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View Pierre Poilievre Profile
CPC (ON)
View Pierre Poilievre Profile
2020-07-20 12:50 [p.2588]
Madam Speaker, when the government first rolled out programming in response to the COVID-19 shutdown, the programming was filled with the old classic rule that no good deed goes unpunished. The government created an income support program for workers, but ripped it away the second those same workers earned more than $1,000, punishing their good deeds of working hard and earning money. It created a wage subsidy, but then tore it away as soon as a business was able to recover more than 70% of its pre-COVID revenue, again punishing a business for the crime of recuperating revenue and rebuilding the economy.
We warned early on that these anti-work, anti-earnings disincentives would penalize the very people who were working hard to put our economy back on its feet in the post-closure period. The government ignored our concerns and delayed. In the meantime, countless workers and business owners have faced the impossible dilemma of whether or not they should go back to earning what they did before the pandemic began.
Members could judge these people, who are out in the world facing that dilemma, but before they do, I ask them to think of, for example, a waitress whose employer may go bankrupt because of the enormous revenue loss that he has experienced during the shutdown. If she goes back and begins earning $1,200, and he then goes under, she will lose her job and she will have lost her CERB. In other words, she will have no income at all, and the government will have imposed this penalty upon her for having worked too hard, having exerted too much effort to rebuild her finances and support her employer and her community.
Up until now, the same went for businesses that committed the offence of regaining lost revenues. If they were down less than 30%, that is to say that they had recovered more than 70% of their pre-COVID revenue, they would lose the wage subsidy. For many of them, the extra revenue was worth less than the wage subsidy. In which case, the perfectly rational and, in many cases, necessary decision for them was to suppress their revenues in order to qualify for the very assistance that would keep them alive and allow them to employ their workers.
Finally, the government has come forward with a proposal to address that disincentive of the wage subsidy. Unfortunately, what we see in this proposal is a cobweb of complexity. I will break down just how complex it will be and how bewildering it will become for the business owners who are trying to make sense of it all.
First, we see there are now effectively four periods that remain until the subsidy is phased out altogether. In each of those four periods, the rate of subsidy is different than it is in the others. Then there are the three scenarios that apply to those four periods. The first scenario is for businesses that have lost less than 50% of their revenue, in which case they are entitled to the base subsidy. Then there is the second scenario for businesses that are down more than 50%, in which case they are eligible for both the base subsidy and the top-up. Then there is the third scenario for businesses with employees who are furloughed or “on leave”, in which case there is yet another different rate of compensation paid through the subsidy. Do not even get me started on businesses that have both furloughed and non-furloughed employees.
If we just take the basic permutations and combinations that I have mentioned, over the next four months, businesses could face 15, 20 or 30 different rates of wage subsidy. They will somehow understand these with the help of very expensive accountants and consultants as they try to go forward and make business decisions. This complexity will no doubt impose massive new costs, unpredictability and uncertainty on the very people who are struggling just to open their doors. They are already facing a whole series of public safety rules imposed by their municipalities, rules that are themselves hard to follow, burdensome and costly to implement. Now they will have to plow through an already complicated system of taxation in order to make sense of an even more complicated system of subsidies.
In numerous conversations with the minister, we put forward proposals that could have made this simple. Why could the government, for example, not have expanded the Canada emergency business account to lend businesses their prior month's revenue loss, and then forgive repayment on 75% of whatever they spent on wages out of that amount? That could be the wage subsidy with no complexity, and it would not be a disincentive. It would be scaled to revenue loss, easy to administer and available at someone's local bank.
Of course that was not the option that the government chose. No, instead it had to come up with the most complicated system possible. The only two sectors that will experience any benefit from that complexity are the accountants and tax lawyers, who will be paid to implement and make sense of it all. Although I suspect many of them will have to hire Ph.D.s in astrophysics in order to make sense of some of the finer details of this particular proposal.
Simpler proposals are better, and simplification should always be the goal of government policy so we know exactly what we are trying to accomplish, and the beneficiaries know how to accomplish it. Therefore, we as Conservatives call on the government to look for ways to simplify the implementation of this.
We also call on the government to signal to the Canada Revenue Agency to be as reasonable as possible in its enforcement and in the subsequent cases of accidental and incidental errors that are inevitably going to be the result of small businesses tripping over many of the tripwires found in this complex proposal.
All that being said, at the very least we can give the government some credit for belatedly realizing the necessity to remove the penalties on businesses that are recovering their revenues while trying to employ their workers.
Now let us turn our attention to those very same workers. Under the current Canada emergency response benefit, workers who earn $999 can keep the $2,000 CERB, but if they earn $1,001, they lose that same benefit. In other words, they are taking one step forward in order to be pushed two steps back. No one would make the decision to earn $1,000 in order to lose $2,000. The effective tax rate on such a person would be 200%. That is a major and unacceptable penalty for work. It is also a problem with an obvious solution.
I see here the member for Haldimand—Norfolk, who was once the employment minister and helped to bring in a solution to the same problem under the employment insurance program. She, in the previous Harper government, helped to bring in the working while on a claim system, which allowed people on EI to go out and get a job and lose only 50 cents of their EI for every dollar they earned. That means that they would always be 50 cents better off for each of those dollars earned. That should be the basic principle of our tax-and-transfer system. People should always be better off when they work more, earn more or take on one more shift.
Our party has very meticulously assembled a proposal for the government that would solve this anti-work problem and give our working-class people the rewards they deserve for going back to their jobs and taking on as many shifts as they possibly can. Our proposal is simple and it is this. For those earning less than $1,000, nothing would change. They would still get their $2,000 CERB. However, for those earning more than $1,000, any dollar earned over $1,000 would result in losing only 50 cents of their CERB.
Of course, all of this could be reconciled at tax time. The government already has records of people's earnings because employers submit the payroll remittances. The government knows exactly what people earn and when they earn it. It would be very easy to use the highly sophisticated CRA software, which could automatically calculate all of this, and people's final amounts could be reconciled at tax time on their returns.
Therefore, we put forward this proposal, which would allow all workers to be better off when they go out into the workforce and get themselves another dollar. It would mean that people would only lose their CERB gradually as they earn between $1,000 and $6,000, so that every day in every way workers who contribute to their employer, get businesses back on their feet, serve local customers, pay taxes and contribute to the economy are rewarded for doing so.
The Parliamentary Budget Officer has said that our proposal would be affordable and that it would be a minor cost. I frankly believe that when the behavioural changes that would result from it are taken into account, the government will be net better off as a result of rewarding rather than punishing work.
This is, of course, a problem that most left-wing governments have. They do not believe that there is any limit to the amount of taxation they can impose upon people. They do not understand the impact that incentives have on human and economic behaviour. That is why we see ever larger tax rates, which punish people for exerting themselves and for contributing to their employers, and which take away from risk-takers, entrepreneurs and working-class people.
We on this side of the House believe in restoring the value of work and rewarding exertion, because work is the only thing that generates the product of our nation. We know that no matter what government program we create, we cannot replace the prodigious output of our 20 million Canadian workers and the 1.2 million businesses that employ them. No government program can ever do that. The only way to recharge our economy and to replenish our wealth from the enormous costs we have incurred and the debts we have mounted is to get our workers and our businesses firing on all cylinders once again.
Beyond just fixing the problems and the penalties in these programs, we also need to unleash the power of free enterprise across our economy. There are parts of the economy that the government began shutting down years before COVID-19. One example of that is the energy sector. The government imposed a shutdown on the energy sector by blocking three pipelines and a major northern Alberta mine well before the COVID-19 pandemic ever appeared. It can now begin to reverse those anti-development policies.
It can, for example, look at the inventory of $20 billion of resource projects that await federal approval, and it can expedite decisions on them now so that billions of dollars of privately funded economic activity can begin without any cost to Canadian taxpayers. This includes a massive $14-billion pipeline and an LNG plant in the Saguenay region of Quebec. It includes smaller pipeline projects and mines right across the country. These projects have already been delayed too long. If the government really wanted a stimulus, a free-market, privately funded stimulus that would reduce debt rather than adding to it, now would be the time to expedite those exact same projects.
Now would be the time to begin to draw the lines of a future energy corridor connecting east coast refineries with western petroleum, opening the door to the sale and transmission of electricity from the prodigious hydro dams of Quebec to energy-starved communities in provinces across the country.
Now would be the time to put an end to the insanity of selling our energy, not just oil and gas but also hydroelectricity, at massive discounts to our American neighbours to the south while we pay premiums for that same energy here in our very own country.
Now would be the time to go through our tax system, page by page, and start tearing out all of the penalties we impose on businesses that produce wealth and the workers who generate it.
Now would be the time to eliminate the enormous delays that are involved in building anything in the country. It takes three times longer to get a warehouse approved for construction in Canada than it does in the United States of America.
That is just one example of why so much capital has left our country for our southern neighbours and for many other economies around the world.
As a country, we went into this crisis weak. We had 0.3% unemployment, higher unemployment in fact than all other G7 countries, except for France and Italy, whose socialist policies our government was working hard to emulate. We went in with growth that was roughly half of that in the United States of America, with half our population $200 away from insolvency, and bankruptcies and insolvencies skyrocketing in the latter months of the year 2019.
We went in with a $29-billion deficit, before the very first case of COVID-19 was discovered in the country. We went in with the second-highest level of debt in the G7 when we take public and private debt combined. Only Japan has higher combined public-private debt than Canada did in 2018, at 356% of GDP, and now that number has grown further.
We now have a government that is adding $343 billion of debt this year, money it believes literally can be created out of thin air, that we can simply count on the Bank of Canada, through keystrokes, to generate this currency out of nothing. The Bank of Canada has created a half a trillion dollars since March and used that money to buy bonds, mostly government bonds. In other words, our governments across the country are currently being financed by fake currency that is literally pulled out of thin air. The Prime Minister thinks that can go on forever, as though he invented the idea of turning on the printing presses to pay for a government.
We know that for thousands of years emperors, kings and others have tried to pay their bills by creating currency from nothing. Whether they clipped coins so that the gold in them could go a little further, whether they took drachmas and wrote “2” where there once was “1”, whether they more recently cranked up the printing presses and pumped out cash until inflation was skyrocketing, the result, in the long run, is always the same: When you create money from nothing, that money begins to be worth nothing.
We are not there yet, but we must plan for the day when, eventually, there are too many dollars chasing too few goods. When that happens, the value of the dollar will decline. This will be wonderful news for the very rich of course, because their assets will inflate in value and they will become richer still. However, it will be terrible news for the wage-earning blue-collar people of the country whose wages will be devalued, who will be earning less money for every hour they put in.
That brings us back to my very first point, that we in this country should always reward and never punish work, that we should unbridle the power of the labourer and the entrepreneur to join hands in the production of wealth, to finance the lifestyle and the economy that our country deserves to pay for our national programs, our national defence, our social safety net and for a quality of life that we in a country like Canada have become accustomed to and that we should only exceed in the days ahead.
I appreciate the opportunity to address this issue. We stand ready to work with the Liberals to improve these policies, to correct their faulty ways and to make our country better yet.
View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2020-03-09 12:05 [p.1778]
Madam Speaker, before I begin, I would like to inform you that I will be sharing my time with my esteemed colleague, the member for Laurentides—Labelle. It is an honour for me to start things off.
On a more serious note, the global economy is in bad shape. The New York and Toronto stock exchanges both temporarily suspended trading this morning because stock prices were plummeting too quickly, as we also saw when the European stock exchanges closed. This is very worrisome, and it can be attributed to the panic created by the oil crash, which in turn can be attributed to the threat currently facing the global economy because of the coronavirus. I would add that even before those two events that caused stock markets to plummet, the global economy was beginning to show signs of a downturn. It was clearly already struggling.
According to widely reported statistics, global growth was pretty weak in 2019 at 2.9%. It is generally understood that when growth is at 2.5% or less, there is a serious risk of global recession. Things are not going well. Europe is also struggling, as it was even before the problems related to the coronavirus arose. The same is true in Asia, especially in Japan, China and other countries in the region.
In North America, the situation is not as bad, but growth is weak and, since the global economy is interconnected, the risks are real. We often get the impression that economic crises, no matter how big or small, happen roughly every 10 years. In fact, the last one was in 2008-09.
The global economy is struggling and now it is sustaining external shocks that we could not see coming, like the coronavirus, the plunge in oil prices and the resulting repercussions. The coronavirus is creating fear, which has crippled tourism all around the world. Some large regions, for example in Italy or China, the epicentre of the coronavirus outbreak, are under quarantine. We can expect an additional slowdown and, since both local and global economies are interconnected, these shocks are likely to have adverse effects on all economic sectors.
If the economy were on a strong footing, then this shock would be temporary and the economy would return to normal growth after a few months. However, as I was just saying, there are already signs of a serious economic slowdown. The current situation might be bad enough to have a serious impact on the economy and plunge us into that phase of the economic cycle we call “recession”.
The problems of the tourism industry, the quarantines and the reduction in personal expenditures could result in the classic scenario of a decline in demand that would possibly trigger an economic crisis. I am certain that our colleague could tell us more about Keynesian analysis and possible solutions later today. I will be there because it will be very interesting, and I invite all my colleagues to come and listen to him.
In his analysis of the current situation, renowned economist Kenneth Rogoff, from Harvard, is introducing a new element by suggesting that there could also be a risk of a supply shock as the coronavirus could cause a downturn in supply. The global economy is so interconnected and supply chains so diversified that a quarantine in a given region, such as China, could slow production of a component used in the manufacture of cars, transportation equipment or other goods. A single missing link could halt and even paralyze the entire production chain in a given economic sector. This possibility is worrisome and the economist Rogoff has more to say.
The Chinese economy is now twice as big as it was during the SARS crisis in 2003. Every segment of the economy is in massive debt. Individuals, businesses and local governments all rely on income coming in regularly to be able to make payments, since they are all over-indebted and over-leveraged. This becomes very worrisome if a zone is quarantined. Individuals, businesses and municipalities will no longer be able to make their payments, which could cause a cash crisis. Everyone knows that China plays a big role in the international economy. This situation is very worrisome.
The economy could slow down because of a drop in demand and also a drop in supply. Basic economic theory tells us that a drop in supply can cause a drop in production, leading to an increase in prices and inflation rates. This is particularly worrisome because the potential inflation could make the traditional methods we rely on to recover from recessions less effective.
The reason inflation has been so low over the past few years is that the primary goal of most central banks is to keep inflation within a target range of 1% to 3%. I would add that it is also due to increased trade worldwide. All this interconnectedness has lowered production costs in every sector, which could explain why inflation has not gone up. However, if the coronavirus sets off a panic and countries start closing their borders, the gains from increased international trade could drop off, leading to an inflation problem.
As I mentioned earlier, the global economy was starting to show signs of slowing down, and we are now facing two problems, namely the coronavirus and the oil crash. Let us hope this is only temporary. However, it is extremely important that governments around the world take concrete steps to help us recover as fast as possible. These problems are so serious that they could mark the beginning of a crisis, and that is deeply troubling.
Naturally, the government will have to make use of its traditional tools. We have seen the Bank of Canada, which operates independently of the government, cut its policy rate. There is also public spending. The parliamentary secretary told us earlier that it is important for Canada to maintain a world-class health care system.
Canada's health care system belongs first and foremost to Quebec and the provinces. It falls under provincial jurisdiction. The federal government's role is to provide adequate funding for the health care system in accordance with its previous commitments, but we are seeing exactly the opposite. I would like to remind members that Quebec's former finance minister, who was a member of the Liberal Party, accused this government of engaging in predatory federalism because it is not honouring its commitment to provide better funding for health care. That really says a lot. There is still no social housing agreement between Quebec and Ottawa. Money for infrastructure is not being disbursed. These fundamental tools would be useful in dealing with current problems, but the government is making the process more difficult than it needs to be. Things are not moving as fast as we would like.
No short-term solution is very effective in boosting supply in an economic downturn. The crisis is an excellent opportunity to move toward the economy of the future. The parliamentary secretary was talking about a transition economy. In my opinion, the government really needs to get on that and stop insisting on remaining in the last century's economy. The price of oil has just dropped. It does not make any sense that the oil industry is receiving more government support than any other industry. We are talking about over $20 billion with cost overruns. That is what was announced just over a year ago. The government is stuck in the past. We need to diversify the economy, and Quebec has everything it takes to succeed in the transition economy.
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