Jason Kenney

Mr. Speaker, once we clear past all the smoke and mirrors accounting and spin from yesterday's budget, what do we find? Surprise, surprise. The taxes of Canadians are actually going up and not down as a result of yesterday's budget. That is because of the minister's annual payroll tax grab and bracket creep.

I have a very simple question. After all the bafflegab is taken out, why are taxes going up by $2.2 billion in this budget instead of down?

Mr. Speaker, the Reform Party would take every low income senior off the tax rolls who should not be paying taxes today but is because of bracket creep. We would take every low income Canadian off the tax rolls who should not be paying taxes but is because of bracket creep.

How can the minister continue to stand in his place and justify a tax system which taxes people without their even knowing it through this pernicious tax grab called bracket creep?

Mr. Speaker, the parliamentary secretary keeps telling us the government has cut taxes. Has he heard anything about the CPP $10 billion tax increase he stood up and voted for? Does he know about the impact of bracket creep which every year takes a billion additional dollars out of the pockets of hardworking Canadian taxpayers?

How can the minister stand in his place and tell us he has cut taxes when in fact as we speak the government is raising taxes on Canadians through bracket creep and the CPP?

Madam Speaker, when I saw the bill come before the House I specifically asked to speak to it. I immediately thought that the bill encompassed both some of the best intentions and worst ideas that I have ever seen in a piece of legislation to come before us.

It is not uncommon for good intentions and poor execution to be commingled in the same political project as we have before us today, which of course is to amend the Canadian Human Rights Act to essentially prohibit discrimination on the basis of social condition, whatever that means.

I am disturbed that this is a Senate bill originating in that other place which would happen to be the one that does not have any democratic legitimacy. That would be the chamber filled with unaccountable, unelected, patronage hacks. Dozens of thoughtful private members' bills have come forward from members of this place who happen to be elected and accountable, whose ideas happen to come from the voters and not from their ivory tower. Private members' bills that originate from this place ought to be deemed votable by the private members' bill committee but rather it gave one of the very few votable spots available to empower individual MPs to a senator in the case of Bill S-11.

That in my humble opinion is sufficient grounds to vote against this or any other bill that originates from a completely absurd anachronism of an institution which should have died with the 19th century from whence it came.

I do not think there is a member of this place or citizen of the country who does not oppose poverty and unjust discrimination. I certainly do not. I prefer to demonstrate my compassion for those who have economic circumstances less fortunate than my own through private charitable activities and contributions. I happen to believe that compassion as Mother Teresa reminded us literally means to suffer with. It does not mean to legislate good intentions.

When I hear the intentions of the movers of the bill, when I hear the member for Shefford say, as I believe she did in this place, that Canada's obsession with the debt and the deficit demonstrate that we really despise the poor, I frankly find that bizarre in a country that has spent untold billions of scarce resources by taxing money away from struggling families, many of whom are below the so-called poverty line. In this enormous project of wealth redistribution to say that Canadians somehow despise the poor because they want to pay their bills is a gross statement of hyperbole which does not belong in this place or this debate.

What would the bill seek to do? I do not think anybody really knows. I read the transcripts of the Senate committee where Bill S-11 was examined. Witness after witness was asked how social condition is defined. There appeared to be no clear consensus or no clear definition.

One thing is clear. To prevent the public sector, parliament, from discriminating against people on the basis of their social condition, it would have some very interesting but unintended consequences. For one thing it would take what is right now a steeply progressive tax system and turn it into a completely flat tax system. Right now the top 1% of income earners, those who report income of over about $150,000 a year, represent about 9% of the income reported in Canada but pay over 20% of the taxes.

The current tax laws very clearly discriminate against people on the basis of income. The lowest income people, I would argue quite appropriately, pay no taxes. We have this enormous case of discrimination on the basis of social condition.

Do the movers of the bill intend that it ought to be interpreted in such a way that the tax laws of the country would no longer be able or that social benefits should no longer be able to be targeted on the basis of income?

Do they suggest the clawback that exists for various social payments ought to be eliminated and that billionaires ought to have the same entitlement to social payments as do the indigent poor? Probably not but they have not addressed that question.

What is it that they are attempting to do? I would suggest they are trying to impose a radical egalitarian, frankly socialist idea which is Marxist in its origins on the private sector to restrict liberty and freedom.

We just heard the parliamentary secretary suggest that if this law were passed it would change the way that banks deal with the poor, with people who are in poverty. What do these people mean by that? Do they mean that if such a statute or amendment were passed a bank or a financial institution would be compelled by force of law, as interpreted and implied by an unelected and unaccountable human rights tribunal, to supply a loan to somebody with no income, no assets and no reasonable prospect of assets or income?

Is that what is implied? If it is not, then why have we not defined that kind of interpretation in the bill?

The lack of definition surrounding social condition is wide open. Is it merely an oversight? No, it is clearly not. Clearly the advocates of this radical egalitarian socialist idea have in mind allowing a wide open interpretation so that our friends, the robed Solons on the bench, may interpret and apply this law in whatever manner they deem appropriate.

In other words, the advocates of potentially radical legislation such as this do not want to paint a picture for democratic discussion as to what the consequences of such legislation would be, they want the courts to do it.

I refer to Professor Martha Jackman of the Faculty of Law at the University of Ottawa who appeared at some length before the Senate committee on this issue both in November 1997 and May 1998. She made some very interesting statements defending the lack of definition.

She says “I would strongly discourage you from including the notion of a definition within this bill because this would be anomalous. There is a significant amount of literature about the idea of race being essentially an artificial concept”. We have race, religion and other grounds within the bills that courts and commissions have wrestled with successfully from the perspective of radical leftists such as Professor Jackman.

She goes on to say “I would discourage the committee from the idea of defining social condition within the bill because that freezes the definition at a particular time that is antithetical to the approach that has been taken in human rights statutes”.

She goes on to talk about the case of Vriend in Alberta where the Supreme Court of Canada ruled that the sovereign democratic legislature of the people of Alberta was contravening the charter of rights by not having included in a particular statute a term which now exists in the charter of rights. In other words, the courts decided to legislate from the bench in the Vriend decision. She says that if we pass this well-intentioned amendment of social condition we will be empowering the courts to do the same thing in respect of social condition as they did with respect to social orientation in Vriend.

She said “Based on precedence, recognition under provincial and federal human rights statutes is in itself a criteria for finding an analogous, non-enumerated ground under the charter”.

What she is saying is “Please, parliament, pass this bill so we can then empower the courts to use this bill as the basis of reading in a new constitutionally protected ground of non-discrimination”.

I submit that if the proponents of this remedy wish it to be entrenched in the Constitution they ought to do it directly, honestly and transparently by introducing an amendment to the charter of rights and freedoms and not through the nefarious back door of this statute.

Madam Speaker, I would admit that it is possible, but I would also admit that it is possible that provinces take into account the loss of equalization revenues that they would receive if they reduced taxes or increased growth.

It is a problem and that is why I recommend my idea of transferring to individuals on the basis of income and need and not to the provinces on the basis of geography.

Madam Speaker, to be clear, I believe that it can act as a disincentive.

Furthermore, I do not believe that provincial governments necessarily respond by electing policies which slow growth or revenue. However, it is unfortunate that it can have the unintended consequence of penalizing provinces that see significant growth. It is an unfortunate outcome of this kind of system.

With respect to the member's point on an individual tax in an individual province, yes, the five province average which takes into account 33 different criteria is the average against which each individual province's fiscal load is measured in the determination of whether it qualifies for equalization transfers. In the instance I raised, the level of revenues that the province of Quebec generates from corporate taxes is a factor in its overall fiscal load as compared to the five province average. This system does create a situation where provinces can maintain artificially low levels of taxation, levels of taxation which would definitely be higher if there were no equalization payments. That is the whole point.

In some cases the provinces are able to maintain much lower levels of taxation in order to create de facto subsidies. I raised the case of New Brunswick which provides all sorts of corporate tax holidays for people who locate their businesses there.

Again, I am in favour of tax competition, but I am not in favour of a system where the federal government gives a financial advantage to those provinces which use those kinds of tax levers in their competition to attract business.

Madam Speaker, my colleague from Stoney Creek does not follow the argument because he did not listen to it.

With respect, I said explicitly that I did not believe for a moment that any provincial finance minister sat down and contrived ways not to generate economic or revenue growth in order to avoid the reduction in federal equalization payments that might result.

However, I said that it does put them in a difficult position. Let us take one concrete example.

The province of Quebec maintains substantially lower corporate tax rates than the province of Alberta. I am all in favour of tax competition in the federation. I think it is great. The problem is that if the Quebec finance minister raises that tax rate he will likely lose a corresponding amount of revenue or even more revenue out of the federal equalization transfer. So he is much less likely to make that policy change, which means that essentially Alberta, Ontario and B.C. businesses are subsidizing artificially low corporate tax rates in the province of Quebec.

I am not suggesting that the provinces should end up constructing their entire fiscal and economic policy to avoid a reduction in federal transfers. I am saying that we are creating a perverse incentive and it is not a good thing. If we move in the direction that I am advocating, which is to create a system of transfers that are sensitive to individuals and their income regardless of the accidents of geography, that would avoid the kind of disincentives which exist in the current system.

Mr. Speaker, I apologize in advance that my voice is not as robust as usual; I am suffering from laryngitis. There is simply too much to shout at the government about. It is difficult to maintain one's voice.

I am pleased to rise today to address the bill dealing with equalization. At the outset and contrary to some of the comments by members opposite, the Reform Party supports the principle. We object to the equalization which is entrenched in the charter.

Contrary to what some members opposite might have us believe, I and others in my party share the belief that Canadians from coast to coast should have access to generally comparable standards of public services at reasonably comparable levels of taxation. We have some significant differences with the current structure of equalization which is perpetuated in the bill.

We have some very serious objections to the process by which Bill C-65 came before us. Equalization is an automatic entitlement program, a statutory program, which causes us to spend $8 billion a year annually out of the public treasury with no specific annual grant by parliament.

Rather, it is an amount that is automatically included in each year's federal budget and automatically spent out of the federal treasury under the authority of the statute we are discussing and amending today. It is an automatic statutory entitlement program. I have a very large problem in principle with programs of this nature because they do an end run around normal safeguards, checks and balances of accountability in parliament.

It is important we not create programs of this nature that simply proceed on auto pilot year after year spending literally billions and billions of tax dollars without a close methodical serious review of their cost, their design and their implications.

We do not have such a methodical review in the debate on Bill C-65 before us today. Quite to the contrary, the government gave the House only three days sitting notice that the bill would be debated today, a bill which will essentially authorize roughly $35 billion in expenditures over the next five years.

This is one of the largest expenditures of the federal government which parliament authorizes. Yet we have quite a remarkable circumstance of being given three days to prepare for debate on an extremely complex and complicated bill that deals with a formula which, as colleagues have said, nobody really understands expect for a handful of specialist accountants in the government.

The government is attempting to collapse debate by not putting up any other speakers. It is so serious about this $8.5 billion public expenditure that I think it has had one prepared speaker on the bill and another who just stood and gave us 20 minutes of hot air. That is how serious it is about a parliamentary review of an $8.5 billion expenditure. It is shameful.

That is why we ought not to rush through the automatic rubber stamping of this huge public expenditure every five years as we are today. Rather we ought to calm down and make a serious, slow, parliamentary public review of the design of the entire equalization system.

We ought to be allowed to have the bill go before a parliamentary committee for extensive hearings, to bring forward academic experts, to speak to the entire concept and design of equalization, and to hear from Canadians on how they feel this matches with their ideas of social and fiscal equity. We will not do that. We will just ram it through yet once more, treating parliament and the people who represent Canadians as a kind of rubber stamp in the system.

A lot of experts would have a lot to add to the debate. In October the C. D. Howe Institute produced an excellent, thoughtful study on the entire balance of fiscal federalism with emphasis on equalization. It was authored by an esteemed professor from the University of Alberta, Dr. Paul Boothe and sponsored by Koch Oil. Other studies have been done by people like eminent fiscal expert Professor Thomas Courchesne at Queen's University. We ought to be receiving the benefit of the expertise of these people and not just rushing through it.

One of the many problems with this formula is that it is extraordinarily complex. A very simple principle involved in responsible government is that spending and taxing decisions should be transparent. They should be easy to see and understand at least by a reasonably well informed layman. I do not think there is a reasonably well informed layman in the country who is not an expert in the Byzantine rules surrounding equalization that really understands the process.

Even the auditor general pointed out that among the many problems with the equalization formula is the inclusion of property taxes in the assessment of the average tax rate in various provinces. It is incredibly difficult to get to the bottom of that. The auditor general in his 1997 report flagged as a very serious problem the inclusion of property tax in the formula for 33 tax sources. The finance department responded by saying that it would address the issue of property taxes in the renewal process, that is in this bill. There is nothing in Bill C-65 dealing with this one very complicated element of equalization.

Another problem is that the government tells us that this is all governed by a clean, clear mathematical formula but that is not the case. For political reasons we have ended up establishing a roof and a floor of equalization transfers.

Let us look at Newfoundland which is going through a period of considerable growth and suppose that it continued or in fact doubled or tripled over the next couple of years. Newfoundland would find its unemployment rate tumbling down. Let us hope that happens. Revenues would be flush in the provincial treasury but Newfoundland would still receive substantial transfer payments under equalization based on the notion that from a given year to a given year the reduction in equalization can only be x amount.

Even if the formula states that one province should no longer be considered a have not province and should be regarded as a have province, that province would continue to receive the benefit of a transfer from hardworking taxpayers in other parts of the country.

Similarly, if my province of Alberta, which seems to be a perpetual have province, were to suddenly suffer the fate of an enormous reduction in commodity prices, energy prices and agricultural commodity prices and suddenly were to fall into a regional recession, we would not suddenly receive a large equalization transfer payment.

Let us look at British Columbia. Today it finds itself in the worst recession ever since 1981, a very serious and deep recession. B.C. taxpayers are having to work harder and longer than they otherwise would in order to send extra revenues into the federal treasury. Those revenues are then spun around in this enormous costly machine we call Ottawa and sent out to parts of the country which are actually growing and which have considerable growth rates.

Family incomes are on the rise in some parts of the country. They are on the decline in British Columbia yet those hardworking families, because of the bizarre mess of the equalization formula, end up having to pay net into the system so that others can receive the benefit. I think that is just plain wrong.

What we need is a system that is transparent and accountable and one that ordinary people can understand. We also need a system that is fair. I have talked about the unfairness inherent in the system today.

One of the points that Dr. Paul Boothe has raised in his many studies on this issue is that if the objective in equalization is equity, if it is to establish a modicum of social equity through fiscal transfers, then the equalization plan as currently designed is surely not the way to do it. It takes money from every taxpayer in British Columbia, Alberta and Ontario, every single person who pays GST, federal income tax or pays in any way into the federal treasury. Even if they are below the poverty line, as hundreds of thousands of them are, they all end up making a net contribution to the fiscal transfer through equalization to even the highest income taxpayers in the so-called seven have not provinces.

Incidentally, I have a hard time believing in one of the wealthiest countries in the world, in a country that enjoys a level of prosperity and a standard of living almost unparalleled to any other country at any other time in human history, that seven of our ten provinces are purportedly have not provinces. I think that is part of the problem with the formula.

Having said that, a single mom in my riding who has a minimum wage job and is earning $14,000 a year and is trying to raise a couple of children on that meagre, paltry sum is still paying federal income tax because of the enormous equity in our tax system. She is paying federal income tax, the goods and services tax and other taxes which come to us in this parliament. What we are going to do under Bill C-65 is take some of the money from that single mother in Calgary Southeast, spin it around in this bureaucracy in Ottawa and then send it out to subsidize the delivery of social programs, including health care, which accrues in part to the benefit of billionaires who might live in another province.

One could say that my low income constituents, because they happen by accident of geography to live in what is deemed by this formula to be a have province are forced to pay, according to Dr. Boothe, 9% more in taxes than they otherwise would in order to benefit the Desmarais family, the Bronfmans of Montreal or the Irvings in New Brunswick, or the Purdues, or the Crosbies in St. John's, Newfoundland. That is not equity; that is inequity. This is not how to design a system of social equity.

If we want to help people who really need help, if we really want to equalize opportunity and living standards across the country, we need to come up with a system of equalization that is sensitive to income, not to the arbitrariness of region or geography or the accident of where people happen to live, but with respect to the very real circumstances of their standard of living.

That is why we propose that there should be a much clearer per capita transfer from the federal government to the provinces for the various social programs and, I believe, an equalization system on top of that which should be designed on the basis of individual transfers. What does that mean? That means we should look to the tax system which can respond to the different levels of income that people have as the way to transfer wealth in this country.

Really that is what this is all about. If we get all the bureaucratic gobbledegook, legalese and accounting gimmicks out of the way and what we are talking about in this bill is how we transfer wealth from those who have a lot of it to those who have not much of it. I submit we do not do that by penalizing the lower income taxpayers in Alberta, B.C. and Ontario to the financial and fiscal advantage of higher income taxpayers in the rest of the country.

My colleague from Medicine Hat mentioned that an Alberta family that earns $30,000 to $40,000 pays 9% more in taxes to the federal government than it otherwise would, whereas its counterpart family in P.E.I. generates 20% more income. These are families with the same standard of living. They have the same jobs. They are working just as hard. The family in P.E.I. is not living in poverty and is no less able to provide the necessities of life than that family in Calgary, Medicine Hat, Toronto or Scarborough, but it gets the 20% advantage.

This reminds me of a study that was conducted some years ago by the Canada West Foundation under the auspices of Professor Robert Mansell, an economist at the University of Calgary. It was the first real effort to quantify the net impact of what we call fiscal federalism, all of these transfers back and forth between Ottawa and the provinces.

This was in about 1992, several years ago. Professor Mancel found in 1992 that the total cumulative cost of fiscal federalism to the province of Alberta, my province, was nearly $150 billion since 1960. That is to say that because of equalization, because of other transfers and things like the national energy program, the federal government had managed to extract $150 billion more out of Alberta than Albertans received in benefits or transfers from the federal government. There was a huge net transfer out of British Columbia and Ontario, not nearly as large. I think it was in the neighbourhood of $20 billion for British Columbia and $30 billion to $40 billion for Ontario.

We are talking about massive transfers of wealth largely based on geography. I just do not think that is equitable or fair in a society which is trying to assist those who need the help the most.

Another problem with the current equalization system is the classic welfare trap, as it has become known by sociologists. As a way of explaining it, the welfare trap is if we subsidize something we are likely to get more of it.

The current equalization plan essentially subsidizes provinces which do not have high rates of economic growth. It subsidizes provinces which keep their tax rates low. Provinces such as New Brunswick give special tax deals to corporations to locate there, as my colleague from South Surrey—White Rock—Langley pointed out, yet they still receive the benefit of equalization.

It creates this perverse situation where if a province raises its taxes or generates more economic growth, it will be deemed to be a have province. Based on the Byzantine equalization formula its transfer from the federal government under equalization will decrease. We are penalizing success. We are in a sense creating a perverse incentive for regional economies not to succeed.

I am not suggesting that any premier or his cabinet would set out to generate low rates of economic growth in order to avoid a cut in its equalization payments. I am not suggesting that for a moment. Surely the provincial finance minister realizes in the back of his mind when he is planning his annual budget that if he raises certain tax rates and if on the other hand they generate significant growth, that the province's equalization payment from the federal government is going to be cut. That is inevitably going to be a factor. We have entrenched this kind of welfare trap into federal-provincial fiscal arrangements.

For all of those and many other reasons, I am vigorously opposed to this bill. I do not think it is in the best interests of social equity in Canada nor is it equalizing opportunity or creating greater harmony between the provinces and individuals within this wealthy and diverse country. I hope my colleagues will look more closely at this issue.

Mr. Speaker, I have risen from my laryngitis simply because I feel compelled to remark that of the many atrocious speeches I have heard in this place the member's ranks toward the very top of the list.

It is fascinating to have learned from the hon. demagogue opposite that he and his colleagues are in favour of equity, civility, collectivity, sweetness and niceness and little furry kittens, and the opposition is in favour eviscerating all that is good and civil about our society. I am delighted to see that the hon. member has a very mature Manichaean view of the political pluralism in the country.

I will bring the hon. member's attention to a speech delivered by the hon. leader of the opposition this morning. The hon. member opposite suggested that the Reform Party opposes all manner of equalization carte blanche and would eliminate such programs.

This is simply, completely, totally inaccurate, false, wrong and misleading. The hon. member would know that, had he been here this morning to hear the hon. Leader of the Opposition say that the Reform Party “supports equalization”. We support the principle of equalization. The people of Alberta, B.C. and Ontario generally support equalization as well. He went on to say that this is an important principle in our federation. What the hon. Leader of the Opposition did say, and I would second his comments, is that we have concerns about the way the formula is calculated and the way the program is applied.

The hon. member suggested that Newfoundland this year has the highest rate of GDP growth in the country. Marvellous. Kudos to Newfoundland and Labrador. We can all join in commending the people of that province for moving ahead economically. However, I would point out that that region is receiving hundreds of millions of equalization dollars from the taxpayers of British Columbia who are right now in a recession.

Given the hon. member's kind-hearted generosity, compassion and care for all, would he be prepared to adjust the equalization formula so that the fastest growing province in the country could help the only province that today is in recession?