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View John McKay Profile
Lib. (ON)
Mr. Speaker, I am thankful for the opportunity to take part in the reply to the Speech from the Throne. Before I do so, I want to congratulate you on your election. You will make a very honourable Speaker.
I want to express my appreciation to the people of Scarborough—Guildwood who have returned me to this chamber for the eighth time. When I started in 1997, I did not anticipate that I would be here for eight successive elections, but it has been an interesting journey for the last 22 years. The other very encouraging thing is that the percentage of the vote went up to the highest level that I have achieved in eight years.
As we know, elections are strange enterprises at times, with a lot of non-substantive things and occasionally some substantive things. I do not want to dwell on the non-substantive things. Today I want to take the opportunity to reflect on what I consider to be the most substantive issue that affected Scarborough—Guildwood during this election, and that is the Canada child benefit. The Canada child benefit is, in my judgment, the signature initiative of this Prime Minister. Once he leaves and history is written about these parliaments, that will be one of the things that historians comment on, namely, the significance of the Canada child benefit and its significance to all people in Canada, but particularly low-income people.
The Canada child benefit is a very large initiative. If we go to table A2.6 in the 2019 budget, at page 289, in the top lines we will see the amount of money that is returned to Canadians, that is sent to Canadians as a benefit. There are revenues from taxes that come in and then the first set of lines indicate the benefit amounts that go back to Canadians. The first line in that set of lines shows that $56 billion will go to elderly benefits, the second line shows that about $20 billion will be returned to Canadians in the form of employment insurance and the third line shows that $24 billion will go to the Canada child benefit. That is the second most significant benefit that goes directly to Canadians from their federal government.
It is reasonable to ask ourselves whether we are, in effect, getting value for money. This is of particular interest to me as the member of Parliament for the riding of Scarborough—Guildwood. When we break that $24 billion down, what does that mean to the riding of Scarborough—Guildwood? What that means is that, each and every year, $100 million goes into my riding of Scarborough—Guildwood. That is a significant sum of money for a riding that has about 115,000 to 120,000 people in it. Centennial College would contribute to the riding with a somewhat similar amount of money, I should imagine, or more. The University of Toronto Scarborough Campus would contribute a similar and significant amount of money. The Scarborough hospitals have huge budgets. Toyota contributes a huge amount of money to the riding. I am sure there are other industries that contribute significant amounts of money to the riding.
This is the order of magnitude of the amount of money that comes into Scarborough—Guildwood, and it is even more significant for its people because Scarborough—Guildwood in the last four years had the greatest reduction in child poverty in the country. There was a 25% reduction in child poverty in Scarborough—Guildwood in the last four years, the number one riding in all of the country.
Why would that be? I can think of at least two reasons. One is improved employment opportunities. At the beginning of 2015 the unemployment rate nationally was around 7.1%. Generally speaking, Scarborough—Guildwood is at a higher rate than the national rate. By the election in 2019, the rate was about 5.7%, again with Scarborough—Guildwood slightly above that. Increased benefits and increased employment opportunities would account for some significant elements of that 25% reduction in child poverty.
The second thing has to be the Canada child benefit, because it acts as a guaranteed minimum income for families. I think it will turn out to be a historic initiative, but it will also turn out to be a test case as to whether this is the best way to alleviate poverty and reduce the growing inequality between people who do very well in our society and those who struggle.
Those are the two reasons that I think Scarborough—Guildwood had such a significant reduction in child poverty. We have to ask why that would have such an economic impact on the people of Scarborough—Guildwood, and the most obvious and intuitive reason is that people in the lower-income quintiles actually spend their money on necessities. It is intuitive and it does seem to make sense, but I am very grateful to the people at the Canadian Centre for Economic Analysis who put together a paper called “Economic Contribution of the Canada Child Benefit: A Basic Income Guarantee for Canadian Families with Children”. They started to put data, flesh to that intuition, the intuition being that poorer people will spend money on food, shelter and core necessities. Indeed, that is exactly what the data does show.
The number one expenditure of the people who receive the Canada child benefit is increases to their shelter. The second, and this is counterintuitive, is on tax and I will come back to that shortly. The third is transportation, the fourth is food and the fifth is household operations. Four out of the five elements fall within one's sense of intuition, which is that lower-income folks will spend their money on things that they actually need. That seems to be borne out by the data.
The other interesting component of the data is that the benefit decreases as income increases. In the upper echelons of the quintiles that have a higher income, the money starts to get diverted to other things such as savings, investments and various other things, all of which we argue are good things.
However, there is an argument to be made that it is somewhat dead money. The lower-income quintiles spend the money on food and shelter, which goes directly and immediately into the economy, while the upper quintiles spend some on things like investments, etc., which is money that is set aside properly, but nevertheless is money not spent immediately and therefore has no significant immediate economic impact.
The interesting argument is this: if the federal government is a steward of taxpayer dollars, then what is the highest and best use of taxpayer dollars in order to stimulate the economy? What the data starts to show on the Canada child benefit is that it is benefit money going directly into the hands of Canadians. Whether it is through elderly benefits, employment benefits or child benefits, that is the money that gives the greatest stimulus, as opposed to tax cuts.
The data really starts to jump out at us. However, I want to deal with one thing before we get into further discussions about the benefits of the stimulative effect of a benefit as opposed to the stimulative benefit of a tax cut, which is that $24 billion is a lot of money. It is actually greater than our National Defence budget; $24 billion is actually greater than almost all other departments.
It is reasonable to ask what $24 billion actually costs. As it turns out, $24 billion does not cost $24 billion, because $13 billion comes back in taxes. For the federal government's $24 billion, $13 billion comes back in taxes to both the provinces and the federal government. Of that $13 billion, $7 billion comes back to the federal government and $6 billion comes back to the provinces. The federal government has a $24-billion investment that really only costs the federal government $17 billion. The provinces have no investment in the Canada child benefit and yet reap a $6-billion benefit. It works rather well for the provinces.
What does $24 billion get us in terms of economic stimulus? It gets us roughly the GDP of the province of Nova Scotia in terms of economic stimulus, or around $46 billion in direct and indirect economic stimulus that is inputted through this investment of $24 billion. That $24 billion provides stimulus that is roughly equal to 0.5% of the nation's GDP annually. Since the inception of the program, it has contributed $139 billion to the nation's GDP.
All sectors of the economy benefit. It is intuitive, but makes a lot of sense that the number one beneficiary is housing. People who receive the Canada child benefit spend their money on housing.
The second is manufacturing. People with kids who receive the money spend it on clothing, shoes, bicycles and other things that need to be manufactured.
The third economic sector that benefits the most is construction.
Every year, this $24 billion in direct and indirect stimulus creates 418,000 full-time jobs and about 70,000 part-time jobs. That is a lot of jobs: 1.4 million jobs since its inception. Those are merely the benefits and the stimuli that can be measured.
There are, of course, a great number of benefits to the Canada child benefit that cannot be measured, that do not fit nicely within the economists' metric. It is intuitive. If a child goes to school properly clothed and with a full stomach, the greater likelihood is that the child will learn a lot better. Similarly, children who are properly clothed and well fed will not have as many negative health issues.
Therefore, the indirect benefits that are not measurable, which I am perfectly prepared to concede, but intuitively make a great deal of sense are huge to families and people with children.
The benefits of the Canada child benefit on the health system are not measurable, but make a great deal of sense. The benefit reduces financial stress. The multiplier is enormous. A healthier child is a more productive child. A better-educated child is ultimately a more productive citizen.
Admittedly, this initiative costs a great deal of money, but it makes economic sense, which I hope I have made some case for from an economic standpoint, health sense and education sense. There is an argument to be made that this is the highest and best use of taxpayer dollars.
Let me finish with a comment from one of my favourite Conservatives, and I do not have many favourite Conservatives. I know they are a little upset, but I would recommend they talk to former Canadian senator Hugh Segal, who said, “we don't want 3.5 million...Canadians to be left behind. That's not who we are... It is in our interest to have an economy where liquidity and financial capacity is available to all.”
I submit that my Conservative colleagues should review Mr. Segal's views on this matter. He and his other colleague, former Senator Eggleton, conducted a massive study into Canadian poverty when they were both senators. One of their most significant recommendations was that there be a Canada child benefit and that it act as a minimum income guarantee for all families in Canada.
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