Mr. Speaker, I would like to thank my colleagues.
Clearly, this issue is of particular importance to the NDP. It is a question of the inequality created by the Conservatives, and the Liberals as well.
Today we will be dealing specifically with the plan the Conservatives presented to Canadians during the 2011 election campaign. We will talk about the concerns it raises because it is quite possible, under the current circumstances, that this plan will be implemented. We will explain exactly what the plan entails and why it is totally wrong for Canadians.
Let me start with the basics of what the Conservatives have proposed, and this goes back to a 2011 campaign promise. I suppose in the midst of a campaign, politicians from time to time get excited or in some cases desperate to gain power, as the was. In that desperation and excitement they make promises that are very bad promises with respect to a policy that they would actually want to invoke one day. That is exactly what this is.
This is a $5-billion income-splitting scheme that the Conservatives have proposed that would not help upwards of 85% of Canadians. Let us pause for a moment. It is a $5-billion scheme that 85% of Canadians would see no benefit whatsoever from. That fact is actually increasing with recent reports. We have one report out today from the Broadbent Institute, called “The Big Split”, that says the number of Canadians who will miss out on this particular program might be quite a bit higher.
It is not just from progressive think tanks; it is also from groups like C.D. Howe. It is also from very conservative economists across the country who have come out and said that the proposal as offered by the Conservatives is one that would increase income inequality in this country. It would further push the tax burden onto the middle- and working-class Canadians and away from those who are earning the most.
We know that over the last 30 to 35 years income inequality has increased dramatically in Canada. Some 90% or more of that was experienced under Liberal regimes, which is, I suppose, telling of the traditional Liberal way of campaigning, which is to campaign to the left but govern to the right. A massive amount of inequality went on under the Liberals but the Conservatives picked up that bad tradition and have continued it. We see income inequality increasing. A recent Parliamentary Budget Office report showed that of the recent tax breaks that came, those people in the 20% top-earning tax bracket took home $11 billion in benefits, fully 36% of all that was offered. The bottom 20%, those we would think they would be most interested in helping out, took home a little less than $2 billion of what was offered, so less than 6%. The top 20% get more than one-third of the benefit, and the bottom 20% get around 6% of the benefit.
That is the Conservative ideology. We understand that. We disagree with it fundamentally as New Democrats, and we see increasing disagreement about the Conservative ideology and plans because income inequality hurts the economy broadly. It does not just hurt those who are most impacted and affected.
We have also seen a second tax shift that has gone on and it is not just increasing the burden to the middle and lower incomes in Canada. We have also seen a tax shift away from corporations under the Conservatives. Just since the Conservatives' taking power, the corporate tax burden has dropped by almost $4.5 billion while personal income tax has increased by $15 billion. When they ask who is paying for all the services that Canadians rely upon, such as the police and the fire and the health and education services, all of those things, and they wonder who is picking up the tab, they see that under a Conservative world view they do not believe corporations should have any part in that. The Conservatives do not think that corporations derive any benefit, I suppose, so why should they pay for it?
We know that good transportation systems, good urban transit, good health care, and good education support not just those who are directly implicated but help the entire economy more broadly, because healthy and smart workers make for a profitable and prosperous economy. However, the Conservative world view says that corporations should not have to pay for any of that, that individuals should pay more and more, and we see that in the numbers.
The Conservatives are entitled to their own opinion on this issue, but they are not entitled to their own facts. The facts speak clearly and loudly that there have been increasing shifts in the burden of taxes away from the rich to the middle class and lower incomes and away from corporations to the individual. Those two shifts have been very destructive to millions of Canadian families and, I would argue, have hindered the Canadian economy writ large.
We wish that the Conservatives would at least take the Hippocratic oath and just promise to please do no harm, because they have made things bad and they now propose to make things worse. They somehow believe that the answer to income inequality is to have more income inequality. The suggestion from the current finance minister is that this type of income-splitting scheme, which is going to cost the treasury upward of $5 billion and only benefit less than 15% of Canadians, and will only benefit the 15% of Canadians who least need the help, is a good plan for Canada.
I will give the Conservatives credit for this. They have somehow managed to unify right- and left-thinking economists in this country. This is a rare feat. This is kind of hard to do, because if we put three economists in a room, we end up with five opinions, but on income splitting the Conservatives have managed to bring all the economists to one side, whether they are progressive or more conservative thinkers. As the C.D. Howe Institute said, this policy does more harm than good. It has also garnered a certain amount of attention from Canada's leading papers. Let me read a couple of quotes.
The first one is in the Ottawa Citizen, which states:
Income splitting is a tax cut for the rich....
There are many ways in which Canada could spend [this money].... We could come up with tax policies to help low and middle-income citizens. We could cut taxes across the board, for all taxpayers, instead of using the tax system to make value judgments about which kinds of families should get tax breaks.
Let us talk about which kinds of families those are. Who would benefit is a relatively short list that one can quickly and easily define. As the Broadbent Institute calls it, it is the Mad Men family. It takes us back to the 1950s, maybe the 1960s, where there was one income earner who was earning quite a bit of money and the spouse earning very little. That is who would benefit from this.
Who would not benefit is a long list, and we should go through it. There will probably be a bunch of Conservative ads on this, if history is any teacher, and a lot of Canadians might think that they can see themselves benefiting, maybe it applies to them and will help out their families. This would not help people whose kids are over 18. It would not help people who do not have kids. Imagine that. It would not help people who are not married and with kids under 18. It would not help people who are married with kids under 18, but are in the same income bracket. All of the people I just listed would get no benefit from this scheme whatsoever. When we start to whittle it down to find out who it would actually benefit, more and more we see that it would benefit people who do not actually need it.
This is not just a question of economics; it is a question of morality.
After years of deficits, we will finally have a surplus of approximately $5 billion to $6 billion. Now the question is: how does the government want to use this money to help Canadians?
The Conservatives made a promise during the 2011 election campaign. However, all of the facts are contrary to what the Conservatives claim their intentions are. The new is saying it is an excellent idea.
There is something in government that we should all adhere to that talks about evidence-based decision-making, but with Conservatives, more and more there is decision-based evidence-making. What they do is make a decision based on their ideology or some hope in the midst of an election to gain a few more votes and pull the wool over Canadians' eyes, and then they reverse themselves and try to find some evidence to support that ideology, even if it does not exist.
I understand that the Conservatives are unlikely to listen to the editorial board of the Ottawa Citizen or perhaps The Globe and Mail that says income splitting needs to be reconsidered or abandoned in favour of a better use of surpluses, that if the government wants to cut taxes, this is not the way to do it, or that the Tory proposal was ill-considered from the start.
Maybe they would listen to the C.D. Howe Institute, as they are strong supporters of it, who said:
The splitting proposal would significantly raise marginal effective tax rates for most lower-earning spouses, thus imposing barriers for working or returning to work; this would make married women more vulnerable by reducing their work experience.
And if the objective is to provide support to families in raising children, it would distribute most benefits where they are least likely to be needed.
The C.D. Howe Institute said that if this is the target for the Conservatives, if this is who they are trying to help, then this policy will not help.
There is something in the midst of that quotation that is important, another inequality that would be perpetrated by the Conservatives, that is:
...thus imposing barriers for working or returning to work; this would make married women more vulnerable by reducing their work experience.
This would put further pressure on women to not enter or re-enter the workforce. Why would the Conservatives want to do that when all we hear from economists, the banks through the progressive side, from the manufacturers association, from basically every key group in the Canadian economy, is that we need more women in the workforce, we need women who have left the workforce to come back in and to have that choice? The Conservatives knowingly would invoke a policy that would resist that and would say no to that.
We know that women on average earn 16% less than men in Canada. That is a deplorable fact, but that fact should have some bearing on the way the Conservatives design tax policy. If women are earning a significant amount less than their male counterparts on average and they are married and may even possibly benefit and fall into that rare 14% of this category, the pressure would be on them to stay home because they are earning less on average. The Conservatives know this.
They may have a Leave it to Beaver kind of world view, a throwback to Ward and June Cleaver and that all things will be good, and that is how the world ought to be oriented. I know there are some Conservatives who believe that. This is 2014. This is an idea that most right-thinking people, most progressive people, have long since left behind. The Conservatives say that maybe the only place for a woman is in the home or something. We believe a woman's place is in the House of Commons.
This policy explicitly supports the Conservative world view, which we think is wrong. They are trying to do some social engineering here, through the tax code, and we know that the Conservatives love their boutique tax credits. They like to tell Canadians how to think and shop and what programs to put their kids into and little incentives here. They love to put their hand in the market and put their hand on the scale. They like some free market but not all free market. They like to intervene on mortgage rates and all sorts of things and interfere. I often imagine what it would be like if a New Democrat finance minister phoned up the banks and asked them to change their mortgage rates.
Let me quote my departed friend because I think the voice of Mr. Flaherty, God rest his soul, is important in this debate. Before he left the finance minister's office Mr. Flaherty had some strong opinions about this particular policy we are talking about today, about income splitting. If nothing else, if none of the facts give any of my Conservative colleagues pause or none of the opinions held by the leading economists in this country about how bad this policy is, maybe the words of Mr. Flaherty might.
It benefits some parts of the Canadian population a lot. And other parts of the Canadian population...not at all.
What he was talking about is that 86% number, the fact that this policy is so directed at so few as to not be worth the $5-billion price tag.
I know the Conservatives feel like they somehow are entitled to their position in government and that the next election, within a year, cannot come too soon. We see this with governments. Governments age very badly, the current government being a great example. The arrogance and entitlement seems to be something that almost inherently is affected in this place. The fact that the Conservatives would go into that election saying that they are going to wed themselves to this particular policy, as bad as it is, as unequal as it is, as ineffective as it is at helping Canadians but simply out of hubris and pride, shows just how far they have fallen away from their roots of responsible and accountable government.
If the government has some sort of assessment of what this program would do for Canadians, that is much more than the 14% or 15% of Canadian households that would benefit by the income-splitting scheme or that it has not been skewed to the most wealthy of Canadians, then I look forward to the debate today. I know my colleagues, the New Democrats, look forward to hearing the evidence as to why this is such a great scheme and why spending $5 billion at the federal and provincial levels is a great idea.
It is remarkable that so many Canadians would be excluded. When Conservatives are on the doorsteps in the next election telling people that they have a plan for them, if they are talking to a person who is not married, then I guess they will have to move on to the next door. If they come to a door where the household has children older than 18 who have moved on, then they have to move on to the next doorstep. If at the next door there is a single parent, and I was raised singly by my mom, that parent will not benefit from this.
I would think that if we were to spend this kind of money to try to target and help families, which is what the Conservatives are claiming to do with this policy, then we would try to help those families that are struggling to make ends meet. We would try to help those families that, for more than 30 years, have suffered through growing inequality and that, under the Conservatives, have seen so much less of the benefits.
I have listed the statistics before, but I will do it again. Out of the Conservative tax breaks, the bottom 20% got around 6% of the benefit, and the top 20% got 36% of the benefit. Maybe that is another golf membership or jacuzzi in the backyard for some, but for those families struggling to pay the bills, it is offensive that the Conservative government keeps ignoring the basic needs of families trying to get their kids to school and offer their children better hope.
For the first time in many generations in our country, all the evidence is pointing to the generation following having a lower quality of life than what we are experiencing right now. If there is any wish parents have for their children, it is that they will have equal or better opportunities than the parent did. However, the opportunity gap grows with the income gap. The gap in opportunity that is afforded to middle-class and working-class Canadians and their children is growing. The gap in accessing better education and training, to that first job, to get that first business loan to start that new enterprise, is growing.
As was once said by an American politician, it becomes a society of the haves and the have mores. Under this policy, that is something the government is going to promote.
The government will say that those who already have great resources, who have benefited greatly by living in this society and prospering through their own hard work or through some endowment are going to get more under the Conservatives because they feel they deserve more for just being who they are. However, those in the middle and lower incomes will get less. They will access less and their services will be cut because we know what the Conservative government has been doing. It is lowering expectations, lowering services, reducing health transfers and gutting environmental policies. It is doing all of this in some nefarious scheme to say to Canadians that they should not expect much from government, particularly if one is so unlucky to have been born into the middle or lower classes.
One of the concerns that economists are expressing to us is what they call a “stratification” of the economy. Canada, for many generations, has enjoyed the possibility that, regardless of where or at what income level one was born, there was a possibility that one could improve one's lot through hard work and dedication. To take that hope away from people is more than discouraging; it is despicable.
This is something that no government should promote. However, we hear it time and again from across the political spectrum, from economists to the C.D. Howe Institute to the Broadbent Institute to the Canadian Centre for Policy Alternatives to Conservative economists and left-wing economists. They agree that this program, this $5 billion income-splitting scheme will offer benefit to very few people.
The New Democrats oppose this proposal because it disproportionately helps those who do not need it and hurts those who need a hand. As New Democrats, there is nothing more fundamental for us, it goes to our DNA, we believe the role of government is the thing that we do when we come together to accomplish that which we cannot accomplish alone.
We look to help our neighbours. We look to care for our neighbour's children, not cast them aside. We do not invoke policies based on pure ideology to gain a couple of points in an election poll, rather than design government as it should be, based on sound evidence.
A progressive government, in perhaps a year or even a little less, will have the opportunity to offer Canadians just that.
Mr. Speaker, I would first like to clarify that it is my absolute pleasure to split my time with the .
I am pleased to respond to the extremely misguided motion proposed by the hon. member for in regard to income equality.
In his earlier comments, it seemed that he was putting women in the kitchen. I am proud to say that I am a woman. I am a member of the House of Commons. I am a chartered accountant, and I am a mother. I am proud of all of these roles. Apparently, the hon. member is not comfortable with that kind of diversity in our caucuses.
Today I would like to reassure the hon. member that our government's top priority remains focused on creating jobs, economic growth, and long-term prosperity for future generations, for our children. At the same time, we are ensuring that all Canadians have the opportunity to share in the benefits of a strong economy. That is progressive.
I would like to highlight what our government's economic action plan has done to reduce taxes for Canadian families like members' families and mine, since taking office in 2006.
I am not surprised that the NDP is against a tax cut to put money in the pockets of Canadians. Everyone in the House is well aware of that party's record for opposing tax relief for Canadians. This attitude is precisely why the NDP, in all of its socialist wisdom, knows how to spend money better than those who earn it. We disagree.
I would like to talk about our government's strong record of tax relief for Canadians, both low income and middle income.
Since we have formed government, Canadians have benefited from significant broad-based tax cuts. These tax reductions have given individuals and families more flexibility to make the choices that are right for them. The average Canadian family of four will pay close to $3,400 less in taxes, this year and every year to come.
These significant savings come from a variety of sources, such as a reduction in the GST rate to 5% from 7%, a tax cut that the Parliamentary Budget Officer noted is progressive and that significantly helps lower-income families. Of course, the opposition voted against this significant relief for low-income Canadians.
We also increased the amount that all Canadians can earn without paying federal tax, a measure that has helped low and middle-income Canadians across the spectrum. Again, it was opposed.
We took 380,000 Canadian seniors off the tax roll completely because they no longer have to pay federal taxes. I am sorry to say that, at least in my province, they still pay significant provincial tax.
Our government introduced the working income tax benefit to help low-income Canadians over the welfare wall. Yet again, this was opposed by the opposition.
We have also introduced the universal child care benefit, which is helping young families across the spectrum. Again, it was opposed, with the Liberals famously saying that all it would do is to allow families to buy more beer and popcorn. That is not what families do in my riding. They invest in their children and their children's future.
It boggles the mind just how ideologically opposed the opposition is to allowing Canadian families to have more money and to make the decisions that are right for them.
However, that is just the beginning.
Our Conservative government has also introduced numerous targeted tax reduction measures. For example, we have helped families by introducing the children's fitness tax credit and the children's arts tax credit.
We have introduced the registered disability savings plan to help individuals with severe disabilities and their families save for their children's long-term financial security.
We have enhanced support to caregivers of infirm, dependent family members by introducing the family caregiver tax credit.
We have provided annual targeted tax relief for seniors and pensioners by increasing the age credit and the pension income credit amounts.
We have provided further support to students, especially to their families, because a lot of families help their children to get through university. We have now exempted scholarship income from taxation. That was a big change. We have introduced a textbook tax credit, and we are making registered education savings plans more responsive to changing needs.
We have introduced pension income splitting for seniors, which has had a huge and helpful impact on so many seniors, and we have introduced the public transit tax credit, to encourage public transit use and again put more money in the pockets of the people who use it.
We have introduced the tax-free savings account, the most significant change to taxation since the introduction of RRSPs, in 1957. In total, our government will have provided almost $160 billion in tax relief for Canadian families and individuals over the last six-year period.
Let me point out to the opposition that Canadians, at all income levels, are benefiting from tax relief introduced by our government, with low-income and middle-income Canadians receiving proportionately greater relief than higher-income Canadians. In fact, the federal tax burden is the lowest that it has been for all Canadians in 50 years. More than one million low-income Canadians have been completely removed from the tax rolls as a result of the tax relief provided by our government. That leads to real income equality.
Canadian families, in all major income groups, have seen increases of about 10% or more in their real after-tax, after-transfer income, since we, the Conservative Party of Canada, have formed government. Canadian families in the lowest income group have seen a 14% increase in real income.
Moreover, Canadian families in all major income groups had higher income, after taxes, transfers, and inflation, in 2011, than they had prior to the recession. That is great news for Canadians.
The share of Canadians living in low-income families has also fallen to its lowest level in three decades. Canadian children from poor families have a higher probability of moving up the income scale than similar children in such countries as the United States, the United Kingdom, France, or Sweden. This confirms that our low-tax plan for job creation, economic growth, and long-term prosperity is in fact working.
Going forward, the government will keep taxes low and will examine ways to provide further tax relief for Canadians, while returning to balanced budgets.
Of course, the leader of the NDP claims that the average Canadian family earns 7% less than they did 35 years ago. This figure is wrong and is based on median market income of Canadians before tax, before transfer income. This is not new math; this is bad math. We have to take all of the factors into account when we do any kind of calculation.
This figure does not adjust for the fact that the average number of people in Canadian families has actually declined over the last three decades, and overlooks the impact of taxes and transfers. Controlling for the changing composition of Canadian families and accounting for the impact of taxes and transfers, the income of middle-income families has increased by 31%, since 1976.
Our government has shown that we are providing the support that hard-working Canadian families need. Our recent budgets have built upon our record of supporting families and communities while establishing a path for returning to balanced budgets.
Economic action plan 2014 supports families by keeping taxes low; better recognizing the costs of adopting a child; helping to lower the prices of consumer goods; better protecting financial consumers, including seniors; and promoting low-cost and secure pension options.
Our approach is working. I am very optimistic about our prospects as a nation, and I am very optimistic about the opportunities that will be available because of economic action plan 2014, for our children, for the future, for our seniors, and for Canadian families, who now have more money in their pockets.
Conservatives believe that Canadian families know how to spend their money. They do not need the NDP to spend it for them.
Mr. Speaker, I am pleased to have this opportunity to address the motion before us.
I would like to take my time today to describe how our government's economic policies have strengthened Canada's middle class. We all know that a strong middle class is vital for Canada's economy. However, while the NDP and Liberals claim to advocate on behalf of the middle class, it is our government that is delivering results. Consider the following: a recent Statistics Canada study revealed that since this government has taken office, the middle class has flourished significantly, and I quote:
The median net worth of Canadian family units was $243,800 in 2012, up 44.5% from 2005 and almost 80% more than the 1999 median of $137,000, adjusted for inflation.
Another study, one from The New York Times, indicates that Canada's middle class is better off financially than that of the U.S.:
After-tax middle-class incomes in Canada—substantially behind in 2000—now appear to be higher than in the United States. Further, since 2006, Canadian families in all major income groups have seen increases of about 10% or more in the take-home incomes.
These statistics are remarkable in their own right, but they are even more impressive when we consider the global economic challenges Canada has navigated during this period. Indeed, we experienced the worst global recession since the Second World War, yet our economic performance during both the recession and the recovery is among the strongest in the world.
Over one million net new jobs have been added since the height of the recession, the vast majority of which are full-time and in the private sector. This is one of the strongest job creation records in the G7.
At a time when Canada's financial systems were brought to the brink of bankruptcy, Canada's banks remained the soundest in the world. When other countries increased taxes, our government kept taxes at record lows. In fact, the federal tax burden is at its lowest level in 50 years.
Unlike the opposition, we believe that leaving more money in the pockets of hard-working Canadian families is a good thing. That extra money provides flexibility to make the choices that are best for them. It also helps build a solid foundation for future economic growth, more jobs, and living standards for all Canadians. That is why our Conservative government has proudly introduced close to 180 tax relief measures since taking office, reducing taxes in every way the government collects them.
What is more, Canadians at all income levels are benefiting from tax relief, with low- and middle-income Canadians receiving proportionately greater relief, as the Parliamentary Budget Officer recently confirmed. Indeed, Canadian families in all income groups have seen increases of about 10% or more in their take-home pay since 2006. In 2014, the average Canadian family is saving close to $3,400 in taxes, while one million low-income Canadians have been removed from the tax rolls altogether. This is historic tax relief.
Unfortunately, the tax-and-spend opposition continues to oppose each and every one of our tax cuts. Let me take this opportunity to remind it of some of the tax reductions it voted against: cutting the lowest personal income tax rate to 15%; increasing the amount Canadians can earn tax free; reducing the GST from 7% to 5%, putting more than $1,000 back in the pockets of an average family of four in 2014; and establishing the landmark tax-free savings account, the most significant advance in the tax treatment of personal savings since the RRSP.
In addition, the opposition has opposed a variety of tax credits that recognize the costs borne by hard-working Canadian families, credits like the child tax credit, the children's fitness tax credit, the children's arts tax credit, the family caregiver tax credit, and the first-time home buyers' tax credit. They were against other target measures to help Canadian families, including the home buyers' plan, the adoption expense tax credit, and the medical expense tax credit.
We have also enhanced benefits for families and individuals, which the opposition also voted against. These include the universal child care benefit, which offers families more choice in child care by providing up to $1,200 a year for each child under age six, and the working income tax benefit.
More recently, in economic action plan 2014, our government proposed a number of measures to expand tax relief for health care services. These included exempting the professional services of acupuncturists and naturopathic doctors from the GST and HST.
To support people with disabilities, our government introduced the registered disability savings plan, or RDSP, in budget 2007. The RDSP is widely regarded as a major policy innovation and positive development in helping to ensure the long-term financial security of those with severe disabilities. Since becoming available in 2008, over 81,000 RDSPs have been opened.
These important measures are a handful of examples illustrating how our government has responded to the needs of Canadian families and has helped Canadians keep more of their hard-earned money.
However, as we frequently see, the opposition members reject our efforts to lower taxes for Canadians. They prefer that we adopt dangerous economic policies such as a carbon tax that could kill businesses, investment, and jobs and hurt Canadian families to further their own misguided agenda. We will not engage in reckless spending that would inevitably be paid for by middle-class families. Unlike the opposition, we believe in spending taxpayer dollars efficiently, effectively, and only when necessary. After all, Canadian families know the importance of living within their means, and they expect governments to do the same. That leads me to my final point.
Perhaps one of the most profound ways we are helping Canadians is by making sure that future generations will not be paying for past obligations of their parents and grandparents by returning to balanced budgets in 2015. By returning to surplus, we would ensure solid, stable prosperity for all Canadians well into the future. Indeed, balancing the budget and reducing debt would ensure that taxpayer dollars would be used to support important social services such as health care rather than for paying interest costs. It would preserve Canada's low-tax plan and allow for further tax reductions, fostering growth and the creation of jobs for the benefit of all Canadians. It would also strengthen the country's ability to respond to longer-term challenges, such as population aging and unexpected global economic shocks.
This government understands the importance of middle-class Canadians, and as our actions have shown, we have listened and we have ensured a middle class for this country that will continue to lead the world. We will continue with our low-tax plan, unlike the tax-and-spend Liberals and New Democrats, whose high-tax, high-spending agenda would threaten jobs and set working families back.
Mr. Speaker, I rise this morning to speak on this NDP motion on income inequality and income splitting.
This is a two-part motion. The first part is a statement that acknowledges the harmful effect of the increase in inequality on Canadian society and tries to assign blame solely to the Conservative and Liberal governments. The second part is a condemnation of the Conservatives' election promise on income splitting.
I would like to address these two parts in order.
First, in terms of income inequality, I agree with my colleagues in the NDP that rising income inequality is a crucial issue for Canadian families. I also agree that it is harmful to our society and that as members of Parliament, we ought to address it. That is why two years ago, I moved a private member's motion directing the House of Commons finance committee to conduct an in-depth study of income inequality. In the wording of that motion and in my speeches in this place I avoided partisanship and as such obtained support from members of Parliament from all political parties, including sufficient support from Conservative members to actually pass that motion.
The purpose of that study was to identify solutions and to put Parliament on a path of progress toward greater equality of opportunity in Canada. At the time, I asked that all members of the House put partisanship aside and work together on this issue, and we were successful in having the finance committee conduct a study. In the end, the finance committee spent just a small fraction of its time on income inequality compared to its other studies. Despite that, the committee's report to the House identified a number of credible solutions that would improve equality of opportunity for Canadians across the country. It included solutions such as increasing the availability of affordable early child education and care programs, a recommendation that was supported by a variety of witnesses, including the Canadian Medical Association, Canada 2020, TD Economics, and the Canadian Council on Social Development.
The report also showed the extent of the problem. It showed that income inequality and equality of opportunity have worsened in Canada over the last generation. The fact is that they have deteriorated under the federal and provincial governments of all parties.
Let us be clear that federal and provincial governments have a shared responsibility for social investment and tax policy and have a responsibility to create conditions for social equity and economic growth and opportunity. This shared responsibility includes all governments, federally and provincially, including NDP governments, although the motion specifically chooses to say “Liberal and Conservative governments” without acknowledging that in fact this is not a partisan issue.
If we are going to deal with this issue effectively, we need to accept that income inequality has grown in Canada, just as it has grown in most of the industrialized world. There are a number of reasons, but some countries are doing a better job than others in maintaining equality of income and equality of opportunity, and those best practices and ideas are what we should be looking at. If we look at Canada's record of rising income inequality, we see that our colleagues in the NDP have taken a selective view of the facts. I encourage them to avoid this temptation, because if we look at the evidence available to us, we get a different perspective.
We can look at Canada's provincial Gini coefficients. StatsCan tracks the annual Gini coefficients for every province back to 1976. Members of the House will already know that the Gini coefficient is the most common way to measure income inequality, with zero representing a completely equal society in which everyone receives the same income and one representing a society in which all the income would go to one person or family.
When the New Democrats look at these Gini coefficients, they want to focus on total after-tax income. This measurement looks at the inequality that remains after governments have redistributed income through taxes and transfers. The drafters of today's motion and anyone else who wants to follow along at home can find provincial Gini coefficients for total after-tax income on the StatsCan website in CANSIM Table 202-07051.
The data show us that when the NDP was most recently in government in B.C., from 1991 to 2001, income inequality among B.C. families went up by more than 15%. That is a drastic increase, to borrow a phrase from today's motion. That is after taxes and transfers are factored in.
For individuals living in B.C., the Gini coefficient went up by more than 12%. That is a drastic increase. Ten years of NDP rule left B.C. with the highest rate of income inequality of any province in Canada. That is despite the fact that the NDP inherited the fourth-lowest rate of income inequality when it took office in B.C. Today B.C.'s Gini coefficient sits slightly lower than it did when the NDP left office. Thankfully, I guess, if we were in the blaming business, which I do not think we ought to be, the current Liberal government has been able to undo some of that damage when it comes to income inequality.
The NDP record on income inequality is not much better in Saskatchewan. After 16 years of NDP rule, the Gini coefficient for Saskatchewan households climbed by more than 8%, which is another drastic increase. Even in Manitoba, the most recent data show that income inequality for households is up by 2.5% since the NDP have taken office.
I am only using these examples to point out that the NDP ought not try to make this a partisan issue, because by doing so we distract this House from dealing with the issue itself. The NDP has intentionally tried to prevent a consensus in this House on the issue of income inequality by playing politics and partisanship with us.
The Conservatives would say that income inequality is not an issue. They are wrong. The NDP will try to make it an issue of class warfare and try to divide it along party lines. I think that is also wrong if we are serious about the issue. The issues of rising income inequality and inequality of opportunity are too important and the consequences of inaction too dire for us to be engaged purely in partisan bickering. Canadians will be better off if we work together to understand how we can reduce income inequality and strengthen equality of opportunity. Therefore, I encourage all members of this House to accept the record of their respective parties and let us focus on the future and develop the best public policy responses to this important issue. We need to move on together and work on solutions that can strengthen equality of opportunity.
We also need to address what is probably the worst example of inequality in our country, aboriginal and first nations Canadians. There is a demographic, social, and economic time bomb represented by, among other things, the fact that 400,000 young aboriginal and first nations members will be entering the workforce in the next 10 years. If they have the skills they need to compete and succeed, it would be a good thing for our economy. If they do not, which is the case with many, it will be of dire consequences to our economy and our society. We need to close the first nations and aboriginal non-first nations education system funding gap. That is something we ought to all agree on across party lines.
These are important issues, and the cost of inaction is significantly high. We have heard from the Conference Board of Canada and from the former dean of the Rotman School of Management, Roger Martin. We have heard from the former governor of the Bank of Canada, now Governor of the Bank of England, Mark Carney. All have said that those who say income inequality is not an issue are wrong and that those who want to make it an issue of class warfare are wrong.
We have to focus on equality of opportunity. They have all warned us that rising income inequality and inequality of opportunity will limit economic growth and prosperity and that rising inequality will tear at our social fabric. It causes future generations to lose hope, and it is notable that for the first time a majority of Canadians now believe that today's generation will be worse off than their parents. Rising inequality weakens the public trust in our institutions. As parliamentarians, we must be careful and avoid policies that would lessen equality of opportunity or deepen inequality.
Inequality can rise when governments lose sight of how their policies affect equality of opportunity. For example, the proliferation of non-refundable tax credits is contributing to greater inequality. These tax credits exclude low-income Canadians from any benefit. Another example of a measure that will increase income inequality is the Conservatives' income-splitting scheme, which is, of course, the subject of the second part of today's motion.
In the last general election, the Conservatives vowed to bring in income splitting as soon as the budget was balanced. It was a cornerstone of their 2011 election platform. Some estimate its cost at $3 billion per year, and I have heard potentially $5 billion. It is clearly the Conservatives' biggest election promise so far.
During the election, the said that once the budget is balanced, income splitting “...should be one of our highest priorities”. According to the fine print, couples with children under 18 would be allowed to split up to $50,000 of income each year for tax purposes. However, since the election, both the C.D. Howe Institute and the Canadian Centre for Policy Alternatives have published thorough reports showing massive flaws in the Conservatives' plan. They have shown how the Conservatives' promise to bring in income splitting would disproportionately benefit high-income earners at the expense of the middle class and low-income earners. The C.D. Howe Institute has called the Conservatives' income splitting a flawed idea that excludes 85% of Canadian households from any benefit whatsoever.
However, it is not that these low- and middle-income Canadians would be just completely left out of the deal; worse than that, they would end up having to pick up the tab through reductions in social investments that could benefit them, and ultimately they would pay higher taxes in other ways. In the words of the C.D. Howe Institute report, the Conservatives' promise:
...would offer no tax reduction for the great majority of Canadian households, while the government revenue loss would lead to either a curtailment of public services or an increase in their tax burden to make up the shortfall.
In other words, most Canadians will pay for this expensive Conservative tax cut through higher taxes or reduced services or both.
Let us look at some examples of how a family might or might not benefit under the Conservative scheme.
In the Conservatives' budget, they like to give examples of how a family might be impacted by their plan. They even give these family members names. In fact, if we flip to page 190 of the latest budget, we will see that Blake earns $48,000 and Laurie earns $72,000. Blake and Laurie and their two children represent the Conservatives' idea of an average middle-class family. In fact, they are on the higher end of the average, and the Conservatives' claim about their savings from previous budgets are a bit skewed.
However, even in the Conservatives' idyllic vision of the middle-class family, Blake and Laurie would not get a penny from the Conservatives' expensive promise to bring in income splitting. Even the fictitious family that the Conservatives cite in their budget would not benefit from income splitting.
If Blake and Laurie would not get anything under the Conservatives' scheme, and the scheme costs $3 billion per year or more, then who would benefit?
Well, under this scheme, the , who earns $320,000 per year and has a stay-at-home spouse, would actually save $6,500 per year. Meanwhile, a Canadian who has a stay-at-home spouse and who earns the average industrial wage would save less than $10 per week. Most households would get absolutely nothing, including households run by a single parent, a person who is struggling to make ends meet, who has no one else to rely on, and who cannot access good-quality child care and early learning.
Former finance minister Jim Flaherty understood the shortcomings of this plan when he said in February that income splitting needed a long, hard analytical look to see who it affects and to what degree, because he was not sure that overall it would benefit our society.
Shortly after Mr. Flaherty made this statement, The Globe and Mail agreed. It published an editorial against the idea, saying:
But Mr. Flaherty is right. Income-splitting needs to be reconsidered, or abandoned in favour of a better use for the federal surpluses that should begin to appear next year. If the government wants to cut taxes, this isn't the way to do it.
The Tory proposal was ill-considered from the start.
With their income-splitting scheme, the Conservatives made a major campaign promise that just was not thought through at the time. Today, with the resources of government and the Department of Finance, the whole government approach, and the capacity of government to research the best practice approaches from around the world and develop sound policy, there is no excuse for the Conservatives not to step back from this and develop a better way to reform our tax system to render it more progressive. We are not in the heat of an election right now.
We have not had a significant study of our personal tax system since 1971 with the Carter commission. Everything has changed in the decades that have ensued in terms of both the global economy and the Canadian economy. Surely there is room for a thorough study of our tax system so as to create a tax system that is fairer, more progressive, and potentially even more globally competitive.
We can look at some examples. Germany has a robust economy, but at the same time, it does not have the same levels of income inequality that we have seen grow in Canada. What is it doing in terms of apprenticeship? What is it doing in terms of skilled trades? What is it doing in its tax system that we could learn from?
The Nordic countries are other examples. Scandinavian countries are sound economic models. They have good growth, and even competitive corporate tax rates in many cases. They also make good investments in progressive social policy, like early learning and child care, as examples.
The Liberal Party is open to supporting tax changes that would benefit middle income Canadians. We introduced the working income tax benefit in the last mini-budget in the autumn of 2005 when the member for was finance minister. That was an example of progressive social policy that helps people get over the welfare wall.
The child tax benefit was introduced by a Liberal government but continued and expanded under the Conservative government. It is another example of a progressive tax policy that has benefited a lot of Canadian families.
Compare those with the non-refundable tax credits that I mentioned earlier that do not benefit low income Canadians and do not change people's behaviour. If high income earners have children in hockey, they are going to benefit, but even if they do not receive it, their children would still be in hockey.
We ought to be thinking about the low income families for whom a direct benefit might make the difference toward their children being in an activity that could change their lives and improve not just their childhood but put them on track to a productive and healthy life. These are the people we ought to be most concerned about, because they are falling through the cracks, and that comes at a huge social and economic cost, not just to those families but to all of us.
We cannot support an income-splitting scheme that would help high income earners and shift the burden to the already struggling middle-class and low-income families who are having trouble making ends meet. We cannot support a tax cut that would so clearly lead to greater income inequality and inequality of opportunity.
This brings me to the motion before the House today.
We agree that increasing income inequality and a growing inequality of opportunity is harmful to Canadian society. We agree that the Conservatives' income-splitting scheme excludes the vast majority of Canadians from any benefit whatsoever and that it could lead to greater income inequality.
Finally, the fact is that Canada has seen a drastic increase in income inequality under federal and provincial governments of all stripes. This debate ought not be simply about assigning blame but instead be about recognizing the problem and working together across party lines to find solutions. Therefore, the Liberal Party supports the motion.
Mr. Speaker, I am very pleased to speak to an extremely important issue that I think is going to be one of the election issues in 2015.
We know that this was a Conservative promise, one that was made without much regard for reality or the social impacts of income splitting.
I want to briefly summarize what income splitting is, even though other MPs are generally doing the same. Nonetheless, it is good to go over the basics and the reasoning.
In their 2011 election platform, the Conservatives proposed allowing individuals to transfer a portion of their income to their spouse, to a maximum of $50,000, in order to put themselves in a lower tax bracket. This applies to families with children, of course.
There are several problems with such a measure. At first glance, it seems like a good idea. I think the government is currently trying to rebrand this measure and find a different name for it. We heard the minister of state talk about justice or fairness for families. On the contrary, this measure is unfair to families. If we look beyond the issue of whether up to $50,000 can be transferred, we see that this measure mostly benefits people with high incomes. A number of studies—the most notable of which are those conducted by the Canadian Centre for Policy Alternatives and the C.D. Howe Institute—clearly showed that 85% to 86% of families will not benefit at all from this measure. It will benefit only 14% or 15% of Canadian families. How is that fair? It is not.
Clearly, this is an extremely costly measure for the federal government. It will be extremely costly in terms of the public services that will eventually be lost. The government is responsible for providing adequate funding, but the Conservatives have exactly the opposite philosophy in how they govern.
According to the two organizations' estimates, the measure will cost the various levels of government about $5 billion—$3 billion for the federal government and about $2 billion for the provincial governments. However these measures will benefit less than 15% of Canadians. Why are only 15% of Canadians benefiting? Let us look at those who will not benefit from this measure. I have a whole list. Clearly, income splitting will not do anything for single people because it affects families with children. It will not do anything for couples who do not have any children. It will not do anything for single-parent families, even though they could use a break, because the measure pertains to couples. Clearly, if a person does not have a spouse, income cannot be transferred. This measure will not do anything for families with children over the age of majority, even if those children are still dependants because they are going to school or they have a disability, for example. The taxation system provides for some tax credits in that regard, but the income splitting measure will not do anything for those individuals. Income splitting will not do anything for families where the parents have similar incomes. A family where both spouses are working and earning about $30,000 will not benefit from this measure at all. This measure does not do anything for parents who earn less than about $42,000 because they are in the lowest tax bracket. We can therefore see that the list of couples who will benefit from this measure is extremely small.
As a blatant example of inequity, consider the members of this House who have minor children and whose spouses or common-law partners are stay-at-home parents. We are people who would benefit from that. Here in the House, there are a number of members who are still young enough to have minor children. With our salary and a stay-at-home partner, if we can transfer up to a maximum of $50,000, we would personally benefit from about $5,000 in tax cuts. Do we want the $5,000? In society, that might benefit us personally. However, ultimately, we need the money far less than couples who, for instance, have trouble making ends meet and where each person has a salary of $20,000 or $25,000. Both must work to provide for their family. We therefore must think of the example we have here in this House.
In terms of the list of exceptions, I will move on to the question of good governance.
As I mentioned, income splitting would increase income inequality, since the wealthiest families would be the ones benefiting from it, as only one spouse needs to work and earns a salary that is high enough to provide for the family.
We are also wondering whether, after balancing the budget, the Conservatives are prepared to do without $3 billion in revenue.
The Conservative government often talks about the late Jim Flaherty, former finance minister. However, before he died, Mr. Flaherty had given the Conservative government a serious warning that this measure was extremely risky and that it had to be studied because it would only benefit a few segments of society, leaving out many families who would have far greater need of it.
In our view, this measure is completely inappropriate. At the time, Mr. Flaherty had warned the government that this measure was risky because, if the government wanted to balance its budget eventually, it had to make choices. Does the government want to throw the country back into deficit right away by providing additional tax cuts once it balances the budget, or does it want to use the surplus for other things such as debt reduction?
Since the Conservatives took power—so since the 2005 public accounts were released—Canada's debt has increased from $421 billion to $667 billion. That figure will be even higher this year. That is an increase of $256 billion—or over 60%—since the Conservatives took power. Do the Conservatives want to use the future surplus to pay down the debt? No, they are talking about offering tax cuts, which will create an even bigger deficit.
That is what happened when they lowered the GST from 7% to 5% and we saw our revenues drop by $8 billion a year. In 2008, even before the recession, the Conservatives had started running a deficit as a result of this measure and the additional corporate tax cuts.
The Conservatives brag about being good managers, but at the end of the day, they are the ones who put us in a deficit situation. Aside from the period between 2006 and 2008, when they came to power and eliminated the federal government's fiscal space, the last time a Conservative government introduced a balanced budget was in 1912—yet they brag about being good managers.
My colleague from mentioned the provinces and income inequality, but he ignored the fact that transfers to the provinces were cut by 40%. These cuts obviously made things tough for the provinces. He blames the provinces for the increase in income inequality. He also blames Liberal, Conservative and New Democrat governments for a situation they inherited from the federal Liberal government at the time.
The NDP has a better record on balancing budgets than provincial and federal Conservative governments. The governments of Tommy Douglas, Gary Doer and Roy Romanow introduced balanced budgets for over 10 to 15 years, and meanwhile, the federal government was running deficits under the Liberals and Conservatives.
The NDP is, without a doubt, the party that is most likely to properly manage public finances for the public good and is considered as the party that properly manages taxpayers' money. After assessing the situation, the Department of Finance agrees with us.
The United States has income splitting, and I am certain a Conservative member will point this out. In fact, it is not so much that the U.S. has adopted income splitting, but rather that it has adopted a basic unit of taxation. Unlike Canada, where the individual is the basic unit of taxation, the family is the basic unit of taxation in the U.S. There are historical reasons for that approach.
In the mid-20th century, the United States needed to unify its taxation policies. A number of states considered the individual as the basic unit of taxation, while others considered it to be the family. Eventually, they had to simplify matters. A broad debate on taxation was held, and the outcome was a more or less simplified taxation system.
The process involved defining the basic unit of taxation. The U.S. decided that it should be the family. A number of commissions, including the Carter commission, and several committees studied the issue. The Carter commission was the last great commission to undertake a reform of the taxation system. After two years criss-crossing the country, the commission produced a report, which was greatly watered down by the subsequent Liberal government, this being the 1970s after all, but widely hailed by academics and tax experts. The report recommended that the individual be considered as the basic unit of taxation. This provision allows for a simpler tax system that everyone can agree on.
Now the government wants to allow people to use the family as the basic unit of taxation in some cases and the individual in others. This will further complicate the taxation system, and if only for that reason, this is not a desirable policy option.
The government boasts of having already introduced pension income splitting. The tax cost of this initiative is already higher that originally forecast. At the end of the day, as a result of pension income splitting, Canada will lose $1.2 billion in tax revenues while the provinces overall stand to lose about $500 million.
This example gives us a pretty good idea of what income inequality would look like. Let us consider for a moment how this measure affects seniors. If we divide pensioners into two groups, one-half having the lowest incomes and the other half having the highest, we see that the half with the lowest incomes benefited from only 2% of the tax cuts as a result of pension income splitting. That means that the half with the highest incomes benefited from 98% of the tax cuts. What is more, the 10% of pensioners with the highest incomes benefited from 31% of the tax cuts.
The example of pension income splitting illustrates the scope of the problem and how the income gap will widen, not only as a result of this measure, but also as a result of the Conservatives’ proposed initiative.
Now then, will the government move forward with this initiative? It will be included in the next election platform. However, if we are to believe the current and certain MPs, it is clear the government appears intent on moving forward. Moreover, instead of addressing additional income inequality issues, it is starting to rebrand to economists, journalists, the media and society as a whole the totally unfair policy of income splitting, which has now acquired a bad reputation. It will rebrand it as an exceedingly fair policy.
I am truly flabbergasted to see how blind this government is to such clear facts and figures. I am far less hopeful than my colleague from , who spoke just before me, as to the will of the parties in the House to find some common ground for dealing with income inequality. It is clear that the Conservatives are turning a blind eye to this reality. For them, it is a matter of facilitating access to education and training. We are not opposed to that, but it will not be a cure-all. Initiatives have been taken in the past, and continue to be taken by this Conservative government and by various provincial governments, that increase the effects of income inequality. Some of the proposed initiatives, such as income splitting, will increase the problems, even exponentially.
When I talk about economists, it is quite interesting to see where these negative comments about income splitting are coming from. It is rare to see the Canadian Centre for Policy Alternatives and the C.D. Howe Institute agree, not only on the fact that this policy is harmful but also on the fact that it would have some financial ramifications.
I have a question for my colleagues who always boast of their sound management. Do they really want to take action that will once again put the federal government in a deficit situation, for the sole reason of bringing in a tax break that will benefit only 15% of Canadian households? Would they not rather show good governance and start tackling urgent issues?
We do not have any problem whatsoever with tax cuts for middle-class families, for families that need a break. However, such measures must be reconciled with measures to reduce the debt, which, may I remind you, has ballooned by 60% since the Conservative government was elected in 2006. Steps will also have to be taken after that to rebuild public services that have been devastated in recent years, especially since 2006.
Consider R and D, the environment and immigration, to name a few areas. All of these services to Canadians have been drastically cut, jeopardizing in the process services for which Canadians pay taxes and to which ultimately they are entitled. I suspect that one of strategies of the Conservative government, and of Conservatives in general, is to ensure a mismatch between the taxes paid to different levels of government and the services that Canadians receive for their tax dollars.
I know that a debate on immigration took place in the House until very late last night. I was astounded by a statistic I learned of during the 2013 holidays—if I am not mistaken— regarding a call centre in Montreal that was set up to respond to Canadians requiring a visa or experiencing immigration problems. The number of employees at the call centre was so drastically cut that 91% of telephone calls in December 2013 were lost in the system and never got through to an agent. In other words, only 9% of calls were answered by an agent.
How about we talk about the cuts to science made by the Conservative government? I know what the ramifications of these cuts are because there are a lot of scientists in my riding. Some scientists work at the Maurice-Lamontagne Institute. Others work at the Institut des sciences de la mer, ISMER, at UQAR. Still others work in a number of private sector companies that come under the umbrella of the Technopole maritime du Québec. A hub of expertise has sprung up in Rimouski and the lower Saint Lawrence valley in marine biotechnologies and maritime technologies in general. The cuts made by the government to the Maurice-Lamontagne Institute have resulted in an exodus of scientists from the region. This has hurt not only the region's economy, but also Canada’s reputation in the sciences.
Additionally, there were a number of measures imposed as part of the overhaul of the employment insurance system that are having a major impact on regions where the economy still relies heavily on seasonal employment. These measures are intended to diversify the economy, but that takes time. In reality, the measures imposed by the Conservative government are making the regions in question poorer. Ironically, the Conservatives’ slogan in 2011, at least in Quebec, was “Our regions in power”. Almost every measure imposed by the Conservative government has ended up hurting the regions and making them poorer.
I know that this issue will be a core plank of our election platform in 2015 in the lead-up to the next election. If what we are seeking is good governance, every measure to do with budget surpluses should be divided between logical tax cuts that benefit a broad cross-section of society rather than simply 15% of people, as income splitting would do, paying down the debt and reinvesting in a number of public services that have suffered considerably as a result of this Conservative government’s cutbacks.
This, therefore, is the principle of good governance that we espouse, and it corresponds to the good governance models of our New Democratic governments in the provinces. I hope that the government will listen to reason and scrap this ill-advised policy of income splitting in favour of adopting fiscal and economic policies that will benefit all Canadians and not just a small segment of the population.
Mr. Speaker, I am pleased to rise to speak to the official opposition's motion.
The government is obviously against the motion. The premise of the motion is incorrect. It states:
That, in the opinion of the House, the drastic increase in income inequality under recent Liberal and Conservative governments harms Canadian society...
There is no drastic increase in income inequality. Income inequality has not increased in Canada in recent years. On the contrary, income inequality has decreased in Canada in recent years.
The problem is that the motion is based on the NDP's political ideological. It is not based on data, facts or statistics, which clearly show that income inequality has decreased in Canada.
In fact, contrary to what the motion would suggest, we have seen a reduction, not an increase, in so-called income inequality in Canada. The truth is that in the past many years, the Canadian economy, notwithstanding the impact of the largest global recession since the 1930s, has done quite well, as a rising tide has lifted all boats.
We see that Canadians are generally better off in terms of their income. Canadians overall are significantly better off in terms of their net worth and assets. The lowest-income Canadians are better off as well. In fact they are closer to the mean than they used to be.
Child poverty is at an all-time low in Canada. The number of people living below the low-income cutoff, often referred to as the poverty line, has diminished. The government has eliminated nearly one million people from the tax rolls altogether, so they do not have to pay taxes, by increasing exemptions and other progressive measures in the tax system.
The entire premise of the NDP motion is incorrect. In fact, families at all income levels had higher incomes in 2011 than prior to the recession, according to Statistics Canada. With robust income growth, the share of Canadians living in low-income families was at 8.8%, according to the most recent figures, the lowest level in three decades. Let me repeat that. The number of Canadians living below the low-income cutoff line is at its lowest level in 30 years.
That is not my opinion. That is not a figment of my imagination. That is a fact based on data from Statistics Canada. I would invite my friends from the NDP to actually contend with the facts on this matter, rather than reciting stale and misleading talking points.
That is not to say that we should be satisfied.
Of course, as a society, as a government and as parliamentarians, we must always work to improve the living conditions and economic opportunities for all our citizens, including, and particularly, those living with low incomes.
That said, we need to recognize that we have made progress and that the percentage of Canadian families living below the low-income cutoff has diminished.
Indeed, the median real income of Canadians, and this is very important, according to the recent study conducted by the Luxembourg Income Study and The New York Times, hardly a Conservative house organ, indicated that for the first time in history, Canadian median family incomes have exceeded those of the United States.
The American dream was always considered the gold standard in terms of middle-class prosperity around the world. However, according to this recent exhaustive study of all the available data, the Canadian middle class is better off than its counterpart in any other major developed economy in the world, having exceeded that of the United States. This did not happen by coincidence or accident. It happened, of course, because of the hard work of Canadians but also because of the prudent economic policies of Canadian governments, and I would submit this government in particular, which has reduced enormously the tax burden on Canadian families. We have reduced the tax burden, through 160 separate tax relief measures, by an average of $3,400 for an average family of four per year. That is not cumulative. That is to say that year after year, the average Canadian family is paying $3,400 less in federal taxes than it did when our government came to office, and that happened because we made necessary but prudent decisions to better manage our spending and decided that taxpayers would come first.
Here is the basic problem with the motion in front of us. The NDP's view is that government should come first and that we should feed the insatiable appetite of government bureaucracies and programs by taxing people more. That is what drives policies that lead to unemployment, stagnant incomes, and fewer economic opportunities.
Fundamentally what this government believes at its core is that hard-working families know better how to spend an extra dollar than politicians or bureaucrats do. New Democrats have a different view. It is a defensible view. It is a view they sometimes obscure at election time, but their fundamental view is that they know better, as politicians, how to spend that extra dollar than working moms and dads do.
Take, for example, the issue of daycare. The NDP and its Liberal friends on the left believe that we should raise taxes on hard-working Canadian families, so that they have to work harder and their after-tax disposable income shrinks, so that we can take that tax revenue, coercively taken from those families, and cycle it through the enormously expensive bureaucracy of the Ottawa government and then send it to the bureaucracies in the provincial governments, which will then cycle it through various programs. In the case of Manitoba, I recall the failed child care policy of the former Liberal government. What did it end up doing? It raised government union wage rates in the child care sector. It did not actually add a single child care spot.
Again, that is a defensible view. It is a view my friends on the other side will articulate. They believe that we should put more economic pressure on hard-working families, more stress, and reduce their take-home pay by increasing their taxes in order to cycle all of that money through two bureaucracies and send it back out in the form of a putative public benefit, when huge amounts of those resources have, in fact, been absorbed by administration and bureaucracy.
Our approach is different. Our approach is to leave the money in the hands of mom and dad in the first place, because we believe that they are the best experts with respect to child care, not government bureaucracies or politicians. That is why we introduced the universal child care benefit that sends a $100 cheque per child under the age of six to every family, which then gets to decide how to spend that themselves, rather than politicians and bureaucrats making that decision for them. It is very simple.
It is also why we raised, by the way, the basic personal exemption. One of the issues I am going to get to is so-called income splitting, what I call family tax fairness. Under the status quo and a Liberal unfair tax policy, it is unbelievable but true that they actually used to say that a spouse working outside the home was of greater value to our society and economy than a spouse working at home.
They reflected the perceived devaluation of dads and moms who work at home by having a lower spousal exemption in the tax code than the basic personal exemption. For a two-income family with one spouse out in the paid workforce and another at home in the unpaid workforce, guess what? The person in the paid workforce would get a higher basic personal exemption against their income taxes than the spouse at home in the unpaid workforce. What kind of weird mentality says that dads or moms who are at home taking care of their kids or their elder relatives are worth less for making what is for many of them a sacrificial decision for their families?
We believe that they are serving the common good, that such dads and moms are making a choice that is best for their families, which we should respect and not penalize. We should respect the choices families make and not penalize them for making choices that they think are best for themselves. That is why this government eliminated that one dimension of family tax unfairness when we raised the basic spousal exemption to be equivalent to the basic personal exemption.
These are some of the reasons we have seen an increase in average family income and net worth. In fact, the median net worth of Canadian families has increased by 45% in real inflation-adjusted terms since 2006. Canadian children from poor families have a higher probability of moving up the income scale than in such comparable countries as the U.S., U.K., France, or Sweden. That is to say, not only do we have fewer Canadian families and children living in poverty than before, and not only are we at a record low in child poverty in this country, but we have greater upward social mobility for those families. We actually do have the Canadian dream.
This is what The New York Times was so astonished by when this study came out last month. The so-called American dream, the notion of upward mobility for low-income families, had become much more of a dream than a reality. However, here in Canada, it is a reality. We continue to have a society characterized by such upward social mobility.
The facts are that the middle class in Canada is doing better. There are fewer poor families and fewer poor children and less income inequality, regardless of what the opposition says.
I would like to talk about the second part of the NDP's motion, which states:
...and that the House express its opposition to the Conservative income splitting proposal which will make this problem worse and provide no benefit to 86% of Canadians.
Once again, the premise of the motion is incorrect. The New Democrats are wrong. They are mistaken.
With the premise of this motion, the opposition is simply wrong.
I find it very interesting that in the political rhetoric and positioning of the NDP, those members always talk about working families. The late Jack Layton, whose memory we honour, always focused on kitchen-table economics. In the last election, he visited a lot of families around their kitchen tables, yet the position of the NDP here today could not be clearer: it does not actually support the family as an economic unit. Those members actually think that some families should be actively discriminated against through unfair preferences in the tax code. We fundamentally disagree.
That is why, in our 2011 election platform, the Conservative Party of Canada committed that if we balanced the budget, we would, at the end of our mandate, introduce family tax fairness by allowing splitting of income between two-parent families.
As the has done, I am pleased to reconfirm that it is absolutely our intention to keep that commitment that we made to Canadians in the last election to introduce family tax fairness, to end the discrimination against certain families, to end the unfairness.
How do we do that? I would like to accept the rhetoric of the NDP position and turn it into policy substance. When New Democrats talk about kitchen table economics and the importance of supporting working families, we do not just do that rhetorically, we want to do that substantively. We do not want to do it as a political tactic or trick. We want to do it by amending the tax code to say that we will treat the family as an economic unit, because after all, it is an economic unit. Is that not the point? Dads and moms who arrange their affairs together as couples with kids or other dependents are making a choice to share their property, to share their income, to share the burdens of life. In so doing, they become the best social programs, the best schools, the best crime prevention programs in raising children.
There is no social program that produces stronger social outcomes than a strong family. Can we all agree on that? We should be honouring and respecting the often difficult and sacrificial choices that families make. That is what family tax fairness through income splitting seeks to do.
What does this mean? Right now, perhaps a dad in a family decides to stay at home to take care of young, pre-school children, or perhaps elderly dependent parents who are living with the family, and we will see more and more of that with the aging of our society. His wife or his spouse goes out and works and makes, let us say, $75,000 a year, which is not much above the average income level in Canada. I do not know why New Democrats are laughing. It is a lot less than they make as MPs. If the wife is the income earner making $75,000 a year and dad is at home taking care of young kids or maybe elderly parents, they end of paying 30% more in taxes, $2,000 more in taxes than a family making the same amount of revenue with both parents in the paid workforce.
What this so-called preference, what this discrimination, what this unfairness does is say that the work the dad puts in at home does not have any economic value. The government says it is worth nothing.
I am not just saying this. I will never forget being in the opposition as revenue or finance critic asking the Liberal government why they permitted this tax unfairness against such families. The then minister of state for finance, the hon. Jim Peterson, for whom I have great regard, committed the ultimate political gaffe. He accidentally told the truth. He actually said the government believed that stay-at-home parents were not working. I guess he had never met a stay-at-home dad or mom, because they work harder than most of us do every single day of the week and they deserve our recognition and our support.
That is why the Royal Commission on Taxation in 1966 recommended that the appropriate tax unit should be the family, as the income and expenditure of two individuals are not independent when they live together. That is why the Royal Commission on the Status of Women, 60 years ago, supported elective joint taxation, voluntary income splitting. It is why the U.K. and France and most other developed countries treat the family unit as an economic unit for purposes of taxation.
It is about time that we said we value families, we support the choices they make, and we will end the unfairness. Will the opposition join us in that?
Mr. Speaker, I will be sharing my time with the hon. member for .
The widening income gap, whether on a global, national or community scale, is clearly a social justice issue. However, it also poses a threat to our prosperity, our safety and even our health.
As a number of studies have shown, in a more egalitarian society, the poor as well as the rich are healthier. Equality benefits everyone.
High income inequality, globally and in Canada in particular, is a concern to many people. Yesterday, Christine Lagarde, the managing director of the IMF, addressed the issue and called it an obstacle to our country’s return to greater prosperity. It is a problem that therefore needs to be addressed, not only for the sake of social justice, but also for the sake of our collective well-being.
Unfortunately, Canada has been moving in the opposite direction for a number of years now. The gap between the rich and the poor continues to widen, as does the gap between the rich and the middle class and the gap between workers and the big bosses.
There is a tendency to place much of the blame for this state of affairs on Conservative government policies. Some of the responsibility must indeed be borne by the Conservatives, but at the same time we need to realize that they are not entirely to blame. In fact, 94% of the increase seen in income inequality over the past 35 years occurred on the Liberals' watch.
However, I get the impression that the Conservatives felt they had not done enough to widen the gap. They decided to press the issue. They have proposed income splitting for couples with children under 18 years of age. Basically, this will benefit mainly the wealthier members of our society. Under the proposal, one spouse would be able to transfer up to $50,000 in income to the other spouse for tax purposes.
To better understand the situation, consider the example of an MP with children and a spouse who does not work. I think all of us can identify in some respects with this example. This MP would be able to transfer $50,000 in income to his or her spouse. I imagine that some MPs would be delighted to be able to do that. The problem is that while this measure may be advantageous for MPs and high income earners, for the vast majority of Canadians, it will be of little or no benefit.
Let me describe to you those who would not benefit in any way whatsoever. There is no benefit for people earning less that $44,000 a year. A couple earning more than $44,000, where both spouses have relatively similar incomes, regardless of what that income might be—$100,000, $200,000 or $300,000—will not see any benefits if they are more or less in the same income bracket. Income splitting will not benefit single persons, childless couples, couples with adult children, single mothers and fathers, and divorced parents. For the vast majority of other people, the benefits will be relatively minor.
According to figures released by the C.D. Howe Institute and the Broadbent Institute, income splitting would benefit only 10% to 15% of families, and obviously the wealthier families.
I have nothing against tax cuts, but they should target the people who need them the most. If we take a closer look at the numbers, we see that this measure will actually benefit 5% of the wealthiest families, at the expense of taxpayers in general, because public funds are involved.
The measure would cost the federal government $3 billion annually to implement and, according to the Canadian Centre for Policy Alternatives, the price tag for the provinces would be about $2 billion. There are quite a few zeros in $5 billion. I wonder if this government has given any thought to what it else it could possibly do with such a large sum of money.
I can think of many things it could do. For instance, it could help every single family, not just the wealthiest, find housing. In one part of my riding, 25% of households with children live in one-bedroom or studio apartments. Yes, in Canada. I am deeply shocked.
Could the government not earmark the tidy sum of $1 billion to help people in this situation? Could it not set aside a little more money for seniors' pensions or for infrastructure that is in need of repair? Is there not some way to help all families, not just a few?
Unfortunately, this government would rather focus on a small number of Canadians who are already among the wealthiest citizens. This government is Robin Hood in reverse. It continues to raise taxes and cut services to the middle class. It chips away at EI, raises the retirement age and delivers a fatal blow to Canada Post, all for the sake of providing some tax breaks to the wealthiest members of our society.
Indeed, I would call this government “Dooh Nibor”, which is Robin Hood backwards. It continues to take from middle-income citizens who have trouble making ends meet, through taxes and cuts to services, to give to the wealthiest.
This bill has even more harmful effects because it might discourage women from joining the workforce. I am not the only one to say so. The rather well-known C.D. Howe Institute also says so.
It says that income splitting would significantly increase the marginal effective tax rate for most spouses with a lower income, which would create an obstacle to employment or a return to work. This would reduce the work experience of married women, who unfortunately often have a lower income, which would make them more vulnerable. The Institute is of the opinion that income splitting would not achieve its self-proclaimed objective of equality if the objective is to support families with children and that this measure could actually benefit families with no children.
Among the harmful effects of this measures is a geographic imbalance, in that some provinces would benefit from it more than others. One of the provinces that would benefit less is Quebec, which this government has completely abandoned.
It was minister Flaherty who said, and rightly so, that this was not really a good idea. For all these reasons, I will stand with my NDP colleagues and strongly oppose this bill.
I feel as though I have a second wind, thanks to you, Mr. Speaker. I did think that I did not need to be speaking quite so quickly. Thank you for the reprieve, if I can call it that.
It really is quite shocking. If I may go on, today's National Post, that left-wing propaganda machine, had another study about this income splitting or—what is it to be called now?—family tax fairness initiative. It says:
It turns out that among the target group [for this policy]—families with minor-aged children—the biggest winners by far reside in Alberta, where the average annual tax saving would be $1,359....
Second is Saskatchewan, with $1,070.The article says:
These two provinces, which have a combined 42 federal ridings, sent 40 Conservative MPs to Ottawa in the 2011 election.
Whereas, at the other extreme:
Families in Prince Edward Island will get an average benefit at $488, followed by Quebec families with children, which would average $510 in benefits. Those two provinces were among the least productive for the Conservatives....
One wonders, and the National Post appears to be wondering, whether there might be politics behind this initiative.
I am sure that is not true. I am sure it is good public policy. However, it does raise some rather interesting questions.
If people do not have kids under 18, it is no good for them. If people are single parents, it does not matter to them. If people are divorced, it is irrelevant to them. If people happen to earn what their spouses earn, it does not matter to them.
We understand the finance department had a report that was done, which appears to have been the basis of the late Mr. Flaherty's antipathy and growing concern about this policy: the need for greater analysis, as he pointed out. We cannot get that report. We would love to see what the finance department says about it.
However, in the words of that Canadian Press article that I cited, “This policy is an inequality generating machine.”
Inequality is what we are here, in part, to talk about today, because it has been spiralling out of control. The top 1% of incomes are surging. The typical Canadian family has seen its income fall for the last 35 years. The gap is getting bigger and bigger. We all know that. We all feel that.
Billions of dollars have been cut to social transfers by successive Liberal and Conservative governments, which has made things worse by reducing access to social programs for low income families.
When we cut transfer payments to the provinces, they get deficits. They get debt, but the federal government gets to brag about a balanced budget. The province passes it on to aboriginal governments and to municipal governments. To some degree, they can have that kind of debt, that kind of imbalance. They cannot run deficits.
So, this trickle-down theory is of great concern, certainly in British Columbia, where I hear about it all the time.
Robin Boadway is the David Chadwick Smith Chair in Economics at Queen's University. He was an excellent witness at the finance committee, where we studied income inequality. That report has been alluded to earlier today. He talked of the significant changes in the tax system, such as changes in the tax treatment of capital income, changes in the structure of labour markets and unemployment, and the effect of changes, as I just said, in federal-provincial transfers on provincial social protection programs. He says:
All of these have reduced the automatic responsiveness of the tax transfer system to income shocks, and this has been particularly noticeable at the top and bottom of the income distribution.
His analysis concludes that government is fundamentally responsible for the surge in income inequality.
To wrap up, I strongly speak in support of a motion that would get the government to do the right thing and take that sober second look that W.A.C. Bennett talked about, about a policy for income splitting promised in the heat of an election campaign. It does little good for so many of us and only makes it worse for so many. We must take more specific and directed measures at income inequality. I urge the government to please get on board.
Mr. Speaker, I want to take a moment to acknowledge the memorial ceremony for the RCMP officers who were laid to rest today in Moncton very close to my riding. We always need to recognize and remember the sacrifice that our law enforcement officers are prepared to make each and every day to protect the greater society.
I am so pleased to be able to participate in this debate today. It gives me the opportunity to provide the House with clear facts regarding our government's record, which has raised the income of the middle class and reduced the tax burden on low and middle-income Canadians. That is why our government's top priorities remain creating jobs, economic growth and long-term prosperity, and we will not be supporting this NDP motion.
Conservatives know that the best way to raise the income of Canadians and their families is through a strong and growing economy. This means ensuring that Canadians have the skills they need to fill well-paying jobs that a strong economy will generate.
We believe the private sector creates jobs, not governments. This is why the government has put in place appropriate policies to maximize the growth in job creation and reduce inequality by reducing taxes, increasing support for hard-working Canadian families, promoting trade investment, supporting key economic sectors, making education accessible and affordable, reducing barriers to labour market participation and being responsible fiscal managers of the Canadian economy.
The proof is in the numbers. Since the depths of the global recession, Canada has demonstrated the strongest labour market performance of all G7 countries, with over one million net new jobs created since the pith of the economic recession in July 2009.
Indeed, because of this strong economy, the Canadian standard of living is one of the highest in the world. Canada's low-income rate has been dropping. In fact, it is at the lowest it has ever been. This is something the NDP like to ignore, but it is a fact.
Since the beginning of 2006, the take-home income of Canadian families across the board, and that is in all income groups, has increased by 10% or more. According to a recent Statistics Canada study, the median net worth of Canadian families is almost 80% more than the 1999 median and when adjusted for inflation, it is up 44.5% from 2005. Our government has helped the average Canadian family of four save close to $3,400 per year by cutting taxes over 160 times.
It is clear that our plan has been working and Canadians of low and middle incomes have seen real tangible improvements in their bank accounts.
It is not just Statistics Canada studies that are validating this approach. The Parliamentary Budget Officer in a recently released report entitled “Revenue and Distribution Analysis of Federal Tax Changes: 2005-2013”, identifies that middle and low-income earners have accrued the greatest financial benefit, specifically those in the 20 and 30 percentile of income earners, or those earning between $12,000 and $23,000. This group of households has accrued an average increase of 2.5% in after-tax income resulting from the major personal income changes since 2005.
This is because we understand how important it is to create the right environment for businesses to grow and create jobs. We recognize how vital it is to ensure that all Canadians have an equal opportunity to share in the benefits of a strong economy.
Through our jobs, growth and long-term prosperity approach, our government has effectively taken action that has improved the lives of Canadians at all income levels. This is why I find the NDP's motion so puzzling. The facts and studies validate our approach to creating the conditions for jobs and growth. I would think even the NDP would look at the hard facts and come to the conclusion that many Canadians have, which is that Canadians are better off today than they were in 2005.
The growing wealth of Canadians ought to be something that all parties can agree on, because each and every member wants to see less poverty and more Canadians with employment.
We are not saying that we are done. It is quite the opposite. We are saying that we are just getting started.
Canada currently has one of the lowest poverty rates among seniors in the world. It is lower now than it was under the Liberals, at 5.2% in 2011. The number of Canadians living below the low income cut-off is now at its lowest level ever. There are nearly 1.4 million fewer Canadians living in poverty under our Conservative government than under the Liberals.
Our government has removed one million Canadians from the tax rolls, including 380,000 seniors. Since we took office, there are 250,000 fewer children in poverty than under the previous government.
However, we are not satisfied. As the has pointed out, over and over again, there are still far too many people without jobs in Canada and far too many jobs in Canada without Canadians to fill them.
Our government believes more can be done with the training dollars we spend to lead to guaranteed jobs, which will improve the lives of Canadians and reduce overall inequality. We also believe that the best way out of poverty is a well-paying job. We believe the best way to reduce inequality is to create more jobs, and this can be done by improving and transforming our skills training system.
Let me outline some of the measures to transform the skills training system that will help Canadians get these available jobs and help Canada create more and better jobs.
As the economy has recovered, these skills mismatches along with labour and skill shortages have emerged in certain regions in certain sectors, highlighting the need to transform training and give employers a role in deciding where training dollars will go. This is why our government introduced the Canada job grant. The Canada job grant will encourage employers to invest more in skills and training and be involved in decisions to ensure that training leads to a guaranteed job at the end of that training.
The minister has reached agreements with all provinces to deliver the Canada job grant through the Canada job fund. The government is also committed to improving other labour market transfers to ensure that funds are being used to help Canadians obtain the skills they need for jobs in high-demand fields.
To this end, the government is renegotiating the labour market development agreements with provinces and territories. These are over $2 billion training funds that come directly from the EI account. Currently the human resources committee has been studying the renegotiation of these agreements, and as a member of that committee, I look forward to being able to recommend to the minister some ways that we could improve these agreements to better train unemployed Canadians for guaranteed jobs at the end of that training.
Our government is also investing $11.8 million over two years and $3.3 million per year ongoing from that to launch an enhanced job-matching service. This will provide job seekers with modern and reliable tools to find jobs that match their skills, and to provide employers with better tools to look for qualified Canadians to fill available jobs.
Through a secure, authenticated process, registered job seekers and employers will automatically be matched on the basis of skills, knowledge and experience. This proposed enhanced job-matching service will build on the launch of a modernized and easy-to-use consolidated national job bank.
Our government has also taken steps to reduce barriers to labour mobility across provinces and territories by helping regulated occupations develop nationally accepted standards.
To reduce non-financial barriers to completing apprenticeship training and obtaining certification, budget 2014 introduced a flexibility and innovation in apprenticeship technical training pilot project, which will expand the use of innovative approaches to apprentice technical training.
In addition, budget 2013 allocated $4 million over three years to continue to work with provinces and territories to harmonize the requirements for apprentices, as well as examine the use of practical tests as a method of assessment in targeted skill trades. Apprenticeship training is an important part of the post-secondary education system, and is a key provider for the skills and knowledge necessary for jobs and growth.
To further assist Canadians with training for a career in the skilled trades, budget 2014 announced the Canada apprenticeship loan, which would expand the Canada student loan program to provide apprentices registered in the Red Seal trades with access to over $100 million in interest-free loans each year.
This action builds on the existing government initiatives to apprentices and employers to encourage apprenticeship training and stimulate employment in the skilled trades. The apprenticeship grants are designed to encourage more Canadians to pursue and complete apprenticeship programs in the Red Seal trades.
In budget 2014, the government committed to take steps to ensure that apprentices would be aware of the existing financial supports available to them, while they were on technical training programs through the EI fund.
These are all measures that the government is taking to ensure taxpayers are well served by the federal training dollars.
Our government recognizes that there are often challenges for under-represented groups, such as youth, people with disabilities, aboriginal people and newcomers to Canada, in obtaining the support they require for jobs and growth. Encouraging the participation of under-represented groups in the job market continues to be an important priority for all of us.
Our government provides over $6.4 billion to the provinces to support skills development and higher education.
I have already touched on two of the transfers, the labour market development agreements and the Canada job fund. There are other transfers, such as the $3.75 billion for post-secondary education that comes from the Canada social transfer, or the labour market agreements for persons with disabilities, which provides $222 million to the provinces for the targeted initiative for older workers.
In addition to the money that we transfer to the provinces to help under-represented groups, the federal government directly spends almost $1 billion on skills development and higher education. There is a youth employment strategy which invests $300 million to provide training, internships, work experience and education for young people. There is the apprenticeship incentive grant and the apprenticeship completion grant, which provide over $110 million to help apprentices.
There is a skills and partnership fund, which partners with employers to provide training for guaranteed jobs mainly in the resource extraction industry. There is the aboriginal skills and employment training strategy, which provides $336 million to support aboriginal labour market participation. There is the opportunities fund for persons with disabilities, which is providing real job experience for Canadians with disabilities.
It is very clear from what I have just outlined that our approach is working and we have been raising the incomes of Canadians and their families. We have targeted initiatives for many different Canadians, for many different jobs and much different training to ensure we provide fairness across the board. We are continuing to equip Canadians with the skills required to obtain and keep the well-paying jobs available today and in the future. We are continuing to make smart investments in programs that are having real results for under-represented groups.
The Conservative government will continue to focus on jobs, growth and long-term prosperity and put in place the appropriate policies to reduce inequality. That is why I will not be supporting this motion. I would encourage my colleagues opposite to look at the facts and reject the motion.
Mr. Speaker, I am pleased to rise to speak to this motion. I think it is one that clarifies the differences here in this House.
We have had the Liberal Leader saying that he thinks it is a decent idea. We have the Green Party, which has it in its party platform, and we have the Conservatives going on about everything else except the topic of this motion today.
I think there is a reason for that. If someone in this House said they had a great proposal, to write an average cheque of $7,128 to 147,000 of the richest families in the country, we would all think they were crazy. An average benefit of $7,000 to 147,000 of the richest; that is what this policy would do. That is why, on this side of the House, we are fundamentally against it.
When we look at the total expenditure of $5 billion, which is $3 billion federal and $1.9 billion provincial, we think about how we could spend $5 billion. How about a universal child care program that would actually help families who cannot find a place to put their kid in quality care? How about a national pharmacare program that would help seniors living in poverty and struggling with choices between keeping a roof over their heads or buying pharmaceutical drugs. There are lots of things we could do with $5 billion.
Instead, the Conservatives are saying let us write a cheque for $7,128 to 147,000 of the richest families. It is beyond belief that they would say that this is a policy about fairness and tax relief for families. This is about aiding their richest friends.
I am amazed that some of the Liberals have gone against what the federal Liberal leader said at the beginning. We do not often see that in the Liberal Party. However, I would like to hear from the federal Liberal leader about whether he still thinks it is a decent idea. It seems like an indecent proposal to me.
I will be sharing my time with the member for , though I do have a lot to say on this.
Who actually benefits from this? We talk about the 14% of families who will benefit. For people in my riding making under $44,000 a year, there is no benefit. For a couple who make above $44,000 a year but are both in the same tax bracket, there is no benefit. For single parents, there is no benefit. For couples with no kids, there is no benefit. For couples with kids who have grown up, there is no benefit. For parents who are divorced, my favourite in terms of irony, there is no benefit.
In my riding, we have a pretty high percentage. I think 86% might actually underestimate the people who would be excluded. When we go through that list, it is just about everybody who I talk to on a daily basis who would get nothing out of this federal income splitting program.
What we have seen is growing income inequality, and this measure would simply fuel that inequality. The incomes of the top 1% or 5% have been skyrocketing, while the average family struggles to make ends meet at the end of the month. The gap between the ultra-rich and the rest of us in Canada continues to grow. Liberal and Conservative governments have done nothing to attack this problem.
I would rather that we were discussing a proposal like a living wage. When I was on city council in Esquimalt, before I came here, we had a long debate about the failure of the minimum wage to provide an income that people could actually live on, that could support a family in dignity. Instead of talking about income splitting that benefits the rich, I wish the Conservatives were proposing to talk about a living wage.
It was the Liberals who eliminated the separate federal minimum wage, in 1996. Now we have a situation where minimum wages continue to erode. In real dollars, we are probably still somewhere below where we were in 1976 when it comes to the minimum wage.
Who earns that minimum wage? The people who would not be benefiting from income splitting for sure, 41% of whom are women and young people. In British Columbia, 32% of minimum wage earners are between the ages of 25 and 54, and 9% of them are aged 55 and over. We are not just talking about teenagers going to school and living in their parents' basement. We are talking about people trying to build a family for themselves, support themselves in dignity, and even support themselves when their retirement income fails. Remember, almost 10% of those aged 55 and over are still working at a minimum wage, and most of them are women.
What would a living wage do? A living wage is the idea that we would pay an amount that two parents, both working full time, with two children, could provide the basic necessities. It does not include paying back debt, savings, trips to Hawaii, which is what I suspect many of the people who would benefit from this income splitting would use this extra income for. Instead, let us pay them a wage that allows them to live in dignity.
In April 2014 in greater Victoria, which I represent, that required a wage of $18.93 an hour. The minimum wage is $10.25, so people who are on the minimum wage are living well below what it takes to live a life of dignity.
Whenever we talk about raising the minimum wage, there are those on the other side who talk about it as a job-killing proposal. If there is any job-killing proposal, it is the income-splitting proposal. That is because it would take money out of the economy in Canada and give it to people who will spend it abroad, either investing or travelling, whereas if we put money toward raising the minimum wage up to a living wage level, those people just might have enough to buy a pizza for their kids at the end of the month. They just might have enough money to make repairs on their house. They just might have enough money to do things that stimulate the local economy.
When we are talking about income splitting, I cannot for the life of me see how any of that is going to put money back into job creation and small business in my riding. It is actually going to take money out of circulation, most probably money that will end up being invested abroad or spent abroad on things like travel, or else money that will be spent on luxuries. Most of those luxuries are not produced in my riding of .
There was a statement in 2006 that I found very interesting. It was cited by the Canadian Centre for Policy Alternatives. This statement was signed by 650 economists, including five Nobel laureates. Let me quote a sentence from it:
...a modest increase in the minimum wage would improve the well-being of low-wage workers and would not have the adverse effects that critics have claimed.
It would not have adverse effects, so if we are talking about spending $5 billion of tax money, let us put it into something that alleviates poverty rather than something that aids those who are already doing well in our society. Let us put it toward incentives to create jobs at the entry or basic level. Let us put it toward training programs. Let us put it toward child care, and then let us put our efforts in the House toward making sure that people actually get paid a living wage in this country.
Earlier one of the Liberal members talked about making this a non-partisan issue. I guess what he means is that the Greens, Liberals, and Conservatives agreeing would somehow make it a non-partisan issue.
At the fundamental nature of politics is what kind of Canada we believe in. I find this proposal for income splitting not the kind of Canada that I believe in, not the kind of Canada I want to live in.
Some of the residents of my riding might benefit from such a proposal, but when they actually see its huge cost and the vast majority of its benefit going only to the wealthiest and most successful, even those people who might benefit in my riding would have cause to think about it again.
Why am I so sure of that? Because even the former federal minister of finance, Jim Flaherty, said he had serious concerns about this proposal. If the Conservatives were not prepared to listen to Jim Flaherty at that time, I am not sure who they will listen to, but hopefully they will get a chance to listen to Canadians. When it comes time for the next election, I hope they put forward policies like this one, policies that clearly state their agenda, which is a devotion to trickle-down economics. Their idea is that if we give money to those who are doing the best, somehow they will invest it or spend it in such a way that the other 86% of Canadians can eventually benefit from it. We all know that this kind of economics simply does not work.
It is interesting to look at the people who have talked about income splitting and expressed their doubts. They range from the C.D. Howe Institute on the right to the Broadbent Institute on the left. Both found that the proposal would, as we have argued on this side, cost the federal treasury $3 billion. Both found it would cost the provinces, yet the provinces have nothing to say about it, because Conservatives never talk to the provinces. It would cost them $1.9 billion out of their tax revenues. Where are they supposed to find that?
Very interestingly, in terms of the percentage of people who would not benefit from this measure, both the C.D. Howe Institute and the Broadbent Institute found that between 86%, in the case of the C.D. Howe Institute, and 90%, in the case of the Broadbent Institute, of the population would not benefit from this income-splitting proposal.
I wish we were talking about a living wage for Canadians who go to work every day, work hard to put a roof over their heads and support their families, and maybe put a little away for their kids' education or for their retirement. This policy of income splitting does nothing to favour those people. It benefits only the 147,000 richest Canadian families, and it would give them, as I said, a cheque for an average of $7,128. I do not think anyone would really want to go back and talk to their constituents about what a great idea that is.
Mr. Speaker, I appreciate the opportunity to talk about this topic, as it is a very crucial topic for a lot of people in my riding. I say “crucial” not because they are looking forward to income splitting, but because most of them, if not all of them, would not gain a single cent out of this income-splitting proposal that the Conservatives are suggesting is a great thing for the average Canadian.
The average family income in my riding is $30,000 less per year than the average for the rest of the country. Almost all of the people in my riding have incomes under the cut-off point at which income splitting would provide a benefit to them. We would have a situation in which those most in need, and I include my riding in that category, would have significantly fewer government services, because the Conservative government has been cutting back on services. They would have no additional income as they watch the cost of living and the cost of everyday items continuing to rise.
For those individuals in my riding, those rising costs mean that they will continue to fall further and further behind. Some will fall into poverty. Some are already in poverty. They will certainly fall further and further behind, while some in the rest of the country, a very small portion, will actually do much better.
We now have a situation in Canada in which the rich are getting richer fast. The various governments of the past 25 years have managed to create systems that are unfriendly to organized labour. Organized labour is one of the ways people improve their standard of living, but if the bosses who are making most of the money have governments that are unfriendly to organized labour, they do better, and the bosses are doing much, much better.
The top 1% of earners of this country paid a proportion of our taxes, and that proportion is shrinking. Since the Conservatives took over in 2006, the proportion of net taxes paid by Canadians to the federal government by the top 1% has shrunk relative to the rest. That means everybody else is paying more than the top 1%.
This proposal by the government will make that situation worse, because those at the very top stand to gain by this income-splitting proposal, while those in the middle and at the bottom would gain little, if anything. As a result, the division between the rich and the poor in this country would get worse.
In the city of Toronto, where I reside and where my riding is, a series of studies have been done by Professor Hulchanski on the city of Toronto. This professor has discovered that there has been a hollowing out of large sections of Toronto as a result of the abandonment of the manufacturing industry, something about which the current government has done little, if anything.
With the abandoning of the manufacturing industry and the replacement of those jobs by retail and other service sector industries, the average income for the middle class in Toronto has shrunk dramatically, while the income of those who are doing well has grown. We have a hollowing out in the inner suburbs of the city of Toronto. About 30 or 35 years ago, these people were considered comfortable middle class. Now those people are on the edge of poverty, on the edge of homelessness, on the edge of not doing well at all.
The proposal by the Conservative government does nothing to change this situation. It does nothing to affect the thousands upon thousands of Canadians who are near the bottom of the food chain or the thousands upon thousands of people in my riding who are recent immigrants to this country.
One of the reasons there are a lot of recent immigrants in my riding is that the housing is relatively cheap compared to the rest of Toronto. My riding ends up populated with individuals who are barely scraping by. As a result of this proposal by the Conservative government, those individuals will gain absolutely nothing. Anybody making less than $44,000 a year will see no benefit, and the large majority of people in my riding make less than $44,000 a year.
The average income in my riding for families, which is the net income of everybody in the household, is something approaching $77,000. That includes those who are doing well, and there are some in the riding. For those who are doing poorly the average is $77,000. The average in Canada is a little over $100,000. We can see that we are already only at two-thirds of the income of the rest of Canada. To suggest a largesse of the current government to redistribute wealth by creating a system of income splitting would simply make the problem worse. It would simply create an untenable situation in which the wealthy in this country would get wealthier.
Perhaps it is a vote-getter for the base of the members opposite. Perhaps that is what is going on here. It is certainly not good policy, but if they believe that the rich should get richer and the poor should get poorer, and if that is who they are catering to when they are trying to get re-elected, unfortunately there are not enough of those people remaining in the city of Toronto to get them re-elected. I do not think the Conservatives are going to do very well in the next election. The people of Toronto understand full well that this proposal does not do anything for 86% of Canadian families. As for the 94%, the increase in income inequality, that is what the theory behind income splitting is. It is to redistribute wealth and maybe make income inequality less of a problem, but the effect of this is to continue the income inequality because those at the bottom will continue to be at the bottom. There is no benefit.
We would take $3 billion out of the federal treasury and $1.9 billion out of provincial treasuries and give that money to those people who are already well off. Maybe that would get them a few votes, and maybe that is the key demographic they are looking for, but it would not get the votes of the majority of the people in the city of Toronto, the majority of the people in my riding, and the majority of the people in Canada, 86% of whom will see little or no benefit to this very strange proposal.
Maybe there is an anti-feminist side to what is being proposed here because there are some members in the Conservative Party who believe that women should not be working, who believe that income splitting is the way to ensure that women do not enter the workforce. Already women only make 70% of what men make and as a result of income splitting, their incomes would be the drag on the family so it would be more likely that they would not enter the workforce. Those women, who tend to be the second earners in many families in Canada, would see that their contribution would be less, as a result of income splitting.
We have situations where the government's proposal to income split would disadvantage the poorest, advantage the richest, and disadvantage the women in this country. Those are three philosophies that this party does not accept. We believe that if we are going to redistribute the wealth in this country, we should look after the poorest in this country first. We should look after seniors. We should look after women who make less than men. We should look after the middle-class people who have seen their earnings go off to the bosses and to the 1% of this country. We should look after the people who really need it first in this country.
The notion that we can take almost $5 billion in wealth and give it to the rich in this country is something that we are so opposed to. We are theoretically and philosophically opposed to taking money from everybody, because that is who pays taxes in this country, and giving the lion's share of it to those who make the most. It does not make sense. It is not something we should do. We will be opposed to that policy should it ever come forward.