Bill C-17 (Historical)

An Act to amend the Budget Implementation Act, 1997 and the Financial Administration Act

Budget Implementation Act, 1997

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, it is with pleasure that I rise today to speak to Bill C-17 amendments to the Budget Implementation Act, 1997. The absurd nature of being in this place in the year 2001 debating retroactive changes to the budget of 1997 is self-evident. In any case, I will focus most of my comments on the Canadian foundation for innovation fund.

The government has consistently, particularly beginning in 1994-95, slashed transfers to the provinces to such an extent that it created a tremendous vacuum in funding for universities throughout the country. The provinces were simply not able to maintain adequate funding to our post-secondary universities and community colleges across the country.

As a result of the deficit that existed in the funding of post-secondary education we saw, for instance, the doubling of the average amount of student debt after a four year program in Canada. We saw tuition doubling not just in one province but across the country.

The Canadian foundation for innovation was introduced in 1977. The government has tried to make up with its federal granting programs some of the ground it eroded from beneath the provinces in the disabling effect of federal cuts to the transfers to the provinces, which created in many ways havoc across the country.

It is still my belief that in terms of education and health care spending the best decisions are typically made by the government closest to the people affected by those decisions. As such, provinces are in many ways much better suited to make long term and visionary decisions on behalf of the people they represent than the federal government, particularly in the areas of education and health care.

While the government has cut and slashed transfers to the provinces, which are in many ways the most appropriate vehicle for delivery of funding to our post-secondary education infrastructure, it has now tried through the foundation for innovation to make up for lost ground and to try to directly fund infrastructure investment focused on the areas of research.

The notion of government helping in investing in the research infrastructure that is so important for Canada's competitiveness in the new economy is not a bad one. I would argue that the investment being made by federal or provincial governments, preferably by provincial governments, is extremely important. There are some flaws, however, in the Canadian foundation for innovation model as applied over the last three years.

One benefit in a perverse way of debating amendments to the Budget Implementation Act, 1997, in the year 2000 is that we actually have the opportunity to be talking about some of the devils in the detail or the flaws in the implementation that are now more self-evident than they would have been in 1997.

In a realistic and applied sense, and not simply as a perceived issue, there is an anti-small university bias in the Canada foundation for innovation granting scheme. As a result smaller universities do not have the same level of access to these grants as some of the larger universities.

This is unfortunate because one of the cornerstones of Canadian post-secondary education infrastructure is the network of undergraduate program universities which perform a very important service to the future of Canada by providing a steady stream of enthusiastic graduates in science programs that may perhaps have graduated with a decision to pursue graduate or post-graduate studies.

In that way the undergraduate programs are performing a very important service to post-graduate institutions by providing an ongoing stream of students and young people with the enthusiasm to pursue post-graduate studies in many of those areas.

Representing a riding in Nova Scotia, and Nova Scotia being the cradle of higher education in Canada, there is a strong tradition in our province of providing some of the best post-secondary university experiences in the country.

There are some challenges. In my riding of Kings—Hants I am very proud to have Acadia University. Acadia University, like many of Canada's smaller universities, simply does not have the same access to the Canada foundation for innovation funding as some of the larger universities.

I have heard the arguments about a need to create levels of critical mass when it comes to research. Some of them are anachronistic. Critical mass can exist through a less parochial approach to research. Universities can co-operate to a greater extent and we should be working to encourage that. Certainly with the death of distance as a determinant in the cost of telecommunications, researchers can be connected via technology and do not necessarily have to be in the same classroom or the same lab, discussing and sharing their ideas.

We should be ensuring that the parochial approach to research which has existed in the past in the university environment is reduced somehow by working with the provinces to ensure and encourage a greater level of sharing of intellectual property between universities.

As a country we need to develop a better approach to commercialization of intellectual property at the university level and to technology transfer. In many ways American universities are much more successful at commercialization and tech transfer than we are in Canada.

As we try to achieve those two goals in that environment we should ensure that granting programs like the Canada foundation for innovation reflect the realities of the diversity of Canada's post-secondary university infrastructure and do not focus purely on some of the larger universities. It should try to address and invest in some of the smaller universities which are providing such an important contribution.

The other issue deals with matching funds. I believe 60% of the funds need to be matching funds. In provinces like Alberta or Ontario where there is a stronger fiscal position than there is in a province like Nova Scotia or Newfoundland, there is an inability on the part of the provinces to participate to the extent of the requirements of post-secondary institutions.

The matching fund issue is very serious and needs to be addressed more thoroughly. We would create a ghettoized post-secondary education granting system if we only contributed through matching fund schemes to universities in those provinces where the fiscal conditions permit an equal or greater investment by provinces and other entities within those provinces.

There has been a problem in the past where not enough foundation for innovation grants were making their way to Atlantic Canada. The government tried to address it last summer with the Atlantic innovation fund. That program was announced in the summer in a pre-election Hollywood-style announcement to try to enrapture Atlantic Canadians with the generosity and general kindness of the Liberal government. It did not work because most Atlantic Canadians saw through this shallow and feeble attempt to make up for past wrongs by a Liberal government that only found Atlantic Canada a few weeks before an election.

The Atlantic innovation fund has not even congealed to an extent that it can deliver any funding. Months later that fund, with its pot of money, is still sitting somewhere in Atlantic Canada with no notion as to how to deliver the money to the universities.

What is really bizarre is that while the government dilly-dallies and dithers with that fund to come up with a delivery mechanism with which to deliver the funding, the Canadian foundation for innovation is still in a position where it is providing money. Over the last several months it has provided an even more disproportionate level of funding to other parts of the country. Atlantic Canada is actually getting less because the notion is that the problem is solved, the Atlantic innovation fund is in place and the Canadian foundation for innovation does not have to be as vigilant now in Atlantic Canada.

That is simply not the case at all. There are also some concerns with ACOA acting in a role of a delivery vehicle for that funding. Concerns have been raised by people in the post-secondary environment and in the technology and high tech sectors. People in the economic development areas of Atlantic Canada have approached me directly to talk about this. They fear there is not enough understanding of technology in ACOA. They feel that ACOA can be an effective vehicle through which to develop a delivery mechanism for the Atlantic innovation fund but that it may not have the level of technical expertise necessary to develop a delivery mechanism for the Atlantic innovation fund. It therefore may not be able to achieve the ends that the government would like to see.

The fact is that if we are to be successful investment needs to take place in our post-secondary infrastructure. The devil is in the details. How are we to find the most appropriate way to ensure that the needs are met and that our competitiveness in this regard has improved?

There is a $3 billion deficit not just in research infrastructure but in general university infrastructure. It is a result of deferred maintenance among other issues and the government's callous disregard for education and health care funding. It let health care and education atrophy as it took its slash and burn approach to fiscal management and offloaded responsibilities to the provinces without considering what the end result would be. We will see a significant price paid over the long term for the loss in future competitiveness in these areas.

One of the fundamental flaws that needs to be addressed by the Canadian foundation for innovation would be the anti-small university bias which denies some of Canada's greatest educational facilities like Acadia University full and unfettered access to important funding opportunities.

The matching fund provision also needs to be addressed. It too discriminates against universities which happen to be in provinces that are less fiscally sound on a current basis. As a representative from Nova Scotia, the cradle of higher education in Canada, it is incumbent on me to defend the interests of my province in that regard.

Some of the macro issues are not addressed in Bill C-17. They deserve some level of debate and discussion when we are talking about amendments to the Budget Implementation Act, 1997.

Looking at Canada over the last 30 years and some of the changes that have taken place in terms of its competitiveness relative to other countries, our investment in post-secondary education can play a role in reversing what has been a very negative trend, particularly in terms of our competitiveness with the U.S.

However there are other issues too. In 1990 Canada had the fourth highest standard of living within the OECD. By 1999 we sank to seventh place with countries like Japan, Norway and Denmark overtaking us. In the last 15 years our real income per capita plummeted from 86% to 78% of the U.S. real income per capita. Ireland soared from 47% to 76%. Over a 10 year period Ireland increased its GDP per capita by 95%. In that same period Canada increased its GDP per capita by 5%. Our performance has been anemic.

We have seen a cyclical decline in the Canadian dollar over the last 30 years. This decline has become precipitous under the government. Over nine years of the Mulroney government the dollar lost one penny relative to the U.S. Since the Liberal government took power the dollar has declined by 12 cents. In 1990 as a Liberal leadership candidate the current finance minister said that if he were given the opportunity he would manage the dollar downward to about 78 cents. He did really well. He overshot his wildest expectations. The dollar is down to 63 cents.

The Prime Minister says that is just fine, that low dollars are good for tourism. The logical corollary of his argument is that if we reduce the dollar to zero we could be the greatest export nation in the world and be really successful. We all know how absurd and perverse is that logic or lack thereof.

There are things we have to do. In terms of government spending Canada's GDP represents about 40%. In the U.S it is 30%. Thirty years ago it was about the same, 30%. Our government's program spending has ballooned in Canada, but it has remained about the same in the U.S.

We have to reduce taxes. As a percentage of GDP, taxes in Canada are 10% higher than those in the U.S. We have to reduce our debt. I will propose one idea that over the next 30 years the government could address reversing some of these negative trends. If we were to reduce our debt in real terms over the next 25 years and apply the interest saved to reducing taxes, our economy would grow significantly both in real terms and as a percentage of GDP.

These are the types of forward thinking and visionary policy measures we do not expect from the members opposite but will see in the future under a different government.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, just to put everyone in context, today we are debating Bill C-17, an act to amend the Budget Implementation Act, 1997, and the Financial Administration Act.

This is the result of several announcements made by the government regarding, among others, the reinvestment of a further $750 million in the Canada foundation for innovation, in addition to the $500 million announced last October in the economic update.

In their eagerness to go to the polls, the Liberals brought down a minibudget, which turned out to be the real budget. Since there is no budget this year, this is how they are putting money into the Canada foundation for innovation.

I will talk mostly about this part of the bill and support for research in general, and less about the other measures contained in this bill, which amends several other acts to correct mistakes, as mentioned earlier, or add things that were missing or corrections that had to be made to the Financial Administration Act.

The federal government, after going through an era of major cutbacks—mainly in 1995, 1996 and 1997—has now started to reinvest in support for research. Granting councils and many other bodies were hit hard, and they had urgent needs. However, they had to wait and this had a negative impact on their ability to support research.

Similarly, cash transfers were drastically cut. As we know, transfer payments to the provinces were used to fund three different programs for health, education and social assistance. They were cost shared programs. However, the money was earmarked and we knew how much of the transfer payments went to social assistance, health and education.

Not wanting to be blamed for making $1 billion cuts in health care, $1.5 billion cuts in education and $800 cuts in welfare, the federal government decided to roll these three programs into one, which it called the Canada health and social transfer. Then it reduced the funding under this new transfer, letting the provinces decide exactly where to cut in those three areas.

The cuts were drastic. Transfer payments fell from about $17.5 billion to $18 billion to a low of $11.5 billion, which meant the provinces had to make cuts in health care and post-secondary education. Of course the latter includes a research component.

Now that the government has the financial means to do something, its first tendency is not to increase transfer payments. It did increase them slightly but mainly for health care. Everybody agrees that health care is important but the government invested very little money in post-secondary education. This is due to the fact that it chose a more visible way of investing in that area, a way which could be effective to a certain extent.

We are not disputing this but the government made this choice not for the sake of effectiveness but rather because it wanted more visibility than it would have had by simply putting more money in transfer payments so the provinces, including Quebec, could support research initiatives based on their own priorities.

We are not talking about petty cash. We are talking about substantial amounts. Of course the granting councils have seen their budgets increase. I could name each of them individually but this is not what we want to do today. However, these councils' regular core budgets are being increased.

It has been said that the government wants to double the research effort by 2010. A timetable has been established and the reinvestments are major. There is therefore a reinvestment aspect in the granting councils.

University research chairs have also been established. We are talking about several university chairs, with a lot of money. Funding for this program will be in the hundreds of millions of dollars over the next few years.

The third component is the Canada foundation for innovation also mentioned in the bill. The foundation will receive $750 million more than originally planned. It has already received more than $3 billion or has assets of over $3 billion. This is a lot of money.

Later on I will talk about some difficulties, some problems that are still unsolved. I will first talk about the first problem that we have with an organization such as the Canada foundation for innovation, without criticizing the people who work for the foundation. It is something governments tend to do, particularly the current government. The same thing happened with the millennium scholarship fund. The same is happening with the Canada foundation for innovation. The government is funding an external organization that does not have the same accountability toward parliament as the department itself.

For members of the opposition, and it should be the same for the government members, it is a bit frustrating to see such huge amounts of money being given to people who are not directly accountable. Of course they are accountable to parliamentary committees but they do not have to justify their decisions here every day.

When a minister is questioned on some contentious issue or a decision that is not in sync with the priorities of the government or of parliament, it is something that has to be dealt with outside the chamber. The minister says that it is an independent agency that carries out its duties as best it can and that the minister cannot always interfere in the operations of such agencies.

Things happen. Take, for instance, the Canada foundation for innovation. More so outside Quebec but even in several regions in Quebec, smaller universities are complaining because they do not have the same capacity as the bigger universities to get the funding and the projects they want.

We have a moral influence over the foundation. We can raise this problem and, in fact, we will do so tomorrow. The chair will be at the committee hearing and we will be able to consider the issue. Parliament put money into this foundation but not without adding some requirements as specific as the ones I just mentioned. That left us with no influence over these decisions and no influence over a minister who would have some say because the money would be spent by his department.

The corrective measures are way too slow and too complex and there is still the problem of accountability. We are talking about public funds. Taxpayer money is handed out to outsiders who have to abide by some rules, but are not subject to the same process as a minister who has to manage a department and account daily for his actions.

If this principle is that good, we will end up—and the process is well underway—handing over all government operations to outside agencies. What role will be left for parliament to play? We cannot support this, whether it is a lofty cause or not. We cannot let the government send money to an outside agency saying “Now you can manage this money as you see fit. We trust you”.

What I have left unsaid is that appointing board members is a way for the government to keep some degree of control. However, this process involves a very small group of people. Very often it involves the Prime Minister, since appointments are made by his office, or the minister himself in the best case scenario. Whatever the case may be, it still creates a situation where the minister and the Prime Minister can influence the board of directors or the senior officers of an organization.

Of course the foundation is sort of a more noble organization. The heads of the granting council are there to ensure a certain cohesion but the fact remains that it should not be independently managed. We have no problem with the department being accountable here. At any rate, when the time comes to make decisions of a more delicate nature, nobody can be sure that these people will have enough neutrality to resist pressure from those who appointed them. It is pressure at a very high level.

Pressure at another level, more appropriate pressure, namely pressure from the people and their elected representatives, is much more indirect and much more difficult to exert. That is the first problem.

For the second problem, taking the case of Quebec, which is in the process of developing a science policy, it is hard to set oneself targets, objectives and a work plan when one has control over only part of the tools. Obviously, there is also health research, but I will focus more on the education sector because this is generally where there is more investment in funding councils and the foundation. The same logic could apply to health, however.

These are matters that are essentially provincial but there is a significant portion still administered by Ottawa, or subject to made in Ottawa decisions or priorities, even if only on the amounts allocated. After that, the areas of focus need to be defined.

When the money is there, the complications of jurisdiction are not something that anyone needs. The government has stupendous financial means and uses that financial clout to become the government that plans future priorities. For many Canadians, this is fine with them. As for us in Quebec, the principal government of the people is the government of Quebec. While it does administer post-secondary education, it does not have all of the means to properly plan the development of its science policy.

Adjustments do need to be made. There is always some way of doing contortions in order to make ends meet. Our system of universities is highly efficient and so is our research. We have no complaints about the amount of funding our universities can manage to get together, for they are successful at getting the job done. They are very good. However, it becomes difficult to be consistent in this kind of situation.

These are the two main problems: accountability and the increasing inability of the provinces to influence the framing of a real scientific policy because Ottawa is using its accumulated surpluses—which came from cuts in transfers, from the EI fund, and so on—to play a planning role and to impose its own vision.

There is no doubt about that, as evidenced by the fact that the federal government is not reinvesting any significant amount of money in transfer payments for post-secondary education. It has reinvested some money in health care but very little in post-secondary education. New funding in this area is administered by the federal government or by an agency appointed by it, that is closer to it.

I cannot ignore one area of criticism that is beginning to emerge but it is constructive criticism. Now that we have said that we would prefer this not be an independent organization, the ideal situation would be to put the money back into transfer payments to the provinces so they can do that themselves, we know it will be very difficult to convince Liberal members to support us in that regard. The day will come when people will be able to settle this debate or to put more pressure so we can at least be more consistent in our actions, instead of having two governments acting separately. This will not always lead to bad results but very often it makes things more difficult. A lot of time is wasted in co-ordination.

Another thing the government must realize is that with all these investments in research chairs, the Canada foundation for innovation and granting councils, two very serious problems are emerging. Clearer directions will have to be given in the short term to correct a problem which, if we wait too long, will become even more serious and create a lot of difficulties, especially for small universities.

Let us be clear. There are not many big universities in Canada. The vast majorities of our universities are small. In Quebec, for example, the Université du Québec network is considered to be a small university by Canadian standards. We have the Université de Montréal, McGill University and maybe the Université Laval that might be called big universities.

Quite often smaller universities cannot rely on private foundations, unlike McGill University in Quebec, or on bequests left to them by some rich donors. Without such financial assistance, they have a hard time covering the indirect cost of the projects. The bigger universities have the same problem but at least they have more leeway than the smaller ones.

Since smaller universities do not have their own source revenues and cannot cut their education budget, because they do have classes to give and not only research to carry out—when they ask granting councils for a subsidy, indirect costs are incurred. From what people in the know tell me, on average, for every project, we have to add 40% for indirect costs.

Provincial programs in Quebec, for instance, pay for about a third of these indirect costs and the rest of the money has to come from elsewhere, by cutting something or making hard choices. Trying to get the money needed to do research can often penalize universities.

This applies to both the bigger universities and the smaller ones. I believe things are tougher for smaller universities because they have fewer tools and fewer choices when cuts have to be made and priorities need to be set. If we do not react quickly, the gap between the bigger universities and the smaller ones will only widen.

The other problem faced by smaller universities is that project approval is based on peer review, which is carried out by a network of peers, and they do not feel like they are really a part of the network. When these tools were brought in, they were not as ready as the big universities, which already had their waiting lists, their contact networks and so on, as well as a much stronger lobbying capacity. They feel they are at a disadvantage because of the initial commitments that were made.

This is even more true in other provinces where small universities have their own specialized areas. Some of them were successful in the first phases. We will have to remember that.

As with the chairs and all those tools, if we do not pay special attention to our small universities, they will have difficulty retaining their good researchers when the big universities or foreign universities from the States or elsewhere come to raid our researchers. This is an emerging problem that could become very serious.

Everybody recognizes that we have to make efforts to keep our researchers in the country and to make sure that our best minds are not exported but if this is true for Canada as a whole, it is also true for the small communities and for the small universities. I certainly hope the government will soon find ways to solve the problems of small universities as compared to bigger universities and of indirect research costs.

Would the best solution be to tell the provincial governments “Listen, we know that you already have formulas to compute payments. We will put money back into transfer payments so that you can better support indirect costs”? It would be one solution. There could also be automatic amounts. When the granting councils provide funding, they could immediately include with it an envelope to help with indirect costs, as do American granting councils.

There is one problem. There is a link missing in the whole research incentive operation. Considerable efforts are being made, admittedly, to increase research capacity. There is also a message that needs to be sent to the private sector. As elected officials, we have a duty and a responsibility to get that message across. Research efforts in any country must not be the sole responsibility of the government. The government must do its part but there is something a little disturbing in Canada.

I will take the case of Quebec. We have very good tax credits and many tools. The private sector has also come up with some of its own, although not as many as comparable countries. A way must be found to stimulate the spending culture, or investment in research, within private enterprises, because their ability to be competitive depends on it. It is not always solely the government's responsibility. Yes, the government must do its part. It must increase its contribution but private enterprise must not shirk its duty to conduct research and always look to the government for help.

The government will always have much of a monopoly on certain very specialized fields, even if there are economic spinoffs. This is clear because there are fewer private enterprises, or because their size does not allow them to conduct certain more fundamental research activities. Here again there must be a more direct dialogue with the private sector to ask it why it is not doing more research than it is at the present time.

Private enterprise is doing more, or trying to do more, but there is room for more to be done.

My other colleagues would perhaps like to address certain other aspects of the bill with which I am less familiar. I am more familiar with the Canadian foundation for innovation.

We will not be voting in favour of the bill for the reasons I have given. First, because allocating money to outside organizations puts them somewhat beyond the control of parliament, if not considerably beyond its control. Second, it is odious and has potential for considerable inconsistency for governments to be competing in the area of public support of research.

I cannot speak for all the provinces but I can speak of Quebec, with which I am familiar. Quebec has a science policy. Ottawa has and spends a lot of money. One does not get the impression that all this spending is necessarily aimed at efficiency alone. There is always a kind of war of visibility being waged by Ottawa and no one finds this healthy.

No one can fault reinvestment in research. That is something on which we will all agree. However, the primary motivation must be efficiency and nothing else. I have some doubts on the government's motivations in this area.

I am convinced that within these organizations, even within the government itself, there are some people whose main concern is efficiency, I am convinced that when the powers that be allocate money, the notion of visibility is foremost in their mind. It has been the case with every decision since 1995, by this government, which is slightly paranoid, thinking that people supported the yes side for this reason, because they had not noticed how effective the government was or because they had seen it as less effective than it really was. This is something we will debate again when the time comes.

With regard to the bill before us today, we will be voting against it for the reasons I mentioned earlier. I urge the government to pay attention to the problems emerging between small and big universities.

Small universities want to expand. They want to retain their scientists but indirect costs and possible raiding from other universities are a problem. And of course there is raiding from foreign universities, but we have no control over that. I am thinking about raiding on the part of our major universities if they are able to raise money faster than our smaller universities.

This is a very real problem for smaller universities. The university in Rouyn-Noranda is very effective, one of the most effective in Quebec in terms of getting funding for research. I know other universities are effective as well; also partnerships are formed.

There is something positive in all this funding issue, namely networks are being created more than ever before. Universities are forming partnerships and I am convinced they are possible in many areas, to find a niche. Universities are faced with similar situations. They can establish partnerships but they need the resources to do it and right now they do not have enough to pay indirect costs.

This is the message I wanted to send. Tomorrow, we will have the opportunity to repeat our message to the chair of the Canada foundation for innovation, who will be appearing before the committee, but for the time being we are saying to all the members of the House and to the government that we want more consistency. We also want smaller universities to have the same ability to grow as the bigger ones.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I rise on a point of order. I did not want to interrupt my colleague on the other side, but I was just wondering about the relevance of what he is speaking about. I have been listening very carefully and I thought we were debating Bill C-17, which has to do with the Canada foundation for innovation and the Financial Administration Act.

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

The House leader calls them legislative improvements. Sometimes they are euphemistically referred to as housekeeping amendments. It just sounds so pleasant.

The real ugly face of it is legislative incompetence on the part of the government. The House leader is the first, whenever the opposition drags out debate on a bill as we occasionally do, to raise the alarm about the cost to parliament and the value of debating time in this place.

We spend hours, days and weeks in every session debating bills such as this one, which are, in substance, corrections to legislative errors that the government made in the first place. If the government got these things right in the first place, we would not be spending scarce parliamentary time debating legislative errors such as those contained in Bill C-17.

Sometimes these errors are not just of a minor, technical or dilatory nature. Sometimes they are very serious and grave mistakes. The Canada Pension Plan Investment Board is a good example. In the immediate past parliament, the government introduced Bill C-2 in order to make some major changes to the Canada pension plan and to authorize and introduce the single largest tax increase in Canadian history. My colleagues will recall that massive tax grab that will cost tens of billions of dollars. They brought—

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

Mr. Speaker, I am pleased to rise on behalf of the official opposition in the debate on Bill C-17. I thank the parliamentary secretary for mercifully abbreviating his remarks.

I will say at the outset that the bill, as the parliamentary secretary has indicated, deals with amendments to two statutes. One deals with funding for the Canada foundation for innovation and the other deals with amendments to the Financial Administration Act, the FAA. Neither are related, but the government has decided to parcel them together in the one bill. Both elements of the bill are evidence of how the government approaches legislation in an inappropriate fashion.

Let me address the bill as it concerns the Canada foundation for innovation. It proposes to give statutory authority to an announcement already made by the Minister of Industry to increase funding to the CFI by some $750 million.

I think many of my colleagues will share this sentiment: I find it troublesome, to say the least, that parliament is constantly putting forth legislation to authorize spending that has already been announced as a fait accompli by the government, in this case by the Minister of Industry.

Rather than coming before the House of Commons to seek the authority of parliament before making public and political commitments, the government ignores the ancient prerogatives of parliament and abuses its executive authority. It makes announcements outside this place and then later comes along to say it needs parliament's approval. After 900 years of parliamentary struggle to give representatives of the House of Commons the power to scrutinize, reject or authorize the spending plans of the crown, this is what we are facing. This is just part of an endless pattern of the centralization of power, the abuse of power and the contempt of parliament, not just by this Liberal government, but its predecessor governments, that increasingly diminishes the prerogatives of this place to authorize spending.

The government might say that it knows for sure that it will get these things passed anyway. How does it know that? The last vote which I was at in this place the government lost. We cannot be certain that announcements made by the Minister of Industry will end up as authorized appropriations by this parliament. There is no certainty in that. To assume otherwise is to exercise a great degree of arrogance.

Also I found it troublesome that the Minister of Industry, that very thoughtful, reflective gentleman and that great contributor to public policy debate in this country, announced this. The Minister of Industry, that great friend of industry, through the Voisey's Bay debacle acted like the dictator of a banana republic by telling a private company that it could not, after having received all regulatory authorization, benefit from its private investment in a major capital investment in his own province. It is an embarrassment that he is the Minister of Industry.

When the minister stood up about a month ago and made this announcement of $750 million for the Canada foundation for innovation, he did so in a context that was completely without any reference in the federal so-called mini budget, the finance minister's political statement of last October and in lieu of a conventional spring budget. He announced nearly $1 billion in new public spending without any broader fiscal context.

We find this troublesome. The fact that he did so at the very end of the fiscal year, which ended this past week, is part of the pattern of spend it or lose budgeting, or March madness, of which this government is a brilliant practitioner. Departments know if they do not fully exhaust money which is on the table or which is available in a given fiscal year, it will be returned and will not be available to them to spend in future years.

The government tells us that this $750 million, and I look forward to questioning representatives of the ministry at committee on this point, will be spent over the duration of something like 10 years. I asked officials in a briefing whether the $750 million would be spent in 10 years. They said “No, something like 10 years”. What does that mean? It is nearly a billion dollars of tax money and the government is not even sure over what duration this will be rolled out.

One thing is for sure. The government wants to book it all in this current fiscal year as part of the well established practice, which has been much criticized by the auditor general, of trying to diminish the size of the surplus in any given fiscal year for political reasons. Then the government can turn around and tell taxpayers that it is sorry it cannot afford to give more real, meaningful tax relief because the surpluses are just not big enough. Year after year we hear this sad story, precisely because the surpluses have been overwhelmingly consumed by huge spending projects and the March madness represented by the announcement which found its way into the bill.

Major spending commitments ought to come before this place in a budget speech in parliament before they are announced by a hyperpolitical minister, like the minister responsible for industry. They ought to be authorized by this place in the context of an overall, long term fiscal plan.

Many private sector economists are agreeing with the official opposition in its assessment that the government's spending program is out of control. Its spending this year will be $35 billion higher than it was projected to be the year before last. That is discretionary spending. That does not include things like the increases for CHST. Spending is out of control.

We see that Canada is headed into choppy economic waters. Growth projections for the current calendar year have been on average cut in half from where they were when the minister's political statement came out in October. At that time he projected a 3.5% growth. We are now looking at an estimated growth of something like 1.5% to 2% this year. That will clearly have an impact on government revenues.

Many economists suggest that in the second quarter of the year, which we are now entering, there will actually be a flat, if not negative growth in Canada. We have a dollar which is teetering on the brink of a near record historic low, having lost 25% of its value under the tenure of the government. Our dollar is now declining against that famed currency, the Mexican peso. The government's reaction is “don't worry, be happy” and that it does not need to bring forward a budget, as is the convention in the House, this spring or even next fall. When the Prime Minister decides by fiat that he is going to deign to come before parliament with a budget he will do so and not before then, notwithstanding that the entire economic landscape has changed dramatically since this government's political statement in October.

Instead of coming before us with a framework to control spending in light of these new realities what does the government do? It presents piecemeal major new spending programs which have not been accounted for in the overall fiscal framework and which have no recognition of the new economic circumstances in which we find ourselves, through the nearly $750 million proposed in the budget.

While we have great consternation about the manner in which this is handled, the amount of spending and the lack of a budgetary authority for it, the official opposition does in principle support the policy objectives of the Canada foundation for innovation. We believe that Canada needs to greater investment in both the public and private sectors in research and development, particularly with respect to hard applied sciences. We have long been an advocate of this kind of policy.

It has been widely remarked that Canada's expenditures and investments in research and development are significantly lower than the average in the OECD and the G-7. This is something we need to correct. Toward that end the Canadian Alliance policy states:

We will appoint a Senior Advisor on Technology with private sector technology experience to report directly to the Prime Minister. We will bring the best ideas in business, government, and universities together to facilitate the transition to the new economy and position Canada as a global leader. We will increase support to Canada's research granting councils and appoint a chief scientist of Canada to co-ordinate science activities in all government departments and ensure that science, not politics, prevails.

We also committed further to that in our election platform an increase in funding for research and development to the various granting councils of some $500 million, an amount far exceeded by the bill before us today. While we believe it is important that both the public and private sectors invest more in R and D, we think that must happen within the context of fiscal responsibility. That means every dollar must be watched with great care.

Another concern that my colleague, the member for Calgary Southwest and critic for science and technology for the Alliance, raised was the manner in which these public moneys were allocated through granting councils, such as the CFI. He interrogated the Minister of Industry on this point at the industry committee, that the government had no clear and impartial framework for granting moneys out of foundations such as the CFI. Also, there was no clear certainty that grants would be done in a completely non-political way and strictly on their merits, as pointed out by the auditor general.

There is no proper reporting on the administration of the grants at research institutes and universities, nor does parliament get proper feed back on the results so we can see what bang taxpayers are getting for their buck.

These are all things that need to be changed. The government constantly comes before parliament or its committees with new ideas about spending on science, technology, research or development. There is a proposal now for major new funding for astronomy. There are various other projects on the table, all which have been dealt with in a piecemeal fashion.

We in the official opposition, and I think my colleague from Calgary Southwest will later speak to in this bill, believe there is a need for a broader framework for funding of science, technology, research and development rather than the kind of political piecemeal approach which we have before us in this bill.

Let me turn my attention to the second section of the bill with respect to the legislation affecting the Canada pension plan investment board and its adherence to the Financial Administration Act.

I find it quite humorous because there are two things that happen in the bill. First, clauses 4 and 5 of the bill clarify the borrowing authority that departments, crown corporations and agencies have. They clarify what we all know ought to be the case, and thought was the case, that parliament delegates to the Minister of Finance the authority to borrow certain sums and he has the delegated authority to authorize or reject borrowing requests from various departments, agencies, boards and commissions.

It turns out that due to typical legislative errors on the part of the government, there are a couple of departments that are not covered by this convention, or legal tradition, of delegated borrowing authority. The Department of National Defence, apparently, had obtained a legal opinion indicating that it had the power to borrow money on its own without any authorization from the Minister of Finance or authorization by parliament. The legal officials in the defence department and the justice and finance departments had a great brouhaha over the past year about whether or not defence department bureaucrats could borrow money without proper legal authorization by this parliament and the minister.

How could we have let that situation get out of control? It is quite conceivable that they could have gone out, done so and contravened a long standing convention of parliament, which is a restriction on the borrowing authority. Because of the government's incompetence and oversights it has taken years to finally come forward with this amendment to tighten up and clarify the delegation of the borrowing authority saying that bureaucrats cannot charge money on the public credit card and tell taxpayers to “pick up the bill, see you later”.

Today it could happen. After this bill it will not be able to but this has stood for far too long without correction on the part of the government.

Then we get to my favourite section of the bill, clause 6. It is really quite marvellous. The government House leader is so proud of his legislative prowess. The problem is that he so often brings bills before this place that are riddled with drafting errors. I spoke about this in debate on Bill C-22. We were making all sorts of corrections to legislation to correct mistakes made in drafting errors in bills brought before parliament by the government.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I am delighted to have the opportunity to speak today at second reading of Bill C-17.

The bill amends the Budget Implementation Act, 1997, by providing funding increases for the Canada foundation for innovation. It also contains amendments to the Financial Administration Act relating to the Canada Pension Plan Investment Board and the borrowing power of federal departments.

I will begin my remarks by discussing the additional funding for the Canada foundation for innovation. I had planned to talk about the history of the Canada foundation for innovation but I think members in the House are familiar with the story. With the bill, funding for the foundation will rise to $3.15 billion. That demonstrates the government's commitment to fostering a knowledge based economy and a climate of innovation.

I will move to the specific measures of the bill which pertain to the CFI and I will explain the funding provisions in detail.

The $500 million announced last October will be invested in two ways. First, $400 million will allow the foundation to contribute to the operating costs of new awards. Second, $100 million will help support the participation of Canadian researchers in leading edge international research projects and facilities that offer significant research benefits to Canada.

The recent announcement of an additional $750 million for the CFI will build on that funding by providing additional stability to universities as they plan their future research priorities. At the time of the announcement the finance minister said:

Giving the knowledge economy of the 21st century a preferred home in Canada will lead to higher incomes, better jobs and increased opportunities for all Canadians.

In addition to establishing the Canada foundation for innovation with a series of funding initiatives that now total $3.15 billion the government has implemented other funding initiatives for research over the past four years.

The initiatives include: one of the most generous R and D tax regimes in the world; increased funding to the granting councils, including the creation of the Canadian institutes for health research, to maximize the advantage Canada enjoys in medical research; funding of $900 million over five years for the Canada research chairs program which would establish 2,000 research chairs at Canadian universities; increased funding for the network of centres of excellence; funding of $300 million for Genome Canada; the sustainable development technology fund; and a Canadian foundation for climate and atmospheric sciences.

As announced in the Speech from the Throne in January, the government is committed to at least doubling its current federal investment in R and D by 2010.

The Speech from the Throne also specified that during its mandate the government intends to increase investment in granting councils, accelerate Canada's ability to commercialize research discoveries and turn them into new products and services, and pursue a global strategy for Canadian science and technology so that Canada can be at the forefront of collaborative international research.

Increased funding for the Canada foundation for innovation, CFI, is not the only component of the bill. Bill C-17 also contains amendments to the Financial Administration Act which I will now discuss briefly.

I should first explain that the financial administration of the Government of Canada, the establishment and maintenance of its accounts and the control of crown corporations all fall under the purview of the Financial Administration Act, the FAA.

In addition, the Financial Administration Act sets out the statutory framework under which the government can borrow money. The Minister of Finance needs authorization from parliament through borrowing authority acts before the government can borrow new money. Authority to refinance maturing debt is contained in the Financial Administration Act. The finance minister is also responsible for debt management under the Financial Administration Act.

The first FAA amendment in the bill concerns the Canada Pension Plan Investment Board. When the Canadian Wheat Board Act was amended in 1998, the Canada Pension Plan Investment Board was inadvertently deleted from subsection 85(1) of the Financial Administration Act.

The error meant that legally the Canada Pension Plan Investment Board was subject to various crown corporation control provisions under the FAA which put it in conflict with its own mandate. Clearly that was not intended. Bill C-17 rectifies the situation.

The Canada Pension Plan Investment Board will again be included in the list of crown corporations exempt from part X of the Financial Administration Act. The change will be retroactive to December 1998 to ensure that the Canada Pension Plan Investment Board has always operated within the laws of Canada.

The second amendment reinforces the authority of parliament over any borrowing by or on behalf of the crown. It also strengthens the role of the Minister of Finance in ensuring the appropriate management of government indebtedness.

The amendment provides for greater certainty that it is parliament that specifically authorizes borrowings made on behalf of Canada. Bill C-17 ensures that all borrowings, not just money but instruments like capital leases, are covered under section 43 of the Financial Administration Act and are subject to supervision by the Minister of Finance.

In closing I will summarize. The amendments to the Financial Administration Act are designed to improve the operation of the act.

The changes to the Budget Implementation Act, 1997, to provide additional funding to the Canada Foundation for Innovation and extend its activities are consistent with the government's commitment to at least doubling its current investment in R and D by 2010.

The Canada foundation for innovation is about looking forward. It is about education and investing in the future. In other words, it is making a down payment today for a much greater reward tomorrow. Let me quote the Minister of Finance when he spoke on October 18. He stated:

—success in the new economy will not be determined by technology alone, but by creating an environment of excellence in which Canadians can take advantage of their talents, their skills and their ideas.

The Canada foundation for innovation and its successes reflect the minister's sentiments. The CFI deserves this increased funding so that it can continue to promote research in Canada and inspire young Canadian researchers, thus contributing to the environment of excellence.

I am confident that hon. members from all sides of this House will agree that investing in education, research and innovation is the most significant investment Canadians can make to foster future success.

Clearly the government is on the right track. I encourage hon. members to give this legislation their full support.

[Jane Stewart, Liberal, for the Minister of Finance]

moved that Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act, be read the second time and referred to a committee.

Business Of The House

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Given the motion that has just passed and the unanimous consent, I would like to clarify the business of the House because it has been changed. In any case, there have been consultations about future business which I would like to share it with the House.

After completing the debate on Bill C-2 at report stage, the House will return to third reading of Bill C-8, the financial institutions bill. After this we will call Bill C-18, the equalization bill; Bill C-17, the innovation foundation; and Bill C-22, the income tax bill, in that order.

Tomorrow shall be an allotted day, as already announced.

Wednesday shall be the day allocated for third reading of Bill C-2. I understand there will be some co-operation to ensure that all parties have a spokesperson on Wednesday. I intend to do my part on this side of the House in that regard.

On Thursday we shall resume the list from today, adding at the end Bill C-9, the elections bill. We shall continue the list on Friday, adding Bill C-12, the Judges Act amendment.

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue consideration of Bill C-2, the employment insurance bill. We will then return to the second reading of Bill C-18, the equalization bill. That will be followed by Bill C-17 respecting the innovation foundation.

On Friday we will consider third reading of Bill C-8, the financial institution, and if necessary we will return to Bill C-18.

On Monday, we will return to Bill C-2. If it is completed at report stage, we will return to Bill C-18, C-17 or C-22 on the Income Tax Act, depending on which of these bills requires further consideration.

Tuesday shall be an allotted day, and I believe it is the Canadian Alliance's turn. On Wednesday, we will return to Bill C-2. We will also try to complete third reading of Bill C-12, the Judges Act amendments, and Bill C-9, the elections bill. If we have the time, I will also suggest completing Bill C-4, respecting the Sustainable Development Foundation, before adjourning for Easter.

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to make the weekly business statement and to indicate to the House that I intend to do my utmost to have order paper questions answered as rapidly as possible.

This afternoon we will resume debate on Bill C-12 respecting compensation for judges. We will then continue with Bill C-18, the equalization bill, which we started this morning. That will be followed, if there is time, with Bill C-17 respecting the innovation foundation.

On Friday we will consider report stage of Bill C-4 respecting the sustainable development foundation, and any time left will be used on second reading of Bill C-7, the youth justice bill.

In an effort to complete consideration of the youth justice bill, we will continue discussing that bill on Monday next.

Next Tuesday we will commence report stage of Bill C-8 respecting the financial institutions legislation. Should that be completed, we would then continue with Bill C-22, the income tax amendment. As previously announced and as adopted by the House, in the evening there will be a special take note debate on the summit of the Americas.

Next Wednesday, March 28, we will debate Bill C-2, the employment insurance amendments, at report stage and hopefully have third reading on next Thursday, March 29.

That is the agenda of the House for next week.

Federal-Provincial Fiscal Arrangements Act

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

Mr. Speaker, I am pleased to rise today to speak to Bill C-18.

The official opposition, the Canadian Alliance, supports the principle of equalization payments, but we do have certain concerns relating to this particular bill.

The official opposition does support in principle the constitutional obligation of equalization but has particular concerns with respect to the bill.

We just heard a fairly comprehensive overview of this legislation from the Parliamentary Secretary to the Minister of Finance. We also heard him set it within the larger context of federal fiscal transfers to the provinces. However, the bill is quite narrow in its scope, much narrower than my hon. colleague's comments would suggest. It is strictly limited to increasing or lifting for one particular fiscal year the ceiling for equalization payments. It does so for the fiscal year 1999-2000, now nearly two years past.

At the outset, my colleagues and I are bound by the democratically approved policy of our party to support the principle of equalization. Our manifesto states:

We recognize that different provinces and regions of Canada have different levels of wealth but all wish to provide similar services to their residents. Therefore we are committed to the constitutional principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide the residents with reasonably comparable levels of basic services at reasonably comparable levels of taxation.

We do support the notion that in a large and complex federation with fairly significant disparities in wealth, income and standards of living the federal government ought to play some function to equalize access to core public services at reasonably comparable levels of taxation.

Having said that, we do believe that the current formula and structure of equalization should be open for serious debate and review. Most provinces have called for such debate. We in the official opposition would like to be on the record as embracing that. We believe there are many problems with the current system, many unintended consequences that have the effect of both penalizing those provinces that are successful in terms of economic development and growth and penalizing taxpayers in the so-called have provinces.

It is often observed that in a country as wealthy as Canada it is inappropriate to suggest that we have seven provinces out of ten that are perpetual have not provinces. The mentality of the current equalization system perpetuates an attitude among some which is contrary to economic development.

One point we in the opposition have raised and hope to explore is the idea of opening negotiations to look at allowing provinces that are now bringing on stream certain non-renewable resource revenues to not be penalized in their equalization payments from the federal government for those new revenues for at least a period of time.

As the system is currently designed, there is what many economists refer to as a welfare trap phenomenon, where earning incremental income, or in this case developing incremental revenues to the provincial treasury, results in a proportionate reduction in federal transfers to the equalization program. This is a perverse incentive against domestic economic development among the so-called have not provinces. That is one of the many areas that ought to be explored.

We ought to explore whether indeed the formulae are applied or calculated on a fair and equitable basis and whether all provinces rather than some provinces should be included in the calculation of the equalization formula, as some provinces have suggested. We ought to take a hard and close look at the application of both the floor and the ceiling of equalization. We should see whether this program is really working to equalize access to core public services across the country at comparable levels of taxation.

It has been observed by academic economists including, for instance, those at the C.D. Howe Institute, that perhaps a better way of equalizing access to quality public services across this broad nation is through income sensitive transfers to persons as opposed to insensitive transfers from one government to another.

These economists have asked us to reflect as policy makers on the paradox, for instance, that there are members of, say, my constituency, a western riding in Alberta that is the largest contributor to equalization, who earn below average incomes. They are from modest families with modest means who are nevertheless obliged to pay a very large share of federal taxes. A portion of their taxes goes to finance the equalization program.

Most of my constituents would not object to the general principle of sharing opportunity and wealth across the nation. However, these economists ask us to reflect on how efficient this transfer of wealth is from government to government and from taxpayer to taxpayer in a way that is not sensitive to income. When the lower middle income family in my riding pays more taxes to finance equalization, it may have the impact of improving the road system, or the health care system which, for instance, is used by, among others, higher than average income people in other provinces.

Some economists have suggested that the current way the program is designed is perhaps not the best way to maximize the equalization of opportunities across the country. They suggest that instead the best way to do that is to redistribute wealth from higher income people, wherever they live and in whichever province they happen to reside, to lower income people, the working poor, who need a hand up. That is an interesting observation by academic economists, which I think ought to be included in the broader and more thorough review of the principle of equalization and its application.

I also think that this larger debate unfortunately has not been engaged by the government. Instead, the government tends to approach the issue of equalization on an ad hoc basis and in the crucible of very political negotiations with the provinces. That is not necessarily the best way to make good public policy.

I would point out, for instance, that the bill brings to us an amendment that lifts the ceiling on equalization payments for the fiscal year 1999-2000, pursuant to an agreement struck between the Prime Minister and his provincial counterparts on September 11 of last year.

Hon. members will no doubt recall that the date, September 11, 2000, was about a month before a federal election was called. Certainly the Prime Minister had the electoral timeline in mind. All of the premiers and public commentators were certainly aware of the very distinct possibility of a federal election on the horizon. It was in that very politicized context that this agreement was reached.

Some commentators have said that what we have before us today, this lifting of the ceiling, was a political demand put on the table in a horse trading session with the premiers and that the Prime Minister agreed to lift the ceiling for at least one year. That is not exactly how we ought to make serious, sober public policy decisions regarding hundreds of millions of taxpayer dollars, in this instance increasing equalization payments by some $792 million.

The ceiling is there for a reason: to protect the federal government from unforeseen increases in these payments. It is matched by a floor as well so that provinces are protected from an unforeseen reduction in equalization payments. For some 20 years now, I think, we have had this system that precludes wild variations or aberrations in the payments, either too much or too little, to the provinces. For the Prime Minister to simply politicize this very important part of the equalization structure in the crucible of an election campaign shows that he is not really committed to a serious, sober review of equalization and its application. That is something we would call on the government to engage in.

I am pleased to say that my hon. colleague from Portage—Lisgar, who is the official opposition critic for regional equity, will be speaking to the bill later today and will perhaps outline some of the principles he thinks should be included in a general review of equalization and the federal-provincial transfer arrangements.

Our party did support certain elements of the accord reached between the premiers and the Prime Minister in September of last year, particularly with respect to the restoration of funds stripped out of the Canada health and social transfer fund since the 1995 Liberal budget. I know I do not need to remind this place that in that budget and since that budget, the federal government removed some $23 billion in real hard cash dollars that were designated to the provinces to finance the highest priority program areas of Canadians, namely health care, higher education and other social priorities.

In poll after poll Canadians register health care as their single highest public spending priority. Yet when the government was given an opportunity to demonstrate its fiscal priorities, what did it choose? It chose to slash, gut and eviscerate health care funding to the provinces, a decision that had a very clear and tangible impact on the delivery of care to Canadians in need of health care. My colleagues and I for several years now have been consistent in saying that this was the wrong choice to make, a choice which the Prime Minister sought to undo in the September accord of last year, from which this bill derives.

It was the wrong choice to make because it reflected the wrong priorities. Between 1993 and 1999 the deficit was eliminated. About two-thirds of that deficit elimination came about through increased revenues to the federal government, in part because of higher tax rates imposed by it and in part because of automatic tax increases through the then deindexation of the tax code and various other revenue measures. Basically because Canadians were working harder and working longer hours, they were paying more to the federal government.

About two-thirds of the so-called deficit elimination is attributable to higher taxes which are now at the highest level in Canadian history as a percentage of our gross domestic product. It leaves us with the highest income tax burden relative to GDP in the G-8 and, further, the highest corporate income taxes in the OECD, the 23 principal industrialized economies of the world. That is the legacy of the fiscal policy of tax increases over the past decade.

The other third of the deficit reduction can be traced to the so-called spending restraint. It is the government's worst spending cuts. Three-quarters of the spending cuts involved in the deficit elimination exercise came about in the $23 billion reduction in transfers for health care to the provinces. Another very large chunk came about through gutting the capacity of the Department of National Defence to provide the resources for our men and women to defend our sovereignty and meet our international obligations.

If we take out national defence and the CHST, the rest of the federal government averaged a spending cut of only 3%. That reflects the fiscal priorities of the government. It was willing to cut health care transfers by one-third, by about 33%, and to virtually gut the capacity of our defence forces; but when it came to the myriad of other wasteful Ottawa bureaucratic spending programs they remained virtually untouched.

I will give some examples of wasteful programs: the Minister of Canadian Heritage with free flag giveaways, multimillion dollar handouts, grants to Liberal special interest groups, subsidies to bloated crown corporations, and the Minister of Industry with billions of dollars wasted on corporate welfare.

Then there is the general waste of mismanagement, duplication and misadministration of the federal public sector. It was virtually left untouched because the easier choice for the government was to pass the buck on to the provinces rather than fixing its own problems in its own backyard. They in turn had to pass the buck on to health care consumers. That is a synopsis of the fiscal choices of the government during the past several years.

Bill C-18 has come before us as part of a package. It was a sweetener to have the provinces accept less than a full loaf in terms of restoration of the CHST transfers to 1993 levels. In the September accord last year the governments agreed to increase those health transfers to only $21.1 billion. The money taken out since 1993 was at least $23 billion. The government was still about $2 billion short on its CHST cut in the accord that it negotiated with the provinces last September. In order to make up for this continued shortfall in critically needed health care funding, it offered to raise the ceiling on equalization. That is why the bill is before us today.

I would like Canadians and my colleagues to understand the political and fiscal context of the bill. In other words, had the government not made the wrong choice to slash health transfers by a third in 1995, had it not stubbornly stuck by that, and had it instead made different choices and reduced wasteful spending in Ottawa programs that do not affect real people, we would not have Bill C-18 before us today. The provinces would not have been so short of revenue that the poor ones would have demanded this aberrant lifting of the ceiling on equalization.

In its frantic pre-election effort to cover up the enormous mistake it made in terms of slashing the health care transfers, the government decided to make a change in the pre-existing, longstanding arrangements with the provinces with respect to equalization.

I do not quibble for one moment with certain provincial governments and premiers for seeking any way they possibly could to get more federal transfers into their provincial treasuries to reinvest in the health care and other social spending which had been stripped by the CHST. I do not object at all to their principled and effective advocacy on behalf of provincial taxpayers and health care consumers in this respect.

I am sure all my colleagues would agree that it would be in the best interests of the administration to have predictability and stability in the application of equalization agreements. We ought to try to play by the rules. Surely we could all agree that it is good public policy not to make exceptions from year to year. However the reason the government made the exception it did in the bill before us today with respect to the ceiling on equalization was to cover up for its own political mistake, its enormous policy blunder in its 33% cut in health transfers to the provinces since 1995.

We do not feel the government has much moral authority to come before us and say that it has decided out of the kindness of its heart for one particular fiscal year to raise the ceiling on equalization payments to the provinces to account for unexpected economic events two fiscal years ago. That is nonsense.

The Parliamentary Secretary to the Minister of Finance knows as well as I do that bureaucrats in the Department of Finance are no doubt rolling their eyes today as they watch the debate go forward. They know this is undermining the overall integrity of their program. In a way it, politically it had to happen in order to reinvest the money that had been taken out of the health transfer which the government refused to put back in.

Without a doubt the bureaucrats are standing there knowing that it may be good politics but it is awfully bad public policy. I would just say that we see over and over again this pattern of misplaced priorities leading to bad policy outcomes and then the government trying to wiggle its way out. That is what it is doing with the bill today.

Let me also say, lest the government try to paint itself as the great dispensary of Liberal generosity to the provinces, that this is a one time, one year deal. It does not intend to continue lifting the ceiling in perpetuity. If I had an opportunity to ask the finance minister's parliamentary secretary, I am sure he would be opposed to lifting the ceiling in perpetuity.

He would probably argue that it would contravene the rules set out in the agreements and that if we lift the ceiling, we should lift the floor and so on and so forth. I am sure he would make that argument, but somehow he avoided that question. He avoided mentioning why exactly this deal happened and why it applies to one year and one year only.

Another point I would like to add is that the practice of retroactive legislation in general is not a good one for parliament to pursue. When we consider fiscal matters, estimates, spending authorizations, ways and means motions, authorizing tax measures or any form of legislation, a principle of parliament ought to be that it ought not to try to go back and change history, as it seeks to do in this bill. We should make things right the first time.

Later today we will be considering Bill C-17, another example of the ham-fistedness with which the government administers its legislative program. We will be making so-called housekeeping amendments to correct mistakes that were made in the bill some time ago.

An enormous amount of parliament's time is consumed with correcting the mistakes the government makes in its legislation. Today we are seeking to change an agreement with the provinces from two fiscal years ago to help save the Prime Minister's hide. It was a deal he made at the last minute before a federal election to make up for his callous and irresponsible 33% cuts in health care transfers.

On that point I express my disappointment with the government for the manner in which it has handled its fiscal relationships with the provinces over the past number of years. I express my hope, although not my expectation, that it will begin to get things right in terms of long term stable and predictable cash transfers, tax points and equalization to the provinces so that we do not have these last minute deals and we do not need this kind of retroactive corrective remedy in legislation.

Budget Implementation Act, 1997 And Financial Administration Act

[Elinor Caplan, Liberal, for Minister of Finance]

moved for leave to introduce Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act.

(Motions deemed adopted, bill read the first time and printed)