Debates of Oct. 6th, 1994

Financial Administration Act

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Madam Speaker, I am pleased to be able to address the House today on the issues raised by Bill C-245. I was pleased that the member for Fraser Valley West finally got around to talking about the bill in his speech toward the end.

I want to congratulate him because it is an important initiative to take a look at the budget and the budget process. As parliamentarians we absolutely want to do the best job we can in the formulation of the budget, to understand its contents and to know how we can logically discuss it, debate it and liaise with our constituents about its contents.

The issue of the the budget speech process and the degree and nature of consultation which goes into its preparation has been the subject of debate for many years in the House. Contrary to what my hon. friend across the way thinks, I believe the process that was used last year was better than the year before. It was more open and it allowed more Canadians to become involved.

The process that will be used in 1994-95 is going to be even more open. The all-member finance committee will be undertaking a series of consultations with the public in order to have their input before the budget is formulated and not after.

It surprises me when we have these debates and I listen to the Reform members when it comes to the matter of consultation. It does not seem to matter what we are discussing, whether it is the budget process, the social policy review, or whatever, I hear the same message: Do not consult, just do. Do not listen to the Canadian people. Just go out and do it. Ignore our constituents. Just go out and do it.

This is the party that about a year ago travelled through the country saying: "Our primary objective is to consult, to listen to our constituents". Yet every time the government suggests a way to consult it was opposed. It is very strange.

Basically this bill calls for two major ideas. The first one has to do with setting a specific date for the budget to be brought down. I will let others discuss that issue if they wish.

The more important part, and the one that the member did finally get around to talking about, is the suggestion that we have a third party assessment of the budget, that the Auditor General have a mandated role in the budget. I want to talk a little about that, about his concept that the Auditor General ought to be taking a look at the reasonableness of things. I have some concerns about that.

[Jim Abbott, Reform, Kootenay East, BC]

I would not doubt it.

[An hon. member]

We know why.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

I will tell you why. There is a fundamental misreading on the other side about what our job is and about what politics is. Members here were not elected to come to the House so they could have a third party tell them what is right or wrong. They were elected to come to the House to use their best judgment, for them to analyse what is going on, for them to bother to read the budget and for them to offer their political opinion and their best judgment.

To abdicate that responsibility to a third party is inappropriate. You are a member of Parliament. I am a member of Parliament. It is our responsibility and to shirk it to a third party is inappropriate.

To go beyond that I have some basic concerns about giving the responsibility to the Auditor General. I have great respect for that office. I know members opposite have great respect for that office. They have often mentioned it. I would be very concerned if we undertook this bill which could very well result in the Auditor General being engulfed in partisan politics, being engulfed in the give and take of the debate, because this is a political issue.

If the government's estimates of expenditures or revenues are wrong, then the government will pay a political price. It is the job of the opposition to make the government pay for it, if it is appropriate.

The opposition was not able to do that when the last budget was tabled because by and large the Canadian people accepted it as sound. That is the difficulty. You were not able to make your case and now you are looking for a third party to make it for you. That is not appropriate. The Auditor General's office is an important one. It undertakes a number of important tasks.

Recently a private member's bill passed, which I was quite happy to see, that gives the Auditor General the opportunity to report on this House on more than an annual basis. That is an important step. It gives the Auditor General the opportunity to come to the House and comment on what the government of the day is doing.

Beyond that, there are some structural difficulties with asking the Auditor General to provide comments and assurances on financial forecasts or projections. Guidelines have been established in the accounting industry, which I much admire and in my previous life had an opportunity to work with quite closely.

The Canadian Institute of Chartered Accountants states very clearly that a very cautious approach ought to be taken when passing judgment on estimates. In fact, it cautions its members to be very careful when offering that kind of opinion, I think with good reason. The institute recommends that the reporting be limited to stating that the assumptions and projection used are suitably supported or consistent with the organization's plans and that the forecasts presented fairly reflect the assumptions.

The Canadian Institute of Chartered Accountants further calls for the auditor to provide a disclaimer, noting that the projections could be materially wrong if there are changes to assumptions and projections. Although members may not want to believe it, the world goes on every day and the assumptions that are made for a budget do in fact change. Indeed they change. The world changes every year. I know the Reform party has a hard time grappling with the fact that change is ongoing and that we have to learn how to deal with it.

There is another concern. What happens if the Auditor General is wrong? Is the Reform Party going to be standing in their places railing against the Auditor General as being the cause of our deficit? To suggest that, because projections are wrong and is the cause of our deficit is ludicrous. With this bill we would be suggesting that if the Auditor General makes an assessment and that office is wrong, that the Auditor General would be responsible for the deficit. I cannot buy that.

In addition, I have some difficulty with the proposed process in the sense that the Auditor General's report will come out three months later. I do not think the House is going to wait for three months before it starts to debate the merits of the budget. There is a similar bill in Nova Scotia. In the Nova Scotia experience the Auditor General's comments come with the budget. There might be some value to doing that and looking at it that way.

However, I would suggest we might want to wait until we see what the Nova Scotia experience is, take the best from it and incorporate it into this House, leaving aside those things that do not work well.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Madam Speaker, I too welcome this opportunity to rise in this House to speak to Bill C-245. Seeing that my colleague from the Reform Party chose to use his speaking time to talk about this, that and the other, the budget, the deficit, in fact, anything but his bill, I would like to briefly go over the content of this bill. I think it is important for all the hon. members of this House to understand what it is about.

First of all, the existing Auditor General Act states the mandate and lists almost all the duties of the Auditor General. He is the auditor of the accounts of Canada, including those relating to the Consolidated Revenue Fund. As such, he makes inquiries and examinations and then reports to the House of Commons as required by the act. He is responsible for auditing the expenditures made by the departments and Crown agencies. He must submit an annual report, naturally, on or before December 31 of each year. In addition, he was recently given the mandate of submitting more than one report. The Bloc Quebecois had asked for this and supported the proposal.

Obviously, the mandate of the Auditor General is commendable. His role consists mainly in checking how public funds are used and I would say that, so far, this neutral authority has carried out his duty.

You will understand that the performance of such duties requires a great deal of precision and accuracy. I realize that everyone is probably familiar with the act and the duties of the Auditor General, but it is useful nonetheless to refresh the memories of some hon. members.

The bill before us is intended to add to the already heavy workload of the Auditor General. In fact, clause 2 of the bill would extend the Auditor General's duties so that he would also become, listen to this, the auditor of the revenue estimates used in preparing the budget speech, for which the Minister of Finance is responsible.

It makes no sense. The Auditor General's role is to audit the public accounts. The member wants to add to this the auditing of the government's future revenues. The Auditor would thus be asked to forecast government revenues, as well as review all its spending. If that were so, the Auditor General would examine revenue projections. He would have to go to the very root of the assumptions made by the government.

The present mandate of analysing the expenditures of departments and agencies is not at all consistent with an additional mandate of estimating revenue.

Experience has shown us that the finance minister's estimates are often unrealistic. The present Minister of Finance is no exception. We cannot ask the Auditor General to assume responsibility for the analyses made by the Department of Finance. Overestimating revenues as a way of reducing the deficit is unacceptable. That is why the Minister of Finance must be satisfied with the quality of the estimates made by his department. The government cannot evade its duties and ask the Auditor General to do the job instead. This is the work of elected officials.

I would like to understand why the member for Fraser Valley West thinks that this task should be performed by the Auditor General, who we must say does not have the resources that the Department of Finance has to carry it out.

This would lead to duplication and overlap and of course additional expense. That is not how one reduces the deficit. Of course, the member for Fraser Valley West might mention clause 3, which says that after the Auditor General reviews the budget, he will report on the reasonableness of the estimated revenues used in preparing the budget speech.

It would not be easy for the Auditor General to determine what a reasonable revenue estimate is. As the Auditor General himself has said, it is hard to know whether the estimates are reasonable or not. Political considerations enter into it, but the Auditor General is supposed to be neutral.

Even if my colleagues in the Liberal Party think that their estimates are reasonable, I am sure that they will again have a strong tendency to overestimate revenues, but they will still have to answer for it to Parliament.

So, again, the Minister of Finance is responsible for the accuracy of the data presented in the budget. I stress that it is up to the Official Opposition, the other opposition parties and financial analysts to criticize the budget, especially its revenue projections.

There are several flaws in the analysis which led to this bill. It would make the Minister of Finance no longer responsible for the validity of his revenue estimates. The critical role of financial analysts and of the Official Opposition would be completely removed.

For these reasons, the Bloc Quebecois will not support this bill.

In closing, we will just say that everyone should do his own job and we will all be better off.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to Minister of Public Works and Government Services]

Madam Speaker, I am pleased to rise on Bill C-245.

First, I want to congratulate the Bloc member. It is the first time this week-and I am not trying to be nasty-that a Bloc member raises an issue in an honest, fair and concise manner. I really appreciate that.

I also thank the hon. member for Fraser Valley West for his initiative. However, I would have liked to hear him discuss the bill itself. He might have been able to convince me that it has many positive aspects but, instead, he chose to make all kinds of political comments. Unfortunately, the hon. member failed to convince me. He could have done better, because I do think that the bill has some good points.

The hon. member knows that the whole issue of budget preparation, including the consultation process, is a permanent process because the budget is an extremely important exercise. Who prepares the budget? How is this exercise conducted? How extensive is the consultation process? Who is consulted? When? What do we do with the information gathered? All these are very important issues.

As I understand it, this bill includes two major points. The first one is the date the budget is tabled. In this case, there is no clear indication that what the hon. member proposes is better than the existing procedure. However, I want to discuss the second point more in detail.

The Auditor General report on the reasonableness of the estimated revenues in the preparation of the budget speech.

The Auditor General would be required to report his findings to the Speaker of the House on or before May 31 in the year to which the report relates.

The Auditor General as we all know has a particularly important job, one that must be above and beyond and not at all associated with politics. The Auditor General has probably as much credibility as some of the institutions that have most in our society today. We must as Canadians, as a society, as a Parliament be absolutely certain of the independence and the credibility of the Auditor General in this institution.

It seems to me that any action whatsoever that might be undertaken by Parliament that might draw the Auditor General into the political fray would destroy that credibility and would damage the independence of the institution, one that I have indicated and I think all colleagues would agree is of great, great importance.

Let us look closely at this provision of the bill. The bill says: "to comment on the reasonableness of the estimated revenues". It seems to me that this could bring the Auditor General perilously close to getting into policy matters, hence into political matters. I worry about that.

Perhaps my colleague does not worry about it. He seems to be smiling but I think that most Canadians would agree with my perspective. That is that the Auditor General must not be put into a position where the credibility and the independence of that institution are questioned. That is the issue here.

My colleague will know, he was indicating that he had had some experience in this field, that normally accountants or people related to that profession will make commentary and historical transactions, financial statements where there are facts to be dealt with. That is their primary focus.

When it comes to projected revenues, yes, they have been involved but they are always extremely cautious. Why is that? It is because they are made based on a number of assumptions. They are based on a number of understandings that people have of the relationships that exist.

It is not unusual for someone to use different assumptions or to do a different analysis based on certain assumptions. My colleague knows that fully. In fact, I am starting to suspect-I did not suspect that before I started-that what my colleague really wants to do here is stir the pot to get a little bit of political hay.

We could be setting up the Auditor General. We could be setting up that institution. We could be setting him up in order for him to try to use-

[Jim Silye, Reform, Calgary Centre, AB]

We want government to start to live within its means and start today. We are not responsible for collecting taxes for 44,000 people.

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

The member will get a chance to speak if he likes later. I would appreciate it if he would be polite. When I heckle, at least I do it quickly.

As I was indicating, I am absolutely convinced my colleague really wants to try to use another institution so that he can try to discredit the government. He has no intention of working with government since he has come here. Why should he start now?

My colleague may be interested in the following:

The Canadian Institute of Chartered Accountants insists on being very cautious when making comments on revenue and expenditures forecasts. The institute even recommends that the auditors add a cautionary note to indicate that forecasts could be totally erroneous if the basic assumptions and projections were to change. The fact is that budget-related information is based on a wide range of economic projections.

We know that to be true. One of the questions that I would like to ask is this. Did my colleague ask the Auditor General whether or not he would accept this, whether or not this was a good idea. My colleague says that he did. Could my colleague please share with us in this House whatever communications he has received from the Auditor General indicating that this would be a good idea?

My colleague will recognize, and he may read and recall, when I say that we have a colleague who proposed change to the Auditor General's responsibilities. Those were passed by this Parliament. In fact in the debate a letter was brought forward by the Auditor General saying that it was a good idea.

Where is the letter? Where is the document? Has it been tabled in the House, the letter saying that it would be a good idea? If it has, I would like to see it.

Hon. members are so excited by my speech that they cannot sit still. This is extraordinary. It is the first time I get this kind of attention and it makes me very proud.

My colleague may know that they have attempted a similar experience in Nova Scotia. They reported in April. I wonder if my colleague took the time to call Nova Scotia to find out what kinds of difficulties they had.

Was it all positive? Were there negatives? What were the positives? What were the negatives? Perhaps he would like to write me a note to tell me with whom he spoke and what points were made.

There is another really quite interesting point, as I understand it. I stand to be corrected; I love to be corrected by Reformers. They never make any mistakes so they will correct me in this instance, I am sure, if I stray from the truth. I am told it would take three months before the Auditor General would probably bring forth his report. A lot of things change in three months. Perhaps the Reform Party does not change in three months, but Canada's economic situation and the world's economic situation change in three months and what is done today may not be as precise three months from now.

I suggest we should talk to Nova Scotia. We should look at that experience. Subsequent to analysing what benefits it might bring, perhaps we should look at this matter again.

I am about to conclude. I would like to ask a few questions and I will be very open-minded. Indeed, if the hon. member can provide answers to all my questions, I will reconsider my point of view. I love to ask questions.

Can the hon. member, who is a member of the Reform Party, a party that loves to brag about savings, tell us what resources would be required for the Auditor General to implement such a measure? Did he give us a figure? Did he talk to the Auditor General? Did he ask the Auditor General to give him a report stating whether or not he agreed with the proposal?

The hon. member knows full well that the Auditor General has a great deal of independence. He also has a lot of credibility, precisely because he is dealing at arm's length with the government. And he can make additional reports because Parliament recently amended the law. What I am saying is that there are certain risks involved although the premise is sound. It is not a bad question. It is even a very good question, I admit, but there are still certain risks involved. He did not do all the research he should have done. I would recommend to him that he do more research.

For example, what would it cost? Can we wait to see the results of the Nova Scotia experiment? After he has answered all my questions, I will review my position but, until he does so, I say no to this bill.

[Stephen Harper, Reform, Calgary West, AB]

Madam Speaker, I am rising today to address Bill C-245, an act to amend the Financial Administration Act and the Auditor General Act, and in particular to give the Auditor General a mandate to review the reasonableness of estimates in the budget speech.

Whenever I rise to address seriously a question before the Chamber I always find I begin in a somewhat depressed state after listening to some of the earlier histrionics. Some of the positions that have been expressed so far today strike me as odd.

For example, the Bloc Quebecois would be concerned about giving the Auditor General the power to limit the independence and effectiveness of elected members of Parliament. Yet the Bloc Quebecois would not be concerned about the plans of the Government of Quebec to undertake action which would destroy Parliament and destroy the country. It seems to me to be a rather misplaced sense of concern.

Likewise some of the Liberal MPs who have spoken are similarly concerned about the control of the Auditor General. He may be controlling some of the decisions being undertaken on the financial end. They would seem to be unconcerned about the fact that our financial policies, if followed, will ultimately lead to the International Monetary Fund controlling the decisions we take here. It seems to me that should be a much greater concern when we examine some of these questions.

In recent years the estimates of revenue have been well off, as have many other estimates in the budget. That is the reason we are here today discussing some of these concerns. The political process left without any degree of fiscal discipline has failed us.

I compliment the hon. member for Fraser Valley West for bringing forward this kind of proposal. It is a very common kind of proposal, not just in political circles these days but indeed in academic and intellectual circles where the fiscal constitutions of parliaments and of governments are coming under some examination. I speak of public choice literature and various other matters.

Let us take a couple of examples of the kind of problem we have in budgeting in the House of Commons. We know that the last government, the Progressive Conservative government, of which none of us are particular admirers, really based its fiscal projections on revenue growth of 4.5 per cent per year basically for eternity or at least to the end of the century. We know and the Liberal government should well know that when it took office it had to deal with the extent of misrepresentation that had entailed and the kind of additional problems that created for its own plan.

In the last plan the government provided, as I have admitted before, much more modest revenue estimates. But the government largely adopted the interest rate assumptions of the previous government. In the last budget just months ago the government estimated that short term interest rates would be around 4.5 per cent for this year and about 6.4 per cent for this year on the long term side.

What is the fact? The fact is that the government is off 1 per cent on short term rates and about 2.5 per cent on long term rates. It finds itself now facing an additional unexpected crunch because those kinds of poor estimates on interest rates with a country that is so heavily in debt impact not only on the kind of deficits and financial planning we have this year but will impact dramatically in future years because of the compounding effect.

Therefore these are the kinds of suggestions governments should be looking at in my view in order to facilitate their work, both here in Parliament as governments with opposition and ultimately with the public and the financial community.

Government members who have spoken have suggested, as I mentioned earlier, their extreme and almost frantic concerns about the Auditor General taking control of their voice as elected officials. They seem unconcerned with the fact that the whips exercise almost unlimited power over their party, but they are concerned about the Auditor General. The strange thing about these concerns about the power of the Auditor General and the concern about opening up the entire subject matter is that this is not a concern at the moment shared by their own government.

As I understand it the government and the Department of Finance are actively studying this very issue, as well they should be. They should be acting of course but they are studying it. I believe and I hope that at some point they will come forward with recommendations to the House on the forecasting processes that have been used and how they might be changed.

They are not just looking at Nova Scotia. They are looking around the world. They are looking at what governments do in places like the Netherlands and Australia on these kinds of matters. The Auditor General is an appropriate individual to look at this sort of information, both at forecasts as well as at projections, as well as at various forecast scenarios that could be used.

It is an approach that is increasingly used in the private sector. There has been some reference that I have had opportunity to review of late to the various guidelines that securities commissions use and the Canadian Institute of Chartered Accountants use for evaluation of future oriented financial information.

This is not something that would be invented out of thin air or that the Auditor General is unfamiliar with. For example, when companies go into the securities markets it is often the practice that before they can issue debts their forecast will be reviewed according to acceptable standards. That would be expected in the investment market. Surely when we are talking about $40 billion deficits a year the taxpayers would expect the same kind of reasonable evaluations of our financial state to have taken place.

Let me just give some idea of some matters the CICA would consider relevant in the examination of future oriented financial information. It would examine all aspects of the procedures.

Public accountants would look at all aspects of the procedures used in formulating both forecasts and projections. They would look at the process of developing these forecasts and some of the assumptions and hypotheses that are behind them, as well as the preparation and presentation of financial forecast data and management representations that were received.

This gives some idea of some of the things they would evaluate whether, for instance, sufficient pertinent sources of information about the assumptions had been considered by management. These would include both external sources, what forecasting firms would say, what government documents say, what is available in various agreements, as well as internal sources.

They would look at whether the assumptions were consistent with the sources from which they were supposedly drawn, whether they are internally consistent and mathematically accurate, whether the historical, financial or other information used in the assumptions was sufficiently reliable for the purpose for which it was employed, whether other data are compatible over the periods of time for which they are being used, and whether the assumptions are consistent with the plans and policies of the entity. Probably, most important, public accountants would evaluate whether there is any bias in the selection of assumptions by management which causes the assumptions on an overall basis to be unduly optimistic or pessimistic. We know there has been a habitual tendency of government to be excessively optimistic, not simply in ways that are optimistic by very marginal standards of judgment but which are wildly optimistic and in fact indefensible by any reasonable standard.

Of course that is the kind of criteria the Auditor General would apply. The Auditor General would not second guess reasonable assumptions or pertinent assumptions, but he would second guess assumptions that were clearly and totally unjustifiable.

In terminating my speech, let me say I support the bill. I support the kind of matter it is looking into. I think if anything the subject could be broadened, but certainly the House should give its support to the bill. It should really consider seriously, as a matter of general policy, bringing this aspect and all aspects of government budgeting under established concepts of fiscal discipline that exist in all other walks of life.

[Jim Silye, Reform, Calgary Centre, AB]

Madam Speaker, as a businessman I have often said that governments should be run like businesses. Now, having been a politician for a year, I say that government cannot be run like a business but it still should be run more businesslike, in a business manner.

My speech is a little long so I will pick out some of the highlights. I realize there cannot be an absolute parallel between the private sector and government. In other words government cannot hire the Auditor General. We do need that arm's length distance.

The Auditor General, however, must be absolutely independent of Parliament and cannot participate directly in the budget planning process. However Parliament would be foolish not to take advantage of the Auditor General's advice in assessing the government's budget plans from the outset.

Why not have value for money audits conducted by the Auditor General in conjunction with budget planning? Why not have sunset clauses contained within all government programs, including social programs, so that they run out after one year, two years, three years, five years or whatever it takes? Then we could see if we want to renew it, add more money, delete some money, or cancel it altogether.

These are some of the things an auditor could do, working in conjunction with the finance minister. The important thing, the crux of the matter, is that governments must stop living on borrowed money and stop refinancing current needs and desires on the backs of our children and grandchildren.

In conclusion because the bureaucracy and politicians are spending the money of other people, no wonder it is hard to balance the budget. No wonder we cannot find out who is responsible. No wonder ministers blame bureaucrats and bureaucrats blame different departments of other departments of bureaucracy. No wonder we have such big fiscal problems within government. I really believe it is important that if we could get the Auditor General to have more authority and become more involved with the budgeting process in this government not only would it complement and assist this government, it would help all future governments and it would, most important, help the people of Canada, the taxpayers.

[The Acting Speaker (Mrs. Maheu)]

The time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 96(1) the order is dropped from the Order Paper.

The House resumed consideration of the motion.

Social Security Programs

[The Acting Speaker (Mrs. Maheu)]

Resuming debate on normal House time, the hon. member for Calgary Centre has 30 seconds remaining and then a five-minute question period.

[Jim Silye, Reform, Calgary Centre, AB]

Madam Speaker, objectivity is required in the matter of social reform, not partisan politics that are being played out by the Minister of Human Resources Development. If we want to have a true social conscience in this country and if that is what government wants to provide, then let us help the truly needy and not continue the practice of helping everyone lest we offend and possibly lose votes.

Will the Liberals have the courage to act after they have received the input they are seeking? The government must govern, the government must lead, the government can only consult for so long. It has already been a year. How much longer do Canadians have to wait before their do-nothing, say-nothing, feel-good leader puts the action plan on the table?

[Jane Stewart, Liberal, Brant, ON]

Madam Speaker, it is indeed with pleasure that I participate in this debate which effectively launches our review and reform of Canada's social security system. Constituents in my riding of Brant have been anxiously awaiting the tabling of this discussion paper. They want to see what the options look like. They want to have input and they want to suggest alternatives. I look forward to working with them over the course of the next couple of months and in bringing their advice and counsel back to this House and debate it at a later time.

For the purposes of this intervention, I would like to take aim at some of the criticisms that we have been taking and will continue to have to deal with over the course of this review.

There are those who say that by undertaking this reform our government is abandoning its Liberal roots. To my mind nothing could be further from the truth. In fact, it was Liberal governments in the sixties that wove together Canada's first effective social safety net. They were responding to the needs of Canadians at that time.

This system worked very well for us through the sixties and the seventies, but now it is becoming dysfunctional. Is it wrong for us to listen to single parents who tell us that they are caught in the welfare cycle because they cannot find appropriate day care for their children or because they cannot find a job that pays them enough to meet and support the basic needs of their families?

Is it wrong for us to listen to employers who say that our training systems are ineffective? They prove this by saying that they have to go to England and Europe to find technically trained staff to help them do the work of their businesses.

Is it wrong for us to want to stop businesses from using the unemployment insurance program as a wage supplement for their employees? I think not. In fact, when I think about it, if we had been the government over the last 10 years I believe we would have continuously changed and modified our social safety net so that this major intervention would not be necessary today. Unfortunately, that is not the way things worked. To meet the needs of Canadians we now have to make significant change. This government will not shy away from that. I am proud to say that I agree with its strategy.

Second, there are those who say to go ahead, embark on this reform, but only do so if the purpose is to reduce the fiscal deficit. I believe that indeed we have to take stock of our economic times and that that has to be a major consideration in the work that we do. However, the economic times that led to this fiscal deficit have also created a huge social deficit in Canada.

We are sending our children to school without appropriate clothing and without enough food in their stomachs. We have university graduates who cannot find that all important first job and as such are threatening bankruptcy and, worse still, suicide because they cannot repay their student loans.

We have men and women across this country whose skills and abilities are not being utilized. They are undervalued, underused and as such they are not able to contribute to their fullest potential to help us reduce our fiscal deficit and to reduce our social deficit.

If we do not deal with our social deficit there is no question that it will add exponentially to our fiscal deficit. We cannot support that. It is not sustainable and it is not right.

Third, I would like to comment on the criticisms that we are receiving from some provinces, particularly my home province of Ontario. The Government of Ontario is constantly saying it feels that Ontarians are not getting their fair share from the federal government. They point out, and rightly so, that the federal government contributes about 50 per cent to the cost of social programs in the province of Quebec and by and large in the maritime provinces.

It points out that in Ontario that contribution is about 20 or 25 per cent. Let us look at the background here. Under the 50:50 cost sharing split that is part of the Canada assistance plan, it has been provinces which have been able to afford to spend money on social programs that received larger transfer payments.

In the 1980s and certainly in 1990 with the partial implementation of the SARC report, Ontario expanded and enriched its social programs significantly. The federal government decided to cap its transfers, deciding that its responsibility was not so much to fund at all costs the unilaterally created social programs of provinces but rather to support the mandate we have under the Constitution, section 36, that says we are responsible to provide for Canadians no matter where they live in this country reasonably the same level of services for reasonable the same level of taxation.

Do not get me wrong. I do not accept and I do not agree that the Canada assistance plan is the appropriate or the right way to manage our transfers to the provinces. I would encourage all our provincial partners to come to this table, sit down and discuss the options that are tabled, suggest alternates, and help us make sure that Canadians no matter where they live have equal access to social security programs.

Finally, I would like to say that as a government our prime role and purpose as we have stated time and again is to create jobs and opportunities for Canadians. The initiative of the Minister of Human Resources Development adds a dimension to that commitment.

Coupled with the work of the Minister of Finance, who will be tabling a statement in the next few weeks, and the work of the Minister of Industry who will be tabling some information on our micro economic status, possibilities and strategies for economic growth, we will have a blueprint that will help us to renew Canada.

I look forward to implementing that blueprint and being part of a government that will in fact bring Canada back to the level that it should be. In closing, I would like to quote from an editorial that was written this week in my local newspaper The Brantford Expositor . In reference to the initiative of the Minister of Human Resources Development the editor writes:

Rightwingers will complain that the plan does not go far enough, that there are too many people living off the government gravy train. Leftwingers will object that the government is caving in to corporate interests and balancing its budget on the backs of the poor. What sensible Canadians should do is try to avoid being buried in all of this muck and take a long and serious look at what Axworthy proposes because the time has come for real reform. Canadians who are fed up with the high taxes and program recipients who are not getting the help they really need stand to be hurt a lot more if things are not fixed.

I do not always agree with the editor of my local newspaper, but this time we are at one. I want to thank the Minister of Human Resources Development for the hard work that he has put into this discussion paper and tell him that as a member of Parliament I will be working hard with my constituents to make sure they have input and that they are consulted in this process so we can work effectively to restore Canada's social security system.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, I congratulate the member for her speech. It was well presented but I feel that somehow it lacked the kind of commitment that Canadians are looking for in terms of actual deficit reduction.

What I am driving at here is this. I do not believe in cutting for cutting's sake but it is time to be more realistic and to realize that spending $5 for every $4 we take in is going to eventually cause us to hit a wall.

When I hear the different concerns and particularly that of balancing the budget on the backs of the poor, it presupposes that the only way one can look after those who do not have what they need is to give them a handout. We need to really seriously look at replacing handouts with work, with things that people can do for themselves, and expand the involvement of family and community in looking after needy people.

Instead of sending a dollar to Ottawa and having it eaten up by bureaucracy and administration and then getting 10 cents back to the person who needs it, we need to bring that more closely to the people.

I would like to know the member's response to this question. How can we be more efficient with the money that we are taking from the taxpayers in order to look after those needs? How amenable is she to making it more local, moving it to the provinces and indeed even down to the communities?

[Jane Stewart, Liberal, Brant, ON]

Madam Speaker, I thank the hon. member for his comments. It sounds like he may have read the document when he talks about the options that we require.

We are looking at ways to make sure that the programs fit the needs of individuals, that they do participate and have a say in the kinds of strategies and activities that we need to do to get people back to work. That is the focus. We want to make sure that we use the skills and abilities of all Canadians so that they are contributing to the country and in effect help us reduce, as I mentioned in my speech, our fiscal and our social deficit.

We cannot lose track or lose sight of the fact that if we do not provide support for Canadians, we do carry a social deficit that has real dollar cost. We as a party, and I am very proud of this, look at things in a balanced fashion. I believe that that has been our strength in the past and will continue to be our strength in the future.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Madam Speaker, during Question Period, the Minister of Human Resources Development practically admitted that the proposed social program reform would translate into savings of about $15 billion over the next four, five or six years. I was very surprised to hear the previous speaker talk about employment in such a context and I have a specific question to ask her. Could she explain to me briefly how this reform will impact on employment?

[Jane Stewart, Liberal, Brant, ON]

Madam Speaker, there are a lot of ways that this is going to have an impact on unemployment. As I mentioned in my speech one of the things that I find is happening in my constituency is that employers are unable to find Canadians with the skills and abilities that they need to do the technically advanced work of their businesses.

Through our program we want to encourage and focus significantly on improving the training aspects that we have for Canadians. Let us face it, if they have the skills to do the work, they will find jobs.

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Madam Speaker, I am happy to speak in support of the minister's discussion paper on improving social security in Canada.

I suspect that few in this room or in the entire country for that matter would dispute Canada's affluence and ability to sustain a generous or even enviable social safety net. In fact, how many countries can we identify that would love to be having this debate right now. Rwanda, Haiti, Bosnia, Cuba, most recently India, to name the more obvious, but also European countries. Even the Americas would love to be engaged in a debate about how to improve what is arguably one of the best social safety nets in the world. I would say we are rather lucky. We are a wealthy nation and we must remind ourselves of that as we engage in this discussion.

I would like to point out that many people have stated a need for reform of our social safety programs. Most Canadians agree that change is imperative. The basis of this need for change comes from two sides. One, we must cut because of the debt and the deficit situation. Others argue that our social programs were born of a different time and place, a different era, and that they are now simply out of date and need modernizing and restructuring to better reflect the current needs of our citizens.

It is this second position with which I agree. Our programs have become dated and there is an absolute need to restructure whatever assistance the government can provide to better reflect the contemporary needs of Canadians. I do not deny that financing our ideological generosity over the long term means attending to our deficit, but we do not have to compromise our ideology or our generosity, or force the burden of prudence on to the backs of those in need.

New directions are necessary. Some will cost money but savings can be realized by improving inefficiencies within the system. We can improve the way we deliver assistance and reduce the amount of overlap and duplication. We can achieve savings by devolving some responsibilities to the provinces. We do not want to cut simply for the sake of cutting. I believe the government has the plan to bring about our badly needed social policy reform.

Foremost, we recognize and fully embrace the need for open and informed consultation with all Canadians. We must if we are to be the architects of a safety net for generations to come, exercise the greatest prudence, and the greatest patience in engaging Canadians in this historic debate. It has to be a system made by Canadians if it is meant to serve Canadians.

I want to commend the Minister of Human Resources Development for his strong personal commitment to a thorough, comprehensive and meaningful consultation on this issue. His commitment is one I urge all members to rely on, to appreciate the need to seek out the views of every constituent in every riding of the country, to want really to know what it is our constituents want.

It has been suggested that the Reform proposals represent firm decisions and that we as members on this side are involved in selling a plan. As you can tell from my comments, it is not my intention nor is it the intention of the government. Rather, my effort today is designed to sell a process, a need to involve Canadians in this important debate.

There are certainly elements of the discussion paper that excite me, particularly those involving helping children and its general direction to more active social programming I wholeheartedly support.

Specifically as a New Brunswicker I can attest to the fact that we have been engaged in a similar debate at the provincial level. Such discussion and debate has resulted in a conception of some forward-looking social programs in our province such as the community academic services program, a literacy training program, and job corps to name just two.

It is the vision behind these creative partner-based programs at the local level that underpins the federal government's renewal initiative. The benchmark for our success is not how much money the government can save, rather it is whether such programs are beneficial and effective in the lives they are intended to improve. That is the objective that must be brought to the government's desire to reform the social safety net. It must be the guiding principle for decisions taken and it should be the framework adopted by all members of the House when they seek input from the constituents in their respective ridings.

I personally learned a great deal from the forum on social policy held in my riding in April. I know that my constituents are encouraged by the fact that they have been asked to help in the minister's reform proposals. My constituents recognize what a proposal means. It is something offered, something suggested, and they know their opinions will be welcomed and valued in helping transform a proposal into reality.

We in Fredericton-York-Sunbury are ready for October 30 when we reconvene to discuss this important reform again. We are anxious to offer whatever assistance we can to the minister because we, too, want a safety net designed to suit our needs both now and in the future.

We must listen to Canadians. The magnitude of this debate is such that its success will depend on achieving some kind of national consensus. In order to achieve that consensus we must assure ourselves and all Canadians that apart from our new social program regime, every effort is made to attend all possible opportunities on the revenue side and elsewhere on the expenditure side.

We must be as creative and fair as we possibly can in addressing our fiscal situation or we will not be able to count on the support of those who need to know the system is fair. We must remind ourselves that our social programs have and continue to be designed with a purpose; to mitigate against poverty, inequity, regional disparity and uneven opportunity.

The reality now is that the fault lies with the system, an outdated system on which far too many with tremendous capabilities have to depend. Our labour market needs these people but we have to find better ways to marry the employment needs of Canadians with the employment needs of Canada.

We are entering a more enlightened era of governing and of offering aid to citizens who need assistance. We have progressed through earlier notions of simple charity and through the 1960s notion of entitlement.

I am pleased that in this reform we are moving further along that continuum. We now recognize the differences between those with and those without, the haves and the have nots, the empowered and the enfranchised and those unempowered and disenfranchised. These differences are far greater than merely money and material assets.

These differences are far more fundamental; differences in skills, confidence, access to opportunity be it financial, academic or professional. These are the factors and the measures against which we must judge the integrity, suitability, sustainability and success of our social programs.

These are the dimensions needed to reflect an enlightened, holistic, modern approach to people, their needs, their goals and their personal desires. I want to emphasize that the cornerstone of this exercise is to recognize the importance of giving people control over their own lives, to let individuals themselves be the decision makers and architects of their own destiny.

Our paternalistic system of defining and administering to the needs of people is approaching an end. I cannot overstate, as we engage in this transition, our need to provide short term support during the progression from unemployment to employment.

As a New Brunswicker I am proud of the fact that we are moving in the direction of greater independence. Just as we need to be able to rely on the support of the federal government to help us through this transition, so too do citizens struggling to improve their own lot in life.

Practically, I would propose special consideration must be given to the unique seasonal nature of the Atlantic Canada workforce. I wholeheartedly support the need to offer training, counselling and choices to those historically dependent on federal programs such as unemployment insurance.

I would also maintain the need for continued income support where present circumstances simply do not allow for many seasonal workers to enjoy a sufficient annual income. We must seize the opportunity to make the entire social system more client based, more efficient, less bogged down, less heavily weighted with administrative infrastructure.

I conclude by appealing to all Canadians to participate in this review regardless of their personal predisposition or politics. Even past positions should not get in the way of helping the government do what is right by Canadians. Lives are at stake, many people are depending on us. We cannot allow the impact of the exercise to be dismissed.

I believe that the solutions to the challenges before us lie in the hearts and minds of compassionate, caring, committed Canadians. Change is necessary. Resources are scarce. We must collectively, hopefully collegially, create a new system that captures the generosity and compassion of Canadians that have served us so long and so well.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Madam Speaker, I want to thank the hon. member who spoke before me. I found his presentation very philosophical. I would like to tell him about a very practical case that I dealt with today in my office, which reflects some of the details of this reform. After hearing about the proposed reforms on television, one of my constituents gave me some historical background. I will read it to you and I will certainly ask questions on this.

To put things in their historical context, if your parents or your grandparents had mentally handicapped relatives, they would have been put to work on the farm. Nowadays, with automation, these people have become vulnerable to unemployment. How many people in Canada are handicapped and cannot work because of a deficiency? Whatever their handicap, many places will not hire them.

Is this new reform penalizing these people who want to work but were abandoned by the industry? Many of them are, through no fault of their own, permanently unemployed. There are many of them, more than we may think. Do you think that this reform will include some mechanism to prevent these vulnerable people from being penalized by the proposed measures? That is the question I want to ask my distinguished colleague.

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Madam Speaker, I thank my colleague for the questions. It allows me the opportunity to speak specifically to the rather targeted nature of the changes. A large part of the reason we are engaged in this discussion has to do with the fact that the Minister of Human Resources Development has invited Canadians to help priorize what is important to social policy spending.

I would say the member has hit the nail on the head. We have to make sure there are sufficient opportunities for those people who are not able to be employed. At the same time, we have to make sure there are opportunities for people, regardless of disability, who would like to work and very often can work, but are constrained by a system that requires them to define themselves as being unemployable to get benefits.

It is deplorable that people who otherwise would love to be working-in many cases that is the case in that particular community-are restricted by virtue of the programs they are participating in. I welcome the opportunity to point that out.

Regarding the rather philosophical nature of my discourse I can only say I really believe that is the tone we should bring to this debate as we launch it, because we want to involve Canadians. The first place to start is the values around which this review should take place.

Clearly my background as a proud member of the party that I support leans me toward supporting the kinds of programs that would offer opportunity to the people the member mentions. As we engage the nation in this debate we are all obliged to set out the parameters and bring a philosophical framework to the discussion.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Madam Speaker, I have lots of sympathy for the Liberal members who must rise in this House and speak in favour of a bill which is not justifiable. It is unjustifiable because it does not state things clearly.

When they talk about such a bill being compassionate, when they pretend its intent is to meet people's needs, when we know quite well it is meant to save money, I might agree with the idea of saving money, but they are not telling it as it is, and I do not agree with that.

During the election campaign, the Bloc Quebecois said we should cut government spending by $10 billion. The government adopted part of our ideas and is trying to cut back, but in all the wrong places. Instead of reducing government spending, they cut into the social safety net we painstakingly set up by paying out large sums of money and they do not touch the machinery of government. Who will benefit ultimately? Students who will see their tuition fees increase? How can they pretend this bill meets their needs? Women who will now receive unemployment benefits only if they prove their spouse is not earning too much? How can this bill meet the needs of those people? How will the frequently unemployed who will see their benefits decrease-

[The Acting Speaker (Mrs. Maheu)]

Unfortunately, your time has expired unless you can reply in 30 seconds.

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Madam Speaker, in my 30 seconds I would say that I also feel sympathy for my colleague. Never having sat in opposition I sympathize with the nature of this place being somewhat adversarial. It is very difficult for members on the other side to see the benefits of some of the things that are proposed. So perhaps we share a sympathy toward each other.

As to the fact that my colleague claims his party has told us about its deficit reduction plans, our plan is to reduce the deficit by the end of the third year to 3 per cent of the gross domestic product.