House of Commons Hansard #25 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

The House resumed from March 18 consideration of the motion that this House approves in general the budgetary policy of the government and of the amendment.

The Budget

11 a.m.

Liberal

Julian Reed Halton—Peel, ON

Mr. Speaker, I will be dividing my time with the hon. member for Lanark-Carleton. It is a privilege for me to speak to the 1996-1997 budget. If I can make some small contribution to the debate-

The Budget

11 a.m.

An hon. member

It will be small.

The Budget

11 a.m.

Liberal

Julian Reed Halton—Peel, ON

My hon. friend from the Reform Party is alluding to the fact that my contribution will be small, and I agree, but it will be a contribution of some use.

I will dwell a little in the history of where we were, how we got to be the way we are and where we may be going. It is necessary to put this budget and previous budgets into of context to address the financial situation of the country.

In my previous incarnation as a member of the provincial legislative assembly in Ontario, I remember deficit budgeting in its infancy. Every province was guilty of deficit budgeting, as was the national government and virtually all governments in the western world.

One of our senators has described that era as one of mutual seduction, when it was a very popular thing to believe that money came from government; that somehow or another there was an infinite well which could do almost anything.

The political stripe of the government of the day really did not matter. As was described, it was simply a case of mutual seduction.

By the time the government changed in 1984 the national debt had risen to $166 billion, over a period of 14 or 15 years. Then in the following eight years the national debt climbed from approximately $166 billion to $400 billion.

There was a realization during those years that this could not go on indefinitely, that a halt had to be called, and yet there seemed to be an absence of political courage to do something until we were on the edge of precipitous financial situation not only in the country itself but in each province. Every province has gone through the same experience, as my colleagues will remember.

In 1993, when the Liberals came to power, there was a feeling of frustration, a feeling of anger among the voting population and a feeling that government was somehow incapable of getting hold of the finances of the country. Expectations were low. It was a case of whether this ship could be steered through rough waters to safe harbour.

We were very fortunate to have the gentleman who is the finance minister at the present time appointed to that position. I think it was a cup that he might rather have passed by because the position of finance minister in this country is very often the kiss of death politically.

He set out on a course and he stated his course clearly at the beginning. He would take the economy in two year short term projections with a goal ultimately of getting rid of the deficit, paying down the debt, and certainly beginning with that portion which is held offshore.

It was a recipe that some people felt could not be achieved because previous finance ministers had continuously failed to achieve the targets they had set out. My honourable friends will recall previous finance ministers as much as $10 billion off their targets.

When our finance minister began this quest there was a lot of scepticism that he would achieve it, but achieve it he did and exceed it he did. Then he brought in the next budget, and achieve it he did and exceed it he did.

Today we thankfully head down that path of reduced deficits. I am not prone to quote other people's writings when addressing the House but I think an article in the Ottawa Citizen from April 13 is worth noting: ``The federal government appears to be sitting pretty

on its deficit target for the fiscal year just ended. The finance department said Friday the deficit for the first 11 months of the year was $23.2 billion, down $4.6 billion from the same period in the previous year. The finance minister set a deficit target of $32.7 billion for the year ending March 31, 1996".

I know some of my friends in the Reform Party feel this target or this goal is spread out too far. I can tell my hon. friends that had we not done that, had we took the slash and burn direction the Reform Party wanted we could have precipitated a recession of disastrous proportions. It was a matter of walking the tightrope and balancing the situation, moving toward the targets but at the same time not throwing out the baby with the bath water.

What has that accomplished? There is a renewed confidence from the international community in Canada today. Canada is now poised for the greatest growth of all the G-7 countries. Sometimes we tend to look inward too much and we do not look out to see ourselves as other countries see us. It is useful to do that from time to time. Then we can get a picture of where we stand in relation to the people we trade with, to the people we compete with, to the people who pay their taxes in their country, and so on.

In terms of taxation I know we all feel we are taxed excessively in Canada. If we compare ourselves to other members of the G-7 it is not exactly so. There are countries whose levels of taxation, especially income tax, are even higher than those in Canada.

I would be the last person to suggest we should keep a high tax regime and I will be one of the first people to recommend to the hon. Minister of Finance that once the targets of zero deficit are achieved and we begin to pay down the national debt that it reflect in a sharing of that good fortune with the shrinking of taxation. The freeing up of money will be one of the essentials for our future.

Now that we are at the point of a deficit of 3 per cent of the gross domestic product, beginning with 5.7, it now means we are approaching that point at which our growth rate is greater than our deficit. That means the deficit can be paid down more quickly now than it could initially. That ratio is very important. However, it is important to remember that what we have tried to do is have a fair and balanced approach to what we are doing, and I am sure we have succeeded in the minds of most Canadians, although not in the minds of everyone.

We have deliberately tried not to leave segments of society out in the cold but we have tried at the same time to impose a balanced responsibility on every citizen so that we are all sharing the load. After all, we all created the load in the first place. For those of my colleagues who are probably young enough to benefit from certain kinds of government largess, we are now in a position where we have to make it right.

The Budget

11:10 a.m.

Reform

Jack Ramsay Crowfoot, AB

Mr. Speaker, I appreciate the spirit in which my hon. colleague has couched his remarks. He is a fine gentleman but I surely take issue with some of his comments.

The member talked about the seduction of governments which led us to this debt. To me that is absolute nonsense. Every family, every organizational group whether it be a church or community organization and every business in this country knows that we have to live within our means. They have done that for the last 25 years while this and previous governments have sunk this country into an enormous debt hole.

We talk about seduction. I think it is clear in the minds of millions of Canadians that it was a simple buying of the Canadian vote in election after election. That was the difficulty they had in pulling away from that kind of overspending and government waste.

We look at whether or not this government could have reached a balanced budget far earlier but in fact it has not even set a date for that. All we have to do is look at the provinces the hon. member referred to. All have placed themselves on track for a balanced budget. Provinces such as Alberta, Saskatchewan and Manitoba have reached the point where they are now in a position to debate what they are to do with the surplus. They are deciding whether to reduce taxes or to plug some leaks in some of their programs through further expenditure of money and so on.

We are now approaching a debt of $600 billion. At the present interest rate, it appears that our interest payment on that debt is going to be somewhere near $50 billion a year.

I would like my hon. friend to address that issue. Can we deal with a $50 billion interest payment per year and still protect our social programs including our transfer payments to other provinces?

The Budget

11:15 a.m.

Liberal

Julian Reed Halton—Peel, ON

Mr. Speaker, I would first like to respond to the question of seduction since we are both here seducing each other. I want to reinforce the fact that it was an era of mutual seduction. It worked both ways. I will leave a little story with my hon. friend to show an example of that.

In 1977 I ran in an election in Ontario. One of the issues my party brought to the fore in no uncertain terms was the deficit in Ontario at that time by the Tory government. We made speeches in the House prior to the election being called on the subject of government waste, excessive government spending, the largesse that was going on hither and yon which was piling up and accumulating the debt.

When we got into the election my leader hammered this message out for the first couple of weeks until the premier was asked about

the comments that were being made. He answered the reporters with two words: "Dr. No". That was the end of it.

The Budget

11:15 a.m.

The Deputy Speaker

I am sorry to interrupt my friend. Time has expired.

Unfortunately, there is no time left for the hon. member for Bourassa to ask his question. Resuming debate.

The Budget

11:15 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, it is a pleasure to make some comments on the March 6 budget of the government.

As I enter the House each day I like to look at some of the Canadians who come to this place. I wonder what they are thinking about when they come here. I wonder if they are as much in awe of this place as I was when I came to the House, to think of the things that happen in this place. I see young people, grade school children who have come for a visit. I see some older children, parents and grandparents. They are Canadians.

Like every member of Parliament I would like to be sure when I speak in this place, that no matter what the age might be of Canadians who are listening to the speech in the gallery, they will think that something good, productive or constructive was said. From time to time statements are made in this place which are more or less one sided. It makes me think of the cliché that if one is not part of the solution, one must be part of the problem.

During the debate we have had on the budget there has been a lot of talk about Canada's national debt which is about $600 billion. It is not an amount which people are insensitive to. No one in this place is insensitive to it. This amount was accumulated over the last 25 years. It reflects the amount of money Canadians took out of the system more than they put in. It is the amount of money we contributed to improve the health care plan and social programs in this country. In that accumulated sum, $350 billion of that is benefits to Canadians.

Governments do not have money. Governments manage the money of Canadians. That $350 billion has grown as a result of interest and compound interest. The balance of that $550 billion to $600 billion of national debt represents interest.

It is in our best interest-excuse the pun-to look at ways we can get our fiscal house in order to not only bring the deficit down but to eliminate it, the shortfall of revenue over expense every year. We have to get to the position where we are creating a surplus so that the surplus can be used to discharge that long term debt.

If Canada had a balance sheet in which all its assets and liabilities were disclosed, we know the liability would be a long term debt of some $600 billion. However, the Fraser Institute and the United Nations have said that Canada is the second wealthiest country in the world on a per capita basis. The reason they can say that is that Canada has a wealth of assets.

According to the Fraser Institute, with our resources excluding land value, Canada is worth about $3 trillion. There really is a dowry or an equity in this country. The money we owe to foreigners and other Canadians for the national debt is not just money that was given away. It was invested in this country. It was invested in our people, our youth, our health.

I see the health minister. I know Canada's health program is the strongest element within Canadian society which holds the country together. It creates the unity within this country and will keep the country united. We have a strong health care system which we are committed to. In good times as well as bad we will not compromise the five principles of the Canada Health Act.

Confidence and stability are the principles which must be reflected in budgets. I hope the people who come here and who listen will feel that in recent years Canada has demonstrated a stability within its affairs, that government has generated a level of confidence, that the right things are happening.

When this government came to office the amount of deficit represented something like 6 per cent of our GDP. The finance minister in his first budget brought it down to 5 per cent of GDP. In the next budget he brought it down to 4 per cent. In the current fiscal year which ends on March 31, 1997, it will be down to 3 per cent. The last time the finance minister addressed the issue of the long term outlook for the deficit he said that in the subsequent year it would be down to 2 per cent.

We are so very very close to delivering a balanced budget. It is something we want to do and I do not think there is disagreement on that. The only disagreement is over the velocity at which it happens.

Some would suggest we have to balance the budget at all costs regardless of the impact on seniors, regardless of the impact on health care, regardless of the impact on jobs and youth. I do not agree. Our budget has to be a compassionate budget. It has to be responsive to the important needs of Canadians, and it has to be done in a fair and equitable way. Are there spending mismanagement or problems in a corporation? Of course there are. In a government? Of course there are. There are always things we can improve upon. We have to look for the things we have improved upon.

I want to talk a little about the national debt because it is not in isolation. There are assets and good things in this country which we have not invested in. They will be with us and are for our children in the long term.

I say to all the young people: Canada is the best country in the world, one of the richest countries in the world and it is going to stay that way. Canadians have demonstrated that we have the know how, that we can operate in a global economy, that we can act responsibly and that we can work together in a proud, generous, tolerant and prosperous nation. This is what makes the United Nations look at Canada and say that is why we are the best country in the world.

Seniors are a tremendous asset to Canada. They led us in bad times through the depression. They led us through the war times. They led us at times when we needed the help. The Prime Minister has said on many occasions that we will never, never abandon Canada's seniors.

In his speech on March 6 the finance minister said: "We believe that the right to a secure retirement should be available to all and not become the preserve only of those who are well off". That is an important commitment.

The seniors are affected in this budget by the creation of what is called a seniors benefit. It is a replacement for the current benefits for seniors, including old age security, the guaranteed income supplement and the age and pension income credits. It is a single tax free benefit to begin in the year 2001.

Some of my constituents have asked why 2001. The important aspect of that is it is going to take time to phase in and allow people to arrange and manage their affairs so that when they do retire they have had an adequate opportunity to make provisions for all their needs.

The Prime Minister committed not to reduce the pensions of today's seniors. The plan we have honours that commitment and goes well beyond it. Canadians who were 60 years of age and over on December 31, 1995 and their spouses whatever their age are guaranteed to receive pensions amounting to no less than previous entitlements. That means they are going to have an opportunity to either stay under the existing plan or go under the new seniors benefits. That is being sensitive to seniors. Many will receive more under the new plan. GIS recipients will receive $120 more a year and seniors will be able to choose the benefit that maximizes their pension.

Most future seniors will also be better off because the new system targets higher benefits for those with lower incomes. Seventy-five per cent of single seniors and couples will receive the same or higher benefits and nine out of ten single senior women will be better off.

The seniors benefits will be fully indexed to inflation and will treat senior couples equally through separate equal cheques for each spouse.

There are so many good things about the budget I would like to talk about but my time is coming to a close. To finish, I would like to say a little word to the family. I spoke on Bill C-10 not too long ago. During that speech I said that if the family is strong, the deficit will be gone. I urge my colleagues to work with me to consider ways in which we can improve the tax status of families that stay together and stop worrying about the tax benefits for those who decide not to stay together.

The Budget

11:25 a.m.

Bloc

Osvaldo Nunez Bourassa, QC

Mr. Speaker, both my hon. colleague and the speaker before him have stated that eliminating the deficit is one of this government's priorities. I agree. But I cannot, unfortunately, agree with the procedure, the mechanisms and the means used to accomplish this.

To me, the social costs of eliminating the deficit are unacceptable: 45,000 public servants laid off, cuts made to social programs, including health and pensions. Having said earlier that you believed that seniors represented an important segment of our society, why are you making more cuts?

The most unacceptable are the cuts to unemployment insurance. There is a $5 billion surplus, and this is not tax money, but contributions by workers and employers. How can there be any justification for using this money, which belongs to businesses and their workers, to eliminate the deficit? Does this not pose a problem of ethics and legitimacy? Does this not represent a misappropriation of funds which have been put in place by legislation not to solve a deficit problem but to provide benefits to the unemployed? That is my question.

The Budget

11:30 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, I understand the member's comments and his preamble. He really got down to employment insurance reforms.

The word insurance has not been operative in the past. It is an insurance plan. That means premiums should be paid into the program by all who participate in the plan and be sufficient to cover the benefits paid out. It has not happened in the past. It is not sustainable for the future. Change is necessary.

The member is part of the problem, not part of the solution. I would like to hear from him how the system might be improved so that it will be an insurance system which is not a burden on Canadians who do not draw on the plan. We all participate and support the plan. My wish is that the one million unemployed Canadians will get jobs and never, ever have to use employment insurance benefits.

The Budget

11:30 a.m.

Reform

Leon Benoit Vegreville, AB

Mr. Speaker, appreciate the awe that the member and all Canadians feel for this place. However, what governments have done and the irresponsibility they have shown in handling taxpayers' money causes me to feel disdain for this place.

Governments have been totally irresponsible. Finance ministers since the early 1970s have said that they realized that the deficit must be dealt with. John Turner in 1975 said: "I come now to specific measures. None is more important than the control of public expenditures".

When the Prime Minister was finance minister in 1978 he said: "Significant reductions in deficits can be expected". They did not happen. Many previous finance ministers promised to deal with the problem of overspending. It did not happened. Canadians cannot feel awe for this place with these kinds of actions on the part of governments when dealing with taxpayers' money.

The member also spoke about the trillions of dollars in assets that Canada has. That kind of thinking is terribly upsetting to me. In Mexico assets meant very little when it did not deal with its overspending problem. The United States took over its oil reserves for the next number of years because Mexico needed the money. The United States along with other countries through the International Monetary Fund provided the money.

This finance minister, with the ever growing interest payments on the debt increasing to $50 billion, has not dealt with the problem.

The Budget

11:30 a.m.

The Deputy Speaker

I think the member has received a question. Briefly please, he has about one minute.

The Budget

11:30 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, I repeat, there are people who are part of the solution and people who are part of the problem.

We can spend all day long talking about history. We are here to talk about the future of these young people, the future of the working people today and the future of our seniors. We have to take positive steps. Now is the time to start. I ask the member to join the rest of the members in this place to start looking toward the future rather than lamenting the past.

The Budget

11:35 a.m.

Bloc

Benoît Sauvageau Terrebonne, QC

Mr. Speaker, I will be speaking today on the budget, if my Liberal colleagues will give me the chance. There is a place where people may discuss respectfully.

Therefore, with the opportunity afforded me, I would like to show that the 1996 budget does not represent, as they like to say, any additional savings, that it really does not add anything new and that it represents the end of the plan to put the country's finances in order. In this budget, the minister is not cutting expenditures and this year's deficit at all. On the contrary, there is in fact an increase in expenditures of $104 million.

The Minister of Finance is demonstrating the government's indifference. It is as if there was no waste, no duplication and no tax inequity. It is all forgotten; out of sight out of mind.

The government is dumping $7 billion of its 1996-97 and 1997-98 deficit on the provinces. Furthermore, it artificially reduced the deficit by taking the $5 billion surplus from the unemployment insurance account, which is funded entirely by contributions from companies and individuals. It is unacceptable to see the burden of the social programs left to the provinces and to those who forced to depend on them. In matters of employment, the government is deceiving the people, and particularly young people. It claims to be creating jobs and improving the economy, but clearly its measures are either inadequate or totally ineffective.

The Minister of Finance cut funding to student job programs by $26 million over the past two years. And then, all of a sudden, perhaps because of an election year or an election on the horizon, he changes direction. He doubles to $120 million the amount of aid to student programs-an increase of $60 million. Nevertheless, the government is hitting young people by cutting funding to post-secondary education.

The government will reduce funding by $150 million in 1996-97 and by between $400 million and $500 million in 1997-98. This will inevitably lead to an increase in education costs, hence the demonstrations by young people and university students in recent months and years against these draconian cuts. In the end, the students will be the ones paying.

For more than two years now, the Bloc has been calling for an investment fund to promote defence conversion. The Liberals promised $200 million per year over five years starting with 1994, for a total of $1 billion. They made this commitment in the red book and during the election campaign. As is too often the case, this promise was then forgotten. The Minister of Finance is proposing $150 million in 1996-97 and maybe $200 million in 1997-98. We would not be surprised if the $200 million figure was revised downward, as is too often the case.

Furthermore, for two years, the Bloc Quebecois has been calling for a major reform of the business tax system. The government has come forward with the proposal to set up a committee made of tax experts, several of whom would come from businesses already benefiting from tax shelters. We, in the Bloc Quebecois, joked that this was like choosing members of the Hell's Angels because they know how organized crime operates.

It seems obvious that the only purpose of such a committee is to ward off criticism and to pretend to examine the issue. We can already anticipate the conclusions of this committee. They will not contribute anything new. In any case, the members of this inner circle are both judges and judged. We, in the Bloc Quebecois, want fair and equitable reform. To this end, we have been asking since we came to Ottawa for a parliamentary committee to analyze federal policies concerning business taxation.

Regarding these same subsidies to businesses, last year the government substantially reduced assistance to the dairy industry, which is mainly concentrated in Quebec. This year, it is simply abolishing it altogether.

Is the Minister of Finance really aware of the negative impact this measure would have on Quebec agricultural and dairy producers? We already know the answer is no. Does he know that these cuts are excessively dangerous, that Quebec is still the federal government's poor relation? Recently, civil servants who had nothing better to do got this great idea, they would go after raw milk cheese. They had a brainstorm over the Easter break. It would give them something to do. They said to themselves: Let us throw another monkey wrench in there. More often than not, the agricultural sector is the one that has to pay.

The Bloc Quebecois demands that the government get its fiscal house in order by seing to it that those who do not pay their fair share do so.

Mr. Speaker, I must ask you if this is a questions and comments period. If not, I would ask my colleague to please be patient a few minutes before making his clever comments.

When will the government act in a real fair and responsible manner? We have now been waiting for two and a half years.

Last year, unpaid taxes amounted to $6 billion and the government was not even able to do better than the year before. There are lots of funds that the government could recover. But because of its ineptitude, its incompetence, the government too often does nothing at all.

The last estimate of the finance department shows that, as far as business taxes are concerned, the government forgoes nearly $10 billion. When will members of Parliament undertake a thorough review of business taxation? Before anything else, the government must put an end to that type of evasion, that tax dodging.

Part of the deficit reduction is due to the country's economic situation, which is relatively good, not because of the Liberals, but because all G-7 countries are currently enjoying a good situation.

Undeniably, the government is making political hay with this. It is true that exportations are high, interest rates are low and unemployment insurance premiums are higher than payments. However, if the economic context was to change, either because of higher interest rates or a stronger pressure on the unemployment insurance system, the impact would be immediate and catastrophic for public finances. I am convinced we would then see a major change in the Liberal government's attitude.

I am a member of the Standing Committee on Foreign Affairs and International Trade. As such, I would like to stress that we will have to examine what seems to be the main problem of new exporters, that is financing, whether it is easy to obtain financing. Above all, we will have to establish parameters in order to facilitate access to foreign markets for small and medium size businesses.

According to what he said on page 78 of his Budget Plan, the finance minister seems to be aware of that problem. I would like to know how much of the $50 million injected into the Business Development Bank and the $50 million added to the working capital of the EDC, will go directly and through concrete measures to small and medium size enterprises trying to export?

Government must recognize that Canada is made up of regional markets: atlantic, Quebec, Ontario, the prairies and British Columbia, which are separately integrated into larger trade and economic continental entities. For British Columbia, the northwest United States and the Asia-Pacific area are natural markets.

For Quebec it is another matter altogether. Its favoured markets are North America, 80 per cent of its exports, and Europe, 12 per cent. We should note that for Quebec European markets are three times as important as Asian markets. It is up to individual companies, and not the federal government, to determine, on the basis of their strengths and the nature of their productions, what their export targets should be.

The federal government should limit itself to providing support. Again the priority in the area of assistance to exporting companies should be a better access to financing.

I would like to stress that we believe Quebec and Canada have lost something when they renegotiated the agreement on lumber with the United States. The fact that we agreed to reopen an agreement already in force will probably serve as a precedent for the United States, which will demand the same in other disputes with Canada.

To conclude, I would like to quote an article by Jean-Robert Sansfaçon, published in Le Devoir on Thursday, March 7: ``While Ottawa continues to pretend that it reduced the deficit by cutting expenditures from $120 billion in 1993-94 to $106 billion in 1997-98, a more thorough analysis shows that at least 5 of these $14 billion come from a normal reduction in the number of unemployment recipients due to economic growth, and another $6 billion come from cuts in transfers to the provinces for health, social assistance and post-secondary education. We know that a new recession would make the unemployment insurance fund surplus melt like new snow and, therefore, increase the budget deficit of the government. Like last year, the victims of this budget are the provinces, especially provinces like Quebec''.

This is the reality: The federal government is not assuming its responsibilities, it is transferring to the provinces the burden of making most of the cuts called for in this budget.

The Budget

11:45 a.m.

Liberal

Ronald J. Duhamel St. Boniface, MB

Mr. Speaker, I listened carefully to the speech of my colleague. I wanted to make two or three brief comments and ask a question.

After this budget was brought down, I looked carefully at the comments made by influential people within the country, that is, business people, men and women who work within the major unions and journalists. The great majority of them had positive comments to make. I am extremely surprised that my colleague was unable, unless I misunderstood him, to put greater emphasis on a number of things that are well accepted, well thought of and that are helping. I believe he mostly emphasized what he thought were the negative aspects.

Perhaps my colleague would be willing to respond to this. Why did he not mention any positive aspects in his speech, when we consider all the positive comments that were made?