What happens with soapbox artists, Mr. Speaker, is they are able to produce a lot of noise but no light. That has been their basic practice in this House. As long as they can keep yelling, screaming, pounding and clapping, no one will really bother looking at what they have to say, which usually adds up to nothing anyway.
What should concern members of this House is not so much what is happening with the rump group in the corner, but that many of the same bad habits are being picked up by members opposite. They think in this time and age the only way to combat the purities of the left wing is to ascribe a purity to the right wing.
We had a perfect example in the speeches last night when we were raised to elevations by the theological purity of the hon. member for Edmonton East (Mr. Yurko) regarding the free market, that wonderful mechanism that has done so much for so long. As a result we have this basis of total domination
versus the free market. It is beginning to sound as if this is a college common room. We are not talking about practical things any more.
We have the theorists and philosophers on the right now combining with the theorists and philosophers on the left. I am afraid that theology is not what is in order in Canada today. We need hard economics. The only exception to that is the Minister of Finance (Mr. Crosbie) who does not believe in theology but thinks he is Johnny Carson. He thinks that rather than worry about economic policy, he should practise his new comedy routine.
The question we have to pose is, when do we get serious about the economic conditions of this country? When do we start looking at taxation policies which are going to make some practical sense? If I still have a moment or two, perhaps I can provide some illustrations to these philosophers to the left and the right. I do not want to confuse them with the facts; I know that would interfere with their particular sort of music.
It is important to recognize certain facts about the way the economy has been working in this country. Let us deal with these gentlemen on the right. They seem to feel there is an enormous burden hanging around the necks of the Canadian taxpayer, that everyone is walking around overburdened by this enormous government expenditure. They like to parade in front of us glorious examples, such as a country like West Germany which is so free of these kinds of burdens and whose economy is so forceful.
I wish to point out that according to a recent report by the OECD the percentage of expenditure in Canada of government taxation related to the gross national product is less than in West Germany. How does that fit with the facts that are constantly paraded before us, that the amount of taxation that is dispensed in this country is less than in West Germany? It is only one percentage point above that of the United States, the home of free enterprise. Therefore, this enormous burden we have been told about simply does not exist in terms of the facts.
What does exist is that there is a large cluster of countries, all of which have a percentage between 30 and 35 per cent of their GNP. Obviously that suggests there are more complicated and more real factors at work in the economy than the hyperbolic situation of this enormous government albatross bearing down upon the backs of the people.
The Tories simply do not look at where the economy is going or what it has been doing. They prefer to deal in the areas of vision and fantasy rather than look at the facts. The facts are here in the Department of Finance report. I suggest that the Minister of Finance, who so conveniently provides memoranda for members of the finance committee, should provide some of the same literature from his department to his own caucus and recommend that they start reading these facts.
On the same kind of account, I listened with a great deal of amusement to the hand-wringing, teeth-gnashing and caterwauling of the NDP last night about how for yeaifs those nasty Liberals had really put it to the poor people. That is the kind
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of sob story we received about how awful the tax system would be.
I refer members of the NDP to the same report, which points out in terms of lower income groups that they have a much higher degree of discretionary income than almost any other country in the OECD. In fact, it has improved by close to 50 per cent in the past three or four years. When you look at the number of tax exemptions that are available to low and modest income Canadians, they have far more tax exemptions than are available to the West Germans, Americans or those in most any other country.
All of a sudden we have found that rather than have the previous government in the back pockets of the big corporations, as they like to testify, the fact is they have far more discretionary income and there have been far more initiatives taken to lower taxation for those groups. As a result, there is far more income available to the very group about which they are concerned.
A member from one of the Vancouver ridings, I forget which one it is, used a term which 1 do not think is considered parliamentary under the Hansard arrangement. 1 would not want to repeat it. I would suggest to her, if that is so, that she take a course in straight reading of English. I am prepared to do that for her. I know it is not printed in the language that she is prepared to use as it does not include those kinds of phrases, but it does suggest that for the income group under $5,000, discretionary income for a family of four has gone up 8.3 per cent over the past year; and for the income group between $5,000 and $10,000 it has gone up 9.4 per cent in the last year. Again, 1 know they do not want to be confused by the facts. I know that is not the socialist way to live. They do not want to look at what is real or effective. They simply want to go by the theories learned at the knee of some U. of T. professor. It is about time they looked at the facts so that their economic comments could be more effective and useful.
Once we get away from the political dialogues coming from left and right we can start looking at the real problems in taxation policy, and there has been no more real problem apparent than the whole issue of what we should do about interest rates, because those rates are directly related to the tax policies we have in place. When we look at the statements being made by members of the government the first thing we should discount is their constant survival technique of saying "It was your fault." The fact is that many of the measures now being introduced were not the fault of those previous Liberals but are initiatives taken by this government.
I point out one particular concern. We find the Minister of Finance and the Prime Minister (Mr. Clark) pledging that they are going to stand in the trenches and fight the good battle against inflation. They are going to be Horatio on the bridge and get tough and do all the things that are required. They say, "Boy, if it's going to hurt the people it's going to have to hurt because eventually we are going to get a solution." And how do they propose to solve this problem? They
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are going to cut back government spending. They are going to reduce the deficit.
Well, members on this side may be excused if we have the odd note of skepticism in our voice. Frankly, we do not know what to believe from members opposite. We heard during the election campaign that the best thing for the Canadian economy was to have a bigger deficit, a stimulative deficit. Apparently those words have disappeared from their vocabulary because we do not hear about a stimulative deficit any more. But that is exactly what they are intending to do, because while they are reaming the Canadian public by the increasing acceleration of interest rates, they are doing absolutely nothing to control deficit spending.
How can they with any honesty or candour stand up and say they are fighting the good economic fight when day after day they bring proposals before the House which would have the result of increasing spending and deficits? While they are talking about the need to hold firm and reduce government spending they are proposing an outlay of an additional $500 million through their mortgage tax program. Where will they get the money for that? Is it going to be concocted out of thin air or do they intend to cut back other worth-while programs? In fact, what they will do is increase the deficit, which will increase the inflationary pressure.
Along the way, Mr. Speaker, we had that grand report from the task force on PetroCan. What does it advocate? It advocates an additional $2.3 billion deficit. Could there be anything more inflationary than suggesting that the way to solve our economic problems is to add $2.3 billion to the existing $11 billion deficit? This really makes the words of the Minister of Finance turn to ashes in his mouth. How can he tell the finance committee he is fighting the good fight when his colleagues in the government are talking about adding billions of dollars to an already substantial deficit? That goes under the definition of total contradiction. You cannot have it both ways. You cannot be talking and plighting your troth about the need to restrict government spending and then have ministers say that if Petro-Canada were privatized it would be the best thing that could possibly happen.
We listened to the hon. member from Winnipeg-Assiniboine (Mr. McKenzie) give us his version of how the economy works; that is something that is probably a cross between Lewis Carroll and Walt Disney in terms of the way in which it develops fancies about the future. He was saying the Tories were going to strengthen Petro-Canada. They would strengthen it first by cutting it in half and turning it over to the private sector, which would be far better managers but would cease to do many of the things that Petro-Canada does, and strengthen it by adding a $2.3 billion deficit to the public treasury. That is a curious way in which to describe the strengthening of this oil agency. It does not add up according to even the simplest economic axiom the Conservatives appear to be using.
The fact of the matter is there is a substantial opportunity to strengthen PetroCan if the government only had the courage to take it, and the way the government could acquire that courage would be to tackle the question of oil pricing, which
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they keep pushing further and further away from resolution, simply apply a windfall profits tax, and then turn the major proceeds of that tax over to PetroCan so that it could use that money for investment in energy to the benefit of all Canadians. Let us not go through the mental gymnastics in which the hon. member for Winnipeg-Assiniboine and the Minister of Finance constantly engage.
Let us talk about an option which makes some sense. Large pools of capital are being pulled out of the economy of this country and allowed to sit fallow in certain large heritage funds. These funds are not being used for investment in major energy projects, major transportation projects or for major agricultural purposes; they are simply being allowed to go unused. We have the paradox of a government which says they are good economic managers when in fact what they are doing is simply delaying the inevitable and allowing themselves to be used by a provincial premier, one who last evening had the audacity to declare his independence, in effect, from any form of common weal in this country. How the Prime Minister can calmly turn the other cheek to the challenge and threat posed by the statement of the premier of Alberta is beyond me. It simply means that the Prime Minister thinks his way of dealing with the provinces, of avoiding a fight by giving away his lunch all the time, will somehow bring about a peaceful solution. 1 have news for the Prime Minister: he has given away his last piece of lunch, he has nothing more to give. All he has done is set up a self-fulfilling prophecy, because these premiers will go after him with all the more ferocity and all the more ambition, knowing he is not prepared to stand up to them.
It is a form of betrayal of the Canadian people that we do not have a Prime Minister who is prepared to stand up to the Premier of Alberta and say: "It is absolutely necessary that on the matter of oil pricing you do not speak just for 8 per cent of the population; someone has to speak for 100 per cent of the population". I am amazed, Mr. Speaker, that the Prime Minister would allow that kind of declaration of economic separatism to be announced and not be prepared to respond with any form of strength or effectiveness. It was one of the sad moments in the history of this country when the Prime Minister once again backed away from living up to his responsibilities.
There are economic answers available; it is just that the government does not want to tackle them. Let us talk for a minute about a favourite topic of the Minister of Finance who has told us he has some choices available to him when it comes to the problem of high interest rates. He said: "1 have to hold firm on monetary policy but I do have the opportunity to make some choices fiscally". What is the choice he has made? He has made only one choice, and that is to introduce the mortgage tax credit program which he thinks will be salvation for all that ails Canadians. He stands up in the House with a great deal of flourish and says: "Think about the 3.8 million households which will get benefits under this program".
What he does not mention are the other 3.8 million households which will get no benefits under the program. Are
they somehow immune from inflation? Will they somehow be able to avoid the problem of high interest rates? What the minister is really saying is that he only cares about 30 per cent or 40 per cent of the population and that the rest of the population can be forgotten. But it is quite obvious that they, too, are affected by high interest rates.
It is not just homeowners who are faced with the problem of escalating mortgages. One of the major problems we are facing today is in the rental market. Many of those rental units were introduced under the ARP program and carry five-year mortgages at 8 per cent which are coming up for renegotiation. The rate will now be 14 per cent, a 6 per cent increase, and they will either have to declare bankruptcy or suffer substantially ballooned rents far beyond the means of most people living in them. Are they to be forgotten? Is the minister excluding that section of the population which for one reason or another decides to rent rather than own accommodation? Is the Minister of Finance saying he is prepared to forget all those who do not have mortgages and therefore will receive absolutely no benefits whatsoever other than the property tax credit, which this year will be $62.50? Is he forgetting those people who are going to find, as they face increases in oil prices which will add up to $300 or $400 on their housing bills, that somehow they are going to be included in this magic mortgage credit program? Who speaks for them? Where are choices being made for them?
The fact is that what the minister is introducing is bad economic policy. He has himself caught in the campaign commitments of his leader and is now trying to wriggle out by putting as pleasant a face on a bad proposition as he possibly can. However, it is bad economic policy because he has committed major expenditures for this year of $575 million. Next year they will be well over $1 billion and ultimately closer to $3 billion over the long term, when he has no ability, according to his own confession, to forecast what the economy will be like.
The Minister of Finance is introducing a structural economic change when what we are in desperate need of are shortterm responses to real and immediate problems. I am sure the minister's economic advisers have told him that he cannot introduce an economic instrument which has a four-year fixed term to it when the economy is gyrating like a crazy top, partly because of the decisions taken by the Bank of Canada, which is under the jurisdiction of the Minister of Finance. The minister is creating a problem and avoiding solutions.
Solutions are obvious and available to him. He could be taking that $575 million and using it to deal with some of the immediate consequences of those 14.5 per cent and 14.75 per cent interest rates on mortgages and prime loans. For example, he could be providing some emergency assistance for those who have to renegotiate their mortgages. He is condemning thousands of Canadians right now because he is not prepared, as I understand it, to make directives to the banks or the lending institutions. Thus these Canadians are locking them-
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selves into mortgage rates of 14.75 per cent. If those rates go down six months from now, those people will be left in the wash. They will be high and dry up on the shore, because if interest rates recede they will still be paying 14.75 per cent carrying costs. Is that a fair and equitable kind of system? Is this a government which is really concerned about the problems of all Canadians, or is this Minister of Finance simply saying once again that he does not care and that he is not concerned about that group of people?
Is it also true that this Minister of Finance is not prepared to provide any assistance to the housing market? The volume is falling out each hour which goes by. It is in total chaos. Building starts have now fallen close to 30 per cent in the rental field. There is going to be an enormous shortage of rental accommodation come next summer. As a consequence, demand will grow and prices will go up. I think economists would call that counterproductive, and yet the minister says he has choices. Why does the minister not start exercising his choices? Why does he not come out of his comic corner now and start doing something effective to help deal with the economic problems in this country? Let him do something now. Let us not wait. What is going to happen at the end of November?
We are now going through a period in which people daily have to suffer the ravages of high interest rates. It simply is not fair for the minister to say he is going to hold the line and hold tough. It is not the Minister of Finance or the Prime Minister who is holding tough. They are forcing many very ordinary Canadians to hold tough, and those ordinary Canadians are the ones who will continue to suffer under the present circumstances.
So when it comes down to the way in which tax policies can be organized and arranged, there is much left to be said about the present state of our tax system. The only conclusion we can come to when we look at the tax policies which so far have been the product of Tory economic thinking is that the Tories are going to add substantially to the deficits of this country. They will add substantially to extended government spending, to the point where estimates are that maybe the Prime Minister was right in the election campaign that there will be a $17 billion deficit. But it will not be a deficit caused by Liberals; it will be a deficit caused by Conservatives. That is the real issue.
Maybe the Prime Minister does know something. We have asked him questions and he does not want to 'fess up, but maybe he really does know something we do not know. Maybe he knows that a big deficit is coming around the corner. With all the commitments he has made regarding allowing new tax write-offs to professional consultants, his tax credit program and his Petro-Canada proposal, we have already counted up $2 billion, $3 billion or $4 billion in additional government spending. I suppose the unstated proposition is that this government has its spending plans, and it is the unspoken conditions which the government is not prepared to disclose. That is what we are really after. The government pell-mell is going to increase deficits. At the same time it is raising interest rates. If there ever was a crazy quilt economic strategy, this one has to be it.
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The government is increasing interest rates while at the same time allowing deficits to rise. How one justifies that contradiction in economic stance I simply do not know, and it is going to be a fascinating experience to watch the verbal exercises of the Minister of Finance as he tries to climb out of that particular maze. That is exactly what he is climbing into. That is the trap he now finds himself in, and it will be fascinating to watch how he manages to get out.
However, I do not think he will get out. I think what he is prepared to do is to make one simple trade-off. To satisfy the economic purists, those Adam Smith theoreticians about whom we were lectured this morning in the Standing Committee on Finance, Trade and Economic Affairs, the minister is prepared to force this country into a serious recession. That apparently is the trade-off this Minister of Finance is prepared to accept.
When we are debating tax bills I think the conditions and features of this economic theory and strategy should be more revealingly disclosed in this House. That is why I welcome this opportunity. I thank the hon. member for Edmonton East for his inspiration. I think he described Mabel the maid's backside ascending to heaven, which is probably the best description of Tory policy I have heard yet since it is simply a fantasy and a vision and has no grounding roots in the reality of the economic world.
As we use this tax bill to sell certain propositions, we say to the Minister of Finance that we would like to see some very immediate short-term steps to cushion the impact of his high interest rates and to help those people in the Canadian economy who are caught and squeezed to the point where they are simply not going to be able to recover. That is the kind of requirement the minister should recognize.
In the area of housing there is a requirement to undertake some immediate rescue operations, to provide for some stability in that market and to take a look at the phony-boloney figures the minister produced today. He said there will be only limited and negligible impacts of high interest rates. My head, Mr. Speaker! That is simply not the case. The escalating costs in these areas are close to 30 per cent to 50 per cent as a consequence of the minister's high interest rates, and he apparently is not prepared to do anything at all about them.
The minister does have choices to make. The problem is that he is refusing to make those choices, and while he refuses to make those choices, the country suffers.
Topic: GOVERNMENT ORDERS
Subtopic: INCOME TAX ACT