Mr. Speaker, I am pleased to participate in the debate on the economic update that was delivered on November 27 by the finance minister. Unfortunately, the latitude of the debate has been stretched beyond recognition. We have spent far too much time debating politics and other strategic activities.
There is a very important matter before us and it is a matter that will affect the daily lives of virtually every Canadian.
Parliament operates on the basis of confidence. It means that the governing party enjoys the confidence of the House, and it is important to remember that. It also presumes the integrity of the information that is provided outside of this chamber. It also operates on the presumption of honesty. Unfortunately, far too often we have situations where people like to state things in a manner that h is not really accountable.
Accountability, to m, means true, full and plain disclosure of the reasons that one did or did not do something so that people will understand. To split hairs, to give a piece of the story without the other part of it tends to lead to a variety of interpretations rather than the truth, and I think that is what frustrates Canadians.
In the election of 2006, accountability was the very first issue that Parliament dealt with. Under the Federal Accountability Act, we established the position of Parliamentary Budget Officer. The Parliamentary budget Officer, Mr. Page, was appointed by the Prime Minister because, in the past, members of Parliament in some parties had been expressing their concern about the integrity of the information being provided by the government.
By providing an independent Parliamentary Budget Officer who has full access to the resources of the finance department, the same as the finance minister, he or she can provide information that Canadians all can rely upon.
Therefore, the starting point of this debate should be on what the Parliamentary Budget Officer said on November 20. He is an officer of Parliament and he said that the financial distress that the Government of Canada was presently experiencing had nothing to do with the global financial crisis or the credit crunch. In fact, he went further to say that the problems that we were experiencing from a fiscal standpoint were totally due to the actions or inactions of the current government, the Conservative government.
He is an appointee of the Prime Minister, someone who is charged with the responsibility of giving the facts. He said clearly that it was due to the erosion of the tax base. It was due to an increase in spending by over $40 billion annually, which put us into a deficit situation.
A report was released by Mr. Page in which he points out that the Conservative fiscal policy decisions are largely to blame for what is occurring. He states:
The weak fiscal performance to date is largely attributable to previous policy decisions as opposed to weakened economic conditions, since nominal GDP is higher than expected in Budget 2008.
Let there be no question, from any side of the House, that the numbers in the deficit scenario laid out by the finance minister in the economic statement on November 27 reflect what the government expects to see in the absence of doing anything else. It has no budget and no stimulus package. What it is saying is that it should just keep going and do nothing.
If we look at page 50, we see that the government is, for the next fiscal year, projecting a $6 billion deficit. It inherited a $13 billion annual surplus but that is gone. There is no surplus. It was depleted by the erosion of the tax base and by excessive spending at a time when we should have been prudent.
The Conservative government's mechanics of budgeting and spending has changed the way in which budgeting has been approached in the past. In the past, when the Liberals, for instance, took over in 1993 and inherited a $42 billion annual deficit, we had to get our fiscal house in order. It took until 1997 for that to happen but since then we have had surplus budgets. Those budgets were achieved and, in many cases, over. The key is that if we do not pay down some debt in good times, we will never pay it down in bad times. That is important, which is why having a surplus is not a bad thing.
When we were faced with issues, such as the SARS crisis, the BSE crisis, the Mexican peso crisis and even 9/11, those had significant impacts on the financial circumstances of every government involved with those events.
Included in the budgetary planning and strategy for the Liberal government was a contingency reserve. It is surprising that even the Parliamentary Secretary to the Minister of Finance thought it was actually money sitting as a reserve to spend if we needed it. The contingency reserve is not money sitting somewhere. It is a principle. The contingency reserve says that once we get to a position where we only have a $3 billion surplus, we will not spend any more money unless there is a significant unplanned, unanticipated activity, like a SARS crisis, a BSE crisis or 9/11. That is when we can dip into that last $3 billion of the ongoing surplus.
However, there was another principle in there, the prudence principle. The prudence principle said that there has been some discomfort with the government's forecasting of growth rates and interest rates. Even though we rely on the input of various parties, we will build into our budgeting a prudence factor. The prudence factor took the average projected GDP growth rate of the third party experts and reduced it by either a quarter or a half, in fact it was a very conservative estimate of growth. We did not want to overstate it. If anything, I would rather understate growth than overstate it, so we get the worst case scenario in our budgeting.
That was included in the budgets that were presented to Parliament. Those are the principles under which budgets were prepared and those are the principles under which, not only did we get the government books in order, but we had 10 years of surplus to pay down debt, restore funding to all of the important programs that Canadians need and deserve, and reduce taxes, but only when they were affordable.
For instance, we can sell an asset, get the profit from the sale of that asset and then use that to spend. That is available for one year. Alternatively, we can keep the asset, which will pay dividends or some return, rent or whatever it might be, and that benefit will be there each and every year for as long as we own the asset.
It is important to understand that principles were articulated in the finance minister's economic statement of November 27, which included such things as the sale of $10 billion worth of assets. If $10 billion worth of assets are sold, there are $10 billion to spend, once. Those assets were either providing a return or they were eliminating an expense that we would otherwise have had to incur.
Let me give an example. If government employees are working in that building and a decision is made to sell that building and lease it back, rent will have to be paid. If a building is owned, rent is not paid, but there are other costs such as maintenance and capital cost allowances, et cetera. There are some financial implications. Generally speaking, a well managed asset means a better deal could be done than a lease deal because there would be no rate of return built into the leasing costs.
I am a chartered accountant, and I do not want to give an accounting lesson, but I want members to understand that there are some fundamentals we should not discount or ignore or say that is not the case and summarily dismiss them. They are facts.
The Parliamentary Budget Officer has said, notwithstanding the protestations of the government, that the government is solely responsible for the economic mess we are in today, and it will get worse.
There is an interesting article in the Globe and Mail, which I want to bring to the attention of the House and of Canadians because I think it is useful. The headline reads “[Finance Minister's] plan prolongs the pain”. This opinion is from one of the key forecasters who the federal government depends on to do its budgeting and the update on November 27.
In the fiscal update the finance minister argued that his previous tax cuts were stimulating the Canadian economy by about $31 billion. Let me remind the House about the presumption of honesty, integrity, credibility and accountability.
The finance minister says that what the government has done in the past will continue to stimulate the economy by $31 billion a year. That is why he has not taken any additional measures right away in terms of economic stimulus. This is the fundamental fact. The finance minister has said time and time again that he wants to wait and see whether we need an economic stimulus. He wants to wait and see whether jobs are lost.
Anybody who has taken economics 101 or better knows about the concept of economic lags. An economic lag tells us to do something, but it will take three, six, nine months, depending on what it is, before it has any implications.
If we wait to have perfect information before we do something, we may have missed the boat and we may spend the money and get no return for it because we have buried ourselves so badly we cannot get out.
This article from a forecaster, one the finance minister has been relying on, says that the finance minister is wrong. We cannot assume that what he did in prior years will continue to have that stimulative effect. It is not there.
We are in a deflationary cycle now. In fact, the growth rate included in the economic statement for the next fiscal year was 0.3%, the highest projected growth rate of any expert who ever opined on such a factor. Most countries are between 0% growth and minus 0.2% growth.
Why does the Parliamentary Budget Officer not agree with the finance minister? The forecasters on whom the finance minister relies for budgeting do not agree with the finance minister. The OECD does not agree with the finance minister. Nobody in the G20 agrees with our finance minister.
Hon. Joseph Volpe: They must be all wrong and he is right.
Mr. Paul Szabo: They must be all wrong and the finance minister is the only one who knows.
If we look at this very carefully, this is not a subjective issue. This is a situation where the numbers speak for themselves. We now have the numbers rolling in that show we are already in a recession. They show that we are already incurring deficits. They show that our growth has gone down, not up. Yet the economic statement says that we still will have 0.3% growth.
It is not credible, and the article is all about that. The government has misled Canadians and parliamentarians. On top of that, and I will not go into it, because it would be fun, it threw in some items which would inflame a few people. It had nothing to do with protecting the jobs, savings, mortgages and pensions of Canadians. It had to do with politics. That is why Canadians are so upset.
The turnout rate in the last election was very low. I have no proof of the reasons, but I can only speculate that it was because of the nastiness, the games, the lack of credibility, the lack of confidence, that ordinary, law-abiding decent people looked at Parliament and the government and said that they did not want to have anything to do with us.
When are we going to change? When are we going to start accepting facts? When are we going to start taking decisive action when action is necessary?
I wonder what Canadians would say if the government immediately announced that Parliament would resume on January 4, not the January 27, and that the finance minister would come to this place present a mini-budget, not a full-blown budget, and lay on the table the principal strategies and actions to address the realities of the Canadian economic crisis? Know what? Canadians would say that would be the responsible thing to do. Canadians would look at it carefully and they would seek the assessment of the experts to see if this would be a good thing.
We have a lot of input from the provinces, the economic forecasters, Canadians and every one of the political parties. They have all called for an economic stimulus. The auto sector, the manufacturing sector, the forestry sector and the health care system have called for it. The OECD has forecasted that we will lose about 250,000 jobs in the near future. That is a lot of pain for a lot of Canadians.
How can we ignore the fact that Canadians will be looking at this and saying, “Can't you mitigate the situation? Can't you do something?”
We can. We can accelerate the infrastructure programs. We can make stimulative investments in certain areas where job losses are anticipated. We can mitigate those job losses, or we can invest in those areas where we know we can quickly get jobs put on the table.
Now is the time for us to stop the rhetoric about how we will do this and who will govern. We are talking about the economic livelihood and vibrancy of Canada. We are asking all members of Parliament to stop the politics and start to put the interests of people ahead of partisan interests.