House of Commons Hansard #181 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

The House resumed from March 30 consideration of the motion that Bill C-76, an act to implement certain provisions of the budget tabled in Parliament on February 27, 1995, be read the second time and referred to a committee; and of the amendment.

Budget Implementation Act, 1995
Government Orders

10 a.m.

The Acting Speaker (Mr. Kilger)

I would like to make the House aware that during the next 54 minutes of debate members will have 20 minutes to make their speeches which will be subject to a 10-minute question and comment period. After the 54 minutes, the House will proceed to the next stage of debate and members will be allowed a 10-minute maximum.

If I am not mistaken, the last person who spoke yesterday was the hon. member for Glengarry-Prescott-Russell and we were at the question and comment period. Are there any questions or comments?

Resuming debate with the hon. member for Hochelaga-Maisonneuve.

Budget Implementation Act, 1995
Government Orders

10 a.m.

Bloc

Réal Ménard Hochelaga—Maisonneuve, QC

Mr. Speaker, I am pleased to speak on Bill C-76. For the benefit of those who are watching us at home, let me repeat that this bill deals with budget measures, notably the important issue of transfer payments to the provinces.

I would like to remind them that, when we talk about transfers to the provinces, for this past year at least, we are in fact referring to three main sets of programs. We are referring to three categories of transfers, namely those under established programs financing, which the federal government has reduced by $21 billion for 1995-96, under the equalization program, which the government has reduced by $8.87 billion, and, finally, under the Canada Assistance Plan, which the government has reduced by $7.95 billion.

It is important to remember that transfer payments to the provinces are a matter of particular importance in a federal system, since, in a federal system, the relationship between the federal government and the provinces is absolutely crucial. Whenever financial considerations are involved, we must bear in mind that a federal system is a system made up or based on three components. In any federal system, first of all, you have two main levels of government: a central government and the so-called subordinate administrations.

Depending on the particular system, these lower levels are called provinces, or landers, or cantons, but where there is a federal system, there are at least two levels of government, each of which is supposed to have sovereign authority over every areas of jurisdiction prescribed in the constitution. In the Canadian Constitution, these areas are listed in section 91. Section 91 lists the powers of the central government and section 92, the provincial areas of jurisdiction.

Finally, the last characteristic of federalism is the constitution, which is designed to delineate the respective powers of the two levels of government. Why do I feel the need to give these elements of historical background and political definition? Because, if the Canadian federal system were harmonious and responsive to the provinces, a system in which the jurisdictions established under the Canadian Constitution were respected, we would certainly not be passing or debating a bill like Bill C-76.

Why am I saying that? Because, in a federal system with two levels of government, where each level has specific responsibilities, financial equilibrium is understandably a matter of great importance. We can appreciate that, when one level of government decides unilaterally, without consulting the provinces, as this government is doing, to cutback transfer payments to the provinces, this is designed to have a destabilizing effect. We must keep in mind-and we will have an opportunity to say it again during the various debates to come-that, for all practical purposes, the federal government plans to use this bill to cut transfers to the provinces by $7 billion.

Let us recall the three programs through which funds are transferred. First, there is the Established Programs Financing for which the federal government plans to set aside $21 billion. As you know, Mr. Speaker, the Established Programs Financing in place since 1977, is the government vehicle for financing health care and post-secondary education. Of course, we know

full well that, under the 1867 Constitution Act, these sectors do not come under federal jurisdiction. Yet, over time, they have interfered in these areas of jurisdiction. So the first vehicle is Established Programs Financing.

The second vehicle is very well-known because, for a very long time, the champions of Canadian federalism told us that an original feature of the system was equalization, for which the federal government plans to set aside close to $9 billion. Equalization was born shortly after World War II. We must keep in mind that this transfer system was aimed at giving all Canadians from Newfoundland to British Columbia access to the same range of services. Equalization saw the light of day because Canada is an impossible country, a country of regional disparities.

Because the provinces do not have the same ability to collect taxes, because they do not have access to the same resources, nor the same tax base, we decided to develop a redistribution mechanism so that funds would be redistributed from wealthier provinces with access to a broader tax base to poorer provinces.

As you know, Mr. Speaker, the equalization formula is extremely complex, involving some 40 factors, so that as we speak, since 1989, in fact, the beneficiaries of equalization have been Quebec, the Maritimes, Manitoba and Saskatchewan.

Again, to make it clear to those who our listening, there is a third transfer mechanism, namely the Canada Assistance Plan, which was established in 1966 and which is the solution found by the federal government to get involved in the financing of social assistance. Under the Constitution, as you know, the federal government has no business in the financing of social assistance programs in Canada; yet, it finances about 50 per cent, or half of the welfare costs of the provinces.

Why do I point this out? It is, of course, because this bill seeks to unilaterally deprive the provinces of some $7 billion.

Why did we end up with transfer mechanisms such as the established programs financing, equalization and the Canada Assistance Plan? It is because there was an imbalance between the tax resources of the federal government and the provinces. That imbalance must be viewed in an historical context. After the first and the second world war, the Federal government took advantage of the exceptional crisis situations generated by these conflicts to move into direct and indirect taxation.

In the fifties, the imbalance became very obvious to the provinces, which were considered somewhat like large municipalities. Consequently, some mechanisms had to be devised to transfer the wealth. These mechanisms are the three to which I referred earlier.

The federal government was urged to spread the wealth and therefore decided to finance sectors which did not fall under its jurisdiction. This created a situation whereby the provinces would provide services to their population with budgets allocated by the federal government. Again, it is worrisome and even catastrophic to see that the federal government now intends to unilaterally cut $7 billion in the transfers to the provinces.

Do you think that the federal government consulted the provinces to make sure that this measure would cause the least amount of prejudice? Absolutely not. The provinces found out, when the Minister of Finance tabled his budget last February, that there would be a cutback of $7 billion, that would break down as follows: in 1996-97, $2.5 billion would be cut from transfers to the provinces; and in 1997-98, something like $4.5 billion. That is the scenario we are given in Bill C-76.

If we consider Bill C-76 and, more specifically, its impact on Quebec, we realize that Quebec will have to absorb $650 million in forgone revenue for 1996-97 and $1.2 billion for 1997-98.

Even more alarming is the fact that the federal government is intervening in areas over which it has no jurisdiction. This intervention, which has continued to this day, has a long history. The provinces have, to a certain extent, remained dependent on the federal government for these transfers which were used to help develop health care and education services.

There are not many examples of federalism left in a continental country with a low population density and most of its population concentrated along the U.S. border. All of a sudden, because the federal government is in trouble, because this federal government is an impossible government, the government, with obvious contempt for federal-provincial diplomacy and oblivious to the impact that these cuts may have on transfers to the provinces and specific services provided to users, decides to cut $7 billion.

The federal government, centralist as always, has gone even further. It says: There will no more established programs financing or Canada Assistance Plan. Instead, there will be a new program called the Canada social transfer.

However, we do not know what criteria will be applied to redistribution of the amounts the CST will contain. Our position is that the Minister of Human Resources Development and the provinces will have to consider the criteria for redistribution of these funds, without necessarily being bound by an agreement.

The official opposition believes-and as you know, the official opposition's predictions tend to be very accurate-that the Minister of Finance, the hon. member for LaSalle-Émard, a Montreal member, may wish to put on the table a redistribution rule that might severely penalize Quebec. We think that redistribution of wealth might be based on population.

As several speakers have said in the House, the Minister of Finance, who has systematically refused to exclude the possibility of dividing the Canada social transfer envelope on the basis of population, may well decide that Quebec will have to absorb 41.7 per cent of the cuts in transfer payments to all provinces in Canada in 1997-98, which would mean that in 1997-98, if that is the basis on which the government intends to operate, Quebec will have to absorb not $1.2 billion but $1.9 billion in forgone revenue. And that is why the Quebec government has reacted very negatively to Bill C-76.

What is most absurd in this situation is that the federal government intervenes in the area of health. Here again, any outsider looking in the Constitution Act of 1867 or the one of 1982, to find the authority, legitimacy or jurisdiction behind the government's involvement in the field of health would be searching in vain.

But everyone knows that there is a Department of National Health in Ottawa, Health Canada, which requires about $1 billion just in order to operate, to pay the salaries of the public servants there. This figure does not include the money allocated by the Minister of Finance in his budget to run its various programs.

According to an article published last month in a learned publication there were more public servants at Health Canada than in the individual provincial departments of health.

This is not the least of the contradictions. There is a two tier structure, with the result that, even before any thought is given to transferring funds to the provinces so they can actually provide health care services to the public, funds must go to a structure that requires $1 billion simply to operate. This is the same sort of absurdity we find in the fight against AIDS.

The federal government is trying to establish a continent-wide health policy, which is impossible, because the level of administration in the best position to be effective and provide the finest and most useful service to Canadians, cannot be the government farthest removed from them. And the government farthest removed from them is the government in Ottawa.

The federal government's attempt to set up a national health policy, which aims necessarily at meeting the needs of communities from Newfoundland to British Columbia, is just as absurd as what it is doing in the fight against AIDS.

What happens when the government tries to intervene in the health field? Let us have a look at Canada's strategy in the fight against AIDS. In the early 1980s, with the appearance of this most terrible disease, which will cruelly mark the turn of the century, the government decided it should act.

Instead of using its tax leverage to mandate the provinces and transferring additional resources to them so they could be the real agents and fight AIDS intelligently, the federal government established a national strategy.

It is an extremely loose national strategy, which really lacks substance and is extremely inefficient, since we all well know that the governments of Newfouland, of Quebec, of Ontario, of Saskatchewan would have been better suited than the federal government to lead the campaign, given their expertise in the area of palliative care and health care.

The result is that the government has to maintain an extremely cumbersome administration and that situations arise like the one that arose last year. The federal government voted in its AIDS strategy, and allocated it a budget of $42 million which was not spent. The federal government, because it is the government level furthest removed from the people and because it has nothing to do with health care, is unable to deliver services in the field, and the concrete result of this is that it is not able to spend the allocated budgets approved by Parliament.

I see that this surprises government members, but it is nevertheless the case. I will conclude by saying that last year, of the $42 million that the government allocated for the AIDS campaign, only $34 million were spent, and not in the most useful ways. This is why people have gotten the impression that the federal government is not the most efficient level of government.

Budget Implementation Act, 1995
Government Orders

10:20 a.m.

Parkdale—High Park
Ontario

Liberal

Jesse Flis Parliamentary Secretary to Minister of Foreign Affairs

Mr. Speaker, I listened intently to the hon. member. I thank him for his intervention.

He complained about the transfer payments from the federal government to the Quebec government being reduced. I wonder if he could share with us how as a country we can reduce the deficit and the heavy debt which is plaguing the country. If we could balance the books, as six provinces have already done and if we could wipe out the public debt, we could put a lot more money into such programs as the hon. member is talking about, for example, helping people affected with AIDS and so on.

Somehow the provincial and federal governments have to work more efficiently, more co-operatively to try to avoid any duplication. Then we will reach the goals that he wants to reach not only for Quebec but for the entire country.

Could he share with us what concrete recommendations he and his party have for balancing the books, as the six provinces have done, and for reducing the public debt eventually to zero?

Budget Implementation Act, 1995
Government Orders

10:25 a.m.

Bloc

Réal Ménard Hochelaga—Maisonneuve, QC

Mr. Speaker, I thank the parliamentary secretary for his question. Obviously, it is quite clear to me how we should go about balancing the books. Those of us on this side of the House are convinced of the need to implement the principle of subsidiarity, whereby the mandate to deliver a service should go to the level of government in the best position to do so. The problem with Canada, and, with all due respect, the problem with the government's logic, is that all that is being offered is an observation. The observation is made that we have a debt of $600 billion, but no questions are asked about the institutional structure that led up to this debt.

Let us not forget that the federal government used to have a department of urban affairs and a department of recreation, and that is why we have the debt we do today. It is because of an imbalance that allows Ottawa to interfere in areas of jurisdiction for which it has no mandate. This is the spending power system. Unfortunately, the federalism we are seeing leaves much to be desired. This is not to say that federalism could not be interesting in theory, but for it to work in the Canadian context, it must be centralized. And for it to be centralized, interference in the affairs of the provinces becomes necessary.

My hon. colleague would be interested to know that before the Department of Health even gets around to delivering a service, a billion dollars has been set aside by the Minister of Finance for its operating expenses. Does my hon. colleague share my concern, my disbelief that Health Canada has more employees than the provincial departments of health? This is not what we should be seeing when it is not even the federal government's mandate.

The best way to reduce the debt, and I do not know whether my colleague will agree with us, is to undertake a political reorganization with the goal of establishing an association between two nations, two autonomous governments, who will obviously have economic dealings with each other where interests dictate, because we know that nations must put interests ahead of feelings. I think that the best way for Canada to reduce the debt is through an extensive political reorganization.

Budget Implementation Act, 1995
Government Orders

10:25 a.m.

Liberal

Jesse Flis Parkdale—High Park, ON

Mr. Speaker, the hon. member is contradicting himself. He said that to have a healthy federalism we have to centralize things more. On the other hand, he is talking about two nations.

My wife comes from the province of Quebec. She has many relatives there, nieces, nephews, and we meet with them quite regularly. I am so proud of Canada when my nieces and nephews visit us and speak three languages. They speak French, English and Polish.

Is it not wonderful that in a country such as ours, in la belle province, people can grow up fluent in three languages? If we nourish this further, we will be the envy of the world. The United Nations has named Canada as the number one place on this planet in which to live. Why would the hon. member talk about two nations? It took us 125 years to reach the level we are at now. Now that the world recognizes that we did this properly and Canadians have the best standard of living, why would we want to dismantle this?

I would remind the hon. member also to talk to the ambassadors here in Ottawa of the Czech Republic and Slovakia. I keep in very close touch with them. They went through the same phase. When they were talking about separation they were talking about the same currency, no obstacles at the border, common defence and so on. The minute they separated they had to print their own currency, they had very strict custom controls. It was the most painful thing they had ever gone through. They are recommending not to let happen to Canada what happened to the former Czechoslovakia.

I am wondering if the hon. member would rethink and answer who is representing my nieces, my nephews, my grand-nieces, my grand-nephews because they do not want two nations. They want to live and grow in this beautiful country as it is now. They do not want to move out of la belle province but they will if we go the two nation route.

Budget Implementation Act, 1995
Government Orders

10:30 a.m.

Bloc

Réal Ménard Hochelaga—Maisonneuve, QC

Mr. Speaker, I know that my colleague is a generous and intelligent man, so I am disappointed with his comparison. I wish to tell him that, since the fall of the Berlin Wall, 21 countries have achieved sovereignty and, out of these 21 countries, it is easy to talk about the economic difficulties experienced by Slovakia. On the other hand, I can give him a list of 20 countries which, not in the distant past but since the fall of the Berlin Wall, have managed their sovereignty successfully. We will have the opportunity to talk about this again later.

I wish to address one element of my colleague's question. What I told the hon. parliamentary secretary is that there are several examples of federalism in the world. Canadian federalism has two distinctive features. Canada is a continental country, unlike the other federalist countries we are familiar with. It is a continental country with two nations. Since being elected to this House, I have seen that there is a gap between the parties. On this side, because we are in touch with Quebec, we know that we are a nation.

Prince Edward Island is not a nation. British Columbia is not a nation. They are great places in the world, with generous people. I spent my vacation in Prince Edward Island and it is a wonderful part of the country, but it is not a nation. Again, it is a wonderful part of the country. Being a nation involves having a distinct language, a distinct legal system, government control, a collective will to live together. These elements make us a nation under international law.

Canada is indeed a great country, and I am able to recognize this. But what I said about Canadian federalism is that, although Canada is a great country, although I have many friends on the other side of this House, including the parliamentary secretary, Canada as it now exists cannot allow two nations to achieve self-realization. That is why, in the next century-and saying this does not show contempt, secessionist tendencies or obtuseness-Canada must be redesigned so that both nations can enjoy a relationship as political equals and economic partners.

When my hon. colleague tells me that his niece, of whom he is no doubt very proud, speaks three languages, it is something that must be applauded. However, the hon. member is confusing the collective dimension with the individual dimension.

I wish that all members of this House were multilingual. Three mornings a week, I get up at seven in the morning to learn English so I can discuss with my hon. colleagues. But all this does not change anything to the fact that Quebec is a nation and must have all the powers, its own country and its own government.

Budget Implementation Act, 1995
Government Orders

10:30 a.m.

Liberal

Marlene Catterall Ottawa West, ON

Mr. Speaker, normally, when I rise in this House to participate in a debate on a bill, I can say that it is with great pleasure that I speak to the bill before us.

This is not a pleasant budget on which to be speaking. For many of us it is a very painful budget. For many Canadians it is a very painful budget. For us as Liberals it presents some decisions we would rather not have to be making.

Liberals tend to want to be builders and creators, not to be pulling back on progress that has been made and programs that have been established. Following the second world war we were able to invest in housing, invest in transportation, invest in the education of our returning war veterans and yet pay off the war debt within five years. That was in the time of an expanding economy both domestically and internationally.

Liberals have been proud to create a package of social programs that has offered Canadians a standard of living and a quality of living second to none. We have been proud to introduce security for workers who lose their jobs. We have been proud to introduce security for Canadians who because of disability and many other reasons are unable to support themselves. We have been proud to share responsibility for our fellow citizens in need.

It was a Liberal government that was proud to set as a national target approximately two decades ago the elimination of poverty among the elderly. We have achieved that.

However, these are different times. We now have to look at how we can use the very limited resources of the nation and of our taxpayers to continue the quality of life the nation has enjoyed and to continue progress into the future. We also have to face some very hard facts and that is what the budget bill does.

We must realize that 40 per cent of our national debt is held by foreign countries and that, when we pay interest on the debt every year, 40 per cent or $16 billion are paid out to foreign lenders. That is money that does not get back into our national economy; it does not work for us to improve our economic situation, here, in Canada. This money is paid outside the country and, therefore, not subject to Canadian income taxes. This is a double loss to our economy.

We have to face the fact that we are now paying one-third of every dollar we collect from Canadians and spend on government programs and services just to pay the interest on the debt. That proportion is rising year by year. If we continue to allow that to happen we will have less and less to do the things we want to do for the country and for Canadians.

I have sat in this House since 1988 and have heard repeated promises of reducing the debt and deficit and that we have to go through this pain to get to a certain objective. However, this is the first time since I have sat in this House that there has been an actual and substantial reduction in the deficit.

With the budget we are projecting the fulfilment of our 1993 campaign commitment to Canadians to cut the deficit by half in proportion to the GNP by 1997.

I have said this is a painful budget. One does not cut one's spending without removing from many Canadians certain programs, services and benefits we have enjoyed as a nation. We have done the budget in full consultation with Canadians. The Minister of Finance has met with Canadians across the country. We as members of Parliament have met with our constituents on what should be in the budget and asked for their advice and counsel in the difficult decisions we had to make.

In Ottawa West I was very fortunate to have several hundred people come together and assist me in advising the finance minister as to what we felt were the important issues to be taken into consideration in coming up with the budget. The people of Ottawa West told me they were concerned about the debt and deficit. They are concerned about the continuing deterioration

of opportunities for the future of the country, for its economy and for the next generation.

They also said they did not want to sacrifice hard earned progress which made this the best nation in the world in which to live for the immediate gains on the debt and deficit. That is a difficult balance but it is a balance the budget and the legislation implementing it manage to achieve.

The people in Ottawa West and all Canadians told us they wanted the budget to be fair. They believe no group in society should disproportionately bear the brunt of the necessary cuts in government spending. We have delivered on that and it is being implemented in the budget.

Greater fairness in the tax system was the message from my constituents in Ottawa West, and also to close some of the loopholes. We have done that. We have increased the corporate rate of tax so corporations are again starting to pay a fair share of taxes. The capital tax imposed on banks is one element of that fairness.

Through a number of such measures we have avoided an increase in personal income tax which Canadians very clearly said they did not want because they already feel their dollars are stretched to the limit.

This is the first time I have had a chance to respond to people in Ottawa West on the specific measures they raised with me prior to the budget and tell them their voices and the voices of other Canadians clearly made an impact. They asked that we not tax their RRSP savings, and we did not. They asked that we not tax health and dental plan benefits, and we did not. They asked that we not touch the income of seniors, and we did not. We did say that Canadians living outside of Canada who are earning a high enough income should not continue to receive their entire old age security. They should be treated the same as seniors who are living in Canada and paying taxes here.

I can honestly report back to the constituents of Ottawa West that the views they expressed to me most strongly have been respected in the budget.

For a number of my constituents the changes we have made in government spending will have a negative impact. These are primarily people who work for the public service. It is not easy to say that of the 45,000 jobs to be cut in the public service, 15,000 of those over the next three years will be lost in this region.

However, through the bill and through other measures the government is taking extraordinary steps to make sure the number of people who will actually lose a job through this major process is reduced to an absolute minimum. We fully expect that at least 60 per cent of the downsizing will be achieved through the early retirement incentives through regulation and the early departure incentives done through the legislation today.

Through various training and placement programs that will be put in place there will be various flexibilities about how people manage their time if they know their particular position will be affected. I want to send a very clear message that at the end of three years, through all of this, at least 86 per cent of the federal public service will still be in place, will still be working. There is no question it will be a dramatically changed workplace and I hope a dramatically improved workplace as we stop trying to ask a shrinking number of people to do everything and accept our responsibility as a government of deciding what programs to continue and what programs to stop. It will be a very difficult three years.

Canadians will know exactly where the government is headed, what programs we think are important and we will have the resources to carry out those programs well on behalf of Canadians.

I express my appreciation to the business community, local politicians in the area and many other people throughout the national capital region who have come together as a community to put in place programs that will assist people, whose jobs in the public service are affected, to remain in the community and to work in the community.

They are one of the great strengths of our region. That very talented workforce will provide further economic diversification and help to build a stronger economic future. I say to them honestly that their members of Parliament and their local community are 100 per cent committed to assisting them in continuing to be employed here and in continuing to make this their home.

Budget Implementation Act, 1995
Government Orders

10:45 a.m.

Bloc

René Canuel Matapédia—Matane, QC

Mr. Speaker, I listened with great interest to the comments made by the hon. member. She said repeatedly that the budget was tough. It is very tough indeed. To try to reduce the deficit to pay off our debt is very laudable. We must do it.

I represent the rural riding of Matapédia-Matane, where I recently met with some local groups. In my region, unemployment matched with employment security is the norm for 35 to 40 per cent of workers. I discussed the budget with these various groups. The students did not understand. They told me: "How can we possibly pay more for post-secondary education"? They do not accept that.

I also met farmers who have herds of 30 to 35 dairy cows. They told me that the situation in the region did not make any sense. The Liberal member who accompanied me has a herd of 225 milk cows, which is not quite the same. For farmers, the budget means a loss of $5,000 over two years, or $2,500 per year, or 15 per cent for two years.

I also met unemployed people. A former Liberal member, Mr. Bona Arsenault, once said that people were lazy. Let me tell you that people in my region are not lazy. They are energetic. They want to work. Given the opportunity to do so, they will work as hard as anyone. The unemployed are very worried.

Why is it that, by contrast, some business people do not seem very concerned. The hon. member referred to banks. The government will get $100 million from the banks.

Budget Implementation Act, 1995
Government Orders

10:45 a.m.

The Acting Speaker (Mr. Kilger)

Order. I apologize for interrupting the hon. member for Matapédia-Matane. I simply want to remind him that the period for questions and comments only allows five minutes. Unless he is just making a comment, the hon. member should put his question if he wants a reply.

Budget Implementation Act, 1995
Government Orders

10:45 a.m.

Bloc

René Canuel Matapédia—Matane, QC

Mr. Speaker, I will ask a very simple question. Why is it that the budget did not bother the multinationals too much. From what I have heard, the banks are not overly concerned by that budget. It is not the rich who are worried about it, but the poor.

Budget Implementation Act, 1995
Government Orders

10:45 a.m.

Liberal

Marlene Catterall Ottawa West, ON

Mr. Speaker, I can tell the hon. member that, in my own riding, five minutes from where I live, many residents have the same concerns. Consequently, I can certainly relate to what the member is saying.

It is for these people that we have to review and redirect our programs. We have to make sure that there is a future for these people, for women who have a very low income and who want to provide a future for their children, for young people who may have quit school five or six years ago and now want to get some training.

It is precisely for these people that we must have a strong economy which, I hope, we will better control, so that we can provide the training programs and the job creation initiatives which will give them a good future.

Budget Implementation Act, 1995
Government Orders

10:50 a.m.

The Acting Speaker (Mr. Kilger)

Again I clarify for the House that the member for Ottawa West indicated she was splitting her time with a colleague. That is why I made sure the question and comment period was for a duration of five minutes.

Budget Implementation Act, 1995
Government Orders

10:50 a.m.

Liberal

Jean Payne St. John's West, NL

Mr. Speaker, I am pleased to have the opportunity to discuss the budget of the finance minister for 1995-96.

The budget was about keeping promises: the promise contained in the red book to reduce the federal deficit to 3 per cent of GDP by 1996-97, the promise made by Liberal governments past and present to preserve a sustainable social safety net that provides for those who are most in need, and the promise to ensure that all Canadians in all regions share equally in the necessary burden of reducing the deficit.

Through a combination of spending cuts and revenue increases the finance minister reduced the deficit for 1995-96 to $32.7 billion. This is the second year in a row the deficit has been reduced. I am proud to be a member of a government that backs up its talk on deficit reduction with action. Unlike the previous Tory government and some members of the third party, the finance minister realizes there is a purpose to deficit reduction and that deficit reduction is not an end in itself.

As a result of the huge debt that has been run up by the last government, Canadians last year saw roughly 33 cents of every taxation dollar go toward paying interest on the debt. This meant less money available for services that Canadians deserve and respect.

The large debt also creates a climate of instability which discourages business investment and job growth. The purpose therefore of deficit reduction is to guarantee Canadians an environment for sustained growth and job creation both now and into the future.

The government understands and respects its obligations to Canadians to stop the practice of borrowing from future generations to finance the spending habits of today. Therefore it is not with enthusiasm that the government set about reducing spending but rather out of necessity.

Canadians from coast to coast to coast understand this point. In fact a recent poll confirmed it: 69 per cent of Canadians said they approved of finance minister's budget, even though a large number of those who approved of the budget expected to be somewhat worse off under it.

I refer to some of the remarks made by my colleague from Ottawa West. She said that some of her constituents spoke to her about their concerns under the budget but were willing to accept the cuts and to live with the budget.

Not only is the budget remarkable for the progress it makes toward the goal of reducing the deficit. It is commendable for the way in which it achieves deficit reduction. Reduction in the deficit was achieved largely through expenditure cuts.

For the second year in a row the government did not increase personal income tax rates. I congratulate the minister on his willingness to listen to Canadians and to refuse to take the easy way out by raising taxes. While personal tax rate increases may have been easy they would not have been equitable.

Rather, the finance minister has managed to reach his deficit reduction primarily through expenditure cuts. For every $1 of revenue increase contained in the budget there are $7 in spending cuts. These cuts are reached largely through a rationalization and downsizing of government while ensuring that the spending cuts do not jeopardize the social programs Canadians value so dearly.

I should like to comment on three specific areas which the budget affects: social programs, small business and changes to the Department of Fisheries and Oceans.

While many Canadians including myself were encouraging the minister not to raise personal income taxes as part of his campaign to fight the deficit, equally compelling was the need to maintain the hallmark of Liberalism, our social safety net.

It was the Liberal government that built the social safety net and it is the Liberal government that is committed to maintaining our social programs. The problem was to adjust the programs to reflect the challenges and realities of the nineties.

Too often complaints were heard about how the social security system did not aid those most in need. At the same time it was becoming obvious that the social safety net was in many instances not providing incentives to Canadians to become less dependent on assistance.

Helping individuals to get back to supporting themselves must be a fundamental goal of any social system. In an attempt to encourage innovative and timely approaches to social security the government has established the Canada social transfer. This payment to the provinces will combine payments for health, post-secondary education and social assistance into one payment called the Canada social transfer. It will allow provinces the flexibility to pursue innovative approaches to the programs.

In conjunction with the transfers the federal government will impose national standards on all provinces as a condition of receiving funding. It will ensure that our commitment to provide for the most vulnerable in society will be maintained. For example, the Canada Health Act and its standards of accessibility, portability and universality will remain intact. Further, the Minister of Human Resources Development is to meet with his provincial counterparts to work out a set of national standards to govern post-secondary education and social assistance.

It has been said that the provinces will receive less funding under the Canada social transfer than previously. However the government has shown its commitment to social programs by cutting its expenditures in this area much less than it cut expenditures in other areas. Further, by announcing the changes in its transfer payments this year to take effect next year, the federal government has given provinces plenty of notice of the changes so that they may have the time to prepare.

Statistics show that under the Canada social transfer total transfers including equalization to the most needy provinces-

Budget Implementation Act, 1995
Government Orders

10:55 a.m.

Reform

Ray Speaker Lethbridge, AB

The hon. member will have the floor when we resume debate at the end of question period.

It being 11 a.m. we will now proceed to Statements by Members.