Lost his last election, in 2006, with 26% of the vote.
Federal-Provincial Fiscal Arrangements Act February 10th, 2005
Madam Speaker, the member opposite is the one who should be embarrassed at presenting this money as a gift from the federal government. If one thing is clear in the Constitution, which was forced on us, it is that health care is a responsibility of the provinces and Quebec. This is not a gift, it is money that is owed Quebeckers.
Federal-Provincial Fiscal Arrangements Act February 10th, 2005
Madam Speaker, to be honest, at this time, I do not have the exact figures, in terms of percentage, on the government's current contribution.
However, we must not forget that if there was a funding increase, it followed many years of cuts and reductions. I am convinced that this increase in no way compensates for the cuts over the past several years. I am convinced of this even without having the exact figures on hand.
We have suffered the consequences of these cuts in Quebec, and in all the other provinces. This government, in order to pay down its debt, sometimes endangered the health of people in Quebec and Canada, by making drastic cuts. It was high time this government increased its contribution so that the provinces and Quebec can provide decent health care, among other things.
Federal-Provincial Fiscal Arrangements Act February 10th, 2005
Madam Speaker, as my colleague has pointed out clearly, the underfunding in recent years has created very great needs in the provinces and in Quebec. Some sectors, such as imaging, may have been neglected by the provinces because they are so hugely expensive. That is one of the direct consequences of the federal government's insufficient funding to the provinces.
This specific agreement, found only in the context of the parliamentary review is unfortunate. One might think at first glance that it refers to all communiqués which it does, but only in connection with a very specific section: parliamentary review, and not implementation of the entire bill.
It is very important that it be for the entire application of the bill. The joint Canada-Quebec communiqué referred to three or four very specific situations, which I will address rapidly. Among other things, reference was made to the following:
The Government of Quebec will report to Quebecers on progress in achieving its objectives, and will use comparable indicators, mutually agreed to with other governments. In this respect, Quebec will continue to work with other governments to develop new comparable indicators.
Quebec’s Health Commissioner is resposible for reporting to the Govenrnment of Quebec on Quebec’s health system. He will cooperate with the Canadian Institutefor Health Information.
Yet the responsibility lies with the Government of Quebec, through its Health Commissioner.
Continuing the quote:
Funding made available by the Government of Canada will be used by the Government of Quebec to implement its own plan for renewing Quebec’s health system.
This is not a reference to accountability, but to implementation. It is not in the bill at the present time.
Naturally, since there is much talk about accountability and reviews, the communiqué is quite explicit. It states, and I quote:
The Government of Quebec will continue to report to Quebecers on the use of all health funding.
The member is quite correct. There are serious problems in a number of health care sectors. This bill corrects them to some extent, but we must not forget that they are the result of poor management, cuts to transfer payments and the underfunding of health by this government.
Federal-Provincial Fiscal Arrangements Act February 10th, 2005
Madam Speaker, unfortunately, the Bloc Québécois cannot support this bill in its present form.
Earlier, I asked the hon. member for Scarborough—Guildwood how, in the bill, Quebec's specificity, or Quebec's specific agreement, negotiated in September 2004 at the first ministers' conference, was recognized. The hon. member said that all the communiqués were incorporated into the bill and, consequently, that asymmetrical federalism and the agreement reached with Quebec were recognized de facto in the legislation.
Unfortunately, I must correct the hon. member opposite. While there is a brief mention of all the communiqués, the reference is found in a very specific part of the bill dealing with the parliamentary review. What is a parliamentary review? Once the various measures included in this bill are implemented, how will they be monitored? How will the accountability process relating to the implementation of these various measures be conducted? Indeed, the relevant clause provides that, for greater certainty and for the purposes of this section, the 2004 10-year plan to strengthen health care includes the communiqués released in respect of the first ministers' meeting on the future of health care that was held from September 13 to 15, 2004.
This is unfortunate, for it shows just how sensitive this government is to Quebec. For so important an accord, an accord on asymmetrical federalism which even the government recognized as historic, when the time comes to implement it, this government forgets the most important thing, recognizing the distinctiveness of Quebec in implementing the accord.
How is it recognized? I remind you that, in the wake of this 2004 conference, the government acknowledged that asymmetrical federalism allows for any province to have specific agreements and arrangements. The first ministers also agreed to a separate communiqué to report on the arrangements made between the Government of Canada and the Government of Quebec with regard—and this is very important—to the interpretation and implementation of this communiqué. The funding made available by the federal government will be used by the Government of Quebec to implement its own plan for ensuring timely access to quality health care and reducing wait times.
We are not talking about parliamentary review or accountability in this agreement. We are talking about the interpretation and implementation of the agreement and the possibility for Quebec to have its own plan. Unfortunately, we do not find this in the bill.
Thanks to the vigilance of the Bloc Québécois, I know that discussions have been held, and are still being held, to ensure that these provisions, namely recognition of this communiqué which recognizes asymmetrical federalism and the specificity of Quebec, are included in the bill.
Let us be quite clear. If this fact is recognized only in the sections referring to parliamentary review, we cannot support this bill. That would be a shame, for we are of course talking about substantial funding for the health of our fellow citizens. Also, this is an agreement which was subsequently acknowledged as an established fact. I refer more specifically, for example, to the conference of health ministers held in Vancouver last October. The news release was very clear. A series of measures was listed relating to this agreement—measures concerning, for instance, reduction of wait times, improved access, the national pharmaceuticals strategy, and general and specific public health goals. The news release recognized the specificity of Quebec by mentioning, for example, that Quebec's contribution to these initiatives would correspond to the provisions of the document entitled “Asymmetrical Federalism that Respects Quebec's Jurisdiction”, which accompanies the 10-year plan to strengthen health care.
The health ministers and the first ministers agreed. Now the time has come to introduce the bill implementing these elements. Through a lack of sensitivity, no doubt—thank heavens that we are here in the House to remind them—they forget to include these elements so that they have the importance that they deserve.
It is the same in regard to human resources in the health sector. Quebec has a specific agreement. In the same news release from the health ministers, it said: “Quebec, having its own process, will collaborate on this initiative by supporting ongoing exchange of information”. One way it will do this is through its own health commissioner.
What has been negotiated by the first ministers and what has been presented by this government as a historic agreement must be referred to in the bill and not just in connection with the parliamentary review.
What did this joint Quebec—Canada communiqué say, more specifically? It stated that ,in regard to the application of the clause in question, this specific agreement did not deal solely with the parliamentary review, but was much broader. It said, and I quote:
—resting on asymetrical federalism, that is, flexible federalism that notably allows for the existence of specific agreements and arrangements adapted to Quebec's specificity—
Quebec will apply its own wait time reduction plan, in accordance with the objectives, standards and criteria established by the relevant Quebec authorities—
There is nothing here about federal interference; it is all about Quebec's powers. It also says, and I quote:
The Government of Quebec will report to Quebeckers—
This joint communiqué goes much further. Indeed, it says the following in the last paragraph:
Nothing in this communiqué shall be construed as derogating from Quebec's jurisdiction. This communiqué shall be interpreted as fully respecting its jurisdiction.
In short, this means that health is Quebec's jurisdiction, period. This is a fact that is not mentioned anywhere in the bill, which talks solely about parliamentary review, and that is too bad.
As soon as we read this bill, we started negotiating with the government to ensure that this reference would be included, ideally in the introduction. It would really be too bad if we could not support this bill because of a lack of clarity on the way the measures to provide the Government of Quebec with considerable financial amounts will be implemented—amounts that will enable it to accomplish its missions, in the health field.
The federal government made us laugh when it said this was an historic agreement and that finally two federalist governments had managed to agree. However, this sense of harmony was short lived because of the conference on equalization that was held in the weeks that followed.
Following a number of criticisms by other provinces and various hon. members regarding the acceptance of this asymmetrical federalism, the government had no choice but to strengthen its resolve on equalization and impose an agreement on the provinces, especially Quebec. It is too bad.
If, in the context of equalization, we had managed to reach a more flexible agreement that was more generous toward Quebec, similar to the recent agreement reached with Newfoundland, for example, then the federal government may not have needed to present a bill that also gives effect to its interference in the area of health, by allocating specific funds to specific areas. It is unfortunate because this is not under the federal government's jurisdiction.
Once again, the government claims to know it all and know best how to manage every issue, especially those under Quebec and provincial jurisdictions. When it comes to managing federal jurisdictions, this government—and the previous government—has a disastrous record.
I could give you many examples, such as agriculture, the Canadian Forces, the softwood lumber crisis, and the mad cow crisis. These are all matters under federal jurisdiction in which the government has almost totally failed.
At the same time, this government is saying it has money it does not know what to do with and that it will show us how to manage a slew of situations that come under provincial responsibility, such as health. Thankfully the agreement confirms the specificity of Quebec and its jurisdiction over health. This must be recognized clearly, precisely and without ambiguity at the beginning of the bill so that the reference applies to all the measures in the bill and not just the parliamentary review and accountability.
This situation is surprising, to say the least, since one would have thought that the members of Parliament from Quebec who sit on the government side would have sounded the alarm. It seems to me that as soon as they read this bill, someone in the government party ought to have noticed that an essential element was missing. Just by chance, once again, something was forgotten, demonstrating, I repeat, the lack of sensitivity to the needs and specificity of Quebeckers.
Consequently, without a guarantee, without amendment to this bill, it will be impossible for us to support it. We will keep on fighting. We will ensure that this bill is amended to correspond with the agreement made by all the first ministers, in order to correct this unforgiveable oversight.
I hope that we will get the government's cooperation on this subject so essential to the health of our fellow citizens. I fervently hope that in committee the members of the government party will quickly remedy this situation. Because, as the hon. member for Scarborough—Guildwood mentioned, this bill must be implemented as soon as possible, so that all citizens of Canada and Quebec can benefit from the money provided under this agreement and this bill.
Why are this agreement and this money so important? We must not forget that in recent years the federal government has radically slashed transfer payments, thereby making it necessary to raise its funding one notch higher, bringing it to nearly 25%. Thank God this will permit the Government of Quebec, in particular, to provide some services which, at the moment, are very difficult to provide, since naturally it must fund other sectors. I am thinking, for example, of education. In this field, again due to the government's draconian cuts, federal funding is now around 12%. As a result, the provinces are called upon to make an extra effort, Quebec especially. In fact, Quebec has to ensure that the services it must provide to its citizens are adequately financed.
This agreement will ease the situation somewhat. Still, in order for this agreement to be effective—I repeat: without this condition we will not be able to support this bill—it is essential that the joint communiqué recognizing asymmetrical federalism, the situation specific to Quebec and Quebec's full jurisdiction over health be acknowledged.
In conclusion, I call upon the government MPs to assure us as promptly as possible of their absolute and total cooperation in getting these amendments into the bill, as otherwise we will not be able to support it.
Federal-Provincial Fiscal Arrangements Act February 10th, 2005
Madam Speaker, during his speech, the hon. member for Scarborough—Guildwood talked a lot about the significant amounts to be paid to the provinces under this health agreement and the bill. He also talked at length about the broad consensus among the provinces regarding the implementation of this legislation and the accountability process.
I should point out that, in September, the participants at the meeting that led to the introduction of this bill recognized the notion of asymmetrical federalism, more specifically in the health sector where specific agreements can be reached with various provinces. Indeed, Quebec did sign a specific agreement.
I wonder if the hon. member for Scarborough—Guildwood could elaborate somewhat on how this bill will apply to Quebec? To what extent does it recognize Quebec's specific situation in the context of an agreement on asymmetrical federalism?
Budget Implementation Act, 2004, No. 2 February 4th, 2005
Mr. Speaker, I would like to highlight the very accurate observation the hon. Speaker made earlier this morning—following the presentation by the Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness, if memory serves—about past, present and future budgets actually all having things in common.
Where this government is concerned, these are: interference in the jurisdictions of the provinces and Quebec; poor budget forecasting; transfer of this Parliament's money into foundations to shield it from scrutiny by parliamentarians; mismanagement of the employment insurance fund and robbery of $46 billion; underfunding of equalization transfers; forecasts for the next five years which include reserves for contingencies and economic prudence larger than the estimated real surplus.
In his presentation, the Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness indicated that resolving the health management issues in Quebec and the provinces will take more than just money. The Liberal government claims to be a great health care manager prepared to take its place in this area, which is clearly Quebec's jurisdiction.
What kind of expertise does this government have in health care management? How many hospitals is it managing and how many employees work for the health department?
Budget Implementation Act, 2004, No. 2 February 4th, 2005
Mr. Speaker, I can really sympathize with the complaints of our colleague from Windsor West. Unfortunately, we in Quebec are used to a federal government that often ignores consensus. It also tends to impose programs and agreements after holding negotiations behind closed doors. An example of this currently in the news is the parental leave program.
We are also used to a government that does not know how to adequately supervise its borders. We need only mention the recent example of the government's inability to ensure adequate protection of Quebec's border by the RCMP.
I want to ask the member for Windsor West to briefly review the reasons given by the government, at present, for not proceeding with necessary projects in his region.
Budget Implementation Act, 2004, No. 2 February 2nd, 2005
Mr. Speaker, we in the Bloc Québécois are very conscientious vis-à-vis our role within this Parliament. We always deal with each issue with rigour. As we have indicated on many occasions, we will support any government bill which we feel is good for the citizens of Quebec, but not those which we feel do not respond to the demands and concerns of Quebeckers.
Bill C-33 implements certain provisions of budget 2004. Allow me to mention in passing that, to a new member, it seems rather odd to be addressing this House on a budget tabled a year ago in order for some of its provisions to be implemented.
We will be voting in favour of this bill because, while not perfect, it does contain a number of provisions that meet our approval.
Bill C-33 is comprised of three parts. The first part implements amendments to the Air Travellers Security Charge Act to reduce the amounts charged to airline passengers under this act.
Although the terrible events of September 2001 unfortunately made it necessary to allocate additional funds to ensure traveller safety, the need is obviously not nearly as great at this time. This bill therefore represents a first step, lower security charges.
The second part of the bill implements the amendments to the First Nations Goods and Services Tax to facilitate the establishment of taxation arrangements between the Government of Quebec and interested Indian bands situated in Quebec. Quebec has often played a lead role, been an initiator in its relations with the various aboriginal nations within its territory. We therefore feel that such a measure will be beneficial to the aboriginal nations, among others.
The third part of the bill implements amendments to the Income Tax Act and related acts which are generally fiscal in nature. I will list some of these.
For instance, the bill mentions a new disability supports deduction. This is a good thing.
Part 3 also refers to improving the recognition of medical expenses for caregivers. Once again, since caregivers do have expenses, improving the recognition of these expenses is a good thing.
There is also reference to eliminating the deductibility of fines and penalties. This is, to my mind, totally logical. An individual or business that pays fines, tickets or penalties, regardless of what regulation governs them, ought not to be able to deduct them as a general rule.
Another point is the introduction of tax relief for Canadian Forces personnel and police deployed to international high-risk operational missions.
I very much like this measure, because Base Val-Cartier is located in the riding of Portneuf—Jacques-Cartier. Moreover, one of my good friends, who is in the Canadian Armed Forces, has in recent years been deployed outside Canada regularly and sometimes to some pretty risky places. If he can benefit from tax relief, along with some of his colleagues, that is an excellent measure.
As I have said, although we will be voting in favour of this bill, it is still incomplete in certain aspects. You know the saying about many a slip 'twixt cup and lip.
In 2004, the Prime Minister had the opportunity to change the way his government did things. He was preparing to go to the polls. He knew that there would be an election soon. He could have taken a new tack in order to properly respond to the concerns of Quebeckers. Unfortunately, once again, the Prime Minister missed the boat.
At that time, he was talking about a new era of cooperation with the provinces. We are still waiting for the smallest sign of this era of cooperation. Unfortunately, there is nothing in sight.
Despite reaching an acceptable agreement on funding health care, the federal government has totally ignored another responsibility, that of funding education. Currently, the federal government's share of education funding is around 12%. This is unacceptable. Unfortunately, this was not included in the last budget. We can only hope that the government will rectify this mistake in its next budget.
During the conference on equalization, the Prime Minister imposed his own priorities at the expense of the needs of the provinces and Quebec. He imposed his own choices despite an appearance of consultation, a speech in which he said he was consulting with his provincial counterparts. That is not the reality. The reality is that he imposed his choices; he imposed his calculations on the provinces at the October 26 conference.
The Prime Minister imposed his priorities, his choices and his calculations. He has totally ignored the reality and the needs of Quebec and the provinces. We are talking here about the fact that equalization remained unchanged during the last conference despite his offer in September. There is no talk about any changes to the formula, although this formula penalizes Quebec. It leads to unstable and unpredictable payments that will do nothing to improve the well-being of our fellow citizens.
Above all, there is something else. We regularly talk about this in the House and we will continue to talk about it as long as this government fails to understand the message being sent by the public, by the constituents. The Prime Minister has done absolutely nothing to resolve the fiscal imbalance. Worse still, he refuses to recognize it.
Let us make no mistake; the fiscal imbalance is a reality that Ottawa must recognize. The fiscal imbalance denotes a situation that is quite easy to understand. My son is nine and he understands it. What is this reality? It is that Ottawa has too much revenue for its responsibilities, while the provinces do not have sufficient revenues for theirs.
As we have seen year in and year out since 1997, Ottawa has been running astronomical surpluses. It is swimming in surpluses; it does not know what to do with them. It has run out of ideas on how to spend all that money, that is the $60 billion accumulated since 1997-98. During that time, the vast majority of provinces have had to manage potential deficits and, in some cases, actual deficits. That is completely absurd.
For Quebec, the shortfall caused by the fiscal imbalance totals $31.4 billion over six years. I would not want to be in the shoes of Quebec's finance minister and have to continually come up against this government which is not responsive at all to the needs of Quebeckers.
The most recent evaluation of the shortfall caused by the fiscal imbalance, along with Quebec's latest demands, including dollar figures, is presented in a document entitled “Correcting Fiscal Imbalance”, which was released when Quebec's most recent budget was presented, in March 2004. Reference is indeed made in this document to a total of $31.4 billion over six years.
The demands with respect to equalization and social transfers are essentially the same as those of the Séguin commission.
However, while advocating the transfer of tax fields as a basic solution to the fiscal imbalance, Quebec's finance minister proposed, as an interim measure—since one has to face reality—to significantly increase transfer payments for health and education, as well as equalization payments.
In total, Quebec's finance department proposed a $7.2 billion increase in federal transfers across Canada. In equalization alone, the federal government should invest over $5 billion, as a result of the 10 province rule and a number of other amendments to the formula. This would restore some tax fairness between Quebec and the various provinces.
For Quebec, these proposals amounted to an additional $3.3 billion for 2004-05 alone. This is, in essence, the shortfall caused by the fiscal imbalance in Quebec, as calculated by its government.
Unfortunately, we have to recognize that we are falling way short, in spite of the health accord and the forced agreement on equalization. This government just does not meet the demands of the Government of Quebec.
This year, the Government of Quebec will receive approximately $300 million more in equalization payments, following the conference that was held on October 26, 2004. It will also receive an additional $502 million for health, as a result of the same conference.
Therefore, instead of having a $3.3 billion shortfall in 2004-05, the Quebec government, its premier and its finance minister must deal with a $2.5 billion shortfall, while the federal government has generated surpluses in excess of $9.1 billion. Such is the fiscal imbalance. It is that simple. The provinces have all the trouble in the world to generate the revenues that they need to fulfill their mandate. Meanwhile, the federal government is boasting, despite its very approximate surplus forecasts, despite turning $1.9 billion into $9.1 billion, and it seems very pleased by this situation. It is outrageous.
The global solution to fiscal imbalance is simple. It involves a transfer of tax fields from the federal government to Quebec and the provinces, giving them not only greater budget resources, but also greater fiscal autonomy in the management of their own decisions. As the Séguin Commission pointed out, the solution to the fiscal imbalance is based on an increase in the level of federal transfers and, above all, on a new distribution of the tax fields between the federal government, Quebec and the provinces.
I want to go back briefly and specifically to Bill C-33. Earlier, I mentioned a number of things about which the Bloc Québécois is pleased. However, there is a specific issue to which I want to go back.
Part 3 talks about ensuring that the general anti-avoidance rules in the Income Tax Act apply to transactions effected through a misuse or abuse of the Income Tax Regulations, a tax treaty or other federal legislation. This sounds like a very good idea to us. It is a good measure. The problem is that it misses the target.
The general anti-avoidance rules were adopted in 1988, after tax authorities discovered the limits of the jurisprudence available to fight invasive tax planning. These general anti-avoidance rules can only be used if no other anti-avoidance provision in the Income Tax Act applies.
When the anti-avoidance rules apply, the penalty provided is the rejection by tax authorities of the tax advantage sought through the transaction. These general rules can apply to countless situations, provided the three conditions set in the section on the Income Tax Act are fulfilled.
The first condition is that the taxpayer gains some tax benefit. So far, so good. The second condition is the existence of an avoidance operation, that is an operation that is directly part of a series of operations leading directly or indirectly to a tax benefit.
However, the act provides an exception when the transaction is primarily conducted for genuine purposes other than gaining a tax benefit.
The third condition requires that the transaction result in the misuse of a specific provision of the Income Tax Act or an abuse of these provisions as a whole.
An amendment specifying that the abuse of a provision in a tax treaty or a section of the regulations is covered by the General Anti-Avoidance Rules in section 245 of the Income Tax Act can only be a good thing. The amendment would provide that when the legislation, the treaty or the regulations fail to cover or improperly cover a situation, the General Anti-Avoidance Rules would apply.
The concern is when the problem lies elsewhere. The real problem is not with the cases that are not covered, but with those that are clearly covered by sections drafted specifically to encourage tax evasion. Under such circumstances, the General Anti-Avoidance Rules do not apply. As luck would have it, Barbados is a flagrant example. Almost all Canadian subsidiaries in Barbados are what are called international business companies, incorporated in a way that limits considerably the amount of taxes they pay.
Since the Canada-Barbados tax treaty excludes international business companies, it does not apply to Canadian subsidiaries and they should therefore be subject to Canadian tax. No problem so far.
The government happened to draft the Income Tax Act regulations so that, even if the tax convention does not apply to such companies, even if section 148.1 of the Income Tax Act excludes only the companies clearly covered by the tax convention, Canadian subsidiaries in Barbados are considered to be covered. Obviously, this encourages evasion and investments in Barbados. Since it is clearly specified in the regulations, we cannot say that this type of situation is not covered. So, the General Anti-Avoidance Rules do not apply, even if an amendment has broadened their scope.
In closing, once again, of course, without there being any direct link with any company, especially not a shipping company, we have here a flagrant case of tax evasion in Barbados, oddly enough.
That said, we will vote in favour of Bill C-33, which contains a number of items we find satisfactory.
Federal-Provincial Fiscal Arrangements Act February 2nd, 2005
Mr. Speaker, I thank my hon. colleague for his excellent question. Sadly, I am forced to agree with him. We have been witnesses for a very long time—and I believe this sincerely—to a weakening of the Quebec state for the sake of promoting federalism.
Forgive me for not remembering the exact quote but, in our party, we all recall a federal minister saying, “We are going to hurt them. They will not vote for sovereignty”.
Federal-Provincial Fiscal Arrangements Act February 2nd, 2005
Mr. Speaker, Bill C-24 implements the results of the conference on equalization held on October 26, 2004, results that were imposed upon Quebec and the provinces by this federal government. We are going to vote against this bill.
Why are we going to vote against it? For a number of reasons. First of all, Bill C-24 does not in any way correct the fiscal imbalance. The funds available, considerable though they are, will not solve the problems, as they are still far from enough.
Second, there is no in-depth reform of the equalization program, so the problems that have been pointed out, by Quebec in particular, are still there and will continue. Worse yet, the proposed changes to the equalization program will potentially worsen the fiscal disparity between the provinces.
Certain specific agreements have been negotiated by the federal government, with Newfoundland and Nova Scotia for instance, but these are not covered by the bill. As a result there is a major problem of unfairness and the very spirit of equalization is being violated.
The very essence of this bill is flawed. Indeed, this agreement includes, among other things, an allocation formula between the provinces that is unchanged. This bill includes an individual threshold provision to guarantee that no province will get less than what had been estimated at the time of the 2004 budget. While this may seem interesting at first glance, it is always difficult—and the Minister of Finance is an expert when it comes to underestimating—to come up with accurate estimates.
In fact, under Bill C-24, Saskatchewan and British Columbia are the only ones that benefit from this measure, to the tune of amounts estimated at $581 million and $191 million respectively.
For the second year of its implementation, the bill sets out the equalization payments to be made to receiving provinces under the program. In the case of Quebec, for example, we are talking about $4.798 billion, or 44.2% of the total amount. What is rather peculiar is that the allocation between the provinces has already been definitely determined—and the term “definitely” is key here—for a fiscal year that will end in March 2006. However, we all know that the relative economic situation of the provinces does not necessarily evolve in accordance with the forecasts.
In light of the lack of accuracy of federal budget forecasts, how can this government claim to do better when it comes to the provinces? Once again, we are dealing with a federal government that claims to know the affairs of the provinces and of Quebec better than its own jurisdictions.
Third, under this bill, overall funding will increase by 3.5% for the year 2006-07, and for each subsequent year. I should point out that this is by default. A group of independent experts will conduct a review to re-examine the allocation and determine if adjustments should be made.
This committee will give advice to the government, but will not have the authority to change the overall amount. It will merely be consulted. It is the federal government which will continue to make all the decisions. When it comes to equalization, we are far from stable and predictable funding. Again, this government will make unilateral decisions, and that is very unfortunate.
As I mentioned earlier, the bill is far from solving the fiscal imbalance issue. Yet, during the last election campaign, the Prime Minister said he would launch a new era of cooperation with the provinces. The bill before us does not fulfill that objective.
The government had even agreed to amend its Speech from the Throne to include a part on the fiscal imbalance, as we call it. They call it financial pressure. Everyone but the government calls it fiscal imbalance. In its Speech from the Throne the government agreed to correct it. Bill C-24 fails to do so.
The Prime Minister has proven it. The election is over and there are no more fine speeches. He has imposed his priorities, choices and methods on the provinces despite some serious resistance. The Prime Minister did not take any account whatsoever of the true needs of Quebec and the provinces.
No change was made to the calculation method that penalizes Quebec and results in unstable and unpredictable payments.
Furthermore, the Prime Minister not only did nothing to resolve the fiscal imbalance, he still refuses to acknowledge it. Yet, a few moments ago, the Conservative colleague made reference to it: Ottawa is up to its neck in surpluses. We are talking about $60 million in surplus since 1997-98. According to the Conference Board, these figures have been raised often in this House. Bear in mind we are talking about some $166 billion by 2015. I am sure that if we updated these figures, the amount would be even higher.
In the meantime, the provinces—except Alberta—are no longer able to pay for their public services properly. A very large portion of funding in the provinces and Quebec goes to health, a very important sector, and the provinces and Quebec have great difficulty funding their other obligations.
Again, the Conference Board estimates that by 2015, the combined deficits of Quebec and the provinces will be $68 billion, another good example of the democratic deficit the Prime Minister talks about .
The democratic deficit is also a political imbalance because the government does not look after its own areas of responsibility. It can barely handle its own as it is. It is busy interfering more and more in areas under the jurisdiction of Quebec and the provinces.
From 1997-98 to 2000-01, we estimate that Ottawa spent nearly $16 billion on new initiatives in areas under the jurisdiction of Quebec and the provinces. That is outrageous. In 2003 alone, intrusions represented $81 billion, or 44% of federal spending and 55% of the government's operating expenditures. Nearly half of the spending of this government, which claims to be a federal government, was directly in areas under the jurisdiction of the provinces and Quebec.
How could we support this bill after all that I have just demonstrated?
Not only is Bill C-24 inappropriate, but the government itself is indirectly acknowledging it. How? It is acknowledging it by signing specific agreements with other provinces. Following a basely election-minded promise and an inappropriate agreement on equalization, the government had no choice. So, on January 28, the government entered into an agreement on oil revenues and equalization with Newfoundland and Labrador and Nova Scotia.
Even that agreement recognizes that Bill C-24 does not work. Under it, Ottawa will reimburse the two provinces for any loss in equalization due to offshore oil revenues until 2012. It represents a huge amount. Naturally, we are delighted for the people of Newfoundland and Labrador and Nova Scotia. We wish them all the best.
Still, we are talking about approximately $2.6 billion for Newfoundland and Labrador between now and 2012, of which $2 billion will be paid immediately in 2004-05. As for Nova Scotia, the amount involved is $1.1 billion, of which $830 million will be paid immediately. For 2004-05 alone, the amount paid to Newfoundland and Labrador will represent $3,868 per capita. For Quebec, this would mean $29 billion.
If Bill C-24 were really great, there would have been no need for an agreement on equalization. Moreover, it is an unfair agreement. Equalization was designed as an equity measure, to ensure that the provinces could provide comparable services. As they becomes more prosperous, equalization declines, and that is how it should be. The principle of equity is thrown into question by this agreement.
While Newfoundland and Labrador and Nova Scotia can get rich without having their equalization payments cut, Quebec's equalization payments are cut whenever it receives hydroelectric revenues. Is this normal? I think not. We have said it a number of times in this House: the solution lies in resolving the fiscal imbalance.
I cannot wait for June 2, when the Standing Committee on Finance's Subcommittee on Fiscal Imbalance will issue its report.
There are ways to resolve these problems. One of them is to abolish the CHST; in other words, transfer responsibility for the GST or personal income tax to the provinces.
That way, the provinces could secure more stable funding and pick their own priorities. Consequently, they would not be driven by the federal government which can change things almost at its own discretion.
However, since the reality is the equalization program does exist, it has to be improved. Bill C-24 does not meet these objectives. Why does this bill not take into consideration the fiscal capacity of ten provinces, commonly called the ten-province standard, instead of just five, as is currently the case. Why are the floor and ceiling provisions not eliminated in this bill. It would be much fairer.
The government must fully respect the representative tax system approach. This means that measurements of fiscal capacity must be based on reality and not on current estimates that can change over time. Otherwise, we end up in situations where overpayments might be made and then Quebec and the provinces have to make repayments.
Of course, this does nothing to foster balanced budgets in Quebec or any other province. This is exactly the situation in Quebec City, where the finance minister, Mr. Séguin, is trying to square the circle and, unfortunately, he will find it very difficult to make ends meet.
Many of the problems of Minister Séguin in Quebec are the direct result of the actions of the federal government, which does not take into consideration the real needs of the citizens who benefit from services provided by the provinces, specifically Quebec in the case that I am referring to.
Earlier, I mentioned the ad hoc agreement reached with Newfoundland, which also opens the door to injustice. Since revenues will be assessed by using a different formula from one province to the next, we can only arrive at results that do not accurately reflect the tax resources of each of them. Consequently, we are making equalization payments that do not meet the objective of equalization. Yet, this objective is simple: it is to ensure, through taxation, that the quality of public services is at a comparable level from one province to the next.
The Bloc Québécois, like the Séguin Commission, feels that ad hoc solutions create problems of fairness between receiving provinces and that they go against the spirit of the program. This program should normally smooth out the relative disparities between the provinces, not increase them.
As I mentioned earlier, the agreement proposes to arbitrarily exclude certain revenues, but not others. On what basis? We are not quite sure. The provinces have their own sources of revenue, including natural resources, energy, income tax, property taxes and commodity taxes. In order for the equalization program to be fair, all of these revenues must be taken into consideration. They also include royalties from mining or oil activities, and revenues from hydro dams.
Under this agreement, when it comes to calculating equalization payments, offshore oil revenues are not taken into consideration, but revenues from mining or hydroelectricity continue to be taken into account. This is not fair to Quebec. This is not a good agreement for Quebec which, incidentally, is not the only loser. Earlier, an hon. member mentioned that Saskatchewan also has problems with this agreement.
Bill C-24 does not at all alleviate the concerns that we are expressing in this House. This is unfortunate. Despite the fact that this is a minority government, all too often we feel that it is not listening to the other parties in this House.
This is unfortunate. However, we remain hopeful. We repeatedly tell them what Quebec's needs are. We repeatedly tell them what the real concerns of Quebeckers and Canadians are. We remain hopeful that, one day, they will understand.
We must not forget that this agreement gives subsidies to the oil-producing provinces. We have talked a great deal about the Kyoto protocol and its implementation. It is an example of misrepresentation by this government that, on one hand, claims to promote the Kyoto protocol and its implementation and, on the other, through special agreements, gives subsidies to the oil-producing provinces. As a result, the bill is paid by those provinces that generate hydroelectricity, a much cleaner energy source. So, once again, we come back to the polluter-paid principle and not the polluter-pay principle.
This agreement is not satisfactory for any of the provinces. Bill C-24 does not work. What do we have to do to get them to open their eyes? This agreement does not resolve the real problems of the equalization program. The current equalization formula is inadequate in terms of both its objective and its operation because the standard is inadequate. Ottawa does not take into account the revenue of all ten provinces. Thus, the average revenue is artificially lowered.
As a result, the recipient provinces have $297 less per capita than the average of the ten provinces to deliver public services. Equalization is, however, supposed to make things essentially comparable. The widest gaps are not taken into account, so the average is skewed.
Ottawa does not gauge revenues properly either. To take property tax revenues as an example, rather than measuring the tax base according to property values, the federal government has arbitrarily invented a complex formula that takes into account a whole set of economic and demographic variables.
For example, in Quebec in 2002 the residential real estate wealth per capita was $30,621. Using the federal formula, which is complex, convoluted and all but obscure, Ottawa assesses it at $71,406, 133% higher. Naturally, equalization payments are reduced accordingly.
The Minister of Finance has the nerve to tell us “Oh my, we have an unexpected surplus. We did not see it coming”. Yet when we look at calculation methods like those, we should not be surprised that the federal government has money coming out of its ears, so much so that it does not know what to do with its revenues and so takes it upon itself to interfere in areas that are the provinces' and Quebec's jurisdiction.
It is the same thing for other types of revenues, so much so that Ottawa's creative calculations no longer reflect the provinces' fiscal capacity in any way. What is more, the overall amount is clearly inadequate. In fact, calculation of the amounts of equalization does not reflect the reality of provincial tax revenues. Ottawa leaves half the provinces out of its calculations, as well as not taking all revenues into consideration, and assesses them wrongly.
This is the recipe for a financial catastrophe, and unfortunately that is just what is shaping up in the various provincial legislatures and in Quebec. Bill C-24 is badly put together and does not meet the needs of the provinces and Quebec. I will be very pleased to vote against it.