House of Commons Hansard #164 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

Questions Passed As Orders For ReturnsRoutine Proceedings

1:05 p.m.

Some hon. members

Agreed.

Questions Passed As Orders For ReturnsRoutine Proceedings

1:05 p.m.

The Acting Speaker (Mr. Kilger)

I wish to inform the House that pursuant to Standing Order 33, because of the ministerial statement, Government Orders will be extended by 28 minutes.

The House resumed consideration of the motion that Bill C-73, an act to provide borrowing authority for the fiscal year beginning on April 1, 1995, be read the second time and referred to a committee.

Borrowing Authority Act, 1995-96Government Orders

1:05 p.m.

The Acting Speaker (Mr. Kilger)

I want to remind the House that pursuant to Standing Order 74 we are now at the next stage of debate in which members will be entitled to a 10-minute maximum intervention without question or comment.

Borrowing Authority Act, 1995-96Government Orders

1:05 p.m.

Reform

John Williams Reform St. Albert, AB

Mr. Speaker, Bill C-73 is the Borrowing Authority Act of 1995-96. Unfortunately it is becoming an annual event in the House of Commons that we debate the Borrowing Authority Act every year after the budget.

Every year since the early 1970s we have had to introduce a borrowing authority in order for the government to carry out the intentions and the policies introduced by the Minister of Finance in his budget.

During these last 30 years or more the borrowing authority has now increased our indebtedness up to $550-odd billion. We know unfortunately that we are going to be doing the same again next year as we increase the borrowing authority another $30-odd billion, $25 billion the subsequent year, and on and on.

When will it stop? That is what we want to know. We have been asking questions in the House of the Minister of Finance, of the Prime Minister, of any member of the government who is prepared to give us a simple, straightforward answer. When can we expect this budget to be balanced?

In due time, the Liberals say. We have been waiting for over 30 years. They created the problem in the 1970s which was carried on by the Tories in the 1980s. They are going to perpetuate it in the 1990s. How long before we stop having this annual rite of debating borrowing authority to dig ourselves further and further into the whole?

One day foreign lenders and the international investment community will not worry about our borrowing authority. They will say that we are not going to get it. They are the ones who are going to say it is all over. It is not going to be this House of Parliament that is going to say we can go out and borrow more money. The international lenders will say that is it, we are cut off. Then what?

The Reform Party has been trying to tell this House to balance the budget in three years. If foreign lenders tells us there is no borrowing authority we will be balancing this budget in three weeks. The Minister of Finance and the Prime Minister refuse to balance the budget or even tell us when we are going to stop this annual fiasco of more and more borrowing.

We had the Minister of Finance table a budget the other day. This was the toughest budget we have had since the second world war. This was really going to cut the fat and get down to the real nitty-gritty of managing the nation's finances.

The following day the President of the Treasury Board tabled the estimates and guess what, spending is going up again. Even though this was the toughest budget since the second world war spending is going up again. Let us stop fooling the Canadian people and let us get the job done. That is all we ask.

The polls are now showing that half of Canadians took one quick look at the budget and felt it was not tough enough and not quick enough to balance the budget. They said for goodness sake, can this government get its act together and get the job done.

All the Minister of Finance could do was increase taxes again; more taxes again on gasoline which affects every person in this country more or less, certainly almost every family. Remember that we have no inflation in this country any more. That means when the government increases taxes on gasoline it is going to affect every family because virtually every family has a car.

This means that these families are going to have to squeeze their budget because the government is going to take more from them. They will have to do with less and adjust their budgets downward in order for them to accommodate the fact that the government is reaching further into their pockets because this government cannot do its job of living with less, doing with less and spending less. It has said that it needs more money and Canadians are going to give it whether or not they like it. That is the fault of the way in which this country has been managed for the last 30 or more years. The government could also tap the taxpayer for more money. That is not going to work any more.

We could always tap the international investor for money but that is not going to work any more. The day is rapidly approaching when we are going to have to say that we have to live within our means. We must do it now or or we must do it as soon as we can to get the budget balanced and be able to return to some idea of prosperity in this country.

There was another budget introduced about 10 days ago called the taxpayer's budget. The Reform Party said the job can be done in three years. Not only can the job be done in three years, it can be done without increasing taxes period.

Let us compare the taxpayer's budget with the Liberal budget which spends more money liberally and leaves the taxpayer with less money. Remember I said the taxpayers were going to have less money. There is no inflation in this country. The taxpayer is now going to have less money because the government wants more. It will squeeze $9.9 billion out of the taxpayers this coming year. Next year it will be $1.3 billion. The subsequent year it will be $1.4 billion. These are the figures of the Minister of Finance, by the way.

That will carry on ad infinitum until the date we can turn things around and say: "Here is a tax decrease". The extra $1.4 billion a year will carry on every year. That should be compared to our taxpayers' budget which said the job could be done and there would be no more taxes.

What about the deficit? According to the figures of the Minister of Finance, in the year 1995-96 the deficit will be $32.7 billion. The Liberal government has been around for 18 months. The deficit was $40-odd billion when it arrived. After this draconian or toughest budget since the second world war-and this is the minister's second budget-he will only get it down to $32.7 billion.

The following year it should be $24.3 billion and maybe $20 billion after that. Who knows after that as the country goes into an economic decline, with UI and other costs like welfare going up and tax revenues going down? They know that will happen. My goodness, are there no business people over there? Tax revenues will go down, expenditures will go up and we will have lost control of the budget again.

What about the taxpayers' budget? The figure in 1996-97 would be $23 billion, not the $32.7 billion of the Liberal government. In the subsequent year we would be down to $11 billion, while they would still be up at $24.3 billion. And, hallelujah, in the following year at the end of 1997-98 we would be down to zero, a balanced budget, and the Liberals would still be around $20 billion.

If they are still over there in that year, we will still be over here talking about another borrowing authority. However if we are over there and they are over here they will not have to worry about borrowing authority speeches after all. We will not need them.

What will the Liberal budget do for job creation? We already know that it is not too rosy in the public sector. There will be 45,000 less jobs. In the private sector there is more debt and less jobs. That is fairly simple. We know that already. Whereas in our budget we acknowledge there will be a negative impact on the public sector because we will have to do what those folks are doing because we will have to fix the problems you created.

Borrowing Authority Act, 1995-96Government Orders

1:15 p.m.

The Acting Speaker (Mr. Kilger)

I would ask the hon. member to direct his comments to the Chair. I feel left out again.

Borrowing Authority Act, 1995-96Government Orders

1:15 p.m.

Reform

John Williams Reform St. Albert, AB

Mr. Speaker, I would not want you to be left out. I apologize. If the Liberal government remains over there it will have its work cut out. Jobs will be denied because of the fact that debt will still be mounting.

On it goes. We produced a 58-page document, almost as big as the one the Liberals produced with all the masses of the public service, statistics and budget analysis right across the country as they spent millions of dollars. What did it all matter? We now find out that the big consultation before the budget was at the Liberal caucus just before the budget was brought down. Perhaps that was the big consultation that influenced the Minister of Finance. All this consultation across the country was for show.

A borrowing authority as an annual event has to stop. That is what we are saying. We cannot afford any more. Therefore let us make a commitment or let us make a real resolution in the House that we may have this one and perhaps two more debates on borrowing authority and no more.

Borrowing Authority Act, 1995-96Government Orders

1:15 p.m.

Liberal

Andy Mitchell Liberal Parry Sound—Muskoka, ON

Mr. Speaker, I appreciate having the opportunity to talk about the budget. I would like to start by congratulating the Minister of Finance.

The Minister of Finance has put forward a responsible, well developed and, something members opposite have a hard time with, fair budget.

It is a fair budget, a responsible budget and a good budget because the government recognizes that it has a dual responsibility when dealing with Canadian affairs. It recognizes that it has a fiscal responsibility. That is why the budget is prudent. It recognizes that we operate in a businesslike way but recognizes that we are not a business. It recognizes that we need to get full value for each of the dollars we spend.

In addition, the government recognizes that it has a social responsibility and that certain things are done in government not just to earn a profit but because they are the right things to do. We do them because we recognize as a government that we have responsibilities and obligations to individual Canadians. We intend as a government to adhere both to our fiscal responsibility and to our social responsibility.

I do not think there is any question in terms of fiscal matters that our responsibility has been carried out and carried out well. For the first time in almost a generation a Minister of Finance established a deficit target last year. Not only did he hit that target. He did far better than what he said he would be able to do.

Second, the minister set a medium term objective of 3 per cent of GDP in the next two years. He set out a strategy that will see us do that. It is a clear and concise strategy. It is an achievable plan that will see our deficit reduced to 3 per cent of GDP.

Despite what members opposite might say, this is not a smoke and mirrors budget. These are real cuts. This is not what happened in the past where the talk of reduction was simply that we would spend a little less than the increase we had planned. These are real cuts in actual spending and they are being done

with no personal income tax increases. They are real reductions, despite what the member opposite said.

In the first year we will cut expenditures by $3.9 billion. In the following year, 1996-97, it will be $5.9 billion. In the third year of the plan it will be $7.2 billion. That is a decline in a three-year period of almost 19 per cent. It is the largest decrease in government since we demobilized after the second world war.

The minister in establishing the budget did two very important and prudent things. First, his estimations in terms of growth and interest rates were very prudent. In terms of growth he projected a smaller amount than what the average private sector suggested. In terms of interest rates, both short and long term, he set his projections higher than what the private sector was suggesting. He built in a cushion to ensure that the budget is fiscally responsible.

Second, he set up contingencies in the next two years: a contingency of $2.5 billion in the first year and a contingency of $3 billion in the second year. He has made what I believe is an important commitment, that if he does not need the contingencies to achieve his deficit reduction targets the moneys will be used to further reduce the debt.

The minister has gone about setting a budget like we do when we set our household budgets or our small business budgets. He has taken what was in front of him, set out a reasonable plan over a reasonable period of time, built in contingencies and come up with a strong, workable plan.

In addition to the fiscal responsibility the minister has recognized the social responsibility. Although we are to cut some funding from social programs, it is important to remember than when the budget is fully implemented we will be spending as a government more than $50 billion on the social safety net of the country, more than $50 billion to protect the men, women and children of Canada. That is an important principle which the minister understands. It is an important Liberal principle and I am proud to sit with a government that recognizes it.

It is a budget that is fair and equitable because it asks all segments of Canadian society to participate in the exercise. It does not ask one part of Canadian society to carry an unfair burden. It is not suggesting that some segments should not have to participate at all. That is why the budget covers a wide range of areas.

Large corporations have been asked to participate by providing some increased revenue. They have been asked to participate by a decrease in subsidies going to businesses.

The federal government is putting its own house in order first. It is going to cut its expenditures by 19 per cent. That is the largest part of the cut.

Individuals have been asked to participate as well, as they should, not through increased income tax, not through taxing RRSPs, not through taxing dental and health benefits, but through a modest tax on gasoline.

He asked the provinces to participate as well. He asked them for a 4.4 per cent participation which is only half as much as what the federal government is doing itself. I think that is important. It is absolutely ludicrous when provincial premiers suggest that we as a government should totally exempt them from participating in the deficit reduction exercise.

Finally, as members of the finance committee which did a prebudget exercise unlike what the member opposite suggested, we adhered to the three principles that came out of the committee meetings. The first was that expenditures should be the largest portion of the action, not taxes. We did that with a 7:1 ratio. Second, we had to get our own house in order first. We did that with a $29 billion three-year cut in our own expenditures or a cut of 19 per cent. The third was that we would be fair and equitable. We did that by having all segments of Canadian society participate.

In conclusion, let me say unequivocally that I support the budget. I support the Minister of Finance. I support the government. We have achieved the dual objectives of fiscal responsibility and social responsibility. I am proud of what the minister has accomplished.

Borrowing Authority Act, 1995-96Government Orders

1:25 p.m.

Bloc

Pauline Picard Bloc Drummond, QC

Mr. Speaker, I thank you for this opportunity to comment on the budget tabled by the Minister of Finance last Monday. Beyond the rhetoric and eloquent speeches, a cold hard look at this budget uncovers the extent and consequences of the federal system's inability to reform and to respond adequately to the aspirations of Quebecers and of Canadians.

Author Jean-François Lisée recently published two works whose titles are evocative of the con job the government has just pulled, the havoc it has wrought, and they are in the back of my mind as I analyse the unseen side of the finance minister's budget, the hidden aspects of its condescending rhetoric which does not tell us the truth about what is really at stake.

First of all, this budget misleads Canadians when it purports to be hard on everyone. This is not the case. It attacks the neediest members of our society, who will bear the brunt of the major cuts, and leaves undisturbed the large corporations and banks. Large corporations will still be able to escape the tax man, and banks will be taxed very minimally, compared to their astronomical profits.

Second, this budget misleads Quebec and the provinces, when it claims to be courageously attacking the federal deficit, when in fact it is offloading the greater part of that deficit onto the backs of the provinces. Seven billion dollars in expenses have been transferred in this manner, but no power went with it.

Third, this budget is destructive of social programs, and in particular health programs. The official speech conceals the truth of the matter, when it implies that the principles underlying the Canada Health Act are not affected and remain unchanged. Some treat when the federal government orders the meal for Quebec and the provinces and leaves them to pay the tab.

Fourth, and this is the most disturbing, this budget flies in the face of the government's claim to be embracing flexible federalism, the latest version of its favourite theme. There is no flexibility in this budget, other than that demonstrated by the Minister of Finance when he sidesteps his responsibilities and dumps them onto the provinces. Everything else remains unchanged. National standards, spending authority, overlapping of departments in areas of provincial jurisdiction.

With this new budget, the government is once again waging an all out war on the least fortunate members of society. For the second year in a row, the unemployed and the small wage earners are bearing the brunt of the cuts, while major corporations and banking institutions go nearly unscathed.

The finance minister announced new cuts to the unemployment insurance program, while he will only temporarily increase capital tax for major banks. He will beg banking institutions for a paltry $100 million, while, in 1995, the Royal Bank alone recorded profits of around $1.2 billion.

Moreover, this government refused to listen to all those, including the Bloc and the Conseil du patronat du Québec, who were asking for the elimination of all business subsidies. The finance minister chose instead to cut $300 million from social housing instead of using the $1.5 billion still earmarked for business subsidies.

Is this the federal approach?

Major corporations and banks can rest easy. The finance minister clearly indicated in his budget that, once again, the unemployed and the poor will be stuck with paying the bill for the inefficiencies of this unworkable federalism; at the same time, he maintains, until the end of the century, the privileges enjoyed only by the rich through family trusts.

The budget is very clear: within the next two years, the federal government will deprive the provinces of 7 billion dollars worth of transfer payments for health care, post-secondary education and the Canada Assistance Plan for which provinces will have to pay out of their own pocket. This is what we call offloading your deficit onto the provinces. Indeed, the federal government should put its financial house in order, but not at the provinces' expense.

Quebec is being loaded down with a big chunk of Canada's deficit, while, for its part, the federal government keeps interfering in Quebec's jurisdictions. Quebecers will keep on paying the cost of all the duplication inherent to the federal system. We will still have two health departments, two human resources development departments, and two environment departments, to name only a few.

This is the new Canada promised by this bad budget. This so-called decentralizing budget is, in fact, nothing but an empty shell, since the federal government will continue to intervene in areas of jurisdiction belonging to the provinces.

The irony in all this masquerade is that, while cutting by 27.1 per cent the transfers to Quebec, the federal government continues to impose to the provinces the same national standards, in particular those coming under the Canada Health Act.

In 1979, when that bill was proclaimed, the federal government was paying 45 per cent of health and post-secondary education costs. Since transfer payments where frozen in 1992, the federal share has been reduced to 29 per cent. With the new measures contained in this budget, the share of the federal government will be down to a new record low of 15 per cent.

How can the minister have the nerve to want to impose national standards when the federal share of health care has dropped 35 per cent since 1979, despite a substantial increase in health care costs, and will decrease again more than 55 per cent with this new budget?

It seems to me that the federal government will have no choice but to leave to the provinces complete management of the health care system.

I said earlier that this budget will mean the floundering of our social progams as we know them today. We all know that Quebec and the provinces are faced with very steep increases in the costs of health care. This is mainly due to the following factors: aging of our population, new and more expensive medical technologies and a substantial increase in the cost of drugs.

Just like previous budgets when the government froze all transfer payments, in this budget, the government announces massive cuts to transfers to Quebec and the other provinces of funds earmarked for health.

It does not matter if these transfers are combined with others to create one single envelope, the result will be the same: there will be less money for health care and the government will be jeopardizing the fundamental principles of our health care system.

The finance minister should have been honest and open with the Quebec and the Canadian people. He should tell them that these cuts to the provinces mean the end of our health care system as we know it now, because that is the real issue here.

Look, for example, at the recent statements made by the prime minister and the Minister of Intergovernmental Affairs, who contradicted the Minister of Finance who said, and I quote: "The conditions of the Canada Health Act will be maintained. For our government, those are fundamental."

How can the Minister of Finance still imagine and argue that Quebec and the other provinces will be able to continue to deliver the same quality of health care services to the people? How can Quebec and the other provinces implement the five principles of the Canada Health Act imposed by Ottawa when the Minister of Finance passes on to them billions of dollars of deficit by means of cuts to the social programs?

The Minister of Finance should have shown courage and tell upfront to his fellow Canadians: "Unfortunately, because of the errors we have made, mainly in the Chrétien and Lalonde budgets, we can no longer afford our health care system as we know it now".

Instead of assuming his responsibilities, the finance minister is trying to get out from under them. The government shuns its responsibilities when it passes its deficit on to Quebec and the other provinces. This government is misleading the Canadian people by not telling them that the health care program is doomed because of this budget.

Let me conclude by saying that this budget is misleading, since it does not mention the cuts that are still to come. It widens the gap between the rich and the poor in our society and puts an end to a good number of features of our social programs.

Canadians must know that. Quebecers in particular must be aware of it before they make a final judgment on the federal regime, which obviously fails to solve its own problems and, even more, to renew itself according to the expectations of Quebecers.

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

Prince Edward—Hastings Ontario

Liberal

Lyle Vanclief LiberalParliamentary Secretary to Minister of Agriculture and Agri-food

Mr. Speaker, it is certainly a pleasure to comment for a few minutes this afternoon on the budget that was presented this week.

I want to start by passing on the comments that I made to members of the press in my riding when I spoke to them on budget night. When asked what my reaction was I said it was one of excitement because this is not the first budget that I have seen. I certainly have not been present for the considerable number that some members in the House have, but this is the seventh one.

This budget fulfils the expectations and hopes for the majority of Canadians. I have been telling my constituents for the last number of weeks and months as they offered suggestions to the government that our challenge was to meet the requirements out there with fair and equal treatment for everyone along with being effective. We met those criteria.

We know that two situations in Canada today are clouding the issue. One is the uncertainty of the future of the province of Quebec. I am pleased to say that the majority of the people in Prince Edward-Hastings say: "My Canada includes Quebec".

Fortunately for all of us, more and more Quebecers are realizing that every day and they have every reason to. More and more Quebecers are realizing that a strong central government is what is good for this country and what is good for everybody. All of us will be better off as Canadians and as human beings if we are part of the family we call Canada.

The finance minister pointed to the second cloud which is the debt and the deficit. I do not have to remind anyone of the size of that: over $500 billion in debt, a $42 billion deficit a year ago, some $80,000 a minute to cover the interest on it, and I could go on.

I need to say no more in emphasizing the fact that the government has a tremendous challenge. Our country has a tremendous challenge. This challenge can only be successfully met with competence, compassion, reform and hope. We made a great step toward that on Monday night with the budget.

We have been honest with Canadians by saying that we too know there is a lot more yet to do. What we did on Monday night was done by pushing the needed measures as close to the edge as possible and doing it without playing havoc with the economy which is growing at a faster rate than just about any other country in the world. Certainly it is the fastest of any of the G-7 countries. Things are on the move. Perhaps they are not moving as fast as we would like but they are certainly on the move and they are going in the right direction.

We knew we were being watched. We were being watched by the international community, by the money markets, the domestic financial institutions, the domestic money markets, the business community. We were being watched by everyone, including all Canadians.

We did what was needed but we did not enjoy it. I can say we did not want to do it because it is not nice to say that we are going to reduce employment, that we are going to have to make some changes. When I say we did not want to do it, it was not because it did not need to be done. It did need to be done. As the Prime Minister has said so clearly and so often, we did it because it was necessary.

It reminds me of some advice I gave to the finance minister leading up to the budget and the slogan used by the prominent company, Nike: Just do it. And we did it. We did it by making $7 worth of cuts for every $1 increase in revenue. We did it after

having listened to Canadians in the greatest consultation process that has ever taken place leading up to a budget.

We did it without increasing income tax. We did it without taxing dental and employer provided medical plans. We did it without making many changes that would affect to any great extent registered retirement savings plan contributions.

We did it without taxing lotteries. Many people thought we would. A number of people said not to tax lottery winnings. I told them that if they were to win a million dollars and had to pay tax on it but did not want to, I knew some people who would take their ticket for them.

We did it without changing the capital gains tax for small business and farmers. In so doing we again recognized the importance of small business and farmers in the Canadian economy.

Yes, we did it on the revenue side by increasing the tax on gasoline 1.5 cents a litre. I think that is fair and equitable from coast to coast. We also did it by cutting the size of government. Yes, I recognize that people in Prince Edward-Hastings riding in the civil service will have to contribute and will be contributing.

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

The Acting Speaker (Mr. Kilger)

Order. It being 1.43 p.m., pursuant to Standing Order 73, it is my duty to interrupt the proceedings and to put forthwith every question necessary to dispose of the bill now before the House.

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

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

Some hon. members

Agreed.

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

Some hon. members

No.

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

The Acting Speaker (Mr. Kilger)

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

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

Some hon. members

Yea.

Borrowing Authority Act, 1995-96Government Orders

1:35 p.m.

Some hon. members

On division.

(Motion agreed to, bill read the second time and referred to a committee.)

Borrowing Authority Act, 1995-96Government Orders

1:45 p.m.

Liberal

Don Boudria Liberal Glengarry—Prescott—Russell, ON

Mr. Speaker, because of the ministerial statement we should be starting private members' hour in 15 minutes. However, if members are agreeable and with unanimous consent perhaps we could start private members' hour immediately.

Borrowing Authority Act, 1995-96Government Orders

1:45 p.m.

The Acting Speaker (Mr. Kilger)

The Chair might be of some help if the chief government whip would approach the Chair for a moment.

Borrowing Authority Act, 1995-96Government Orders

1:45 p.m.

Liberal

Don Boudria Liberal Glengarry—Prescott—Russell, ON

Mr. Speaker, I rise on a point of order. Pursuant to what we discussed briefly earlier, if you were now to seek unanimous consent you would find that instead of suspending the House for 15 minutes, which is what we would normally do at this time, we could perhaps start immediately with private members' hour, as no other bill is before the House.

Borrowing Authority Act, 1995-96Government Orders

1:45 p.m.

The Acting Speaker (Mr. Kilger)

The House has heard the suggestion of the chief government whip. Is there unanimous consent?

Borrowing Authority Act, 1995-96Government Orders

1:45 p.m.

Some hon. members

Agreed.

Borrowing Authority Act, 1995-96Government Orders

1:45 p.m.

The Acting Speaker (Mr. Kilger)

It being 1.50 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Income Tax ActPrivate Members' Business

1:45 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

moved that Bill C-247, an act to amend the Income Tax Act (child care expenses), be read the second time and referred to a committee.

Mr. Speaker, I rise today to present my private member's bill C-247, an act to amend the Income Tax Act on child care Expenses.

This bill would give all parents a tax deduction of $5,000 or $3,000 per child to assist them with the increasing costs of raising their children while at the same time eliminate the current tax discrimination against stay at home parents and those who do not use day care. All parents would have the same deduction available to them regardless of their incomes, status, marital status, labour force, or chosen method of child care.

I would like to read an excerpt from a discussion paper that was sent to me, not by a special interest group but by Cheryl Stewart and Sandra Evans of Ontario. It reads:

We are Canadian mothers who work at home full time nurturing our children.

We both had successful careers in the paid workforce prior to choosing to stay home and raise our children.

We are concerned about the direction that this process is taking toward institutionalized child care and how it is virtually ignoring other forms of care-particularly those who choose to care for their own children.

According to Statistics Canada, 68.5 per cent of women in two-parent families with children under three, and 62 per cent with children between the ages of three and five, remain at home on a full time basis or work part time. When all women in two-parent families with children under 16 years of age are taken into consideration, 57.6 per cent have decided to either remain at home full time or work part time.

These figures show us there is a large percentage of women who have made their choice to stay at home with their children. Despite this fact, they are not entitled to the same tax treatment as those who use day care.

As a direct result, our courts are filled with cases of individuals and families alike who feel that the Canadian income tax system discriminates against them. Calgarians, Jim and Laurie Boland, for example, were told in Federal Court that a parent that chooses to be at home with a child is not entitled to the same privileges as those who pay for child care.

The judge ruled that the Income Tax Act admittedly denies the Bolands equal benefit under the law but because stay at home parents are not "a discrete and insular minority" they are not protected by the charter of rights and freedoms.

This is just one example of people fighting a system that does not reflect the realities of society. Currently provisions in the Income Tax Act make the child care expense deduction only to families who pay institutions to look after their children. The deduction can only be claimed by the lower income spouse of a married couple, which makes it useless when one parent stays home to raise the children.

In other words, if you put your child in receipted day care, the government will reward you, but if you opt for a different arrangement like most Canadians do, you are on your own. It is just a matter of time before the courts overrule this decision. Maybe it is time for the legislatures in Canada to set the agenda as opposed to responding to court decisions.

You only have to look at how the Thibaudeau decision on child support payments sent the Minister of Justice scrambling. The fact is that this legal discrimination must and should stop. As the dynamics of the family continue to change, parents should be free to choose the method of child care that best suits their situation, as opposed to having government reward one choice over another. It is the choice that I am trying to emphasize today. Flexibility and freedom of choice should be the key elements of our approach to child care.

It is obvious that people cannot afford non-subsidized day care and have limited choices other than to stand in line and wait for a spot in a subsidized program. Why not give them the financial means and the options to choose other forms of child care? Provide all families with the $5,000 tax deduction, leave the money in their hands and let them choose whether to stay at home; unregulated day care, nannies, relatives or friends are the best options for them.

Interest groups all talk about the need for more flexible child care. Here we have true flexibility. Leave more money at the source and stop financially encouraging families to choose outside receipted child care.

Let us look at this from a different perspective, a different angle. Currently there are 360,000 child care spaces in Canada, 150,000 of which are subsidized for low income families. Is the answer more spaces as the Liberal government thinks, or is it more choices as I think?

The purpose of my bill is to amend the Income Tax Act to allow the deduction of a fixed amount of $5,000 or $3,000 as child care expenses, depending on the age of the child, regardless of the income of the parent and the amount of child care expenses actually incurred. Quite simply, the bill provides for a straightforward income tax deduction per child, up to age 14, to any taxpaying parent regardless of the method of child care chosen.

Therefore, Bill C-247 is based on three fundamental principles: funding the family, not the institution; giving freedom of choice to parents for their preferred method of child care; addressing the shortcomings of our current system and the subsequent increases in the financial burden on Canadian families.

The fact is that Canadian families have been taxed to the hilt. With Bill C-247 parents would be free to choose how to best spend their money. If they choose to send the kids to day care, so be it. If they choose to have one parent stay at home to raise the children, let us give them the freedom to make that decision. My main concern is to treat everyone equally. Leave money in the hands of the people who earn it and need it, and let them make their own choices on how to run their lives.

The vast majority of federal funding for children's programs in Canada is provided in the following ways. There are actually six different mechanisms by which people get assistance.

The child tax benefit went into effect in January 1993, replacing the former family allowance program as well as the refundable and non-refundable child tax credit. This program delivered benefits of $5.2 billion between July 1993 and June 1994.

The Canada assistance plan, which comes under the human resources department, shares in the cost with the provinces and territories of providing social assistance and welfare services. This program delivered benefits totalling $2.8 billion in the year 1993-94.

The third mechanism is the child care expense deduction. It is a tax measure intended to assist parents with the cost of receipted child care. This program cost Revenue Canada just over $330 million in fiscal 1993-94.

The fourth mechanism is the equivalent to married tax credit, which is a non-refundable tax credit available to single parents to help ease the burden of raising children alone. Only one child can be claimed. This program cost the federal government just over $565 million in fiscal 1993-94.

The fifth mechanism is the goods and services tax credit of $213 million per year.

In addition, the Liberal government in the red book promised to spend an additional $1.4 billion with the provinces to create 150,000 regulated, non-parental child care spaces over the next three years. This is apparently on hold with the latest budget. Hopefully that will be confirmed later on today.

Currently in Ontario there are about 7,000 vacant child care spaces in non-subsidized day care, while 25,000 people are on waiting lists for subsidized day care. If we put stay at home parents or any families that do not use outside receipted day care on the same financial footing as those who do, then some of those child care spaces would be freed up as parents choose different options and the list of 25,000 would shrink.

The government could then take part of the revenue that it was going to spend on more spaces and target it specifically at the poor families in the form of subsidies and benefits. That would be a true social program for the truly needy, a welfare assistance program that helps people who are in need, if it is a demonstrable need.

We are considering spending billions of dollars to apply a national program and national standards to families that are different in composition, situation, work and educational schedules, income, age, cultural and linguistic profiles, urban and rural settings, and the list goes on. The only common denominator I can see is that these people all have children.

Does it not therefore make sense to give families the economic tools to make their own decisions depending on their own specific needs? Let us consolidate the list of programs which I outlined and adopt Bill C-247 for all wage earners and introduce a social welfare package that, I submit, would be of significantly less cost.

If one totals the programs I have mentioned, it is over$8 billion. We can certainly have a two-level plan and make the cost for the social and welfare programs a lot less.

Using Revenue Canada statistics, using the government's main statistics bank, for taxes filed in 1993 it is estimated that Bill C-247 would cost the federal government $3.6 billion in tax revenue losses. One can call them tax expenditures.

The government may come up with another set of figures that says $6 billion but maybe the cost is $4 billion or $5 billion. What is a billion these days? People seem to throw it around like it does not matter.

The question that begs to be asked, however, is where that money comes from. Where does the money come from for this new program that everybody gets a deduction? The answer, 92 per cent of my bill is related to families with incomes above $30,000.

Simply put, one needs income to claim a tax deduction. Last year the $5.2 billion child tax benefit which was designed to help lower income families paid out $2.1 billion to families with incomes in excess of $30,000.

If members narrow the targeting of the child tax benefit to those making $30,000 and under, that would free up $2.1 billion to pay for Bill C-247. Do not forget I said there is a two-tier system, over $30,000 and under $30,000. We have just freed up $2.1 billion to help cover the costs of Bill C-247.

Where does the additional $1.5 billion come from? If I stick to my $3.6 billion in costs, which I could round up to $4 billion if the government would like me to, a portion can come from the $1.4 billion. We have found $2.1 billion now. A portion can come from the $1.4 billion that will be spent on subsidized day care, the future spending they will not have to spend. Leave the current day care facilities in place and reduce that list of 25,000 people who are waiting. They can go to the ones that are empty in the private day care centres or they might choose other forms of day care.

Eliminate the need for the equivalent to married tax credit, the $565 million, because quite simply with Bill C-247 single parents would be left with more of their own money and be able to claim more than one child as is currently the case.

They would not need this assistance because as the recipients of child care payments, they would have the offsetting deduction to eliminate the tax payment. There is another $560 million.

The final costs would be made up through the elimination of handling charges on the money that is redistributed by Ottawa through tax credits. The beauty of a deduction is that the money stays at the source, leaving more disposable income for people, lower processing fees for Ottawa and greater netbacks for everybody.

I believe that the power of the lobby for day care is overly evident in governmental policy to date. In his social reforms discussion paper, the Minister of Human Resources Development addressed day care spaces and flexible work arrangements for parents but said nothing about current taxation inequities, charter challenges or, more specifically, stay at home parenting.

One of the biggest single problems that this government has is that it always fails to identify the right problem, just like the deficit and the debt. It wants to lower the deficit. However that is just a contributing factor to the debt. It should be attacking the debt and how to solve that problem.

Such a move would have been too racy, the Minister of Human Resources Development said on a Calgary talk show, to consider a proposal of deductions for children. I fail to see what is so racy about a tax break for people who work just as hard in the home,

but it is obvious that someone with a different view has the minister's attention.

The red book deals once again with the day care spaces but not with other significant issues affecting families in the 1990s. For example, it specifically addressed a child care system that enables parents to participate fully in the economic life of the country. That is on page 35, for members opposite.

In other words, do not stay at home, work. What about people who choose to directly participate in the lives of their child? Is this not valuable? When the Tories were in power they proposed Bill C-144 which basically stated that parents of children six and under would be able to double the child care expense deduction of $2,000 in 1988.

For the benefit of larger families the plan would have removed the $8,000 family limit for child care expenditures.

Parents staying at home to care for their children or those without receipts for child care expenses would have been able to claim an additional $100 tax credit per child in 1988 and $200 in years after that; not significant amounts, but recognition of the problem was a step in the right direction.

Bill C-144 was hammered by the lobby groups for subsidizing for profit care and spending money on tax breaks as opposed to subsidized spaces. It died on the Order Paper, on October 1, 1988.

Day care advocates continue to claim that true equality for women cannot be achieved until a universal day care system is in place. I argue that a balance must be struck to encourage a system that enables parents to participate fully in the economic life of the country and/or if they so choose to participate fully in the raising of their children.

The key word and the key problem this bill is attempting to resolve is choice, eliminating the discrimination. The current legislative agenda does not recognize that people want the freedom and resources to choose what is best for their children. They are tired of governments and government bureaucracy trying to influence their actions through old-fashioned social engineering.

I recognize that child care comes under provincial jurisdiction. This is the federal contribution to that system. In conjunction with provinces they could discuss the various ways and means of developing the social safety net to target those who are truly in need.

Bill C-247 is of national interest as it addresses the highly contentious issues of national child care, funding for child care spaces, the discriminatory aspects of the Income Tax Act for individuals using non-receipted child care, the stay at parent. It encourages the focusing of social spending to the truly needy and provides families that are not in need of social programs with tax incentives to spend their money the way they see fit.

The time has come to bring tax laws up to speed with the modern era. We must modify present tax laws, not only to bring about greater fairness but to reflect the changes that have occurred in our society.

The Bolands from Calgary challenged the discriminatory nature of the Income Tax Act. The Schachtschneiders challenged the discriminatory nature of the Income Tax Act in its apparent favourable treatment of common law couples as opposed to married couples. Ms. Thibaudeau challenged the discriminatory nature of the Income Tax Act in its treatment of child care payment recipients.

Unless we act now the only way these issues will be truly addressed in the House is if the Supreme Court or the federal courts render a decision that contradicts or negates existing legislation. We have an opportunity as legislators to initiate discussion and action on this issue which, after all, is how things are supposed to work.

The Income Tax Act is by no means perfect. Bill C-247 would go a long way in addressing the reasons for the charter challenges. Contributions to the work force should once and for all be on the same level as contributions in the home. I recommend that we stop playing one off the other and start giving stay at home parents financial, political and social respect. They deserve the opportunity to work not only in the home but in the workplace as well. They deserve the opportunity to live the lifestyle they choose to live on their own without having to consider tax implications and the costs, the netbacks or the net benefits they are receiving.

As I mentioned, the five or six existing programs are just like the Income Tax Act. They make up part of the Income Tax Act, with 2,137 pages of convoluted, mixed up mishmash that is difficult to understand. If we took those six programs, combined and consolidated them to make two, one for over $30,000 and one for under $30,000, this government and parliamentarians would be proud to present a system of child care better than what we currently have.

Income Tax ActPrivate Members' Business

2:10 p.m.

Winnipeg North Centre Manitoba

Liberal

David Walker LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I thank the hon. member for Calgary Centre for the opportunity to present the views of the government on this issue. I appreciate the time being set aside during private members' hour to give him, his colleagues and other interested people the perspectives that I, as parliamentary secretary, can bring to bear on this issue.

Members will recall that the Reform Party's alternative budget presented last week called for massive spending reductions, including $15 billion on social programs.

It is surprising, therefore, that Bill C-247, tabled by the Reform Party member for Calgary Centre, proposes action that would increase federal and provincial tax revenue costs by a whopping $6.5 billion annually. That is right, an extra $6.5 billion a year at a time when all Canadian governments are striving to reduce both their deficits, and Canadians' tax bills. Maybe the The Taxpayers' Budget should have been entitled Out of The Taxpayers' Pockets.

Bill C-247 is also surprising given that Reform's budget says that government must "build on the Canadian tradition of self-reliance-and make assistance available only to those who are genuinely incapable of providing for themselves". However, Bill C-247 does not limit assistance to those who need it. Rather, it would allow fixed child care expense deductions of $5,000 or $3,000 for all, regardless of the income of the parents or the amount of child care expenses, if any, actually incurred.

In effect, Bill C-247 would actually create a new child tax benefit. And sadly, because it would depend on a taxpayer's marginal tax rate, the benefits would actually be greater for those in high income brackets than for those in lower brackets.

Unlike the measures proposed in Bill C-247, the current child tax benefit targets substantial assistance to low and middle income families with children.

Delivered monthly and tax free, it provides a basic annual credit of $1,020 per child, plus $75 for the third and each additional child.

That assistance is reduced by 5 per cent-2.5 per cent for one-child families-of family net income over $25,921. Also included is a work income supplement of up to $500 per family with net family income under $25,921. This helps to meet the extra costs associated with participating in the work force.

A supplement is provided for parents who choose to remain in the home to raise their pre-school-aged children. This year, the supplement is $213 for each child 6 years old or younger. Assistance for families is also provided through the child care expense deduction.

It recognizes for tax purposes the child care expenses that taxpayers must incur in order to earn income, to attend a recognized educational institution full time or to take a vocational training course.

The deduction acknowledges that these taxpayers have less of a capacity to pay taxes than other taxpayers with an identical income, but who do not have child care expenses. As a result, up to a limit, income used to pay for child care expenses is not taxable.

The deduction is applied to earned income in order to ensure that tax assistance is provided for child care expenses incurred to earn that income.

This reflects the general view that parents not employed outside the home are expected, and indeed have a responsibility, to look after their children.

Bill C-247 would completely change the nature of the current deduction. It would also be prohibitively expensive at a time of fiscal consolidation. As such, we can neither afford, nor should we even entertain, the amendments proposed by the member for Calgary Centre. I therefore urge this House to deny passage of this bill.

Income Tax ActPrivate Members' Business

2:15 p.m.

Bloc

Osvaldo Nunez Bloc Bourassa, QC

Mr. Speaker, I rise today to speak to Bill C-247, an Act to amend the Income Tax Act (child care expenses) tabled on May 6, 1994 by the member for Calgary Centre.

The purpose of this bill is to amend the Income Tax Act to allow the deduction of a fixed amount of $5,000 or $3,000 as child care expenses, regardless of the income of the parents and of the amount of child care expenses actually incurred.

The existing statute does not apply to stay at home parents. Only those families whose children attend profit making establishments are allowed the child care expenses deduction.

The bill means that parents can decide how they want their children cared for and deduct a fixed amount of $5,000 for children seven and under and $3,000 for those aged eight to fourteen, regardless of their income and the actual expenses incurred.

Upon initial examination, this bill seems to make sense. However, I would like to have more detailed information on what it will cost, given that the deductions now allowed represent the major part of day care costs for the government. I would also like to know how many families and children would benefit from this bill. The government must manage its resources wisely. Given their scarcity, I would think that priority must be given to women who work.

That being said, statistics show that in 1961, in 65 per cent of families with a child under the age of six, one parent stayed at home. In 1991, this sort of family structure represented only 12 per cent of families. Nowadays, over 70 per cent of pre-school age children attend day care regularly while their parents work.

Child poverty is increasing dramatically. The government's cuts in social programs have further worsened the situation.

In addition, the cost of raising children at home is rising. Who would dare to say that those parents who stay at home are not working? And yet, the monetary value of this work is not recognized.

In this sense, the bill provides a modest financial benefit for families in which one parent stays at home to care for the children. We know that there are very often no more vacancies in day care centres.

The present income tax regime is unfair to single income families. The child care expenses deduction applies only to two-income families, whatever the total. Families may claim a maximum of $5,000 per child, for children less than seven years old, and a $3,000 deduction for children 7 to 14 years old. No deduction is allowed for one-income families because the legislation assumes they have no child care expenses to pay. These are the families who need financial support, particularly single parent families which, in most cases, are mother and children units. Children in those families are the first ones to be struck by poverty.

In our modern world, we can see that, for a great many families, it is vital for the mother to work outside the home. This participation in the workforce is sometimes threatened by the lack of child care services.

Under certain circumstances, women are forced to stay home and that can cause serious problems. These women suffer from isolation and lack of social recognition. Therefore, the government should take the necessary steps to ensure their social and economic equality. Years spent at home caring for children result in a considerable loss of income and great difficulties when reintegrating the labour force.

According to what I have just heard the hon. member for Calgary Centre say, it seems the Reform members support this bill for very old-fashioned reasons. Even though I tend to agree with this bill, I cannot share the philosophy and the line of thought of the hon. member sponsoring it. His objective seems to be to promote a more traditional and conservative view of the family. He would like to see women stay home in greater numbers. I think this would be a move backwards that would profit neither the women themselves, nor society which would no longer benefit from their valuable contribution in important areas.

On the other hand, we must examine this bill in the current context of the government social policy which is very regressive. There is a blatant lack of an overall and fair child care program. And if we consider that a great number of women choose to stay at home to raise their children, the bill proposed by the hon. member for Calgary Centre makes sense, of course, if that is the free choice of these women. Then, the government must respect this choice, recognize the economic value of the work of these women at home and give them this modest financial benefit.

This bill is far from being the ideal solution, but it gives the opportunity to revive the debate on child care.

Our society wants children, but parents who have them and raise them are penalized.

I support this bill only inasmuch as the mother or the couple choose that kind of child care of their own free will. If they do so, they should not be unduly put at a disadvantage by the federal tax system.

Surveys show that the general public supports some kind of government financial assistance to families where one parent stays home to take care of children.

The government and our society should find a comprehensive solution to that problem. I certainly hope the Minister of Human Resources Development will examine this whole issue of assistance to families and particularly children, because it is urgent. The federal government should work hand in hand with the provinces to provide more child care services.

I should add that comparative studies in the United States, Canada, and Europe suggest that it is inadequate and unfair to hand out money to families to pay for child care instead of using tax dollars to fund a child care system, which is probably the way of the future.

In conclusion, I would like to say that, eventually, we should also examine the issue of assistance to families who take care of the elderly, the chronically ill, or the handicapped.