June 29, 1972

GOVERNMENT ORDERS

FAMILY INCOME SECURITY PLAN

LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Hon. John C. Munro (Minister of National Health and Welfare) moved

that Bill C-170, to provide for the payment of benefits in respect of children, be read the third time and do pass.

He said: Mr. Speaker, during the last several weeks of compressed debate on this legislation the argument I have heard perhaps most frequently is that the family income security plan legislation is detrimental to the middle income group. This is hardly astonishing for, as I indicated in an earlier debate, the argument does have its political appeal, at least initially. I firmly believe, however, that such political appeal is tenuous and of short-term duration. It is difficult to reconcile the constant and differing demands by the opposition. On the one hand, they demand an increasing redistribution of income and, on the other hand, the same members of the opposition simultaneously espouse the cause of lowering the tax burden on our middle income groups. The facetious attempts on the part of the opposition to palm off this political sleight of hand will, I fear, damage greatly its credibility with Canadians in the long run. In other words, how can the opposition call for greater expenditures than the government is now making, yet accuse the government at the same time of placing too heavy a tax burden on the middle income groups.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
PC

Gerald William Baldwin (Official Opposition House Leader; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Baldwin:

That is a matter of interpretation.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

Therefore I have become increasingly convinced that such an approach is based on a cynical and disdainful regard for the intelligence of the majority of Canadians.

Needless to say, some in the opposition have advocated that the rich and the corporations should be taxed more. Of course they should be. If we are to undertake these additional financial obligations, it will be absolutely mandatory that we do so. It will be mandatory not just for the sake of the revenue which would be provided but also for the simple reason that the affluent of this country must accept their full obligation to our society generally.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
NDP

John Gilbert

New Democratic Party

Mr. Gilbert:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
NDP

Stanley Howard Knowles (N.D.P. House Leader; Whip of the N.D.P.)

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

Say that to the Minister of Finance (Mr. Turner).

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

As it stands, the government is already making a heavy investment in income security. At present, roughly $4 billion is committed to just three programs. Old age security and the guaranteed income supplement for the aged, with the increases voted by Parliament in December, 1970, and again last month, will represent expenditures of about $2.5 billion. The legislation now before the House represents an additional $800 million, and perhaps more. In addition, the federal 50 per cent share of provincial allotments for social assistance and social support and rehabilitation services means another $800 million in expenditures. With these facts in the background I should like to deal with some of the proposals I have heard opposition members raise.

Some in the opposition say that what we are proposing is not enough. For example, when the Family Income Security Plan legislation was last before the House some in the opposition talked about increasing the benefits over and above those recommended in the present bill as well as making those increased benefits universal. Just to make the benefits universal at the present levels, let alone provide increases, would require an additional $700 million over and above the $800 million that is now recommended.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
PC

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert (Edmonton West):

The minister forgets that these payments could be subject to income tax.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

I ask, from where is this additional revenue to come? Let us combine this measure with another promise or position advanced in the House during the current session, namely, that there should be universal old age security payments of $150 a month. The first proposal would pay family allowances at the rate of $15 a month for those under 16, $20 a month for those 16 and 17, on a universal basis. The implementation of these two programs would require an additional expenditure of about $1.5 billion in excess of the presently projected costs I have already mentioned. Do those in the opposition who talk about the burden on the middle income group really believe that the middle income group can be misled to believe that these promises will not cost them money?

I have not finished costing some of the proposals of those in the opposition. Some have talked about the desirability of a guaranteed annual income, a concept which I have indicated before the government is continuing to consider. We already use the guaranteed income technique in the income supplement for the aged and we are now about to apply it to family allowances. In addition, we have created a fund in conjunction with interested provincial governments which will be used to finance experiments on a full guaranteed income technique.

However, to move immediately to a full nation-wide guaranteed income would require enormous new finan-

June 29, 1972

Family Income Security Plan

cial resources. Even if paid only at the poverty line levels set out in the 1969 Economic Council brief to the Senate committee on poverty, which numerous councils and agencies have suggested are already outdated, such a full program would cost anywhere from an additional $1.5 billion to $2 billion taking into account all savings from present programs, including savings from the recent guaranteed income supplement increases for the aged and the projected FISP expenditures. I have picked a conservative figure of $1.5 billion to $2 billion based on outdated poverty line levels.

Let us add it all up. Those who advocate a universal old age security payment of $150 a month are advocating an increased expenditure of $700 million to $800 million. Those who advocate universal family allowance payments at maximum FISP benefit levels are advocating an additional $700 million of federal spending. Those who advocate a guaranteed income, even at 1969 Economic Council levels, are advocating an additional expenditure of $1.5 billion to $2.5 billion. The projected expenditure of $1.5 billion to $2.5 billion for a guaranteed income would be over and above what is now being spent. It would be over and above the increased spending resulting from the two guaranteed income supplement increases for the aged voted in the last two years and would be over and above the money allocated to FISP. This brings us to a rather grand price tag at the level of $3 billion to $3.5 billion in extra federal expenditures.

It would only be fair to go into how those in the opposition who suggest this very extensive increase in our expenditures for income security would fund these proposals. On the basis of the promises already advanced by the opposition, I believe that when we analyse the inadequacy of their responses to this question we will see that they are really insulting the intelligence of middle income Canadians.

This government accepts that the burden of financing new programs should be spread fairly and equitably. I think the Family Income Security Plan will reflect this philosophy. Only 28 per cent of the revenue required to finance FISP will come directly from families with children who must give up all or part of their present family allowances. The remaining 72 per cent will come from general revenue. This means corporations, childless couples and single people as well as families with children. In short, everyone will bear a proportion of this task.

What I pointed out in Quebec and re-emphasize now is that even if we were to increase the tax rate on high income earners and on corporations to extreme proportions, the revenue generated would be greatly inadequate to finance the new large-scale programs advocated by various members of the opposition. I was simply pointing out where we must look for the needed revenue if the promises of many of these politicians are to be realized. Do any in this House seriously think the middle income groups in this country can be so easily manipulated that they will believe that promises and policies such as I have heard in the House would not cast a partial burden upon them?

I might refer to a recent speech by the leader of the New Democratic Party when he talked about where we might find some additional revenue. He talked about obliterat-

ing any tax concessions to corporations as a fetchingly appealing strategy. Unfortunately, it will soon come home that even that by doing that not enough revenue would be generated to anywhere near finance proposals of this magnitude. I have pointed out that, on the basis of rough estimates, steep increases in corporation tax, in the order of say 20 per cent, would yield only $400 million to $500 million. I have also pointed out that just a $10 universal increase in the old age pensions from $80 to $90, a woefully inadequate figure in itself, would eat up approximately half of that amount.

Some of the opposition talk of taxing the rich to implement this promise. I repeat, of course we should: However, 1969 statistics show that only 11 per cent of the Canadian taxpayers paid on incomes of over $10,000 a year.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
NDP

David Lewis

New Democratic Party

Mr. Lewis:

We know that.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

It is a fact. Even if this is but a rough guide, it hardly indicates a sufficient tax base to render adequate revenue to the government, even at prohibitive tax rates. I frankly feel that if we taxed in full every dollar earned over $20,000 we would get but a fraction of the amount necessary for the large-scale programs mentioned.

In light of these facts, I realize that some of those in the opposition will admit that even if we applied prohibitive tax rate increases against the affluent it would not bring in enough revenue for all the increases they are suggesting. But then, of course, at least in respect of FISP they would go on to suggest special recovery rates, especially if we made universal payments to the middle income groups.

In setting these recovery rates the opposition has a choice. They can recover at rates of up to 100 per cent, or, if they are afraid of further alienating the middle-income voter, which they greatly desire not to do, they can recover at much lower levels.

If they do not recover at rates of up to 100 per cent there will be a major leakage of benefits to the affluent in this country and there will also be a heavy additional burden on the general revenue fund, the bulk of which comes, once again, from the middle income group which they claim they want to rescue from the burden of increased taxation. If, for example, they recover at normal tax rates, then that recovery would represent only slightly in excess of $200 million of the additional $700 million needed to pay universal benefits-a loss of close to $500 million which could otherwise be directed to other more pressing social concerns, as well as a substantial burden on the middle income groups, as I have just pointed out. If, on the other hand, they did recover at rates of 100 per cent, then all they would be doing would be placing an additional tax burden on the middle and upper income husband in order to make a payment to his wife.

So once more let us review the opposition proposals in their totality: new additional federal spending programs of up to $3.5 billion, with little prospect of obtaining a significant proportion of this money from increased levies on the rich and the corporations, even at prohibitive rates.

June 29, 1972

Thus it is obvious that those opposition members to whom I have referred are already advocating increased taxation affecting the middle income groups.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
NDP

Winona Grace MacInnis

New Democratic Party

Mrs. Maclnnis:

What about the other income groups?

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

With regard to the upper income groups and the corporations I have already said that to finance this proposal-and they will pay their share-taxation would have to be levelled at much higher, even at prohibitive rates.

So when opposition members make charges of irresponsibility, let them, to avoid charges of disdain for the intelligence of Canadian taxpayers, tell the middle income group where they intend to raise the money to carry out the promises they are making. Let them be assured of one thing: these middle income Canadians are not so naiVe that they will not ask the question. I believe this is a challenge which the opposition must meet.

For the benefit of those who talk about the burden of some of our policies on the middle income group I should point out just in what way certain of our policies have helped the middle income group.

For example, we have not forgotten to provide financial compensation to middle income citizens with families. Our income tax laws continue to provide for children's exemptions. This is because they are mainly directed to horizontal redistribution of the tax burden from taxpayers who have children to taxpayers who do not. Tax exemptions for children are estimated to represent $550 million. The tax exemption system does favour middle and higher income families because, as income is higher, the exemption becomes more valuable.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
?

Some hon. Members:

Right on!

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

Nor is this the only government measure which aids the middle income group. I would cite for example, programs such as hospital insurance, medicare, unemployment insurance, the Canada Pension Plan, retirement, disability, widows' and orphans' benefits, and the financing of post-secondary education, all of which were implemented under Liberal governments.

These have spared those benefiting by them enormous personal financial obligations which might otherwise have crushed their financial security and forced them into a dependency on welfare. This is especially true since programs such as hospital insurance, medicare and postsecondary education financing have been most heavily utilized by the middle income groups in comparison with all other income groups in our society.

In this connection I should stress that our country has outperformed the United States, despite their vastly superior financial resources. We have not only kept pace with the American economy and the American standard of living, notwithstanding the extra pressure of a proportionately faster growing labour force, but we have also provided social benefits not yet available in the United States, for example, comprehensive universal hospital insurance and medicare, basic non-contributory old age pensions and family allowances.

Moreover, we should remember that thanks to the prosperity resulting from the improvement of the economy in

Family Income Security Plan

the last decade, a process toward which present government and Liberal governments preceding it have greatly contributed, real income flowing to the middle income group, over and above the inflation factor, has risen by almost 30 per cent. In short, thanks to positive government economic measures much of our working class has moved into the middle income group. And through continued vigorous government action we intend to see that these workingmen who have moved into the middle income group stay there.

I should also like to talk about a few of the other criticisms which have been levelled at the Family Income Security Plan. First, I would point out that its key principle is to assist the low income worker. Thus it goes a long way toward meeting a number of criticisms of our present welfare system.

This plan is not designed to aid the indolent. Its principal aim, I repeat, is to aid those who work, to build in incentives which will encourage them to continue working by providing supplementation to their low-level earnings.

We hear today much criticism on the grounds that people are sometimes placed in situations which encourage them to ask: Why should I work when I can get as much on welfare? The middle income group feels it has worked hard and saved its money. Naturally it resents those who would abuse the welfare system and prefer to use the hard-earned middle income tax dollar to support themselves without working.

Of course, as I have often stated, the number of people who would prefer to live on welfare rather than work is exaggerated. But the feeling held by many people is understandable, none the less. There are some who would prefer to live on welfare and turn down reasonable job opportunities.

The Family Income Security Plan helps meet this problem by providing incentives for the low income earner. It assists him or her to resist the temptation, if and when it does exist, to go on welfare and withhold his or her contribution to society.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
?

An hon. Member:

How does the bill do that?

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

If the criticism about some social assistance rates being as high as or higher than certain wage levels is justified, it is derived from the fact that in some provinces social assistance rates applicable to a family with several children often do come perilously close to what the minimum wage rates or laws provide in that province.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
?

An hon. Member:

Anything is possible with this government.

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink
LIB

John Carr Munro (Minister of Amateur Sport; Minister of National Health and Welfare)

Liberal

Mr. Munro:

I could easily talk about some provincial governments of the same political complexion as the hon. member which do the same thing. This closeness between welfare and the minimum wage is especially true when one considers that often other social services, such as hospitalization and medicare, are provided to the man or woman with a family on social assistance while the wage earner must pay the regular shot. FISP does something about this.

Family Income Security Plan Mr. Alexander: The minister is filibustering his own bill.

June 29, 1972

Topic:   GOVERNMENT ORDERS
Subtopic:   FAMILY INCOME SECURITY PLAN
Sub-subtopic:   MEASURE TO PROVIDE BENEFITS IN RESPECT OF CHILDREN
Permalink

June 29, 1972