House of Commons Hansard #41 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was provinces.

Topics

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:10 p.m.

Progressive Conservative

John Herron Fundy Royal, NB

The vice-chair of the finance committee is the member for Kings—Hants.

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:10 p.m.

Progressive Conservative

Gerald Keddy South Shore, NS

He is the vice-chair of the finance committee. He went on to say:

As a reflection of this importance, equalization is the only transfer program that is actually enshrined in the Constitution act. The goal of equalization, of providing equality of opportunity across Canada, is extraordinarily important. We should also recognize that a goal of equalization should be to provide a ladder for provinces and individuals in those provinces, those recipient provinces, to rise from their status as recipient to the point that they can participate in the free market economy fully.

That is the nuts and bolts of the legislation. The equalization system should under no circumstance provide barriers or roadblocks to success for individuals and provinces as they try to bootstrap themselves into a more prosperous economy. The equalization system, as it is formulated, can create and encourage a continued roadblock to success for these provinces. That is perhaps the most fundamentally important issue in equalization which has not been addressed and which needs to be addressed.

The Conservative Party is concerned that the government, instead of debating the issue, discussing it over the past five years and trying to come up with an equalization plan that provides all regions of the countries with opportunities to succeed, continues with the same old tired policies that we need to revisit.

If we are ingenious about giving opportunities to recipient provinces and about eliminating barriers to success, it will take more than a few hours of debate in the House of Commons and some witnesses appearing before the finance committee.

We need a new visionary approach to equalization. We need a new equalization program that provides a ladder to success and not barriers to success as this one does. Our party believes that an equalization program is necessary and that we should continue to protect and encourage equalization as a tenet of Canadian social policy. We can make it better as parliamentarians.

There are a number of concerns from our provincial counterparts, especially those in Atlantic Canada. Many of these concerns are relative to natural gas revenues. Offshore natural gas and oil revenues for some of the provinces affected, be it Nova Scotia or Newfoundland, and the opportunities for Nova Scotians, Newfoundlanders or Atlantic Canadians to bootstrap themselves into some level of prosperity in the 21st century are largely contingent on these revenues.

We should be very careful not to create a clawback through changes in equalization. That is exactly what we have now, a clawback that effectively eliminates and reduces significantly the benefits being made by these provinces.

In the past governments made the mistake of trying to protect regions of the country from risks of the future. In so doing with social programming and reinvestment in times when the government is not able to do that, we can create a very dangerous precedent and a very dangerous set of political dynamics.

At no other time in the history of Canada has Nova Scotia been positioned as well on the doorstep to the future as it is now. In no other time since Newfoundland joined Confederation has it been positioned as well as it is now to enter the country as a full-fledged partner.

The vision of the federal government must do what it chose to do from 1957 to 1965 in the province of Alberta when it allowed that province to keep its equalization payments as well as its revenues. If we had a similar program in Atlantic Canada for five years, and if we allowed those provinces to keep their oil and gas revenues as well as their equalization payments, in a very short period of time they would be able to be contributors to Canadian equalization instead of drawing on Canadian equalization.

That is one instance. There are also other opportunities in these areas: the gas fields on Sable Island, the stepout wells that are being drilled this year, the deep water drilling that will be taking place on the east coast, the potential of the Laurentian sub-basin, the potential off Labrador, and the additional wells being drilled off Hibernia. Newfoundlanders, Nova Scotians, Prince Edward Islanders and New Brunswickers have their foot in the door of the future.

The government has to show the vision to open that door wider. We have had Premier John Hamm campaigning in Ottawa. He was in Alberta a few weeks ago on his so-called campaign for fairness.

This is not rocket science. This is simply saying that the province, taking Nova Scotia as an example, manages to keep only 19 cents of every dollar of offshore oil and gas revenues in Nova Scotia. The rest of the money, the other 81 cents, goes to the coffers and fattens the revenues of the federal government.

There is something absolutely and incredibly wrong with that. We should not have to discuss the fact that 81 cents go to the feds and that 19 cents go to Nova Scotia. This is not the scale of justice. It is not imbalance at all; it is completely out of whack.

When Nova Scotia and Newfoundland signed the offshore accords, the intent of those accords was to give undersea revenues to the provinces that brought those revenues into Confederation. In 1867 when Nova Scotia joined Confederation, it brought with it those offshore revenues because it controlled those revenues. That became a net contributor to the economy and in the last 10 years it has been a huge contributor to the economy.

We have to find a way to ensure or enshrine, because the legislation is protected in the constitution, that some of that money goes back to the provinces from whence it came, whether from Alberta with revenues that come from underground, whether from Nova Scotia and Newfoundland with revenues that come from offshore, or from any other province in the country. There has to be some flexibility in the equalization system to accept varying and differing circumstances at different periods in our history. What we have now does not do that. We need some positive change and soon.

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:20 p.m.

Etobicoke North
Ontario

Liberal

Roy Cullen Parliamentary Secretary to Minister of Finance

Mr. Speaker, the member for South Shore talked about the fact that equalization or what Nova Scotia and Newfoundland are asking for is not rocket science. It is not rocket science when they are asking for something that no one else gets, that is preferential treatment.

We should go back to the original principles of equalization. The way equalization is supposed to work is that when a provincial government gets better off by a dollar its equalization goes down by a dollar. When its revenues decline its equalization increases.

In rare circumstances the federal government has reached some accommodations with certain provinces that departs from this. It happened with Quebec for asbestos, Saskatchewan for potash, and Nova Scotia and Newfoundland through special accords. Nova Scotia and Newfoundland are allowed to keep 30 cents on the dollar or more from revenues raised from offshore oil and gas.

It was in the 1980s that the governments of Nova Scotia and Canada discussed the ownership of offshore resources. Both governments agreed that Nova Scotia should be allowed to tax offshore resources as if it owns them.

The member for South Shore talks about the offshore accord. Has he skimmed through it and does he realize that once triggered Nova Scotia is able to shelter about 90% of offshore revenues against equalization? That comes down over 10 years or until it is clawed back. However the equalization was never meant to provide an ongoing benefit. It is meant to be a transfer from the so-called have provinces to the have not provinces.

If oil and gas revenues from Alberta were also excluded, we might be paying equalization to Alberta. How would the member for South Shore feel about that?

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:20 p.m.

Progressive Conservative

Gerald Keddy South Shore, NS

Mr. Speaker, I have read the Canada-Nova Scotia offshore accord and it is obvious to me that the member has not. He should pick it up and take a real good hard look at it because the accord states that the bulk of the revenues coming from the offshore should go to the province involved, either Nova Scotia or Newfoundland.

The separate side deal was for the Hibernia project. Newfoundland got to keep 25% of its revenues because of the cost of bringing the project on stream. It was a huge cost and some of the technology developed for Hibernia was the first time that it had ever been used anywhere on the planet.

The member's other question is really ludicrous. The principle of equalization is that when a province makes a dollar the federal government will claw it back. That is why we are standing on our feet today discussing the issue. That is what is not working.

If we read the history books and take a look at what happened between 1957 and 1965 we find that Alberta kept its equalization payments. Why not? It allowed the province the opportunity to build its infrastructure, to dig itself out of the hole that it was in and to climb up the ladder of opportunity.

We are saying all the provinces should be allowed to do that. It would not be forever. We cannot expect to implement it forever. The provinces should be given an opportunity to climb out of the hole and to get on top of their debts instead of looking up at them. They should be able to bring in the revenues they richly deserve.

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:25 p.m.

Canadian Alliance

Jason Kenney Calgary Southeast, AB

Mr. Speaker, with reference to the comments made by the Parliamentary Secretary to the Minister of Finance, I note that it was his own Minister of Industry who as premier of Newfoundland said that the government should seriously consider allowing provinces for a period of time not to be penalized through the welfare trap by withholding equalization payments pursuant to growth through non-renewable resource revenues.

I would like to follow up the remarks made by member for South Shore. At the outset they confused me. He said that he was in favour of lifting the ceiling on equalization altogether. That was not a position taken by his finance critic during his opening remarks on the bill. Lifting the ceiling on equalization is a matter entirely different from the substance of his remarks related to non-renewable resource revenues.

If the member wants to lift the ceiling on equalization, the federal government will ask that the floor be dropped, which protects the provinces on the other side. He is treading into very dangerous waters. I encourage him to focus on allowing provinces more flexibility with respect to resource revenues than completely changing the system. We might as well throw the formula out if he lifts the ceiling, as the floor will go and the provinces will suffer.

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:25 p.m.

Progressive Conservative

Gerald Keddy South Shore, NS

Mr. Speaker, I recognize the member's very good comment. We need a ceiling and a floor. The four Atlantic premiers are meeting in Charlottetown as we debate the bill. They are looking at the caps on equalization.

A press release is expected from them by 3 p.m. Atlantic time. I will let them speak for themselves because it is always dangerous to speak for someone else. However it is expected that they will be asking for the caps to be removed in some fashion.

Privilege
Government Orders

3:25 p.m.

The Acting Speaker (Mr. Bélair)

Before I go to the next speaker I want to rule on a point of order raised by the hon. member for St. Albert last week.

On March 29, 2001, the 2000 annual report of the Canadian Human Rights Commission was tabled in the House of Commons. At that time the hon. member for St. Albert raised a point of order concerning the fact that copies of the report were not available for distribution, contrary to the usual practice for tabled documents.

I made a commitment to review the situation and report back to the House.

I understand that copies of the report were in fact available for distribution. However the copies of the CHRC report were packed in boxes under a second report from the commission, a report on employment equity. Employees looking for the annual reports could not immediately find them. Only after checking back with the commission did we learn about the packaging of the two reports and find the errant copies of the annual report. These were then immediately made available to members.

I apologize to hon. members for any inconvenience caused by the confusion that resulted from the simultaneous delivery of the two reports. Members will be pleased to learn that steps have been taken to avoid such a situation in the future.

The House resumed consideration of the motion that Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act, be read the second time and referred to a committee.

Federal-Provincial Fiscal Arrangements Act
Government Orders

April 2nd, 2001 / 3:30 p.m.

NDP

Judy Wasylycia-Leis Winnipeg North Centre, MB

Mr. Speaker, it is good to have an opportunity to participate in this debate on Bill C-18, which really goes to the heart of what we as New Democrats have been trying to do in the House and what so many Canadians are concerned about.

It was interesting to hear the comments of the Parliamentary Secretary to the Minister of Finance. I want to register concern about his suggestion that opposition attempts to lift the ceiling on equalization and to eliminate the cap are in any way, shape or form preferential treatment for one province over another. His comments do a great disservice to a fundamental concept, a philosophical instrument, that has been very much a part of the history of this country in shaping it into what it is today.

I am not sure what the parliamentary secretary's main point was in raising his question on the Conservative member's comments around lifting the ceiling, but it strikes me that what we are hearing from both the Liberals and the Alliance in this debate is a fundamental questioning of a principle grounded in the notion of equality. Surely that is what the debate should focus on. That is why it is so important for the government to hear and to act upon the recommendation, which is not just to lift the cap for the fiscal year 1999-2000 but to in fact lift it permanently.

Many of my colleagues in the New Democratic Party have said very eloquently how important equalization is as a principle in the country. It has been said to hon. members in the House that equalization is not only a moral principle but a constitutional principle. In this debate, we are asking the question: if something is a moral principle, is it not in fact morally reprehensible to disband the concept entirely? Is it not morally wrong to remove or to erode a program that has been fundamental to the notion of equality in this country? If it is, as my colleagues have said, a constitutional principle, is the government not wrong not to address the error of its ways when it so arbitrarily put a cap on equalization in the past, and is the government now not wrong not to act to remove it forever?

That is the point of our submission throughout this debate. We very much believe that equalization is there for a reason. It has been part of our history for a long time in order to ensure some measure of equality among all regions in the country. It is in the constitution for a reason. It has been part of our tradition as a nation in terms of building links from one end of the country to the other.

It is our view that it was wrong on the part of the Liberals to implement this cap on equalization in the first place and that it is wrong of the government at this moment not to lift it permanently. Obviously it is a small step in the right direction to lift the ceiling on equalization for one fiscal year. That is a tiny step. It is an improvement. It deals with some of the concerns that have been raised. However, today is an opportune time and this parliament is an opportune moment for the government to put back in its entirety the full equalization program, without its limitations, without its ceilings, without its caps.

It is interesting to hear such clear support from the Conservative member, the hon. member for South Shore, for lifting the ceiling on equalization on a permanent basis. We appreciate that support and that position. However, it is important to point out that in many ways today we are in this dilemma of trying to address and correct a major assault on social policy in the country because of Conservative policies then and Liberal policies now.

I do not think we should let this moment pass without remembering just what kind of damage has been caused to the social fabric of the nation as a result of the Mulroney Conservatives and now the Liberal government which has followed so steadfastly not only in implementing but in adhering to and accelerating the Mulroney Conservative agenda. It is worthwhile to point out that we are really talking about a decade or more of Conservative and Liberal cuts to social programs, a very deliberate assault on our social policies, which is causing such serious ramifications today and around which we are trying to regroup to redress the errors of the past caused by these governments.

It would be fair of us who have been working so hard on these issues for more than a decade in terms of the right wing agenda of both the Conservatives and the Liberals, at least from the New Democratic Party's point of view, to draw the attention of the House to the consecutive cuts and the slashing of programs over the last while, starting with Brian Mulroney and the Conservatives.

Let us not forget that it was under the Conservatives that a cap on the Canada assistance plan was first introduced. Let us not forget that the Mulroney Conservatives used three consecutive acts to amend fiscal legislation in the country, putting funding for education and health on very shaky ground. It was under those steps taken by the Mulroney Conservatives that the country faced the threat of seeing cash for health care and education entirely dry up.

Under the Conservatives, the changes to the established programs financing formula restricted growth in the formula and made it such that given the combination between cash and tax points, cash for health care and education would dry up in at least one province by this year, right at this very moment as we are speaking in the House today.

Incredible damage was done to our social policies, which had to be corrected. Unfortunately, the Liberals came into office in 1993 and by and large continued with that kind of slashing and hacking at our social policies and at our important health, education and social assistance programs. Let us not forget, in fact, that the Liberals promised in the 1993 election campaign to redress those egregious errors and those horrific cuts of the Conservative government. Instead, they very much perpetuated that direction.

We had hoped that the Liberals, once back in power, would lift the cap on CAP and would put back into the formula for health and education arrangements in order to allow for growth in the transfers to provinces, so that our provincial jurisdictions could keep up with the growing threats to the preservation of health care because of demands, needs and changes in the system.

Instead, as my colleague from Winnipeg Centre pointed out earlier, the Liberal government proceeded to make the most regressive social policy change in the history of the country. It took the single biggest bite out of financing and cash transfers for health and education that we had ever seen in the history of medicare.

Enormous damage was done by the Conservatives and it was perpetuated by the Liberals. Today we are trying to catch up. We are trying to address the fact our medicare system, our public post-secondary education system and our equalization program, the programs that are pride of our country, were dealt enormous damage and are on very shaky ground in terms of meeting the needs of Canadians. In fact, they are failing to do precisely what they were intended to do, which was to ensure that all people in the country, regardless of where they live or what community they are from, regardless of their income, their cultural background or their ethnocultural heritage, are able to access those programs that are considered to be fundamental rights and fundamentally part of what it means to be a citizen in the country today.

The Liberal approach has been very much a band-aid one in the last number of years. We hear a lot of rhetoric about trying to patch up the system, trying to move forward based on the resources available and trying to do things in a balanced and responsible way. However, the band-aids are so small and the approach is so ad hoc that we are not able to put a stop to the bleeding and actually start to build again for the future.

For example, I think of all the rhetoric and the great fanfare from the government around money that it claims to have put back into transfer payments. In the February 1999 budget the government made a great deal of the millions of dollars being put back. In fact, it turned out to be two cents for health care for every dollar in tax cuts. Then of course last fall as we tried to convince the government to take its responsibility seriously, the answer was an supposed additional massive influx of money through the federal-provincial agreement in the September accord. That turned out to be enough money to get us back to 1994 levels.

This is hardly the kind of strategy and leadership that one would expect if medicare was so central to who we are as a country and if our social programs were so fundamental to the very definition of what it means to be Canadian. The parliamentary secretary does a disservice to the definition of equalization when he talks in terms of preferential treatment. Probably the accurate definition of equalization is as my colleague, the hon. member for Winnipeg—Transcona put it: to ensure a comparable level of public services in the country. Regardless of the fiscal capacities of the province, regardless of the wealth each province is able to generate based on natural resources and other economic advantages, no one region should be able to have greater benefits.

It would be fair to define equalization as something that was instituted in order to allow provinces with lower fiscal capacities to fund health, education and other provincial programs at tax rates comparable to those in more affluent provinces. That is certainly the understanding of provincial governments. That is certainly the understanding of the government in the province I come from.

In fact, I just quoted from a letter from the minister of finance from the province of Manitoba. The parliamentary secretary may very well be aware of a very detailed letter from that province. I am sure he has received similar presentations from other provincial finance ministers, who are all concerned about the way in which this government has failed to address the concerns that provinces brought to the table and also concerned about the failure of the government to live up to the Prime Minister's words and the commitment he made in September 2000. In fact, the finance ministers in all of our provincial and territorial governments are very mindful of those words and hopeful because of the wording that was agreed to in the communiqué around the September accord.

I would like to quote a sentence from that communiqué because it shows just how much people and the provinces feel they have been let down by the bill before us today, Bill C-18, and by the failure of the government to restore the equalization program on an ongoing basis and to lift the ceiling on equalization on a permanent basis. That communiqué states:

First Ministers raised the issue of Equalization. The Minister of Finance will examine this issue further after consultation with provincial Ministers of Finance. While final revisions for Equalization purposes for the fiscal year 1999/2000 likely will not be known until October 2002, the Prime Minister agreed to take the necessary steps to ensure that no ceiling will apply to the 1999/2000 fiscal year. Thereafter, the established Equalization formula will apply, which allows the program to grow up to the rate of growth of GDP.

The provinces believed from that communiqué that the ceiling on equalization payments would be lifted for the year 1999-2000, as specified in the bill, but they also expected the Prime Minister to actively pursue an extension to that lifting of the freeze for at least another fiscal year. They also expected to see the Prime Minister and the government address their concerns for a growth factor in the formula so that there would be some way for less affluent provinces to keep pace with the needs and demands on their systems.

As an example, I will outline the kind of impact this would have for a province like Manitoba. Manitoba is a wonderful province with great potential but it is not one of the most affluent provinces. It depends very much on the federal government's fairness and commitment to ensuring that cash transfers meet the growing needs in the fields of health and education. It is a province that depends heavily on the federal government to be firmly committed to the notion of equalization.

In a letter to the government, the province of Manitoba pointed out that its potential cost for 2000-01, given the government's failure to lift the cap for that year, was about $100 million. Application of the ceiling to 2000-01 equalization entitlements may actually result in lower payments than for 1999-2000, despite a significant increase in entitlement as generated by the formula.

The minister of finance for the province of Manitoba, Mr. Greg Selinger, goes on to make a very important case to the federal government for lifting the ceiling on equalization for at least another year and for the government to look seriously at the need to fully restore the program as it was originally intended.

The most important message we can bring to the House today, in hopes of shaking up the government and persuading it to amend the legislation while it has a chance, is to appeal again to the sense of what it means to be Canadian, what is a part of our identity and what is very much central to any notion of national unity in the country today. I do not think I need to repeat this as many members have said it so eloquently. It is our notion of equality between regions and between all people in the country.

What we bring to the debate is the notion based on an old cliché “from each according to his ability to each according to his need”. That is the essence of the debate. We are looking at ways to ensure that the wealth of regions can be shared equally across the country and that everyone has access to decent public service, universal health care, education, decent housing, clean water and clean air to breathe. Those are basics. That is the role of the federal government. That is why we have the equalization program.

I appeal to the parliamentary secretary, who I know has been listening intently throughout the debate, to find a way to amend the bill or to accept our amendment before pushing it through. The government has the fiscal flexibility today to do that.

I hear the rhetoric time and time again. It is now time for the government to show what it means to put its money where its mouth is and lift the ceiling on the equalization program for not only this fiscal year, which is referenced in the bill, but for the next fiscal year, and to look at it as a permanent feature of our system.

As has been noted so many times in the debate, it is a moral principle, is it not? If it is, how can we in any sense of the word dismantle a concept that is about equality and about achieving that kind of adherence to that kind of moral principle?

If it is a constitutional principle, how in any way can we justify that there should be a cap on a constitutional principle? How can we justify a cap on morality? How can we justify a ceiling on equality?

I appeal to the government to amend the bill and to act in the best interests of all Canadians.

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:50 p.m.

NDP

Pat Martin Winnipeg Centre, MB

Mr. Speaker, I enjoyed the speech from the member for Winnipeg North Centre. I thank her for raising many very important and very relevant themes as they affect the province that we share, the province of Manitoba.

I also thank her for reminding the House of Commons of the many shortcomings of the Mulroney Tory government. Sometimes I think people forget that a lot of the negative trends that we are seeing lately and that we are actively fighting against found their origins in the philosophy of the Mulroney Tories.

What is hard to imagine today is that even though the Mulroney years were cruel, heartless, callous and meanspirited, many of us look back fondly at those times because compared to the Liberal government today, those times seem benevolent by comparison. The Liberals have taken those trends farther than Mulroney ever had the guts to do. Even though he warned us that we would not recognize the country when he was through with it, frankly, after seven years of Liberal government, we are starting to realize that we do not recognize the very country that we are so proud of building.

Would the hon. member elaborate a little bit more on the equalization formula in the year following? We all understand that relieving the cap for the year 1999-2000 is based on the demands of the various first ministers and ministers of finance as they met over the years. However, the reinstatement of the cap in the year following, which, as I understand from the hon. member's speech, could be at a rate lower than it was before and would give us a one year holiday on the cap, may in fact end up being a lower cap than it was originally. In other words, we are going backward on this idea of greater equalization. That is the first thing I would like her to comment on.

Second, would the member speak about the clawback ideas? Is it not true that if we allowed some of the have not provinces to keep the increased revenue that they might have instead of losing dollar for dollar, they may climb out of the trap that they are in now, relying on equalization solely?

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:50 p.m.

NDP

Judy Wasylycia-Leis Winnipeg North Centre, MB

Mr. Speaker, I appreciate the comments from the MP whose riding is next to mine in Winnipeg and where we share many of the same concerns. These are two constituencies where poverty is at a very high rate and where people have felt the impact in real, human, hurtful terms of a decade of Liberal and Conservative cuts.

It is important for us to remember, not just what the Liberals have done in the last seven years but what the Conservatives did leading up to that. Probably the best description of that came from an article by Daniel Drache and Meric Gertler who, in describing and summarizing the Conservative's policies, which fit with those of the Liberals, said:

No area of government policy has been spared. Across a broad front that includes not only trade but regional development, tax and fiscal policies, old age pensions, family allowance, labour market policy, social income programs, and collective bargaining, the government has moved persistently and systematically to reshape the institutional and legislative character of Canada. Its strategy is to water down Canadian redistributional programs so as to make them equivalent to the lowest common denominator, and to cut the direct and indirect labour costs to business.

I think that sums up both the Mulroney Conservative agenda and the Liberals today. We have been dealt one blow after another by this government and I think the assault on our social programs has to end.

The question pertaining to the impact of the failure to lift the ceiling for the next fiscal year on a province like Manitoba is a very good one and it is a serious problem. I have indicated the impact it will have based on a letter from the Manitoba minister of finance. He clearly indicated that with this kind of approach by the government, Manitoba would be worse off than if the government had just left well enough alone.

In his letter, the minister of finance for Manitoba said:

I would respectfully suggest that the removal of the ceiling—especially for 2000/01—does not appear to be an issue of affordability for your government.

Recently, your Department issued a press release, which stated that the federal government would have a surplus in 2000/01 of at least $10 billion. The revenue revisions that would result in the ceiling being triggered would almost certainly imply that federal revenue is substantially higher than your current official projections.

The case has been made by provincial governments for fiscal affordability in terms of lifting the ceiling on equalization. The case has been made by provinces like Manitoba about the very serious impact that would occur if the government does not act. The fact that the government of Manitoba, like other have not provinces, would see a tremendous hardship in meeting its needs without a lift on the equalization ceiling should be enough for the government to act. That is the only reasonable approach.

I would hope that if the parliamentary secretary has not thoroughly read this correspondence from Manitoba he will do so and give us his comments and his feedback.

Federal-Provincial Fiscal Arrangements Act
Government Orders

3:55 p.m.

Etobicoke North
Ontario

Liberal

Roy Cullen Parliamentary Secretary to Minister of Finance

Mr. Speaker, I listened carefully to the comments by the member for Winnipeg North Centre. In looking at the federal transfers to Manitoba, a one year removal of the ceiling on equalization payments was agreed to at the first ministers' conference. Because of the pressures on equalization payments, the Prime Minister agreed to lift the ceiling for the year 2000. After that, it would be based on growth in GDP year by year. It will go back to the original year so we will not know what the equalization will be for another year or two once all the numbers are in.

By lifting the ceiling on equalization payments, Manitoba would receive a further $76 million, which would be the second highest increase in equalization payments to Manitoba. In fact, if we look at total federal transfers to Manitoba for the year 2000-01 it would be $2.3 billion. That would account for approximately 35% of Manitoba's estimated revenues. Canadians are doing a pretty good job in terms of recognizing Manitoba's needs.

The member is quite right when she says that equalization is meant to ensure that there is equality in services and programs across Canada notwithstanding where one lives in Canada. It is not an exact science but that is the intent. When provinces have offshore revenues, the idea is to allow them to take advantage of some of those revenues but over time to bring them back to the intent of the equalization program.

I wonder if the member knows about the impact on Manitoba as a result of lifting the ceiling and about how that is good news for Manitoba.

Federal-Provincial Fiscal Arrangements Act
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3:55 p.m.

NDP

Judy Wasylycia-Leis Winnipeg North Centre, MB

Mr. Speaker, we again see the failure of members of the Liberal government to recognize the kind of damage their policies have done to provinces like Manitoba over the last seven years.

It is true that there has been some reinjection of funds through cash transfers and equalization by lifting the ceiling for one year, but the amount that flows to a province like Manitoba and the benefit to less affluent provinces still falls short and hardly makes up for what was taken out of the system. We are still dealing with an enormous shortfall and without the resources to counter the growing demand on the system and changes in the health and education fields that require a much more balanced and involved approach by the federal government.

It is true that finance officials from all provinces thought that lifting the freeze for one year would provide ample room to accommodate entitlements over the present renewal period. However, further work and recent estimates have proven these projections to be incorrect. The current estimate of equalization entitlements for the 1999-2000 fiscal year, the very first year of the new arrangement, exceeds the ceiling by close to $800 million.

The Manitoba government goes on to indicate the impact on Manitoba. If I had more time I would love to read into the record every detail of the letter. Suffice it to say, the new estimates show that the changes will not meet the demand and that there is a real need on the part of provinces to extend the ceiling on equalization.

Federal-Provincial Fiscal Arrangements Act
Government Orders

4 p.m.

The Acting Speaker (Mr. Bélair)

Is the House ready for the question?

Federal-Provincial Fiscal Arrangements Act
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4 p.m.

Some hon. members

Question.