House of Commons Hansard #167 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

Business Of The House
Government Orders

5:45 p.m.

Some hon. members

Nay.

Business Of The House
Government Orders

5:45 p.m.

The Deputy Speaker

In my opinion the yeas have it. I declare the motion carried.

(Motion agreed to.)

The House resumed consideration of the motion that this House approves in general the budgetary policy of the government.

The Budget
Government Orders

March 15th, 1995 / 5:45 p.m.

Liberal

George Proud Hillsborough, PE

Mr. Speaker, I will be sharing my time with the hon. member for Gatineau-La Lièvre.

Contrary to what we hear flowing back and forth across the floor, it is an honour for me to participate in the budget debate on behalf of my constituents in the riding of Hillsborough. I congratulate the Minister of Finance on such a finely crafted budget. In my years in this House and in my years in the house of

another jurisdiction I can honestly say that this is one of the best budgets I have witnessed.

The budget is about commitments made and commitments kept. During the election we campaigned on a platform of creating opportunity. We asked Canadians to put their trust in us and we put our trust in them to get things moving in the right direction.

We promised to create jobs for Canadians and we have. As has been talked about many times in the last number of weeks, in the past year over 400,000 jobs were created across the country. We promised stable inflation and we have the lowest inflation in the industrialized world. Our exports are at an all time high and the level of business confidence in the Canadian economy is at its highest point since 1979.

The budget moved us further down the road to even more opportunity in the future. As the Minister of Finance has stated, the budget breaks the back of the deficit. The government will reach its deficit target of 3 per cent of GDP by the end of the next fiscal year. Once we have reached that point the government will move to reduce the deficit even further. We will accomplish our goals without punishing the vulnerable.

Some people out there would say and have said that it is just a Tory budget tied up in red ribbons. Nothing could be further from the truth. We have gone about the budgeting process reasonably. Instead of across the board cuts as was the case with the previous government, we have examined every program and every activity of the federal government.

Yes, we can do more. The Minister of Finance chose a scalpel over a meat cleaver in making the cuts. In departments such as in the Department of Transport where the need for their services have declined, the minister has made larger cuts. The commercialization of airports will create new opportunities in my area for businesses to export their goods and promote better tourism marketing.

In the Department of Veterans Affairs the minister made considerably smaller cuts. I know that the Secretary of State for Veterans was keen in protecting services for veterans across the country. As a result few jobs will be lost at departmental headquarters in Charlottetown. This is also something the people of the riding of Hillsborough really appreciate.

Seasonal workers will be happy to know that there will be no changes to the unemployment insurance system. There have been no changes to eligibility criteria or the length of time one can collect benefits. The Minister of Human Resources Development will continue to examine the operation of the program, to streamline the operations, and to find better ways to help recipients of unemployment insurance.

The budget was also a fine example of sharing the burden of deficit control. For the second year in a row the government has refused to increase personal income taxes.

Most Canadians have realized for quite some time that wealthy Canadians enjoy special treatment come tax time. On budget day the Minister of Finance moved a long way toward stopping special treatment by eliminating exemptions for family trusts.

A couple of years ago the former government extended a tax holiday called the family trust exemption. Previously some of the wealthiest families in the country could hide their money away from the tax person by saying it was for their children and grandchildren. Because these family trusts have been exempted for so long it is difficult to estimate how much money is involved. Estimates have ranged from hundreds of millions to a couple of billion dollars that the tax people cannot reach. This special privilege was unacceptable and I am glad to see it gone.

The Minister of Finance placed a special tax on banks that had record profits in the last year. As well the government will be leaning on banks to make sure more capital is available to small and medium size businesses. The government will hold banks accountable on their performance in helping the Canadian economy grow and provide more jobs.

In the budget there is an increase in the taxes on large corporations. This was done because we realized that ordinary taxpayers were already paying their fair share. The budget spreads the burden more evenly.

The government has taken the position that we cannot do it all. Nor should we. It is the job of government to ensure that there is a level playing field for all Canadians to prosper. It is not the duty of government to run businesses the private sector can run better. That is why we are selling, for instance, our remaining shares in Petro-Canada and selling Canadian National Railway. On the list being examined for sale is the Canada Communications Group that has come under fire from small businesses across the country.

In the future we will be looking not only at what government does but why government does it. If we cannot find a legitimate answer then we should stop it. This is about more than smaller government even though government will be smaller. It is also about smarter government.

We must remember the Liberals created Canada's social programs and safety net. While we will be funding those programs in different ways we will insist that certain national standards apply. All aspects of the Canada Health Act will continue to be enforced, especially universality and accessibility. Of that there can be no doubt in the minds of Canadians.

We are well on our way to both fiscal sanity and healthy government. The naysayers and the special interest groups will try to convince Canadians that we have cut too much. Other people will say that we have not cut enough and that we should sacrifice our social programs in the interest of deficit elimination. Neither opinion reflects the needs and the desires of Canadians. The budget is about fairness, balance and a sense of the future.

As I said earlier, there is more we can do. I have mentioned this at different meetings with the Minister of Finance. There are more ways to find waste and other excesses in government. Every stone must be turned to find waste. Public servants out there are willing to talk about it and to tell us but they must be protected.

As Liberals we will continue on our course of creating opportunity for Canadians.

The Budget
Government Orders

5:50 p.m.

Reform

Chuck Strahl Fraser Valley East, BC

Mr. Speaker, as I was listening to the member I could not help thinking the Liberal side of the House must have a special fund set aside for psychiatric help. I have never heard so much talk about how they proudly built the programs and now they are equally proud to dismantle them. I just do not know how they can say that.

I would like the member to address several dilemmas that must go through the Liberal mind. I would not want to call them broken promises. How does he reconcile that the budget broke the workforce adjustment directive when a couple of months before they promised they would not break it?

How can he justify that when the government came into power it said that it would not sign the GATT without a strengthened article 11(2)(c) and then it signed it anyway? The government was not going to sign the NAFTA but it signed it immediately coming into power. The government promised to eliminate the GST but that has not been possible. The government said that it would reform the pension plan of MPs but it just does not have the guts to do it.

Furthermore, things are coming down the road that Canadians know about. The Prime Minister muses that perhaps a 1 per cent or 2 per cent of GDP drop in health care funding is inevitable. That will amount to $10 billion or $15 billion. That is inevitable.

The member proudly said that there were no changes in UI. Yet the minister in charge of that program travelled the country for six months to try to find ways to change it. The member is proud to say that it has not changed. It has to change.

The last question I would like to ask the hon. member is: With respect to the pension plan of MPs, will he opt out or not?

The Budget
Government Orders

5:55 p.m.

Liberal

George Proud Hillsborough, PE

Mr. Speaker, to the last question first, my answer is definitely not. I will not opt out. I am not ashamed of the pension plan. We changed the pension plan as we said we would do. We even went further than that. I will defend our pension plan and salary as MPs anywhere in Canada. I am not afraid to do that.

As far as justifying the workforce adjustment directive, the government negotiated with the unions and 15 of the 16 unions agreed to it. It came to a point where it had to be done and we took the attitude that we would do it. We did it and we are going to look after it in the most humane way possible.

We built the social programs and we are not dismantling them. I have said it over and over again. The Prime Minister has said that the costs of health care can be cut. That is what I said in my speech. We have to do things smarter and we will do it. We built the social programs; we will maintain the social programs. The social programs will be as good in 10 years time as they were 10 years ago as long as we form the government.

I have no qualms about any of the questions the hon. member asked. We have lived up to our commitments. Commitments were made and commitments were kept and we will continue to do so.

I have no problem in defending unemployment insurance. Not one change has occurred to the unemployment insurance system as yet. That is what I said. Nothing has changed. Some changes will be made. The minister has travelled the country.

In my speech I was talking about seasonal workers. Seasonal workers are not the problem; it is seasonal work. When we reach the point where such people can work 12 months of the year we will not need unemployment insurance for them. Until that happens, with them in agriculture, fishery and tourism we need to have some kind of compensation for them. I will be the one to make sure, to the best of my ability, that it remains for them.

The Budget
Government Orders

5:55 p.m.

Liberal

Mark Assad Gatineau—La Lièvre, QC

Mr. Speaker, in tabling the budget, our Minister of Finance has certainly shown a great deal of courage; it is definitely a first step towards the sound management of public funds.

To have a good understanding of the current economic climate and take effective action, we must, first, identify the economic changes experienced in the last 20 years and, second, have a clear vision of the goals to be achieved and the concrete ways to achieve them.

We are, of course, facing major economic changes. They have brought hardships and restrictions to all our fellow citizens. Their impact on disadvantaged groups is even stronger. Salaries

have gone down. Jobs are getting scarcer and less stable. Access to social programs is increasingly restricted.

In the next few minutes, I will review the changes and propose goals and ways to reconcile economic and human considerations.

Successful reconciliation of these considerations depends on our ability to strike a healthy balance between competition and individual achievement, on the one hand, and sharing and co-operation, on the other hand.

In the last 20 years, our economy has been shaken by three major changes: the global economic slowdown which started in 1973; two major anti-inflationary recessions in 1981 and 1990; and, in the last decade, the economic system's gradual rejection of people with little education.

Before 1973, our average standard of living rose by 40 per cent every decade. All classes of society were reaping the fruits of this growth. Since then, the rate of economic development has barely exceeded 15 per cent per decade. Several groups, including less qualified workers, have even seen their standard of living drop in absolute terms. This long term economic slowdown is common to all industrialized countries.

In the wake of the great depression and the second world war, all countries enjoyed enormous catch-up growth potential based on delayed technological development, cheap natural resources and an agricultural workforce ready to move to the cities. It took us a quarter of a century to use up this potential. Since then, all countries from Finland to Canada and from Italy to Australia have been having a hard time. Nothing is easy any more.

We managed for a while to circumvent the new economic constraints. The declining birthrate, the generalization of female labour, the high prices obtained from the sale of our natural resources until 1981, the debt increase in the 1980s allowed us to constantly defer until later the painful adjustment in our material expectations. The strong decline in consumption during the current recession underlines our belated awareness that money no longer grows on trees. Members of the middle class have finally started to tighten their belts.

But people are very nervous. Economic stagnation has resulted in both an increase in the need for social protection and a narrowing of the tax base financing our social safety net. Governments have managed to partly resolve this contradiction by raising taxes, which fuels the anger of taxpayers, already aroused by the state of the economy. This situation threatens our income security system, which is already starting to erode. Sharing does not come as easily when there is no growth.

Most industrialized countries started off the 1980s with an inflation rate of 12 per cent and were blamed for it. At the instigation of central banks, governments then subjected their economies to two anti-inflationary recessions. In 1981, Canada suffered the most severe recession in the industrialized world and inflation was brought down from 12 per cent to five per cent. Later on, starting in 1988, the Government of Canada and the Bank of Canada undertook to finish the job and force the rate of inflation further down, from five to two per cent. This target was just met in 1992.

Once again, Canada stood out because, once again, it put itself through the worst recession in the industrialized world.

These two recessions have led to a massive underutilization of our human and material resources in the past few decades. The resulting loss of income for Quebec is already to the tune of $100 billion. Obviously, this loss is on top of the general economic slowdown I mentioned earlier.

The $100 billion swallowed up by the two recessions represents an astronomical and senseless waste. It is cruel, considering the hardship and countless psychological, family and social problems it caused. It is also fundamentally unfair. In addition, this loss of $100 billion so far is not distributed equally amongst all people. Small businesses and low income earners are being hit absolutely disproportionately. Yet, they are not responsible, in the first place for causing the inflation we are now trying to curb.

Nowhere is growing chronic unemployment more obvious than among workers of all ages who did not finish high school. For the past decade, people in this category have slowly been sinking deeper and deeper. They are offered less and less money for jobs that are fewer and fewer and increasingly unstable; the rate of unemployment is increasingly higher than average. They have started to leave the labour force massively, generally ending up on the CSST or welfare rolls.

One third of Quebecers between the ages of 20 and 64, three times as many as in Germany or Japan, do not have a high school diploma. Barely one third of them have jobs. They are in a desperate situation. Compared to this group, the Gaspesian Peninsula is a real employment paradise. School may get you nowhere, as the saying has it, but it sure seems that ignorance does not get you much further.

Workers with little education were affected by the long term economic slowdown, like everyone else, and by the 1981 and 1990 recessions, which have hit very hard, but they also seem to be gradually pushed aside.

We have in Canada great economists and great minds. In Quebec, we have an economist of nationwide and even worldwide reputation. I have had the pleasure of meeting him on a

number of occasions and hearing him testify here, before the finance committee. I am referring to Pierre Fortin, from the Université du Québec in Montreal.

Mr. Fortin has shown a great deal of common sense in his approach to the economic situation. He came up with a three-part social and economic program. That is, first, given the vulnerability of people who never graduated from high school on the job market, he said that we need to create jobs as quickly as possible mostly for their benefit, second, to protect what has already been acquired, and third, to undertake a second educational revolution.

I will now comment briefly on these points. It is very clear that large scale job creation will obviously reduce the amounts paid out in unemployment insurance benefits, social assistance and other benefits. It is also very clear that, by creating jobs, the federal government will generate more revenue for deficit reduction.

Mr. Fortin does not suggest that the government increase spending but rather that it exert pressure to maintain our interest rates under or around the five per cent mark or thereabouts, like our American neighbours.

If interest rates were at five per cent, many small and medium size businesses would have access to the funds needed to create enough jobs to put all of the unemployed back to work. I think that makes eminent sense.

Secondly, we clearly do not want to be irresponsible and to spark another increase in inflation. On the contrary, job creation and increased profits will hedge against the likelihood of inflation becoming a problem. The danger of inflation flaring up over the next three to four months is very minimal.

Thirdly, we must undertake a second educational revolution. Obviously, people between the ages of 20 and 64 who do not have a high school diploma need vocational training. We are not talking about university diplomas, we are talking about training spread over one or two years. That essentially is my conclusion.

I would like to say to my colleagues that there are some good ideas out there and that it is high time that we in the House of Commons take heed of them.

The Budget
Government Orders

6:10 p.m.

Bloc

Yvan Bernier Gaspé, QC

Mr. Speaker, I listened to the member for Gatineau-La Lièvre. He made a nice speech, but forgot to mention that the Liberals were in office for a long time and that the deficit started growing back then.

I am somewhat sceptical when I hear that restoring confidence in the economy will result in the money markets lowering interest rates which, in turn, will stimulate job creation. I am from the Gaspé Peninsula and I can tell you that fringe areas need catalysts. Unfortunately, that budget does not include any job creating initiatives. There is no catalyst to help people improve their lot.

The government's proposed approach, which is to let the private sector act freely, presupposes that it expects the private sector to create jobs for people with low levels of education. However, these jobs will not be well-paid. I would like to know how the regions will be mobilized. All the nice rhetoric heard in this House is fine, but the regions expect positive measures and guidelines. Instead of that, the government is cutting the financial support available through the Federal Office of Regional Development. Where is the support? Instead of providing support, the government is withdrawing it.

The Budget
Government Orders

6:10 p.m.

Liberal

Mark Assad Gatineau—La Lièvre, QC

Mr. Speaker, I will first answer the hon. member's second question. I said, as did Mr. Fortin to the Standing Committee on Finance, that we have to exert pressure to lower interest rates.

Increasing the deficit will not solve the problem: it will only postpone it and make it worse. We have to find a way to lower interest rates, so that small and medium size businesses can get the money they need to expand. Let us not forget that there is a production capacity in our country.

The hon. member mentioned that the deficit started under the Liberals. That is true. However, when the Liberals left in 1984, the deficit stood at $160 billion, whereas when they came back last year, it had grown to $460 billion. Between 1984 and 1994, the deficit grew by 250 per cent, in spite of unprecedented levels of revenues.

The Budget
Government Orders

6:10 p.m.

The Deputy Speaker

It being 6.15 p.m., pursuant to Standing Order 84(6), it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of Ways and Means Motion No. 20.

Is it the pleasure of the House to adopt the motion?

The Budget
Government Orders

6:10 p.m.

Some hon. members

Agreed.

The Budget
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6:10 p.m.

Some hon. members

No.

The Budget
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6:10 p.m.

The Deputy Speaker

All those in favour of the motion will please say yea.

The Budget
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6:10 p.m.

Some hon. members

Yea.

The Budget
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6:10 p.m.

The Deputy Speaker

All those opposed will please say nay.