Debates of Dec. 11th, 2001

The Budget

[Charles Caccia, Liberal, Davenport, ON]

Mr. Speaker, after listening to the debate today and question periods over the last couple of months, and the requests made by the official opposition, particularly by the leader of the official opposition, one cannot help but conclude that there is a profound sense of contradiction in the position taken by the official opposition in its demands over time for greater expenditure on the part of the government, particularly with respect to national defence, security, intelligence, transport, you name it.

There seems to have been an amazing discovery by the official opposition that there is a role for government to play, after having criticized, until very recently, the presence of government in all walks of life. We have seen almost a conversion on the road to Damascus on the part of the official opposition. It finally has discovered that actually there is a role for government to play, and not only that but that government should be spending more money.

We have heard this trend since parliament resumed sitting in the fall. This trend is so strong it almost leads us to believe there may even be an element bordering on hypocrisy. One cannot ask the government to do more and demand greater expenditure, as the official opposition has done, and then criticize the government for spending too much, as we have heard in the last 24 hours. In the last 24 hours we heard only complaints that the government is overspending.

Half an hour ago in the Chamber we heard the leader of the official opposition reveal his vision about Canada's economic future which is limited virtually to a vision of reducing the debt. That seems to be the major overriding preoccupation of the official opposition as represented by its leader.

One has to ask whether the opposition can have it both ways, whether it can continue to blame government spending and at the same time request the government to do more in specific fields as chosen by the official opposition. Obviously this kind of contradiction does not help the consistency of the position taken by the official opposition since being elected to that role. It is no wonder the official opposition will remain where it is at the rate it proceeds to elaborate on the role of government. It expects the government to spend when there is a crisis, but at budget time it criticizes the government for doing its duty, namely protecting the public and the public interest.

The main theme of the leader of the official opposition this afternoon has been a repeated desire, almost an obsession, with the elimination of the debt. I am very glad the government has not dealt with the reduction of the debt in the budget. Anyone with a minimum understanding of what the gross domestic product is all about would know that the gross domestic product, namely the economy of the country, keeps growing from year to year, sometimes at 3%, sometimes at 1%, sometimes in between, but the economic pie keeps growing.

Instead the debt remains at a certain amount. In proportion to the gross domestic product or in relation to the economic pie of the country, it is becoming less and less. This means that as the years go by and as the economy grows the weight of the debt over the entire economic pie will become smaller and smaller. For that reason, therefore, I am glad that in the budget no resources were devoted to the debt.

In addition I am also glad that there was no further reduction of taxes. As a government we saw a decision made in the last budget to reduce taxes to the tune of $100 billion over the next five years. This is a considerable commitment and a considerable amount of revenue lost for very good reason: to stimulate the economy. It is there and will certainly serve the purpose, but it is $100 billion which the government does not have to perform its tasks, duties and role.

The budget is very strong on national security, and so it should be. However one has to note at the same time that it is not strong on social, environmental or climate security. I would like to think there are measures in the budget which could help the workers at Algoma steel, for instance, and those who are becoming unemployed because of globalization and other competitive economic measures that are mercilessly affecting a large number of Canadian workers. It is therefore a gap which I would consider to be a temporary one.

Conditions made it necessary for the Minister of Finance to produce a short term budget in anticipation of the fact that once it is clear the strength of the economy will pick up, particularly south of the border, it will then be possible to produce a long term budget containing the dimensions that are missing in the budget today.

In particular I mention the fact that the predominant issue in the international scene when it comes to climate change, namely the ratification of the Kyoto agreement, requires a number of changes to our taxation system and, in particular, an appreciation of the fact that we need to encourage the development of alternatives to fossil fuels.

I am referring to various products such as ethanol, hydrogen and other means of producing energy that require a shift in Canada's taxation system so as to prepare the country for the reduction of dependence on fossil fuels and the adoption of new forms of energy which will make it possible in the long term to reduce greenhouse gas emissions and to achieve the targets we intend to arrive at by the year 2010.

That task is not a minor one and does require, from the perspective of the Kyoto agreement and the climate change challenge, taxation measures to be taken very early to obtain the desired results.

Each of the number of issues that the leader of the official opposition has raised deserves a lengthy rebuttal. For instance, he proclaimed the desire for capital gains tax to be further reduced.

Mr. Speaker, I can see that you are indicating that my time is up. I will have to leave it to another colleague of mine to continue with the rebuttal of the official opposition's speech.

[Leon Benoit, Canadian Alliance, Lakeland, AB]

Mr. Speaker, the hon. member in his presentation referred to the Canadian Alliance and said that we have said the government should spend more money. That in fact is absolutely not the case.

We have said that the government should spend more money in certain areas. We have said that overall spending should be lower. We have said that the government has to learn to prioritize spending. That is what we said. Never, never have we said that the government should spend more. We have said prioritize.

We have said let us do something about the wasted spending, grants and contributions. The auditor general pointed to $16 billion in grants and contributions that should be looked at and scrutinized properly. We have said let us end the wasted spending and regional economic development programs right across the country. We have said let us end the low priority spending, such as the spending that is going on now to help fund this leadership race. The industry minister, the health minister and the finance minister are all trying to fund the leadership race through taxpayer money. That is what we saw this time: the Prime Minister allocating the money to leadership contenders, saying that he wants to do it as fairly as he can. That is not a proper expenditure of taxpayer money.

I would like to ask the member if he understands now that clearly never has the Canadian Alliance asked for more spending. We have asked for prioritized spending. We have asked for more spending in health care, in security and in education. We have asked for a balanced budget. In no case should we start running deficits again. That is what we--

[The Acting Speaker (Mr. Bélair)]

The hon. member for Davenport.

[Charles Caccia, Liberal, Davenport, ON]

Mr. Speaker, the hon. member for Lakeland has a very poor memory and a faulty one on top of that, because every day since we resumed in September he and his colleagues have been up asking for more expenditures here and more expenditures there. Not one day went by in question period when the official opposition members did not get up and ask the government to play a stronger role than it has so far and to spend more on specific things.

Of course if one were to add up the total cost of the requests made by the various critics on the part of the official opposition, it would be a hefty amount of money. The member for Lakeland has to realize that he cannot have it both ways. In other words, the official opposition cannot ask for greater expenditures and at the same time for reducing the budget, or it cannot ask to have more money invested in certain specific sectors and at the same time to proceed with tax reductions. These are contradictions that are available to anyone who has taken economics 101. Perhaps the member for Lakeland will one day take a course in economics and learn the basics of that fine art.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I listened carefully to my colleague's speech. I must say, he normally seems to be a reasonable person, but I am surprised to hear him in his speech today defend the government so staunchly. I am disappointed about that.

I would like to hear what he has to say about security. What does he think about the security of Canadians who will lose their jobs? What does he think about the EI surplus, that will reach $42 billion by the end of March 2002, and that the federal government and the Minister of Finance are using to gouge people, workers who lost their jobs, in order to balance the budget?

What does my colleague—normally a reasonable person, who is defending the government very passionately—think about this budget that offers absolutely nothing to workers who will lose their jobs?

[Charles Caccia, Liberal, Davenport, ON]

Mr. Speaker, if the member for Acadie--Bathurst had listened to my speech, he would have heard me making a reference to the workers of Algoma Steel. I did ask in my intervention as to what are the measures in the budget that would help them. I admitted the fact that in this budget the social security and the environmental security dimensions are missing. I expressed the hope that in the next budget, when the economic picture will be clearer to be interpreted, those two dimensions will be addressed.

[The Acting Speaker (Mr. Bélair)]

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 Cariboo—Chilcotin, Forest Industry; the hon. member for Davenport, the Environment; the hon. member for Burnaby—Douglas, Justice.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, the budget presented yesterday by the Minister of Finance is very disappointing. We already knew that would be the case. Last October, when the finance ministers met, this government suggested that there would be no new money for health and education. It did no more than commit to protecting projected transfers. Quebec still believes that Ottawa has enough money in its sock to offer some help.

As always, we think that the minister overestimated his spending and underestimated his revenues. He says that the surplus will amount to $11 billion for the two fiscal years covered by the budget but, according to our estimations, it will be $24 billion. We can come back to this later because we have been pretty accurate these last five years. We were off by about $4 billion for the last five years, meaning for the last five budgets presented by the minister, whereas his projections were off by $60 billion. Who is right? We can discuss it at the end of this fiscal year.

There is not one measure in this budget to get the economy back on its feet. As I said earlier, the Minister of Finance is hiding behind his inability to estimate his revenues and surplus to put this budget over on us. Once again, he is providing us with proof that he has serious credibility problems. Recently, once again, the federal surplus reached the level we had predicted, $13.6 billion. Now, he tells us he has no room to manoeuvre. Even the surplus in the EI fund was $3.7 billion, when the chief actuary had said it was $7 billion.

In our opinion, a budget was appropriate, but it ought to have been far more proactive. The real challenge to the Minister of Finance ought to have been to put together a body of measures that were more likely to bolster consumer confidence, and this he has not managed to do.

In the context of September 11, an investment in border security constitutes a strategy decision that cannot be avoided. This we admit. Yet we hardly need point out that, even before September 11, when there was no problem with air security, we were already at risk of a recession. In order to counteract the economic downturn, capital projects need to be accelerated, small and medium-size businesses in difficulty given assistance, and investment encouraged. In all, with a margin of maneuverability that is far greater than that of Quebec and the other provinces, the federal government ought to be sending out a clear message, demonstrating its leadership in reviving the economy so as to minimize job losses in the coming months.

The exercise has missed its target, and the minister has settled for presenting a budget just for the sake of form. As a number of analysts have been saying today, what we got yesterday were advertisements, rather than the budget we were entitled to. It is as if the government had bowed to the pressure, and did not want to be accused of doing nothing to deal with the recession. In fact, it was never convinced that budgetary intervention was needed. The Minister of Finance is counting on the billions of dollars invested by the Americans to stimulate our economy. As for the rest, he hopes that the drop in interest rates and the tax reductions announced last year will have the desired effect.

His lack of originality and courage can be seen in his decision to invest $2 billion in a new strategic infrastructure foundation, if, and only if, he records a surplus this year or next. It was not even included in the tables he presented yesterday. This foundation depends on there being a surplus. Instead of providing for a measure in the event of a catastrophe, the Minister of Finance is going to take money, cut the amount in half and create a foundation. We can see there is no point getting excited over this foundation just yet.

Municipalities must not count on it right away, because legislation will have to be passed in the House, and we know how long the procedures are. After a bill is tabled, it has to go to committee for study and then, after it has been examined in committee, it has to be passed by the Senate. So we will not see this foundation tomorrow.

Clearly the Liberal government is pursuing its strategy to establish a centralizing government, acting contrary to consensus. The foundation is an intrusion, further interference in areas of provincial jurisdiction. It is inconceivable that non elected officials could be given the task of negotiating directly with elected municipal officials.

It is outrageous to think that the Quebec transport minister would have to negotiate with board members of a foundation instead of his federal counterpart. Is it not the role of government to decide which roads, congress centres or water purification plants get priority?

What the public must understand is that the sole aim of these foundations is to give jobs to pals of the Prime Minister. A lovely parting gift. The public also has to know that these foundations will be funded by budget surpluses, one way of getting hold of the money left over at the end of the fiscal year.

The auditor general is critical of these foundations because they alter the government's financial data.

As we all know, since the idea of a ministry of state for urban affairs came up in the 1980s, the federal government has not been able to hide its intention to bypass the provinces and negotiate directly with the municipalities. Therefore, the objective of the infrastructure foundation is twofold: to exempt significant amounts of money from being monitored by parliamentarians, and to strengthen the federal government's authority to influence the Canadian economy.

When it created these foundations, the Liberal government explained that they would attract capital money from the private sector. This is true in the case of the Canada Foundation for Innovation, while for the others, contributions from major companies are rather rare.

At the time, we were told that these foundations were ad hoc measures, which would not be in place for more than 10 years. But the interest accumulated in these bank accounts suggests that these foundations are not going to run out of money anytime soon.

As for international humanitarian assistance, we expected Canada to show its intention to set a timeframe to reach the OECD's objective of spending 0.7% of the GDP on assistance to developing countries. We have already called for this in the House. As we all know, a $1 billion investment in international aid has a much greater impact than the same amount spent on defence.

As I have already stated in the House, in order to be effective, the fight against terrorism must involve not only military operations, but also a fight against poverty, which is a breeding ground for violence.

This lack of inspiration is also reflected in the unacceptable decision to not invest more in health services. How can the Minister of Finance tell the Canadian Press that health has without question been the number one priority of the federal government, when he is merely meeting his October 2000 commitments?

Is this the government's priority? There is nothing in the budget. There is nothing for health care and education. There is nothing for the poor. Nothing. There are no measures to fight poverty.

Health care funding is a huge challenge for provincial governments. The federal government's withdrawal from health care is unacceptable. The federal contribution has been shrinking steadily over the past 25 years. It is now only 13 cents on every dollar invested. This is what the government calls its number one priority.

Yet health care programs in Canada are not a federal but a provincial responsibility. Ottawa does not have to administer hospitals, pay nurses, negotiate with physicians, develop payment schemes or decide which services need to be funded; the provinces look after all that.

In spite of that, yesterday's budget did not contain any measure aimed at increasing health transfers to the provinces.

Since 1993, this government did not put one penny of new money into the system. Even medical specialists in Quebec blame it for problems in that province's health care system. The Fédération des médecins spécialistes du Québec supports Canada's provinces in their request for an increase in federal health transfers.

They say that there is a true fiscal imbalance in that sector. The fluctuations in federal transfers from one year to the next do not allow players in the health care system to do proper planning. Moreover, these transfers should be indexed because of increased costs related to new technologies, the aging population and escalating drug prices.

The opposition and the Bloc Quebecois are not the only ones complaining that the government is not meeting these priorities, that is increasing transfers to provinces and indexing these transfers because of increased costs related to the aging population and new technologies. So are Canadian nurses federations and the Canadian federation of physicians and health workers federations in Quebec.

By letting the provinces fend for themselves, the federal government is being very disgraceful. By refusing to pay its fair share of health care costs, the Liberal federal government becomes the greatest danger that threatens the universality of our health care system.

Now for the situation with the unemployed. Not one word about them in this budget, except for the fact that the unjustified and unexplained surplus from the employment insurance fund will be used to finance the government's current spending instead of helping those who need it.

It is unthinkable that the unemployed are paying off the Government of Canada's debt. How does the government do this? By maintaining premiums at levels that are too high, by limiting access to benefits and the length of the benefits period and by thumbing its nose at the program's objectives.

The auditor general stated in her report that the management of the fund's surplus did not respect the spirit of the Employment Insurance Act. The surplus has had a direct impact on the government's financial situation. Without it, the government would have had a surplus of $8 billion rather than $17 billion by the end of the fiscal year ending in March, 2001.

The government has not even come up with a program to help older workers who have been laid off. The re-evaluation of the federal government's position to follow up on the recommendations of the Standing Committee on Human Resources Development on employment insurance can be summed up as tens of millions of dollars for education.

In fact, the only good news on this front is the shorter waiting period for apprentices, but this government continues to pilfer from the fund.

The Minister of Finance boasts that he has kept the tax cuts already announced. The Bloc Quebecois was expecting much more. This government has not come up with any significant measure to rebalance the tax cuts in favour of low and middle income households. Again, it will be the richer members of society who benefit from the cuts, the rich friends of the members opposite.

The budget is immoral when it says nothing about the use of tax havens. Here again, the government is allowing large sums of money, which have a major impact on the Canadian tax base, to leave the country. Need we remind the government that fewer than 2% of non-residents of Canada filed a tax return last year. In addition, under the Canada-Barbados agreement, it is apparently possible to transfer capital gains totalling more than $800 million.

By contrast, what has this government announced to alleviate the housing crisis? The budget confirms a $680 million grant. This is nothing new. It has been known since the federal-provincial conference on this topic. Is it enough? Apparently not. The housing crisis continues to worsen, according to the latest CMHC report. We are experiencing an unprecedented housing shortage. The vacancy rate in Canadian cities is 1.1%, the lowest since 1987. In the riding adjoining mine, in Sherbrooke, the rate has dropped from 4.7% to 2.3% in the last year.

My Bloc Quebecois colleague, the member for Sherbrooke, could say more about this. Certainly, the federal budget brought down yesterday provides for $680 million, including $162 million for Quebec. This money will cover only 6,500 new social housing starts in partnership with municipalities.

In Montreal alone, 11,000 more units are needed. The federal government's withdrawal from social housing funding in 1994 has deprived Quebec of some 50,000 units.

This budget announces the introduction of the first new tax since the GST. This one should be called “the September 11 tax”, and it will enable the government to recover the $2.2 billion it has put into improving airport security. I should point out that any permanent resident wishing to obtain the secure identification card, which is to come into force in June, will have to pay $50 for it. On top of that, next April 1, travellers will have to pay an additional $12 each way, $24 for a round trip within Canada, to be collected when plane tickets are purchased. This will help impoverish remote regions still further.

What the public needs to keep in mind is that the government is going to move ahead with new air security measures, but above all that airline passengers will be the ones paying for them. This new tax is likely to have a very damaging effect on an industry already very hard hit by the terrorist attacks of September 11.

In this respect, Canadian measures are far from matching those announced by the U.S. government, which is giving a credit to everyone taking domestic flights. We are far from doing what representatives of ACTA, the association of Canadian travel agents, called for when they presented their brief to the Standing Committee on Finance.

This tax will apply equally to a $800 Air Canada ticket and a $150 WestJet ticket. It will be over and above all other charges travellers have to pay, such as fuel surcharges and airport improvement fees.

This government would have done well to follow the proposals that we made in our economic stabilization plan. Quebec's ideas are good: when it comes to taxes, allowing businesses to defer their corporate tax installments for six months is a measure the Bloc Quebecois asked for two months ago.

We commend this measure, just as we commend the tax credit for apprentice mechanics that we proposed and defended here in this House. The only problem: these measures are clearly insufficient without other meaningful measures to support business.

In closing, allow me to briefly recap yesterday's sad spectacle here in the House.

The Minister of Finance generously helped himself to the employment insurance fund surplus to finance newly announced measures instead of giving workers a real break on employment insurance premiums. This government could also have given employers a break on premiums. Everyone is tired of paying more than is needed to the employment insurance fund.

Environmental groups felt abandoned; meanwhile, everyone is concerned about pollution related problems. The government seems to be ignoring the fact that each year, 16,000 people die because of poor air quality. It is far from achieving what the Bloc Quebecois asked for in order to make good on the Kyoto agreement, with the exception of wind energy.

In keeping with his practice of sprinkling investments over various areas, the Minister of Finance brought down a budget as a matter of form and to please our American neighbours. It is as if his intent was to reassure the Americans, who wanted increased security for the continent.

The minister could have done a lot more for the provinces. From taxes on tobacco alone, he will take in an additional $400 million in 2002. He could have worked with the provinces to prevent their having deficits and support their initiatives to stimulate the economy quickly pending the economic recovery.

As is his wont, the Minister of Finance is considerably underestimating the budget surplus and withdrawing $13 billion from public debate.

He is not giving even a cent to health care and education and is leaving the provinces to struggle with funding for these priorities, including those of Quebecers.

As the time allotted me is going quickly, I will conclude by saying that, apart from providing investment to strengthen security measures and defence, the Minister of Finance's budget is timid. It lacks vigour and vision. It contains nothing of note for the economy. It does not even offer a cent to the middle class. It is a failure.

[Jean-Yves Roy, Bloc, Matapédia—Matane, QC]

Mr. Speaker, I want to thank the hon. member for Drummond for her excellent speech. I have a simple question for her.

I would like to know if, in her opinion, yesterday's budget can help our economy get back on track immediately.

Will the measures proposed in the budget allow us to create jobs tomorrow, considering that, following the September 11 events, the economic slowdown and the number of jobs that were lost, concrete action is truly necessary to revitalize employment?

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, I thank my colleague for his question. I think I have spent the past 20 minutes demonstrating just that. There is nothing in this budget to boost the economy. I am not the only one saying that. Based on the articles I have had a chance to read today, analysts across the country agree that the Minister of Finance missed the mark in terms of stimulating the economy.

There is nothing. The tax reductions were already planned. There is nothing new, no new money. What would have been really important is an increase in the Canada social transfer to help the provinces faced with serious problems in the health sector. The rate of funding for education has never been so low. Something should have been done in that sector as well.

Investing in services stimulates the economy, because more people can be hired to provide these services, particularly in hospitals.

There is nothing, apart from the instalment payments called for by the Bloc Quebecois. This was also a measure favoured by Mrs. Marois in her last budget. Apart from the deferral of installment payments for six months, there is absolutely nothing to help industries or companies.

There are many companies in my riding. I think that all entrepreneurs are now starting to dip into their reserves because of the economic downturn. We must not mince words. We are now in a real recession. These people are worried. They expected the Minister of Finance to help them out until the economy rebounds. This is not what is being offered in the budget brought down by the Minister of Finance yesterday.

In our view, this budget does nothing but make announcements regarding security, defence and so forth. We have nothing against the federal government taking meaningful action to ensure the safety of Quebecers and Canadians. But we were expecting more. The Minister of Finance is still keeping us in the dark and fiddling with the books. In our opinion, he had another $6 billion available to reinvest and put the economy back on track.

[Shawn Murphy, Liberal, Hillsborough, PE]

Mr. Speaker, I want to advise the House that I will be sharing my time with the member for Etobicoke--Lakeshore. I congratulate the Minister of Finance on the budget tabled in the House yesterday.

I had the privilege of serving on the House of Commons Standing Committee on Finance as part of the budget process. The committee had in excess of 70 meetings and we heard from over 500 groups and organizations. I attended many other meetings leading up to yesterday's budget, including at least two caucus consultative meetings and one consultative meeting in my riding of Hillsborough.

The budget is the most important document that the government tables in the House in a given year. It sets out the policies, programs and priorities of the government.

Last Monday I spoke to a Canadian Alliance motion on the budget. At that time I urged the Minister of Finance, first, to allocate sufficient resources to deal with the security of the nation. I am talking about security from an economic sense and from a physical sense.

Second, I urged the Minister of Finance not to go back into a deficit under any circumstances. We had large deficits under previous Conservative governments. Canadians have been there. They have seen the destruction they cause to the economic and social fabric of our nation. One message that resonated from the mouths of Canadians from coast to coast was that the government was to avoid a deficit. That message came out loud and clear during all those hearings.

Third, I spoke about Canadians who told us it was imperative that the government maintain the $100 billion in tax cuts and the $23.4 billion in transfers to the provinces which would be used for health care and child care services. That was agreed to by our Minister of Finance in September 2000. These tax cuts, together with the many interest rate cuts announced by the Governor of the Bank of Canada over the past number of months, would continue to provide the necessary monetary stimulus to lead the country out of the downturn we are presently in.

Fourth, I spoke of confidence. That is an important issue during this downturn. We must have the confidence of consumers, investors and business people. We must have confidence in the financial future and that the minister knows how to deal with the economic downturn we are presently in, that he has a plan, that he is prepared to act and that he will act.

I am pleased and proud that the budget tabled in the House yesterday addressed those four concerns. I am pleased the government would allocate the necessary resources to deal with the issues facing the nation's security. National security is a complex issue and an issue which cannot be solved immediately. The finance minister has dealt with security in all its facets.

Money would be allocated to increase funding for the RCMP, CSIS and other security related departments, as well as for general government emergency preparation. There would be funding for air travel security. There would be $1.6 billion over the next five years for screening of immigrants and refugees. There would be a considerable amount of money, $646 million, allocated to enhance border operations. There would also be an additional sum of money for border infrastructure.

I am pleased our finance minister chose not to lead us back into a deficit. That would have been the easy solution. That would have been the course followed by a weaker government and a weaker minister. However that was not the course followed yesterday.

The expenditure of the assets of future generations is a path that Canadians do not want to walk down. It is a path that the government will not travel. I am pleased that the Minister of Finance has not in any way altered the massive tax cuts initiative he announced in September of last year. I am pleased the $23.4 billion package that was subject to the health care agreement made among the Government of Canada, the 10 provinces and the three territories last September was untouched by the government.

Last, I am pleased that our finance minister has taken a balanced approach from a fiscal and monetary point of view. It conveys a strong message to all Canadians that the government has the finances of the country under control. It is prepared to make tough decisions to govern the nation. It understands the tough economic circumstances of not only this country but every country of the world. It is prepared to act on the circumstances.

The issue of confidence is important in all its facets. Confidence will be shown by business and investors as we go forward from this day onward. That confidence, if seen, would be supported by tax cuts; by increased health care expenditures; by the absence of a deficit; by lower interest rates which are very important; by security spending which is needed; by border enforcement initiatives that would allow goods and services to flow freely across our borders, specifically between Canada and the United States; by support for the innovation agenda; and by a certain level of monetary stimulus into the economy.

We are governing in challenging economic times. Our GDP growth is down and will continue to be down for the short term anyway. The government's revenues are down and unemployment is up slightly.

The government has two instruments at its disposal in dealing with such circumstances. It has the fiscal policy which entails a massive investment of public funding, and some parties in the House want the government to embark upon a massive program of public spending.

The second tool is monetary policy. That is probably more important. We have a good combination of monetary policy with the tax cuts and through the interest rate relief provided to us by the Governor of the Bank of Canada. Whether it was good luck or good management, the $100 billion tax cuts announced by our finance minister last September are coming into play right now. That is the medicine that is needed for this downturn.

On the issue of monetary policy I want to address briefly the effect that the combination of tax reductions and lower interest rate policies would have on the average family. According to the calculations that were in the budget document there would be an approximate $2,200 reduction, assuming a family had a $100,000 mortgage. That is about $1,100 of tax relief. This depends on the circumstances but it is over $3,000 and could be as high as $4,000 in tax relief for that family.

I am pleased that our Minister of Finance has followed the course that he outlined yesterday. He listened to Canadians from coast to coast. He listened to colleagues on both sides of the House. He has drawn up a very positive plan to secure the progress of the nation in a very uncertain world.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I am surprised to learn that my hon. friend from Hillsborough, whom I respect and with whom I share a seat on the finance committee, found nothing to criticize in the budget insofar as he joined me in concurring in the recommendations of the Standing Committee on Finance. Does he still believe in the recommendations?

On page 27 of its report the committee recommended the government limit its program spending to inflation plus population at 3%, a level less than a third of the 9.3% included in the budget. On page 80 it recommended we immediately eliminate the capital tax. This is not mentioned in the budget. On page 26 it recommended we reallocate spending from low priority areas to finance any new security spending. Not a dime of this is provided for in the budget.

On page 30 the committee recommended the government provide a five year planning horizon. The budget provides a two year planning horizon. On page 82 the committee calls for the government to consider a yearly basic exemption for EI premiums. This is mentioned nowhere in the budget. On page 113 the committee recommended the government sell its shares in Petro-Canada to pay down the debt, realizing $2 billion in liquidated assets. This is mentioned nowhere in the budget.

On page 31 it recommended the government use its contingency to pay down the debt. The contingency disappears and is no longer directed toward the debt.

Finally, on page 33 the committee recommended all new spending be subject to the program review criteria outlined by the committee. This again is not mentioned in the budget.

How could the hon. member have signed on to these substantive recommendations, of which not one iota is reflected in the budget, and still endorse it?

[Shawn Murphy, Liberal, Hillsborough, PE]

Mr. Speaker, the hon. member is quite correct. There are a number of initiatives and suggestions in the report of the finance committee. I supported it, signed on to it and agreed to it. The suggestions include the YBE or yearly basic exemption and the reduction or elimination of capital taxes. These are good programs. I will not stand here today and say I do not support them.

However we must take everything in context. Everything cannot be done immediately. There is a certain issue of affordability and balance. The finance minister is dealing with challenging economic times. He must take all Canadians into consideration. He has done an excellent job. The balance is there. The initiatives are in the report. I hope our finance minister and our government will see fit to implement them at some point in the future.

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I am pleased to join in the debate on Budget 2001. I congratulate the Minister of Finance for bringing down this balanced and timely budget. I also thank all Canadians, in particular my constituents in Etobicoke--Lakeshore, who participated in prebudget consultations and offered advice to the process.

The budget is a good one. We have heard comments about the recommendations of the finance committee. I think we gleaned the best of the suggestions and recommendations from the committee.

Budget 2001 responds to the realities of the uncertain times in which we are living. There is much concern in the public about economic uncertainty and personal security. The horrific events of September 11 have touched our shared sense of security and put additional stress on the already ailing global economy.

In the aftermath of the tragic events of September 11, I have heard from many of my constituents through correspondence, e-mails and meetings all expressing their thoughts and feelings about the threat of terrorism, their personal security and the impact of the events on their jobs and the Canadian economy as a whole. They have told me they want the federal government to ensure the safety of our communities and society. They want the government to take steps to keep terrorists out of Canada and to stimulate the Canadian economy.

In the budget the Liberal government identified national security as an area of high priority. It is committed to providing the financial resources necessary to protect Canadians. Though we are in a difficult economic period the measured and balanced approach taken in Budget 2001 will serve to restore confidence in our economy and the confidence of Canadians in their personal safety.

Ensuring the security of Canadians in the fight against terrorism cannot be done without making sound and solid investments where they are most needed. That is why the budget has committed a total of $7.7 billion over the next five years to enhance the security of Canadians. This investment is based on a plan to increase resources to Canada's intelligence and policing agencies, to enhance screening of new entrants to Canada both at our borders and abroad, and to enhance faster and more thorough screening of refugee claimants.

Providing better emergency preparedness and military deployment, Budget 2001 provides $1.6 billion to support Canadian military participation in the international war against terrorism, to fund military equipment purchases and to double the capacity of joint efforts to make air travel more secure by creating a new air security authority, providing armed undercover police officers on Canadian aircraft and providing better trained personnel to screen passengers and carry-on baggage.

We heard today the Minister of Transport as well as the Minister of National Defence speak to the support they are giving to the various programs. The measures address pressing concerns and are in line with Canada's international obligations in fighting terrorism.

Newcomers to Canada choose this country as their home because we put a high premium on the values of tolerance, respect and diversity. We are a nation that cherishes the values of freedom, equality and democracy. Like many of my constituents I was saddened in the wake of September 11 to read about attacks made on individuals in various communities who have been the target of intolerance owing to their country of origin, their ethnicity and their religion.

It is in times of crisis that we need to stand united as a country. We do not need to make scapegoats of each other. We need to pull together and draw on the strength of our diversity. The $9 million in funding provided by the budget aims to foster, respect and promote values which demonstrate that the federal government is conscious that divided communities are not in the best interest of Canada's social development. The new funding will be used to support the multiculturalism action plan put forward by the minister for Multiculturalism.

Core elements of the plan include: working in partnership with relevant federal departments to develop the intercultural training and tools to strengthen community relationship and trust; developing broad based educational tools, public awareness and Internet based information tools; working in partnership with community and voluntary organizations to build capacity, strengthen community cohesion and enhance intercultural and interfaith understanding; and partnering with local police and municipalities to assist with the development of strategies and programs to enhance outreach and to develop social cohesion.

As the finance minister stated in the House yesterday, personal and economic security go hand in hand. We cannot move forward as a country without sticking to sound fiscal management and making investments in Canada's human resources.

Budget 2001 is the government's fifth consecutive balanced budget in five years. This is a record, the first in 50 years, making us the only G-7 country to balance its books this year. This is something we as Canadians need to be proud of. As a result of the government's strong and prudent fiscal management Canada's debt to GDP ratio will fall below 50% next year for the first time in 17 years. I know our opposition is pleased about that.

My constituents and all Canadians can take pride in the fact that the sacrifices we have all made to put the country together are paying off and putting us on a strong financial footing. With the budget the federal government reaffirmed its commitment to enhancing the quality of life of all Canadians. We live in an era where technical skills are driving the engines of economies. Investing in Canadians will ensure they have the skills and tools to participate in a competitive and technologically driven global economy.

Canada must have a highly skilled and educated labour force to lead the way. Our long term prosperity depends on these factors. That is why the budget follows up on the Canada opportunities strategy, the Canada millennium scholarship and Canadian education grants with $10 million over two years to improve supports for persons with disabilities to obtain higher education, $15 million a year to encourage the acquisition of trade skills by changing the provisions of the EI program so apprentices in approved programs are subject to only one week waiting period before they start receiving EI benefits, and another $5 million a year to exempt from income tax any tuition assistance for adult based education provided under certain government programs including EI.

Canada is a generous nation. We can take pride in knowing that when individuals are fleeing persecution in various regions of the world we will not abandon our humanitarian tradition. The people of Afghanistan and those who receive our international assistance will know that what we have put in the envelope will be providing some support for them.

Since the Prime Minister has restated his commitment that development in Africa will be the main theme of the G-8 summit, I am pleased that the trust fund to assist Africa to the tune of $500 million will create a partnership so we can work with institutions in the international sphere to promote sustainable development in Africa.

This is a good direction, a good budget. I call on all my colleagues to see the spirit, the sense and the commitment that there is to move our country forward.

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Mr. Speaker, even though I have great respect for the member who just spoke, I have to admit that only a Liberal could like this budget.

I ask her to turn to page 92 of the budget, table 5.1 expenditures. When she said that $1.6 billion would go to the military, she made it sound as if the money would go right now. The reality is that $400 million of that will go to emergency preparedness which has nothing to do with the military. It will go to other agencies. The fact is that $510 million of the money has already been spent on Operation Apollo and on military purchases, that is, the refueling and the sealift capability. That leaves close to $700 million over five years.

Only the arrogance of the Liberal government could give us a five year budget that is planned long after it assumes it might win the next election. The reality is that we can only take the budget for the term of this mandate. The Liberals gave us a budget that exceeds the mandate of their government.

It is only because of the Liberal government's arrogance that it can get away with this. It is surprising because the Liberals have a lot of very decent people on that side of the House. However to present a budget for Canada that extends the length of their mandate is unbelievable.

The one thing the member completely forgets when it comes to the military is that there was not one red cent and not one word about the Sea King replacements. Where is the money? Where is the deadline? Where is the timeline for the replacement of those helicopters?

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, one thing about a debate in the House is that it gives the questioners the opportunity to put their concerns on the record, regardless of the fact that my speech addressed some crucial issues and some crucial areas that I was hoping the member may have focused on.

To respond to the fact that we as Liberals are looking to the long term, I think the member would want us to be strategic and to look to the long term. I think he would want us to live longer than today. The budget addresses not only today but it looks at where we came from and where we are going with the hope that with good, strong fiscal management and with changes in the economic situation we will be able to meet all the requirements that are asked and demanded of us at this time.

The budget responds to a whole series of issues that the member has overlooked. When the member talks about Liberal arrogance, that terminology should be used in some other forum outside the debate and outside the remarks I made around the budget we presented, which is a reasonable sound budget and one that meets the demands that have been placed on us as a result of September 11. It also meets the requirements of the issues that face us.

Members asked us for a budget over and over again in the House. I heard members ask when we would have a budget and why the finance minister was not bringing in a budget. We have done what is possible to do at this point in time.

I hope the member will settle down, reread, see the direction in which the budget is taking us and see that we are not shortsighted but that we can look beyond today.

[Loyola Hearn, Progressive Conservative, St. John's West, NL]

Mr. Speaker, the hon. member, in referring to the couple of little issues dealt with by HRDC, followed by saying that we were a generous nation.

I wonder where her generosity was in dealing with the many people who did not get enough work this fall to qualify for employment insurance. People are waiting to get their Christmas cheques because the minister indicated they would get them. She then sent out a directive saying that they would have to beg and they would get one week.

Where is the generosity? Where is the $40 billion surplus that will not go to help people in need across the country? Businesses and people have contributed but the government goes around bragging about what it is doing. What it is doing is balancing the budget on the backs of those poor people.

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I think that question has been addressed several times in the House by this member and others to the minister, who has responded in terms of what needs to be done and what is being done in HRDC to make sure that at this time of the year the constituents who are looking to HRDC for their cheques will get them. He knows this is happening.

[Leon Benoit, Canadian Alliance, Lakeland, AB]

Mr. Speaker, I was going to start by saying that I am very pleased to be speaking to the budget, but as you will see from my presentation, I am not quite as thrilled as I might be if it were a different budget.

When we are looking at a budget and analyzing the effectiveness of a finance minister and a government in a particular budget, we want to measure that against what has been asked for by Canadians.

From various polls that have been done over the past several months, I want to mention what Canadians in my constituency and across the country have been asking for. The first thing the polls say, and what my constituents certainly say, is that Canadians want increased spending in health care. The second thing Canadians want is the government's commitment to improve security measures. The third thing Canadians want are reduced taxes. The fourth thing Canadians want is debt retirement.

Those were the things Canadians wanted to see in the government's budget. They also added some caveats to the whole thing. They said that under no circumstances was there to be deficit funding on the part of government. They made that clear. They also wanted the government to prioritize its spending so it could meet the needs and desires without running deficits. It was a matter of setting priorities.

Let us look at what the government has done in terms of the four main things Canadians wanted to see in the budget

First, what did the government do in the area of increased spending on health care? There is not one dollar of new spending on health care. Canadians will certainly see that as a complete failure.

The second area concerns reduced taxes. Not only is there no further reduction in taxes through the budget, but there are actually tax increases. For example, there is $2.2 billion over five years through the new airport tax to help pay for security. There is in fact an increase in tax, not only that, there are some others in the budget as well. I think Canadians will certainly judge that on the issue of tax reduction the government's budget has failed.

When it comes to debt retirement, even if there were a surplus at the end of this year, the government has said that not a penny of it will go to debt retirement. It will go to other program spending. On the issue of debt retirement, the third issue to which Canadians referred, the government has failed.

Let us go to the fourth area, which is the area of improved defence and security. On this issue I want to take a little more time. Being the official opposition defence critic, I particularly want to look at the defence aspect, but I also want to look at the whole security aspect to some extent.

Mr. Speaker, I would like to mention right now that I will split my time with the hon. member for Crowfoot. It is better to tell you now than not at all and take his time as well, although with the kind of presentation he gives, it could be kind of borderline anyway. He will have a lot of important things to say so I am looking forward to his comments.

I heard a couple of government members say that the Canadian Alliance members had asked for a lot of increases in spending and now they were being critical. That is true, we did ask for a lot of increases in spending, but we wanted it targeted to exactly the areas asked for by Canadians. We wanted it to go into health care and into security, both of which are important to Canadians. Security is important because of the events of September 11, although the threat has been there for some time.

In response to my questions today, a couple of members said that we could not have it both ways, that we could not ask for increased spending and then criticize the government when it spends too much.

Well we can because what the government fails to understand is that we can target spending much better. For example, as the auditor general pointed out, the $16 billion that goes to grants and contributions is improperly scrutinized. Much of it goes to friends of the Liberals. We have seen various demonstrations of this over the past couple of years.

Spending should be scrutinized and the money should be better spent. It has actually been proven that regional economic development programs are harmful to the very regions they are there to serve. That could be eliminated entirely. We also have low priority spending areas, such as much of the spending the finance minister has allocated equally, as he puts it, between the various leadership candidates in the Liberal leadership race. The industry minister, the health minister, the finance minister--

[An hon. member]

The defence minister.

[Leon Benoit, Canadian Alliance, Lakeland, AB]

No, not the defence minister as far as I know, but it certainly includes the foreign affairs minister. Money has been allocated to all of them so they can all go into the leadership race using taxpayer money. The government fails to understand that much of the spending is low priority spending and that it needs to set some proper priorities.

This particular budget has been billed as a defence and security budget so one would expect the government to show the very best it is going to offer for some time in the area of defence and security. Let us look at what in fact has happened.

The government has talked about, and this a figure put out by the finance minister, $7.7 billion for defence. I thought that was in line with what the Canadian Alliance had asked for. Well it is not because $2.2 billion of it will be financed through a new tax at airports. Then there is another $500 million, which brings it down to $5 billion, which is what the finance minister pointed to. I looked at this figure and thought it was kind of in line with what the Canadian Alliance had pointed out was needed, but no, that was not the figure because that $5 billion is not per year, it is over a five year period. The government is spending about $1 billion per year on security and defence, which is less than the money it gives to CBC. That is unacceptable. That is in a budget that is designated as a defence and security budget.

If we listen to what the government says, the defence portion of the budget is about $1.2 billion. In fact a couple of government members threw out the figure of $1.6 billion or $1.7 billion, but $1.2 billion is the figure that most point to. The fact is that amount is over five years. About $600 million of that is not spent on the military at all. It is spent on OCIPEP, the Office of Critical Infrastructure Protection and Emergency Preparedness, and on other civilian uses.

When it is all sorted out and the $200 million and some that goes to fund the war in Afghanistan is taken off and the incremental costs of war are taken off, we are down to the bottom line, which is that the military portion of spending in this budget is less than $.1 billion per year.

Let us measure the budget against what the auditor general has called for. Last week the auditor general said that to hold the military at its current level, to provide proper maintenance and operation and to replace the equipment that has to be replaced over the next five years, $2.2 billion has to be spent each year. Instead, the government has allocated $.1 billion per year.

The Conference of Defence Associations, which is a group of people who care about the military, broke it down to exactly what the military needed and said that it needed $2.2 billion per year. The government instead promised less than 5% of what the auditor general and the Conference of Defence Associations asked for.

In the area the government has billed as its top priority in the budget, the defence and security area, the government has clearly failed. Am I saying that none of the spending is good? No, I am not. Some of the spending is well targeted and will be extremely helpful but if this is the government's response to the serious concerns of Canadians when it comes to defence and security, but in particular to the area of defence, then people should start asking themselves why.

If I may say just one more thing, the auditor general had it tagged when she was questioning people in the defence department and they said that the government had told them they really did not have to sustain a combat capable military. That is the bottom line. The government had told them it did not really expect we would be in dangerous situations so it was cutting back on the combat capability. That shows a clear failure on the part of the government. It is not to be trusted with the Canadian military, a sad commentary indeed.

[Bob Speller, Liberal, Haldimand—Norfolk—Brant, ON]

Mr. Speaker, I would like to thank the hon. member for his speech. He mentioned that his constituents are asking for health care, security, tax cuts and something to make sure we do not have a deficit.

I think the hon. member missed the speech yesterday because obviously from his comments he did not understand that in this budget, as in previous budgets and in this fiscal year, the Government of Canada had to book all those commitments we made last year for health care. Therefore, in fact, we are spending more dollars on health care, we are putting dollars toward security, we are giving Canadians tax cuts this year and we are dealing with the deficit.

I agree with the hon. member that this is in fact what Canadians are saying, not only in his riding but also in my riding. In fact we are funding an extra $23.4 billion in health care. I think that is important. Those dollars go to, for instance, my province of Ontario. Is the hon. member not aware that this year alone the Government of Canada gave $2.8 billion extra for health care? A lot of that is going into my province. Hopefully the other provinces and the other ministers of finance will match those sorts of increases that the Government of Canada--

[The Acting Speaker (Mr. Bélair)]

The hon. member for Lakeland.

[Leon Benoit, Canadian Alliance, Lakeland, AB]

Mr. Speaker, I am very pleased that the member asked those questions. First, with regard to his questions on health care it is funny how members of the government keep bringing up again and again promises that were made in previous years. The fact is that the government now is spending less on health care transfers to the provinces than the government was when the Liberals came into office in 1993. That is a fact. It is spending about 14% of the total cost of health care in the country.

When medicare was put in place, the federal government promised to fund it 50% and leave the rest to the provinces and local government. It now funds only 14%. How can the member stand up and brag about that? If it were not for the increases in spending in provinces like Ontario and Alberta, we would not have a health care system that was managing to hang on at all.

The member ought to be ashamed standing up and quoting that as a success of his government when the fact is it is spending less than was being spent back in 1993 when it came into office.

[John McCallum, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I was not going to rise until the hon. member kept giving us these factual errors. I think the best place to look is page 114 of the budget document, which shows a chart of the federal transfer payments to the provinces. It is today at an all time high.

The error the hon. member makes is that like provincial premiers he fails to include in his transfer numbers the transfer of tax points, which the government made to the provinces some time ago. If he looks at the chart he will see them.

The fact of the matter is that total federal transfers to Ontario accounted for 22% of total Ontario expenditures five years ago and now it is 27%. In the case of the province of Quebec it is 30%. In the case of the maritime provinces it might be 40%. The fact of the matter, if we calculate these things right, is that the federal contribution has been on the rise.