Debates of Feb. 28th, 1995

The Budget

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I thank the member for his intervention. He puts his finger on the core problem that has to be resolved in the House, I would hope in the course of the budget debate.

After the spending cuts that have been proposed by the minister the sad problem is that we still end up running a $25 billion deficit at the end of 1997. The federal debt is over $600 billion and the interest payments on that debt are over $50 billion.

If members would work through the consequences of those higher interest costs on the rest of the social spending, particularly the social programs, they would find that does more damage to the social services network than virtually anything that has ever been proposed by anybody in terms of spending reductions.

The taxpayers' budget we presented endeavoured to get the deficit down more quickly so that the debt stops growing and this bleeding off of social program spending through interest payments ceases.

I honestly submit to the House that if people would compare those two, the pain of the cuts to get the deficit down more quickly versus the pain that will come if nothing is done and those programs are all eroded by higher interest costs, they would find it would be more advisable, more saleable to the electorate and more acceptable to Canadians to hit the Reform target of deficit elimination in three years rather than the minister's target of cut the deficit in half by 1997.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, when the member for Calgary Southwest rose to his feet today he said that he would not be approaching the debate in a partisan way. Therefore I was rather surprised the leader of the Reform Party did not acknowledge the fact that there were no personal tax increases in the budget.

I read the Reform Party's budget. I realize that I cannot show it here because it is inappropriate. It would propose a flat tax idea. As members will know, this is something I personally believed in although I call it the single tax and it has a much more progressive design than the member is proposing.

In the proposal of the leader of the Reform Party for a flat tax it is absolutely inevitable under that system that many Canadians would pay more personal income tax. How does the leader of the Reform Party square that flat tax idea with his statement that there should be no more money taken out of the personal income tax envelope?

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I thank the member for his question and I will respond to it in two parts.

First, he implied that we should be thankful for the minister not increasing personal income tax. I remind the member of the fact he knows well that all these taxes come out of the pocket of the same taxpayer. Automobiles do not pay this fuel increase of 1.5 cents a litre on gasoline; people pay it. The tax increases of over a $1 billion a year in the budget are going to be paid by real people. Ordinary taxpayers do not care much about where it is coming from. They end up having to pay it.

With respect to the member's second question on the implications of flat tax on the budgetary situation and the impact on taxpayers, I say it comes back to the concern about the total tax load. If we could get spending capped and then down to the point where we could offer tax relief, which is the whole aim of the taxpayers' budget, the total tax load on Canadians under a flat tax system or any other system would be lower than it is under the current system.

Our aim is to deliver genuine tax relief second through tax reform but first through getting the spending down, which is the root cause of high taxes.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, I have only a brief comment and a question for the leader of the Reform Party. Among the measures affecting farmers in the east contained in this budget, there is a cut of $32 million in funding for Quebec. Of course, the government has also made cuts affecting farmers in the west, for example the Crow rate, but it will also compensate farmers of that region to the tune of $2.9 billion.

This measure typifies what Quebec has a problem with in this country. Money is taken from some areas and given to others, and Quebec gets none of it. Before asking my question, I cite the energy sector in Canada and Quebec as an example of this. We have three kinds of energy: petrochemical, nuclear and electric. The government made massive investments, billions of dollars

worth, in petrochemical energy. Hibernia is an example of this. The federal government made massive investments in CANDU reactors. The federal government's cumulative investment in this project is $12 billion, of which Quebec paid 25 per cent. Nothing was ever invested in electricity in Quebec.

This is what we say. I think that what my hon. colleague meant when he said: "We're going to hit the wall quite soon", and I fully agree with him, is that he admonishes that we are on the verge of an apocalypse, and we Quebecers say that our personal apocalypse would be to stay in this system.

Can my hon. colleague tell us his point of view on the differences between how the west and Quebec are being treated?

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I could respond to a number of points. I thank the member for his intervention. I remind him that Quebec Hydro has paid no income taxes. Nor was Quebec Hydro ever been subject to a raid by the federal government the equivalent of the national energy program, which is one of the differences between how energy has been treated in the west and how it has been treated in Quebec.

With respect to the agricultural impacts of the budget, I have heard other comments by the member's colleagues implying that there is some unfairness in the government cancelling the Crow rate and compensating western farmers to the tune of $1.6 billion and the 30 per cent reduction on subsidies to the dairy industry, a large portion of which is in Quebec.

I remind the member that the dairy industry gets its subsidies from two sources. One is directly from the government but the other is from the high level of protection that supply management is offered. That subsidy comes directly out of the pockets of the consumer and not from the government. If we add the levels of subsidy we find the subsidization of supply managed industries in Quebec is as high or higher than the more free market grain trade and livestock trade in the west.

It is for members from the province of Quebec to consider that if Quebec is an independent country the capacity of Quebec to subsidize and protect to the degree it has in the past is gone and those farmers would be hurt infinitely more than they would be by any measure under the budget.

[David Walker, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I want to say to the leader of the third party with humour, not anything else, that if he wants to speak without props I suggest he look around here, then look around behind himself where he came to this debate fully propped for his presentation.

It gives me a great pleasure to join in the debate today, which perhaps is one of the most important times of our history, the discussion of the 1995 budget presented yesterday here in the House by the Minister of Finance.

I do not have to tell the House that it not only deals with the questions of cutbacks, with the question of some of the nitty gritty and the program review. In a fundamental way the Minister of Finance has laid out for this government and for the people of Canada how we are going to go about getting government right.

This philosophy is clear. In order to fulfil the ambitions of this government-I hope of the whole House-our job here is to provide an environment for economic growth, for creating jobs for Canadians and to see that there will be new economic wealth shared by all Canadians. In this context that we have set out the first step we must take is to make sure we get government right and we do things properly here in Ottawa.

This budget will result in considerable savings so that we can meet our red book commitment to reduce the deficit. Furthermore, if the economy does better than forecast in our extremely prudent estimates, the deficit could go down even faster.

This will pay off not only this year, not only next year, but because we are getting it right this time, it will pay off long into the future.

As an aside, everyone in this House should be heartened by the tremendous positive reaction. This budget has been accepted by Canadians from coast to coast, by people who are concerned about our deficit but on the other hand wanted to be given hope that the government was not going to hurt their lives unnecessarily. Yes, the price is being paid by many people in many ways in many walks of life. On the other hand, it is also gratifying that Canadians have come to a point in this development where they can say this is the right step, that we are doing the right things for Canada. International observers who do have an influence on our success have also seen that the Minister of Finance has taken the right steps and is going about putting our house in order.

This budget is different, very different from the previous Tory budgets. People ask me that question all the time. We are not just making rhetorical flourishes. We are doing very precise things. We are going to be successful. It is not a budget of promises. It is a budget of commitment. We proved last year that we can fulfil our commitments. We will prove it next year, the year after and the year after that.

Most important for people on this side of the House, this is not a Conservative budget in a fundamental way. It adheres to the Liberal legacy of nation building. It is clearly rooted in the principles of economic leadership, compassion and increased

fairness. We will not leave Canadians with another decade of disappointments in the development of the budget and the development of their government.

Today's budget is a call for action. It is a time for opportunity and challenge. As our Prime Minister has said on many occasions, if we have to make cutbacks in government, make them while the economy is growing. The economy is growing now and now is the time for firm action.

We have seen in the past year, not because of our actions but because of the collective wisdom of Canadians and their increased confidence, over 443,000 permanent jobs created in this economy. We have seen a growth rate that far outstrips all of our fellow countries in the G-7. We have shown the way among western industrial nations about how to grow an economy.

We do not take credit for that. We understand that it is not us but we hope that we are helping to provide the environment which makes businesses and individuals confident of the future because that is the way that this economy will continue to grow.

We also have an opportunity at the political level. Canadians clearly indicated that they wanted vigorous measures to reduce the public debt so that we can get rid of the crushing burden of high taxes and resulting interest rates.

The challenge we face is just as clear. Canada's economic future is in real danger because of the $500 billion debt which makes us extremely vulnerable to the brutal impact of interest rates.

These interest rates have continued to rise under pressure from the U.S. and Canada. Since October, short-term rates have risen by about 2.5 percentage points.

It is very important to emphasize this point. I want to say to all parliamentarians here today that sometimes during the course of our committee work we wonder if it has an influence, do the ministers listen, does the Prime Minister listen, do opposition members have an influence. I think the finance committee stands out in its work as a great example of how parliamentarians contribute to the development of policy.

We went through long hearings. We heard from over 650 witnesses in the fall. We came to the conclusion that the government must be prudent, that the government must pay attention to increasing interest rates, that we must take dramatic and deliberate actions to reduce the deficit. The Minister of Finance heeded those words.

Although we seemed to be on the drastic side when we made our recommendations our warnings bore out the truth, that interest rates have gone up and made the job of this government much more difficult.

To the credit of the Prime Minister and the Minister of Finance and other colleagues in the ministry, they responded and produced a budget which showed our own willingness to reach our targets. This caution will be what propels this government to do the right thing in the years to come.

Let us stop and think. What would have happened if we had done nothing? There are voices in the country and voices on the lawn in front of Parliament which say this is really an okay situation, all this talk about deficits is some right wing plot to destroy our social programs. If we had not done anything we would have been $5 billion higher in our deficit this year and we would have missed the mark by $10.6 billion next year. In other words, we would be further behind than when we formed the government on the commitment to reduce the deficit to 3 per cent of GDP. The actions are necessary and we are in the process now of taking the necessary steps to rectify the situation.

In order to reach our budget targets as the Minister of Finance explained yesterday we are implementing cumulative savings over the next two years of $15.6 billion. Over $13 billion of these savings will be in spending cuts and there will be no increase in personal income tax rates.

As the leader of the third party said a few minutes ago, this is great news for Canada. We have to realize that we have attacked the problem of government debt while at the same time recognizing the legitimacy of middle class families, that the tax burden has shifted over the past 15 years far to much to them and therefore to their children and their ability to have economic security.

This government has listened to that message and listened very carefully and responded with prudence, responded in such a way that Canadians understand that we are putting this government in order and are calling upon them as a last resort to lend assistance.

We are also taking firm action to make the tax system fairer, close loopholes and increase the contribution of big business to the fight against the deficit.

Taking the next three years together, the budget delivers almost $7 in spending cuts for every $1 in revenues. These actions are changing the size and shape of the government by hard choices on priorities. By 1996-97 program spending will fall from $120 billion down to $108 billion. This is the most dramatic action seen in any government for decades.

The most important point of all, in 1996-97 the debt will no longer be growing faster than the economy. When the Minister of Finance says on public occasions that we are going to break the back of this, we are going to get off this treadmill, this is the key point. The debt to GDP ratio will begin to decline. That is the key for the fiscal sustainability and that will put us on a permanent downward track.

There are going to be payoffs. We want Canadians to appreciate this. This is the first step. Budgets are not made or broken on one night's announcement, they are made by Canadians adjusting themselves and departments adjusting themselves. There will be a payoff. The payoff is that we will make sure we reach our targets.

We set up substantial contingency funds: $2.5 billion this year, $3 billion the year after. Even if interest rates go another full percentage point higher we will still be able to reach our targets.

It is this type of caution in the pasture which has caused us to reach our target, to do better than we told Canadians we were doing, and that is what is contributing to the confidence of Canadians in their national government. We are saying things that we can do. We are not setting targets five years down the line or ten years down the line so that when a crisis occurs like Mexico everybody says do not worry about this particular short term problem, we can put it off and look after it in the future.

What we are saying in this House is that as a crisis occurs we adjust, we reduce our spending, we reach our target year after year. That is the confidence builder, not having some vague target in the future which says we can reduce the deficit to zero in three or four years. That does not help anybody. That just frustrates people. That leaves a bad taste in the mouths of the politicians who are over promising.

It is very important that every member in this House understand the responsibility that we have in the debate, that Canadians understand that we are going to reach targets and that those targets will be reached in such a way that it is done fairly and consistently. When people look back at the period of the mid-nineties it will not be like it was in the mid-eighties, there will be real accomplishment by their national government.

Our contingency reserves could play a dual role in the future. Not only will they ensure that we will meet our objectives, but, if they are not needed they will not be spent and will allow us to further reduce the deficit.

This is yet another dividend to be reaped through prudent economic forecasting.

If interest rates and growth do better than our forecast and conform to the private sector average the 1996-97 deficit could drop dramatically. It could be much less than projected in the budget. We could have a deficit under 2.5 per cent instead of 3 per cent of GDP.

The government is being very careful on this point. We want people to understand that our targets are realistic and if we do better it is through good luck. We are being prudent in each of our particular projections because we do not want to fall short. We think that the credibility, not of this government but of the nation, is based on targets reached year after year.

The heart of the process to achieve these goals was not done in the hurried up fashion of a Minister of Finance sitting around a table with a few officials. In my first year the minister would call me in from time to time and we were trying to figure out what could be done. We had only been in office for a few months and it was very much a learning process.

What the minister decided quite appropriately, which was supported by his cabinet colleagues, was to have a program review which in some respects sounds esoteric. A program review gave a group of ministers an opportunity to talk with each other about what they wanted to see reshaped in government, a new strategy within government. It was not to throw around programs and say, cut here and cut there. It was to say department by department, what is it that we have to get out of and what is it that we have to emphasize? How do we redevelop an industrial strategy? My colleague from Don Mills is involved with that. How do we develop a strategy on science? How do we reduce subsidies in the agricultural field? How do we make the transportation system more effective? These are not catch as catch can questions, these are hard to answer; nor are our answers this year the final answers.

We will find this will be a progression of innovation. We will be back again and again suggesting new ways to do things. This budget is going to energize our colleagues on this side to do the right thing and to find new ways for the government to operate. I hope the opposition parties will make suggestions that we can incorporate so that we can develop a stronger and stronger national government.

Of course, we did not wait for the budget to take concrete action. Our review of agencies, offices, councils, boards and commissions-which ended in early February-will lead to the abolition of 73 of these 120 organizations. The 47 remaining entities will be restructured and rationalized. This will allow us to eliminate 665 positions held by governor-in-council appointees and save $10 million a year.

We could mention a lot of examples that have proven to be really fruitful in this process. Spending by fisheries and oceans will fall $210 million over three years. We have found that there are more officials than there are active fishers. Transport will move from being an operator of the transport system to a role of regulator and policy maker.

There has been a large question raised in the minds of the public about subsidies to business.

In fact, business subsidies will be cut in every department. The reduction will affect agricultural and transportation subsidies that were established decades ago.

Overall the budget will cut subsidies in half, from $3.8 billion to $1.5 billion by 1997-98.

We will also do other measures on cost recovery, for example in dealing with immigration issues.

On the question of provincial transfers, we are taking action to reform the provincial transfer system. We think that our innovations will create a system that is more sustainable and more responsive to community needs.

In the last budget, to set the stage to show ourselves to be supportive of each of the provinces, we renewed equalization for five years. There is no change in that commitment in this budget.

For 1996-97, the other major programs, established programs financing for health and education and the Canada assistance plan, will be converted into a single, consolidated block transfer called the Canada social transfer.

It is a matter of converting the Canada Assistance Plan to the block funding system already used for EPF, thus allowing the provinces to innovate according to their priorities.

However, the budget also makes it clear that the principles in the Canada Health Act must be adhered to. And there is no change to the principle that the provinces must provide social assistance services without minimum residency requirements.

The introduction of the CST will see total provincial transfers reduced by $2.5 billion next year and the year after that by $4.5 billion. This means that the total of all major transfers to provinces in cash and tax points will be 4.4 per cent lower next year than it is today.

By comparison, the drop in federal spending will be 7.3 per cent. To put it in another perspective, the reduction by the second year will equal only about 3 per cent of all provincial aggregate revenues. We have hit ourselves harder than we are hitting anybody else.

There are two other issues which are still outstanding: unemployment insurance and support for the elderly. I will touch on them very briefly.

Sometime this year, the Minister of Human Resources Development will be tabling legislative proposals to put in place, based on the best features of the UI program, a reformed program the emphasis of which will be on assistance rather than dependence.

This reform will take place in 1996 and will reduce the size of the program by a minimum of 10 per cent. For 1996-97 this means the reform will secure savings of $700 million. I will choose another time to speak about the payments to the elderly.

This may be a difficult budget in some ways but the optimism with which Canadians received it last night and today shows that we are on the right track and that we have the support of the country.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Madam Speaker, I listened with interest as my hon. colleague sang the praises of the latest budget, saying that this may be the opportunity we were looking for to act aggressively to put our fiscal house in order. But would he agree with me that this budget did not come down very hard on the banks and family trusts?

All banks are asked to pay over the next two years is about $100 million. This is really not very much when you think that banks are the businesses that have turned the largest profits over the past five to ten years. Last year alone, the Royal Bank's net profit was $1.2 billion. And this is just one bank.

In addition, by deferring changes regarding family trusts to 1999, or five years down the road, the wealthiest segment of our society will have ample time to find another place where to put their money away to avoid any form of taxation. Considering that the government could have brought in perhaps as much as $1 billion from these trusts alone, does the hon. member really think that his government took firm and fair action?

[David Walker, Liberal, Winnipeg North Centre, MB]

Madam Speaker, the hon. member raised two issues on which I would like to comment. First, with respect to family trusts, we have removed all tax advantages related to these trusts and reduced the allowed deferral under the 21-year rule. We are beginning immediately to take action on family trusts.

There are two questions under family trusts. One is the question of income dispersed to beneficiaries which is going to be changed immediately. The other is the question of the capital tax. The 21-year rule is effective in 1999 which is the time it takes given the fact that the Conservative government eliminated the rule. There had to be a few years to allow for adjustment. On the income issue we will begin immediately; on the capital issue we begin.

On the other issue, the bank issue, we are raising a special tax on banks, which will bring in $60 million just this year.

We think this is a great step forward. It will begin to deal with the banks on several issues we think they should be addressing immediately.

[Pierre Brien, Bloc, Témiscamingue, QC]

Madam Speaker, the hon. member referred to the transfers to provinces and said that, in his opinion, provinces would not be really affected, considering the cuts involved. This raises the whole issue of national standards. What will happen to standards?

The budget makes several mentions to such standards, but they are not very clear. I wonder if the hon. member could give us his own view on that issue. In his speech, the Minister of Finance said, and I quote: "Provinces will now be able to design more innovative social programs- programs that respond to the needs of people today rather than to inflexible rules".

Thus, and that is a step in the right direction, the minister does confirm that, in the past, there were some inflexible rules. But the sentence which follows is the one for which I would appreciate an explanation. It reads: "However, flexibility does not mean a free-for-all". That sentence appears in italics in the budget speech. What does the minister mean when he says: "flexibility does not mean free-for-all"?

It means that the federal government will continue to exert some control. Yesterday, the Minister of Human Resources Development, who was participating in a radio show with me, said that before the government had no control over funds but that would now change because the federal government would define standards, in co-operation with the provinces.

We all know what joint standards mean. Therefore, I wonder if the hon. member could explain the statement to the effect that flexibility does not mean free-for-all.

[David Walker, Liberal, Winnipeg North Centre, MB]

Madam Speaker, I thank the member for his question. This area is both old and new in Canadian politics, that is to say, how do we transfer money to the provinces?

Essentially the federal government's strategy since the mid-1960s has been to have a program called the Canada assistance plan. It allows the provinces to access money freely if they fulfil certain federal conditions. In the 1977 EPF program, we said to the provinces that they would have block funding for post-secondary education and health as long as they conformed to the Canada Health Act.

In several discussions going back to the early 1980s the provinces have been asking for greater flexibility in the Canada assistance plan to enable them to design more innovative social programs. At the same time there is the feeling at the national level by many national interest groups that as one moves about the country support for post-secondary education is varied. The types of services available under the Canada assistance plan are varied.

We have said to let us go back to the first principles. Let us move toward a way in which we can give the provinces a wider range of flexibility through social transfers. At the same time, as a national government we have to make sure we are true to the principles we want as a Liberal government. Through the budget consultations which normally take place when the budget laws are introduced, we will have an opportunity to discuss it. I am sure the ministers of finance and social policy as well as the prime minister will want to talk about it.

[Jane Stewart, Liberal, Brant, ON]

Madam Speaker, I would like to congratulate the parliamentary secretary on his speech and tell him how much I enjoyed working with him on the Standing Committee on Finance.

He made reference to the fact that the work of the committee had a big impact on the minister and the results of his budget. I agree that I could see a direct reflection in the budget of the recommendations made by the committee and the details provided to us by individual Canadians. The committee provided an important venue for Canadians to participate in the debate on the budget which is so important to them.

Does the parliamentary secretary expect that the Minister of Finance will continue this participative process with the Canadian public? Will the minister ask the committee yet again to be involved in the process as we prepare for our next budget?

[David Walker, Liberal, Winnipeg North Centre, MB]

Madam Speaker, it is going to be a much more elaborate process next year, in a good sense of the word elaborate. We all learned something last year. I think we would like to start a little earlier.

The consultations by the finance committee is a House order. We are mandated by the House to do these consultations. We will continue with them.

I can also point out that the government itself has changed the way that departments produce their budgets. Each committee is now going to be involved with the budget preparation. We are going to build upon last year's success. We are going to have a very strong process. The finance committee will be the centre of it, but unlike this year, we will not be the only participants. I welcome the work of other committees to make sure we improve the budget on an annual basis.

[Ghislain Lebel, Bloc, Chambly, QC]

Madam Speaker, I want to ask the parliamentary secretary if he shares my impression to the effect that there is very little in terms of job creation programs. The Minister of Finance is somewhat like a discouraged unemployed worker who sells his tool box because he feels he will never find another job.

I do not see any job creation initiatives in this budget. Rather, I am under the impression that the minister is selling his wood to pay for his stove. There is something wrong in all of this.

Can the parliamentary secretary tell us what miraculous solutions he sees to promote job creation?

[David Walker, Liberal, Winnipeg North Centre, MB]

Madam Speaker, last year we announced our infrastructure program. That program enabled us to create many jobs and implement many projects.

This budget will allow us to pursue our job creation efforts right across the country. I am convinced that our strategy will be successful.

[The Acting Speaker (Mrs. Maheu)]

I have the honour of welcoming the Leader of the Opposition among us, once again.

[Some hon. members]

Hear, hear.

[Lucien Bouchard, Bloc, Leader of the Opposition]

Madam Speaker, 16 months after the October 1993 election, the government just made a very sharp turn. Indeed, the government has now stopped claiming, as it did for most of 1994, that there was no real fiscal crisis in Ottawa and that it could just surf on the wave of economic recovery, a wave which largely came from south of the border.

When a country with a debt as huge as ours anticipates, as the federal government did in its February 1994 budget, a reduction of its deficit based on totally extravagant assumptions regarding interest rates, that does not reassure anyone, let alone creditors, whether in Canada or abroad. Because of the irresponsible action of the federal government, these creditors have become the true masters and judges of Canada's fiscal position. Since the Canadian government needs foreign lenders, the latter have had ample opportunity, in recent months, to signal the end of the party. A weak dollar and high interest rates are two phenomena that have become inseparable. At this very moment, real interest rates are among the highest we have ever known. The cause is as straightforward as it is shocking: by March 31, 1995, the federal debt will be $546 billion or 73.2 per cent of GDP. If we add to this what the provincial debt will be on the same date, $210 billion, the total equals 102 per cent of GDP.

This means that a country as rich as Canada has practically lost its monetary and budgetary autonomy. One third of federal revenues, $42 billion, will be spent this year on servicing the debt.

Perhaps I may digress at this point because there is a comment I would like to make. Two billion more or less may not be that important, but I was nevertheless surprised when in his speech on October 18, 1994 before the Standing Committee on Finance, the Minister of Finance evaluated debt charges for 1994-95 at $44.3 billion, and then reduced this to $42 billion in his budget yesterday, although interest rates had gone up considerably since October 1994, something no one could have foreseen. This is rather interesting, and I have a distinct impression that the Minister of Finance occasionally lets politics, with a small p, play a part in his financial forecast. Yesterday's budget is certainly no exception. So much for that.

Our creditors snapped their fingers and, lo and behold, the little red book drafted by the same Minister of Finance went up in smoke. Cuts in social programs, providing for a surplus in the UI account that will be allowed to rise above $5 billion, the savage downsizing of cash transfers to the provinces: none of this was on the red book's agenda.

On this side of the House, we talked about cutting the fat in the federal apparatus, a possible reduction in the defence budget, and getting rid of tax shelters and duplication of services by the federal government and the provinces. On the other side of the House, they just laughed and said somewhat condescendingly: Sure, we know the Bloc wants to dismantle the federal government. You want to cut $6 billion from the government's operating budget, plus 2 billion from the defence budget, while Canada spends less on defence than any other NATO country. Now be sensible! That is what they told us not so long ago.

Yesterday, the Minister of Finance told us we were right. In three years, non statutory spending by federal departments will be cut by $9.8 billion, in real dollars. Better late than never, although the many targets of the government's program review do not necessarily deserve the kind of treatment they get in the budget, a budget that takes a hard line on social programs and tries to manipulate the public.

Listening yesterday to the Minister of Finance I was reminded of a song by Dinah Washington at the end of the fifties. Some members may remember What a difference a day makes , a nice soft ballad. Yesterday's budget could have been subtitled: ``What a difference a year makes''.

Remember last year. Who was talking about the debt crisis, the fat in the federal government, the wasteful overlapping between federal and provincial governments, and so on? Was it the Liberals? Of course not. They were all or almost all singing together from their bible, the red book. The Prime Minister was saying: "What debt crisis? Canada is okay". A year later, sobered by the money markets which are now calling the shots-he who lends to the piper calls the tune-the same Liberals are cutting with a vengeance.

The objective of a 3 per cent deficit to GDP ratio, the alpha and the omega of budget discipline in the red book, has become a simple marker on the way to a balanced budget. No date has been set aside for this new objective, but one senses that the Minister of Finance would like to get there as soon as possible and, I would add, at almost any cost.

For example, he becomes lyrical on the possibility that the deficit could be below $19 billion in the 1996-97 fiscal year. I would like to sound a note of caution here for two different reasons.

The first one refers to that inscrutable thing we call the future. The future has a way of messing things up. The Minister of Finance knows this very well. Just last year his interest rate forecasts were solidly off base barely two months after the budget was brought down in the House. Who predicted the Mexican crisis which began last December 21? Nobody, publicly anyway. On December 20, if we believed the pundits, Mexico was doing fine.

I am told that economists like many other respected professionals tend to follow the herd. This explains, at least in part, why their forecasts are very often interchangeable and consistently miss the turning points. All recessions have been predicted after the fact. To be more precise, one can feel uncomfortable with the budget assumption about real GDP growth. Last year the GDP growth assumptions for 1994 and 1995 were 3 per cent and 3.8 per cent. The first one underestimated it by a wide margin for it finally was 4.3 per cent, thanks in part to the strength of the American economy.

This year the assumption for 1995 is the same as last year, 3.8 per cent. This sounds a little strange in view of the fact that interest rates are projected to be so much higher this year than was anticipated last year. Already there are signs that high interest rates are biting into consumer demand. We certainly cannot exclude the possibility of 2.5 per cent real growth this year. In such a case the Minister of Finance's plan will be set back.

But there is another reason for our caution. Real expenditure cuts are one thing and the program review is supposed to deliver them. However there are other cuts in the budget which rather fit in the smoke and mirrors category.

The budget stresses the importance of a second set of reductions involving cuts in transfers to the provinces. Transfer payments basically cover three different programs: the Canada Assistance Plan, Established Programs Financing, which includes health care and post-secondary education, and equalization. Their treatment is not necessarily the same. The federal government's calculation of these payments not only includes cash payments but also the revenue yielded by tax points transferred to the provinces under cost-sharing agreements. This makes the federal government look good. However, it has no control over what the provinces make of these tax points and can certainly not take them back: there was never any question of its doing so. What the federal government controls are cash transfers, and how they change is the true measure of federal fairness.

Here is where the federal government strikes a real blow. Convinced that, and I quote from the budget speech: "At present, transfers under the Canada assistance plan come with a lot of unnecessary strings attached, which limit the flexibility of the provinces to innovate", the federal government decided to combine them with the established programs financing into a single program, as of 1996-97, to be known as the Canada social transfer.

This program will continue to include, in federal accounting, both tax points and cash transfers. And, for the federal government, this is the beauty of the thing. For three reasons.

The first reason is that this arrangement means a significant reduction in cash transfers, which are the only real expenditure for the federal government, and it means the government can show financial markets a more impressive record in deficit terms, while presenting a different image to Canadian public opinion, and this is the second advantage, thanks to the tax point transfer being included in the calculation.

Also according to the budget speech, and I quote: "This means that the total of all major federal transfers to the provinces in 1996-97 will be 4.4 per cent lower than they are today. That compares favourably with the reduction in spending in our

own backyard-that is, everything except transfers to the provinces-which will be down 7.3 per cent by that same year".

The third advantage of launching the Canada social transfer lies in the date of ignition: not this year, but early in 1996-97, in other words, after the referendum. This point is revealing, unintentionally, of course, but revealing nonetheless. If this new program were so beneficial to the provinces, including Quebec, and if it really demonstrated the flexibility of Canadian federalism, should it not be operational by the start of the new fiscal year, that is by April 1? This way, Quebecers could examine the quality of the merchandise with their own eyes before making their historical choice in the referendum. In actual fact, there is no chance in the world this will happen. We will see why. All provinces are concerned.

All provinces are directly concerned about the impact of the new Canada social transfer. If one looks at the cash transfers that come with it on page 33 of the budget speech, one sees the unvarnished truth.

From 1994-95 to 1996-97 cash transfers from this program will fall from $17.3 billion to $12.9 billion, a $4.4 billion drop. One needs to take into account equalization grants, which increase from year to year, to obtain the global picture for transfer payments to provinces. When one does so there is still a drop of $3.6 billion in federal transfers to provinces over a two-year period. As a matter of fact this represents a real 14 per cent decline, not the theoretical 4.4 per cent the Minister of Finance would like us to believe, hence a more drastic decline than the one experienced by total federal program spending.

Who is going to be fooled by the pretence of such a program to define a more decentralized federal system when its sole motive is to cut federal spending? A last proof, if need be, that this is not a one-shot program but rather a constantly vanishing one. The global sum-fiscal and cash transfers-is available for the Canada transfer program in 1997-98 but not the cash transfer separately.

However, having both fiscal and cash transfers separately for each year from 1994-95 to 1996-97 makes it quite easy to produce a good estimate for the cash transfers part in 1997-98. It amounts to about $10.3 billion or $2.5 billion less than in 1996-97. Flexible federalism, maybe, but for whom?

This cut in the Canadian social transfer to the provinces represents more than 40 per cent of the reduction in federal program spending between 1994-95 and 1996-97. It allows the federal government to trumpet the achievement of a less than $25 billion deficit in that last year. It may or may not raise eyebrows in the money markets, but it is almost certain that many provinces will have to accept higher deficits in order to cope with the cold wind blowing from Ottawa.

For Quebec, there is more to come and there is worse still. Information on cash transfers both before and on implementation of the Canadian social transfer shows that Quebec will suffer a net loss of nearly $700 million in 1996-97 alone. For 1997-98, the loss will amount to nearly $2 billion. In view of this, the budget speech is rather comic if not somewhat ludicrous. I wondered how the finance minister could have kept from laughing when reading to this House the part of his speech praising the innovative approach the provinces could take from now on in managing their social programs.

His composure and self-control must have been seriously tested when he read the following passage, and I quote: "With the Canadian social transfer, provinces will now be able to design more innovative social programs-programs that respond to the needs of people today rather than to inflexible rules". And he continued, deadpan as ever, and I quote again: "However, flexibility does not mean a free-for-all". The federal government is creating a program which will take $2.5 billion from Quebec over three years, but wait, that is not all. There are still standards to be met. Big Brother is cutting and keeps on cutting, but is still issuing orders. Is this stupidity or sheer arrogance?

It takes a lot of nerve to speak to the provinces in such a tone, just before tying them up in a financial straitjacket. Good news, the minister tells them, I am cutting $7 billion but at the same time I am letting you use your imagination. The budget and the minister do not say so, but we know very well how provincial leaders will have to use their creativity. They will have to be creative in devising new cuts to services and racking their brains to prevent their deficits from ballooning out of control.

This will be a merciless process, with a domino effect causing one level of government to fall after another. But in the end, the taxpayer will bear the brunt of it all. For the unemployed, the poor, the sick, the minister's skilful manipulation of figures and evasion of responsibility will result in awfully concrete realities: a reduction in unemployment insurance benefits, the elimination of assistance programs, reduced health insurance coverage. That is without counting seniors, who will be informed of the results of the minister's review of their old age pensions next year, after the referendum. At the very least, seniors must be thinking that when a Minister of Finance reviews a social program, it is not to see whether he can increase funding.

Then, there is the more specific issue of fairness toward Quebec in the implementation of certain programs. I am thinking in particular about the farming sector. Quebec's dairy farmers have been hard hit by a 30 per cent cut in dairy subsidies. No compensation.

Farmers from the west are faced with the elimination of the Crow rate, a grain transportation subsidy. However, they are being very generously compensated by non-taxable cash payments. Double standard. Regrettably, there is another case. We will talk more about the other cases in the next few days. In the defence sector, for example, a recent study found that Quebec is getting $600 million less per year than the share of military contracts and spending it would get if its share were weighted according to its population.

Six hundred million dollars per year, and to top it off, Quebec does not have its quota of Canadian military bases. Already, it is getting short shrifted out of defence spending, should it not get its fair share of military bases? So what does the budget say? Another Quebec military base, Saint-Hubert, will be closed and staff at another, in Bagotville, will be cut. You may reply that there will also be cuts in the rest of Canada. No. Of course there will be cuts elsewhere, the scale is already off kilter. The latest decisions only tip the scale more in their favour. Even if we take transfer payments into account in comparing the current situation with the situation that will be created once the new transfer payment arrangements are implemented, we must draw the same conclusion.

In Quebec, federal transfers are going to shrink away: $7.4 billion today; in three years, $6 billion. Another paragraph from the budget seems to predict even darker hours: "So we are prepared to address those issues by funding CAP in a similar way as we fund the existing EPF transfers for health and post-secondary education". This statement is very ambiguous. Quebec receives approximately 35 per cent of CAP's funds and some 25 per cent of EPF transfers. But if demographic considerations take precedence over those of real need in calculating the Canada social transfer, the result will of course be an additional shortfall of several hundreds of millions of dollars for Quebec.

One paragraph in the budget plan suggests that such a reorientation is not beyond the realm of possibility. One of the justifications given for the new Canada social transfer is as follows, and I quote: "Federal expenditures will no longer be driven by provincial decisions on how, and to whom, to provide social assistance and social services". This looks very much like a pulling back from a more socially oriented approach.

And what better time to point out the very real asymmetry of Canadian federalism? If the federal government does not like the provinces forcing its hand, it could draw a line and withdraw beyond it. But for decades the provinces, particularly Quebec, have had to bow to the wishes of the federal government, with no power to keep it from interfering. It is probably in the field of health that this relative powerlessness of the provinces is the most in evidence. The budget states in no uncertain terms that the federal government will make increasingly smaller payments for health costs, while ordering the provinces, who already carry the bulk of the financial burden, to meet the standards set out in the Canada Health Act.

Less for health, less for social assistance, less for the unemployed. When we know that the elderly now account for 40 per cent of all health care needs, and that this proportion will continue to grow, we can only conclude that this budget marks a change of direction in social policy that could indeed be described as harsh and insensitive. Is Canada so poor, is social solidarity so fragile that the poorest and most helpless in our society must bear the brunt of the necessary fight against public waste?

However, this change in social policy will not take effect tomorrow but only a year from now. The government is trying not only to impress the financial community but also to influence the results of the referendum by postponing until after the Quebec referendum all projects it is about to cut and slash. When will it clear-cut transfer payments to the provinces? In one year. New UI restrictions? They will be discussed in the fall and start in July 1996. What about the debate on income security for seniors? In the fall, with major changes already proposed for implementation at the beginning of 1997, particularly for the old age security pension.

One does not need to be a rocket scientist to realize that the federal government is playing the waiting game. It would dearly love to see the referendum take place tomorrow. But how could anybody decide now between two fundamental options when the federal side does not want to clarify its position on all those dossiers that it is keeping in its bosom? Does it think Quebecers have forgotten about May 1980? The trap was sprung once. It will not happen a second time. I say to those in front of me: "Clear the air. Show us what you have up your sleeve. The people want to know what you are going to offer them".

One thing at least is clear. All the hoopla about the budget led some to believe it could rekindle the flame of a new federalism where the federal government would retire from provincial jurisdictions and send the appropriate fiscal resources to the provinces. For many people the deception must be all the more cruel. The idea of a dominant central government and of 10 "infeodated" provinces is as present as ever.

Canadian federalism encompasses financial and regulatory powers. For a long time, the federal government enjoyed both types of powers. Today, because of its meddling, it lacks financial power. That is why it holds on to regulatory powers in the name of a certain conception of the Canadian "nation" that the people of Quebec have always rejected. If the federal government manages to shift a significant part of its deficit to the provinces, it will clean up its finances, at others' expense, of course. It is already thinking about it, as the budget clearly

shows. Many observers feel that there is an automatic link between the federal debt and the distribution of powers. Things are not so simple. Reducing the size of government is one thing, but a genuine decentralization is something else. Clearly, the federal strategy is to do the former without a serious commitment to decentralize and therefore without a coherent vision of the future relationship between Quebec and the rest of Canada. That is the budget's main lesson. It is probably a history lesson but for reasons that are the opposite of those put forward by the author.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to President of the Treasury Board]

Madam Speaker, I am pleased to rise today to speak to the budget.

Our position is very clear. International markets have reacted favourably to this budget. Of course, the Reform Party feels that the cuts do not go deep enough. They wanted the government to slash more deeply. We remember the so-called budget they tabled a few days ago-I say so-called budget because it did not generate any positive comments. They tabled this document to convince Canadians that they were competent enough to bring down a budget. All this so-called budget did was to propose deeper cuts across the country.

And then this morning, the Bloc, the official opposition, said that we cut too much or not enough. I listened to their speeches with a great deal of attention and I am not sure that I know what they want. What do they want: more cuts, fewer cuts, different cuts? I do not know.

I have just heard a comment to the effect that the Bloc's suggestion that the size of government should be reduced was held holding to ridicule by the Liberals, and now we are told that we have finally realized that there was some fat to trim after all and made cuts. Is there not a glaring contradiction between these statements?

It seems to me that there is a glaring contradiction. If I am wrong, my hon. colleagues will no doubt ask questions and clarify their position. I would be only too happy. We find ourselves today stuck between the far right and the left-I would even say the far left at times. This is not a bad position at all.

What do the people of Manitoba have to say about this budget? I thought my hon. colleagues from both opposition parties might like to know. One paper ran the headline:"Grits Axe Spending". Another headline reads: "Western Diversification to Get New Look"; this is positive feedback. This one says: "Social Safety Net Rescued", a quote from the Minister of Human Resources Development.

And it goes on. "Tough Plan Boosts Buck, Raises Hopes". These words were not written by Liberals, I assure you. Also, "Federal Budget Turning the Corner". And this one, from Manitoba: "Budget Draws Applause". So, the response is generally positive in Manitoba. I can see my colleagues from the Bloc Quebecois are just thrilled by this positive response. I will list more positive responses in a moment.

I know how appreciative my colleagues from the Bloc Quebecois are when I mention them in my remarks, pointing out their glaring contradictions, demonstrating that the whole country, except for the official opposition party, can see some good in the budget just tabled. It is not just good, it is beyond being plain good.

As you know, this is a tough but fair budget. Not one region or group of individuals is affected unfairly. Many people are affected, but can you say they are treated unfairly? If so, please let me know.

The Minister of Finance made a special effort to distribute budget cuts equitably amongst the various regions. I must add that this budget takes necessary steps, and I stress the word necessary, to bring the deficit under control. These are the most severe budget measures taken by the federal government in fifty years. This will ensure that the deficit is going to be brought back to 3 per cent of the GDP by 1996-97.

Consequently, the budget exceeded the expectations of international traders. I should add that this is not the budget of a Conservative government. This budget does not make indiscriminate cuts: it redefines the role of the government, so that every department can concentrate on the priorities of Canadians. This is something important. We are going to do what we have to do.

I do hope that Bloc members will be pleased to see that, following the implementation of the measures announced in the budget, overlap and duplication will be reduced. Bloc members will surely be pleased to hear that, since they talk so much about that issue.

Moreover, unlike the previous Conservative budgets, we did not target the poor, absolutely not. The Liberal Party of Canada made a commitment regarding social programs.

Later this year, the Minister of Human Resources Development will table a bill on a significantly revamped UI program designed to better meet the needs of all Canadians.

Our government is also determined to provide fair, financial protection to our seniors, who have made such an important contribution to this country's development.

There is more. As I mentioned earlier, this is a tough budget but, according to most observers, it is also fair. To reach our

objective of deficit reduction, the following measures take effect immediately. That is very important.

First, the tax rate for large corporations goes up from 0.2 per cent to 0.225 per cent. As well, the surtax rate for companies increases from 3 to 4 per cent. Together, these two measures will generate additional revenues of $260 million annually. All large companies with capital assets exceeding $10 million will be affected by this tax rate increase.

The budget also provides for a temporary increase of the capital tax for banks and other large deposit institutions mentioned in Part VI of the Income Tax Act. That additional tax will bring in $100 million over a period of 20 months.

Another issue often discussed here in this House was that of family trusts. They were decried, but we are dealing with this problem. Family trusts will be eliminated as of January 1, 1999. The choice allowing one to postpone capital gains taxes according to the 21-year rule will be abolished.

The cancellation of that choice given the preferred beneficiaries will prevent people from using the trusts as an income splitting tool, a most profitable procedure.

My friends from the other side will no doubt be happy with these very progressive and, above all, fair measures. I can see it in their smiles. This is a measure they will applaud and praise.

There is no provision for income tax increases in this budget. I am surprised my colleagues have not commended on that. I am surprised they only pick out items that, according to them, will embarrass government.

I am also surprised that my colleagues from the other side have not mentioned that for each tax dollar, government programs will be reduced by $7. I am enormously surprised they have not mentioned one outstanding and very important point, which is fundamental to the process launched by the government, the fact that we ensure a simple and reasonable financing which will allow us to meet the needs of Canadians while cutting programs that are not absolutely essential.

I am also surprised they did not talk about RRSPs, an issue where we certainly found a reasonable solution. As you know, there were people on both sides: those who did not want any cuts and those who wanted RRSPs to be practically eliminated. What did the government do? It cut a little; they will be frozen and increased by 1,000 $ every year. Well-off people will be those mostly affected. I would have thought that my friends of the Bloc would have at least indicated that this was a step forward. Perhaps they will do so later on.

No taxation of dental and medical health programs. As you know, we all received letters from citizens throughout the country who did not want these programs to be taxed, and they were not. I would have thought that my colleagues across the way would have had something nice to say about that. Perhaps they forgot. It is quite likely that they will mention that very soon.

This morning I read various press clippings from everywhere in the country. I would like to quote some of them so that Canadians know about the feelings of people who are not in politics, who do not belong to any political party in the opposition, who are looking at it in a rational way in order to give Canadians some advice.

Here is from The Gazette : Belt-tightening Impresses Markets''. How interesting. AndOttawa aims to shrink deficit. Big spending cuts, modest tax hikes will be used to save $13.6 billion''.

There are others, and I know that my colleagues really appreciate the fact that I am sharing with them a rational point of view. The Globe and Mail says: Family Trust to Lose Deferment''. And it goes on, Mr. Speaker.Department Spending Reduced by 19 Per Cent'', Le Devoir , February 28. How interesting.

Then, a headline in The Globe and Mail says: ``Ottawa Axes Business Handouts. Subsidies Being Cut by Nearly $2.3 Billion over Three Years''.

Here, on the same page: "Women's Programs Dodge cuts". Surely, my colleagues are going to rise in favour of that measure. Let me go on. In today's edition of the Ottawa Citizen , one can read: ``Environment Groups Offer Rare Praise to Government''. How interesting.

Let me continue: "Average Consumer Escapes Brunt of Budget". That can be found in today's Gazette . The Toronto Star says: ``Liberals Cut Where Tories Didn't Dare''. How interesting, Mr. Speaker.

Let me continue further. Jeffrey Simpson writes, in The Globe and Mail : ``A Fine Start in Attempting to Escape the Deficit/Debt Trap''.

And on the other side of the page, still in the Gazette : Historic Budget Slays the Herd of Sacred Cows''. Then in today's edition of <em>La Presse</em> , one can read:L'économie peut de nouveau respirer''. That means that the economy can breathe again. ``Martin Budget Good First Step, but Canadians Still Face Tough Decisions''. It is true, indeed. But it is a step in the right direction.

Finally, and this is quite interesting, in a press release, chartered accountants say that they give 4 out of 5 to the federal budget. Four out of five!

This morning, opposition party members were giving us perhaps 1 or 2 out of 5. I am surprised that they did not find anything good about the budget. It is beyond me. I know that some people would like to find us to identify issues close to their hearts and would like to make recommendations to improve the situation with regard to those issues. I understand that and I respect that. That is the role of the opposition. However, I do not understand why they cannot find anything positive in the whole budget. It is beyond me.

One thing that also surprises me about the Bloc is that they think that there is a federalist hiding behind each reduction and each operation. They say that it must be a prereferendum strategy, that, yes, there is something there, that there has to be something there. They think that even if there seems to be nothing, there is surely something. They imagine that there is a federalist lurking behing each comma, each period, each word, each sentence.

The budget is reasonable, fair and tough and it is also sensitive to regions. When you take the position of the far right-

That is the Reform Party. I talk about the extreme right, the Reform Party. The Reform Party came forward with "a budget". Of course I did not see one positive comment from any responsible journalist across the country on it. The fact that it is going to sit here and criticize this budget perhaps lacks some substance in credibility.

Again I would invite its members if I am wrong to correct me. I would invite them as well to suggest how this document can be improved. That is the challenge I offer my colleagues from both opposition parties, the official opposition as well as the third party.

Do not just stand there and shoot at this budget. Stand up and make sound recommendations so that it can be improved for the benefit of this nation and for the benefit of all Canadians. That is the challenge.

I spent some time in opposition. I rather enjoyed it I must confess because one has a responsibility obviously to critique that which comes forward. That is fair. Surely the responsibility goes beyond simply taking particular issues where one feels that the government might be vulnerable or where one feels one might have a political advantage. I accept that. However, it goes beyond that and one has a responsibility to make concrete suggestions.

To my friends from both parties on the other side of this House, I would like to offer this challenge. We have a number of days to debate this budget and make progress. Criticize all you want in a constructive manner but please, make suggestions that will improve what has been proposed. Make suggestions which will meet the needs of Canadians everywhere and allow us to be much more sensitive than we might have been if we had not had a chance to share your ideas and your political wisdom had you chosen to use those qualities for something else than attacking this budget. I underline that it has been well accepted up until now throughout the country, but even more important, on international markets.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Mr. Speaker, I would like to say to the hon. member for Saint-Boniface that if we were smiling on this side, it is simply because we are always astonished to see how a government member can turn a deaf ear to politics with a small "p", as the Leader of the Opposition said earlier.

When the hon. member says that we have found no positive elements in the budget, it is not true. I wish he had understood or listened completely to the speech that the leader of the Official Opposition gave earlier. My friend would have seen that the hon. member for Lac-Saint-Jean referred to some positive things. However, this budget does not go far enough. It contains inequities, and I will mention only three to the hon. member for Saint-Boniface because my time is limited.

The member for St. Boniface says he saw nothing unequitable or unfair in this budget. First, does he think it is fair to cut $32 million from subsidies paid to Quebec farmers and dairy farmers and to give western farmers $2.9 billion to compensate them for cuts that are, relatively speaking, identical? Does he think such a cut is fair? He also mentioned family trusts. Is it fair to wait until 1999 to take action in this area?

By 1999, there will be no more money in family trusts. Those persons will have found other tax shelters to protect themselves. The budget should have addressed this issue immediately.

Finally, does the member think it is normal that banks, among others, be taxed a mere hundred million dollars when a single bank, the Royal Bank, made more than $1.2 billion in profits last year? Is it normal? Is it fair? I would like to hear what the member for St. Boniface has to say on those issues.

By the way, the member for St. Boniface quoted headlines from some newspapers in his riding. I suppose he should have, as a French speaking member, chosen at least a few headlines from French newspapers in his riding. I do not know. Maybe francophones are less well served in his province than in Quebec.

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

Mr. Speaker, I will start with the last comment. No French papers were published last night or this morning. That is why I did not quote any.

As for French speaking citizens of my province, yes, indeed there have been very positive improvements. I do believe that the constituents in my riding are well served by their federal member and their provincial member, as well as their municipal councillor, since we are all French speaking. We will see. Eventually we will have to go back before the electorate. I was elected in 1988, and again in 1993, and I might get elected again in 1997 or 1998. We shall see. I will let my constituents pass judgment, rather than my friend from the Bloc Quebecois.

I might add, however, that I thought it was a bit mean on his part to argue that I only quoted English newspapers from Manitoba. I repeat that none in French were published this morning.

When I went through the press clippings, I quoted some in French which praised the government for the budget. I took what I could find. I will find some more and I will pass them on to you, so you can read them and perhaps change your opinion.

[The Acting Speaker (Mr. Kilger)]

I hesitate to interrupt the hon. member for St. Boniface, but I want to make sure that all comments are made through the Chair, and that hon. members do not use "you", or "vous" in French. Hon. members must address the Chair.

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

As for the three specific questions on cuts in the west versus those in the east, you know, Mr. Speaker, the people from the west-Mr. Speaker, I thank you for having reminded me to address my comments to the Chair because it is my intention to do so.

That is the problem with Bloc members. They are like that sometimes. It is sad because there are people, men and women, who are very broad-minded when they want to- Here is what Westeners are saying: We had a 100 per cent cut, while in the east they suffered a cut of only 30 per cent.

This is how people think. One member said that they would receive compensation. Of course, but if their subsidies are totally eliminated, perhaps it is only right for them to be compensated.

Mr. Speaker, they do not want to consider this: compensation for having lost 100 per cent of their subsidies. But a 30 per cent reduction is not fair. Members should think about it.

As for family trusts, we are the first government to act on the issue.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Are you?

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

Patience. You see, Mr. Speaker, they want us to do everything today, even when they are not ready. In fact, this government will ensure that it is done, but without being unreasonable. When we decided to cut transfers, we did not say right now, as of midnight tonight. We are giving people time to adjust to the change. It is the sensible way to go about it. We did not smash everything at once with the government's big hammer. We are kind. We are giving them time to adjust.

As far as banks are concerned, $100 million is a lot more than what I have presently in my bank account. It might be a significant percentage of their revenues. Could it be higher? Of course, it could. What will the impact be? If we were to increase it a lot more, will it have a negative impact on job creation? The problem is that they refuse to look at all the other sides of the medal. They only look at one. They keep on referring to something people dislike, such as the banks' huge profits, and they try to exploit it. I do not find this very honest on their part.

[Ray Speaker, Reform, Lethbridge]

Mr. Speaker, the hon. member for St. Boniface read from a number of newspaper articles and quoted a variety of sources that commended somewhat the budget but not in a conclusive way. It was said that it is a good first step but Canada faces challenges.

One of the major challenges that Canada and individual citizens face is the fact that the government, in its first period of administration, by 1996-97 will have placed in the laps of Canadians another $100 billion in debt without any plan, without any indication that there is finality or an appointed time at which that debt will stop accumulating and growing. There is not one mention or indication at all to Canadians that it is going to stop.

Does the hon. member after all of his fine pronouncements have the answer to the question when the deficits will stop accumulating on the debt? Then Canadians will know the finite sum of our debt, at which point we will have to deal with it.