House of Commons Hansard #69 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was federal.

Topics

Committees Of The HouseRoutine Proceedings

3:20 p.m.

The Speaker

Does the hon. parliamentary secretary have unanimous consent to introduce the motion?

Committees Of The HouseRoutine Proceedings

3:20 p.m.

Some hon. members

Agreed.

Committees Of The HouseRoutine Proceedings

3:20 p.m.

The Speaker

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Committees Of The HouseRoutine Proceedings

3:20 p.m.

Some hon. members

Agreed.

(Motion agreed to)

Business Of The HouseRoutine Proceedings

3:20 p.m.

Canadian Alliance

John Reynolds Canadian Alliance West Vancouver—Sunshine Coast, BC

Mr. Speaker, I believe you would find consent for the following motion. I move:

That at the conclusion of the present debate on today's Opposition Motion, all questions necessary to dispose of this motion be deemed put, a recorded division deemed requested and deferred to the expiry of the time provided for Government Orders on Monday, June 4, 2001.

Business Of The HouseRoutine Proceedings

3:20 p.m.

The Speaker

Is there unanimous consent for this motion?

Business Of The HouseRoutine Proceedings

3:20 p.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of the motion and of the amendment.

SupplyGovernment Orders

May 31st, 2001 / 3:20 p.m.

Liberal

John McCallum Liberal Markham, ON

Mr. Speaker, it is my pleasure to participate in the debate on the Bloc motion regarding transferring tax points to the provinces. I will broaden the discussion a little if I may because there are three components of the Bloc economic policy that form a logical and coherent whole. That can be taken as a compliment, I suppose.

The first component is today's motion, that is the transfer of tax points from the federal government to the provinces.

The second component, which coincides with that, is the Bloc's notion that the federal government's surpluses next year will be about $18 billion—according to the Bloc—rather than $7 or $8 billion according to the economists. If that is true, it will be easier for the government to make such a transfer to the provinces.

The third component is the Bloc's idea that we should give up the Canadian dollar and use the U.S. dollar.

All three of these components are a logical and consistent whole because all of them separately and together lead to the same thing. All three lead to a weakening of the federal government, a weakening of the Canadian economy and an increase in the likelihood of the separation of Quebec from Canada. While they are logically coherent, I would for those reasons oppose them all very strenuously.

I will go through very briefly each of the three components of the Bloc economic platform. First, on the transfer of tax points, which is the subject of the motion today, I will comment very briefly on the major elements of current transfers including tax points. I will then give the House two reasons why I think the Bloc motion makes little sense at all.

Right now there are three major components of transfers from the federal government to the provinces. The first consists of around $18 billion of cash transfers, which was increased recently by the health accord in the fall of last year and added some $20 billion of federal money for health over five years.

Next, and this is something the Bloc Quebecois and indeed all the provinces tend to forget, we have transfers in the form of tax points because back in 1977 the federal government transferred tax points or taxing powers from the federal government to the provinces. This amounts to a value of $16 billion today whereas in 1977 when the transfer occurred it was about one-tenth of that.

The fact that the Bloc and the provinces tend to ignore this tax point component is relevant, as members will see in a minute, to the subject of its motion respecting the transfer of further tax points.

The third component of special relevance and importance to Quebec concerns equalization payments made to have not provinces. This year those payments consisted of $11 billion of which nearly half or $5.4 billion went to Quebec. This equalization payment has been among the fastest growing components of our expenditures, having increased by 33% over the last decade or so.

It is the status quo. What the Bloc is proposing is that the federal government transfer more tax points to the provinces. In my opinion, this is not a good idea at all. What the federal government did last fall was to make the largest cut in personal income tax in Canadian history, a $100 billion tax cut, but a tax cut for Canadian taxpayers.

What the Bloc Quebecois wants is not a tax cut for Canadian taxpayers, but a tax cut for Canadian provinces. In my opinion, it is a lot better for the federal government to cut personal income tax than to cut taxes for the provinces.

If any province wants more revenue it is entirely free to raise its own taxes, but if Ottawa has excess money it should cut taxes to the people, not to the provinces as the Bloc motion suggests.

The final point is even more important. It shows that the Bloc proposal is inherently and blatantly contradictory. We have had transfers of tax points from Ottawa to the provinces since 1977. Whenever provinces say how much Ottawa is contributing to health care or other social programs, unfailingly they never include the tax points. The provinces say Ottawa only pays 19% of health care or some amount like that because they have forgotten the tax points, which would more or less double the contribution.

Now they want us to transfer further tax points. Do we think that in the future they will acknowledge that transfer when they report the contribution of Ottawa to provincial social programs? Obviously they will not, given the history of the last 24 years when they have never reported tax points.

So it is obvious that the object of this motion on transfer of tax points is to reduce the importance of the federal government in the eyes of Quebecers. That is the true objective of the Bloc Quebecois because, if the importance of the federal government is reduced in the eyes of Quebecers, this will advance the cause of separatists. This is its objective. It has nothing to do with the economy. It is purely political and a good reason to oppose this motion.

The second point is related to the first. According to the finance critic of the Bloc Quebecois, all bank economists who make these economic forecasts are always wrong and only the finance critic of the Bloc Quebecois is right. He showed with graphs the huge forecast errors economists made and the small forecast errors of the Bloc.

I told him the other day that perhaps he should not be here in parliament. If his forecasts are so wonderful, he should start his own business and he would become a millionaire.

It is true that if one can outperform the market in terms of economic forecasts one can be a millionaire.

But before the finance critic of the Bloc Quebecois makes this career change, if I were him, I would continue believing the economists. Consequently, it seems to me more reasonable to think that the federal surplus will be $7 billion or $8 billion, instead of $18 billion, next year.

I will be very brief on this final point because it is all part of the same separatist circle coming together. It is the incessant clamour by the Bloc for Canada to give up its dollar and use the U.S. dollar. It is evident from a separatist point of view that this would be a very nice thing, because come the great day of separation, if we were all using the U.S. dollar, currency would not be an issue. However, if we were using the Canadian dollar, it would be a big problem. Obviously from a purely political view the Bloc favours dollarization.

I have one story to illustrate the point that there is very little support within the Canadian business community for dollarization. We had a debate in Quebec on dollarization, which I participated before I got into politics. Three hundred business people came to the Montreal board of trade meeting. Then the organizers wanted to have a repeat debate at the Toronto board of trade but there was no interest. The dollarization issue is largely a Quebec issue, in particular a Quebec separatist issue, plus a sprinkling of academics across the country. It has no general backing from the Canadian business community.

In conclusion, I mention these three aspects of the Bloc program because they all hang together: the further transfer of tax points; the gross overestimate of next year's federal surplus; and the incessant clamouring to use the U.S. dollar. They are coherent in the sense that individually and taken as a whole they would lead to: first, a weakening of the federal government; second, a weakening of the Canadian economy; and third, an advancing of the cause of Quebec separation. On all three of these grounds I strongly oppose this motion.

SupplyGovernment Orders

3:30 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, to listen to the member for Markham, a former chief economist of the Royal Bank, people would think that he would make a much better novelist than an economist, especially with such wild imaginings.

On the matter of sovereignty alone, I say this to him: no motion of the House of Commons will bring it about. If he thinks it is a step in this direction, he is mistaken. We will decide on sovereignty at home in Quebec with a referendum the issue of which will be decided by the people of Quebec. He will have nothing to say on the matter. That is the first thing.

Second, if the single currency is linked to separatism, is Thomas Courchene, North America's top macroeconomist—at least considerably better than he is—, who supports a single currency, a separatist?

Is David Dodge, the Governor of the Bank of Canada, who sees the single currency as unavoidable in the three Americas within the next 10 years, another separatist?

I think the member for Markham has a problem somewhere.

There is another problem with what he has just said. He talks of economists' forecasts. He is looking out for himself. He was one of the small group of four or five economists that gravitated around the Minister of Finance until last year. Not all of them predicted such ridiculous surpluses as this gang, the buddies of the Minister of Finance.

When the real non partisan economists—and here we can see he is partisan, he became the federal Liberal member for Markham—were consulted, they thought the forecasts of the Minister of Finance were laughable and forecast surpluses of about the same amount as we had.

If he is here today, I put the question to him, is it because he lacked the ability to forecast at the Royal Bank, in fact?

SupplyGovernment Orders

3:35 p.m.

Liberal

John McCallum Liberal Markham, ON

Mr. Speaker, I will respond to these three points.

First, the motion has nothing to do with separatism, at least not directly. This is not a referendum. What I said is that the more tax points are transferred to the provinces, the less important the federal government is in Quebec. This advances the cause of separatism. This is what I said.

Second, I said that it was actually Quebec which was in favour of a single currency, namely the U.S. dollar, because no one among Toronto business people wanted to hear about it.

I also said that a handful of academics including Thomas Courchene supported the idea. I admit to it.

Finally with regard to the finance minister's buddies, yes, I became a Liberal, but I am the only one. The other ones are probably more conservative. I did not make the forecasts, the big forecasting agencies made them, namely universities. They have no axe to grind, no political axe to grind.

Maybe they are right, maybe they are wrong, but they are politically neutral.

SupplyGovernment Orders

3:35 p.m.

Bloc

Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I just wanted to point out to my colleague from Markham that before the election he said, “Mr. Martin has erred in his forecasts for political reasons so that the surpluses turn out to be larger than planned”.

What does he have to say about that?

SupplyGovernment Orders

3:35 p.m.

Liberal

John McCallum Liberal Markham, ON

Mr. Speaker, as usual Bloc members are totally out of context. This is the same interview in which I said that the Bloc critic should join the private sector if his forecasts were truly so fantastic.

What I said in this interview—he missed the important point—was: “It could have been said two or three years ago that Mr. Martin would do that—For the past two or three years economists have been making forecasts and they have no political agenda.”

At least, for two or three years, the surpluses could not have been deliberately inflated because they were forecasted by private sector economists.

SupplyGovernment Orders

3:35 p.m.

Bloc

Francine Lalonde Bloc Mercier, QC

Mr. Speaker, I will be sharing my time with the hon. member for Papineau—Argenteuil—Mirabel.

I want to address today's motion from the Bloc Quebecois, because I want to remind the House where these enormous surpluses come from. There have been a lot of them since 1996.

Half come from cuts to the employment insurance fund. These cuts, and the state of the economy, have helped the government generate surpluses year after year. These were planned surpluses. Every year, about six or seven billion dollars are paid by workers, even those who only earn $1,000, and by small and medium sized businesses that employ the largest number of workers with salaries that do not, or barely reach the ceiling at which one stops paying employment insurance premiums. This is a regressive type of contribution.

The government got these surpluses from the workforce and the small and medium sized businesses, which are said to play a critical role in our economic development, particularly in Quebec. They are the ones who made the greatest contribution to the surpluses.

What did the government do with these surpluses? Essentially two things. When the surpluses came as a surprise, following a dubious planning process, at the end of the year they were automatically used to reduce the deficit. There was no debate. Yes, there were negotiations on health, but these came only after the government was put under a lot of pressure, after television and newspapers presented dramatic stories about what was going on everywhere in the health care system.

The federal government also took these surpluses to use, if not abuse its spending power in provincial jurisdictions, particularly in Quebec. Of course, there was a referendum in 1995; the government knows there will be another one and has already started campaigning.

There is one consequence of these cuts to the employment insurance plan and to transfers for health and education that has not been mentioned. I repeat, before they were increased, health transfers were drastically reduced. Yes, there was a slight increase, but it depends on how one looks at it; they went down from $19 billion to $11 billion, and then up to $13 billion. The cuts are slightly less severe, but they are still huge.

In education, there were even bigger cuts. When I sat on the industry standing committee, year after year we heard from university professors and researchers, health researchers for example, who were in a terrible situation. While funding for universities in the United States, including in the area of medical research, was increasing sharply, what was happening in Canada? Such funding was decreasing, and it was decreasing sharply. We have just begun to see again investments in that area. But, again, it is the federal government that will decide where the money is spent.

I would like to point out something. Canada prides itself on the international scene of having very generous social measures. The OECD tells us that, in fact, as far as social spending is concerned, and I am including all social spending in the area of health, education, pensions and so on, from 1980 to 1997—when Canada invested a lot more—Canada ranks 25 out of 29 in this regard.

Some say that Canada is a generous country and that we should make even more cuts. This is the case of our colleague from Markham, for example, who says that we have to reduce income tax instead of transferring tax points to the provinces so that they can take care of health, education and all the rest of social spending. What else would he want to see? Would he like to see Canada drop a few more places, to the bottom of the OECD ranking?

It is very important because even in Canada, people think that they have one of the best social and educational systems in the world. Canada ranks 25 out of 29. Then there is the United States. We say “Oh, we are not like the United States”. We are close to Japan, where we all know that there is no such thing as a safety net, close to Turkey, close to Mexico—which is still a developing country—and close to Korea. Can the members appreciate who we are close to?

What has happened is really dramatic. For one of our colleagues to argue that we have brought forward this motion urging the government to transfer tax points—not only to Quebec but to all of the provinces—only to promote sovereignty is shameful.

Going back in history, I would remind the House that the first to negotiate tax points for Quebec were the Liberals in the 1960s, and then the Union Nationale. Although they were federalists, they did not agree with the way the money was being allocated.

Daniel Johnson, of the Union Nationale, was elected after promising to get his hands back on 100% of the corporate income tax, 100% of the personal income tax and 100% of the inheritance tax. Soon after he was elected, he came to Ottawa to try to negotiate. He was told for the first time by a young Trudeau, a former member of the NPD freshly out of university, who had soon realized that, if he wanted to become Prime Minister, he had better run as a Liberal candidate “I also speak for the people of Quebec”.

The so-called sovereignist agenda we are supposed to be pushing, according to the government, focuses on change. Jean Charest, a Quebec federalist, is travelling to western Canada to meet with the premiers and ask for tax points.

The problem here is not only Confederation, although it has not been working well for a long time and is increasingly so, now. What is in question is the ability of young people to receive a decent education, the ability of universities to continue to train intellectuals who will be able to receive scholarships from funds created by the federal government. The government creates scholarships, but to be able to receive merit scholarships in research, there must be a pyramid. This pyramid must be funded adequately, but it is not, at this time.

Health spending is growing rapidly. Although we are trying to cut everywhere, it continues to grow. We know the population is aging, but this is not all. Medication is more expensive. Surgeries and equipment are also. We know that in Quebec people working in hospitals do so at a lower cost than in the rest of Canada.

Consequently, what is happening is the country, which could compare itself favourably to progressive countries, will now be comparable to Turkey, Korea and the United States, because social spending has fallen. When the government says that taxes must be reduced further, it continues to say that the provinces will not pay for the spending that is essential to a minimum of well-being and to the rights of the citizens.

SupplyGovernment Orders

3:45 p.m.

Liberal

Serge Marcil Liberal Beauharnois—Salaberry, QC

Mr. Speaker, I would just like to make a comment. We must always pay attention to what we say, particularly when we know that people listen to the debates and also read news originating in the House of Commons. Often we tend to exaggerate the facts.

When the members of the Bloc Quebecois say that there has been so many cutbacks to employment insurance, that the government has accumulated a huge surplus to wipe out the deficit, they neglect to point out to the public that this is the same phenomenon as in all provinces. This was a period of heavy recession, and all provinces, the country as well, were heavily in debt. Each government, therefore, accumulated a larger operating deficit with every passing year.

In 1993, the deficit was $42 billion. According to the Bloc Quebecois, the Canadian government should have borrowed still more money in order to pass it on to the provinces. That is more or less the mechanics of it. The more our budgets increase, the more the deficit increases, the more we borrow; the more we borrow, the more interest we pay on the debt. Asking the federal government to transfer tax points to the provinces, money to the provinces, when there is an operating deficit in excess of $42 billion, is like asking it to borrow money on behalf of Canadians and then give it to the provinces.

So a deficit at one place is increased in order to try to decrease it at another. When things like this are said, care needs to be taken.

The second point is that there is still reference to our ranking 25 out of 29 as far as social spending is concerned. I do not dispute that ranking of 25 out of 29. It refers to social spending, not the quality of services provided in Canada. The quality of services provided to Canadians is not what is involved here. They say Canada ranks 25 out of 29 in terms of social spending.

When spending in Canada is being considered, all social spending by the provinces is added in as well, not just federal spending. It is the total of spending in the country by each provincial government, plus federal spending, that makes up total social spending.

SupplyGovernment Orders

3:50 p.m.

Bloc

Francine Lalonde Bloc Mercier, QC

Mr. Speaker, I am pleased to reply to the member, and I hope he will listen carefully. As they say in English “I will put his record straight”.

He has just mentioned the recession as a reason for EI cuts. As it happens, I was my party's EI critic during this period.

We noted that, although this system had had a deficit of only $2 billion, and even though the federal government had pulled out of funding and active employment measures, responsibilities which should normally have been assumed by the government, the fund immediately turned around and started paying for itself.

The truth was that the fund more than paid for itself, because benefits were cut and the government continued to collect premiums, knowing full well—and I have been told this by a senior official who is now with the OECD—what the fiscal impact of the cuts would be. I said to him “But you did not know how it would affect people, the regions, the social impact. It does not make sense that you knew and that you went ahead anyway”. So, yes, it knew what the tax impact would be.

What is true is that, for other spending, the government borrowed from the EI fund, which is made up of the contributions of ordinary citizens and SMBs. That is the truth. This is what it borrowed from.

As for social spending, Canada ranks 25 out of 29 OECD countries. This includes provincial spending and that is why I mention this. When the government cuts transfers to the provinces, this has an impact on all social spending, including that of the provinces. I am not interested in hearing that there can be differences like those among all the countries in Europe, which are the world leaders, and that Canada, which is in 25th position, could aspire to the same quality.

When it comes to social spending, we know that quality resides not just in equipment, but in people in all the forms of assistance, and the duration of assistance. Take a look at the duration of unemployment insurance benefits in Europe.

So, I am sorry but, through this policy, Canada has completely and significantly altered the Canadian values he is talking about.

SupplyGovernment Orders

3:55 p.m.

Bloc

Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I am happy to speak to my colleague's motion. According to this motion, the government should call a federal-provincial first ministers' conference to discuss the federal government's surpluses and a possible transfer of tax points.

It was practically unbelievable to hear members, such as the Liberal member for Beauharnois—Salaberry, mention in the House that there were deficits and that is why the federal government must no longer transfer tax points to provinces, when we have surpluses coming out of our ears. The federal government has $19 billion in surpluses.

I am proud of my Bloc Quebecois colleague—duly recognized by the member for Markham—who, on this day last year, estimated to within 2% the surpluses forecast by the Minister of Finance. Again, my colleague is announcing that next year the federal surpluses will still be $19 billion. I tend to believe him more than any other member in the House. He was the only one, and I thank him, to tell all Quebecers and all Canadians about the financial situation of the federal government.

I consider most timely his motion that the government should call a federal-provincial first ministers' conference to discuss the federal surpluses of billions of dollars and a possible transfer of tax points to the provinces, which certainly need them, for a very simple reason. For all those Quebecers who are listening today, I say our quality of life is provided to us by the provinces and their various entities, including the municipalities. Here is what I mean by that.

Health is the main factor that contributes to a person's quality of life, and health services are provided by the provincial government. The same goes for education. We all want our young people to have a good education so they can succeed in life, and education is a provincial responsibility.

There is also public safety; we all want to feel safe. There is water quality, water treatment, household garbage collection and disposal, these are all services provided by municipalities, as well as transportation. These factors that contribute to the quality of life of all Quebecers and Canadians depend on services provided by the provinces and municipalities, their entities.

That quality of life has been severely compromised. Let us all remember the year 1992. That is when the federal government decided to make the most drastic cuts to transfers to provinces in Canadian history. In 1984, these transfers were at 23%; in 1993, they were at about 20%. They were cut by nine percentage points over six years before going back up slightly. Now, about 14% of Quebec spending comes from federal transfers. But let us not forget that when the health system was put in place, the federal government paid 50% of the cost. Now, it is down to just 14%.

It is important that we all remember the year 1992, the year when, perhaps to eliminate the accumulated deficit, the federal government decided to make drastic cuts in transfers to provinces. It is only fitting that we should be debating my colleague's motion today, at a time when the government will rake in, year in and year out, a $19 billion surplus. The Canadian government should convene the premiers to discuss the federal surpluses and to transfer tax points to improve the quality of life of Quebecers and Canadians.

We should never forget that by 2008 health spending will have doubled in Quebec, from $10 billion today to $20 billion.

Health and education will take up over 45% of the provincial budget. If that is true in Quebec, it will be the same in all Canadian provinces.

We should understand that since 1992, the federal government has withdrawn some of its support to try to erase its huge accumulated deficit. This withdrawal had a domino effect in the provinces.

Since 1992, they had to make cuts in health, education and transfers to municipalities. I am well aware of this because I was in municipal politics. Until last year, I was president of the Union des municipalités du Québec. Prior to 1992, none or very few of Quebec's municipalities submitted applications to the federal government. They always managed to reach agreement with the government of Quebec.

With the cuts in federal transfers to the provinces since 1992, a crisis has developed in Quebec involving the municipalities and the government of Quebec. In the past few months, without any reason, and even though the municipalities are the creatures of the government of Quebec, we have heard statements made by ministers outside the House and even in the House that consideration should be given to amending the Canadian constitution so that money may be transferred to the municipalities. This is rich.

The federal government is not even capable of transferring the proper amounts to the provincial governments in order to resolve education and health care problems, and it is prepared, for purely political reasons, to transfer funds and consider amending the constitution in order to transfer funds to municipalities to help them settle their problems. Prior to 1992, they had no problem, they could deal with provinces one on one.

Now, because of the cuts to transfers and because provinces have had to put most of the money they could get hold of into health and education, which are major expenses, over 45% of Quebec's budget and, because of the federal government's drastic cuts in transfers to the provinces, they barely manage to maintain the portion the federal government could send them. Some of the small increases are nothing more than what they were getting before in federal subsidies to keep up with the cost of spending in each of these sectors. But the federal government still maintains its share of approximately 14% of all spending on health care and education and other public services. The federal government pays only 13.9% of spending on all these services in the provinces.

As far as I know, we pay 50% of our taxes to the federal government. What does it do with our taxes? Simple. It is maintaining an old age security system that has hardly been indexed. The government has not even been able to index the old age security system to the cost of living. But it is keeping an army. In Saint-Jean, Quebec, they closed a military base. In Quebec, we have the army, but they are closing military bases.

With respect to airports, we have discussed in the past, here in the House, the developments at the Mirabel and Dorval airports in Quebec, the transfer of flights from Quebec to Toronto. This is a federal decision. This is what the federal government is doing with Quebecers' money.

I can talk about research and development, because I come from the Outaouais region. There are 50 research and development centres in eastern Ontario. Until last year, we had one on the Quebec side in the Outaouais; the government shut it down. This is what the federal government is doing with Quebecers' money. It has decided to spend money on economic development.

In conclusion, in the transportation area in the last two years, $10 million out of the whole budget was spent in Quebec. We are talking about road infrastructures, with an annual budget of $100 million. Only $10 million was spent in Quebec. Elsewhere in Canada, over 50% of the budget was spent in the maritime provinces to help Liberals win the last election.

These are always political decisions that go against Quebec's interests. I hope that Quebecers will have understood that since 1992 it is Canada, through the most drastic cuts in its history, that has hurt the most the health and education systems of Quebec.

SupplyGovernment Orders

4:05 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, the Liberal member for Beauharnois—Salaberry said that we were in a recession and that this is why the federal government had been forced to rob the provinces and the employment insurance fund.

Could my colleague tell us when the last recession ended? Could he also tell us whether, since then, the surpluses from the employment insurance fund have been used to eliminate the deficit or to increase the surpluses of the Minister of Finance?

SupplyGovernment Orders

4:05 p.m.

Bloc

Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I thank the hon. member for his question. We all know that the last economic recession ended several years ago. We hope that there will not be another one. The last recession ended in 1987. Since then, the surpluses from the employment insurance fund have belonged to the workers of Quebec and Canada.

The EI fund has been an independent fund since 1996. Contributions are made directly by employers and employees. The federal government no longer makes any contribution. This is quite something, considering that out of the $19 billion in surpluses, my colleague estimates that $7.5 billion comes from the employment insurance fund.

Under the bill that was recently passed by the House to amend the Employment Insurance Act, the government will directly appropriate the $7.5 billion that belonged to the workers and employers of Quebec and Canada.

That money allows the government to boast, declare surpluses and profits and unilaterally decide to reduce the debt.

As regards employment insurance, the Bloc Quebecois has always held the same position in the House: let workers and employers discuss and decide what they will do with an insurance plan to which they contributed for their own benefit.

Let these people discuss the issue among themselves. As for the rest of the surpluses, let us give a chance to the provincial premiers, as my colleague suggested, to get together and discuss the future of the huge surpluses that my colleague estimated so accurately once again.

SupplyGovernment Orders

4:05 p.m.

Bloc

Francine Lalonde Bloc Mercier, QC

Mr. Speaker, I would like to ask my colleague if he believes that when Jean Charest is campaigning in favour of repatriating tax points to Quebec, it is because he is in favour of sovereignty?

SupplyGovernment Orders

4:05 p.m.

Bloc

Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, of course we are not stupid. Tax points have been a longstanding claim in Quebec. I will not reiterate all the statements made by my colleagues in the House. It is an historical issue.

The province of Quebec is asking for tax points for all kinds of historical reasons, and one in particular that Quebecers and people in other provinces will understand. It is because the quality of life is ensured by the provinces. Health care, education, everything we can think about, such as public safety, national safety, water, water treatment, garbage collection, all these services are provided by the provinces and their creatures, the municipalities.

There is a reason why the provinces are asking for their fair share, to assure the quality of life of the citizens of Quebec and Canada. To answer my colleague's question, there is a reason why, like his predecessors, the leader of the opposition in the Quebec national assembly is also asking the federal government to transfer to the provinces the tax points they deserve in order to meet their ever increasing expenses.

I repeat that in Quebec health care expenses will double by 2008. The same will happen in every other Canadian province. New technologies are extremely expensive. When the system was put in place the federal government paid 50% of the expenses and, today, it only pays 14%. This is the harsh reality of being part of a federal system.

I will answer the member for Markham that I believe he is becoming machiavellian with all the things he is dreaming up against Canadian unity. They are showing daily that Canada is less and less united. It is with reactions like the member for Markham's that people in Canada will understand that trying to bleed the provinces to death is not a solution, because they are the ones who are providing services ensuring the quality of life of their citizens.

SupplyGovernment Orders

4:10 p.m.

Liberal

John McKay Liberal Scarborough East, ON

Mr. Speaker, I will be splitting my time with the hon. member for Waterloo—Wellington.

This debate is like Yogi Berra saying déjà vu all over again. We do seem to be going at this once again. The provincial premiers meet in Saskatchewan and their surrogates coincidentally rise up in the House in order to bash the federal government for not giving them enough money. Some tunes never change.

The problem for the party opposite is that no amount of money will ever be enough. No amount of cash, no amount of tax points and no amount of equalization payments will ever be enough for the sponsors of this motion.

If the premiers had their way, Canada would become a collection of independent principalities and the Prime Minister would be nothing more than a bill collector. He would be in the rather unenviable position of having to phone up a Mike Harris or a Bernard Landry in order to get enough money to cover the expenses for the army. By that time, of course, in their generosity it would probably look like nothing more than a glorified police force.

The facts, however, are somewhat less prosaic. Provincial revenues in the fiscal year 1999-2000 totalled $181 billion, as opposed to the federal government's share of revenues which was $161 billion. Provincial revenues for the past 25 years have exceeded federal revenues regularly and consistently. Maybe the Prime Minister should have a meeting with himself to see if he can get the revenue flowing the other way.

The provinces do very well in this scheme of loose federalism and have virtually the same access to revenues as the federal government. The major transfers from the federal government to the provinces are through the Canada health and social transfer in the form of tax points and cash.

Generally at this point eyes begin to glaze over because Canadians, and indeed I would suspect many members, do not understand tax points. I have some sympathy in this regard.

The definition of a tax point is room given by the federal government to the provincial governments in the tax system. The federal government reduces its rate by a certain percentage in order to give provincial governments room to increase theirs accordingly. The tax point transfers make no difference to the overall burden on taxpayers. It is in fact a break even situation for all taxpayers. The provinces increase their tax base at the expense of the federal government and presumably in Saskatchewan that is exactly what the premiers are trying to do.

Tax points are one of the means of transferring revenues to the provinces based upon the strength of their provincial economies. If, for instance, Ontario does well, the revenue from tax points will go up and the money will come into the federal treasury from the provincial taxpayer. It does a U-turn and heads directly back to the provincial treasury. The federal government merely acts as a collector of those funds.

Throughout the dark period of federal fiscal difficulties, the tax points remained sacred. There was no reduction and there was no change. Whatever the economy of the province generated, it immediately went back to the provincial treasury. It is a very simple system.

The Bloc is in the unique position of arguing that tax points do not exist, but if they do exist then they want more. The head office in Quebec City has dictated today's motion, which reads:

That, in the opinion of this House, the government should call a federal-provincial first ministers' conference for the purpose of reapportioning the tax base among the federal and provincial governments through the transfer of tax points.

Do we really believe that premiers want to apportion more tax points to the federal government? Really, and I have some swampland in Florida.

Then, very handily, the Bloc manages to answer the motion by setting up Quebec's own commission. It is called the commission on tax disparity. I am grateful to my colleagues opposite who see no need for the debate, as they have already prejudged the issue simply by naming this commission the commission on tax disparity. What could be more clear? It is always handy to arrive at one's own conclusion before stating a problem.

In the year 2001-02 the provinces and territories will receive a total of $34 billion in tax points and cash, $15.7 billion in points and $18.3 billion in cash. It is anticipated that there will be a 19% growth in tax points over the next three or four years.

Last September the federal government committed itself to an additional cash transfer of $21.1 billion over five years. Having worked the federal government over for cash in September, it is now time to work the federal government over for tax points in May and June. Some would argue that the Prime Minister becomes a head waiter for the provinces.

If the federal government does not retain some control over the cash, the provinces would never have any meaningful national health standards and we would be even further down the road to absurd levels of devolution.

The Liberal government's policy of transfers to the provinces is a balanced one. The cash component is large compared to the tax transfer component. This means that not only does our government preserve and enforce national standards but the provinces can rely on stable sources of revenue.

That does not begin to address the equalization program that is now at an all time high at $10.8 billion of which, by the way, Quebec receives the lion's share. In the province of Ontario the CHST accounts for something in the order of 18% to 20% of provincial revenues. It has remained fairly steady over the years as Mr. Harris has chosen to reduce his revenue sources by his commitment to tax cuts in preference to all other commitments.

Various provincial governments make their own choices about spending versus tax relief and the federal government has little say, some would say thankfully, over those choices. It is now a little hypocritical for the provinces to come along and say that they need more federal moneys because of their own decisions. Having worked the so-called CHST cash cow in September, namely the cash part of the CHST, we are now in May and we are trying to work the tax points part.

The finance minister has repeatedly said that there is no financial space for large initiatives. The federal government debt is still quite enormous even after the $15 billion paydown this year. The first $40 billion of all federal revenues immediately goes toward the interest payment on the debt. If we took away another $34 billion for CHST transfers and cash, and added in another $11 billion in equalization, we would have precious little money left over for other programs, such as direct transfers to Canadians on matters like EI and pensions. Spending pressures for research and development, for on reserve aboriginals and for pensions would continue to be enormous in the short and medium terms.

The provinces do very well in this very devolved federal state. Their revenues actually exceed the federal government's and their debts are less than those of the federal government. The government already transfers over $40 billion to the provinces. I for one say that enough is enough and I urge hon. members to reject the motion.

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4:15 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, so many outrageous claims have been made that it is hard to know where to begin and what questions to ask.

I have about 25 questions I could ask my colleague, but first I want to make a comment. We are not looking for handouts. When the member says: “The federal government would be transferring tax points at its own expense”, he has to understand that the federal government does not exist for its own purposes.

Will the members opposite finally understand that the federal government does not exist for its own purposes; it is there to stand up for the people who have elected it and who have agreed to have it speak on their behalf in this House.

Will the government realize that there are people in Quebec and in Canada who need health, education or income support services, but that these services are provided by the provinces under the constitution itself?

Will it recognize that in the next four years, even with all the various federal programs mentioned earlier, like the pensions and also equalization, the federal government will still have accumulated surpluses of $70 billion to $90 billion?

If the government thinks that there are no problems, it is the one with a problem. There is a major imbalance. The provinces have huge responsibilities, particularly in the area of health. My colleague was saying a little earlier that in eight years health care needs in Quebec will have doubled and the situation is the same in other provinces. We do not have the resources to face that. The resources are here.

If the government does not understand that the federation does not work that way, with a superior government, with members who consider themselves superior to others, above everything, above provinces and above the needs of the population, I think it is mistaken. Will it understand my point?

All we are asking by this motion is a conference between the provincial premiers and the Prime Minister of Canada in order to see what the situation is and where we are heading. The Minister of Finance has acted in such a hypocritical way in the last seven years that we have never seen in what state the public finances really are. Every year it is a surprise. There are incredible surpluses and everything is going toward the debt.

We are all for reducing the debt, but there is quite a difference between allocating to the debt part of the surplus and all of it when the needs of the population are so important.

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4:20 p.m.

Liberal

John McKay Liberal Scarborough East, ON

Mr. Speaker, my hon. colleague opposite seems to want to have it both ways. He wants money to be transferred to provincial revenues and simultaneously he acknowledges that there is an enormous debt which needs to be dealt with.

He ignores quite nicely the earlier part of my speech in which I said that provincial revenues far exceed federal revenues by something in the order of at least $25 billion. He ignores the fact that the provinces have virtually the same access to revenue sources as does the federal government. He also ignores the fact that the equalization program is one of the few programs that did not get cut. His province is the major beneficiary of that program to the detriment, I would argue, in some respects of other parts of the country. It is probably the equalization moneys which have grown the most in the past number of years.

We can ignore all of these sorts of things. We can live in this fantasy world where we want it both ways, but I say to my hon. colleague opposite that we cannot have it both ways. We do have a nation. The nation has needs from coast to coast to coast. We on this side of the House will address those needs in a fair and balanced fashion.

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4:20 p.m.

Bloc

Marcel Gagnon Bloc Champlain, QC

Mr. Speaker, I would like to make a comment. I am outraged when I hear what government members are saying. They make it sound like the collection of revenues is a race between the federal government and the provinces. The member says that since the provinces have more revenues than the federal government, the federal government should not give anything back to them.

Wait just a minute. Provinces have more revenues but their responsibilities are greater. They are the ones with responsibilities, not the federal government.

Did the hon. member compare the provinces' responsibilities with those of the federal government?