House of Commons Hansard #41 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was report.

Topics

Standing Committee On FinanceGovernment Orders

3:45 p.m.

The Acting Speaker (Mr. McClelland)

I am sorry, I cannot ask for unanimous consent unless I know specifically what we are talking about.

Standing Committee On FinanceGovernment Orders

3:45 p.m.

Liberal

Sophia Leung Liberal Vancouver Kingsway, BC

Mr. Speaker, the Minister of Labour has undertaken a national survey to identify the challenges and help develop meaningful solutions. We must support her efforts.

I have personally visited the Portland Hotel Society in Vancouver's downtown eastside, the poorest postal code in Canada. This noteworthy organization works with poor and low income individuals to provide housing and services. It tries to address the needs of a group which faces numerous challenges such as drug and alcohol abuse, HIV positive, mental illness, poverty and social isolation.

Every day the personnel of the Portland Hotel Society work to rescue those who have fallen through the cracks of our social safety network. The manager of this affordable housing project clearly expressed her concern for the plight of homeless individuals. We must endeavour to build national partnerships to address this urgent problem.

Increased support for post-secondary education in Canada is needed. Education is an essential element to ensure that our children will gain the knowledge to allow them to compete on an equal footing in the new global economy. Knowledge is the key for the 21st century. Canadian universities and colleges must have a sustainable level of core funding.

I am pleased that the finance committee is recommending a balanced approach for our budget to ensure solid fiscal health in the future. It is clear our Liberal government not only listens to Canadians for their financial interests and needs, we also will build a better future for our younger generation.

May I take this opportunity to wish all my colleagues a very happy holiday season.

Standing Committee On FinanceGovernment Orders

3:45 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, my question for the hon. member, my colleague on the finance committee, has to do with the issue of leaky condominiums in British Columbia.

On a recent visit there I met with some community groups. I was disturbed to learn that 50,000 condominium owners in British Columbia have been badly served by a systemic government failure at the federal, provincial and municipal levels which has left the 50,000 homeowners with repair bills in each case on average of $24,000 to $25,000.

The PC Party of Canada supports allowing eligible homeowners to withdraw up to $20,000 of their RRSPs without penalty for use in repairs to be repaid over 15 years. Additionally, we would support the government matching the provincial government's sales tax relief with a GST rebate on qualified repairs and renovations for leaky condominiums. We would also allow an income tax deduction for repair expenses for the condominium owners.

Would the hon. member support these tax measures which would address the issues for the leaky condominium owners?

Standing Committee On FinanceGovernment Orders

3:50 p.m.

Liberal

Sophia Leung Liberal Vancouver Kingsway, BC

Mr. Speaker, I thank my hon. colleague for his question. This is an issue of concern in B.C. and many other places. As a matter of fact we in the B.C. caucus have repeatedly tried to address this issue. In the meantime, we will try to seek an increase in rent support. At the present time we have $75 million. We are trying to see if this can be made interest free. This is the direction we are planning to take and this will help some of the needy tenants.

Standing Committee On FinanceGovernment Orders

3:50 p.m.

Reform

Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, I take particular exception to the comments I have just heard.

The member mentioned the Liberal members from British Columbia. I made a sincere attempt to get an all party, behind closed doors meeting to see if we would get one voice from British Columbia so we would not be fighting each other on the leaky condo issue. I received a very curt letter from the chairman of the Liberal caucus in British Columbia saying that they would have nothing to do with it.

I would like the member to tell me why in trying to provide some relief for leaky condo owners in British Columbia it is the Liberal government that appears to be the sticky point. We want some leadership from the government to pull all the players together because it is a system-wide failure. It is a disaster that is analogous to the ice storm in this end of the country.

I would like a clarification from the member. Why did the Liberal caucus in British Columbia reject a sincere approach to try and get one voice from British Columbia on this issue?

Standing Committee On FinanceGovernment Orders

3:50 p.m.

Liberal

Sophia Leung Liberal Vancouver Kingsway, BC

Mr. Speaker, I want to thank my colleague for his efforts. I want the record to show that I do recognize his efforts in trying to solve the leaking condominium issue. We have not given up on this issue. We are still working on it and we want to find the best solution. I thank the member for his continued interest.

Standing Committee On FinanceGovernment Orders

3:50 p.m.

Reform

Grant McNally Reform Dewdney—Alouette, BC

Mr. Speaker, my colleague is talking about the budget. I would ask her how she, as a member from British Columbia, could possibly defend the slash and burn approach the government has taken since 1993 in the areas of health care and education? The government has removed approximately $21 billion in this area while reinvesting, as the Liberals like to say, $11 billion. This leaves a $10 billion shortfall. How can the member justify that?

Standing Committee On FinanceGovernment Orders

3:50 p.m.

Liberal

Sophia Leung Liberal Vancouver Kingsway, BC

Mr. Speaker, as we all know the government has provided $11.5 billion over the next five years. I do not think we are cutting. We are actually increasing the transfer payments. In the meantime, we want all the provinces to join together and work together.

Standing Committee On FinanceGovernment Orders

3:50 p.m.

Liberal

Joe Jordan Liberal Leeds—Grenville, ON

Mr. Speaker, I will say at the outset that you need not apologize to me for getting my point of order confused. I was a bit confused myself. It was the spirit of the need for haste which threw me off.

I am very honoured to participate in the prebudget debate. Having sat through the morning and now part of the afternoon on this issue, a couple of things strike me and I want to point out a few things. I am not on the finance committee. This is not an apology, but I am trying to bring a different perspective to the issue.

I have taken a quick look at the document we have been referencing as well as the minority reports from the various parties. It is very clear that it is an extremely hardworking committee. Understandably and not surprisingly, various parties are taking traditional stands on issues. I think if we put the entire package together, including the minority reports, we have a good handle on the numbers which make our economy work.

On the issue of tax cuts, we have been around that a number of times. That argument is over. It is very clear the government needs to address the level of taxation.

We make a mistake if we assume that tax cuts are it. I do not argue for a minute that tax cuts are not part of it; what I suggest is that tax cuts are not all of it. What I am hearing from some speakers is that this is somehow a panacea to make the economy work in some magical way: let us eliminate government altogether; let us cut taxes so much that we are actually giving money to be Canadians. I do not know where this ridiculous argument ends.

If we look at the forces at play in our economy today, especially globalization, dismantling and devolving the federal government at this time is sheer lunacy. It is very opportune politics to go around and ask people if they think they pay too much tax. We would have to go into many doughnut stores before we would find somebody who said, “No, I want to pay more”.

It is fundamentally misleading to talk about American level taxation unless we want to talk about American level social spending. If Canadians are confronted with that reality they may say that yes, everybody wants to pay less tax, but what they really want is to get value for their expenditures. I want to leave the numbers aside because it is not all about numbers.

I listened with great interest to my Reform colleague. I would suggest to him that somehow burying our heads in a pail of pay stubs is not going to provide the vision that Canadians will require in terms of leadership from the federal government on the verge of the new millennium. We have to look for that kind of balance.

We certainly had a short term crisis. With a $42 billion deficit we were essentially up to our ass in alligators, but we are over that now. Through the fiscal management and commitment of all Canadians and the hard work of the committee, we got ourselves to a crossroads. The decisions we have to make at that crossroads are whether we will continue to have our planning horizon mirror the election cycle or will we think three, four, five, six, seven generations down the line and start making some of the decisions that will make our economy sustainable.

The number of people who are in on this debate is interesting. It took the premier of Ontario all of 24 hours to break his self-imposed rule that he was not going to comment on areas of federal jurisdiction. The premier of Ontario is calling on the federal government to put in a balanced budget law which essentially makes it illegal to run a deficit. It is big brother at its worst, that somehow we can come up with decision making algorithms and eliminate the human side of government altogether, that we can put these things in a formula and the computers will govern the country for us.

Surprisingly I have to say that I agree with Mr. Harris. We should not go into deficits in this country but I would argue that his definition of deficit is far too narrow. I would gladly support statutory regulations that prevent us from going into social deficits and from going into environmental deficits as well because that is where we have some very serious problems. I would like us to address literacy issues with the same vigour that we are addressing some of the tax reforms that members are talking about today.

In terms of specific areas for tax reform, as a member of the subcommittee on persons with disabilities I would offer as a suggestion, and unfortunately it did not make the report, that we need to look at the way the tax system treats people with disabilities. They are required to use the medical exemption which is an exemption designed for catastrophic health events in a person's life on an ongoing basis. This is a very difficult deduction for people with disabilities to make.

I hope and trust that our government, as we flavour the next budget as a children's budget, will make sure we capture in that envelope children with disabilities. It is important that all Canadians share in the economic growth that we have been enjoying in the last few years.

I listened with great interest to my Conservative colleague who is, I understand, an economist. I am not, although I must say I held up my end of the bell curve in a few economics classes. He talked rather flippantly about having a hypocrisy tax on the Liberals and somehow that would get us out of debt. In all seriousness, I would suggest to him that maybe we should put in place a failure to learn from one's mistakes tax because of the Conservative's stand on the referendum law. That party's members need to learn the lesson of sitting around the table with separatists when trying to run this country. It is not too late for them to change their mind. The Reform Party did it and it seems to have worked. They need to come onboard, but I will leave that alone because it is obviously salt in a widening wound.

I do want to recognize the NDP member for Saskatoon—Rosetown—Biggar on his maiden speech. I thought it was an excellent speech. The member for Regina—Qu'Appelle then got up and again picked up on some very positive themes. They are themes I am mirroring here today in terms of there being more to it than economics and crunching the numbers.

The member from Regina then made a fatal mistake when he talked about half the surplus going to spending, half going to debt reduction and half going to tax reduction. Apart from being impossible in terms of geometry, it is that third half of money that the NDP does not have a sense of reality about. We have to pay for these things. To somehow invent a new half, apart from the fact that it defies the laws of physics, it also does not resonate with voters. Having gone through the debt and the deficit and the cycle of spending and taxing, the voters understand that at the end of the day we have to pay the piper. We cannot spend money we do not have. It is a rather old adage but it does not hurt to remind ourselves of that from time to time.

I will touch on the repeated references to the GDP. It is a real fallacy in the country when we link our well-being to gross domestic product. Economic indicators are important but they do not tell the whole story.

Let us consider the fact that when children get asthma because of air pollution, the price of their inhalers is added to the GDP. When we have wells go bad in rural Canada because of groundwater problems, rural Canadians buy bottled water, and that is added to the GDP. When people replace stolen property or put security systems in their homes, that increases our GDP. When the insurance industry has to spend billions of dollars, as it did in eastern Ontario after the ice storm, because of increasingly violent weather events, our GDP goes up. When planes crash off of Peggy's Cove, our GDP goes up. As a nation and as the new millennium is looking us in the face, the beans need to be counted but we do not govern by the numbers.

It is not unlike driving a bus full of Canadians barrelling down the road, staring at the speedometer. From repeated consultations I have had with groups across the country, the people of Canada are looking out the windows. They are expecting the government to take some leadership, certainly in the area of sustainable economies, but they also want to see us move toward sustainable social systems where all people share in the benefits that are generated and certainly in sustainable environmental policies. At the end of the day, air, water and soil are fundamentally important to the well-being of Canadians.

Standing Committee On FinanceGovernment Orders

4 p.m.

The Acting Speaker (Mr. McClelland)

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Cumberland—Colchester, National Defence; the hon. member for Halifax West, Equality; the hon. member for Dauphin—Swan River, Gun Control.

Standing Committee On FinanceGovernment Orders

4 p.m.

Reform

Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, I am splitting my time. I am pleased to speak today on the prebudget allotted time. However, I have to question this exercise which has gone on for months now. The finance committee has travelled across the country hearing from every group of the political spectrum. I was on this committee for some of its travels and I sat through many of the hearings here on the Hill.

The all-party Standing Committee on Finance has now filed its prebudget report with the House. It is entitled “Budget 2000: New Era, New Plan”, and has 45 recommendations. My prediction is that the finance minister's budget will not resemble our committee's recommendations, just as it has been every year with the Liberals in government.

The feedback I received from across the country centred around tax relief. Not every group that presented testimony called for tax relief. Many Liberals and socialists were calling for further program spending. In fact, I am certain that some would like to see the entire surplus put toward spending initiatives. They would choke us all with big government. However, I would say that the majority spoke passionately about the need for tax relief. Whether it was relief on the capital gains tax, income tax or just taxes in general, the theme was the same.

Getting back to the committee, the members of parliament on both sides of the House spent much time listening to the grassroots tell them what was needed in the next federal budget. At the end of the day, members will ask themselves if it was worth it. We in the House know that the committee passed a controversial amendment on the unwise 50:50 plan of spending balanced with tax relief and debt reduction only to have this reversed the next when the word came down.

Committees in this place are run like a dictatorship. It is the government's way or it is no way. Canadians need to know that their voices mean little to this administration as evidenced over the years by what the government has brought forward in policy. Walter Robinson of the Taxpayers Federation makes the parallel of the prebudget to a Hollywood movie. The previews look really good, but when we show up and pay we are really disappointed.

Reform has, from its inception, been calling for tax relief. Reformers are not alone in this view. The Canadian Institute of Chartered Accountants said that tax reduction would significantly increase economic growth and employment. The Certified General Accountants Association agree. The International Monetary Fund is pushing for Canada to abandon its 50:50 plan and begin tackling the $570 billion debt more aggressively, in addition to giving extensive tax relief.

The Canadian Chamber of Commerce does not want to see tax reduction take a back seat to new program spending. The C.D. Howe Institute says that Canadians are underemployed, overtaxed and unproductive in comparison to many of our trading partners. The OECD says that Ottawa should give the highest priority to cutting personal taxes, accelerating its reductions in EI surpluses and work with provincial governments to lower business taxes.

These are respectable groups in the financial community. They are all saying the same thing, of what is a wise course to build a better country for everyone, especially for those of low or no income. How can the Minister of Finance, the Prime Minister and the caucus be so out of touch with reality?

Canadians know about the Liberal plan and they know that is much about image, about favouring the sectors that support them and about playing the role of benevolence to an electorate that is supposed to be appreciatively grateful for what it has done for them. In other words, the more surplus the more lolly the ministers can dole out to friends in their ridings. A case in point is the transitional jobs fund for which the Liberals' behaviour with just that one program should be evidence enough for them to be sent packing after the next election.

Reform has a great plan, a plan that will bring Canada back to standing firmly on sound economics and fiscal responsibility, capable of protecting Canadians from troubles in other countries. Much of it has been laid out in the committee minority report and I urge everyone to read it.

Many of my colleagues before me have spoken at length about our plan, and I will try again to highlight a few of the points.

First, we would scrap the unwise 50:50 promise. I think if we asked Liberal members today most would agree. Members across may scoff at this, but if this were not true, why did such an amendment pass the committee last week? This is an embarrassment for them because they know we are correct. They know that the Liberal members who voted in favour of scraping the 50:50 in committee are correct. The kind of underhanded scheming that went on in the finance committee to change it in the last minute was deplorable.

Second, Reform would reduce the capital gains tax. I will refer to the United States for a minute to show a chronology of what happened when it tinkered with the capital gains tax rate. Between 1970 and 1977, the capital gains tax in the United States increased. Revenues collected from this tax decreased. In 1978, the rate was cut sharply and revenues soared. In 1987, the rate was raised again and revenues stagnated. In 1997, the rate was in the 10% to 20% range and the result was that revenues from the adjustment increased by 40%. The numbers do not lie. Why is the minister and the government ignoring what is so plain and simple to everyone else?

Third, Reform would eliminate bracket creep. I will read what the OECD said about bracket creep. It stated:

The burden on Canadian taxpayers has increased over the last several years largely as a result of a non-indexed tax system. The lack of full indexation has pushed around 20 per cent of tax filers into higher tax brackets over the past ten years, resulting in increasing average tax rates at all income levels (although proportionately more for low- and middle-income individuals).

Let us say that the average worker receives a cost of living raise, that person could possibly be moved into a higher tax bracket, pay higher taxes and in fact probably never notice the raise. That person may even see their income decrease.

In the past 12 years, bracket creep has pulled more than a million low income Canadians into the income tax net. Most of these are the working poor who, under the Reform plan, would pay no tax.

I find it interesting that the Liberals, who have always pretended to take the side of the disadvantaged, would not be doing everything in their power to eliminate bracket creep. Reformers, on the other hand, are advocating fairness for Canadians. Why will the Liberals not follow suit? They are raising revenue via the back door. It is underhanded and it is simply wrong.

Fourth, Reform would hold the line on spending. This is something dear to the hearts of the Liberals, the desire to spend. Next to the NDP, no other political party in the country spends like the Liberals. Spending allows cabinet ministers to dole out sweet deals to their supporters. We do not have to look any further than the transitional jobs fund, a program for creating jobs in federal ridings where the unemployment rate is supposed to be above 12%. According to the national accounts of Canada, government program spending has never been higher than it is today.

Let us take a look at the numbers. In 1997-98, the Liberals overspent by $2.95 billion or 2.79%. Budget 1997 planned spending was $105.8 billion; actual spending was $108.8 billion. It gets worse. In 1998-99, the Liberals overspent by $6.9 billion or 7%. Budget 1998 planned expenditures were $104.5 billion but actual spending was $111.4 billion.

In 1999-2000, all indications point again to overspending and a budget plan that already has in it fat, questionable categories.

Farmers in the prairies are suffering, yet the government says that it has no money. The RCMP is understaffed in British Columbia, yet the government put millions into a flawed gun registration program. The residential crisis of leaky condos in British Columbia cries out for help, yet the Liberals are nowhere.

Reform is not saying that government should not spend money. What we are calling for is control on spending and a more reasonable reallocation. Where is the expenditure management program that was once in place? This needs to be a permanent fixture whether or not there is a surplus.

I could go on and on about the fiscal mismanagement of the Liberals since they took office in 1993. They are truly not wise managers of the public trust. There needs to be a change in the leadership of this country. I am not referring to the current Prime Minister stepping down, for when I look at the team bench, the replacements would not help very much. Canadians are asking for a fundamental change in the direction of the country, not the Liberal version of the so-called balance.

Let us reform the budget so that some day the working poor will pay no income tax, so that some day seniors on fixed incomes will no longer fear the taxman coming, so that some day all taxpayers will pay the same percentage rate of taxation, so that some day the federal government will live within modest means and help rather than hurt, and so that some day we will have viable universal medicare for everyone.

Reform's fiscal responsibility message has been virtually the same since its inception. I can only imagine how strong Canada would be today had our policies been put into place. Canada's story is one of missed opportunity, but we are ready and we have the plan. We have the vision, the vision to lead, the competence to manage and the compassion to provide.

Business Of The HouseGovernment Orders

December 16th, 1999 / 4:10 p.m.

Scarborough—Rouge River Ontario

Liberal

Derek Lee LiberalParliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I rise on a point of order. Following consultations among the parties in the House, I think you would find unanimous consent for the adoption of the following order.

I move:

That, for the remaining of this day's sitting, the Chair shall not receive any dilatory motions or quorum calls, or any motion to extend the hours of sitting.

Business Of The HouseGovernment Orders

4:10 p.m.

The Acting Speaker (Mr. McClelland)

The hon. parliamentary secretary has put a motion before the House. Is it the pleasure of the House to adopt the motion?

Business Of The HouseGovernment Orders

4:10 p.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of the motion.

Standing Committee On FinanceGovernment Orders

4:10 p.m.

Liberal

Murray Calder Liberal Dufferin—Peel—Wellington—Grey, ON

Mr. Speaker, I listened with great interest to the speech of the hon. member opposite. Quite frankly, he has me really confused.

I have read different media releases that the Reform Party has put out and they are all contradictory. Reformers talk about wanting to give a $2,500 tax break across the board to Canadians. They want to put new spending into defence, education, health and social services. Let us take a look at what they are talking about, and then I will pose my question to the member.

In Canada there are 30 million people. Of those, there are 14 million taxpayers. If we gave each taxpayer back $100 in a tax break across the board, it would cost the federal government $1.4 billion.

What is a hundred bucks? It is nothing. The taxpayer will probably want $1,000 or close to the $2,500 the Reform Party is talking about. That $1,000 would cost the Government of Canada $14 billion. The $2,500 that the Reform Party is tossing about would amount to almost $40 billion.

If the hon. member does all this spending and cuts all this money out of revenue, does this mean to say that the Reform Party will take Canada back into deficit spending?

Standing Committee On FinanceGovernment Orders

4:15 p.m.

Reform

Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, I guess we have heard the backward thinking of the Liberals who somehow think that ever increasing higher taxes brings higher revenue. It is exactly the opposite. I just pointed that out by using the American example.

We have to look at the unwise spending within the envelope. I have pointed out how the Liberals cannot even keep to their own projected budget, but we need reallocation of wiser spending within that budget envelope.

We have to recount the story of the lost opportunity of growth in the economy because of high taxes. It is not merely a dispute or discussion over dividing up the size of my share of the pie versus another portion of the pie. It is also how we grow a bigger pie.

The issue at this point in international economics looking at Canada's overall situation in the world economy is that we are overtaxed. The highest priority at this point has to be giving real tax relief to average Canadians.

Standing Committee On FinanceGovernment Orders

4:15 p.m.

Reform

Grant McNally Reform Dewdney—Alouette, BC

Mr. Speaker, once again I am also a little baffled by my Liberal colleague's inability to understand that the government is responsible for spending.

He seems to believe that tax cuts cannot be given to individuals because we have to keep spending more and more money. That is the fallacy of the 50:50 plan over there. They continue on the path of wanting to spend 50% of the surplus and on the path of a lot of other wasteful spending that they are doing right now.

Would my hon. colleague expand on that misunderstanding? The Liberal government just does not seem able to grasp that concept.

Standing Committee On FinanceGovernment Orders

4:15 p.m.

Reform

Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, I will use the example of medicare which is dear to the hearts of Canadians. When we describe the difference between an American and a Canadian, we often find Canadians saying that they have a wonderful medicare program.

How do we provide safety and surety for medicare into the long term to ensure that it will always be there? With increasing demands, looking at the changing demographic characterization of Canadian society, we will have quite an economic pressure on our medicare plan.

Which party in the House will ensure in its economic plan that we have viable universal medicare? It is the Reform plan, by first of all going after tax reduction. That is how we will ensure and guarantee that we have the available resources to pay for medicare. In other words, we need a vibrant economy to generate the wealth to pay for the social programs we so desire.

Standing Committee On FinanceGovernment Orders

4:15 p.m.

Reform

Jim Hart Reform Okanagan—Coquihalla, BC

Mr. Speaker, it is an honour to rise on behalf of the people of Okanagan—Coquihalla to speak to the prebudget debate.

It is appropriate to mention that as we close the House that we have some 4,500 Canadians serving abroad in the Canadian armed forces on missions who will not be sharing this holiday season with their families. I think the House would join me in congratulating those members of the Canadian armed forces for their hard work in the year 1999 and to wish them the very best this holiday season.

My subject today on the prebudget debate will be defence. In 1994 the federal government formed the special joint committee to review Canada's defence policy to answer the question of what principles, purposes and objectives should guide our government in setting defence policy in a rapidly changing world.

The special joint committee of which I was a member studied the issue for eight months and literally interviewed hundreds of witnesses from coast to coast and internationally. The special joint committee concluded that there was a limit to which defence spending cuts and personnel reductions could go without compromising the combat capability of the Canadian armed forces.

We recommended to the Liberal government at that time in 1994 that the Department of National Defence should maintain a core budget of at least $10.5 billion and personnel levels of the regular force were not to fall below 66,700. I stress that at that time these figures were absolute minimums. Any cuts below these figures would require a corresponding decrease in the commitments of our troops and any increase in commitments would require additional funding to the department.

In response the Liberal government issued its 1994 white paper which laid out the groundwork for its declared official defence policy. In the document the government went to great lengths to state officially that it was the policy of the Liberal government to maintain combat capable forces. I quote from that 1994 white paper which states:

The Government has concluded that the maintenance of multipurpose, combat-capable forces is in the national interest. It is only through the maintenance of such forces that Canada will be able to retain the necessary degree of flexibility and freedom of action when it comes to the defence of its interests and the projection of its values abroad.

The white paper further states:

Canada needs armed forces that are able to operate with the modern forces maintained by our allies and like-minded nations against a capable opponent—that is, able to fight alongside the best, against the best.

Since making these lofty proclamations the Liberal government has broken its stated defence policy by consciously pursuing a defence policy that has literally stripped the Canadian armed forces of combat capability.

The Liberals have accomplished this in several ways. First, they have begun to pursue a foreign policy based on the fluffy and cuddly concept of soft power and human security. I will quote the Minister of Foreign Affairs, the defence minister's senior, who sees little value in the concept of a combat capable force. In the 1997 issue of the International Journal he stated:

A country's image is key to the use of soft power. An attractive set of values and an image as a trustworthy partner encourages other countries to consider and weigh our views.

He referred to soft power by saying that it:

—blurs, even counters, the perception of traditional power assets, such as military force.

The problem is that this idea of influencing other nations by using Canada's image as a country full of nice folks with nice values just does not work.

Let us look at how influential the foreign affairs minister was with the military junta that took over Pakistan recently. Does the Minister of Foreign Affairs really think Saddam Hussein or Slobadan Milosevic will really mend their ways after hearing about Canada's great values? It just will not happen.

Ironically even the creator of the soft power concept, Joseph Nye, understood that soft power meant nothing without hard power or military assets to back up that concept. Also the Liberal government slashed defence spending a whopping 24% to just over $9 billion, far below what was recommended in the 1994 special joint committee report. This has literally gutted the Canadian armed forces.

I believe many of my Liberal colleagues across the way, in particular those who sit on the defence committee, would agree with this point. The Liberal members, the Reform members and the Conservative member supported the defence committee's first report to the House calling for significant increases in defence spending as a percentage of GDP over the next five years. The finance committee has recognized the urgency of the situation and has recommended a five year increase for national defence.

The results of these massive cuts to defence spending were very predictable. Personnel had to be cut to 60,000, far below that which we recommended in the special joint committee and a dramatic drop from the 87,000 personnel we had in 1987.

According to the Conference of Defence Associations that appeared before the defence committee today, this number has fallen to about 56,000 or 57,000 because national defence cannot afford to replace the people it is losing through attrition.

As we all know manpower is essential to our combat capability. The army is particularly hard hit with personnel at only 65% of what is needed to achieve combat capability. The Conference of Defence Associations told the defence committee today that Canada's forces would be hard pressed to fulfil the Liberal government's 1994 white paper commitment to field a combat capable brigade size force. It argued that the Canadian army is really only combat capable at the company level, which is about 150 troops.

In Canada, with a population of some 30 million people, we are only capable of fielding a company of 150 personnel that are combat capable. We have seen how stretched our two battalions are in Kosovo and Bosnia. We have to bring home our battalion of 1,300 troops from Kosovo because we cannot effectively sustain two battalions in the region.

The army is getting so desperate that two weeks ago, members might have read in the press, Colonel Howard Marsh advised the government contrary to the government's own white paper on defence that it should cut the army to 10,000 personnel from the current 20,000 and make up the difference by using high tech gadgets. This idea is absolutely ludicrous.

The Conference of Defence Associations stated today that even with the army at its current size of 20,000 it is far too small. High tech gadgets will not make up the difference for the crucial role played by highly trained individuals in the army.

Just last month the Conference of Defence Associations stated during hearings before the finance committee that the Canadian forces were on the verge of a major breakdown in combat capability, unless the defence budget was increased by at least $500 million, climbing to $1.5 billion over the next few years.

It is important for me to mention again the mismanagement of the Sea King helicopters by the Liberal government. We have been waiting for six years for a replacement for the Sea King helicopter. Canadians still wait and this is unacceptable. We probably will not have replacement helicopters until the year 2008. They are literally falling apart. Pieces are flying through the air from Sea King helicopters. They need to be replaced and they need to be replaced now.

The Liberal government has broken its stated defence policy which claims Canada must have combat capable forces. Instead the Liberal government has consciously pursued a defence policy that has stripped our Canadian forces of much of its combat capability.

Before we get to the point of no return the official opposition calls on the Liberal government to increase defence spending by at least $2 billion over the next two years to reverse this decline in the combat capability of the Canadian armed forces.

Standing Committee On FinanceGovernment Orders

4:25 p.m.

Reform

Monte Solberg Reform Medicine Hat, AB

Mr. Speaker, the member for Okanagan—Coquihalla gave a very thoughtful speech. My question has to do with some of the responses the member received from the defence minister when it comes to questions of how stretched Canada's military is.

Both in response to questions about our ability to do peacekeeping and about our ability to keep the Sea King helicopters in the air, the minister has always assured the public that everything is okay and that they are not stretched beyond their capacity.

I wonder if my friend would care to react to that. It sounds to me like there is a contradiction. My friend is saying there is a huge problem and the Minister of National Defence is saying there is no problem.

Standing Committee On FinanceGovernment Orders

4:25 p.m.

Reform

Jim Hart Reform Okanagan—Coquihalla, BC

Mr. Speaker, the member is absolutely correct. The Minister of National Defence continually leads the Canadian public to believe that we do not have a serious problem with our defence forces and that every time a mission comes up it seems Canada is able to respond very quickly. The problem is that places tremendous stress on our troops. At this time, some 4,500 army troops are serving outside the country. That means three times that amount are needed to maintain that 4,500 figure. The reason is that 4,500 people are training to go on that mission, there are the 4,500 who are deployed on that mission already, and then recuperation time is needed, so there are another 4,500 people who have just returned from the mission and are taking time with their families and undergoing debriefing and training opportunities.

The whole concept of Canada's always being there and deploying more people with the budget constantly declining and the government foisting more missions on the armed forces is a very desperate situation that has come to a crossroads. We like to point these things out constantly to the Canadian public, but we always hear quite the opposite from the defence minister and the foreign affairs minister that everything seems to be fine. The Canadian public should realize this is a desperate situation.

The Canadian public has given its support to the Canadian armed forces in the missions we operate in around the world. It is time for the government to give the people in the Canadian armed forces the tools they need to do their job, whether it be peacekeeping or whether it be a combat role in hot spots around the world.

Standing Committee On FinanceGovernment Orders

4:30 p.m.

Etobicoke North Ontario

Liberal

Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I appreciate the input from all members as we continue this debate.

I am puzzled with the position of the Reform Party. In their platform Reformers talked about tax reductions but not starting until the year 2000. We would not have had any tax cuts at all. The Liberal government has already implemented tax cuts of 10%.

In their platform they talk about a tax cut package that in the third year of their proposal would cost the federal treasury $26 billion. They also talk about an equal amount against paying down the debt. That is $26 billion in year three for tax cuts and $26 billion for paying down the debt. If my arithmetic is correct, that is $52 billion. When I look at the document released by the finance minister a month ago and the surpluses projected forward by 11 of Canada's leading economists, it shows that in year three the surplus would be at a level of $12.5 billion.

Then the other Reform member was talking about increased expenditure on defence. Other members of the Reform Party have talked about increased expenditures on farm income relief. How does the arithmetic add up? How does this package fit?

Standing Committee On FinanceGovernment Orders

4:30 p.m.

Reform

Jim Hart Reform Okanagan—Coquihalla, BC

Mr. Speaker, the member has his facts and figures wrong. As has been pointed out, we would have offered tax relief in 1997 with the return of the $7 billion UI fund. To get to the heart of the matter and how we can say that we want to increase defence spending, we would not waste as much money as the Liberal government wastes on unnecessary items.

I do not have to go very far back to remember a $25 million program where we were giving out free flags to the Canadian public when the people in Bosnia and Croatia did not have the proper clothing to wear. The government wasted $25 million there and sent our military personnel literally having to exchange helmets and flak jackets as one unit was getting on the plane to come home and the other unit was getting off the plane.

I would tell the government that its priority in spending is out of whack 100%, it has been for years, the Canadian public has financed the deficit reduction the government takes claim for, and it is time to return that money to the Canadian public and use the priorities we as the official opposition have suggested to re-fund, for example in defence.

Message From The SenateGovernment Orders

4:35 p.m.

The Acting Speaker (Mr. McClelland)

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill S-3, an act to implement an agreement, conventions and protocols between Canada and Kyrgyzstan, Lebanon, Algeria, Bulgaria, Portugal, Uzbekistan, Jordan, Japan and Luxembourg for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, to which the concurrence of this House is desired.