Mr. Jacques Guilbault (Saint-Jacques):
Mr. Speaker, when one examines attentively the motion presented by the hon. member for Champlain (Mr. Matte), one realizes from the start that it is a non-confidence motion against the government. One realizes also that this motion blames the government for two separate reasons. First, it blames the government for having taken, according to the Social Credit, no concrete steps to ensure the establishment of a guaranteed minimum income plan, to overcome poverty in Canada. This motion also accuses the government of having done nothing to fight inflation efficiently. It is on
this second point of the motion that I should like to dwell, as my colleague the hon. member for Ontario (Mr. Cafik), Parliamentary Secretary to the Minister of National Health and Welfare, stated a while ago, in a brilliant way, I think, the reasons why the Canadian government so far did not think it wise to establish a guaranteed minimum income plan.
As for me, I do not agree at all that the government did not do anything to fight inflation efficiently, as it is said in the motion proposed by the hon. member for Champlain, which would have us believe, if we read it attentively, that a guaranteed minimum income could be used to fight inflation. And I do not agree at all on that.
I am not sure at all that a guaranteed income program could be used to fight inflation. On the contrary, I believe that putting more money in circulation and increasing the money supply available to the Canadian people would only increase the demand for products and, should that demand come at a time when there is no mechanism to provide for an equivalent supply, inflation would be still more serious. Making millions of dollars available to the Canadian people through the establishment of a guaranteed minimum income plan could eventually worsen inflation. And it is on that point that I disagree entirely with the hon. member for Champlain, who maintains, according to his motion, that a guaranteed minimum income could fight inflation.
Moreover, I believe it would be a false principle to give money to all Canadians through a guaranteed minimum income, while inflation does not affect everybody. And I should like to insist on that point a few minutes and repeat what was already said in this House, namely that the average Canadian benefits from the simultaneous increase in prices and incomes.
I wish to quote here the hon. Minister of Finance (Mr. Turner) who, speaking in the House on March 5, said that last year the real per capita personal income of Canadians, which is the income left to each person to spend or save after paying taxes and allowing for the inflation rate, has increased by 6.8 per cent. This means that income has increased more rapidly than the cost of living. This recent rise follows the already exceptional increases of 5.9 per cent and 6.7 per cent recorded in 1971 and 1972 respectively.
The minister went on to say that last year's strong increase in personal income was the result of various factors, notably an unprecedented increase in the number of Canadians productively employed, a substantial growth in farm income, the reduction in personal income tax provided for in the budget and equal to 12 or 13 per cent, the raising of social benefits, especially of old age security pensions, of family allowances and of other social security benefits.
The minister continued to say that this 6.8 per cent increase in the real disposable personal income per capita last year in Canada was one and a half higher than that of the United States. Since 1970, the average real disposable income of Canadians has gone up by 21 per cent, that is almost twice more than that of the American people.
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This means that inflation does not affect everybody. Inflation does affect a few citizens, particularly those on fixed incomes. So I cannot agree with the motion of the hon. member for Champlain who claims that a guaranteed minimum income might help fight inflation. On the contrary, I feel that if the government acted in this way, it would put money in the hands of those citizens who do not need it and who already benefit from simultaneous increases in prices and incomes.
Finally, I would like to answer more directly the charge in this motion, which states that the government did not do anything to fight inflation efficiently. On the contrary, in the past, that is in 1973, the government took many steps to deal with inflation. And even more important, Mr. Speaker, the government intends to take more steps this year. The Speech from the Throne that was delivered at the opening of this session showed that the government was going to make all efforts possible this year to fight inflation.
What are the government's plans for 1974 as regards inflation? First let us recall-and it is a wellknown fact- that the government is concerned by the inflation problem, and that it does not think necessary to resort to an overall control system. The government recognizes that our economy is resting for a large part on our trading relationship with other countries. That is why inflation that developed in the whole world as a result of certain phenomena is affecting us as well.
However, the government fully recognizes that there are in Canada different means to deal with inflation, and these means are much more effective than the guaranteed minimum income referred to in the motion.
The government programs designed to fight inflation are actually divided into three separate parts. First, in the speech from the throne, we mentioned projects aimed at protecting the individuals, mainly those on fixed or low income. We are also proposing measures intended to prevent price increases in specific areas. We also intend, and this is very important, to deal with shortage-creating problems by encouraging supply, that is to say by stimulating production. The government prefers such a system which, besides, has been used over the last few months, namely selective measures applied in different ways and at different times as the occasion warrants to selected goods and services.
This makes for a flexible and appropriate system in a society seeking to control change in the most effective manner. Lately, the government has applied such selective measures to which I will come later. However, we will not hesitate to resort to additional deflationary measures if required. And as previously stated in this House by the Prime Minister (Mr. Trudeau), we will not hesitate to go after the "big guys" in the market place to protect the Canadian consumer.
One of the cornerstones of the counter-inflationary program we will launch in 1974 as a follow-up to those we have initiated last year is production stimulation, particularly of foodstuffs. Since food is one of the major factors in the price index in Canada and that the food shortage in the rest of the world as in Canada is one of the major inflation factors, the government set forth recently in the speech from the throne a food policy which will urge
Canadian producers to produce more so as to check rising prices. Of course, this is a medium and a long-term method, but the government also took some immediate measures.
I should like to deal in particular with some measures that the government implemented last year and which are still being applied, in order to show clearly that the blame put on the government by this motion is quite unfounded.
Last year, the government first set up a committee which was instructed to investigate food prices and which the House approved on January 23, 1973. Later on, the government created a Food Prices Review Board, which actually replaced a House committee.
I should like to emphasize the much more specific and selective measures which are included in our counterinflationary program and which the government implemented last year in order to check the rise in prices of certain goods, particularly food products.
In the meat business, in August 1973 the government imposed export restrictions on beef and hog. That resulted in a widespread ban on Canadian meat sales on the U.S. market where prices were higher because of reduced production brought about by controlled prices and salaries. That initiative stopped meat prices in Canada from going up for a while.
With milk which is another basic commodity, the government announced last September that it would be subsidizing powdered milk at a rate of 20 cents a pound which resulted in a price drop of 14.3 per cent. It also announced a 5 cent subsidy on liquid milk which prevented or at least slowed down subsequent price increases. Of course, that plan is still in force.
With bread also in September the government set up a two-price system for flour which resulted in Canadian bakers receiving a subsidy which slowed down a price increase.
Unfortunately, Mr. Speaker, Canadians have difficulty recognizing the result of steps to prevent prices from rising. Prices are high and people are not satisfied. If we pass a measure which would reduce the price of a commodity, people could understand right away and feel that we curbed inflation.
But people are having difficulty realizing the effectiveness of steps such as those I just mentioned and which prevented milk prices from increasing because if the price of bread does not go up for six months, people find that normal. However, people often forget that it is because of steps taken by this government that the price of commodities such as bread, milk and meat, increased in a more moderate way or did not go up at all recently.
Let us now turn to what the government did to check the increase in the cost of oil products.
At the end of last year, the government asked oil producers in Canada to freeze their prices voluntarily as of September. So, in the part of the country that lies west of the Ottawa Valley, the price remained about $4 a barrel while the price of crude oil on the world market reached more than $10 a barrel.
The government is now negotiating with the provinces to set for all of Canada a standard price that would be
March 19, 1974
lower than the present world price. Besides, the government took other budgetary and economic measures, such as amendments to the Income Tax Act. The government took many other steps against inflation and I was surprised to hear the hon. member for Champlain contend that we had not done anything to fight inflation.
May I remind that among other measures, the government indexed personal income tax on the cost of living. As will be recalled, the government enacted legislation under which the income tax deductions of individuals will increase according to the rise in the cost of living index. Such a measure will result in annual tax reduction to the extent of price increases. The net result is, for this year alone, that 175,000 Canadian taxpayers will have no income tax to pay while all the others will pay less.
Still on the subject of income tax, the government announced that it will reduce the basic rate of taxation between 10 and 21 per cent, according to the taxpayer's income. For instance, a single taxpayer whose income bracket is between $5,000 and $8,000, will have a tax reduction of between 10 to 20 per cent. Therefore, every Canadian taxpayer will save at least $100 for the 1973 fiscal year. A couple whose annual income bracket is between $7,000 and $10,000 will see its income tax reduced between 11 and 21 per cent.
These measures have even been suggested to us by some members from other parties. That is why it is surprising to see that when the government adopts measures such as those I just mentioned, we are charged with doing nothing to stop the price increases.
But we have done even more, we have eliminated the sales tax on certain consumer products to counter the effects of inflation. Amongts those products are soft drinks, sweets, fruit juices, which are totally free from federal sales tax. Children's clothes are no more subjected to any tax, there will not be any excise tax on tooth paste, shaving lather and other cosmetics. Custom tarrifs have been reduced for numerous kinds of imported fruit, a measure that should bring a reduction of consumer prices for these food stuffs which are not normally produced in Canada.
To fight inflation, we have taken many other measures that are certainly more efficient than the establishment of a guaranteed minimum income. For example, the Canada Pension Plan has been changed in order to increase the maximum annual pensionable earnings and the benefits to meet the rise in the cost of living.
As you know, there has been a substantial increase in family allowances, in order to compensate the beneficiaries for the rise in the cost of living.
Changes have also been brought, for the same reason, to the veterans allowances, to the old age security pension plan and to the guaranteed income supplement.
Therefore, Mr. Speaker, I think I have definitely proven, as I mentioned in the beginning of my speech, that this year's government programs are particularly aimed at fighting inflation. I believe I have proved as well that the government will live up to the promises it made in the Speech from the Throne.
The best way of knowing what the government will do with regard to this problem is to consider what it did in
the past. The measures I have just mentioned and which were implemented by the government in 1973 to fight inflation are the best guarantee Canadian citizens could possibly have of the efficiency with which we will tackle this inflation in the year to come.
Mr. Speaker, I completely reject the claims of the hon. member for Champlain (Mr. Matte) when he says we do not fight inflation. On the contrary, I say that of all the governments of industrialized countries, the Canadian government is the one that has set up the most complete the most diversified, arsenal, that has taken the wisest decisions in the fight against increasing prices, problem which concerns the government and which is doubtless one of the most severe Canadians have to face at this time.
I would like to add that the measures promised by the government in the Speech from the Throne will be implemented, that others will be brought forward, and that Canadians can rest assured that even if prices rise, which is happening in every country in the world, the Canadian government intends to solve this problem which is considered to be the most important one facing our country.
Topic: GOVERNMENT ORDERS
Subtopic: BUSINESS OF SUPPLY