House of Commons Hansard #143 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was surplus.

Topics

Unanticipated Surpluses Act
Government Orders

12:45 p.m.

Liberal

David Anderson Victoria, BC

Mr. Speaker, the member has just illustrated the fundamental problem we face in trying to debate major economic issues facing the Canadian public, which is the complete obsession by the official opposition with electoral politics.

We have to discuss some of these things in a more realistic way and the member's first question was a realistic one. He asked how it is that there are unanticipated surpluses. They come because forecasting is inaccurate. They come because forecasting in the case of surpluses is too low. Forecasting occurs at least 12 months, generally 14 to 18 months, prior to the end of the fiscal year that is forecast.

As we all know, economists rarely give an opinion more than two years out so we are really asking them to stretch it when we ask them to forecast ahead 14 to 18 months. They do not like that kind of issue. The reason their analyses have been so bad dealing with climate change is because they have trouble forecasting years and decades ahead.

Economists have difficulty calculating anticipated forecasts but they work the figures through and look at trends. I have a number of forecasts in front of me that have been done by the Canadian Imperial Bank of Commerce and the Royal Bank. I know I am not allowed to use them in the House because they would be considered a prop, but I have them and I will ensure he gets these kinds of documents. I will even give him some of the forecasts from Statistics Canada on energy, which is another point for another bill.

The fact is that economists make mistakes and the private sector frequently makes mistakes. Shell Oil calculated, and I think my figures are pretty accurate if they are not exact, $4.6 billion for its latest tar sands development. It is coming in at $7.2 billion. That is a phenomenal overrun. If that were government, we would not talk about anything else.

The private sector forecasts are based on government calculations and it can make errors. If the errors are in a certain direction, for example, revenues are more than expected, then a surplus results. That is why we are getting some of these contradictions. That is why the opposition has such trouble understanding the Minister of Finance when he says that we cut tax rates and received more tax revenue. Those members cannot understand it. It is because the economy can expand in a greater than expected way.

That is how we get this kind of unanticipated surplus and why the bill should be looked at quite carefully in terms of what we do.

Unanticipated Surpluses Act
Government Orders

12:50 p.m.

Conservative

Brian Jean Athabasca, AB

Mr. Speaker, that particular tar sands is in my constituency so I can tell the member why the Shell expansion was so overbudget. I can assure the member that almost all of the expansions in that area are overbudget and that is because the government lacks vision.

The government had an opportunity last year and this year to put some money into northern Alberta which would have created jobs for Canadians. We have so many jobs available in northern Alberta that it is not funny but we just do not have enough people to fill the jobs. We also do not have any affordable housing. I think the government put $3 million into the area out of the $3 billion it took out last year. We have problems in northern Alberta because the government has no vision for sending Canadians to Alberta instead of leaving them on unemployment insurance.

I can assure the member that we on this side of the House understand Reaganomics, Keynesian and economics but I do not think Canadians, if they were given a choice between Reaganomics and steal-onomics, would pick steal-onomics, and that is what we have had from the government over the past.

I have two questions in particular that I would like to ask the member. How much of the $6 billion out of last year's surplus was actually paid on debt? What is wrong with paying off debt? What is wrong with leaving our children and grandchildren with no debt?

Unanticipated Surpluses Act
Government Orders

12:50 p.m.

Liberal

David Anderson Victoria, BC

Mr. Speaker, his last words prove I have made a convert. Here we have someone on the Conservative side saying that it is good to pay down debt. All the Conservatives have talked about up until now, and what their lead speaker kept saying, is, “Don't pay down debt. Cut taxes”. Now we have my hon. friend from Fort McMurray at least agreeing with me. I thank the member. I must say that I am looking forward to him opposing the member for Medicine Hat and standing alongside my vote because that is good stuff.

Some of those members are learning but the member has not learned everything from what I heard him say before he made that comment.

With respect to the issue of Fort McMurray and the tar sands, the member cannot have it both ways. If all the good things going on there are the responsibility of something else, the member cannot blame what is not good on the federal government. He has to be fair.

The fact is that Alberta would not have those developments if it had not been for the Prime Minister, when he was minister of finance, making the changes to the taxation system which started the boom in 1994, which the member knows full well but simply will not admit.

Why did that not happen when the Conservatives were in power? That did not happen because they did not have our minister of finance who made those tax changes. You know that. You have to tell your constituents that, even if it means you probably should, in theory, lose your seat.

Unanticipated Surpluses Act
Government Orders

12:55 p.m.

The Deputy Speaker

Order, please. I would remind the hon. member to refer to members by their riding name, perhaps, or in the third person rather than the “you”, because that raises the tension level.

Unanticipated Surpluses Act
Government Orders

12:55 p.m.

Scarborough—Guildwood
Ontario

Liberal

John McKay Parliamentary Secretary to the Minister of Finance

Mr. Speaker, I thought the questions the member raised in the debate were quite good and quite thoughtful. It is a pity that he had to first take the questions from the other side.

The hon. member was concerned about what would happen during a catastrophe, such as a hurricane or some other natural catastrophe. I know the hon. member has been in government for a number of years. I am not sure whether this bill would apply to a situation in which there was an intervening event.

The books are closed off on March 31 and the surplus is declared by the Auditor General somewhere around September in the following year. Now if in fact there were a significant natural catastrophe between March and September of that year, presumably that would come out of the then budget of the government of the day and it would be a draw on that budget. It may put the subsequent budget into deficit but, nevertheless, it would come out of that budget rather than the determination of the surplus on the year's previous budget.

I would be interested in whether the hon. member thinks that is in fact the way in which it would be handled.

The second issue he raised is that the good times may not continue to roll, and he is absolutely right, and he gave a number of very good reasons why those times would not continue to roll. In which case, I do not think this bill would have any application whatsoever.

Unanticipated Surpluses Act
Government Orders

12:55 p.m.

Liberal

David Anderson Victoria, BC

Mr. Speaker, the hon. parliamentary secretary has illustrated some of the dilemmas. We would sort of go into deficit, then we would go back into surplus and then we would go back into deficit, depending on what ultimately happened with the bill. That is the type of thing I think we should avoid doing.

If it is within $3 billion that is the contingency fund, and if the contingency fund has not been used for any other reason, yes, all that $3 billion could go to the emergency. However if it exceeded $3 billion, we would then be into the deciding which hat to lift up to find the money routine which I suggest may not be the very best.

I would agree with him that, yes, and obviously everybody in this House would agree, we will respond to an emergency. The question is that when we start putting out bills that limit us in the future and limit what people can do in the future, despite what pressures there may be in the future, I think we get into the type of situation that I described.

The fact is that we have mechanisms but then the question is, if we have such mechanisms, does this bill make any sense.

Unanticipated Surpluses Act
Government Orders

12:55 p.m.

Conservative

Ed Komarnicki Souris—Moose Mountain, SK

Mr. Speaker, there is no question that there has been some confusion as to whether or not unexpected expenses and so on can come out of the budget. I gather from the parliamentary secretary's answer that any type of contingency can be covered off in the current budget.

I would ask the hon. member for Victoria not to worry himself too much about this aspect of the bill because the bill is nothing more than a pre-election ploy. It is done for a purpose, as the government has done in many other bills, such as Bill C-37, the do not call registry. We had no rules or regulations but the public was concerned about unsolicited calls so the Liberals put together a shoestring bill and left it to the CRTC to manage the workings of it, without regard to cost, so that they could direct their attention to the segment of the population that was interested in that type of legislation. An election is looming, which is why they would do that and why they have a surplus.

The surplus in the last number of years has been embarrassingly large and they know the public is upset, especially those members of the public who are running the treadmill attempting to stay alive, trying to make their mortgage, car and loan payments and are barely able to stay ahead, when the government is accumulating surpluses that have never been surpassed in the past, year after year. It has the audacity to call the bill itself an unanticipated surpluses act, when the surpluses have been anticipated year by year and are even larger than anticipated.

The legislation reads:

Recognizing that it is in the public interest to predetermine how annual unanticipated surpluses, if any, are to be applied among competing priorities...

It is not the public interest so much that the government has in mind. It is its own interest and in preserving its own political hide, and attempting to sow seeds toward what will be an imminent election that causes this bill to come forward.

The bill talks about applying, in a balanced way, the surpluses to spending priorities, to the deficit and to tax relief. Remarkably, it says “surpluses, if any”, so the government has reserved to itself the right to ensure that there is no surplus by tabling legislation that will eat the surplus, which really is not unanticipated, which it anticipates and knows well in advance of closing its books.

Insofar as tax relief is concerned, it is also remarkable that the government indicates that will happen as long as the increases are considered to be fiscally sustainable. Who decides that? The Minister of Finance decides that, the same Minister of Finance who tabled the budget in this House and said that he would entertain only technical changes to his budget. When it became apparent that the government might fall, the same minister and his officers prepared to enter into the one page NDP $2.5 billion budget bill to spend what was already in the surplus in order to preserve its own hide and stay alive because at that time it was not prepared to face the electorate.

What the government has done in this legislation, as it has done in other legislation, is it has built in contingencies and conditions that would make it appear as if it is doing something when in fact it is not, or has reserved for itself the option not to do it. In fact, it is an addiction to spending that must be cured, and the only way that addiction can be cured is by voting that particular party out of office and cleaning house. So addicted is it to spending that it has said in this legislation that the surplus would only be determined after some specific spending priorities were put into their budget.

In fact, in the spending area, the note I have says that as well, the extent to which one-third of the unanticipated surplus is allocated to spending every year would depend upon the spending priorities identified by the government. Therefore if it chose to spend in advance, it could. As the parliamentary secretary said, if there were a disaster or if there were some other aspect that required spending, the government could spend the money on that.

What would that do? That would simply eliminate the surplus. The government reserves unto itself the right to spend and says that if it has not misspent and there is some money left, it still wants to reserve unto itself the right to spend one-third.

At present it is required that the surpluses be applied to pay down the debt. Something which the hon. member from Victoria indicated and which makes good sense is that any family with a debt would try to focus all of its efforts on paying down its debt. That is the way it is now. What has the government done with this new legislation and the humongous surplus instead of giving it back to the public? It has decided to put only a portion of it toward the debt, a portion of it toward tax reduction and only if the minister decides that it is sustainable, and more spending.

When talking about spending, we have to wonder if the spending priority of the government is what it should be when we look at the NDP budget bill. As I read the legislation, subclauses 2(1) and 2(2) indicate that the whole bill is subject to clause 4 which means that the bill is subject to the spending of $2.5 billion that was agreed to in the NDP budget bill. Even into the future, not only has the government reserved the right to ensure there is no surplus, but the bill would only apply in 2005-06 and 2006-07 after the NDP budget and spending was put in place.

I found it remarkable that the leader of the New Democratic Party would say he was surprised that they did not receive that money immediately following the passage of the bill. I would instruct the leader of the New Democratic Party that any legislation tabled by the government needs to be read very carefully. There was no requirement in that bill to spend the money immediately after its passage; it was in time and it was conditional. The government has learned how to make things conditional, reserving unto itself the right to spend or not spend. Optically the Liberals want to create an illusion to satisfy public opinion, to try to bolster their opportunities in an election.

Perhaps this would be a good time for me to read an article by Roy MacGregor. It was written in anticipation of the visit some days ago of Condoleezza Rice, the United States secretary of state. He said in his note to her:

You are arriving at a time when there is much talk of tax breaks in the air. That is because there may be an election soon. Or there may not be. Or there may be, too. No one knows.

No one knows for sure but there is something in the air. I am a farm boy from the prairies. I can tell when rain is coming because I can smell rain in the air and I can smell an election coming. That is why we are debating this legislation that is dressed up and painted to make it look like it is something when in fact it is nothing. Lawyers have spent time drafting this legislation to make it appear that we are getting something substantial when in fact we are getting very little, depending on the whims of the government of the day which has reserved unto itself the right to spend and has reserved unto itself the right to have discretion. In real terms it could amount to nothing.

Roy MacGregor went on to say that Ottawa, the capital, collects far more taxes than necessary. That is the truth. Ask those Canadians who work 10 hours or 12 hours a day, five or six days a week, just to feed their families. They are paying taxes, lots of taxes, in the thousands. Where are those taxes going? To the government, and where are we getting the surpluses?

Regarding the goods and services tax, the government made a promise in the red book. I heard it with my own ears from the then prime minister who said that the GST would be cancelled but he did not do it. The Liberals are happy to have it now and they allow it to accumulate. Where else are the resources coming for the surpluses? There are the high energy and gasoline prices. Consumers are paying more and more money and the government is watching. The government is becoming embarrassed by the surplus that is accumulating without it doing anything. The Liberals have done a good job trying to spend it, and misspend it on the sponsorship scandal, on the Dingwall affair, on $500,000 severance packages, on André Ouellet spending $1 million without receipts, and on having departments that are not operating frugally or efficiently.

The Liberals are embarrassed. They have done all of that and they still have a big pile of money left, so they say we have to have some legislation.

Roy MacGregor went on to say in his column:

Ottawa...collects far more taxes than necessary and then, every three months or so, announces an enormous surplus, which millions of Canadians take to mean the government has turned a profit and is cause for celebration.

It is no cause for celebration that despite mismanagement, despite misspending, despite program goodies being given up for an election, still has a big pile of money left as a surplus. What is that telling us? The government is not running a good operation and is not turning a good bottom line. It is charging people too much money and thinking it is its own, or it is taking it from the provinces or municipalities.

Roy MacGregor went on to say that the government “then takes some of this 'profit' and gives it back to the people as a minor tax break”, maybe at the discretion of the minister. It is like taking a lot of money out of my wallet, giving 20% of it to the government and telling me I should feel good about it. That type of attitude needs to change.

It would be one thing if the government used some of that money for appropriate spending, but look at what is happening in government and the situation that farmers in my province are facing. One must ask how the government has had humongous surpluses for a number of years and a crisis has developed in the Prairies and the Liberals are not doing anything about it. Farmers have been trying to get the ear and attention of the government about what is happening on the Prairies and they have been ignored. The NDP that engineered the $2.5 billion budget did not even mention the word agriculture.

I asked a question in the House of the Minister responsible for the Canadian Wheat Board as to why the government would set such low initial prices when our farmers cannot afford to pay their input costs. They cannot afford to pay them and need additional funds at this critical time, extra cash flow. What has the government done? It has ensured that initial prices are about 60% to 64% of what they actually expect them to be. The government is playing big daddy to the farmers, holding back money in the thousands of dollars when the farmers need it, but the government does not care.

The minister had the audacity to say in the House that he has known about this for a number of weeks, that he is looking at it and thinking about it. That is what is happening in the CAIS program. He is looking at it and studying it. That one simple example shows a government that is out of touch with a segment of its people when it has huge surpluses and it is mismanaging and misspending.

In fact, the price for feed barley has been set so low in my constituency that after deducting the costs of taking the feed barley from the elevator to port, it nets the farmers 18¢ or 19¢ a bushel and it costs them almost that much to deliver it. It is an embarrassment that the government would even allow that kind of circumstance to come to be without addressing it immediately. It has not done it. I challenge the government to do it now, to raise that price so at least the farmers can put some extra dollars in their pockets as opposed to losing it totally in transportation by paying it in handling costs.

There was also an issue in my constituency about farmers having own use permits to allow them to save a few thousand dollars to eke out an existence. The government did not take any steps to extend the deadline beyond September 30 to allow them to acquire own use permits at considerable savings. Where are the government's priorities? Where is it going?

Let me indicate to the House how dire the situation is. I do not know what our farmers have to do to get the ear of the government. How drastic must the situation get? Must it get as bad as what we witnessed the other day with the first nations before the House turns its ear to it? The problem is severe.

I received a letter from a constituent recently with respect to the state of agriculture. She said, “Dealing with the government in areas of income tax, GST and CAIS has become extremely frustrating. I have had to deal with the death of a close family member, watched sibling family members struggle through farm bankruptcy and near farm bankruptcy and had to deal with some health crisis. I informed CAIS personnel that I may as well just go home and shoot myself. Then I proceeded to leave work and go home to do just that. Were it not for my husband and daughter, I would not be writing this letter”.

In fact, there were at least two suicides in my consistency. Most people have loans for machinery, for cattle, for land, for operating. The letter went on to say, “For two years we lost our crop to hail and frost and now when we finally have grown one, we have to pile it on the ground while the fuel bill reaches $15,000 and we can't sell it”.

And the government is embarrassed about sitting on surpluses when these kinds of conditions are happening. The Liberals had the opportunity to address the energy crisis and fuel bills on the farm. Fuel bills and fertilizer bills are getting very near to or exceeding the cost of the low commodity prices and the Liberals have done nothing. In the energy bill, they have tried to address a very narrow segment of the population, and again have forgotten my constituents. My constituent asked, “What are we supposed to do?” They cannot sell the grain. She said, “I love my family but this farming is killing me. I do all the things my mother did to raise a family, plus hold down a full time job, and when I look at my bank account today, I have $91 to buy groceries until the end of the month”.

The government is sitting on billions of dollars, doing nothing and then, because it was embarrassed, is pretending to divide it up for more spending, tax cuts potentially, just to save itself some embarrassment. It is not being done to help people because this problem has existed for a long time.

My constituent went on to say, “We are doing our best to keep the farm going. It sometimes becomes overwhelming trying to keep straight all the deadlines and rules for all the government programs which include income tax, payroll, GST, NISA wind-down, CAIS, Saskatchewan crop insurance, hail insurance, feeder calf set aside, TISP, Canadian farm income plan, business risk management, Saskatchewan farm fuel program and Canadian Wheat Board permits to name a few” not to mention the own use permits. The government has administered and regulated and made bookwork such a difficult thing for farmers that most of them are almost prepared to give up in desperation. She went on to say, “while trying to expand your operation, hold down a full time job, watching our bottom lines shrink away and our costs go up”.

This is what is happening in the midst of plenty. I fail to understand how the government could put a few billion dollars into the CAIS program, half of which is eaten up in administration, half of which never reaches the farm gate, causing farmers to operate with very little. How can the Liberals justify that?

A farmer from my area gave me some figures. He said wheat at 25 bushels an acre at $2 cost him $50 an acre. His chemicals cost $22 and fertilizer costs $26 for a total of $48 on two items and he has $2 left to cover fuel and operating expenses, not to mention the opportunity to feed his family. He and his wife are both working off farm. His brother is working off farm. They are doing whatever they can and are struggling to get by. They think it is galling to see the misspending and the waste that happens and the government cannot help an entire industry that is about to go down in Saskatchewan.

The government is doing nothing about it. The Liberals are not looking forward. They are not looking at any kind of a program that will preserve farmers in their hour of need. Instead, the Liberals are quibbling about whether they can frame the bill to show them as being magnanimous in dealing with the surplus by dividing it in thirds. If they were really doing that, at least that would be of some satisfaction. But they built in the opportunity for them to do their own thing, like they always have, to continue gouging and taxing on the backs of ordinary people who are attempting to make a living. The Liberals want to continue to get their surpluses and spend the money in government departments with waste and mismanagement, as common people on the ground have a hard time making a living. How can that be in this country?

Why has the government not addressed this situation and the economic impact in my home constituency? Instead, the government introduces a trifling bill such as this just to save its face and have an election gimmick. This is hard for my constituents and my constituency to take.

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1:15 p.m.

Liberal

Don Bell North Vancouver, BC

Mr. Speaker, I appreciate the comments made by the member for Souris--Moose Mountain. My question for the member is, why would he be against the concept of balance and transparency?

The member indicated what he believes are the motivations for this government putting the bill forward. I sat on the Standing Committee on Finance with many of his colleagues from that side of the House. The reason for this bill is to be responsive.

The government listened to the input that we received, not only from the public but also from the finance committee hearings. Last year we had over 300 witnesses that appeared before the pre-budget consultation proceedings. That process is going on again now, and we have had representations from groups representing the width and breadth of Canada from coast to coast to coast, from industry, arts and culture groups, and the groups that provide social services, the nursing groups.

The messages that came through during those discussions were in fact conflicting messages. We expected this when we listened to such a diversity of the Canadian population. The residents and organizations told us that they wanted reduced taxes. That was one of the messages and that is certainly a message that consistently comes from the Conservative members from time to time.

We also heard that Canadians wanted the government to reduce debt. This came again from the business community. It said that with smart financial handling, the government would pay down the debt in times of surplus. We also heard from groups saying there is a need for new program spending. That is the reason for the three aspects of this bill: reduce taxes, reduce debt and provide for program spending.

I would suggest to the member that this is a balanced response and a transparent response. The goal is not to go back to a deficit position that was characteristic of the Conservative government. The government will run on its record which is in fact to have the best track record in the G-8.

I would ask the member, what is his concern about having a program of balance, responsibility and transparency that attempts to reduce the debt, where we have gone from 38¢ of each dollar to 19¢, and the government's goal is to take it to 12¢?

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1:20 p.m.

Conservative

Ed Komarnicki Souris—Moose Mountain, SK

Mr. Speaker, as the matter stands now, without the legislation, the surplus would go to the accumulated debt. That is where it is going now.

The problem is that whether there is a surplus or not, it is determined by government spending, pre-election spending, or pre-year end spending where the government ensures that it has used up that money in one fashion or another. That is where the problem lies.

This piece of legislation is simply window dressing for an election. It is window dressing because in true transparency, the government never said without question that it would apply a third here, a third there and another third there. The government has reserved some for itself. As we have said, first of all, the government has to cover Bill C-48 and there is no question about that.

One of the questions that was asked was, what happens if there is a special obligation, such as the offshore accord and so on? The response was that “all spending obligations will be taken into account before determining the surplus for a specific year in accordance with standard accounting practices, and that the amount available for additional expenditure initiatives will therefore be computed after taking into account year end adjustments”.

That alone is sufficient to drive through a two tonne farm truck without any difficulty. It is a loophole.

Then we have another aspect in respect to tax relief. Where does the government think the money comes from? The money comes from the backs of ordinary Canadians, from resource revenues and from the GST. This is not the government's money. The government has not given it back. The money has been put on the tail end if there is a surplus. After all of the loopholes, there might be a tax reduction. It is right in the minister's own documentation that he released after the bill, which says:

--to make the tax relief permanent, subject to the Minister of Finance’s assessment that the fiscal impact in following years is affordable.

We know what the minister has done. He said there could only be a technical change to the budget that came down in February. I say that $2.5 billion is not a technical change. It is a substantive change.

This minister, who is from Saskatchewan, should be addressing the situation in Saskatchewan and he is not, to his embarrassment. It has been changed because it was politically feasible to do so, and to say that this is clear and transparent is not so. It is not.

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1:25 p.m.

Bloc

Gérard Asselin Manicouagan, QC

Mr. Speaker, in connection with Bill C-67 in which the government concerns itself with the allocation of surpluses, it certainly does not want to make this a vote of confidence. The surpluses that we have now could easily have been foreseen by the Minister of Finance. If he knew about them, there is a problem. But if he did not know about them, there is an even bigger problem.

This morning during a question that I was asking, I referred to employment insurance. Every year the government pockets $4 to $5 billion of the surplus in the employment insurance fund, which it invests in its consolidated revenue fund but on the backs of working people and the unemployed. In the regions, this is of major importance.

In a second question, I referred to the lack of maintenance on federal infrastructure and facilities in the regions, including ports and airports. In the fishing industry in the Lower North Shore, the seaports belonging to Fisheries and Oceans or Transport Canada are very important.

Finally, I would like the member to tell me whether he thinks it is all right for the government to feel it has to pass a bill today on the equitable allocation of its surpluses when there are corrections officers at Port-Cartier penitentiary who have been without a collective agreement for four years and have had to take to the streets in order to assert their rights. They do a very dangerous job, but the government does not recognize its responsibilities in their regard. These public service employees have been without a contract for four years. This is immoral and not all right.

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1:25 p.m.

Conservative

Ed Komarnicki Souris—Moose Mountain, SK

Mr. Speaker, there is no question that the government, in my view, has lost touch with the common people, with the workers of the country and with the producers of the country. It has spent money, but it has spent it foolishly.

In addition to the dollars that I have mentioned, the government has taken $50 billion from ordinary Canadian workers, when it assessed them directly and applied it to general revenue as opposed to putting it into debt reductions or programs for workers. The government has spent the money and it has given out $300 million from the worker's protection fund which is laughable and perhaps embarrassing when we look at the great amount of money that it has taken from these people.

This is a money bill. It should go forward before the House. The government should be defeated because the only way to clean house is to get rid of the present government and put someone in there who will reorder the priorities, get back in touch with the common people, and spend the money where it should be spent, which is on the ground for hard working Canadians as opposed to fat cat executives.

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1:25 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, it is my pleasure to celebrate Bill C-67. It is indeed a bill for which I have been waiting for a long time because it finally marks a point at which Canada has fully achieved the recovery that was necessary from the circumstances that it inherited back in 1993.

I had a written a speech to give on Bill C-67 to talk about the details of the bill, but the members very well understand the bill and they really want to talk about other aspects of the financial administration of the country.

It is fair to say that members who have spoken and the three finance critics who addressed the House after the minister this morning, all addressed Bill C-67 with the assumption that there will no longer be a federal budget in Canada, that Bill C-67 will replace the federal budgeting process.

They went on to argue that to take the surplus at the end of the year and allocate the excess of $3 billion to one-third to debt, one-third to tax relief and one-third to spending priorities is just a mathematical game, and that it is no way to govern a country.

First, the premise of that assertion is wrong. There is still a budgeting process. There are budget consultations with Canadians still going on. They are going on right now. We will have a budget before the commencement of the next fiscal year. To remind Canadians and all hon. members, the fiscal year of the government ends on March 31. The current year will end on March 31, 2006. There will be a budget which will be for the year starting April 1, 2006. The priorities within that budget and the assumptions that will be made for Canadians are being made now as we speak, as the consultations go on with Canadians and with experts.

We are now talking about Bill C-67, which is not establishing the priorities for spending and how we will deal with any surplus. We are dealing with a bill that finally brings to the House a process. It is proposing a process that we will use to deal with surpluses that exist after budget priorities have been taken care of and that is really important.

Let me reflect on the comments of the Conservative finance critic who said that productivity is where we should be, that we have to have improved productivity, that we have to have corporate tax cuts for the manufacturing sector and create those jobs, and that we have to have income tax cuts for middle income earners. I do not disagree, but not exclusively.

Let us reflect on what the Bloc finance critic had to say to the House. He dismissed the bill as being arithmetic. Then he said that we really should be worrying about the fiscal imbalance, that there is a fiscal imbalance in Quebec, that the federal government has more money and Quebec should get some of it, and that if we were to just transfer the money, that would solve all the problems because there is a fiscal imbalance.

Quebec has the same taxing authority that the federal government does. That province has responsibility for spending exclusively in certain areas and there are areas in which there are shared responsibilities such as health care, post-secondary education, and social assistance. There is federal participation.

However, Quebeckers are also entitled to tax cuts. They are also entitled to live in a secure financial situation. Debt servicing, debt repayment and the savings of interest are important also to Canadians who live in Quebec. This is just one part of it.

Let me reflect on the NDP finance critic. She came to the House and totally dismissed Bill C-67 in her first sentence. She then went on to say that we should be dealing with child poverty, affordable housing, foreign aid and a whole bunch of issues, many of which are included in Bill C-48 which was adopted by the House. It does authorize spending in those areas to the extent that it is fiscally sustainable and the House has approved that.

Having listened to the speeches by the finance critics, it is clear that their assumption is that Bill C-67 somehow replaces the budget, but it does not. They want Canadians and other members in the House to believe the budget and priority process we go through in planning a budget will somehow be replaced by a mathematical formula of one-third, one-third, one-third. That is not the case. This is a celebration.

Let us reflect on where we have been. Prior to 1997, Canada experienced deficits for 27 years. That was 27 years of spending more money than it brought in. Nobody could operate a household like that. How did governments do that? How did this happen? The national debt increased to $500 billion, a mortgage on our future. At the time, we had a debt to GDP ratio of 70%. Interest rates were up, social programs were in jeopardy and our economic sovereignty was questioned. We were described as a Third World economy.

Our debt was 68.4% of GDP. It is now down to 38.7%. Within the decade, it will be down to 25%. We have the best performance in the G-7. The foreign content of our debt has gone from 43% to 17%. That is very significant. Canadians said that too many foreigners were holding the debt. Now it is down to 17%. Debt interest was costing us 38¢ of every dollar collected from Canadians. Today it is down to 19¢, a very significant improvement. Canada is now back to a triple-A rating. Everyone should celebrate because we are now the envy of the G-7. That is important for Canadians to know and to understand.

We still have a budget. We are going through this process, a budget will be forthcoming and it will be before the commencement of the next fiscal year, which starts on April 1, 2006.

If Bill C-67 is not what the opposition is suggesting, what would it do? Bill C-67 is not a spending bill. As a consequence, it is not a confidence bill. Bill C-67 describes a process. On March 31, 2004, we had a surplus of $9.1 billion. After the plans for the year were executed, the books were closed on March 31. Six months later, after the audit by the Auditor General in September, she announced that the surplus was $9.1 billion. For the year ended March 31, 2005, she announced a surplus of $1.9 billion.

Under the rules set by the Auditor General and the rules of Parliament, all of the $9.1 billion had to go to pay down debt. No year end adjustments can change that. There are minor accruals, but no additional spending. Once March 31 was over, an audit was done and a $9.1 billion surplus was reported six months later by the Auditor General.

We always have built in a $3 billion cushion to make absolutely sure that we never again go into deficit. Canadians have said that they do not want more deficits, and that $3 billion is the cushion. To the extent that there is a surplus in any fiscal period which is in excess of that $3 billion, we need a process on how we will get the authority of Parliament to dispose of some of that without having it all go to debt. Bill C-67 provides that instrument.

It basically says that an appropriation can be put through which reserves the excess surplus over the $3 billion. That excess surplus, which was unanticipated and could not have been spent before March 31, now can be allocated. The bill proposes the process, which is one-third will go to debt, one-third to tax relief and one-third will be for additional program spending and supports.

Everyone understands the importance of continuing to pay down the debt, which also saves interest. Since we balanced the budget in 1997, $65 billion of national debt has been paid down. It has saved Canada over $3 billion annually of interest expense, which is available for health care, for housing and for the social needs of Canadian.

With regard to the one-third that would be for tax relief, it is established initially as a one-time credit. We do not know what will happen next year. The bill also provides a process that where we continue to have room to provide these credits, this one-time credit can be a permanent tax relief credit to Canadians.

Finally, with regard to the program spending, members somehow are suggesting that the finance minister can choose what he wants to do. It is clear in the bill, if the members would read it, that no spending of the one-third for program spending can be made except pursuant to a bill passed by Parliament. It is not at the discretion of the minister. It is at the discretion of Parliament.

I think members now understand that there still is a budget process which establishes our key priorities. Bill C-67 would not take away anything from the importance of having a fair, transparent and open consultation process with Canadians and with parliamentarians to determine our priorities. It provides us with the last necessary piece so if there ever again is a surplus which is far in excess of the $3 billion of contingency, we have an opportunity to use it in a way other than repayment of debt.

I want to comment very briefly on the $9.1 billion surplus of the fiscal year ending March 31, 2004. In the fourth quarter of that year, corporate revenues were way beyond the fiscal forecasts of any of the forecasters, so far beyond that there was absolutely no way even to detect it. By the time it was reported, the year end was already over. It was substantively a revenue opportunity which just occurred. The economy was booming. The corporate sector was doing its job. We could not have anticipated it 18 months earlier when the budget was set. In fact, this is a perfect example of an unanticipated surplus, all of which, in the absence of Bill C-67, had to go to pay down the national debt. None was available to deal with the other priorities of Canadians. If we had known, there would have been programs.

It is important to look at where we were. It is important to see what happened when we had large surpluses. We have to understand that last year there was not a surplus in excess of $3 billion and Bill C-67 would not have kicked in. There would not have been any one-third, one-third, one-third, simply because the surplus of last year was only $1.9 billion.

I hope this helps members and Canadians to understand that Bill C-67 does not establish priorities for Canadians. It establishes a process by which, in certain circumstances, Parliament has an opportunity to agree upon and pass legislation to authorize further spending in areas as a consequence of unanticipated surpluses.

It is extremely important to summarize again the themes and the importance of why we should consider Bill C-67 to be a bill of celebration.

First, the legislation would allow the government to allocate future unanticipated federal surpluses equally among cutting personal taxes, spending on social and economic priorities and reducing federal debt, a balanced approach. It would apply any of the surplus over the $3 billion contingency reserve before closing the federal books, starting in the fiscal year.

One-third of the surplus would go toward tax relief to all taxpayers in a one-time credit, which is non-refundable credit. This means each and every Canadian would equally share in the distribution of the tax relief.

One-third of the surplus in excess of the $3 billion contingency would go toward spending priorities, again, approved by Parliament, not dictated by the Minister of Finance as the previous speaker indicated.

This process would provide for greater transparency, accountability, fairness and balance. The bill is all about that.

Canadians have consistently told us that they do not want to go back into deficit. We do not have legislation that says we cannot go into deficit. We are managing the finances of the country by providing contingencies, by providing prudence in our estimates and by consulting widely with the forecasting community to make absolutely sure that we have the fundamentals right or at least as right as we can get them 18 months in advance of the year end.

Sometimes we cannot anticipate economic blips. Some years they will be good and in other years they will be bad. We have seen that over the last eight years. However, we have continued to balance the books eight consecutive balanced budgets. We fully anticipate that the next two budgets will also be balanced.

I remind members that under the current accounting rules guiding Parliament and the books of the Government of Canada, any surplus that is determined to exist at the end of the year automatically goes against the debt. The purpose of Bill C-67 is to provide a process so we can take part of that surplus in excess of the $3 billion and use it for something other than debt repayment, where there are priorities.

Also in the past, when some of the surplus was larger than anticipated, it was important to go after some areas, and I think that the House would agree. If not, maybe members would tell me which of these they did not agree with, in terms of unbudgeted spending.

How about the enormous amount of money that was put out for the mad cow crisis? How about the terrible tragedy of the SARS outbreak? How about the provincial health accord? How about the child care initiative? How about the B.C. pine beetle? How about the national security requirements, as a result of the tragedy of 9/11?

Sometimes very significant events occur in our world. A government has to be able to respond quickly. That is why we have put prudency factors. Sometimes that $3 billion may be required to meet emergency priorities, in the best interest of all Canadians. If the members feel that any of that spending, whether it be on mad cow, on SARS, on the health accord or on the national security issues related to 9/11, was not appropriate, please tell me what would be because I could not imagine anything else.

Today's legislation would give the government the authority to allocate this unexpected surplus. On the tax side, it would continue to build on the $100 billion tax cut program of the year 2000, which is now fully implemented. The indexation of the income tax system, as well as the other changes to the non-refundable tax credits that have been provided, have added a further $13 billion of tax savings for Canadians.

On the spending side, it specifies how year end spending, starting with the current fiscal year, could go directly toward clearly defined priorities, as approved by Parliament, not by the minister. On the debt side, the legislation would provide for the repayment of the debt of the $3 billion contingency, as well as one-third of the surplus over that amount.

Finally, many countries today are in no position to study approaches toward unanticipated surpluses because they do not exist. Canada remains to be in good financial shape. Canada continues to consult with Canadians on important priorities. We are in the area of keeping our books in good shape, meeting the health and social needs of our people, meeting the priorities of our children and seniors, meeting the priorities of our provinces and making sure we have the security and stability that makes Canada the envy of the world.

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1:45 p.m.

Conservative

Merv Tweed Brandon—Souris, MB

Mr. Speaker, the only thing missing from the hon. member's statement was that he did not start it with once upon a time.

The member opposite talked about revenue projections of the government. I would remind him that over the last several years the Liberal government has missed revenue projections by $80 billion.

In his most recent comments he talked about the $1.9 billion surplus that overnight turned into a $9.1 billion surplus. I have to remind the hon. members that this is not government money. This is the money of the people of Canada, which seems to be forgotten by members on that side all the time. They are even starting to refer to their entitlement as our money, our budget surplus. This is Canadian money. This is overtaxation on Canadian taxpayers and that has to be recognized by the government.

The member said that this was not a spending bill but in reality it is a spending bill. If there is a surplus at the end of the year, as has been proven by the history of the government, it will continue to spend that surplus time and time again. At the end of the year and at the end of the day that money will not be there. It will be spent on Liberal projects. It will be spent as if it were Liberal money and it will be of benefit to very few Canadians.

Does the hon. member believe that Canadians actually believe the Liberals when they say that they will spend or share that money with Canadians, or does he believe that Canadians expect the Liberals to spend it on their own pet projects in their own communities?

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1:50 p.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the member and I think other members in his party have said that the existence of a surplus means that Canadians are overtaxed. It is an interesting comment but he should also understand that under the system of accounting for the Government of Canada, the only way to pay down $1 of debt is to have $1 of surplus.

Paying down debt, in my CA terminology, is not a P and L item. It is a balance sheet item. Just for the member's edification, a surplus is necessary under the current rules to pay down debt. Under the rules, every dollar of surplus automatically must go to pay down debt. We cannot spend any amount of that after March 31.

The member suggested that if we see an anticipated surplus coming we will spend it all in advance. He argues that Bill C-67 must be a spending bill because they are spending it but Bill C-67 does not apply until after the fiscal year. The member is talking about before the fiscal year is over, so Bill C-67 would not apply. Clearly, he has not read the bill nor does he understand it.

I would suggest that we can debate as much as we want in this place about whether or not things are going well but the important indicator is whether Canadians think the country is in good shape.

I believe the international community clearly has recognized that Canada's economic performance has been a leader in the G-7.

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1:50 p.m.

Bloc

Guy Côté Portneuf, QC

Mr. Speaker, I find it extremely sad to listen to the member for Mississauga South. He believes what he is saying. This is very sad. He has talked a great deal about the fact that it is impossible to make accurate forecasts. I agree that, some years, revenue would be higher and expenditures lower. But, if it is impossible, how is it that they have been making the same mistake since 1998, oddly enough? This government no longer has any credibility with regard to its estimates. It has none whatsoever.

Bill C-67 formalizes this government's recurring practice of underestimating its surplus so that, at year-end, it can spend this money for electioneering purposes, in direct contradiction to the budget consultation process. This shows disrespect for the witnesses who appear before the Standing Committee on Finance, for the committee itself and even for the House of Commons. It is unbelievable.

Could the member tell me why our finance critic, the member for Saint-Hyacinthe—Bagot, always forecasts the government's end-of-year surplus almost exactly, while the government keeps getting it wrong? This government no longer has any credibility.