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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-30 14:36 [p.8049]
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Mr. Speaker, this morning StatsCan delivered some bad news for Canadians. Economic growth was zero in July. Our stalled economy means we do not have enough good jobs. Canada lost a staggering 112,000 private sector jobs in August.
According to the OECD, Canada ranks a dismal 16th out of 34 when it comes to employment. Even the Minister of Finance admits this is not good enough, at least when he is out of the country. He confessed in New York today that “We'd like to grow faster”, so where is his plan for growth?
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-24 16:31 [p.7793]
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Mr. Speaker, I am very pleased, on behalf of the Liberal Party, to support this deal. We are going to be voting in favour of it.
Canada is a trading nation. We understand that, as the 11th largest economy in the world, it is absolutely essential for Canada to be fully plugged into the global economy, and that means doing trade deals.
We are also very pleased that we finally have a deal with South Korea, an advanced and exciting democracy. It is a great country for us to be doing business with.
What I am going to be talking about first is Canada's position in trade, our views on what we should be doing and what we see going wrong. Then I will talk about this specific trade deal with Korea.
Starting with why trade is important and what Canada's current position is, trade has never been more important for Canada or any other western developed economy in this 21st century. We are living in the age of globalization and countries that do not figure out how to plug themselves into the global economy are going to fail. They are going to fail their citizens and, crucially, they are going to fail to deliver the kinds of middle-class jobs and middle-class incomes that are at the centre of the Liberal approach.
For Canada, exports account for about 30% of GDP, and one in five Canadian jobs right now is linked to exports. That is why this is such an important issue and why the Liberal Party stands so firmly in favour of free trade and an expanding Canadian trade relationship with the world.
What I am very sad to note, however, as my colleague from Winnipeg has already alluded to, is that right now Canada is falling behind in trade. We hear a lot of glowing rhetoric from the other side of the House, but the reality is that we are not doing well in trade, and all Canadians are hurting because of it.
The Liberal Party believes in listening to businesses and to the people who are out there building our economy. That is why we paid so much attention to and are so worried by a report that was published this year by the Canadian Chamber of Commerce. The title of this report alone should worry us all. It is called “Turning it Around: How to Restore Canada’s Trade Success” . That really tells us everything. We used to be doing better than we are doing today, even as the rest of the world is getting better at trade and better at export-led growth.
When we look inside the report, it gets worse. I would like to read parts of it because it really paints a worrying picture of what is happening right now in Canadian trade. This is what the Canadian Chamber of Commerce has to say:
...the increase in exports and outward investment has been slow in recent years, and diversification to emerging economies has been limited.
The Chamber of Commerce points out that Canada's falling behind its own lagging performance has come at precisely the time when the rest of the world has been surging forward. That is something we will see when we turn to speaking specifically about trade with Korea.
The Chamber of Commerce goes on to give some detail about what is happening. It says:
Despite more firms looking abroad, Canada is lagging its peers according to several measures. Over the past decade, the value of exports has increased at only a modest pace...This is despite significant price premiums received by Canadian producers of energy, mineral and agricultural commodities.
Now, here comes the crucial part. The Chamber of Commerce says:
If these price increases are excluded, the volume of merchandise exports shipped in 2012 was actually five per cent lower than in 2000 despite a 57 per cent increase in trade worldwide.
If we take out the growth in commodity prices, what we have seen is a 57% increase in trade worldwide over the past decade and Canada actually falling by 5%. We hear a lot of glowing rhetoric about trade performance. We have a lot of photo ops of trade deals signed. However, the reality is that the numbers reflect a Canadian economy that is performing more poorly in exports. This is also seen in the numbers my colleague referred to in mentioning the swing from a trade surplus to a trade deficit. Exports are an area that we believe is essential to driving growth and producing middle-class jobs. Economists agree with us.
This is a real problem. It is a huge issue for Canada. It is a huge issue for all middle-class Canadians.
Let us turn specifically to Korea. As I said, the Liberal Party is pleased and proud to support a free trade deal with South Korea. However, we have a real problem with the timing of this deal. The problem is that it has come too late. That lag has done real and quantifiable damage to the Canadian economy and to Canadian exporters.
In describing his pride in having secured this deal, the minister spoke earlier today about how this deal will “restore a level playing field”. He also said, “our fiercest competitors...are already benefiting from their own preferential access”. That is sadly true but not something to be proud of. We should be ashamed and sorry that our fiercest competitors are enjoying preferential access and that it has taken us so long to get this deal done.
The United States has already done a deal with South Korea, which was ratified by the U.S. Congress in October 2011. As far as I know, the current Canadian government was in office then. That agreement went into effect in March 2012. Again, the government was in office. We did not have a deal then and that hurt Canadian exporters, who were put at a disadvantage relative to U.S. exporters.
A deal with the EU has provisionally been in force since July 2011. Again, the current government was in office. It allowed a huge trading bloc to do a deal with South Korea, which really did serious damage to Canadian exporters.
Australia is smaller than us. One would think it would have less leverage, yet it has already done a deal. It did its deal in April 2014.
This has done real quantifiable damage to the Canadian economy and to Canadian exporters. We have lost 30% market share. The minister himself pointed out that our fiercest competitors already enjoy preferential access. They have used it and the loss to Canadian exporters is quantified at some $1 billion. That is serious damage to the economy.
While we are pleased and proud to vote for this deal now, our question is this. Why was it not done sooner and why did the government allow Canada to lose $1 billion? We could do a lot of good in this economy with another billion dollars.
The minister also spoke about how he is proud of this deal and how it is important because it will provide an essential foothold in Asia. That is a lot of boggle. We think it is very important now for Canada in its trading relationships to move to deal with the fast growing, emerging markets in Asia. However, we are gravely concerned that with the poor performance we have seen in Canada's trade negotiations with Korea, where I underscore we have lagged behind the U.S., the EU, and Australia, all of whom are our competitors and peers, we could see a similar lost opportunity in the absolutely crucial trans-Pacific partnership talks. Canada joined those talks late. They started in 2008. Again, the members on the other side of the House were in government. Canada was not at the table. Canada did not join in until June 2012. If we get to the party late, we have to deal with terms that are not of our own making, and so we start at a disadvantage.
The Liberal Party would like to assure Canadians, and also our friends on the other side of the House, that we will be watching Canada's performance in those negotiations closely. There is already some talk that Canada, in multilateral arenas of all kinds, is not seen as the most valued, the most co-operative, partner. Therefore, we will be watching closely.
I would like to assure our partners in the TPP talks and the Canadians who are so eager for that deal to get done that if the members on the other side of the House do not manage to get it done in the next 12 months or so, it will be a priority for us and we will get that deal done.
What is also essential for us to focus on, and where we would like to see much more performance, is a wider understanding of the other emerging markets that we should be going after.
We are glad to support the Korean deal, which we do without reservation, but the sad history of this deal is that because we started late and did the deal late, Canadian companies have suffered. Making up that 30% lag, that 30% loss, will require a lot of hard work by our companies. They are coming from behind.
We want to ensure that does not happen again. We would like to see the government much more aggressively pursue trade deals with other fast-growing emerging markets around the world; particularly, in Africa. That is a part of the world that is full of opportunity for Canada, for Canadian companies, and where a trading relationship can do a lot of good.
I would also like to see much more action from the government in an area where we see very strong rhetoric but, sadly, not always the action to match; that is, our relationship with Ukraine.
Most of us here were proud to be in this House when President Petro Poroshenko spoke to us and talked about how proud he is of the Canadian relationship with Ukraine. He also invited us to quickly conclude a free trade agreement with Ukraine.
Again here, I am sad to say, Canada is falling behind. Europe signed a trade deal with Ukraine last Tuesday. We like to call ourselves, Canada, Ukraine's best friend. Where are we on that file? It is time, really, for us to act. The message is the same. The rhetoric is okay. We really want to see action. We will strongly support and work with the government on a deal with Ukraine. That is something, surely, we can get some cross-party support on and act quickly and get it done.
We are very happy to support this deal. We think a free trade agreement with Korea is important. We understand the absolute importance of free trade for Canada.
We would like to see the government do a better job of actually focusing on the results. It is really important.
We have spoken in this debate already of the swing we have had from trade surplus to trade deficit. That is not a good report card for the Canadian export sector. That is the number we have to look at and we really have to focus on. A big part of the problem is that we are coming late to these trade deals.
I want to remind this House that the United States Congress ratified its deal with Korea in October 2011. It went into effect in March 2012.
The EU agreement has been in force since July 2011.
Again, even in Australia, which is smaller than we are, their agreement was signed on April 2014.
So, it is great that we are doing this deal with a strong democratic country in Asia. It is great for our exporters to now have access to those essential Asian economies. However, we really need to underscore, even as we support this deal, that it should have been done more quickly and that our exporters have suffered. They have lost $1 billion. They have lost about 30% of their market because, again, as the minister himself said, our fiercest competitors are already enjoying preferential access.
Nonetheless, it is better late than never. We are pleased to be supporting this deal. Korea is already our seventh-largest merchandise trading partner. It is a democracy. There are a lot of exciting technologies there. It is a great match for us.
We have heard particular enthusiasm from agriculture food producers, from the aerospace industry, and from spirits industries. We are hopeful that, thanks to this agreement, those Canadian exporters who lost out because their competitors enjoyed preferential access, while they did not, will be able to make up some of those gains.
We are going to be supporting them in that effort. We are glad that we finally have a deal that will allow them to do that.
However, again, we must not lose sight, even as we back this deal, of the fact that it has taken a long time to get there and that, going forward, it is really essential for Canada to not be following in the wake of the U.S., the EU, and Australia when it comes to doing trade agreements with emerging markets.
It is really important for us to be in the lead. When one is first at the table, one gets the best deal—and not only does the country get the best deal, but its businesses get the best deal. It can be very hard to unseat a competitor who gets in first because he or she enjoyed preferential access because his or her government was more on the ball.
On TPP, it is going to be really important for Canada to shift from this hostility, this sort of go-it-alone bullying approach that has characterized our attitude in multilateral organizations of late. This is a really important deal, and with this opening up of the Asian markets, about which we have spoken so much today, and of which we hope the Korean deal will be a harbinger, TPP is going to be where the rubber meets the road on that. It is an essential opening to Asia.
We understand the need for some closed-door negotiations in trade agreements. We get that. These are very complicated. TPP is particularly complicated because so many parties are at the table. However, it is important to note that we have started those negotiations at a disadvantage. We did not get there until 2012. Everyone else, apart from Mexico, was there from 2008. We had to agree to accept some of the terms that had already been laid out without us there.
It is really important that we play ball now, that we are involved and seen as productive partners. It can sometimes be appealing, and maybe make a testosterone-type person feel particularly good, to use harsh, bullying, tough-guy rhetoric when talking, perhaps in the House. However, we are only the world's 11th largest economy, and when it comes to trade negotiations we have to be co-operative and collaborative and earn the trust of our partners. I would strongly urge the members on the other side of the House to take that kind of approach—dare I call it a small l liberal approach?—when they sit down at the table at the TPP negotiations. This is really essential for the future of Canada's export economy. If the Conservatives want some tips on how to do that, we are happy to talk.
In closing, we do support the deal. South Korea is a powerful economy. It is a democracy. It is a great place for our Canadian companies to be doing business. We regret the fact that we have lost 30% of market share due to the slowness of the agreement being done. However, we are confident that the House will support the deal and that Canadian companies are strong enough to bounce back.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-24 16:51 [p.7796]
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Mr. Speaker, I will go through the member's comments one by one.
First, on the facts with respect to Australia. The negotiations started in 2009 and the agreement was signed in April 2014, which is what I said. It was tabled in the Australian parliament in May 2014. Australia signed the deal before we did. Again, we have to get better at this.
I am rather touched by the hon. member and his colleagues' interest in the Liberal Party's allocation of the valuable time of our MPs and who sits on which committee. I am proud to work with my skilled and knowledgeable colleague from Saint-Léonard—Saint-Michel, who represents us effectively on the trade committee.
As far as I know, a majority government has a lot of prerogatives, but it does not get to decide how opposition members spend their time and which committees they formally sit on. I do really want to clarify this. I want to be clear that I do not sit on that committee for the Liberal Party, and so to allege that I am absent and not performing a duty that I am obliged to perform is not correct. I want to be able to say that in this House. That is very important—
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-24 16:54 [p.7796]
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Mr. Speaker, on CETA, we in the Liberal Party are adults and we understand and respect the fact that, if trade agreements are going to be done, they need to be done behind closed doors. That is particularly true when it is a complicated agreement, as it necessarily is with the 27-member-state European Union. We get that. From the start we have been supportive of CETA in principle, and I am proud that we have been.
We support free trade. For our government negotiators to go to the table being able to say they have cross-party support is effective and important for Canada.
Equally, we appreciate the reality that we are only able to evaluate an agreement in sum when we see what negotiators have come up with. Trade is like a Rubik's cube; each piece is dependent on the whole. We can only evaluate it definitively when we see the details, and that was the point.
I would be happy to talk about Honduras, but I see the Speaker is telling me to sit down, so I will.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-24 16:55 [p.7796]
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Mr. Speaker, the member for Winnipeg North is legendary in the House for his ability to talk about anything and to know about everything, and I salute him for that.
When it comes to trade, our issue is this. We are firmly pro-free trade, and we hear that rhetoric coming from the other side of the House. It is one thing to have bold ambitions, but those ambitions have to be matched with actual performance.
It is not just our party that is concerned about this. The Canadian Chamber of Commerce, the respected voice of business, is also really concerned. We are seeing the reality, which is that Canadian trade and export performance is falling behind. That is a real problem for the 11th-size economy in a globalized world economy, and it is part of the reason our middle class is falling behind.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-24 16:57 [p.7796]
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Mr. Speaker, I would like to thank my colleague for her question. I will not try to answer her in French right now, but maybe next month. It is very important to me.
It is absolutely true that Korean cars are present in the Canadian market, that South Korea currently exports a lot more cars to Canada than the other way around and that there have been some concerns around it.
The reality, though, is the Canadian car export market in South Korea right now is relatively small and the match of Canadian manufactured vehicles that would suit the needs of Korean consumers is really small.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-24 16:58 [p.7797]
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Mr. Speaker, I absolutely agree with the hon. member for Saanich—Gulf Islands. Part of the reason we are seeing this view, and I emphasize this because it is really important, coming from the business community, among others, that Canada's export performance is falling behind is because of this balance.
We do not need to shrink from the fact that we are a powerful commodity producer. That is a great thing, but that cannot be the only leg on which our economy stands, particularly because our economic performance has been flattered by high commodity prices, which we cannot count on lasting forever.
In building a stronger export-driven Canadian economy, we have to work harder to be sure that value-added exports are a big part of it, including really high-valued manufacturers.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-09-23 14:37 [p.7722]
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Mr. Speaker, Canada lost a staggering 112,000 private sector jobs in August. Over the past year, our working-age population has grown by 375,000, but only 15,000 new full-time jobs were created.
The Conservatives' small business tax credit will make this dire situation worse by giving employers a perverse incentive to actually cut jobs. The Liberal plan would foster growth and help create as many as 176,000 new jobs.
Why would the government not adopt our plan?
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-19 14:24 [p.7164]
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Mr. Speaker, the Minister of Justice recently made remarks to the Ontario Bar Association that were so strikingly sexist that lawyers there described them as offensive.
As one of the many mothers of young children in this House, I wonder whether the minister believes that we, too, should be intimidated by the old boys' network. Does the minister think that we, too, should stay at home because of our special maternal bond with our young children?
Will the minister apologize for his blatant chauvinism?
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-17 14:14 [p.6988]
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Mr. Speaker, this month Toronto will have the honour of hosting the WorldPride Celebration. My constituency of Toronto Centre will be at the heart of the festivities.
We can be proud this landmark celebration will take place nearly nine years after gay marriage became legal across Canada.
What better symbol of our decade of equality than our victorious premier, Kathleen Wynne, the Commonwealth's first openly lesbian elected head of government?
WorldPride is a moment for us to redouble our work to support LGBT rights. Here at home, a particular focus must be LGBT youth, who are too often a target of bullying and disproportionately find themselves homeless and unemployed.
WorldPride is an essential time for us to speak out about LGBT rights around the globe as well. Too many countries, ranging from Russia to Uganda, are turning back the clock.
LGBT rights are human rights. Canada must be both a world leader and a global haven on this crucial issue.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-17 17:45 [p.7015]
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Mr. Speaker, it does seem cruel to be talking about Canada's excellent cheeses at a quarter to six. I got very hungry listening to the previous presentation.
Having heard about the hon. member's great love for Canadian cows and Canadian dairy, I cannot resist sharing with the House the fact that I am not only the daughter-in-law of a dairy farmer but also a granddaughter of dairy farmers, and so I join everyone here in our support for our great dairy industry and the tremendous innovations that are happening there.
What I would like to talk about today, and what I think this gives us an opportunity to talk about more broadly, is our trade policy. I would like to discuss what is happening with the CETA deal and the need for transparency in our trade policy so that Canadians can see what is happening and the House can discuss what the deal actually contains. I want to talk about a trade policy that actually delivers, a policy whereby deals that are announced are actually concluded and whereby the deals that now stand concluded actually deliver the results. We in the Liberal Party know a good trade policy can and must deliver for the Canadian economy.
We need trade to work for us because we are a small country—not in geography, but in population—in a huge world economy. Without effectively joining Canada into the global economy, Canada will fail. Our middle class will fail to have the rising incomes that we are not getting now and that we really need.
We are really supportive of an effective trading policy. However, I am sad to say that we do not feel we are getting the results that a truly liberal trade policy should be delivering. In particular, I would like to talk about CETA.
The CETA deal, as we all know, was signed with a lot of fanfare on October 18 of last fall by the Prime Minister and the President of the EU, José Manuel Barroso. We still do not have that deal concluded, although we have had some opportunities. The Prime Minister was recently in Brussels. There was a lot of speculation and a lot of hope among Canadians that he would come home with a done deal. He has not done that. We would like to hear why. We would like to know what is going on.
The irony of the situation for us as Canadian legislators, at least for those of us on this side of the House, is that right now we and Canadian citizens are hearing more from EU officials and EU diplomats.They have been quite open in talking about how the deal is not quite ready and talking, quite frankly, about how that initial agreement was signed much earlier than is normal in these trade negotiations and that much more work needed to be done then. More seems to still need to be done now than we were led to believe when the agreement was signed with such great fanfare.
It is even the case that we have had a hard time tracking down what was actually signed. We submitted an access to information request to access the agreement that was actually signed by the Prime Minister and the President of the EU. Here is what we were told by the Privy Council Office:
A thorough search of the records under the control of PCO was carried out on your behalf; however, no records relevant to your request were found.
This really is theatre of the absurd. We really would like to know. I think everyone in the House would like to know and needs to know. As the private member's bill suggests, we need more transparency on what is happening. We need not just great photo ops, but the details of what is going on with these trade deals that are so essential for the Canadian economy and for Canadians.
What I am particularly concerned about when it comes to the CETA deal is that because of the timing, because of the lag between today, in the middle of June, and October 18, Canada now finds itself behind the United States in the queue of nations that are negotiating trade with the EU. The story of Canada, the story of Canadian diplomacy in the world, is understanding what it means to be the neighbour of the United States. There can be big advantages, but it also means we have to dance delicately and lightly and act smarter.
While we were ahead of the U.S., while the U.S. proposals were not on the table, there was a real opportunity for us to have the full attention of EU officials and EU negotiators. Now, however, I am very sad to say that people informed about these deals are saying that EU officials are, understandably, focusing much more time and energy on their negotiations with the United States. We are now, I am afraid to say, in a position where important concerns, including concerns of the Canadian dairy industry and of Canadian auto manufacturers, are going to have to take a back seat to the deal being hammered out by the Americans, and we may well find ourselves having to settle not for a deal made for Canada in Europe but for a copy of what the Americans are able to negotiate.
It did not have to be that way, given that this deal was being worked on earlier, and we would really like to hear why we have let ourselves fall behind a party that has a bigger economy to bring to the table.
I would also like to point out that despite the fact that many of us in this House agree that trade and exports need to be, and are, an essential part of a healthy Canadian economy, we are just not seeing that performance today. We have photo ops and we have trade deals announced, but they are not moving the dial when it comes to Canada's actual economic performance.
I do not ask members to blindly trust my assertion. I do not ask members to simply take my word when it comes to the undeniable fact that Canada's trade policy, although we are getting the photo ops and the announcements, is not delivering for the Canadian economy. Here is who I do ask members to trust: the Bank of Canada.
In its financial system review published this month, this is what the Bank of Canada had to say, in part, about export and trade and its performance for the Canadian economy: “In Canada, the anticipated rebalancing of economic growth toward exports and investment remains elusive....”
These are damning words. It is not enough to have photo ops of trade deals. It is not even enough to have trade deals. What we need are trade deals that do the job we need them to do, and that is to strengthen the Canadian economy. Right now, as the Bank of Canada economists say, we need a tilt toward exports. Trade deals are meant to facilitate that, but as the Bank of Canada says, that shift remains elusive.
We really need to see and would like to see more transparency about what the government is doing on this file. We need and want to see harder work on this file and more delivered results.
I would like to cite another source, another group that is deeply concerned about Canada's export performance. This is another group that we in the Liberal Party listen to very closely, the Canadian Chamber of Commerce. What business has to say about Canada's trade and about export performance in particular is very worrying. Its report was issued just last month, and even the title is very worrying: “Turning it Around: How to Restore Canada’s Trade Success”. It states that “... the increase in exports and outward investment has been slow in recent years, and diversification to emerging economies has been limited.”
This is echoing the Bank of Canada report. We are just not seeing the export performance that we need.
The Chamber of Commerce is worried. In referring to “Canada's lagging trade performance”, here is what it says:
Despite more firms looking abroad, Canada is lagging its peers according to several measures. Over the past decade, the value of exports has increased at only a modest pace.
Most worrying of all, the chamber did an interesting calculation in which it backed out the increase in commodity prices that has flattered Canada's export performance. It concluded:
If these price increases are excluded, the volume of merchandise exports shipped in 2012 was actually five per cent lower than in 2000 despite a 57 per cent increase in trade worldwide.
Therefore, the real story—what the numbers say, what the Chamber of Commerce is worried about, and what the Bank of Canada is warning us about—is that our trade performance is lagging behind. We need to do better.
To conclude, we very much hope that we will have more transparency and better performance on the CETA deal and on deals with some of the big emerging markets in the world.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-11 15:05 [p.6640]
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Mr. Speaker, this month Toronto will have the honour of hosting the WorldPride celebration. This is an essential moment for us all to assert that LGBT rights are human rights, and to establish Canada both as a world leader and a global haven on this crucial issue.
My constituents understandably expect their Prime Minister to take part. Could the Prime Minister please tell the House which of the many Pride events he will be attending?
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-10 16:13 [p.6564]
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Mr. Speaker, I would like to start by saying that I will be splitting my time with my colleague, the member for Bourassa.
It is a real honour and a pleasure to be talking about this subject here in this House today. Rising income inequality is one of the most striking and most important new characteristics of the 21st century economy. It is a way the world economy and, particularly, the economies of the western industrialized countries have changed.
For all of us here in this House grappling with that transformation, it should be our absolute priority to understand it and work on ways to make this new economy work for all Canadians.
I would like to start with some data points. According to the IMF, since 1980, the richest 1% increased their share of income in 24 out of 26 countries. That is a really significant data point, because very often debates about income inequality happen in a national context, as our debate is happening here, and we lose sight of the fact that this particular story is a global story.
Of course there are national aspects, but overall the shape of what is happening is something that is happening particularly across the western industrialized countries. We must understand that in order to really understand what is going on.
This is happening in Canada as well. In 1980, the top 1% collected $8 out of every $100 earned in Canada. By 2010, that had surged 50% to $12 out of every $100. In the meantime, middle-class incomes in this country have been stagnating.
In 1980, middle-class families reported income of $57,000, and 30 years later they were still at $57,000. This growing income divide—and as I said, an income divide that we are seeing growing across the western industrialized countries—is also translating into a growing wealth gap.
I would like to cite one figure. This is based on some very important research that Oxfam has done, which is really important and something for us to all focus on. Oxfam calculated that if we took the richest 85 people in the world, their wealth is equal to the wealth of the bottom 50% of the whole world, 35 billion people. That is just 85 people, which is a lot fewer than it would take to fill this House. It would fill maybe a quarter of my side of the House. Let us think for one moment about what that says about our world today and about how the world economy is working.
It is important when we are talking about this, and particularly when our conversation moves to talking about political solutions, to really reflect on and acknowledge the fact that this is a new phenomenon. The world economy today is working differently from the way it did, particularly in the post-war era, when I think many of our conceptions of how the world economy works, and certainly many of our political ideas, were formed.
In the post-war era, we had a Goldilocks economy. It was a time when there was very strong economic growth across the western industrialized world, and at the same time income inequality was actually decreasing.
Starting about 30 years ago, that changed. Even as the economy grew, we started to see income inequality surging: a growing share of the income going to the very top and incomes in the middle either stagnating or actually declining, depending on which measure and which timeframe.
There is a lot of debate about what is driving this phenomenon. Inevitably that debate becomes politically tinged. All of us who approach honestly what is happening will have to agree that there are three primary drivers. One of them is in fact political.
The 30 years in which we have seen this surging income inequality across the west also coincided with the rise of neo-liberalism, what we might want to call the Thatcher-Reagan revolution. We saw a combination of weaker protections for trade unions, a culture that accepted higher compensation, particularly for executives—higher CEO compensation—a new philosophy of shareholder value in companies, lower taxes at the top, and crucially, deregulation of many industries.
Therefore there was this political element, and again that political element had national features, of course, but it was also something that happened across countries, particularly because we are living in an age when so many businesses operate internationally and there has been, in many cases, particularly on the taxation front, competition across jurisdictions.
However, there are also two other factors that are really important drivers of what is going on, and those are globalization and the technology revolution. For me, those two factors are the ones on which it is really important to focus; and it is important for all of us, particularly those who see rising income inequality as a huge problem, to acknowledge that these two drivers of rising income inequality are also very positive. That is the paradoxical nature of what is going on.
The technology revolution, bringing us so many pluses, is also a driver of increasing income inequality. The same is true of globalization. If we are blind to that paradoxical nature of what is happening, we are not going to be able to come up with good solutions. Particularly when it comes to the technology revolution, it is important for us to understand something. I will refer to one of my favourite books on the subject, The Second Machine Age by Erik Brynjolfsson and Andrew McAfee. They argue that there is no law in economics that provides that the technology revolution will lead to more jobs or evenly distributed rewards. That is really important to bear in mind. Changes in the economy, which are good in aggregate, may not be good for individuals, and it is going to be our job as legislators to find ways to strike that balance.
What can we do about this? I have talked about something that is big, that is new, and that is global. How can we cope with it? I would like to quickly talk about five ways in which we can approach it. The first is to do no harm, and that is why we in the Liberal Party are absolutely opposed to income splitting. At a time when there are powerful economic forces, many of them good, which are driving up income inequality, introducing changes to our own legislation, rather than pushing back against them, and increasing income inequality is absolute political and democratic malpractice.
The second absolutely important thing is to focus on equality of opportunity. A terrific Canadian economist, Miles Corak, has identified something that has been dubbed by his admirers The Great Gatsby curve, which shows that rising income inequality correlates with declining social mobility. We have to push back against that, particularly with investment in schools, families, and early childhood education.
A third area that is absolutely essential is to be open to innovation, particularly innovation for people who might not have the opportunities and networks. One thing we are seeing is that old businesses are dying. That is part of the technology revolution and of globalization. We have to be the country where it is easiest for someone with a great idea to start a new business.
Finally, and this is really crucial, we have to understand that we operate in a globally connected economy. We are living at a time when capital is global, but politics and legislation very often are not. If we want to capture the wealth that is being accumulated in the world, we are going to have to come up with some global answers. I am going to quote Larry Summers, the former U.S. secretary of the treasury, and then Pope Francis. Larry Summers stated:
The share of corporate profits taken by tax authorities around the world is probably a little more than half of what it was 40 years ago. And the reason is a basic process of competition, a basic ability to move business activity or to use accounting tricks to move income to low-tax jurisdictions.
Therefore, we are going to have to work together to push against that trend.
In conclusion, I would like to cite a higher authority on why this is so much of an issue and that is, as threatened, Pope Francis himself. He has said that increasing income inequality is the root of social evil. I really believe that. I hope that together in the House we can identify this as a major problem and work together to try to fix it for Canadians.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-10 16:24 [p.6565]
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Mr. Speaker, I did not misspeak. It is the position of our party that we believe, like the late minister Jim Flaherty, that income splitting would increase income inequality and we are not in favour of it.
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View Chrystia Freeland Profile
Lib. (ON)
View Chrystia Freeland Profile
2014-06-10 16:25 [p.6565]
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Mr. Speaker, absolutely, I think the Nordic countries provide some very important examples and lessons for us. Interestingly, if we look at market incomes before government intervention, they too have experienced an increase in income inequality among those countries, as my hon. colleague knows very well, and the IMF has cited in its research.
What they have done though to push against those tides is a few things. They have had a very great focus on social opportunity, particularly on education, and I think Finland in particular has some important lessons. They have had a very great focus on innovation and opportunity for economic innovation. There I would say we have a lot to learn from Sweden and maybe from Norway.
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