L012b - Wed 13 May 1998 / Mer 13 Mai 1998 1
The House met at 1830.
ORDERS OF THE DAY
TAX CUTS FOR PEOPLE AND FOR SMALL BUSINESS ACT, 1998 / LOI DE 1998 SUR LA RÉDUCTION DES IMPÔTS DES PARTICULIERS ET DES PETITES ENTREPRISES
Mr Baird, on behalf of Mr Eves, moved second reading of the following bill:
Bill 15, An Act to cut taxes for people and for small business and to implement other measures contained in the 1998 Budget / Projet de loi 15, Loi visant à réduire les impôts des particuliers et des petites entreprises et à mettre en oeuvre d'autres mesures contenues dans le budget de 1998.
Hon Norman W. Sterling (Minister of the Environment, Government House Leader): On a point of order, Mr Speaker: I believe it has been agreed upon between the parties that if any party is not here to have their leadoff speaker, that time will be postponed till the next time we call this and they will have the opportunity then to lead off with their time.
The Acting Speaker (Mr Gilles E. Morin): Is it agreed? Agreed.
Mr John Gerretsen (Kingston and The Islands): Mr Speaker, I wonder if I could raise another point of order and deal with another matter. It deals with the late show that involves the member for Windsor-Sandwich and the Minister of Energy. I wonder if that late show could be postponed until the Tuesday after we come back.
The Acting Speaker: I don't see any members from the third party. Was it agreed with them?
Mr Gerretsen: They have no objection as far as I know.
Hon Mr Sterling: Only, as far as I know, the member for Kingston and The Islands should refer to me as the Minister of the Environment. I know it was a slip that he called me the Minister of Energy.
The Acting Speaker: I'm sure that's not intentional to irritate your feelings, Minister. Member for Nepean.
Mr John R. Baird (Nepean): I would indicate at the outset of my remarks that I will be sharing my time with the member for Halton Centre and the hardworking member for Northumberland.
I'm very pleased and proud to be able to speak today on behalf of Bill 15. Hardworking Ontarians support the measures in Bill 15 for good reason, because these measures are the key measures from the 1998 budget and are part of making Ontario the best place in the world to live, work, invest and raise a family.
All Ontarians, I believe, can be very proud of the accomplishments of the Ontario economy over the past three years. The Ontario economy is booming. Between February 1997 and February 1998, we saw more jobs created here in Ontario than at any other time in any other one-year period in our history, and that is indeed good news.
The tax cuts for people and for Ontario small businesses in Bill 15 will help continue the unprecedented rate of job growth Ontario is experiencing, and that is indeed good news, because there are a number of priorities of the recent budget, many contained in Bill 15, particularly for cutting income taxes to create jobs. Allowing consumers to keep more of their hard-earned dollars is having a tremendously positive effect on the Ontario economy.
That's particularly the case in the region of Ottawa-Carleton where unemployment, just a few short years ago, was at 10.8%. I know, Mr Speaker, you share my hope and optimism to see it down to 7.1%. The measures in this budget, I believe, will help push unemployment lower. It allows more people to keep more of their hard-earned tax dollars and to spend it in the community, which is indeed good news.
The government promised to the people of Ontario a 30% income tax cut over three years. As a result of the four steps of the Ontario tax cut, the Ontario economy has performed even far greater than optimistic projections contained in the last two budgets. We are accelerating the final stage of the tax cuts to try to build on that economic growth, with the final stage of the tax cuts taking effect six months earlier than was forecast, on July 1, 1998.
Interjection.
Mr Baird: "That's good news," the member for Scarborough-Ellesmere says. Indeed. All taxpayers will benefit from the 30.2% rate cut. All taxpayers with incomes of under $60,000 will receive an income tax cut of at least 30% or more. Taxpayers with incomes of $250,000 or more will receive, on average, a tax cut of only 18%. This tax cut disproportionately benefits hardworking middle-class families and that is good news, whether those hardworking families be in Kingston township or in Nepean or in Oakville or in Belleville.
Sixty-four per cent of the benefits of this tax cut will be concentrated on middle-income Ontarians earning between $25,000 and $75,000 a year. Bill 15 would amend the Income Tax Act to implement the final phase of the income tax cut, which would reduce the personal income tax rate from 45% to 42.75% of the basic federal tax for 1998. It would reduce it to 40.5% of the basic federal tax for 1999 and subsequent years. That is good news because we know that tax increases kill jobs.
The member for Scarborough-Agincourt, when he was the official opposition finance critic five years ago, said the last time the Ontario income tax was increased that that income tax increase would kill about 100,000 jobs. Regrettably, the member for Scarborough-Agincourt was right. In fact, tens and tens of thousands of jobs were lost in large measure due to the tax increase contained in that budget.
But this seeks to redress that and to get those jobs back, because the people of Ontario, in Nepean and Barrhaven and Bells Corners, are concerned about high taxes and the effect they have on their ability to raise their families. That's a real concern for all members.
Finally, Bill 15 would also adjust the Fair Share health care levy to reflect the change in income tax rates. That helps to make the tax cuts progressive and helps to make the tax cuts benefit middle-income families making between $25,000 and $75,000 a year.
Bill 15 also contains a small business corporations tax cut. Last year, small business in Ontario created an estimated 82% of all new private sector jobs in Ontario. That is indeed good news. Many individual small business owners told us that further cuts to small business taxes would help them create even more jobs. We responded to this advice. We are cutting the small business corporation tax in half, from 9.5% to 4.75%, the lowest rate in Canada, over the next eight years. That tax cut will help the more than 90,000 small businesses continue to create jobs. We are phasing in the tax reduction over eight years to help the province meet its fiscal plans while ensuring that the small business sector continues to play a key role in the Ontario economy.
Bill 15 would amend the Corporations Tax Act to implement these taxes. It would legislate the full eight-year schedule of reductions to give businesses certainty that these tax cuts will be delivered. That is something that's good news because a lot of Ontarians were somewhat sceptical of a 30% provincial income tax reduction during the last provincial election. They didn't believe anyone would do it. I think we've proven that a promise made is a promise kept. With this legislation we are putting in stone these tax reductions, which will be good news for small business people so they can make decisions based on those tax rates. We hope that would further assist the solid job creation measures contained in previous budgets and will help the Ontario economy grow and rebound.
There are a number of other very worthwhile initiatives contained in the budget and in Bill 15 - the Ontario film and television production services tax credit. Ontario is Canada's leading film and television production centre. In 1996 the film and television industry supported about 23,000 direct jobs in Ontario. Our government recognizes the importance of this industry to Ontario. We are taking action to continue to support job creation in this sector and ensure that we maintain a pre-eminent position in the industry.
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Not too many weeks ago I was listening to the radio and they had a discussion on the tax competitiveness and the tax credit competitiveness of the provincial economy. They were able to compare Ontario with British Columbia and other provinces. They interviewed a number of representatives from studios south of the border. They all acknowledged that Ontario is making it extremely attractive to create jobs here, and we're pleased to have those jobs indeed.
We want to take action to ensure that Ontario continues to be a world leader in film production and help to encourage further job growth in this expanding industry. You don't have to walk much farther than a block from this building to see television series and motion pictures being filmed. That is good news, because you see a lot of people working, and we're very pleased about that.
Last November, the Minister of Finance announced at the Ontario reception at the International Development Research Council Congress in San Diego that the government will be introducing tax measures to provide support for foreign-based film and television productions in Ontario. This significant incentive will help maintain and increase the level of production in Ontario.
Bill 15 implements the new refundable Ontario production services tax credit and the enhancements to the Ontario film and television tax credit announced this past November. The Ontario production services tax credit benefits corporations performing production services work in Ontario and is also available for domestic film and television productions that are not eligible for the Ontario film and television tax credit.
This government is acting to ensure that the province will remain the most attractive place in Canada for foreign films and television investment. Our action shows that we're committed to fostering a vibrant, world-class film and television industry in Ontario because that means more jobs for the people of Ontario.
I know the member for Scarborough-Ellesmere was a big proponent of these tax credits to encourage investment in the film and television industry here in Toronto, because she knows that her constituents are finding jobs in this industry, jobs which they can contribute to the Ontario economy and raise their families. That is indeed good news and I know many are very appreciative for those efforts that she made over the years.
There are also some amendments to the Highway Traffic Act in Bill 15. Everyone has a right to a sense of personal safety and to feel assured that their family is safe, and this includes when they're travelling on the roadways in our communities. To help increase safety on our roads, Bill 15 would amend the Highway Traffic Act to increase the minimum fine from $60 to a minimum of $150 for failing to obey a red or amber light.
We propose to raise the minimum fine for both amber light running and red light running. Raising the fine only for red light running would likely increase the number of drivers going to court claiming, in order to receive a lesser fine, that they only ran an amber light.
It's essential that drivers, rather than the vehicle owners, are held responsible for all moving traffic violations, including a red light. Direct identification of the driver means that demerit points can be assessed against the offender's driving record, leading to the potential loss of driving privileges and higher insurance rates.
This piece of legislation also amends the Highway Traffic Act for suspended drivers who drive. Despite the penalties for driving with a suspended licence, an estimated one third of suspended drivers continue to drive, and that, simply put, is unacceptable to us all. I think that would be an issue with which we would find strong triparty agreement.
Under the old system, drivers who drive while their licences were suspended all faced the same penalties, with no distinction for the reason for that suspension. Bill 15 would amend the Highway Traffic Act to create a separate offence for driving with a licence that is suspended for a Criminal Code conviction. This includes drinking and driving offences.
In my constituency there is a terrific amount of concern about the issue of drinking and driving. We in my community want a zero tolerance policy taken for that measure and appreciate the support of all political parties in Ontario in passing some of the toughest drunk-driving legislation in North America last year. The amendments to the Highway Traffic Act build on that success.
There are a good number of committed volunteers in my constituency who worked extremely hard on these issues and putting them on the public agenda, whether it's Susan McNab or whether it's Colleen Mackenzie, the president of the local MADD chapter, or Marjorie LeBreton, all three of whom I've had the opportunity to work with on combating drunk driving and towards promoting drunk-driving countermeasures, particularly on education, where we have had the opportunity to visit Sir Robert Borden High School, where student Jonathan Ritter organized two assemblies of 400 or 500 students. We were able to make presentations to those young people and to hear the experiences of family members who have lost loved ones, to have representations from the police and indeed from fellow students. That is a very important part. I think education plays an important role in fighting drunk driving, but perhaps no area is more important than educating young people at the time that they would be getting their first driver's licence.
These drivers have proven themselves to be a threat to the safety and lives of others on Ontario roads. With the changes contained in Bill 15, these drivers will face significantly higher penalties. This is part of the government's overall strategy to reduce drinking and driving and to remove the worst drivers from our roads. The fine for a first offence would be increased from the $500-to-$5,000 range to the $5,000-to-$25,000 range, plus extending the suspension by six months. Fines for subsequent offences would be increased from the $1,000-to-$5,000 range to the $10,000-to-$50,000 range, plus six months' extended suspension, plus six months' potential imprisonment. That emphasizes the extremely serious nature of drunk driving and how we in Ontario treat drunk drivers.
The government is doing more than simply increasing penalties. The Ministry of Transportation has introduced a vehicle seizure program. Vehicles being driven by drivers suspended for a Criminal Code conviction shall be immediately impounded at the roadside, and the vehicle owner will be responsible for all costs related to the impoundment. The vehicle will be impounded for 45, 90 or 180 days, depending on the number of vehicle impoundments registered against the owners. That is again trying to target the repeat offenders. I know that issue had a terrific amount of support both from the minister, the member for Mississauga South, and the then Minister of Transportation, Mr Palladini, and we are pleased to see those measures contained in Bill 15 to help follow through on those initiatives.
The reasons for non-Criminal Code licence suspension can include, for the record, failure to pay fines, demerit point accumulation and medical conditions. The minimum fines for driving while suspended for non-Criminal Code convictions have been doubled so that the range for the first offence will be in the $1,000-to-$5,000 range.
There are measures contained in the budget for the land transfer tax rebate extension. Low interest rates make mortgage payments quite affordable to many people, but first-time buyers often have difficulty coming up with the necessary down payment. This is certainly the case in my constituency, where a lot of young families have the goal and the dream of owning their first home. For many of them the cost of the land transfer tax represents a large share of the down payment that they would need to make, and eliminating the land transfer tax enables them to buy a home sooner than they otherwise would have been able to.
As well, this is a highly competitive market, and in spite of the recent increase in demand, the housing industry is still operating well below capacity. The land transfer tax refund has been a great incentive for first-time home buyers and has helped support new housing activity. This refund is working well, helping young families to buy their first house and supporting jobs in the housing industry.
Since the introduction of this program in the May 1996 budget, we have provided $33 million in land transfer tax refunds. We have helped more than 26,000 people, most of them young families, to buy their first home. In April we announced that we were extending the land transfer tax refund for another year, to March 31, 1999. Bill 15 implements this extension to make a home purchase more affordable for Ontarians. The land transfer tax refund applies to first-time buyers of newly built homes. The amount of the refund is the entire amount of tax paid or payable up to a maximum of $1,725. To date, the average refund is $1,200.
I know the member for Cochrane South is a big supporter of the land transfer tax rebate for first-time home buyers buying new homes because he too understands the disincentive that tax is to young people trying to buy their first home.
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Bill 15 also contains some changes to the Ontario Loan Act. Ontario will meet its target to balance the budget in the year 2000-2001. I'm very proud and privileged to stand here today and say that we have met every single deficit reduction target we've made in the last three years. That is welcome news. I know our colleagues in the New Democratic Party were in somewhat of an awkward position. They were elected the government and read with great fanfare the announcement of a $78-million surplus. Some 21 days later, when Mother Hubbard went to the cupboard, the cupboard was bare.
Mr Bud Wildman (Algoma): First it was $400 million, then it was $4 billion.
The Acting Speaker: Member for Algoma, you don't have the floor.
Mr Baird: Poor Floyd Laughren, the then Treasurer, not long after he arrived at the Frost Building South discovered a $400-million deficit. Then it grew to a $4-billion deficit. So I think it is most unfair to blame the New Democratic Party for taking Ontario from a balanced budget to an $11-billion deficit. In fact, they took it from the $4-billion Ontario Liberal Party deficit. I believe, and the member from Algoma will correct me if I'm wrong, that deficit was the highest deficit in the provincial treasury's history, a $4-billion deficit at the time.
Mr Wildman: That's right but we didn't want to leave them that record.
The Acting Speaker: This is not questions and comments.
Mr Baird: That is indeed a difficult thing.
The good news is that the deficit is falling as more jobs are created. That is indeed good news. The act authorizes the government to meet its financial obligations in terms of dealing with the accumulated debt. We know we're spending taxpayers' money and not ours, but we're accountable for every dollar we spend. I'm very pleased to say that there is not a doubt in my mind that this government will meet its deficit reduction targets this year and next. That will be good news, because the public said deficit reduction was a major priority. But it was not more important than job creation. We couldn't ask the unemployed to simply wait until we balanced the budget, so we're doing job creation and deficit reduction at the same time. That is indeed good news.
Mr Gerretsen: And you complain about people having it both ways.
The Acting Speaker: Member for Kingston and the Islands.
Mr Baird: There's also some amendments to the Ontario Lottery Corporation Act. Bill 15 expands the purposes that the Ontario Lottery Corporation profits can be used to fund. It will expand the list of purposes to include the provision of health care, the activities and objectives of charities and non-profit corporations, and the funding of community activities and programs. Under Bill 15, all provincial proceeds from slot machines and half of the net revenue from table games will be dedicated to support health care, including the operation of hospitals, funding to charities and not-for-profits, communities, and the Trillium Foundation. That is good news.
There are changes to the retail sales tax in this bill with respect to border collection. That is good news. There is a whole host of changes to the retail sales tax.
But this government recognizes that there's got to be priorities. This bill will allow the government to meet its financial obligations, particularly with respect to health care. I know, and the government members will know, that the provincial government has increased the health care budget this year to $18.5 billion. That will allow the government to spend $1.2 billion over the next number of years to build and have constructed more than 20,000 long-term-care beds. I know that's an extremely important issue in my community, where if we can get more long-term-care beds, like the Villa Marconi project, perhaps expanding such excellent facilities as the Starwood (Extendicare), we can get more long-term patients out of the hospitals and clean up the emergency ward situation at the Queensway-Carleton Hospital. That will be extremely important. We are sad to see that the president of the Queensway-Carleton Hospital, Rob Devit, will be leaving the hospital and heading to Peterborough. We wish him well in that.
The bill will also allow us to meet some education announcements. School construction is a big issue in my constituency, as I know it is in the constituencies of a number of my colleagues. John McCrae secondary school and Mother Teresa secondary school are now under construction in the growing community of Barrhaven. That is indeed good news. Folks like Norm MacDonald and Frank St Denis are working with the community on that very worthwhile initiative.
Bill 15 will also ensure that we can meet new priorities. In the pre-budget consultations, we heard from the Canadian Advanced Technology Association, from Shirley-Ann George, the executive director, and later I spoke with John Kelly, the chairman, who's also the president of JetForm. They made an exceptionally strong case that those of us from Silicon Valley North know only too well. They were able to make an excellent presentation to the government with respect to high-tech skills training, that we had to double the number of computer science positions, we had to double the number of computer and electrical engineering positions in the province, in terms of the education system.
This year the Ontario government announced $150 million to be spent over the next three years to do just that, to ensure that we can fill those jobs when they are needed. That is something that has been fought for for a very long time and will assist not just the western end of the Ottawa-Carleton region, Nepean and Kanata, with job creation, it will also do a lot in the greater Toronto area and in Kitchener-Waterloo and the Cambridge area as well. That's very good news.
I'm very pleased to have had the opportunity to speak to this important piece of legislation. I look forward to hearing the remarks of my colleagues the members for Halton Centre and Northumberland.
Mr Terence H. Young (Halton Centre): I'm very pleased to speak in support of Bill 15. Once passed, this bill will implement key measures in the 1998 budget to cut taxes, to create even more jobs in our growing economy.
The government promised the people of Ontario a 30% tax cut, and as a result of the first four steps, over three years the economy has performed even better than expected, almost double that of the other nine provinces. Bill 15 proposes to accelerate the final phase of the personal income tax cut to July 1, 1998, half a year ahead of schedule. It's going to be a great summer and a great future.
Bill 15 would cut the small business corporations tax rate in half, to 4.75%, the lowest rate in Canada, over eight years. Small businesses are the people who create over 80% of the new jobs in our economy, and will create even more with our support. Under this legislation, the tax rate on eligible small business income would be reduced from 9.5% to 9% immediately and would be reduced each year thereafter until 2006, when it would be one half the current rate. This tax cut will help more than 90,000 small business people continue to grow our economy and create jobs in this province, and create a brighter future for all of us.
Bill 15, once approved by this Legislature, would implement the land transfer tax refund extension for another year, to March 31, 1999. This tax cut has been a great incentive for first-time home buyers, and has helped support new housing activity, which is at its highest rate in years. Our government is extending this refund because it's doing what it was supposed to do: It's helping young families buy their first house. It has helped create 26,000 new jobs in the construction industry since 1997, and also many more jobs in related industries: carpet, paint, paper, plumbing, concrete, tools and other building materials.
Since we introduced this program in the May 1996 budget, we have provided $33 million in land transfer tax refunds, helping more than 26,000 people, most of them young families, buy their first home. That's $33 million that young families could spend on furniture, appliances, clothes or perhaps a made-in-Oakville Ford Windstar.
This government is very committed to making our communities safer. Bill 15 would help increase safety on our roads by proposing to more than double the fines for running red lights. We have to get the attention of all drivers to reduce this dangerous practice.
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It was just a little more than two years ago that our government's first budget was introduced. The Minister of Finance declared the 1996 budget one of hope and opportunity. It was about cutting taxes to create jobs. It was about leaving more money in the hands of hardworking Ontarians, who had endured 65 tax increases in the previous decade. It's their money, for their priorities, in their hands. It was about reducing the cost and the size of government. It was about spending taxpayers' dollars more wisely, better services for less, better management of our resources. It was about building a brighter future for ourselves and our families. Cutting taxes was a key part of that plan to achieve these goals.
The Minister of Finance said in his 1996 budget speech, "The tax cuts I am announcing today will prove a simple truth: The best job creation program is a tax cut for every single Ontario taxpayer."
Some people didn't think our plan would work. Perhaps they even hoped it wouldn't work, because if our plan succeeded, it would prove how far off their policies had taken Ontario; and so they had.
In our first two budgets, we cut taxes a total of 30 times, we cut spending and reduced the size of government and we consistently overachieved in our deficit targets, because we took in more revenue. More people were working and paying taxes. Instead of fighting over the pie and who gets the biggest piece of the pie, we've made the pie bigger.
Today, only two years after our first budget, we are witnessing the greatest turnaround in this province's history. As we said then and I'm saying now, the best job creation program is a tax cut for every Ontario taxpayer. The numbers speak for themselves. The Ontario economy created 265,000 net new private sector jobs from February 1997 to February 1998. This is the biggest 12-month job gain ever in Ontario's history, 265,000 people who told their family at the end of the day, "I got the job." In the first quarter of this year, the Ontario economy created jobs at a rate unequalled in the past 15 years. In April alone Ontario gained another 22,500 jobs. And 1998 promises to be one of the best years in Ontario's history for job creation. Thousands more of our neighbours, friends and family members will share in this new job growth.
As you've seen, there are more job-creating measures in this budget. We are on target to balance the budget. Last year's deficit will be $5.2 billion. This represents a reduction of almost $1.4 billion from the $6.6-billion target set out in the 1997 budget. The deficit for this year will be $4.2 billion, $600 million lower than the deficit target for this year set out in the balanced budget plan. Our balanced budget plan will ensure that the deficit is eliminated by the year 2000-2001. What a great way to start the new millennium, by telling the world that Ontario pays its bills on time, every year.
In the 1996 budget, the Minister of Finance said we are investing "in programs that are a priority for Ontarians such as health care, classroom education and community safety." We vowed to maintain and enhance services that Ontarians value.
The 1998 budget continues to invest in priority programs. We're investing in jobs for the future today. We're emphasizing work, not welfare. Since June 1995, the welfare caseload has gone down by nearly 20%. More than a quarter of a million people are no longer dependent on welfare.
We're putting more money into health care. We're putting more money into educating our children in the classroom. We're putting more money into measures that enhance the safety of our communities.
The tax cuts in Bill 15 don't just create opportunities, they ensure a quality of life that allows all Ontarians to take advantage of these opportunities today and in the future.
Ontario's economic future has never been brighter. We are poised to enter the 21st century with renewed confidence and optimism.
Mr Doug Galt (Northumberland): It's certainly a pleasure for me to be able to rise and speak on this very special budget bill, Bill 15, which is, in the first part, going to reduce the income tax rate further, from 45% to 42.75% of the basic federal rate in the current year, 1998, and also moving it further down the following year to 40.5% of the basic federal rate for the year 1999.
It's good news that we're able to arrive to this 30% cut in the provincial income tax, bringing it up a bit early, to July 1, 1998. I know that's very upsetting to the opposition, but it's good news for the people of Ontario. I'm pretty pleased and proud to be a Conservative and to be part of a government that's able to take drastic measures such as this and make it fly, at the same time creating jobs and getting people off welfare.
Of course with this bill there's also an adjustment for the Fair Share health care levy, and that's being reflected similarly to the income tax rate. It's interesting to note in our income tax return how the federal Liberals tried to mislead what we were doing with the Fair Share health tax. They rolled it all into a surtax that was already there and tried to call it a Fair Share health tax and mislead the public. Typical, I guess, of a Liberal, but it's most unfortunate because people actually believe we're charging that much as a Fair Share health tax when in fact it was already there from previous governments as a surtax on their income tax.
In part II we're recognizing the Corporations Tax Act and giving deductions to small business. Where have all the jobs been created? It's been in small business, a tremendous number of jobs created in the businesses that have five, six, seven employees. As they pick up one or two, that means a 10%, 20%, 30% increase in the employment in that particular business and in that community.
What are we doing to help them with that deduction? We're moving that corporation tax from 9.5% down to 9% this year, and then on January 1 every year we're moving it down 0.5% until we get it down to 4.75% on January 1, 2006. That's really looking ahead and having a vision to the future.
In this particular part of the bill, we're looking at things like the Ontario film and TV tax credit. As mentioned by the member for Nepean, there is a tremendous amount of film production right here in the city of Toronto and in Ontario in general. It's just great to see that kind of business mushrooming and booming in this country.
Of course there's also the Ontario book publishing tax credit, there's the Ontario computer animation and special effects tax credit, there's also the Ontario new technology tax incentive and a small business investment tax credit available to financial institutions.
I've been wondering over the last few months just how wrong the opposition can be. I can't believe they can consistently be so wrong. They've been saying we're wrong about the tax cuts, and they were certainly wrong. They were wrong about their ideas on what we were doing with welfare reform. It's worked extremely well. They were wrong about our reform for education, they were wrong about our ideas on a unified Toronto and they were wrong about the future of this great province. You would think they would soon start to see how things are happening and where they're flowing from and where they're flowing to.
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One of the troubles with the opposition is that they really don't know what they want and they're not going to be happy until they finally get it. They're against tax cuts. I have to admit I was a little shaky when I first looked at this 30% tax cut, and I'll talk a little more about that later. But certainly, as a result of the tax cut there's just no question Ontario is on the rebound. It's so simple.
I received a letter from a young man from Kingston in grade 10 -listen, member for Kingston and The Islands, from your riding. He understood what's going on. He said his mother's a teacher and didn't quite agree, but he understood how the tax cuts work:
"Tax cuts" - it's right in his letter, he wrote it himself - "put more money into people's pockets."
Mr Gerretsen: We all know how that works: The rich get richer and the poor get poorer.
The Acting Speaker: Order. The member for Kingston and The Islands, you don't have the floor yet.
Mr Galt: "When you have more money in your pocket, you spend more money, you invest more; and when you invest more and spend more, that creates jobs for other people."
When you have jobs for other people, that stimulates the economy, you end up with more taxes coming in, more revenue. What happens? From the fiscal year 1994 to fiscal 1995 to the past year, what happened to the revenue? It increased by $6 billion. That's all in taxes and you're saying the tax cut created harm. No, the tax cut stimulated the economy, and the result of stimulating that economy has brought in all kinds of tax revenues, up to $16 billion per year.
The opposition keeps saying it's not going to work. The NDP, the third party, says there were recessionary times when they were in government. Maybe they were, but what was happening to the rest of Canada? Over 400,000 net new jobs were created in that five-year period in Canada. What happened in Ontario? Minus 10,000 net new jobs. What was the problem with Canada? Ontario in that five-year period was like an anchor dragging Canada down. What's happened from 1995 to 1998? We've created approximately 350,000 net new jobs right here in Ontario. Two thirds of the net new jobs across Canada were created in Ontario.
What's going on in BC, out on Canada's left coast?
Mr Baird: It's down the drain.
Mr Galt: Down the drain. Increased taxes. Something like 20%, 30% of the businesses in BC want to move. There are actually more people flowing from BC into Alberta than going into BC in grand total from the US, from other provinces, from Hong Kong. They're leaving BC, the Canadian left coast, because they can't take it any more.
Interjection.
Mr Galt: Don't take my word for it. There are many other people who believe this very strongly.
Mr Wildman: It has nothing to do with the Asian situation, of course.
Mr Gerretsen: Nobody is doubting your word.
The Acting Speaker: The member for Algoma, member for Kingston and The Islands.
Mr Galt: Dr Sherry Cooper, for example, a vice-president with Nesbitt Burns, came before our standing committee on finance. Both your parties were there to hear her excellent presentation. She went on till I found it rather embarrassing about what a great job we were doing as government. I finally questioned her, and it's in Hansard. I said, "A lot of the opposition says it's all to do with the international economy, and probably some of it is, but in your opinion, how much has to do with the international economy, the low dollar, low interest, and how much has it to do with what this government is doing here in the province of Ontario?" She took off again.
Mr Baird: What did she say?
Mr Galt: She was extremely complimentary about this government. I finally interrupted her and I said, "Do you mean that the response to the economy in Ontario is more than 70% as a result of this government?" "Oh," she said, "far more than that." And you people are telling us that it has to do -
Interjection.
Mr Galt: I don't know. She's a PhD economist, as I understand, vice-president of Nesbitt Burns. Far be it for me to argue with her opinion.
Then you could talk to people from the Toronto-Dominion Bank and their economic forecasting. What did they say? "Ontario's the place to be." Wow. In their opinion, in their prediction, we're second only to Newfoundland in economic growth in this coming year.
We've had spectacular growth in this province and it's understandable why we have. Of course, there's the low dollar, but with the tax cuts that we're talking about here in Bill 15, the corporate taxes and the income taxes, there have been tremendous employment gains. Thank heavens that the Liberals have talked a lot about this lowering of the personal income tax, because the federal Liberals with their payroll tax increases have almost nullified what we've given back, our 30% tax cut.
Mr Gerretsen: Well, then, how would your action end that?
The Acting Speaker: Member for Kingston and The Islands, I don't want to have to repeat it again.
Mr Galt: If it wasn't for you people talking it up, the public out there might never know about the tax cuts that we've made. Certainly the federal Liberals have really tried to nullify any of the cuts that we've made for the public here in Ontario. I can tell you, it's been quite an anchor -
Mr Wildman: If you really think about it, this is a bit of a contradictory argument. If it's been nullified, how can it do any good?
Interjections.
The Acting Speaker: Please take your seat. The members for Algoma, Kingston and The Islands, Prescott and Russell, please remain quiet. You'll have the opportunity shortly with questions and comments. Voice your opinion loudly at that time.
Mr Wildman: Speaker, I would apologize. I was provoked.
The Acting Speaker: Member for Northumberland.
Mr Galt: Thank you very much, Mr Speaker, for getting a little control here in the House. They weren't hearing my remarks and that's most unfortunate.
Moving right along to the Royal Bank economic analysis, their comment was, "Ontario's economic outlook is rosy." How much nicer could you have than, "Ontario's economic outlook is rosy"? They predict that next year we'll have a GDP of some 3.7%. That's following a year of 4% and 4%-plus. They're recognizing things like housing starts, up some 26%. They're recognizing the tremendous demand for domestic cars. Consumer goods are up.
I'm sure when you go to the shopping centres around Kingston you find the parking lots full of cars. That's because people are in spending their money from the tax cut that they've received, whether it's from the corporate tax cut or the income tax cut. I know it's most distressing for you to go to a shopping centre and you can't find a place to park. Go park way in the back and walk in and you'll recognize that the retailers are doing very well.
Moving right along, there is the Bank of Montreal and their employment analysis. They expect the jobless rate in Ontario to really drop, and it's already dropped tremendously. They claim there's been, as was mentioned just a little earlier, some 265,000 net new jobs in this last 12 months.
Mr John L. Parker (York East): How much?
Mr Galt: Some 265,000, a historical record, never happened before in Ontario and certainly wouldn't have happened in that period 1990-95. They're expecting employment growth to continue at some 2% into this coming year.
I want to recognize the official opposition. They have been right. The Liberals have been right, especially if you look down in Quebec. The Liberals there recognized the difficulty of getting a good leader, so what did they do? They went to the Tory ranks and got Jean Charest. There wasn't a single Liberal in Quebec or a single Liberal across Canada who could go and do a decent job.
Mr Wildman: So did the PQ. The PQ did as well.
The Acting Speaker: Take your seat.
Mr Galt: Thank you very much, Mr Speaker. I was just explaining how right the Liberals had been in getting Jean Charest as the leader, because he's going to do a tremendous job on Canadian unity. There's no question that's going to happen.
Then out in Alberta, what happened there? They couldn't find a decent Liberal to lead their party so Nancy MacBeth, who lost out to Klein, has gone over to the Liberal side to become the leader of the Liberals.
Mr Wildman: The two of you are the same.
Mr Galt: I'm sure with the difficulties you're having with your leader - and really he's a nice guy, but he's trying to be everything -
The Acting Speaker: Order. I just want to remind you which bill we're debating, and you'll debate that bill, won't you, please?
Mr Galt: It's Bill 15, Mr Speaker, and that's just what I was getting around to explain. The Liberal leader is trying to be all things to all people, and that's just not working out very well. But I'll stick to the topic, Mr Speaker. I know that you're a good Speaker and really look after that. I guess it got a little touchy when I started talking about the Liberal leader here in this House.
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One of the greatest measures we have in terms of what's going on in the taxes and what it's costing our economy relates to tax freedom day, as it's calculated out. By the way, the premise of tax freedom day is that if you paid all your taxes up front, by the time you get to that date, you've got your taxes paid and from there on you can put it in your own pocket. Back in 1985 it was May 25. Then you could start earning something for yourself. By 1990, it had moved to June 21. Now you can understand why they'd be called the tax-and-spend Liberals. Then, in the following five years, 1990 to 1995, it moved from June 21 to June 26. That was because the NDP were borrowing so much money. They didn't bother to increase the taxes, so they doubled the debt, and that's why we ended up where we are. It only moved up some five days from June 21 to June 26.
When we first talked, as a party, about a 30% income tax cut, to be very honest, I looked at it and wondered: "Wow. How is this going to work out? Will this really fly?" I met two economists I'd never met before. I was out knocking on doors. They were in two different locations, very different places in my riding. They invited me in and we talked about the Laffer curve, which I'd never heard about before. It was very refreshing to have them explain how this was going to work. They were so enthused about the Laffer curve and how it affected taxes.
Basically, it gets to the point that when you go over the top, as you add more taxes, you really reduce jobs; it has this tremendous affect on jobs. As you cut taxes, it increases jobs; it stimulates the economy. That is exactly what we've seen in Ontario. These two economists - I met them about three weeks apart - walked through this Laffer curve. It's been fun over the last three years to follow just how that has fallen in place and how it's really been very, very effective and has worked very well.
This budget and Bill 15 is all about jobs. Jobs are up; taxes are down. It has happened in so many other jurisdictions and across this province.
High taxes, such as the income tax and the corporate tax that we're getting reduced in Bill 15 - the higher taxes go, the more it drives an underground economy. If you go back to the early 1960s, it was estimated that the underground economy in Ontario was about 5%. In 1995 or thereabouts, it was estimated to have tripled to 15%. When the underground economy triples like that, not only are you losing income tax but PST, GST and umpteen other taxes. That really is all about tax leakage.
What does the federal government do when they start to realize that? "Oh, we won't get at and straighten out the root problem. We'll clamp down. We'll send out more inspectors, we'll send out more tax police. We'll attack the public to force them to pay." They should be looking at the root problem of high taxes and waste and re-evaluate that.
I've mentioned before in the House that when Puerto Rico back in 1987 dropped their rate from a horrendous 67.6% to 41%, an incredible thing happened. In one year, there was a total turnaround in tax revenues. It increased by 28%; 50% more income was declared and the number of registered taxpayers increased by 30%. Obviously, in that culture, as in ours, people really do want to pay their fair share. They don't want to rip off the government; they don't want to rip off their neighbours on the left or on the right or across the street; they want to pay their fair amount.
As we talk about reduction of income tax and corporate taxes, one of the greatest tax grabs we have in this country is the federal government's Canada pension plan moving from some 5.6% up to 9.9%, a 73% increase in that payroll tax alone, while we're trying to get rid of the employer health tax and some of the other payroll taxes. Then, to top that off, the federal government doesn't play fair towards the rest of the country with its employees. They roll that all in with their pension donations and they don't have to increase their payments; they just recognize that, oh well, they'll take $20 million less going into the pension fund.
Ontario has absolutely led the way in showing that tax cuts can indeed create jobs. That's what this budget was all about, and it's also about getting people off welfare. It's about so many good things: a strong economy that has been stimulated by these tax cuts, stimulating jobs and growth. It's about educating our children for the future. The budget really emphasized work, not welfare, and it's good news that we're going to move further with Ontario Works and the workfare program. There's lots of good news in that budget.
We stimulated the economy to have more dollars to spend in health care, moving up some $300 million more in health care than we had anticipated being able to spend, moving it from $18.2 billion to $18.5 billion. I'm sure you'll recall that our commitment at campaign time was that there would be no reduction in health care, which at that time was at $17.4 billion; so this year, as you can see if you do the math, we're up in health care by $1.1 billion. Some of the savings in health care, as came out in the budget - $1.2 billion we'll be spending on long-term-care beds. Many dollars have been saved from the restructuring of hospitals, which has been very painful in many ridings, including my own, but from those dollars we're reinvesting in kidney dialysis and bypass surgery and MRIs - the list just goes on and on, for about 20 of those different activities.
We're reinvesting in things like personal safety, looking at helping children on low incomes. This budget has been truly a good-news budget for the people of Ontario, one that will go down in the history of this province as really boosting the province.
We've come through the tough times of getting the deficit under control. We haven't killed it yet, haven't got it to zero, but the main reason for not eliminating it as quickly as we could, in three or four years, is that we want an economy that's sustainable. Yes, it could have been brought down very quickly. It would have been very painful. People on the other side of the House would have yelled and screamed and carried on if it had come down that quickly, and it was possible.
But the way we're going about it - working it down, reinvesting where it should be reinvested, stimulating jobs, cutting taxes - we're ending up with a sustainable economy that is going to carry us well into the next century. It's going to help our young people find work and employment, and I'm sure all members of this House agree that there's nothing more important than to see our young people coming out of university or secondary school and having jobs when they graduate. It was very disappointing over the 10 lost years, from 1985 to 1995, when so many jobs went down the drain.
It's interesting to note that back in the late 1980s, just before the Premier of the day, Peterson, called an election, they were bragging that they had balanced the budget and actually had a few dollars to the good. But lo and behold, what did the third party, the NDP, find when it came into government? They had juggled the books, moved hundreds of millions of dollars around to try and arrange it so it looked like they had balanced the budget when in fact the budget really had not been balanced.
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Then we had the NDP come into government, and what did they do? They kept two sets of books, one for the public and one for themselves. It was quite misleading to the public to see what was going on with these two sets of books. It was things like taking $60 million from the northern heritage fund and just spending it. I don't know what they spent it on, but at least it has now been replaced. There's at least a reserve in the northern heritage fund of some $60 million, where it should be, rightly so. It's most unfortunate that you would strip that from your own people in the north.
All in all, it's been a very good budget. It's unfortunate that the opposition are as upset as they are with this good-news budget, but it's certainly going to go down in our history as a budget that really brought Ontario forward and did a tremendous amount for the economy of Ontario.
The Acting Speaker: Questions and comments?
Mr Gerretsen: I find it interesting that the member went on for quite a long time trying to attribute how well the economy is doing to the tax cut, but then suddenly slammed the federal Liberals, saying that whatever tax cut was given in Ontario was taxed back by the federal government. If that is so, it's a neutral thing. How, then, can your tax cut be the reason the economy is doing better in Ontario?
Let me tell you what Bank of Montreal economist Tim O'Neill says: "We've been consistent about this from the beginning" - he's talking about income tax cuts in the provincial budget - "both at the federal and provincial levels. Eliminate the deficit first. If the economy is doing fairly well, that's the time you get rid of the deficit."
What these Tories just don't understand is that during their three years in office, the public debt of this province has gone from $89 billion to $105 billion, a $16-billion increase. According to your own budget document, the amount we spent in servicing the public debt, in other words, to pay the interest on the debt, has gone from $7.4 billion a year to over $9 billion a year. We are spending more on interest on the public debt in this province than we are on all the social services you're involved in.
So what you're saying just doesn't make any sense. Yes, I want Ontario the place to be and I certainly want the economy to be rosy, but I would like it to be rosy and the place to be for everyone. Through your cuts to a lot of the social services and health care services, you have completely cut out a significant portion of the Ontario people.
Mr Wildman: I came to this debate tonight to listen to it to determine how I might vote on this bill. I was very interested in listening. I heard the member for Nepean, the member for Halton Centre and the member for Northumberland, and frankly I think they may have turned me against the bill, particularly the member for Northumberland. That was the most vacuous, self-congratulatory, contradictory piece of puffery I've ever heard.
The member went on at great length, as my friend from Kingston and The Islands pointed out, about the changes in income tax, that the lowering of the income tax rate has produced jobs in Ontario. Then, after saying that, he attacked the federal government for a surtax which has, he said, largely neutralized the provincial tax changes.
Think about that argument: If it had been neutral, they couldn't have been produced any particular changes in the economy. I don't know whether he's right or not, but if his argument is that the federal government has increased taxes so that there's no difference in how many dollars an individual has to pay, then it doesn't make any difference. His argument about more money being in people's pockets for them to spend and produce jobs doesn't work, because the money isn't in their pockets and they can't spend it, so there are no jobs. It's completely contradictory. It doesn't make any sense. The member obviously wasn't listening to his own speech or he wouldn't have made such contradictory comments that make absolutely no sense.
Mr Dan Newman (Scarborough Centre): I'm pleased to comment on the speeches by the members for Nepean, Halton Centre and Northumberland. I think the three of them did an outstanding job in addressing the issues contained in Bill 15.
If you look at Bill 15, its short title tells you what this bill is all about: the Tax Cuts for People and for Small Business Act, 1998. That's what this bill is all about and that's what the budget is all about, where we've seen tax cuts that have benefited small businesses and individuals in this province.
I know the member for Halton Centre would have wanted to comment on this, but he shared his time with the other members. Part of Bill 15 deals with removing the retail sales tax from 1-877 toll-free services, the phone exchanges for call centres. If you look at the fact that we had the 1-800 service and then the 1-888 service -
Mr Gerretsen: There's something that's really meaningful.
Mr Newman: The member for Kingston and The Islands says it's really meaningful. He's right, because this is a growth industry in this province, something he may not know about. Jobs are coming into this province through call centres. We've already used up the 1-888 toll-free lines. Now we're into the 1-877 toll-free lines. These jobs were going to provinces like New Brunswick and other provinces in this country, but now the jobs are coming to Ontario because we're cutting taxes to create jobs. This is just one example I wanted to point out to everyone that's having a positive effect on our economy.
The bill also deals with the land transfer tax and the fact that the land transfer tax rebate has been extended to first-time purchasers of newly constructed homes, for the third year. It's extended to March 31, 1999. This is very positive news for first-time home buyers, because that $1,725 reduction is after-tax dollars. That too is having a positive effect on our economy.
Mr Jean-Marc Lalonde (Prescott and Russell): I'm really disappointed to hear the member for Northumberland talk the way he did about the economy and the deficit. Only one government in the last three decades balanced the budget, and that was the Liberal government, in 1989. It seems you don't even believe your Minister of Finance. It's right in there. It's printed in black and white. The member for Northumberland probably hasn't read that book.
If we had not gone ahead with the reduction of personal income tax, there would be no more deficit. We could inject more money into health care. At present, we're cutting health care, even though you're saying there will be $1.2 billion over the next eight years. I'm anxious to see it, member for Northumberland.
When we left government, the Liberal government only had a $39-billion deficit. By the year 2000, the PCs are going to have a debt of nearly $117 billion. If you hadn't gone through with those personal income tax cuts, we wouldn't be where we are today. It looks good: "We have reduced the deficit." The deficit could be nil at the present time, but you haven't gone that route. You should have gone to an Ontario sales tax reduction instead, probably down to 6% instead of 8% or 7%.
The Acting Speaker: Member for Nepean, now is the time to respond.
Mr Baird: I'm pleased to respond to the remarks by my colleagues the members for Kingston and The Islands, Algoma, Scarborough Centre and Prescott and Russell.
The member for Prescott and Russell just promised to cut taxes by $2.8 billion and says we should have cut taxes by $2.8 billion. It's just like the last election campaign, when Liberals went around the province promising to cut taxes by $2 billion or $3 billion, promising to cut taxes before the budget was balanced, and now they've changed their tune again. They've flip-flopped so many times. They promised to cut taxes by billions. They promised to fire 14,000 public servants.
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They promised work for welfare. They promised mandatory opportunity. They promised payroll tax cuts. They promised to repeal Bill 40. They promised to repeal the quota law. They promised to cut the number of school boards. But that was then and this is now.
Now we look at the real Dalton McGuinty agenda. He's been very clear. The first thing he wants to do is to scrap mandatory work for welfare, because he believes the old system was just fine. That's what Dalton McGuinty wants to do, one of the priorities he wants to do. If I'm wrong, stand up and correct the record. If Dalton McGuinty doesn't want to get rid of mandatory welfare, stand up and correct the record.
Interjection.
Mr Baird: "Turn-back-the-clock" McGuinty, my colleague says.
Now Gerard Kennedy - he's not the Liberal leader's right-hand man, he's his left-hand man - wants to increase welfare spending by 20% if a Liberal government is elected, the official spokesman for the Liberal Party. I hope they talk about that during the next election, because they've flipped so many times it's simply outrageous. Do they want to put quotas back? Do they want to bring Bill 40 back? Who knows? They flip-flop so often, we'll just have to wait and see.
The Acting Speaker: The member for Nepean, I just want to tell you how fortunate you were because I let you speak. You were not supposed to. You already had the floor. That was my mistake.
Mr Baird: Two-minute response.
The Acting Speaker: No, you already had delivered a speech. There were three of you who divided the time, so it was not your turn to speak. So you were lucky.
Mr Baird: On a point of order, Mr Speaker: My understanding is that you can split the time, the hour introductory speech can be split, without unanimous consent, and the standing orders explicitly allow for four two-minute responses. Then they allow one of the speakers to sum up with a two-minute response. If I'm wrong, we've been operating this place wrong for the last three years, because that is exactly what has happened every single speech in this House. I stand to be corrected, sir.
The Acting Speaker: Let me assure you, that was not a response. You were responding to your own speech.
Interjection.
The Acting Speaker: No, no. The time was divided among three speakers, okay? You spoke, the member for Halton Centre spoke, and the member for Northumberland spoke. Then we go around for questions and comments, so you're responding to your own speech.
Interjection.
The Acting Speaker: I know, but it should have been somebody else. I hope it's clear. Let's not have an argument. You had your turn. We'll discuss it later on. Bring it back later on.
Mr Baird: On a point of order, Mr Speaker: Every single speech that I've ever had, the speaker had two minutes to respond. There are four comments and then the original speaker has an opportunity to respond. I would seek your clarification on that because I think it's important before we go on.
The Acting Speaker: The member for Nepean, you're right. I must tell you that what confused me was the fact that I thought you were the third one to the address the -
Interjection.
The Acting Speaker: Exactly. I made a mistake. I apologize. If it's the only thing that you can reproach me, I'm okay.
Further debate?
Mr Gerretsen: On a point of order, Mr Speaker: I certainly can well understand your confusion in this regard, because although you were right in your final ruling, we all know that this all stems back from the draconian rule changes that were made by this government.
The Acting Speaker: No, no. That's not a point of order.
Mr Wildman: On a point of order, Mr Speaker: I think all of us in this House would agree that you preside with dignity and aplomb, and one mistake once in a while is quite understandable.
Mr Baird: On a point of order, Mr Speaker: Your service in the chair has been exemplary, and once every 13 years everyone is entitled to a mistake.
Mr Gerretsen: On a further point of order, Mr Speaker: The member for Etobicoke-Rexdale asked for a public inquiry into the rule changes. I think this is a reasonable request, realizing full well that these rule changes are draconian. I would ask unanimous consent that an immediate public inquiry into the draconian rule changes that this House now operates under be immediately done and investigated. Agreed?
The Acting Speaker: The recess is now over. We will now continue with the debate. Further debate.
Mr Alex Cullen (Ottawa West): After listening to the remarks here, I'm not sure if I'm responding to Groucho Marx or any of the other Marx brothers in their comments.
Certainly from the comments earlier, I thought I heard a challenge in terms of what our party would stand for, and of course I'm ready to start speaking about the McGuinty report called First Steps: Report of the McGuinty Task Force on Children, but I'm sure you would correct me, Mr Speaker, that indeed we're supposed to be discussing Bill 15, which implements a number of measures contained in the 1998 budget. I do want to say, though, that there are alternatives to this government. We're very proud of the alternatives that we have, and on another occasion I'm sure I'll have the opportunity to speak to it.
Bill 15, of course, to implement measures contained in the 1998 budget tabled by the Minister of Finance on budget day, May 5, contains a number of items that some of the members have been commenting on. Of course we can't help but discuss the impact of the budget as this bill seeks to implement some of those measures.
The very first item in this bill, part I, talks about the Income Tax Act and this government's agenda in terms of reducing income taxes. When I look at the deficit that this government is bringing in, in 1997-98 the Ontario deficit will be $5.2 billion, and the deficit for 1998-99 will be $4.2 billion.
One therefore has to ask why, when we are in a deficit situation, this government continues on insisting upon an income tax cut. If we did not have these income tax cuts, we would have a balanced budget today. Quite frankly, the people of Ontario, when they were given a choice, as they were back in the last federal election - and of course we were coming to a situation where the budget would be balanced. So the question put to the people of Ontario was, "Should we incur or go into more income tax cuts, should we reduce the debt or should we repair the social infrastructure?" The voice of the people of Ontario was very clear in electing an overwhelming Liberal caucus to the federal Parliament: "Repair the social infrastructure." And indeed that is going to be our position going into the next provincial election.
Here we have a government that in introducing its income tax cut has incurred an additional cost of $1.2 billion, followed by in 1997-98 an additional $3.3 billion, and in this coming year $4.7 billion, looking at $5.6 billion. We know that every time they have introduced a cut to our income tax system here, it has cost us in borrowed money; every cent of that income tax cut has been financed by borrowed money. Indeed, we see a government that is continuing along its agenda, trying to find money, borrowing money not only from debt holders in this country and outside of this country, but as well having to go and seek funds from within a spending envelope to pay for this income tax cut.
So people are now hearing on one side that this government has cut some 36 taxes, but on the other side they're hearing that there are 35 hospitals that are going to be closed, $800 million taken out of the health care spending envelope dealing with hospitals, closures of beds, layoff of nurses. Indeed, all of a sudden we read within the budget that there's going to be a task force to look at the nursing situation in Ontario after having laid off 7,000? It just boggles the mind.
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We are looking here at a bill that insists on cutting income tax. I heard the remarks over there about this economist and that economist saying it does wonders for the economy. I'm sorry. I happened to be at one time in my existence a practising economist. I would go -
Interjections.
Mr Cullen: You can't suck and blow at the same time. You can't go and quote from economists and then, when you have an economist stand before you and speak to you, say, "Oh, we don't want to listen to that." It's amazing.
Let's take the nation's newspaper. Since Conrad Black doesn't have his newspaper up and running, of course, I'm referring to the Globe and Mail. The Globe and Mail had an excellent article dealing with the anticipation of this particular budget, talking to different economists. My colleague from Kingston and The Islands only referred to the Bank of Montreal economist, but let me tell you what economists are saying are the reasons behind Ontario's boom. Has it got anything to do, as the members on the government side opposite try to claim, with the income tax cut?
You have to think. You have to look at the issue. I was a private sector economist, and I would have to stand before my clients and present to them scenarios that we had to justify, that we had to show made sense, or else they would not buy our product. That's the private sector. That's the way it's supposed to work, and I have to tell you that our little economic consulting company, of which I was simply a member, has continued to exist all these years by providing sensible, accurate, well-researched documentation. So when I go, for example, to the Ottawa Economic Association and I sit among my peers and I ask them, "How is Ontario doing?" they say to me, "Ontario is pretty damned lucky."
Indeed, the Globe and Mail says it right here. What does the Globe and Mail say?
"Ontario's economy is booming, but there's little evidence the provincial government's much-trumpeted personal income tax cut has had much to do with it." This is the Globe and Mail, certainly not a rabid paper, certainly not a Liberal paper, you'd have to say. "Rather, many economists argue that low interest rates, a surging US economy and a low Canadian dollar are the main reasons for Ontario's stellar performance in creating new jobs."
It only makes sense that if on the one hand a government cuts income taxes but at the other end it cuts expenditures, it cuts services, it cuts jobs, then if indeed the economy is improving, which we all know it has, it cannot be as a result of the government's own actions.
Indeed, the members opposite, as my colleague from Kingston and The Islands acknowledged, have already acknowledged this when they say, "Isn't it too bad that their income tax cut was eaten up by the actions of the federal government?" Don't they wish today that they had the stellar budget performance that the federal government has? Why is it that the province of Mike the deficit-fighter is going to be among the last of the provinces in Canada in terms of dealing with its deficit?
Why is it that this government, which came in and said the New Democratic government created so much havoc to the economy, ends up with the same bond rating from Bay Street as the Rae government? Why is it?
Quite frankly, it's because you cannot do two things at once here. It's an elemental law in economics. Those of you who have studied it know the Tinbergen law, that it takes one policy action to deal with one policy issue at a time, and a government that cuts income tax and tries to balance the budget at the same time obviously finds itself continuing in a deficit situation. If it hadn't been for those income tax cuts, we would not be borrowing today up to $4.6 billion.
In Bill 15, Mr Speaker - I know you are concerned about staying on topic - we have here part V: "The bill enacts the Ontario Loan Act, 1998. That act authorizes the borrowing of up to $4.6 billion, in total, for the Consolidated Revenue Fund." Why is this money needed? Because we continue to run a deficit. Why do we continue to run a deficit? Because we continue to cut taxes.
What happens to the average taxpayer out there in Mike Harris's Ontario? We just heard my colleague the member for Fort William in question period today talk about the average family earning over $40,000, who would be a beneficiary of this income tax cut, having to pay out more in higher tuition fees for post-secondary education. She made the very telling point about the impact of this government's programs seeking to help, supposedly, the working parents, the middle-income parents of our province, but instead this government hits them time and time again by having other bodies do the dirty work of this government: cut the funding to universities, cut the funding to community colleges, release them from any restraint in terms of tuition fees. Tuition fees naturally go up. It is true there is a demand curve. Lo and behold, parents are paying more.
What is happening in municipalities as a result of this government's fiscal plan? This is one of the things that's missing from this bill and it's one of the things that's missing from this budget: any comment whatsoever about helping the poor property taxpayer, on whom this government has foisted over $2 billion - I think it's nearer $3 billion - in additional services, and yet it leaves them hanging with nearly $600 million in additional costs.
Why does this government want $600 million? It has to pay. It has to pay for its deficit. It has to pay for its income tax cut. So what happens? Municipalities are now stuck with the bill. Who is stuck with the bill? Didn't Mike Harris once say there was only one taxpayer?
What is happening out there in your communities? Why did members of your caucus vote against the downloading bill? Because they knew there would be an impact on your and my voters, the property taxpayers. What is that impact? In my community, we are seeing increases in user fees, we're seeing increases in wading-pool fees, in arena fees, hockey leagues. By the way, I do believe the toughest politics I know happen to be at the hockey-league level, but I'll leave that to another day.
You are a tourist who comes to one of the gems in Ontario for tourism; you come to the national capital. You have to park somewhere. What happens? Your parking fees have gone up. What kind of message does this send out there? But the municipality says, "We have no choice whatsoever, because lo and behold, the provincial government has given us all these costs, and we have to go back and find this money." They have to take it out of user fees, and so they're doing so in parking arrangements. It is simply not sustainable.
What do the other economists say here? Let's quote some economists. My friend the member for Northumberland quoted some economists. Here we have Lise Bastarache, assistant chief economist at the Royal Bank of Canada, who said that low interest rates "are the number one element driving economic growth across Canada, including Ontario, and there is no way to distinguish whether the average Ontario consumer decided to spend more" because of an income tax cut or because of the low interest rate that he or she received courtesy of another government that balanced its books.
Let's remember that the federal government, a Liberal government, is three years ahead in terms of balancing its books, because it was sensible. It dealt with its spending prior to cutting income taxes. What are people in Ontario saying? "Get your fiscal house in order before you talk about income taxes." What is this government doing? It's going to have to borrow again. It's going to have to borrow to pay for a deficit this year of $5.2 billion, next year of $4.2 billion, and on it goes.
We heard so many times during the budget, "A promise made, a promise kept." I have to tell you, it is enough to make us all gag. People in Ontario in 1995, when they voted in that election, heard from this government that it would make government smaller. Well, all right; it kept that promise. But it also promised, we heard Mike Harris saying, that there would be not one cent cut from health care. What has happened? Eight hundred million dollars cut from annual hospital budgets, a total of $1.4 billion since the Tories took office.
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We say that this budget is a hit-and-run budget. We say this because this budget continues the Harris government agenda of hitting health care, hitting education, hitting kids, and yet they're running for an election. That's what is going to happen.
This budget is so cynical in what it says in terms of health care, education and what it's doing for the honest taxpaying people in Ontario. What did this government say? What did Mike Harris say about hospital closures during the last election? What did he promise? Remember, this bill is implementing a budget where they said so many times, "A promise made, a promise kept."
The question was asked during the leaders' televised debate on Global TV, "Can you guarantee us tonight that your pledge to protect health care will mean that you will not close hospitals?" Mike Harris said, and the gentlemen and ladies opposite know this by heart by now, "Certainly I can guarantee you, Robert, that it is not my plan to close hospitals."
How do you think the people in Ontario are paying for these income tax cuts? How do you think the people of Ontario are paying for the additional deficit that this government was pledged to eliminate but continues to run and will continue to run for the rest of its mandate? It's having to close hospitals, 35 of them.
This bill talks about implementing other measures contained in the 1998 budget but it is silent on the user fees that are happening out there in the community because of the fiscal actions this government has taken.
What did Mike Harris say in his Common Sense Revolution? Did he not say there was only one taxpayer? Did he not say that a user fee was a tax in another name? What did he say in the Common Sense Revolution? My colleagues opposite all know because they swore an oath to uphold that Common Sense Revolution. It's not making any sense for the common people in this province because he says, "Under this plan, there will be no new user fees."
This government directly, never mind what's happening in the municipalities, instituted $225 million in new user fees for seniors and the poor who purchase medication through the Ontario drug benefit plan. I'm sorry, folks. You can't hide behind it. That's a user fee. A user fee is a user fee is a user fee.
I heard earlier that this budget contained elements to improve safety in our communities. I am totally amazed at the gall of this government. Recently, before I was elected to this House, I sat on the regional municipality of Ottawa-Carleton council and we put in place regionalized policing. We had a police budget of about $100 million, of which $8 million was being financed through grants by this government. So what did these folks opposite do? What did these law-and-order folks do? They eliminated the grant that helped keep property taxes down, that was used to hire police officers to patrol our community, to keep our community safe. They cut that out, and then this government has the gall to create a political crime commission to run around this province and say: "Crime is on the rampage. We must do something about it," and they table a budget that says they're going to do something about it.
My God. Why did they cut out the $8 million from the Ottawa-Carleton police budget? Oh, excuse me. They have a deficit. They're deficit fighters. They need this money to fight the deficit; and they promised to cut income taxes, so they're cutting income taxes, and they had to take that money out of our community to pay for that income tax cut.
What do the people in Ottawa-Carleton say? Do they say, "Thank you very much, thank you for taking the money out, thank you for putting us in a crisis. Thank you for making us have to choose whether we have community police centres here"? You call the program as you like. The fact of the matter is that this has created a budget crisis in Ottawa-Carleton. They're having to choose between supplementary aid for the people who are most impoverished and maintaining the police force. Is this the kind of community we want to have? I'm sorry, I don't think so.
We heard this government still crowing very loud and clear just eight months ago that it was delivering the promise, that it was delivering the agenda, and eight months ago the voters in Ottawa West dealt a very clear message from the second-oldest riding in Canada. We are second to Victoria, BC. These are the folks who would ordinarily support your party. They did for many years. They sent a resounding message - not simply a plurality, but a majority - and they said: "You cannot suck and blow at the same time. You cannot speak about fighting the deficit and giving us income tax while at the same time cutting our health care and our services." This is nonsense.
The Speaker (Hon Chris Stockwell): Questions and comments?
Mr Wildman: I listened carefully to the member for Ottawa West. He started out by indicating that he was an economist. It reminded me of that old saying that it's such a dismal science. It also reminded me that one wag once said, "If you laid all the economists in the world out, it would be a good start."
It seems to me that if you have more than -
Mr Cullen: Point of order, Mr Speaker: The actual statement is, "If you lay all the economists end to end, they would still not reach a conclusion."
Mr Wildman: I was actually just going to get to that. I do like the one that it would be a good start. The fact is, if you get three economists in a room, you have 10 different opinions. The problem is that so much of the measures are subjective, and the conclusions that are arrived at are a matter of opinion.
Having said that, I appreciate the presentation from the member for Ottawa West with regard to his view that the government is increasing the deficit in order to finance the changes in the income tax, that the government is also cutting services - hospitals, schools and so on - in order to finance this change in the income tax. I share with him his view that if the government were serious about cutting the deficit, the government would do that before making these changes to the income tax.
I would say, though, that since the member shares with me the view that this is a wrongheaded approach, I hope that in his response he would make it clear what the Liberal Party would do about the income tax break that this government is imposing on the people of Ontario.
Mr Galt: I was very entertained by the member for Ottawa West as he made his presentation. On dramatics he'd get about a 5.8. On this side we were wondering, on his user fee, how much a user fee would be to go to a wading pool in Ottawa, particularly the city that receives the most dollars of any city in Canada for development, for museums etc from the federal government and the provincial government. A tremendous amount of money goes into the city of Ottawa. Something that Bob Rae once said is, "It doesn't matter how much you give them, they always want more." With you coming up on council, I can understand why you just want more and more. There's never enough.
The member for Ottawa West also made reference to taxes and recessions, the tax cut, the deficit, the budget and all that. Let me remind you how the taxes went up in the late 1980s. What did we have in 1990? A recession. That was in Ontario. What happened in BC? They were doing quite well, thank you very much, in the early 1990s. Their taxes went up under an NDP government, a socialist government, in the early 1990s. Where are they today? Into a recession. There's a direct relationship between higher taxes and ending up with recessionary times.
Let me tell you about the US, the 10 highest-taxed states versus the 10 lowest-taxed states. The economic recovery of the 10 lowest-taxed states through the 1980s went up 20% faster than the 10 highest-taxed states. Also, a thousand people a day moved into the lower-taxed states and a thousand people a day moved out of the higher-taxed states. There's just no question what happens to people, what happens to industry, what happens to jobs when taxes are too high. They leave the country, just as is happening in BC today.
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Mr Lalonde: I want to commend my colleague from Ottawa West. I could see that he has very deeply studied Bill 15, and he touched on some very important points. As our leader Dalton McGuinty says, it's a hit-and-run budget, and everything is reflected in this budget. It's hit-and-run because all the way through the Conservative people have been chopping down all the programs, cuts in education, cuts in health care and also downloading to the municipalities.
User fees, definitely: There won't be enough people who will be able to participate in the local municipalities' activities because of the user fees the municipality has to come out with. Only so many people will be able to afford them, so there won't be any programs in place because of the user fees the municipality will have to put in place due to the downloading.
But there's one thing we shouldn't forget. After the election in 1995, I walked into a shopping centre, and this gentleman came up to me and said, "There's one reason I voted for the Conservatives, because of the tax cuts." I saw him a couple of weeks ago. He says, "Where is my tax cut?" They were all expecting a 30% tax cut. The way you people did the publicity, they thought it was a 30% decrease in their taxes. Really, if it were like they do at consumer and corporate affairs, this government would be taken to court.
Mr Tony Martin (Sault Ste Marie): I want to congratulate the member for Ottawa West for his speech, well delivered and very timely and appropriate, given the devastation that is beginning to happen out there that is more than obvious to anybody in Ontario today who has a social conscience.
You will hear the government, over the next few days as they debate these bills on the budget, tell you that all the indicators are showing that Ontario is booming, that things are well and that the economy is strong. But they will not tell you about some of what is really happening out there in Ontario because of the policies of this government.
Deteriorating infrastructure: Our infrastructure has actually attracted investment to Ontario over the years, has made Ontario one of the most attractive jurisdictions in the world to come to and to invest in.
Our health care system: Talk to anybody in the province and they'll tell you that they're concerned about the state and the shape and the condition of the health care system.
Our education system: No matter how you paint it, people involved in the education system, whether it be teachers or parents of students or students themselves, will tell you that they're worried and concerned, that it's not the same system they were used to, that what you're doing is not what they expected you to do and that you are destroying what was a very excellent system.
The social safety net we put in place to take care of people who fall through the cracks when there are difficult times, as there always are in any jurisdiction where there's an economy working, particularly where it's a market-driven economy: You only have to look at those people who are most directly targeted and who have become victims of this government: the poor in our province.
I said the other night that we are becoming, in communities, frayed at the edges. That fray is beginning to come closer and closer to the centre. Sooner or later we will all experience it.
The Speaker: The member for Ottawa West has two minutes to respond.
Mr Cullen: I'd like to thank the members for Algoma, Northumberland, Prescott and Russell, and Sault Ste Marie for their comments.
When the member for Northumberland talks about the federal buildings in Ottawa-Carleton, one has to assume that they ought to pay their fair share of tax. How is it that when they do pay their fair share of tax for the municipal services they consume, the city of Ottawa has a $10 million bill as a result of downloading and the regional municipality of Ottawa-Carleton has a $50 million bill as the result of downloading? This is cold comfort to the taxpayers in Ottawa-Carleton, who, by the way, have been paying provincial tax all this time and also are still looking for their income tax cut.
With respect to the comment about how many economists you have and how many opinions, parenthetically, I do collect economist jokes; please send them over.
But my colleague from Kingston and the Islands talked about the economist from the Bank of Montreal and I earlier referred to an economist from the Royal Bank of Canada. I just want to quote from an economist, the director of forecasting at the Conference Board of Canada: "I find the whole argument about tax cuts specious, because we've had a tax cut, but we've laid off thousands of public servants and cut hospital jobs." He doesn't think that the income tax cut has had much of an effect on the economy here, and I have to agree with him.
I think the remarks of the member for Sault Ste Marie are most telling. What is the effect of this government's agenda? Presently in Ontario, over half a million children are living at or below the poverty line. We've had child care funding cut by $65 million, and there are over 30,000 families on waiting lists for child care subsidies. In Toronto, 71,000 kids are looking at food banks. Ontario has the second-highest child use of food banks in the country, after Prince Edward Island. We have homelessness. We have child abuse -
The Speaker: The member's time has expired. Further debate?
Mr Wildman: I said earlier that I had come to this debate to listen to determine how I might vote on Bill 15. I have indeed listened and I've tried to analyse the bill. I've listened to the comments of the various members and looked at what the bill says. In determining and laying out what my position will be on this legislation, I would like to refer to parts I and II of the bill and particularly to part V. Then I will have some comments to make about part VI as well.
Parts I and II make changes in the tax system. This bill facilitates the changes that are touted in the budget, and the government makes these arguments that in making these changes, there will be more money available for the private sector for spending and investment and this will produce confidence and produce jobs in Ontario.
We've heard all the arguments about this and about a number of opinions of various economists, usually banking economists, who say one thing or another. Some say these changes do indeed stimulate spending and jobs. Others say no, the changes in the economy, the improvements we've seen in southern Ontario - but not in northern Ontario, I would point out - are largely related to the export markets and the fact that the American economy is accelerating at an enormous rate. That has meant that there have been more markets for Canadian goods, particularly manufactured goods and particularly in the auto sector: auto parts and automobiles. I won't get into that argument. I just want to deal with the question of the relationship between parts I and II, and part V.
Before getting into that, though, I would make this comment: It seems to me that if a government wishes to use tax expenditures - because that's what they are, tax expenditures - to stimulate private spending in the province to produce jobs, it makes sense that those people who live from one paycheque to the next would be the ones who would get the biggest tax break. They are the ones who will spend that money locally, in the local retail sector, because they are the ones who need the extra cash. People who already have money to salt away in the bank or in RRSPs or in investments abroad don't really need the money, and if they do spend it, rather than sheltering it in RRSPs or whatever, they are not as likely to spend it locally. They may spend it elsewhere, which does not produce any jobs in Ontario. It may indeed produce jobs, but not in this jurisdiction. If someone buys a condominium in Arizona or Florida or Bermuda or the Bahamas, it doesn't produce any economic benefit in Ontario.
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That's a major problem. It seems to me we should have targeted tax cuts. If you're going to go that route, the tax cuts should be targeted to those who are most likely to spend it locally. That would then benefit the mom-and-pop corner store, the supermarket, the department store, the furniture store, the appliance store, the automobile dealership and so on in the local community and people then would be spending to generate jobs.
The other problem is that with high levels of personal debt in our economy, those who do not need the money to spend for immediate family needs may use the money simply to pay down debt. That may be a good thing for themselves and for their families, but it does not produce jobs. So those who make these kinds of arguments really should analyse them closely.
I would like to turn to parts I and II and part V of the bill. Part V of the bill refers to a piece of legislation called the Ontario Loan Act. Part V of the bill authorizes this government to borrow up to $4.6 billion. This is a government that likes to position itself as being opposed to debt - opposed to public debt, opposed to deficits, opposed to borrowing - because they argue that this is a drain on the economy. Well, one of the central parts of this bill is to allow the government to borrow almost $5 billion.
Why do they have to borrow this $5 billion? The reason they have to borrow it is because that's how much it costs to finance their tax scheme: $5 billion a year. So this government that says it's opposed to public debt and wants to bring down the debt and bring down the deficit is in fact borrowing, over its mandate, about $20 billion to finance a tax break for the wealthy.
I don't have anything against a party that's running for election saying: "Look, we want to give more money to the wealthy. That's what we're about, and if you vote for us, we're prepared to do it. If you're wealthy, vote for us, and if you hope to be wealthy, vote for us too because you'll get a benefit here." If they want to run for election on that basis, that's fine. But they didn't say at the same time, "Of course, we're going to have to borrow the money we're going to give to you by changes in the income tax system, and we're going to have to increase the deficit in order to do this by $20 billion."
That's beyond all the other fees they have to increase. I'm just talking about the debt thing. This is a government that says they're opposed to debt, yet they're borrowing $20 billion. This bill right here, Bill 15, in part V authorizes the Minister of Finance under the Ontario Loan Act to borrow $4.6 billion, and they've had to borrow in this magnitude each year since they were elected in order to finance their changes in the tax system. This is a government that pretends to be opposed to deficits, pretends to be opposed to debt, but in fact continues to borrow like a drunken sailor.
Mr Wayne Lessard (Windsor-Riverside): But student debt is okay.
Mr Wildman: That's true. When I say this government is opposed to debt, what they really say is that they're opposed to public debt. They're not opposed to private debt. If the various changes they make increase private debt, well, that's just the luck of the draw and that's too bad. If you mortgage the future of our young people by telling them that if they graduate from university they're going to have a debt of somewhere between $20,000 and $25,000, and over the next 20 to 30 years, if the trend continues as a result of the deregulation of tuition fees, they will have debt somewhere near $60,000, that's okay.
It's unfortunate, though, because they told that same generation when they were running for election that they were running because they wanted to save their generation from debt and debt charges. But all they've done is move it from public debt to private debt. They've transferred it directly to them and said, "Fine, now you pay it," to all those students and their families.
Of course, not everyone is a student, not everyone attends university or college, and under this system fewer and fewer will be able to. There will be less access. I suppose that instead of having the debt owed by all of us as a community, this government says it's okay because it's just going to be a few individuals and their families who are going to have to pay this debt. Private debt is okay, public debt is not.
That's the connection between part I and part II of the bill and part V, which deals with the Ontario Loan Act.
The Income Tax Act and the Corporations Tax Act are being changed, and the way they're being changed requires a change to the Ontario Loan Act, requires the Treasurer to borrow money in the financial market and to increase the debt of the province in order to give a tax break to a few very well-to-do individuals.
The members across the way can't deny the fact that it says directly in Bill 15 that our Treasurer is authorized to borrow $4.6 billion. It says that right there. There's going to be a change to the Ontario Loan Act, and the reason you have to do that is because of the changes in the other parts of the bill to the Income Tax Act and the Corporations Tax Act. It's right there. The government is increasing benefits for the wealthy, for those who will not have to pay as large a tax. Because of the tax expenditures they are making, they have to borrow the money to finance them, and that's what they are indeed: tax expenditures.
I don't have to say anything further than to say I'm opposed to borrowing for this purpose. I'm opposed to borrowing and increasing the debt and the deficit for this purpose, because it does not benefit the community, it benefits the few at the expense of the many. That's why I don't agree with it.
I want to talk briefly about another portion of this bill. That's part VI, the one that deals with the Ontario Lottery Corporation Act. There's one section in there that we demanded and that we agree with, that is, that this bill would repeal all provisions related to video lottery terminals. We agree with that, and I won't go into that other than to say we agree with it.
The part I disagree with and that I find particularly distasteful is that portion which amends the Ontario Lottery Corporation Act by adding health care and charities to the authorized list of purposes for the lottery corporation's net profits. Many people might wonder why I'm opposed to this change. Many would say, "If the government is going to provide money from the lottery corporation's profits for health care and for funding charities, surely that's a good thing." I don't think it is, and I'll explain why.
One of the things that defines us as Canadians is our commitment to quality health care for everyone in Canada. One of the things we are proud of in Ontario is the fact that we are committed to a health care system which does not bankrupt the sick, which does not say to those who are ill that you cannot get service, cannot get health care unless you have the dough; that does not say you have to use your credit card when you come in the door or you don't get service, that you have to write the cheque at the emergency room or you don't get service.
All of us as a community share the bill for health care and individuals who need health care have access to it no matter what their income, no matter what their economic status. That is one of the things that defines us as Canadians. I'm proud as a New Democrat to say that, knowing the history of the health care system and how it developed in Canada, knowing the contribution that the CCF-NDP, led by people like Tommy Douglas, made to bring socialized medicine to Canada.
Mr Gerretsen: How about Pearson?
Mr Wildman: Pearson followed suit after Saskatchewan had established it. So should Paul Martin Sr take credit for that, and so should the justice who recently died, the one who carried out the study for the federal government at the time.
Mr Gerretsen: Emmett Hall.
Mr Wildman: Emmett Hall. All of them deserve credit. That's one of the things that all of us as Canadians have come to value and is one of the things that make us quite different from our neighbour to the south, where close to 40 million people have no health insurance at all, where many others have to finance their health insurance privately at great cost and where if you face the situation of a major illness like cancer or a serious heart condition, it could mean serious financial loss, as well as all of the heartache and difficulty that illness brings to a family.
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So we value this. I believe that as Canadians and Ontarians, when we value such a health care system, as a community we must be committed to raising the tax revenue required to finance that system. We should not say that the quality of our health care will be dependent upon gaming, that the quality of health care that is deliverable to Ontarians will be dependent on revenue from gambling.
I'm not being critical of our neighbours in Ireland, but I would point out that the Irish Sweepstakes has been one of the ways the Republic of Ireland has financed its health care system for many years. I don't agree with that approach. I don't believe that gambling should be one of the main sources of revenue for financing quality health care for people in need, for the sick. I believe that all of us in our community who can afford it and have incomes that require us to pay taxes should be prepared as a community to contribute to the quality health care system that benefits everyone in our community. I don't believe it should be a question of chance. That is not a way to finance a health care system, so I oppose those changes in part VI of this bill to the Ontario Lottery Corporation Act.
This is a government that, when it was a party in opposition, campaigned against expansion of gambling in the province. I remember that the Treasurer, when he sat on this side of this House, was vehemently opposed to expansion of gambling. I remember that the current Premier, when he was leader of the third party in the province, said, "We in Ontario" - I remember almost word for word what he said - "do not have a revenue problem, we have an expenditure problem. We don't need any revenues, I don't want any revenues from gambling. I'm not interested in it." He said that. He made it clear on many occasions. Yet now we have not only this change before us in this bill, but we have a government before us that wants to have 44 casinos established in this province, purportedly to provide revenue for charities, but in fact 44 casinos that will provide an enormous take for the Treasurer of Ontario.
The government in this assembly, the Conservative Party in this assembly, has yet to explain that. They talk about promises made, promises kept, and yet they don't deal with the fact that the Treasurer, when he was on this side of the House, was vehemently opposed to any expansion of gambling in Ontario. He was one of the most rabid in making that point in the House. The Premier, when he was the leader of the third party, said he didn't want the revenue, that he didn't need it, that Ontario didn't need it and that he didn't want it. He wanted to have nothing to do with gambling revenues.
Why? Why the change? Why do we have this amendment before us to finance our health care from gambling revenues?
Mr Douglas B. Ford (Etobicoke-Humber): Just talk.
Mr Wildman: The member across the way says the Premier was just talk at that time. Maybe that's true. I don't know. Maybe that's the case: It was just talk; it didn't mean anything. I suppose that may be the case. I had greater respect for him than that. I thought when he said something, he meant it, but I guess as the member for Etobicoke said, it was just talk. So okay, it's just talk. That's an explanation. It's one I wouldn't have expected from a member of the Conservative Party in this House, but I guess it's as good an explanation as any: It's just talk.
I'm clear on the record that I have listened to the debate in this House, I've analysed the bill and I've looked at the relationship between parts I and II and part V. I don't accept the view that we should borrow money and increase the deficit and the debt to finance tax changes that will benefit the wealthy, and I'm completely opposed to financing our health care system out of games of chance. That is not acceptable and I view that in the same way the Premier did when he was on this side of the House and said he did not want revenues from gambling to finance things like health care.
The Speaker: Questions and comments?
Mr David Tilson (Dufferin-Peel): I want to comment briefly on some of the remarks made by my friend from Algoma, specifically his comments with respect to the Ontario Loan Act, which is part V of the bill. He spent some time on that. I think you know exactly what this is for. This is to finance the deficit that has been going on in this province. You're talking as if this is something brand-new. You used to do this when it was $11.6 billion, so I don't know what you're talking about. You're the people who created this mess in the first place. That's why we're going through this whole circle, to try and remove that deficit. We have promised to do that and we're going to do that. You've got a lot of nerve to stand up in this House and talk as if this is something new. This is not something new; this is something that you've been doing, and that before that the Liberals used to do. The whole purpose of this is to obtain money to pay for the deficit you started to create.
Laughter.
Mr Tilson: You laugh, but that's exactly what it does. That's why this province is in the mess it is, because of the spending. You were spending more than was coming in. That's what this is all about. We can't keep spending more than is coming in. Somehow you got it in your bright head to have all these wonderful policies you couldn't afford. You start to stand up in the House and say, "You're putting this province into debt." Baloney. You're the people who created this mess. What do you think this is all about? We're trying to end the mess you created with your red tape and your debt and your overspending. It's outrageous.
Mr Gerretsen: I would just say to the member for Dufferin-Peel that I find it very ironic that the amount you're borrowing under this act, $4.6 billion, just happens to be the amount of the total tax cut to date as well. As far as I'm concerned, if you didn't have the tax cut you wouldn't have had to borrow and we would probably have a balanced budget by now. That's number one.
Number two: You should speak to your friend over there from Northumberland. He talked for about 20 minutes or so about how the tax cut was really helping the Ontario economy. Then, after the 20 minutes, he all of a sudden says, "Of course the federal government is taxing it back." If that's the case and the tax cut is not having any effect at all, how can you take credit for the fact that the tax cut apparently, according to him, is benefiting the Ontario economy? You can't have it both ways.
Let's very quickly look at your own budget document, and let's see how much people actually get back.
Interjection.
Mr Gerretsen: I'm speaking to the Speaker.
Earlier tonight I was told -
The Speaker: You're speaking about the member for Algoma's comments.
Mr Gerretsen: The member for Algoma always makes an awful lot of sense in this House. Let me just tell you quickly: A single senior with a net income of $14,940 gets $60 per year in your tax cut. A one-earner couple making $29,000 gets $400 per year as a result of your tax cut. You ask those people whether they aren't spending this money, and much more than that, on the various user fees your government has initiated, whether we're talking about user fees with respect to the health care system if they're seniors, or many of the user fees that municipalities have had to initiate. The tax cut, sir, simply isn't working.
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Mr Lessard: I want to express my appreciation for the comments by the member for Algoma, for whom I have a deep respect and high regard.
I was especially impressed by his remarks fact that we shouldn't have a health care system that is based on an ability to pay and that we shouldn't have a health care system that is funded by the proceeds of the lottery corporation. That's not the way we should be funding our health care system. It's a system we should ensure continues to be publicly funded. We all share in the interest of having that system publicly funded.
I was interested in his remarks that all those charity casinos were going to provide revenues for the provincial government. I kind of wonder whatever happened to those charity casinos. It's just another example of this government's mismanagement. They said they were going to do this - I don't think that should be a means to finance our health care system - but they still haven't come around to do it.
Anyway, this is an example of what things are like in the Mike Harris Ontario government and the Ontario Lottery Corp. In Windsor we have a Freedom Festival and each year they always have a community partner mobile stage program from the lottery corporation. This year they were advised that program has been cut out. The stage they have always been provided with by the lottery corporation, for years and years, it is not going to be able to provide any more, and it's unfair.
Mrs Julia Munro (Durham-York): I welcome the opportunity to comment on a couple of the ideas that were suggested by the member for Algoma. One of the things he spent a great deal of time talking about was the question of the tax cut. I think it's rather interesting because very clearly, in the previous government, it was viewed as necessary to increase taxes in order to raise revenues. Very clearly, when you look at the numbers, that didn't work. It demonstrates beyond any shadow of doubt that it is the cutting of a tax rate that sends out a very clear message.
One part of that message is that people can spend their money better themselves, and the second thing is that it sends out a message of creating the climate for jobs. When you look at the fact that in this province 345,000 new private sector jobs have been created, very clearly the tax cuts are having a beneficial impact.
The member for Algoma also referred to the fact that this is for the rich. I'd like to draw attention to the fact that it is those people who earn less who benefit more. He referred to the people who are the wealthiest in this province. It's very clear when you look at those people who accept the responsibility for the Fair Share health levy, who earn over $75,000, those people are not getting the kind of break that the people between $25,000 and $65,000 are.
The Speaker: Member for Algoma, response.
Mr Wildman: I'd like to thank my friends from Durham-York, Windsor-Riverside, Kingston and The Islands and Dufferin-Peel for their comments. I am surprised that such a dry subject would produce such controversy and intense feeling, but I do appreciate their views. I started out by saying that economics is a dismal science; perhaps it's not as dismal as I thought.
I would comment to the member for Durham-York that 6% of the income earners in Ontario earn individually more than $80,000 a year. That's 6%. They get 25% of the dollars from the tax break, so you can't argue that the people at the top end aren't getting most of it. They get 25% and yet they are only 6% of the people.
I want to comment on my friend from Kingston and The Islands. He's quite right. The $4.6 billion that part V of the bill authorizes the Treasurer to borrow is almost exactly the amount that it costs in tax expenditures for the tax break. It's very simple math. The government is borrowing the money to give the money to the people who benefit from the tax break. They don't have it, they're borrowing it. They're increasing the debt in order to do it.
As the member for Windsor-Riverside said, this government believes in private debt, and private debt is okay as long as it's not public. Again, I appreciate his remarks with regard to the fact that it's very unwise to be financing our health care system that we all value from games of chance. That's just not appropriate in our society.
The Speaker: Further debate? The member for Niagara South.
Applause.
Mr Tim Hudak (Niagara South): That's very kind of my colleagues in the assembly.
Mr Speaker, I intend to share my time with the member for Etobicoke-Rexdale.
The Speaker: You need consent for that.
Mr Hudak: I do?
The Speaker: Yes, you do.
Mr Hudak: Mr Speaker, if I could can kindly ask consent of the members to split my time with the member for Etobicoke-Rexdale.
The Speaker: Agreed? Agreed.
Mr Hudak: I thank you, Mr Speaker, and I thank my colleagues here this evening. I sit beside the member for Etobicoke-Rexdale every day we're here and benefit from his wit and wisdom in all these debates and I know the other members of the assembly are anxious to hear from the member on his perception of Bill 15 and the good things that it means to the province of Ontario and the good folks of Etobicoke.
I would like to add a few things. I've already heard this evening from the members for Nepean and Northumberland and from Halton. What I would like to add to the debate is a bit about how Bill 15 and its budget initiatives are being received in the Niagara Peninsula. I think you're seeing a remarkable turnaround in Niagara due to the activities of this government and bills like Bill 15.
Many members here as well as the folks watching at home will probably remember just four years ago, about the mid-1990s, the unemployment rate in Niagara was over 14%.
Mr Frank Klees (York-Mackenzie): Who was the government then?
Mr Hudak: I believe the government then was the Bob Rae NDP government.
Mr Wildman: No, it was the Mulroney government.
Mr Hudak: In Ontario. We saw this huge change. We'll put the matter to the cause of those problems. A 14.2% unemployment rate at that time, which was among the highest rates of unemployment across Canada. The Niagara Peninsula had one of the highest rates of unemployment across Canada. I'm glad to say that under this government and under bills like the bill before us today, Bill 15, we have seen a remarkable, an astonishing, an outstanding reduction in the rate of unemployment in the Niagara Peninsula.
Mr Klees: And who is the government today?
Mr Hudak: To answer my friend the member for York-Mackenzie who asks who the government today is, of course it's Mike Harris and the Conservative government.
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You've seen, Mr Speaker, the unemployment rate in Niagara cut in half, from 14.2% down to the low sevens. I'm going to make a bold prediction that if we pass bills like Bill 15 and those that follow, the unemployment rate in Niagara will continue to fall. I'm very confident of that.
One of the main reasons that this is going on is the very simple premise that only Mike Harris and his team had the courage to say during the election campaign in 1995, that tax cuts create jobs. We're seeing that working out. We are cutting taxes. We're cutting taxes on income. We're cutting taxes on small business. We're cutting taxes on young couples or young individuals who are buying for the first time a home to help spur the construction industry. For Fort Erie we've decreased the tax on the racetracks to allow for more money coming into the racing industry, which means good things in the long run for racetracks like the beautiful track we have in Fort Erie.
A total of 66 tax cuts to date: The number 66 is significant at this point because if you combine the tax hikes, the increase in taxes that we saw under the Peterson-McGuinty Liberals and the Rae-Wildman NDP, they come to a total of 65 tax hikes, but 66 cuts under the Conservative government.
I heard earlier some members opposite saying that the tax cut is strictly for the benefit of the rich in society. Then we heard the counterargument from the member for Durham-York, who said it's quite the opposite: Income tax has become even more progressive under this government. There are thousands of individuals and families in Ontario now who used to pay taxes, low-income families, modest-income families, who now will not pay any Ontario income tax. That's certainly a shot in the arm for those families who are trying to climb up the economic ladder and put some money aside in the bank to save for their futures - more money coming back to them.
If you look at the entire package of tax changes under this government, the tax cuts and the Fair Share health levy, the tax system has become more progressive. Certainly you would expect that the members opposite in the Liberals and the NDP would support a progressive tax rate in the province. They believe fundamentally that the rich should pay a higher proportion of their income in taxes and that low-income individuals should pay a much-lesser proportion of their income in taxes or not pay any taxes at all.
The member for Kingston and The Islands asked what I believe. I believe, as I said earlier, that tax cuts create jobs, so we disagree on that one. But ironically, the point I am trying to make is that under our changes to taxes, low-income individuals - thousands of them across the province - are no longer paying provincial income tax. The federal Liberal government still makes them pay the federal tax, and I understand they don't want to change that. Hopefully, some day they will. The Ontario government has eliminated that tax for low incomes. As well, the percentage reduction for modest-income families is greater than it is for high-income families. So the tax cut has indeed been progressive, and I'd ask for support.
I think the confusion comes from the confusion of tax rates and taxes. Yes, we have reduced the tax rates. People in the province of Ontario at the end of the day will be on average paying 30% less in their Ontario income taxes plus the other 60 or so tax cuts, depending on how they spend their money. So the tax rates have been reduced. However, because this has stirred the economy because there is more investment, more jobs being created, more consumer confidence and more business confidence, you have seen an increase in the tax revenue. Not only is the plan working because tax cuts are creating jobs, the plan is also working because tax cuts have brought in more revenue.
What is the government doing with this revenue?
First of all, one of our major commitments was to eliminate the deficit by the year 2000-2001. It's important to put this into perspective. The deficit, when we came into office, was over $11 billion, and certainly we had to make some very difficult decisions to get that under control, to reduce that. I'm pleased to say tonight that we are ahead of schedule in lowering the deficit towards balancing it in 2000-2001. By cutting taxes we have created jobs, which has meant more revenue to government coffers, which in turn has led to a quicker reduction in the deficit, towards balancing it as we promised. I'm confident another promise made will result in another promise kept.
Second, the tax cuts, which have brought in more jobs and more revenue, like they do in Bill 15, have allowed us to invest in priority areas for Ontario residents. I'll give you some examples. We have announced most recently, because of initiatives like we have in Bill 15, 20,000 - 20,000, member for Nepean -
Mr Baird: Wow.
Mr Hudak: - new long-term-care beds in the province of Ontario.
Interjection.
Mr Hudak: To make it clear to those enraptured by my statement, that is the first investment, not even of that nature or that scope, but the first investment in long-term-care beds in over 10 years.
Mr Baird: They must have done one.
Mr Hudak: There was not one single bed.
Mr Baird: Not one?
Mr Hudak: Not one single bed in 10 years; now 20,000. Do you know what that means for Niagara? You may have seen the announcements, the request for proposal in the paper, 100 beds for Niagara, to begin.
Applause.
Mr Hudak: I know the members of the assembly are excited about that for Niagara residents as I am. But that's only the beginning: 100 beds followed by another 546 new long-term-care beds for a total of 646 new long-term-care beds for the Niagara Peninsula alone to plan for a growing and aging senior population.
Let me tell you another thing that we're using the money for. We have put on the table the additional money that we received through tax cuts to help out those victims of tainted blood, for hepatitis C. The current deal offered by the federal government would compensate only those between 1986 and 1990. But Ontario, proud again, taking a leadership role again, the strong province again, driving the rest of Canada once more because of tax cuts to create jobs, to bring in more revenue, has put on the table to say that Ontario views the issue as the same, whether you were infected on December 31, 1985 or January 1, 1986. We're not going to split hairs.
Maybe there are legal arguments, I'm not sure. But to put that into the balance with compassion and issues of fundamental justice, it makes sense for Ontario to extend that package to all hepatitis C victims. I know that the members opposite have supported that and I congratulate them for that.
Mr Gerretsen: Give some time for Etobicoke-Rexdale.
Mr Hudak: It's a very good point. The member for Etobicoke-Rexdale has great points to bring up, and I'll get to him shortly.
To finish off, because I have some of my clippings here this evening, I did say I'd talk about the Niagara Peninsula. I know members are anxious to hear about what people are saying in Niagara.
One of the clippings from the Welland Tribune is "Small Businesses Cheering Tax Cuts," the big title there, which is certainly true. We are cutting the corporate tax for small businesses in half. We're eliminating the employer health tax for small businesses to help them create jobs.
I'll give you an example, Mr Speaker. Ironically in the riding of the member for Welland-Thorold, somebody who disagrees: "The executive director of the Welland-Pelham Chamber of Commerce believes Tuesday's provincial budget will help small and large Ontario businesses alike to become more competitive in the global economy." She said the news of the final phase of the employer health tax cut, the tax on jobs being cut, is great news. Another positive step for small business is a 50% cut to the small business corporations tax rate. The director says, "Anything that will enable Ontario businesses to become more competitive is good news." She anticipates that even more people will be hired because of these initiatives.
One person quoted in this article said that 36 new cuts introduced Tuesday will assist in the remarkable turnaround in the Ontario economy by creating more jobs. He noted that last year's total of 240,000 new jobs in the province set a record. I think we'll break that record again. That individual was Tory backbencher Tim Hudak, the member for Niagara South.
Mr Wildman: You're quoting yourself. That's against the rules.
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Mr Hudak: I just thought it was a great point. I just want to point out that the member for Niagara South has been described as "rookie backbencher Tim Hudak," so "Conservative backbencher Tim Hudak" is one step up.
I have a couple of things to pass on about Niagara, the good news for jobs. Recently three employers in my riding announced major projects and are now manufacturing in Stevensville. Stevensville, of course, is home to the -
Mr Baird: Tim Hudak Action Centre.
Mr Hudak: Tim Hudak Action Centre, the member for Nepean says.
Mr Palladini, the Minister of Economic Development, Trade and Tourism, was in Niagara South last week.
You know what? To give credit to the great team they have down at Ronal, the hardworking people at Ronal have the exclusive contract for the aluminium wheel rim for the new Volkswagen Beetle, one of the hottest cars around. So if you buy a Beetle in Canada, the States, Mexico, Japan, wherever you buy it, odds are that wheel rim was made in Stevensville, Ontario, which means more jobs at Ronal.
Fraser Ship Repairs in Port Colborne has doubled its employment since this government came into office, up to 500 or so employees from 200-and-some in 1994-95. Things are looking good for them.
Sumi Durez as well, in Fort Erie, the biggest city in my riding, has been expanding rapidly with, I might add, increased investment from the Japanese, who could have invested anywhere in the world, and they could have done it years ago, but chose most recently this past year to invest in Fort Erie, Ontario, because they see the rebounded economy, they see productive workers and they believe in what Mike Harris and the Common Sense Revolution have achieved for the province of Ontario, which means tax cuts are creating more jobs. More jobs have meant more revenue to put into programs like the biggest increase in long-term-care beds we've seen, 20,000 new beds. It can help us find justice and compassion for the hepatitis C victims. It has meant more money into community care. Cardiac surgeries are down 20% on the waiting lists. Those are just some of the many accomplishments this government has achieved in three years.
Mr Wildman: If you don't hurry up, your seatmate is going to have a heart attack.
Mr Hudak: At this point I will, at the request of the member for Algoma, turn the floor over to the member for Etobicoke-Rexdale.
Mr John Hastings (Etobicoke-Rexdale): It's really fascinating to listen to the member for Niagara South, because he does tell it as it is and what is occurring locally, provincially and globally.
We've listened to the so-called discussion across the way on this bill, that the whole concept of tax rate reductions is somehow inherently the wrong way to go. One thing we haven't heard, however, is any mention in Bill 15 as to what their position is or their alternative position is regarding the land transfer tax and the exemption under that particular bill that has been put forward by the Minister of Finance in two budgets. Do we hear them attacking that particular proposition in Bill 15?
It means that for every new home buyer in the province there is at least an average of $2,000 per new home buyer if they get the exemption. When they get that exemption, they probably utilize it to pay down their mortgage or perhaps to purchase some new furniture. Across the way, of course, they would be opposed to that because a tax exemption is a tax rate reduction. Those folks across the way don't believe in any virtue of a tax rate reduction vis-à-vis its strategic linkage to jobs.
Often we hear across the way our colleagues opposite simply argue for the existing status quo or defending probably what they did in the past regarding tax hikes. If you had tax hikes, why was it that we had such a severe decline in the economy when the NDP assumed power in the first budget of 1991? We had the old Keynesian nostrum put out that we'll pump prime the economy. That incidentally increased, widgeted up significantly, the $11.4-billion deficit we inherited.
Did we hear anything about an increase in jobs as a result of increasing the deficit back in 1990-91, when the former member for Nickel Belt advocated that position in his budget? If you go back and look at job creation, as they ramped up tax expenditures, your jobs declined. So in that type of economic environment, we should have had just the opposite.
They have been defending for the last three, three and a half years that somehow or other there's a great virtue in tax hikes. We had from the Glibs, from 1985 to 1990, 35 tax increases, yet the job increase was not that significant during the mid-1980s. We had a growth rate of 4% generally in the economy from 1985 to 1990, yet the number of jobs did not increase with the increase in expenditures on the tax side. How come that is, if that is the great defence they have over there? They call tax reduction stupid, bizarre, crazy etc. Well, we can apply the same methodology and description for tax hikes. There's absolutely no defence for increasing your taxes when you already have a $100-billion deficit.
The other thing I wanted to add is that we don't hear anything from the folks across the way regarding the decline over eight years in the small business tax. You don't hear them saying, "Well, let's ramp that up from 9.5% to 12% because it's going to increase the number of jobs." I'd like to hear from members opposite whether they could advocate such a position. It's probably quite untenable. They've heard from the Canadian Federation of Independent Business, they've heard from their retailers that when you do that you have fewer people buying consumer goods in the stores or any other type of consumer durable.
In absolute fact, this particular piece of legislation, whether it's locally, provincially or globally applied, has got this province moving way into the future.
The Speaker: Questions and comments?
Mr Gerretsen: I think the member for Etobicoke-Rexdale should clearly understand that we have nothing against tax cuts. The problem is that you cannot have a tax cut when you still have an annual deficit, because it means you're still adding to the public debt of this province. As has been indicated on many occasions in the past, the public debt in this province has during your mandate increased from $89 billion in total to $105 billion - by $16 billion. The interest cost of the public debt - your own budget document indicates this - has gone up from $7.8 billion per year to a projected $9.4 billion a year. We're spending more on servicing the public debt of this province now than we are on social services. You just don't get it, do you?
The other thing I found absolutely astonishing is that for the first time in my limited experience in this House, the three years that I've been here, we actually had a member quoting himself. It is my understanding, from talking to some more senior members in this House, who have been around for 20 or 30 years that they have never, ever heard this. I've never heard it in any forum that I've been at. It is ludicrous. Are you that hard up for quotes that you've got to start quoting yourself?
Just for the record, let me say this to you: Yes, I think we should help first-time home buyers. I think it is a good idea to have the land transfer tax exemption go on for another year. I think it is a good idea because the construction industry has to be stimulated. But let me just tell you that the economy in Ontario may by rosy as far as you're concerned, but you go anywhere in eastern Ontario, east of Cobourg, and talk to the small business owners there and they certainly haven't seen any economic recovery.
Mr Wildman: It's with some trepidation that I stand to comment on the remarks of my friends from Etobicoke-Rexdale and Niagara South. I think the comments they made, then commented upon by my friend from Kingston and The Islands, just prove the point I was making earlier, that if you get a bunch of economic arguments put together, if you have two or three economic arguments, you have about 10 different opinions.
The fact is that no matter how the members try to paint it, part V of this bill allows the government to borrow $4.6 billion each year, and that amount is almost exactly the amount of the tax changes. The government is borrowing the money to finance the tax changes. The government does not have the money and they are borrowing. This is a government that claims to be against deficit financing, that claims to want to lower the debt, yet they don't have the money to give out the tax break but they're going to borrow it in order to do it.
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This is a government that tries to play both ends against the middle - the suggestion that the serious recession we experienced in the 1990s that was not just a problem in Ontario but was in fact global is somehow the fault of one particular government. I guess I could blame it on the Mulroney government, but I wouldn't be one to do that.
Mr Parker: I listened with interest to the comments from the member for Niagara South and the member for Etobicoke-Rexdale. I've also listened with interest to the remarks in the questions and comments following. In those remarks, this government and the two speakers on the bill have been criticized on the subject of the tax cut, because all of a sudden on the opposition benches they seem to have caught religion and they are committed to balancing the budget.
This is a new item to the people of Ontario. I hope they're listening, I hope they're paying close attention that now the members of the Liberal Party and the members of the NDP here in Ontario are fiscal conservatives; they are focused entirely on balanced budgets. They've forgotten, of course, that they're the ones who put the budget out of whack in the first place, and this government has worked over the past few years to bring the deficit down from $11 billion to less than $5 billion and we're on track to achieving our pledge of a balanced budget over the course of this government's term.
Of course, if all we had to do during our term was to balance the budget, we could have done that already. If that's all that had to be done by this government to correct the mess this province was left in, then we could have balanced the budget by now. But we had other problems besides an $11-billion deficit. We also had massive unemployment - over one million people unemployed in this province.
We have two areas where we've had to advance. One is in the area of the budget, where we've had to reduce spending to bring the budget into balance, and we're on track in doing that in the time frame that we committed to. We've also had to reduce taxes to increase employment. We have increased employment just over the last year. We've seen over 265,000 new jobs -
The Speaker: Questions and comments? Responses.
Mr Hudak: I thank my colleagues for the comments. I apologize for making a bit of a joke and using my own quote. I thought it was kind of funny. I think it's because there have been a lot of long faces on the Liberal benches these days, because they know the plan is working. They know we're cutting taxes to create jobs. They know the jobs are going through the roof. They know more revenue is coming into the province for key areas like classroom education and health care.
Because the member for Kingston and The Islands didn't like my quote, I have a couple more for him about the Niagara Peninsula, for example. Human Resources Development Canada just put out a survey that said that in the next few years there will be 50,000 new jobs in the Niagara Peninsula alone because of the boom from the Mike Harris government - 50,000 new jobs, which is unprecedented economic growth in development in the region. The basis for prediction: Carol Dupuis, the HRDC labour market analyst.
Funding for new textbooks: The budget contained $100 million for new textbooks. Said Bill Miller, associate director of the new Niagara district school board, "That's marvellous news." It's a quote in the Welland Tribune.
I have a couple of more quotes that the member from Kingston surely would be aware of and be supportive of. You would think you would follow through and be aware of these. I have some more quotes.
"It's good to see money go back into tourism, particularly if we can access some of it for the Kingston area. Over the past 10 years the tourism marketing budget has gone down drastically, but now we're seeing it go up." That's David Phillips, the Greater Kingston Chamber of Commerce.
Another one: "Small business tax cuts are really being felt in the community. They help increase the cash flow and they help stimulate the economy. A company will now be able to go out and buy that photocopier it needs" - John Battams, quoted in the Kingston Whig-Standard.
"We're looking at reinvesting in this province, so this is going to help us along the road" - Chuck McDonald also.
The Speaker: Further debate?
Mr Sean G. Conway (Renfrew North): I'm pleased to join the debate tonight on the second reading of Bill 15, the budget bill. Obviously, it gives me an opportunity to say some things about the budget read by the Treasurer here a few days ago.
I've enjoyed the debate tonight. It's been quite lively and quite interesting, often more about religion than about fiscal policy, but I suppose that's not a great surprise in the business of politics.
I want to take the opportunity tonight to pay tribute to the Deputy Minister of Finance, Michael Gourley, who, regrettably, is leaving the public service. Michael, as the Treasurer observed when he read the budget speech here a couple of days ago, has been an enormous part of the senior public service in the government of Ontario for the past many years. I had the privilege in the mid-to-late 1980s to work with Michael when he was the head of the budget office in our time in government, and I know the current Treasurer speaks for all of us when he says it's hard to find a more diligent and more exemplary public servant. Michael, wherever you are, I want to wish you all the best in your new endeavours and say that I and all of us in this Legislature and many previous Legislatures have greatly appreciated the hard work and the good example you have set. Certainly there's a lot of Michael Gourley, as Mr Eves said, in the budget we're debating tonight.
It is a good-news budget. You'd have to be a Cassandra of some special kind not to see the good news in this budget. However I want tonight, in the time remaining to me, to look at some of the specifics in the budget. If anyone has the budget papers, I might ask you to turn to page 54. I find that when you look at the numbers, you find some very interesting, perhaps even some counterintuitive, data; page 54, Ontario budget table B-4, "Operating Expenses." I'm interested when I look at the five-year spending plan, 1994-99. I find it interesting, understandable in some respects, but interesting and surprising. I think the people of Ontario would be surprised to find that according to this budget, in fiscal 1998-99 it is the plan of this government to spend $54.627 billion, fully $2.3 billion more than was actually spent in the fiscal year 1994-95.
Mr Bert Johnson (Perth): Health care spending is up.
Mr Conway: You're right. Health care is up; if I look at the line items, health care is up, but it's up marginally, according to the numbers. If I look at the numbers - I'm sorry. It is up from $17.6 billion to $18.6 billion, but social service spending is down by nearly the same amount. Education is up by as much as health. There are reasons, and I can take you through the reasons, but it is interesting none the less that the government of Ontario in fiscal 1998-99 will spend $2.3 billion more than was actually spent in the last year of the Rae government.
Mr Ford: That is exactly the cut the feds took.
Mr Conway: That's not exactly right. I ask the member from Etobicoke to look at the numbers; that's what I have in front of me, the numbers. In terms of percentage, the executive office account is up by nearly 100% over that five-year period. I'm sure there's an answer. Mr Speaker Stockwell gets some credit, because on the other side the Board of Internal Economy is down in real terms by about 15% or 20%. But I repeat, the executive office account over that five-year period is up from $10 to $19 million. I'm simply reading from the budget document.
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I find it interesting, if I look at the actual spending pattern. What do I see? I see, yes, big cuts in social services over the five-year period, down from $9.3 billion to $7.8 billion; education up from $8.3 billion to $10.2 billion; health up from $17.6 billion to $18.6 billion; but, as my friends have observed, public debt interest up from $7.8 billion to $9.2 billion. The reality is that on the spending side, this document tells me that over the five-year period from 1994-99 we will be spending $2.3 billion more at the end of the cycle.
Let me quickly, because I don't have a great deal of time, take a look at pages 32 and 34, the in-year changes. It's very interesting. If I look at the budget document and at the in-year changes in fiscal 1997-98, it's even more interesting. What do I see? According to the budget paper, I see that in-year revenue is up $3.7 billion, and that's a good thing. I am not going to quarrel with that. A billion of that is a carry-over of personal income tax from the year before, so we should be careful about the level. None the less, it's $3.7 billion more in the fiscal year than was projected. That's page 32.
Turn to page 34, in-year spending changes: Spending is up by $3.322 billion. That's a lot of money, folks.
Mr Ford: Of course it's a lot of money.
Mr Conway: I simply say it because the mantra is being cast about, from the action centre in Stevensville and wherever else, that we are cutting taxes and cutting spending. Well, the document does not show that.
When I look at the spending, when I look at the budget paper, page 35, and I look at the spending area, what do I find? I find $3.3 billion of increased in-year spending, and where is it? The bulk of it is in higher-than-expected municipal and health care restructuring. Let me tell you, those costs are not going to go away.
Mr Klees: That's one-time spending.
Mr Conway: The member for York-Mackenzie says one-time. We will see.
I heard the Minister of Finance on the radio the other day. I darned near drove off the road because he was asked on the CBC Radio Noon program by a caller from Wolfe Island, "What about the future of these ferries on our part of eastern Lake Ontario?" I heard the Minister of Finance with my own ears. He gave a perfectly good response, which was to say that it is absolutely impossible to imagine that those municipalities could shoulder the cost. He's right, and they will not be shouldering it, mark my words.
But that's just one small example. There will be many more. I simply look at this: In year one, we've got spending of $2.601 billion above the budget plan to deal with higher-than-expected health care and municipal expenses. My friend from Rodden township knows that as we head into the next year and the year after, there will be many claims made by municipalities which will have to attract the positive attention and response from the Minister of Finance, whoever he or she is.
I just ask honourable members to look at the documents. In this past year, where growth was wonderful - we had real GDP of 4.8%. Listen, that's much better than it was the year before, when it was down around 1.5%.
Somebody said a few moments ago about the mess they're in in British Columbia. I'm not an expert on the British Columbia economy, but I can tell you this: The British Columbia economy is very dependent on southeast Asia, Japan particularly. The Japanese miracle has come apart. It is a mess. If you look at where we all were five years ago about the Japan miracle, if you look at the academic and economic literature of the late 1980s and the early 1990s - CBC Radio the other night ran a repeat broadcast of the Davos conference of 1992, and the collective universal wisdom about the Japan miracle was something to behold. Well, it's a mess. To date, it hasn't affected central North America, and hopefully it won't.
Yes, we've had a good year. Let there be no confusion. When growth rates roar near 5%, it's not a bad time to be chancellor of the exchequer. It looks, for the next couple of years, as if it will continue, and hopefully it will. But if I look at the actual experience of this document - we've been through a lot, absolutely, and some of it had to be done. Any government elected in 1995 was, whether it wanted to admit it or not, going to have to administer some very painful medicine.
I just ask the House to look at the numbers. What are the numbers? I wish I had with me - and I don't. I'd like to see the spending back to 1992, because I'm not so sure that in constant dollars the Rae government didn't cut as much between 1993 and 1995 as you will have cut between 1995 and 1998. I'm not sure, but I bet it might be close.
The other great benefit we've got, of course, is that inflation is low. I just want to make the observation that times are good. There's no question that there's more confidence out there; there's better consumer confidence, there's better business confidence.
Let me just leave with this: On page 10 of the budget - this is an incredible statistic. I say this as a Liberal, who was on the other side of the free trade debate 10 years ago. If you've got the budget paper, it's page 10. In 1989, exports, as a share of Ontario's GDP, were at 28.5%. We're talking, basically, about the United States economy; 90% of our exports are America-bound. So 28.5% of Ontario's GDP in 1989 derived from exports. But eight years later, that share of GDP has gone from 28.5% to 45.6%. That is a very powerful engine, but let us hope and let us pray, loyalists all, that Uncle Sam stays healthy and well, because if he catches a cold we are going to get the flu.
The Speaker: It is now 9:30 of the clock. This House stands adjourned until 10 of the clock tomorrow.
The House adjourned at 2130.