible up to $500 per child under 14, with a maximum of $2,000 per family. What result will this have on those in poverty? According to a staff consultant with the metro Toronto Social Planning Council, these proposed tax exemptions could raise the price of private day care, thereby penalizing the poor even more rather than aiding them. The reasoning behind such a probable increase is simple. Currently, the bulk of day care service in Canada is provided by private individuals, many of them low income women. To qualify for the proposed child care exemptions, a mother would have to produce day care payment receipts. This will leave the woman who is providing day care but not reporting her income two choices: she could refuse to issue receipts and thus deprive a mother of the exemption; or she could declare her day care income and raise her rates to compensate for income tax, pension plan, and other payments. The proposed child care exemptions are therefore no substitute for what is really needed, a national day care policy. The poor will not benefit-in fact, they will probably suffer-from the changes since the reforms are not tied to any national day care scheme.
In addition to the tax reform proposals that will affect poverty, there are some ingredients of the budget that will have an impact as well. The removal of guaranteed income supplement payments from the taxable income side of the ledger can only be seen as a trivial move, little more than another hypocritical move by a government which proclaims a desire to aid the needy, old age pensioners and then proceeds to give them a 42-cent increase in their old age pension and fix it at that level.
The budget tell us that the 12 per cent sales tax on margarine is to be eliminated immediately. This is a welcome step because it aids the poor as consumers and it is as consumers in the marketplace that the poor face the difficult task of stretching too few dollars over too many items. The elimination of the 3 per cent surtax is another aspect to discuss. However, my colleagues have already pointed out the lateness and inadequacy of this feeble attempt to stimulate the economy and the even feebler effort to put money-actually a paltry amount- into the hands of all Canadians, especially the poor.
Given this assessment of what the budget and tax reform proposals contain for the poverty-stricken, let us now consider what they could contain. First, let us look at one budget alternative. The sales tax on margarine was removed. Why not remove other sales taxes as well? Removing the tax on construction materials could reduce the cost of housing in Canada, costs that are exorbitant to the poor. Removing the sales taxes on food and necessities has long been advocated by the Consumers Association of Canada. Currently, the over-abundance of sales taxes at the federal and provincial levels hits the poor severely. Taxes on children's clothing are unfair, and mothers who try to economize on these costs by sewing
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clothes themselves pay the penalty of sales tax on yard goods, patterns and notions.
Next, let us discuss an alternative to the present tax reform proposals. This alternative is perhaps the most obvious one I could mention-the negative income tax. The negative income tax was proposed in the United States by the economist Milton Friedman. His proposal started with the premise that families who earn too little to file a tax return are also deprived of the automatic exemptions for each member of the family and the deductions for medical bills, and so on, which amount to tax savings. To compensate, Friedman suggested a family reporting no income should be paid an allowance which would be equal to half the sum of the standard tax exemptions and deductions. Thus, the scheme would be a reverse income tax. If a family reported a nominal income, the allowance would not be cut off; it would simply be reduced by 50 per cent of each income dollar earned.
The essential idea of a negative income tax, then, is to extend the operation of the personal income tax structure by having the federal treasury make payments, based on negative rates, to people With incomes below some specified poverty line while collecting positive taxes from people whose incomes are above that line. Negative income tax proposals are only one form of that family of proposals loosely grouped together and called guaranteed annual income schemes. These schemes have in common the aim of supplementing incomes in an attempt to raise and keep all incomes above the poverty line.
Currently, the most seriously discussed guaranteed minimum income schemes would operate like Friedman's original proposal, through negative rates being applied through the income tax structure-but individual plans vary immensely. The advantage to be gained through implementing a form of negative income tax would be felt not only by the poor but also by the Minister of Finance in his job of controlling stabilization policy.
This brings me to government welfare programs. I have examined the poverty problem in Canada. I think it can be seen that this budget and tax reform measures are not the anti-poverty measures they are claimed to be. I have pointed out the alternatives open to the government if it is serious in its attempts to alleviate poverty in Canada through budgetary and tax reform measures. Now we should look at the present and some proposed anti-poverty, or so they are called, programs of other government ministers in an effort to see whether present and proposed federal anti-poverty schemes are so superlative in combating poverty that any efforts by a finance minister to attack poverty are redundant.
In 1965, the stated goal of the Liberal government was to eliminate poverty. It would be expected, therefore, that programs from that date would have had a chance to make sufficient headway that poverty would have been progressively diminishing by 1971. The 1965 expression of the Liberal goal to eliminate poverty came in the Speech from the Throne. It stated:
All the great potentialities of our economy are not, however, being realized. The talents of some of our people are wasted because of poverty, illness, inadequate education and training,
inequalities in opportunities for work. To combat these, to improve the opportunities of people who are not at a disadvantage, is to put power in our economic expansion and to enhance the unity of our country. My government is therefore developing a program for the full utilization of our human resources and the elimination of poverty among our people.
Yes, the goal was clearly stated. The aim was nothing less than the elimination of poverty. Some of the means of achieving it were spelled out in broad general outline, including regional development, manpower training and education. In November, 1970, in the white paper on income security the government reiterated its belief that the operations of such services were important and effective in combating poverty. They said:
Manpower, education and economic expansion policies are intended to promote the development of higher paying employment by equipping people with better skills and more physical capital, by creating new jobs and by providing more information.
Between the 1965 Speech from the Throne and the November, 1970, publication of the white paper, therefore, it would appear that Liberal government programs established to eliminate poverty have been making considerable progress. But this is not borne out by the facts. In fact, these services are ridden with faults and are far from being the anti-poverty devices that they are billed. As for example, the Manpower program is not an antipoverty program although in the white paper the government is trying to present it to the public as one. The Manpower program is more oriented to help employees rather than potential employees. It also has been accused of having a bias against those with the most need for rehabilitation and education.
Education is another area where not enough is being done to help poor people, especially poor children. Where are the programs designed to ensure that these children can cope with the demands of the school system? The success of regional economic expansion policies in alleviating the plight of the poor is highly questionable. To date, these schemes have chalked up a spectacular record, not of success but only of failure and wastage of the taxpayers' money.
But these programs are not the only ones designed to reduce poverty in Canada. The white paper also states that "basic to the elimination of poverty is the buoyancy of the private sector of the economy and the effectiveness of government growth and stability policies". All of us here know how empty is the economic growth jargon of the Minister of Finance and his confreres. We know that in 1970, the year in which the white paper on income security appeared, the economy grew at the poor rate of only 3.3 per cent. It is hard to convince the working poor, who are often forgotten, to swallow the economic growth theories of politicians and others when they seem to be receiving so little visible benefit from it. The most direct anti-poverty devices of the federal government must certainly be the income support programs operated through the Department of National Health and Welfare.
Income support programs comprise those income security measures intended to assist people considered to be in a state of poverty, as opposed to income insurance
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programs which are intended to keep people from falling into a state of poverty. Under income support measures, the federal government supports the incomes of those who have children, through family and youth allowances, of those who are past a certain age, through old age security measures, and of those whose income is insufficient to maintain themselves and their dependants through the guaranteed income supplement, social assistance and the Canada Assistance Plan. Beyond the income support programs presently in operation are guaranteed annual income plans under which everyone would be entitled to a minimum income, the level of which would be determined by the size of the family's income and the number in the family. Such a plan is usually thought of as a replacement for existing income support programs, with special needs being met by supplementary social measures.
An assessment of these several income support programs, whether those now in operation or those raised as alternatives for the future, reveal that the Liberal government's income support measures and its vision of the future in this field are both severely limited and inadequate to meet the often desperate needs of those living in a condition of poverty. The old age security and guaranteed income supplement benefits, even with the increases provided this year, still fall short of the minimum required for a satisfactory standard of living for the aged. Indications are that few older people will be removed from poverty as a result of this increase.
There is a question of why the universal program
old age security-is not substantially beefed-up so that the need for the selective program
guaranteed income supplement-would be a necessity for a relatively small group, for example, 10 per cent. Currently, about 50 per cent of the people on old age security are receiving the guaranteed income supplement and more than half this group get the full supplement. The flat rate of $80 for old age security with an escalation of 2 per cent maximum for the guaranteed income supplement is unfair when the cost of living is rising at 4 per cent to 5 per cent annually.
If the past performance of the economy were repeated in the future, this would mean that in 25 years the $80 would buy something less than $40 worth of goods and services, and at the end of 50 years it would not buy anything. Yet pensioners are at the mercy of the system and cannot bargain for wage increases like everyone else. This action by the government is even more unfair when we realize that old age pensions were directly paid for, in part, by the pensioners themselves and calculated as part of their necessary retirement funds.
Furthermore, old age pensioners are encouraged by provisions in the pension plans not to engage in any part-time job to supplement their meagre incomes. Such a penalty on work incentive is not consistent with the allegations in the white paper on income security that the major reason for not adopting the guaranteed annual income centres on the need to develop a suitable work incentive for such a plan.
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There are many other inadequacies of the federal income support programs for the aged: I have highlighted only a few. The Canada Assistance Plan, enacted in 1966, is a comprehensive public assistance measure which provides, under agreements with the provinces, federal contributions of 50 per cent of the costs of assistance to persons in need generally and selected costs of extending and improving welfare services. As an antipoverty measure, two objectives of the Canada Assistance Plan are to assist the provinces in providing adequate levels of assistance to persons in need, and to encourage the development and extension of welfare services designed to help prevent and remove the causes of poverty and dependency on public assistance.
Perhaps the most serious problem in the current operations of provincial plans supported by the Canada Assistance Plan is the difference in support levels for recipients across the country. Statistics from the Department of National Health and Welfare show that assistance payments funded through the Canada Assistance Plan range widely between the provinces from a low of $2,256 annually to a family of four in New Brunswick, to a high of $4,020 per year to a family of four in Alberta. Such inequality prompted Senator Croll in his interim report of the Special Senate Committee on Poverty to say:
There is unfair financial burden upon the poor provinces ... In the final analysis the beneficiaries of the Canada Assistance Act are the treasuries of rich provinces. The poor provinces can give their people very little. There is unfairness about it.
The scarcity of financial resources, as a result of the fact that 50 per cent of costs must be found within each province, means that the poorer provinces find they cannot afford to provide a desirable standard of assistance and services to eligible persons. Furthermore, evidence shows that provincial differences are quite substantial, not only in terms of dollar amounts given to families in like circumstances but also in terms of the particular characteristics of each scheme-for example, who qualifies, how earned income is treated for persons receiving social assistance, what appeal procedures are available, and so on. The problem surrounding appeal procedures is a serious one which I do not have time to dwell on.
The Canada Assistance Plan has had virtually no impact upon the working poor, those unable to earn a minimum adequate living although fully employed. Those who have only partial earning capacity suffer because of the low level of earned income exemptions provided by provincial assistance programs. Another problem of the recent operations of the Canada Assistance Plan is the need for closer integration with other programs both federal and provincial.
The Liberal government has taken no concrete steps toward the improvement of the operations of the Canada Assistance Plan, yet it has recently taken steps toward changes that will undoubtedly irritate present difficulties with this program. I am referring now, of course, to the federal government's proposal to the provincial welfare ministers that the Canada Assistance Plan be amended so that the federal government would provide compensation for programs that employ an income test,
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thus allowing provinces to enter into a guaranteed income plan. This federal proposal to amend the CAP in order to permit provincial guaranteed schemes would increase regional disparities and penalize the poorer provinces which cannot afford to raise 50 per cent of the total cost of such a program. Already we have seen that range in provincial assistance under the CAP is from $2,256 to $4,020. The federal proposal will do nothing to close this gap. More likely, the gap will increase as the more well-to-do provinces forge ahead with guaranteed income schemes while the poorer ones fall even further behind.
Provincial differences in terms of dollar grants are matched by differences in the form of assistance available. This raises the question of portability. The federal government has stated in its working paper "Income Security and Social Services," at pages 71 and 72, that because Canadians are now so mobile and move so frequently from one province to another "it is important to the people involved that their income security benefits be portable", and "it is important for this reason, too, that income security measures be reasonably uniform across the country." Individual provincial guaranteed income schemes negate this statement of federal philosophy. Portability is a definite problem arising from the government's new proposal.
As a result of these provincial differences in income support payments and programs there is a very serious problem that would arise if the federal government proceeded to implement this proposed amendment. The problem is how national standards could be maintained in the future if each of the provinces were to embark upon a different guaranteed income scheme or, more importantly, refuse to take up the federal offer to inaugurate its own guaranteed annual income.
Obviously, the implementation of such an amendment to the Canada Assistance Plan would only irritate the present situation in which there are wide variations in the provincial standards of social welfare already instituted under the Canada Assistance Plan. In its white paper on income security the Liberal government rejected a guaranteed annual income on the basis that it is too expensive and that Canadians cannot afford it at present. The government now has contradicted itself by offering to share with the provinces in instituting such a scheme.
It would seem that this federal proposal must have evolved quickly, and only recently, for it is inconsistent with the Prime Minister's statements in a television program last month, as reported in the Montreal Star of June 8. At that time the Prime Minister (Mr. Trudeau) said of Quebec social affairs minister Castonguay's scheme:
If he thinks that he is going to pay a guaranteed annual income in Quebec with money from the taxpayer of Ontario or of Alberta, he is not going to do it with this government.
Altogether, then, the Liberal government's recent actions involving the Canada Assistance Plan are inconsistent and unlikely to do anything more than irritate present problems in the operations of this income
support measure. These problems should be resolved satisfactorily before any new major program, such as a guaranteed annual income, is incorporated into the structure of the Canada Assistance Plan.
There is no excuse for the Liberal government to produce such half-baked and ill-planned schemes to eliminate poverty. Other countries are forging ahead with their welfare programs while Canada is standing still. Only last week the House of Representatives in the United States approved a sweeping revision of the welfare system by bringing most of it under federal control and by establishing for the first time a national income for poor families. There is no excuse for the Canadian government to continue bungling in this field.
It is obvious, therefore, from all the facts I have presented that the efforts of the present Liberal government in the battle against poverty are atrociously inadequate and could never be considered as an antidote to poverty. Thus, when the Finance Minister faced the task of preparing a budget and tax reform he should have taken the opportunity of embarking upon a real and effective anti-poverty program, for none of his cabinet colleagues have. In conclusion, Mr. Speaker, I would like to challenge the Liberal government-
The Acting Speaker (Mr. Laniel):
Order, please. I regret to interrupt the hon. member, but the time allotted to him has expired.
Mr. J. G. Lind (Middlesex):
Mr. Speaker, it is a pleasure to speak a few words on behalf of the constituents of Middlesex. The majority of people in our area are relieved because this budget has provided tax relief for married breadwinners straight through the middle-income range. The Minister of Finance (Mr. Benson) extended tax benefits to working mothers, senior citizens and the infirmed. In giving these concessions he also introduced a capital gains tax the rates of which would roughly parallel the capital gains tax in the United States. In order to offset this new tax the budget abolished gift and estate taxes. There is a general feeling of good will flowing throughout Canada. I should like to quote as follows from Canadian Business Service:
Basically the budget measures are expansionary and the proposed tax reforms pragmatic. The capital gains tax will be an unwelcome intrusion into our daily existence but it is now a fact of life for all other highly industrialized nations. To console ourselves it is always useful to remember that the U.S. has been able to live with, and even prosper under, such a tax-
The measures are clearly designed to inspire confidence in both the private sector of the economy and the reluctant consumer. It removes the uncertainty which has pervaded business and investment planning during the past year and a half.
This confidence in the Canadian people will grow since business at least knows the rules of the game. From July 1, 1971, the 3 per cent surtax on personal and corporate income will be eliminated. This, along with other changes in the tax structure, should help stimulate the economy.
A large percentage of the people in the constituency of Middlesex are farmers, and our agricultural economy
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is one area that needs a stimulus. Allow me to quote from the Globe and Mail of June 26, 1971. The article reads as follows:
Net farm income after operating expenses last year dropped 7.6 per cent to $1,191,000,000 from $1,289,000,000 in 1969. According to Dominion Bureau of Statistics' reports it was down nearly one-third from its peak of $1,774,000,000 in 1966 and at its lowest level in more than ten years. The figure represents what all farm operations have left for family living or investment after meeting their farm operating expenses and providing for depreciation on their buildings and equipment.
The farmers in Canada are suffering from overproduction, the result of which is depressed prices. Many of them are receiving less for their products than they did in 1946. At the same time they have to pay more for their machinery, gasoline and essential necessities to operate the family farm. In fact, almost everything the farmer needs to operate his farm has increased in price. In Ontario, our farmers have operated under the guidance of some 18 different marketing boards which have provided guidance in production and marketing of farm products. However, now that a decision has come forward in Manitoba that it is no longer legal to close provincial boundaries, I suspect that we will have a continuance of the chicken and egg war. There is no doubt that this may spread to other commodities. If the opposition had cooperated with the government we may have had legislation today to save many family farm enterprises. I must say that the agricultural economy of this country needs a great deal of stimulus.
Perhaps the elimination of the estate tax, through the budget, will mean the survival of some farmers-but my concern is that many of these farmers will go bankrupt and lose not only their investment but their farms if the present downward trend in farm income is not reversed and the agricultural economy of this country is not given a permanent boost. Farmers must, in my humble estimation, be allowed to operate within a supply management framework so that they do not overproduce. I do not know any other segment of our economy which has suffered a loss of one-third of its net income in the last ten years. Even if our farmers have an excellent crop year in 1971, surely it will be hard to compete with such facts as were headlined in some newspapers that construction labour in Toronto has settled for $5 an hour. I cannot blame these labourers. If other construction trades are receiving more, why should they not receive it?
Our government, through CMHC, has been endeavouring to supply suitable housing to those on lower incomes, at reasonable prices. But it is almost impossible for a married couple with a combined income of $8,000 or less to purchase a home when they have to pay high interest rates, heavy municipal taxes and endeavour to repay the mortgage over a 25 to 30-year period. Even with our easier money policy at the present time it is impossible in the small communities throughout my riding to obtain a mortgage for less than 10 per cent interest on a new home, and on an older home it would be higher than 10 per cent.
The other day there was an article in the Globe and Mail about retail lumber dealers in Ontario asking for an
The Budget-Mr. Rynard
investigation in the rapid rise in lumber and plywood prices. Lumber prices have increased since January 1, 1971, as much as 40 per cent in some types and sizes, while at the same time there has been a very substantial increase in plywood prices. I should like to quote an article which appeared in the Globe and Mail on June 22, 1971. It reads in part as follows:
-The Ontario Retail Lumber Dealers Association in a telegram to Consumer and Corporate Affairs Minister Ronald Basford. It says: "Members are deeply concerned with spiralling prices of lumber which we consider to be beyond the point of fair financial return to mills and definitely not in the best interests of consumers.
Wholesale prices for two-by-fours have risen from about $100 a thousand board feet at the end of 1970 to about $135 a thousand currently, according to Alan Bumes, who does the lumber buying-
He says there is "no end in sight" in the present surge of prices and cites market comment from various sources in support of this view.
Naturally, all these increased construction costs are passed on to the consuming public, and in the end those on low incomes will be deprived of owning a little bit of Canada and a home of their own.
I would like to urge that a department of urban affairs be set up which would seek a means whereby local municipal bylaws and provincial and federal regulations could be standardized and co-ordinated throughout the country to provide the opportunity for those who earn less than the average income to become the proud owners of a small lot in this great Canada of ours. I am certain they will also become more conscientious and law-abiding Canadians. In local municipalities in my riding a person or couple is not permitted to build on less than 25 acres of land if the parcel of land is not part of a municipal plan-which virtually prohibits any person from obtaining a lot other than in the regular subdivisions.
I urge the government to investigate excessive increases in both wages and materials, and by co-operation at all levels of government to reduce the restrictions so as to permit Canadian couples, if they so desire, to own their own homes.