Bill C-54 (Historical)

Marlene Catterall Ottawa West—Nepean, ON

Mr. Speaker, I rise on a point of order. Discussions have taken place between all chief whips and there is agreement, pursuant to Standing Order 45(7), to re-defer the recorded division scheduled for 3 p.m. today on second reading of Bill C-54 until the end of government orders today.

Wendy Lill Dartmouth, NS

Madam Speaker, it is a pleasure to rise today to speak to Bill C-54, an act to amend the federal-provincial fiscal arrangements with regard to equalization payments.

From the debate in the House today, we all know that the equalization program is an essential component of fiscal arrangements in Canada and it needs to be strengthened to fulfill its constitutional mandate.

The growing fiscal imbalance between the federal government and the provinces and territories raises concerns over the adequacy of fiscal arrangements between the different levels of government.

The equalization program enables all regions to offer more comparable levels of public services and narrows the differences in tax burdens for Canadians across the country. It is certainly not simply the NDP that believes this. In fact, this is entrenched in the Constitution.

The importance of equalization has been acknowledged in subsection 36(2) of the Constitution Act, 1982. It stipulates:

Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

This is a critical part of our Constitution. It is certainly a critical part that regions like the one I come from, Atlantic Canada, hold onto and believe in deeply.

In its current structure, the equalization program is becoming more inadequate in its ability to achieve these constitutional commitments. Since the beginning of the nineties, equalization entitlements have been declining as a proportion of GDP while fiscal disparities in Canada have not been significantly reduced.

I would like to focus on the concept of adequacy and equity in this program of equalization.

I had a chance to look at the Finance Canada website recently, under transfers to provinces. I worked with the figures that were posted, showing total major transfers by provinces for the years 2000-01 to 2003-04.

Numbers are not necessarily my forte, but I do have access to a Radio Shack calculator. After crunching a few numbers from the Finance Canada website, I found some pretty disturbing things.

The website starts off telling us that between 2000-01 and 2003-04, total major transfers from the federal government to the provinces, mainly equalization and CHST, increased from $42.8 billion to $49.2 billion. That is an increase of almost 15% in just three years. That sounds good. The trouble is that not every province managed to get a seat on the gravy train.

For New Brunswick, total major transfers over the three year period increased, not 15% but a mere 3.6%. For Prince Edward Island, the increase was only 1.6%.

However, even those two provinces were better off than Newfoundland and Labrador and Nova Scotia. Unlike P.E.I. and New Brunswick, Nova Scotia and Newfoundland and Labrador have some revenue from offshore oil and gas. Instead of getting a minor increase in major transfers, they got a major decrease in major transfers. Nova Scotia's transfers dropped 1.3%. Newfoundland and Labrador's dropped more than 10 times that, at 14%.

For the Atlantic region, overall total major transfers from the federal government dropped by 3.3%, from 2001 to 2004, for a total decrease of $200 million. For the country as a whole, total major transfers from the federal government to the provinces increased by 15%, or more than $5 billion.

The Atlantic region is the poorest part of the country. It has the highest rates of unemployment, taxation, and post-secondary tuition, and the lowest per capita rate of expenditure on social programs. For this region, major federal transfers dropped by 3.3%, or about $200 million. There is something wrong with this picture.

If the purpose of these federal transfer programs is to provide a level playing field for Canadians from coast to coast to coast, why are the poorest provinces being cut back before they get anywhere near that level playing field?

Under our Constitution, Canadians have the right to reasonably comparable levels of public services at reasonably comparable levels of taxation. It is time the government started taking the constitutional obligations seriously.

The NDP is calling on the government not only to forgive the census related costs it has calculated in the recent census measurements but to accept a great deal of the responsibility for those losses. We are asking the government to work with Nova Scotians to make the province again a place that will sustain families and their hope for a better life.

We found out recently, this week in fact, that another funding crisis is hitting Nova Scotia's health care system. It is in the form of the largest health care district, the capital district health authority, being forced to cancel overtime for nurses.

Despite the difficulties our province is having in paying for our health care services, education services and what I have just been talking about, the Liberal government is threatening to claw back over $80 million in equalization payments based on the recent census figures.

It took the federal government nearly seven years to realize that its failed economic development programs were forcing young Atlantic Canadians to leave. Its first response was not to determine what went wrong. Its first response was to demand money back. That is an astounding thing to me.

Changes in the employment insurance program meant fewer people could earn a living in Nova Scotia through seasonal employment. The federal government could have fixed that. Instead, it chose not to. A lot of people went down the road.

Cuts to funding for education and health care through the CHST have sent more people down the road. The incredible cost of post-secondary education in my part of the country has made it impossible for young people to carry those debts. Again, we have seen a decrease in our population due to the government's punitive economic measures. We are now being asked to pay back money that in fact is not coming our way.

The offshore oil and gas industry was supposed to be a saviour for Atlantic Canadians, a cash cow like the one Albertans have enjoyed for many years. However, the promise of increased revenue from our offshore has not come true and there are no signs that it will ever be a viable industry that will provide a great deal of revenue for our province.

The Nova Scotia offshore accord, signed by the province and the federal government, was supposed to provide an equalization holiday for Nova Scotia once oil and gas started flowing.

Unfortunately, the accord was signed and came into effect before the member for LaSalle—Émard brought in his infamous 1995 budget which dropped the Canada assistance plan for the new Canada health and social transfer and put in a new set of rules for the provinces. In addition, the transition period for offshore revenues was only set for 10 years. It runs out this year. I know our colleagues from Newfoundland and Labrador also face difficulties with revenue earned from the offshore and its impact on equalization payments.

Although it is not actually a part of equalization, under the CHST brought in by the member for LaSalle—Émard, health care funding to provinces is inequitable. It is based only on population, not on need.

The provinces with the lowest overall levels of health get the same level of money for health care per person as provinces with much healthier populations. For the Atlantic provinces, it is a double edged sword. Failed economic policies mean younger, healthier people are leaving our region, as I already mentioned. The result is an aging population in poor health which means we have higher health care costs per person.

Everyone in the House should be aware that a low socio-economic standing poorly affects health outcomes. Poorer provinces automatically have higher health care needs to offset that. The current Canada health and social transfer does not reflect that reality and the new separate transfer for health is based on previous spending. Again, it is not on need.

In conclusion, I want to emphasize that we need to review how equalization payments are calculated so that they can truly be a tool for poorer provinces to provide a comparable level of care to that of our wealthier neighbours. We should not wait for another year and force provinces to scramble around to meet their budget priorities with such a flawed agreement.

We need an equalization program that treats provinces equally, that treats all citizens across this country equally, and that does not punish a province for the results of the federal programs that have been very hard on many of our provinces.

Francine Lalonde Mercier, QC

These are all phrases we can use. This is sad. As individuals involved in politics, as representatives elected by the people, we would normally expect to come and do some serious work in this House and not to be stuck here for months, watching time go by until a new government can take over. That is nonsense.

Some people somewhere in government have to consider Canada's image. I am the foreign affairs critic. Canada, which boasts about its reputation, is doing itself serious harm. It is being observed. It is putting itself on the map, so people are watching. The current situation in no way demonstrates good governance or transparency. Not at all. This is serious.

That is why we want this bill to be defeated. However, we still have one hope, and that hope has just been introduced. We are telling the House how we feel. If, in response to our amendments, the government responds to our fears, we might change our minds. However, if things remain unchanged, including the text of the bill, we can only be angry at what is before us.

Bill C-54 bears a number with a past. This was the number of the so-called Internet transaction bill, which infringed on Quebec's jurisdiction. This was long debated. As things currently stand, if Bill C-54 is not amended, we will strongly oppose it.

Bryon Wilfert Oak Ridges, ON

Mr. Speaker, this bill has four clauses and they are not very long. The problem is that the Bloc has failed again to read the bill.

The issue here is an insurance policy with regard to equalization. It is to ensure that in the unlikely event that we do not have an agreement by March 31 that the payments to the provinces, including Quebec, will continue to flow.

We talk about sincerity. If the Bloc members were really sincere, they would realize that the government did not cut equalization even during program review. This has been a cornerstone of the government.

We have had a successful meeting between the Minister of Finance and his provincial counterparts on October 10.

The member for Niagara Centre understands the bill completely which is why he supports it. He does not understand why there is a problem and I do not understand either.

The fact is that it is insurance. The discussions are ongoing and if Bloc members have any valid issues with regard to equalization, that is fine. However, this is not the bill dealing with that. It is simply dealing with insurance.

However, Bloc members will stand up on April 16 and scream if money is not flowing to Quebec because they did not support this insurance policy which is Bill C-54.

I know it is hard, but could we stick to the issue? If Bloc members want to talk about something else, they can do it at another time.

I would like to ask the member, if we do not have an insurance policy in place, is she going to say to the House that it is fine, no money to Quebec? Obviously not.

Bryon Wilfert Parliamentary Secretary to the Minister of Finance

Mr. Speaker, clearly that member and the Bloc have not read the bill. The bill has nothing to do with the issue he has raised. This is an insurance policy. Currently, the Minister of Finance is meeting with his counterparts. As members know, they met on October 10, they are continuing these discussions and they will meet again.

As far as what will happen in the future, that is something we are anxious to resolve. Obviously, by March 31 we want to have the agreement in place. However, in the unlikely event that we do not have an agreement, this insurance policy will ensure that moneys continue to flow to Quebec and the other seven provinces.

The fact is, without this legislation, there will be no money, and I am sure that member will have the audacity on April 16 to stand and say “Where is the money?” There is no money because his party is holding up Bill C-54. We need to have this in place as an insurance policy.

We have two tracks here. One track is negotiating with the provincial governments. The meetings have gone very well, and I again emphasize that.

If we do not have an agreement at the end of March, although unlikely, I assume that member would support insurance just as he would on his house or his car? He gets it not because he hopes he will have to cash it in, but for protection.

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I thank my colleague, the member for Jonquière, for her question.

Naturally, we all realize that, if Bill C-54 is being rushed through the House, it is because the Liberal government has decided to adjourn the House; that means we will soon be on a break until the next election. This is all due to the fact that one man has decided to call an election, the member for LaSalle—Émard, as leader of the Liberal Party, next spring, in 2004.

Of course, in the meantime, the member for LaSalle—Émard has no intention of coming here to answer questions that we could ask in the House, about equalization for example, to find out about his position on the new way of distributing equalization payments among the provinces in Canada.

Since it is quite possible that the House will not have time to sit or adopt a new equalization policy, the government is simply extending the former policy, which was supposed to expire next spring.

The government is really not taking any chances: it is extending the policy without consulting the provinces. This is the part that is hard to accept, because this is only one of many similar cases. I will not list all the disasters that have happened in this Parliament over the last few weeks; I know the journalists are taking care of that.

The truth is, however, that it is hard for members from Quebec, like my hon. colleague from Jonquière, my hon. colleague from Charlevoix, my hon. colleague from Laurentides and my hon. colleague from Sherbrooke to protect the interests of Quebec when, every time we are about to address an issue, the government introduces a bill and tries to ram it through the House in order to avoid any discussion and especially to avoid any question being put to the next leader of the Liberal government.

That is the grim reality. These days, we discuss things with members, ministers and a Prime Minister who no longer have any power, who can tell us whatever they want, knowing full well that the member for LaSalle—Émard has publicly said that he would review all the decisions made by the current government.

How can we talk about equalization with the finance minister when the hon. member for LaSalle—Émard has stated that he would review all the decisions made by the current government?

So, it is not easy. This is why we oppose Bill C-54. It is not that we are against equalization, but we do not like the fact that the provinces were not consulted beforehand and that we cannot put questions to the member who will be running the next government.

Mario Laframboise Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I must first inform you that I will be sharing my time with the hon. member for Laurentides.

It is my pleasure to rise to speak to Bill C-54 to extend the Federal-Provincial Fiscal Arrangements Act. Of course, this bill extends the period during which equalization payments may be made. When we hear this word, it sounds very complex. What is the formula? On what basis is the distribution made? There is a whole lot of discussion about that.

Oddly enough, before the last election in Quebec, there was less money for equalization. After the election, the money started coming in. Some will say it was unintentional. Personally, I would say that the timing was perfect. That is the name of the game. There is always a dilemma with respect to equalization. Why? Because this is the way Canada, and the federal government in particular, has decided to redistribute wealth throughout the country.

Redistribution of wealth means that some provinces receive equalization payments while others receive nothing. Quebec is a recipient province. I long for the day when Quebec will no longer be a recipient. The reason is simple: to receive equalization is an indication of a flagging economy. It is true that unemployment is higher in Quebec than elsewhere. Take for example the GM plant in Boisbriand, which closed down. This closure affects the ridings of my hon. colleagues from Rivière-des-Mille-Îles and Laurentides as well as my riding of Argenteuil—Papineau—Mirabel. This is a fine example of distribution of wealth across the country. All the automobile manufacturing is in Ontario. But all the raw material is in Quebec. That is how wealth is distributed.

In order to reach that balance at the end of the year, the federal government decided to redistribute money. Some provinces have more money than others. Ontario does not receive any equalization payment because it has big companies, big manufacturing plants and big car plants. We have none. We have to be content with some small parts plants. And yet Quebec is one of the biggest producers of aluminum and magnesium in the world. These products are used to build cars, but they are no longer built in Quebec. There are no more plants. The Liberal government chose to close the Boisbriand GM plant. That is a fact.

The other way to try to reach a certain balance is to redistribute wealth through equalization payments. Today with Bill C-54 the government is renewing the way equalization payments are calculated. As we know, there is a lot of debate and discussion on how they are calculated. There were discussions when the Parti Quebecois was in power in Quebec. The debate is still going on. Questions are being asked by the Liberal government now in power in Quebec. Other provinces are asking questions too. They want to review the way these infamous equalization payments are calculated.

Without warning, the government has decided to renew the agreement in this respect because the House might not be sitting before the existing legislation expires. Today the government is rushing through an extension without discussing the principle of equalization. That is a fact. It will not be discussed because there is no time. A system that is challenged by every province is going to be extended.

Why is it challenged? I will give one example. Because, among other things, in order calculating the average, the richest provinces are not taken into account. The wealth of the richest provinces is not assessed to determine which are the poorest and which ones must benefit the most. They are taken out of the equation. Only some provinces enter into the calculation. I will tell you which ones later. These provinces are used to calculate, among others, equalization payments.

You will understand that to redistribute wealth one should be able to put in the balance the richest provinces and the poorest provinces. One should give to the poorest ones and take a little bit more from the richest ones. That is a fact.

By taking a little more from the wealthy, I mean taking more money from the federal government and giving more to the poorest. Anyway, the wealthy will not get any. If we were calculating this way, it would cost the federal government $3 billion more.

This is why the calculations are still done using the old system because they do not want to redistribute wealth according to the newly established formula. I have made this comparison because it is not easy to understand for those who are listening to us. They are not all administering provinces.

Let us look, for example, at the old age pensions and the way the government calculates the increase in the cost of living. The cost of living corresponds to the average family cost of living. Do not tell me that the cost of living is the same for the elderly as it is for the average family. They do not have the same eating and the same driving habits. However, their housing and drug costs are much higher for them than for the average family.

Thus, when the Canadian government increases the amount of the old age pension, it uses the traditional formula. It does the same thing when redistributing the money among the provinces. Provinces are now asking that the redistribution be according to a new formula, and seniors from Quebec and Canada should ask the same thing, to ensure that the government is not calculating the increases according to an average family cost of living.

In recent years, the cost of living for seniors has risen drastically. That is the reality. What is the reason for this? The cost of housing has gone up a great deal, and prescriptions cost more as well, while food and transportation are down.

Governments benefit from this. One example: the Old Age Pension, which is pegged to the cost of living. In some quarters of the past year, no increases have been necessary, because the average cost of living has not gone up. There is to be a small increase coming up shortly, but it is still less.

For these reasons, the distribution of wealth needs to be reconsidered. Discussions must be reopened on how the wealth is shared with seniors, so as to bring their pensions into line with actual accommodation and health care costs.

The same thing goes for the provinces. Equalization payments must be increased so that the poorest provinces, those with less resources, can benefit more, which is the principle behind equalization payments. Provinces with fewer resources ought to benefit more from the equalization system than the extremely rich ones.

Everyone must be included. We must not do as the Liberal government has done in its calculations for equalization: take just a handful of provinces and do an average. They use Quebec, Ontario, Manitoba, Saskatchewan and British Columbia.

The others are excluded, purely and simply because they are sometimes too rich. Thus calculations for the equalization payments are simplified. To repeat, if true wealth were calculated, that is all the resources of the richest provinces compared to those that have the least, there would be $3 billion more in equalization payments to the poorest provinces.

Quebec and some others would benefit, most definitely. Hon. members will understand why the potential recipients complain about the way the calculation is being done.

In conclusion, the Bloc Quebecois is opposed to Bill C-54, but not to the principle of equalization payments. We are opposed to the fact that it is being brought up at the last minute, without any discussions with the provinces, the ones concerned by the system of equalization payments.

Don Boudria Minister of State and Leader of the Government in the House of Commons

Mr. Speaker, this afternoon we will return to consideration of Bill C-32, the Criminal Code amendments, followed by Bill C-54. If we get through this, we will proceed to consideration of Bills C-19 and C-6, two bills on first nations. If we have time, we will also look at Bill C-51.

If that is a bit too ambitious, the first item for consideration tomorrow will be Bill C-6, the specific claims legislation. After oral question period, we will come back to Bill C-54, which we debated this morning, concerning fiscal arrangements. If there is time, this will be followed by Bill C-46, the market fraud bill, and Bills C-19, on first nations, and S-13, concerning the Statistics Act.

Next week, we will continue to consider bills that have not been completed, beginning on Monday with Bill C-46, on financial institutions. We will add to that list Bill C-23, the sexual offenders legislation.

By mid-week, we hope to be in a position to consider Bill C-52, the radio communications bill, and Bill C-20, the child protection legislation, as mentioned by the Minister of Justice during oral question period.