Bill C-28 (Historical)

Budget Implementation Act, 2003

An Act to implement certain provisions of the budget tabled in Parliament on February 18, 2003

Jobs and Growth Act, 2012

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, I rise to speak to the Conservatives' latest omnibus budget legislation, Bill C-45, at report stage.

I will focus my remarks today on: one, how the New Democrats worked closely with and supported, helped, aided and abetted the Conservatives in their ramming of this omnibus bill through committee; two, a very dangerous precedent that was set at finance committee during the study of Bill C-45; and, three, some of the flaws in Bill C-45 that were identified by Canadians during the committee's study.

As members know, Bill C-45 is a mammoth bill. It is over 400 pages long and would amend over 60 different laws. It includes a large number of provisions that simply do not belong in a budget bill: rewriting the laws protecting Canada's waterways; redefining aboriginal fisheries, without even consulting first nations peoples; and eliminating the Hazardous Materials Information Review Commission. These are just a few examples of what is in Bill C-45 and examples of measures that would really have nothing to do with the fiscal situation of the country.

Canadians overwhelmingly disapprove of the Conservatives' use of omnibus budget bills to ram a large number of unrelated measures through Parliament without sufficient study or debate. A recent poll by Forum Research shows that 64% of Canadians oppose the Conservatives' omnibus legislative approach. Even a majority of Conservative supporters oppose the Conservatives' use, overuse and abuse of omnibus bills.

The Prime Minister once opposed the use of omnibus bills, but under his watch we have seen a clear trend toward the use of omnibus legislation. In fact, Bill C-13 in 2006 was 198 pages; Bill C-28 in 2007 was 378 pages; Bill C-10 in 2009 was 552 pages; Bill C-9 in 2010 was 904 pages; Bill C-13 in 2011 was 658 pages; and Bill C-38 earlier this year was 452 pages.

To put this in context, the largest Liberal budget bill was Bill C-28 in 2003, which was 144 pages in length, and it focused on fiscal measures, not on unrelated measures.

I will also speak about the NDP in this case. The NDP actually helped the Conservatives in passing Bill C-45 as quickly as possible through committee. The New Democrats say that they oppose Bill C-45 and they say that they oppose closure. However, their actions speak louder than their words. While they talk the talk, they do not walk the walk when it comes to actually standing up to the Conservatives and their abuse of Parliament. Instead of standing up to the Conservatives and providing any real opposition to Bill C-45, the New Democrats have actually been helping the Conservatives.

Here are a few examples. The New Democrats voted with the Conservatives to impose time allocation to limit the debate on Bill C-45 at committee. The New Democrats voted with the Conservatives to overrule the finance committee chair, the member for Edmonton—Leduc, a chair who is respected by all members of the House for his judgment. To have him rebuked by his own colleagues was bad and it was terrible to see the New Democrats gang up with the Conservatives against the member for Edmonton—Leduc. The New Democrats voted with the Conservatives to throw out the rules at committee and to shut down opposition to Bill C-45. The New Democrats then gave up one of their votes at finance committee and worked out a schedule with the Conservatives so the finance committee could get through Bill C-45 as quickly as possible. The New Democrats voted with the Conservatives almost 2,000 times at the finance committee to oppose measures that could have delayed certain parts of Bill C-45.

Federal-Provincial Fiscal Arrangements Act

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to speak today at second reading of Bill C-54, which amends the Federal-Provincial Fiscal Arrangements Act with respect to the equalization program.

Briefly, the bill would provide the Minister of Finance with the authority to continue to make equalization payments according to the current formula for up to a year in the event that new legislation is not in place by April 1, 2004.

Let me stress “in the event”. The fact is that the minister has had very productive meetings with his provincial and territorial counterparts in October of this year and this is simply an insurance so that if in fact for some reason by April 1 we do not have in place a new agreement, when April 16 rolls around, we can continue to pay. Therefore, it is nothing more than an insurance policy.

I am sure all members of the House would want to ensure that this is in place so that on April 16 the payments can continue.

Before reviewing the measures in Bill C-54, I first want to set the legislation in context. No discussion of the equalization program can take place without a discussion of the overall federal transfer system and the role of equalization within that system.

As hon. members know, the federal government, in partnership with the provinces and territories, plays a key role in supporting the Canadian health system and other social programs. The provinces and the territories deliver their own health care, education and social services, while the federal government provides them with annual financial assistance through transfer payments.

In 2003-04 it is expected that provincial and territorial governments will receive $51.6 billion in federal transfers. Because of transfers, all Canadians can expect equal access to public health care, a safety net to support those most in need and the freedom to move throughout the country to seek work, higher education and training available to all who qualify and reasonably comparable services in whatever province one chooses to live.

The federal government provides the large majority of the transfers to the provinces and territories through four major transfer programs: the Canadian health and social transfer; equalization; territorial formula financing; and the new health reform transfer, which was created as a result of the February 2003 first ministers health care agreement.

I would like to briefly review each of these programs beginning with the Canada health and social transfer, the CHST. A block fund, the Canada health and social transfer is the largest federal transfer providing provinces and territories with cash payments and tax transfers in support of health care, post-secondary education, social assistance and social services, including early childhood development.

The CHST upholds the five medicare principles of the Canada Health Act: universality, comprehensiveness, accessibility, portability and public administration. It also ensures that no minimum residency period is required to receive social assistance. In 2003-04 the federal government will provide $37.9 billion to the provinces and territories through the CHST and the CHST supplement.

Hon. members will recall that the CHST will be restructured, as of April 1, 2004, into separate transfers: the Canada health transfer, the CHT, and a Canada social transfer, the CST, to increase transparency and accountability.

I want to speak for a moment about tax transfers because this is one of the least understood aspects of the CHST, despite the fact that tax transfers are absolutely fundamental as to how the program functions.

A tax transfer provides the same support as a cash transfer. The tax transfer component of the CHST occurred in 1977 when the federal government agreed with provincial and territorial governments to reduce its personal and corporate income tax rates, thus allowing them to raise their tax rates by the same amount.

As a result, revenue that would have flowed to the federal government began to flow directly to provincial and territorial governments. The net impact of the tax point transfers on taxpayers is zero, but the impact on the federal-provincial governments is real.

The second transfer is the health reform transfer through which the federal government will provide $16 billion over five years to assist the provinces and territories in accelerating health care reforms, which were identified in the 2003 first ministers accord. These reforms include primary health care, home care and catastrophic drug coverage.

The federal government will ensure that the level of funding provided through the health reform transfer is integrated into the new Canada health transfer starting in 2008-09.

I would also like to mention that federal government funding under the CHST and the new health reform transfer is provided on an equal per capita basis to ensure equal support to all Canadians regardless of their place of residence.

An equalization program, which I will discuss in more detail in a moment, is the third major federal transfer. This program ensures that the less prosperous provinces will have sufficient revenue to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

The fourth federal transfer is the territorial formula financing, the TFF, which recognizes unique challenges and costs of providing services in the north. The TFF ensures that the territorial governments can provide a range of public services to their residents comparable to those offered by provincial governments. In 2003-04 federal payments provided under the TFF will total almost $1.7 billion.

Hon. members may be interested to know that the federal cash transfers are forecast to grow at an average rate of 7.7% between 2000-01 and 2004-05, substantially higher than projected growth in federal revenues.

Let me turn now to a more detailed discussion of the subject of today's debate, equalization.

I hope my colleagues on the other side of the House will really understand that this is simply an insurance policy, and not anything else, to ensure that those revenues continue to go to provinces after April 16. In many ways equalization is a program that expresses the generous spirit of Canada.

Equalization has been in existence since 1957 and has played an important role in defining the Canadian federation. It is unique among federal transfers in that its objective was entrenched in the Canadian Constitution in 1982.

According to the Constitution, the program's purpose is to ensure that the less prosperous provinces can provide reasonably comparable public services without their taxes being out of line with those of the more affluent provinces.

At present eight provinces qualify for federal support under equalization: Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba, Saskatchewan and British Columbia. Ontario and Alberta are not eligible.

The fact that equalization was one of the few programs which was exempt from restraint measures during the mid-1990s illustrates the importance that this government attaches to this program. The government clearly understands what equalization means to receiving provinces.

I should also mention that equalization payments are unconditional. Receiving provinces are free to spend the funds on public services according to their own priorities. In 2003-04 provinces will receive approximately $10.1 billion in funding equalization payments from the federal government.

Hon. members may be interested to know how the program works.

Let me begin by pointing out that equalization is the most important federal program for reducing the differences in the abilities of provincial governments to raise revenues. Equalization payments are calculated according to a formula set out in federal legislation to respond to economic developments in the provinces.

When a province's economy is booming relative to the standard provinces, its equalization payments decline under the formula, reflecting the increase in wealth of that province. Conversely, when a qualifying province's fiscal capacity declines relative to the standard due to a slowdown in the economy, its equalization transfers increase. As well, equalization payments are subject to a floor provision. Until recently they were subject to a ceiling provision too.

The floor provision provides protection to provincial governments against unexpected large and sudden decreases in equalization payments. The floor limits the amount by which a province's entitlements can decline from one year to the next, according to a formula based on the equalization standard.

The ceiling provision was the other side of the coin. It provided protection to the federal government against unexpected increases in equalization payments. In order words, the ceiling permitted changing economic circumstances unaffordably driving equalization payments through the roof. The ceiling thus ensured that the program remained sustainable in the long run.

As part of the February 2003 first ministers accord and in light of improved federal fiscal circumstances, the Prime Minister announced that the government would permanently remove the equalization ceiling on an ongoing formula basis beginning with the fiscal year 2002-03. This provision was announced in the 2003 budget and legislation in Bill C-28, the Budget Implementation Act of 2003, received royal assent in June of this year.

Federal and provincial officials review the program on an ongoing basis to ensure that these differences are measured as accurately as possible. In addition, the legislation is renewed every five years to ensure that the integrity and fundamental objectives of the program are preserved, the last renewal being in 1999. As we know, new legislation must be in place by April 1, 2004.

The purpose of Bill C-54 is to ensure, and I underline this for all of my colleagues in the House, an uninterrupted stream of equalization payments following March 31, 2004, the date that the existing legislation is set to expire. As I said earlier, it is an insurance policy to ensure the continuation of payments for up to one year in the unlikely event, and I stress unlikely event, that renewal legislation does not obtain parliamentary approval before the expiration of the existing legislation.

As the Minister of Finance stated about the bill, the equalization program reflects the core values of our federation, and I believe it is important to give this matter the consideration that it deserves.

The minister went on to say that this measure was a precautionary one to ensure that the payments on which the provinces depended were not interrupted. As the minister has said, we are committed to tabling full renewal legislation in time for passage by March 31, 2004 deadline, but we must protect the public services that the provinces fund through the equalization program for the benefit of their citizens.

Without a doubt, passage of the bill will ensure uninterrupted equalization payments to the provinces in the unlikely event that new legislation is not in place by March 31, 2004. As well, in the event that the government continues payments under the current legislation, the proposed bill will ensure that the floor payments will continue to be made.

I suggest to hon. members that they view the measures in Bill C-54 as extra insurance, given that the impacts on receiving provinces could be very significant without the legislation. Of course, the renewal legislation, when passed, will supercede this extension. I want to emphasize that.

I will say a few words about the renewal legislation which would ensure, for my hon. friends across the way, and I know they will support this, that the program remains up to date and that the best possible calculations and data are used to determine equalization payments.

The government has identified three key principles in this renewal. First, the government is committed to a strong equalization program that allows provinces to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. This is our constitutional commitment. I believe that the current program does that.

Second, the government is committed to improving the predictability and the stability of the equalization program. Equalization payments to the provinces should not destabilize provincial fiscal planning, something with which I am sure we all agree.

Third, the government is committed to maintaining the integrity of the equalization program. This principle is founded in the premise that payments have to be based on an objective formula, thereby ensuring equal treatment to all provinces. Maintaining the integrity of the program requires periodic revisions to reflect the most up to date figures and, obviously, current provincial taxation practices, while ensuring long term stability of the program.

As hon. members know, equalization is not static. Rather, it responds to the changing fortunes and circumstances of provinces over time. Indeed, since the program's inception, all provinces except Ontario have received payments to varying degrees, but always in accordance with objective calculations at the time.

In short, the government's commitment to equalization renewal is about making appropriate, fair and accurate changes. It is not about cutting or enriching the program.

Before closing, I want to take a moment to review the government's response to some of the provincial concerns. I am pleased to say that the federal government has listened, particularly with respect to their concerns about the ceiling, strengthening the equalization program, as well as further work to ensure the stability of payments.

As I indicated before, as part of the February 2003 first ministers accord, the Prime Minister announced that the government would permanently remove the equalization ceiling on a going forward basis from that time. This addressed a key provincial concern and, as I said, that was dealt with by the Prime Minister earlier this year.

We also know that in consultation with the provinces the federal government is working toward a new equalization legislation for the five year period beginning in April 2004. The program is being reviewed to ensure that it continues to accurately measure fiscal disparities and the capacity of provinces to raise revenue.

As well, with the provinces, the federal government is also working on how best to improve the stability of equalization payments. We agree with the provinces that it is important to improve the stability and the predictability of payments under this program. I am sure my colleagues across the way are delighted to hear that.

In closing, let me mention a few key points. We know that all parts of the country cannot generate the same revenues to finance public services. Federal transfers therefore help to ensure that important programs are adequately funded. Transfers also help to ensure that all Canadians receive reasonably comparable levels of public services no matter in which province they reside.

Canada's equalization program reflects the values of our federation, ensuring that all Canadians can have access to quality public services no matter which province they live in.

The bill underscores the priority the government places on equalization and will ensure that the receiving provinces continue to have resources to provide the services their people need and want, if necessary.

This is an insurance policy. This is not rocket science. It simply means that in regard to an unlikely event after April 1 payments would continue. I want to assure all members that the discussions the minister had earlier this month went very well, but the fact is that it is always prudent to have an insurance policy. I would hate to be in a position where payments did not flow on April 16, so I would urge all members of the House to give quick passage to the legislation.

Income Tax Act

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, the legislation before us, Bill C-48, implements a new federal income tax structure for Canada's resource sector, to be phased in over five years.

To begin, I want to give the House a sense of the overall importance of the resource sector, especially mining and oil and gas, to the Canadian economy as a generator of investment, exports and jobs for Canadians.

In 2001, for example, the sector accounted for almost 4% of Canada's GDP, with over $64 billion in exports and more than $30 billion in capital expenditures. As well, over 170,000 Canadians work in resource businesses.

The potential for future resource development exists right across the country. While the mining industry is vital to rural and northern economies, the oil and gas industry is important to both the western and Atlantic provinces and the territories.

Internationally, Canadian resource industries are large investors in innovative technology and they also play a significant role in the provision of exploration and extraction services.

Overall, the changes in Bill C-48 will be positive, both for mining and for the oil and gas industry, but before discussing them, I want to briefly review the existing sector specific tax measures.

As hon. members know, income earned in Canada from the extraction and initial processing of non-renewable resources has historically been subject to a range of targeted tax measures.

For example, certain provisions determine the timing of deductions for capital expenditures. They include Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses and capital cost allowances. These measures recognize the risks involved in investing in resource exploration and extraction and also play an important role in ensuring a competitive business environment.

In addition, the resource sector is able to use flowthrough shares to raise capital for resource exploration and development. Individuals investing in flowthrough shares for grassroots mineral exploration are also eligible for the 15% mineral exploration tax credit, introduced in October 2000 as a temporary measure to moderate the impact of the global downturn in exploration activity on mining communities across Canada.

Another resource specific provision is the 25% resource allowance. This provision was introduced in 1976 primarily to protect the federal income tax base from what were rapidly increasing provincial royalties and mining taxes, which had been deductible for federal tax purposes.

The resource allowance, however, is an arbitrary deduction that does not necessarily reflect the actual cost of royalties and mining taxes. Consequently, it can distort the returns from individual resource projects and the allocation of investment between projects within the resource sector and between the resource sector and other parts of the economy.

As well, the complexity of the resource allowance calculation has meant substantial compliance costs for the industry and administrative costs for government.

The economic conditions that led to the introduction of the resource allowance have changed significantly since the 1970s, leaving the original need for it less relevant. In today's economic environment, there is greater pressure on producers to be efficient and on host jurisdictions to levy royalties at competitive rates.

The government recognized that the resource sector tax regime is capable of generating even greater investment and jobs for Canadians. In designing a new tax regime for the sector, the government was guided by three main goals.

First, the tax regime must be internationally competitive, particularly in the North American market. Second, it must be transparent for firms and investors. Third, it must promote the efficient allocation of investment both within the resource sector and between sectors of the Canadian economy.

Following extensive consultations with the industry, and I underline extensive, the government announced in the 2003 budget that it intended to improve the taxation of resource income.

Subsequently, on March 3 the Minister of Finance released a technical paper on the budget proposals. These proposals were reviewed in the course of extensive consultation with the industry and with the provinces. In response to these consultations, some special transition measures were incorporated into the legislation before the House today.

I would now like to briefly review the measures in Bill C-48. The proposed new tax structure will ensure that the resource sector firms are subject to the same statutory rate of corporate income tax as firms in other sectors. It will also ensure that these firms can deduct their actual cost of production rather than an arbitrary allowance.

Let me explain a little further. The first measure in Bill C-48 would reduce the federal statutory corporate income tax rate on income earned from resource activities from 28% to 21% by 2007. This rate is often the first piece of information viewed by prospective investors. If Canada is to send a positive message to investors that it is competitive, then this uniform lower rate is indeed essential.

The second measure would eliminate the arbitrary 25% resource allowance and would provide a deduction for the actual amount of provincial and other crown royalties and mining taxes paid. This means that projects would now be treated in a more comparable fashion. This change would promote efficiency by ensuring that the investment decisions were based more consistently on the underlying economics of each project. It would also result in a simpler tax structure, streamlining tax administration and compliance.

The government has recognized the particular circumstances of the mining sector in Bill C-48 by proposing a new 10% mineral exploration tax credit and it will apply to both Canadian grassroots exploration and preproduction development exploration for diamonds, base or precious metals and industrial minerals that become base or precious metals through refining.

It is proposed that these new measures be phased in over a five year transition period. An exception is the new mineral exploration credit which will reach its full rate in only three years. The proposed implementation schedule provides a reasonable transition to an improved tax structure in a fiscally responsible manner.

In addition to the resource tax changes, Bill C-48 includes measures that promote renewable energy and energy conservation projects by improving the treatment of Canadian renewable and conservation expenses, the CRCE. These expenses are fully deductible in the year that they are incurred and can be transferred to investors under a flow-through share agreement.

As I clarified in the standing committee hearings, we are discussing federal tax changes only. To the extent that the provinces rely on the federal tax base though, if offsetting adjustments are not made, provincial income tax revenue from the resource sector may increase as a result of these changes.

The international competitiveness of Canadian firms will be maximized where provinces provide a mechanism to return to the industry any provincial revenue gain arising from the changes to the federal tax structure.

The new tax structure for the resource sector complements other measures in the 2003 budget. We discussed these measures during the debate last spring on Bill C-28, the Budget Implementation Act, 2003. That bill eliminated the federal capital tax over five years, which will strengthen the Canadian tax advantage for investment in the capital-intensive resource sector.

Together with the elimination of the federal capital tax, the new measures in the bill we are considering today will substantially reduce the effective tax rates, both for the mining and the oil and gas industries.

For oil and gas, this reverses a current disadvantage relative to the United States. For mining it will build on an existing advantage. In both cases the changes place the Canadian resource sector in a markedly improved position to attract capital for exploration and development.

Bill C-48 reflects the government's ongoing commitment to an efficient and competitive corporate income tax system which plays an important role in creating a stronger and more productive economy. The resource sector attaches considerable priority to the delivery of these proposed changes. I cannot emphasize that enough for the members.

During the finance committee hearings on Bill C-48, the industry representatives and many committee members indicated that they considered the timely delivery of the legislation to be of utmost importance to their constituents and, indeed, to many provinces such as Alberta, Saskatchewan, Nova Scotia, et cetera. Given the benefits of these changes for the resource industries and the communities on which they depend, I would encourage all hon. members to give quick and speedy passage to Bill C-48.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I appreciate my colleague's intervention more than he knows.

I will go over the four provisions again: Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses and capital cost allowances determine the timing of reduction for capital expenditures. These provisions recognize the risks inherent to the large investments required for resource exploration and extraction and play an important role in ensuring a competitive business environment.

Also, there are two targeted income tax vehicles: the Atlantic investment tax credit that supports resources development and other investment in Atlantic Canada; and flow-through shares, which are designed to support junior exploration firms.

As well, the 15% mineral exploration tax credit was introduced in October 2000 as a temporary measure to moderate the impact of global downturn in exploration activity on mining communities across Canada.

The 25% resource allowance was introduced in 1976 to effectively put a ceiling on deductions in respect of rapidly increasing provincial and other crown royalties and mining taxes. This allowance functions as a proxy for actual royalties and mining taxes paid to provinces.

The government recognizes that the resource sector tax regime can generate greater investment and jobs for Canadians if it achieves these three goals. First, the sector must be internationally competitive, particularly within the North American context. Second, it must be transparent for firms and investors. Third, it must promote the efficient allocation of investment both within the resource sector and between sectors of the Canadian economy. I believe the measures in Bill C-48, which would be phased in over five years, meet these goals.

As we know, in a global economy with intense competition for capital, a tax system with a lower tax rate, applied uniformly across all sectors with a simpler and more efficient tax structure, is far more effective than one with a higher rate of tax applied on a less efficient tax base. Bill C-48 would address this issue by reducing the federal statutory corporate income tax rate on income earned from resource activities from 28% to 21% by 2007.

The federal statutory corporate income tax rate is important because it is often the first piece of information viewed by prospective investors. A uniform, low statutory rate sends a positive signal to investors in Canada and internationally about Canada's relative competitiveness. In addition, a single rate reduces compliance and tax administration costs. The resource tax package will result not only in more competitive tax rates but also in a more competitive tax structure.

I would like now to look at changes relating to crown royalties, mining taxes and the resource allowance. As hon. members may know, the existing tax structure disallows the deduction from income of crown royalties or mining taxes. The resource allowance can either exceed or be less than non-deductible royalties and mining taxes for a specific project annually or over its economic life.

The resource allowance also introduces complexities in the tax system, thus adding to the cost of compliance and administration. It operates in economic conditions that have changed significantly from those that gave rise to it in the 1970s and earlier 1980s. Oil and gas markets are now deregulated and international competition for exploration and development capital is more robust.

All these factors put pressure on producers to be more efficient and, on host jurisdictions, to levy royalties and mining taxes at competitive rates.

By providing through this bill a deduction for the actual amounts of provincial and other crown royalties in mining taxes paid and eliminating the resource allowance, projects will now be treated in a more comparable fashion. This means that investment decisions will be based more consistently on the underlying economics of a project.

When fully implemented, this measure will result in a tax structure that imposes the same corporate tax on resource income as on other corporate income, and one that also allows deductions for actual costs instead of an arbitrary allowance.

These changes with respect to the resource allowance and royalty deductibility present important structural improvements to the treatment of costs in the resource sector.

Another measure introduces a new 10% mineral exploration tax credit for corporations incurring qualifying mineral and pre-production exploration expenses before a mine reaches production in reasonable commercial quantities. The new tax credit will be available only to corporations and will not be refundable or transferable under a flowthrough share agreement or through a partnership or trust. It will apply to both Canadian grassroots exploration and pre-production development expenditures for diamonds, base or precious metals, and industrial minerals that become base or precious metals through refining.

I should point out that this new tax credit is not to be confused with the 15% temporary mineral exploration tax credit that Bill C-28 is extending to the end of 2004. That credit is only available to individual investors in flowthrough shares. It was introduced as a temporary measure, as I mentioned earlier, to moderate the impact of the global downturn in exploration activities on mining communities across Canada.

Bill C-48 also includes special transitional arrangements. I will provide a little background at this point.

Following the budget announcement that the government intended to improve the taxation of resource income, on March 3 the Minister of Finance released a technical paper on the proposed changes.

The government reviewed the changes with industry and the provinces. Further to these discussions the government made two changes to the transition provisions of the new tax structure.

The first change will achieve a better measure of taxable resource and non-resource income for the purposes of applying the general corporate rate reduction during the transitional period by utilizing resource pool deductions in the determination of resource income.

The second change targets the Alberta royalty tax credit, ARTC, transitional relief set out in the technical paper to get a greater number of small and medium size producers. The Alberta royalty tax credit, as many hon. members know, is one of the most significant refund programs for crown royalties. Under this program the province of Alberta refunds a minimum of 25% of the first $2 million in crown royalties paid by each corporation or group of corporations.

A special transitional measure will reduce, during a 10 year transitional phase-in period, a portion of the refund that must be included in income tax for tax purposes. It will be available to individuals who receive the ARTC and to taxable Canadian corporations that pay no more than $2 million in Alberta crown royalties. Taxable Canadian corporations that may pay more than $2 million but less than $5 million of Alberta crown royalties will be eligible for a reduced amount of special transitional fund.

This new measure will further assist smaller corporations in their transition to the new tax structure. Both the general five year transition and the 10 year ARTC transition will provide investors with the certainty they need when making investment decisions.

There will be several benefits to the changes implemented through the bill. These changes will increase Canada's international competitiveness in oil and gas and in mining. As I indicated earlier, they will result not only in more competitive tax rates but also in a more competitive overall tax structure.

Regardless of how a firm's tax base is affected by the removal of the resource allowance and deductibility of crown royalties, all resource firms will benefit from a lower rate of corporate income tax. The oil and gas sector will pay less federal corporate income tax as a whole as a result of this change. Similarly, it is anticipated that the new taxation regime for mining, which includes the new pre-production mining tax credit for corporations, will result in a lower tax burden for that sector. For the most part there has been strong positive feedback on these proposed changes from industry organizations.

When these measures are fully phased in, it is estimated that the annual revenue cost to the federal government will be about $260 million.

There is one more important element of this bill that I would like to discuss. Bill C-48 also includes a measure that will enhance the treatment of the Canadian renewable and conservation expenses, the CRCE. These expenses are associated with the development of certain renewable energy and energy efficiency projects. The measure will also allow corporations to renounce Canadian renewable and conservation expenses to flowthrough share investors in a year where the CRCE will be incurred in the subsequent year.

This change was proposed in a July 26, 2002 Department of Finance news release. It will apply to qualifying renewable energy and energy conservation projects and will provide greater flexibility in the timing of investments financed through flowthrough shares. The treatment of flowthrough share investments in such projects will now parallel that of investments in non-renewable energy projects.

This new tax structure will achieve what it is designed to do. It will improve the international competitiveness of the Canadian resource sector, in particular relative to the U.S. It will promote the efficient development of Canada's natural resource base by establishing a common corporate income tax rate for all sectors and by treating costs more consistently, both across resource projects and between the resource sector and other sectors of the economy. It will simplify the taxation of resource income, streamline compliance and administration, and send clearer signals to investors.

This is a very important new regime. It will build upon Canada's tax advantage to support investment, innovation, productivity, growth and jobs for Canadians. I would urge all members of the House to support this bill.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I appreciate the opportunity to present Bill C-48 for second reading today.

The bill would implement federal income tax changes that were announced in the 2003 budget for Canada's resource sector, comprising the mining, oil and gas and fertilizer industries.

The 2003 budget takes concrete comprehensive action in several areas to build the society that Canadians value, the economy that Canadians need and the accountability that Canadians deserve. Included in the budget are measures to help Canadian business become even more competitive in the North American and global economies.

This new structure for federal income taxation of the resource sector reflects the government's ongoing commitment to an efficient and competitive corporate income tax system.

As hon. members know, a better economic performance for Canada tomorrow requires a more productive, innovative and sustainable economy today. Our tax system plays an important role in creating a stronger, more productive economy.

An efficient tax structure can enhance incentives to work, save and invest. It can also support entrepreneurships and the emergence and growth of small businesses. In addition, a competitive tax system is critical in encouraging investment in Canada, which leads to greater economic growth and job creation.

That is why the government launched a five year $100 billion tax reduction plan, the largest in our history, which has strengthened the foundation for economic growth and job creation in this country.

Among other things, it lowered the general federal corporate income tax rate from 28% in 2000 to 21% in 2004. With the tax cuts implemented to date, the average federal-provincial corporate tax rate in Canada is now below the average in the U.S.

The 2003 budget builds on the Canadian tax advantage for investment.

Several measures that will benefit the resource sector were included in Bill C-28, the Budget Implementation Act, 2003, which received royal assent last June.

These measures include: eliminating the federal capital tax over five years, a move that will strengthen Canada's tax advantage for investment in the capital-intensive resource sector; increasing the amount of annual qualifying income eligible for the reduced 12% federal small business tax rate from $200,000 to $300,000; and extending the existing temporary 15% mineral exploration tax credit until December 31, 2004, and providing an additional year for issuing corporations to make expenditures related to these arrangements.

When fully implemented, the measures in the legislation we are debating today, Bill C-48, will require that firms in the resource sector are subject to the same statutory rate of corporate income tax as firms in other sectors and that they will be able to deduct actual costs of production, including provincial and other Crown royalties and mining taxes.

Before discussing the measures in detail, I would first like to put them in context.

The resource sector is an important generator of investment, exports and jobs for Canadians, indeed, a significant component of the Canadian economy. In 2001, for example, the resource sector accounted for almost 4% of Canada's GDP, with over $64 billion in exports and more than $30 billion in capital expenditures. Over 170,000 Canadians work in resource businesses.

As well, the sector in general, and the mining industry in particular, is vital to rural and northern economies, while the oil and gas industry, long important to western provinces, is now also a significant economic presence in Atlantic Canada.

The potential for future resource development exists in virtually every region of the country. Moreover, Canadian resource industries are large investors in innovative technology and major participants in the provision of exploration and extraction services internationally.

Historically, income earned in Canada from the extraction and initial processing of non-renewable resources has been subject to special tax treatment. There are three main reasons for this.

The first is that resources are key economic assets. Since the development of non-renewable resources can create significant economic and social benefits, there is a strong initiative for governments to design a sound, economic and fiscal framework for large capital investment requirements.

The second reason underlying the tax treatment of the resource sector is that governments have come to accept that there is a specific set of risks and benefits inherent in the business of resource exploration and extraction. The tax treatment acknowledges that the resource sector is operating in a distinct environment.

The third reason underlying this special tax treatment is the direct competition for international investment dollars. Historically, international capital has been critical to the development of our resource industry. Competition for this capital, including Canadian capital, is increasingly intense.

I would like to review for members the current income tax provisions that are specific to the resource sector.

There are four provisions: Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses--

Supply

[Paul MacKlin, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Madam Speaker, I welcome the opportunity to speak to the motion put forth by the hon. member for Joliette. While I commend the hon. member for bringing this matter to the attention of the House, I am unable to support the motion.

Following my remarks I am confident that hon. members may well share my views. In the time allotted to me today I want to focus on two issues. First, I want to set the record straight about the government's commitment to tax fairness and tax equity. Second, I want to review with hon. members why Canada has a network of tax treaties or tax conventions, as they are often called, in place.

Let me begin with the tax fairness and tax equity. Since the beginning of our mandate back in 1993, two of the government's ongoing priority areas continue to be sound fiscal management and fairness in our tax system. The government is fully aware that better economic performance for Canada tomorrow requires a more productive, innovative and sustainable economy today.

Our tax system plays an important role in creating a stronger, more productive economy.

An efficient tax structure can enhance incentives to work, save and invest. It can also support entrepreneurship and emergence and growth of small businesses.

In addition, a competitive tax system is critical in encouraging investment in Canada, which leads to greater economic growth and job creation. That is why, in the budget in 2000, the government introduced its five year $100 billion tax reduction plan, which is the largest tax cut in history.

The tax reduction plan is putting in place a tax advantage for business in Canada as a basic part of the strategy for fostering a strong and productive economy. With the tax cuts implemented to date, the average federal-provincial corporate tax rate in Canada is now below the average U.S. rate.

The 2003 budget builds on that tax reduction plan to further improve the tax system and enhance incentives to work, save and invest.

Hon. members will recall that Bill C-28, the Budget Implementation Act of 2003, received royal assent in June. That bill contained several measures that improve the tax system. We will soon be debating Bill C-48 which introduces a new tax structure for the resource sector to make it more internationally competitive, again a measure that stems from that 2003 budget.

I can assure hon. members opposite that the government remains committed to a fair and equitable tax system, one that is reasonable and compassionate and that we will continue to introduce measures as appropriate to ensure that this commitment is met.

This brings me to the topic of today's motion, that is the tax treaties or conventions. Our tax treaties our tax treaties are there to assure us of how Canadians will be taxed abroad. At the same time, these treaties assure our treaty partners of how their residents will be treated in Canada.

Canada, as we have already heard today, has over 70 tax treaties in place. This speaks volumes to the work behind the scenes on behalf of the government to set up this extensive network.

Canada's tax treaties are all designed with two general aims in mind: first, to remove barriers to cross-border trade and investment; and second, to prevent unintended tax results by encouraging co-operation between Canada's tax authorities and those in other countries.

International trade and investment decisions can be influenced by the existence and terms of a tax treaty and their importance in this regard should not be overlooked. Tax treaties do not impose tax nor do they generally restrict countries from taxing their own residents as they see fit under their domestic tax laws. Among other things, however, tax treaties set out the rules under which one country can tax the income of a resident of another country. This is particularly important for traders, investors and others with international dealings who are interested in doing business in Canada. It is only natural that they would want certainty as to the tax implications associated with their activities here and reassurances that they will be treated fairly.

The importance of eliminating tax impediments to international trade and investment has grown even more important now that the world economy has become so intertwined. It should not, therefore, come as any surprise that it can be advantageous to have tax treaties in place with other countries.

One of the most disconcerting things to a taxpayer is unrelieved double taxation, in other words, to have income taxed twice when the taxpayer lives in one country and earns income in another. Without a tax treaty, both countries could claim tax on the income without providing the taxpayer with any measure of relief for the tax paid in the other country.

To alleviate the potential for double taxation, tax treaties resort to two general methods. In some cases, the exclusive right to tax particular income is granted to the country where the taxpayer resides. In other cases, the taxing right is shared but the state where the taxpayer resides is obliged to eliminate double taxation by providing relief for the tax paid in the other country.

Put another way, tax treaties reduce the frequency with which taxpayers of one country are burdened with the requirements to file returns and pay tax in another country when they are not meaningful participants in the economic life of that country or where it would be a nuisance for them to do so.

Withholding taxes are also a common and important feature in international taxation. In Canada's case they were applied on certain income, for example, interest dividends and royalty payments that Canadian residents make to non-residents. Withholding taxes are levied on the gross amounts paid to non-residents and generally represent their final obligations with respect to Canadian income tax. Without tax treaties, Canada usually taxes this income at the rate of 25%, which is the rate set out in our domestic law or, more precisely, under the Income Tax Act.

Our tax treaties specify the maximum amount of withholding tax that can be levied by Canada and its treaty partners on certain income. These rates are almost always lower than the 25% rate provided for in the Income Tax Act.

I now want to turn to the second objective of tax treaties, namely that of preventing the unintended tax results by encouraging co-operation between Canadian tax authorities and those in other countries.

The most obvious unintended result from a tax administrator's perspective is that of tax evasion or avoidance. Like their predecessors, tax treaties are also designed to encourage co-operation between tax authorities in Canada and in the treaty countries to prevent tax evasion or avoidance.

Treaties are an important tool in protecting Canada's tax base as they allow for consultations and the exchange of information between our revenue authorities and their counterparts in these eight countries.

Because of tax treaties, tax authorities are able to deal directly with each other to solve international transfer pricing issues, to reach satisfactory solutions to concerns raised by taxpayers, to complete audits and to engage in other discussions aimed at improving tax administration.

But there are benefits. Many positive benefits ensue for taxpayers and businesses alike from tax treaties. For example, taxpayers benefit from knowing that a treaty rate of tax cannot be increased without substantial advance notice.

Investors and traders benefit from the atmosphere of certainty and stability that the mere existence of tax treaties will foster.

Our tax system works more effectively with the introduction of mechanisms to settle disputes. Our expanded tax treaty network generates more international activity which impacts favourably on the economy. Of course, assurances against unrelieved double taxation are always applauded by taxpayers.

In concluding my remarks, Canada's network of tax treaties with other countries is one of the most extensive of any country in the world. Canada's exports now account for about 40% of our annual GDP. Further, our economic wealth also depends on direct foreign investment as well as inflows of information, capital and technology.

Clearly the impact of tax treaties on the Canadian economy is significant. Without these international agreements, double taxation can adversely affect economic relationships between countries, mainly because tax treaties are directly related to international trade in goods and services and therefore impact directly on our domestic economic performance.

Let me reiterate: The passage of tax treaties results in many meaningful benefits for taxpayers, benefits that include a more simplified tax treaty system, a more stable environment for investors and traders and most important, the elimination of double taxation that might otherwise result in harmful international transactions.

Given the success of the existing tax treaty system and its contribution to creating fairness and equity in the tax system, I feel that the premise of today's motion is not relevant and I am unable to support it.

[Eugène Bellemare, Liberal, Ottawa—Orléans, ON]

Mr. Speaker, I am pleased to have this opportunity to address the motion put forth by the hon. member for Port Moody—Coquitlam—Port Coquitlam.

While I appreciate his concern, and commend him for bringing this matter to the attention of the House, I am unable to support his motion.

Does the hon. member not realize that there are many demands today on the government's scarce resources, not just his? I would hope that he realizes this, because it is important for the government to remain firmly committed to sound financial management and fairness in the tax system.

The government intends to continue to follow a balanced approach to managing the wide range of priorities and pressures facing it, as exemplified by measures in the 2003 budget, which I will discuss in a moment

Since the beginning of our mandate back in 1993, two of the government's ongoing priority areas continue to be sound financial management and fairness in the tax system. Balancing these two equally demanding commitments has been a challenge for the government. It would appear that my hon. colleagues opposite have not been paying attention to any of the tax measures our government has consistently introduced since 1993.

The government is fully aware that better economic performance for Canada tomorrow requires a more productive, innovative and sustainable economy today. Our tax system plays an important role in creating a stronger, more productive economy

An efficient tax structure can enhance incentives to work, save and invest. It can also support entrepreneurship and the emergence and growth of small businesses. In addition, a competitive tax system is critical in encouraging investment in Canada, which leads to greater economic growth and job creation.

That is why the government launched a five-year $100 billion tax reduction plan—the largest in our history—which has strengthened the foundation for economic growth and job creation in this country, and helped low and middle income Canadians at the same time.

Need I remind hon. members that, in the course of preparing the 2003 budget, the Minister of Finance was advised by Canadians that his budget must be more than the tallying of accounts. The budget must reflect the sum of our values as well.

The budget the minister presented to this House in February meets this challenge in three arenas of national life:

First, it builds the society Canadians value by making investments in individual Canadians, their families and their communities.

Second, it builds the economy Canadians need by promoting productivity and innovation while staying fiscally prudent.

Third, it builds the accountability Canadians deserve by making government spending more transparent and accountable.

Just as important, the government is able to meet these challenges and pursue significant new investments, but without risking a return to deficits, because of our continuing commitment to sound financial management.

Exactly as I just explained, Mr. Speaker, we cannot support this motion because of the many demands on scarce government resources and because of our commitment to sound financial management.

Our commitment to fiscal responsibility is real and rigid—not just rhetoric—as demonstrated by the fact that we have already delivered five consecutive surpluses, a $47 billion reduction in the federal debt, the $100 billion tax reduction plan, and in our latest budget a $34 billion investment in health care for Canadians.

In Budget 2000, the government introduced its five year $100 billion tax reduction plan, the largest tax cut in history. The 2003 budget builds on the plan to further improve the tax system and enhance incentives to work, save and invest.

The plan continues to deliver growing tax relief—about $24 billion this year, and $30 billion in 2003.

Let me expand on this a bit. For example, 75% of the tax reduction plan was focused primarily on personal income tax deductions. Federal personal income tax reductions under this plan are 21% on average and 27% for families with children.

Key elements of this plan include: full indexation of the personal income tax system as of January 1, 2000; lowering personal income tax rates for all taxpayers; eliminating the deficit-reduction surtax; and substantially increasing tax support for students in post-secondary education.

We have also created a Canadian advantage in the area of business taxation. The government legislation a 7 point reduction in the general rate of corporate tax from 28% to 21%. For this year, the rate has already been reduced to 23% and will fall to 21% in 2004.

Honourable members will recall that we recently debated Bill C-28, the Budget Implementation Act, 2003, here in this chamber. That bill contains several measures that improve the tax system, many of which are directed at helping families with children.

There is no more important investment that we can make than in the opportunities we create for our children. Through this bill, the 2003 budget strengthens our long-standing commitment to Canadian children and families in several key areas.

First, annual assistance for children in low-income families is increased through the Canada child tax benefit to $10 billion by 2007—with annual benefits increasing to $3,243 for the first child, $3,016 for the second child and $3,020 for each additional child.

Second, in recognition of the fact that caring for children with severe disabilities imposes a heavy burden on families, a new indexed $1,600 child disability benefit, effective July 2003, will provide additional assistance of up to $1,600 annually to low and modest income families with a disabled child.

Third, $80 million per year is provided to enhance tax assistance for persons with disabilities, drawing on an evaluation of the existing disability tax credit and the input of a technical advisory committee.

The budget also adds to—and builds on—tax measures introduced in previous budgets to provide support to persons with disabilities.

More infirm children or grandchildren will now be able to receive a tax-deferred rollover of a deceased parent's or grandparent's RRSP or RRIF proceeds, and the list of expenses eligible for the medical expense tax credit is expanded to include, for example, certain expenses for the incremental cost of gluten-free food products for individuals with celiac disease.

Canada's high calibre workforce also deserves the support of a competitive tax system, a fact not overlooked by the tax reduction plan. The 2003 budget further improves the tax system through incentives to save and invest, to help small and medium sized enterprises and boost Canadian competitiveness.

For example, to promote savings by Canadians the budget increases registered retirement saving plan and registered pension plan limits to $18,000 over four years and indexes these new limits.

However, I urge my hon. colleagues to remember that any new tax measures must be done in concert with our commitment to sound financial management. We have to ask ourselves, what other commitment would we have to give up to pay for the proposal before us today? As the minister said in his budget speech, we will not go back into deficit.

I am unable to support this motion and I encourage other hon. members to follow suit.

Canada Elections Act

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

Mr. Speaker, I do not know who writes this stuff, but he or she would be fired right now if I were in the place of the hon. member.

The hon. member should know the legislative program of the government. We have dealt with everything from international agreements, aboriginal self-government in Bill C-7 and the budget implementation bill that transfers the funding to the provinces for the health accord to improve health in every way, and about which the hon. member has just talked.

What party voted against Bill C-28, the budget implementation and health transfers to the provinces to help in health? Hon. members across, who are asking me these preposterous questions, are the same people who voted against giving extra money to the provinces for health and all kinds of other things. They voted against the tax reduction measures and all those other things on which the government had been working so hard.

In terms of the Prime Minister's image, and I want to end on that note, the Prime Minister is at an historical high in his personal popularity. He has led Canadians in an absolutely magnificent way for all these years. In a year from now, or close to that, he will no longer be the Prime Minister, unfortunately in my view, but he will be remembered as being one of the great leaders the country has ever had.

National Children's Memorial Day

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Mr. Speaker, on February 20, I raised a question in question period expressing my concern with the federal government's unwillingness to respect provincial jurisdiction in its budget, which had been delivered a few days earlier. I noted that while there had been nationwide disappointment with the budget expressed by many provincial governments, opposition to the federal budget had been particularly clearly stated in the Quebec legislature.

The then minister of finance for Quebec, the leader of the ADQ and the finance critic for the Quebec Liberal Party, which was still at that point in opposition, all expressed their complete disapproval of the federal government's interference in provincial jurisdiction. At the time I wanted to know why the minister did not trust the provinces to administer programs for health, families, social housing and education.

The minister responsible for intergovernmental affairs gave a most unsatisfactory response to my question. I am here today to further question the federal government's infringement on the rights of the provinces to deliver social programs such as education.

Let me give a clear example of the kind of insensitivity to educational priorities that has been shown in this budget.

In Bill C-28, the budget implementation act, the federal government plans to retroactively amend the provisions of the Excise Tax Act relating to school bus transportation. This takes place after the federal government lost a test case in Quebec and was ordered by the courts to pay back GST paid by the schools for transportation. Astonishingly, the Liberal government's solution is not to simply pay the money that it owes to school boards, but instead the budget is pushing through a retroactive clause to justify a tax on local school funding that the courts have said is unlawful.

Technically speaking, the federal government may have a legal right to impose retroactive taxes on schools, but it goes without saying that there is no moral justification for this. Money that would have been used to educate our kids will now have to be diverted to the bottomless money pit known as the federal consolidated revenue fund.

This is not just a Quebec issue. In Eastern Ontario, the Upper Canada School Board will be particularly hard hit by this retroactive tax. This school board will be deprived of $2.59 million. That is $2.5 million that could have been used for school repairs, the hiring of more teachers, or for the replacement of infrastructure.

My fellow Ontario Alliance MP, the hon. member for Renfrew--Nipissing--Pembroke, has raised this issue in the House of Commons, poignantly stating the problem as well as the effects it will have on school districts in her riding. On May 12 she stated, and I quote:

The decision to grant only a partial GST exemption of 68% to school boards for the supply of transportation services has meant that school boards have had to pay millions of dollars in GST payments to the federal government instead of applying the funds to important educational requirements.

That applies to the Upper Canada School Board as well which is in my riding and it applies to school boards in many other parts of the country, particularly in Quebec where this test case took place.

Therefore I ask the parliamentary secretary this. How can she and her minister claim that the federal government is working, as he said in his response to my question in question period, cooperatively with provincial and local authorities when it refuses to even allow them to keep moneys that it owes to them under the law?

Budget Implementation Act, 2003

[The Speaker]

I declare the motion carried.

The House will therefore proceed to the vote on the third reading stage of Bill C-28.

[The Speaker]

The House will now proceed to the taking of the deferred recorded division on the previous question at the third reading stage of Bill C-28.

(The House divided on the motion, which was agreed to on the following division:)

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, it is a pleasure for me to speak on Bill C-28, the Budget Implementation Act, 2003.

For the benefit of those listening, when we talk about adopting a budget, clearly, we expect to have a budget that contains measures to resolve obvious problems.

I am going to talk about one of these problems. I do not think there is a single Quebecker or Canadian who is unaware of the serious problem facing the Canadian airline industry. We all know that this situation is the result of the horrific events of September 11, 2001.

These events were in no way the fault of the airline industry, the men and women who are the brains behind this industry. It was the terrorists, who chose to use an airplane as a missile, who inevitably shook the airline industry worldwide.

Canada has suffered and is still suffering. Then came SARS, severe acute respiratory syndrome, which has been another blow to the airline industry.

All the industry stakeholders, not simply those in the aeronautics or aviation industry, but the entire travel and leisure industry has told the government, “Look, you are preparing a budget. You chose, in budget 2002, not to help the airline industry”. That is what happened. Despite requests at the time by Air Canada, which had immediately asked for $2 billion in assistance, the government chose to ignore this request and even withdrew the loan guarantees it had intended to announce, since Canada 3000 had declared bankruptcy. So, the government chose not to provide any assistance.

The only assistance the federal government provided was compensation to pay insurance premiums. Naturally, after September 11, the insurance premiums of airlines, particularly liability premiums, have practically quadrupled.

So, the government, like other governments around the world, decided to provide assistance as far as insurance was concerned. That is the only international initiative that the Canadian government decided to copy. The United States implemented an airline assistance program. The only thing Canada chose to copy was to compensate airlines for insurance rate increases.

Of course, the government thought that things would get back to normal. For those who are listening to us, this also gives us the opportunity to make a short analysis of the issue of Air Canada, which was asking for a $2 billion assistance right from the beginning. The federal government decided not to help it.

What the government realized was that Air Canada could dig into some cash flow, that is that the company decided to do some accounting, to sell its aircraft and to rent them, which allowed it to get more than $2 billion in cash flow.

Of course, once again, I believe this was the beginning of the end for the company. From the beginning, it had well targeted its $2 billion needs, considering the events of September 11 and the problems that it knew the industry would face during the following months. So it decided to dig into its own accounts. It sold its aircraft and rented them, getting some cash flow from the sales. In this way, it was able to survive for more than a year on its reserves.

Except that the airline industry did not recover. In the budget of 2002, which was adopted in December 2001, as members will remember, the government decided to impose an air security tax to be able, once again, to gain some revenues.

It did not help the industry, or not much; $180 million was set aside to compensate for higher insurance premiums; in addition, the industry was penalized with a supplementary tax of $24, which brought in nearly $400 million to the government.

When it was all added up, with the security tax, Canada's airline industry was paying nearly $280 million more after the events of September 11 than it was before. This problem is not limited to Canada. It is the worst disaster in any industry of any sort, across Canada. The result of the 2002 budget was that the government's revenues increased by nearly $280 million, leaving out the compensation paid to the airlines for insurance premiums. Thus, we are increasing our revenues on the backs of the airline industry. That is Canada.

In 2003, the entire airline sector, all the workers in it, this concentration of brain power that works to design the airline industry, expected that the 2003 budget would correct this error. The industry expected that the airport security tax would be withdrawn. What happened was a decision to cut the tax by half and thus collect about $200 million. That will just about cover the government's spending of $180 million to compensate the airlines for increased insurance premiums.

Two years later, with the industry as unhealthy as ever and affected by other crises such as SARS, the government is still getting the same level of revenue from this industry as before the events of September 11, 2001. Now I know why we are getting close to using extraordinary measures. It is because of such measures that a company such as Air Canada has had to resort to bankruptcy protection. We can blame Air Canada for many things, for making bad decisions in 1997-98, but it is not the fault of Air Canada employees or those of any other airline that terrorists decided to use their aircraft as missiles on September 11.

This is what makes this budget difficult to swallow, and this is why the Bloc Quebecois will vote against it. Why? Because we had a real problem. It is one example, but there are others, and my colleagues told the House about some of the other problems with the 2003 budget.

There is a serious problem, which has been affecting the airline industry as well as the tourism and recreation industry because of the events of September 11, 2001, and also because of the severe acute respiratory syndrome, also known as atypical pneumonia.

The airline industry is going through a crisis because of all these events, and this budget will provide no help. As I was explaining earlier, in 2002, the industry was hit with a $220 million tax. This budget reduces the tax by 50% and brings the revenues from the airline industry back to where they were before September 11, 2001, and the industry is still going though a crisis.

Men and women with various skills who are internationally known for their qualities as workers in the airline industry have lost their jobs in the last few weeks or will lose them in the next few weeks. Why? Because the federal government has simply decided to keep its money and not to help the airline industry. This is probably one of the most serious problems in this budget, the fact that the government will keep collecting a security tax of $12 per passenger that is harmful to the industry.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am very happy this afternoon to have an opportunity to address at third reading stage Bill C-28, the budget implementation act.

I am particularly delighted to have an opportunity to follow my colleague from Winnipeg Centre in addressing Bill C-28. I do so for two reasons. One is that it allows me to pay tribute to the member for Winnipeg Centre for the Herculean, heartfelt effort he has put forward in standing together with first nations people to oppose the insulting, disrespectful, so-called first nations governance bill that is being rammed through by the government. It has several connections with the misplaced budget priorities we are here debating at this moment.

Second, I am very pleased to follow the member for Winnipeg Centre to simply echo my total support for the two issues he has yet again brought to the floor of the House of Commons. Let me just repeat them, because it bears repeating until the government finally addresses both of these anomalies, the first being the absolute obscenity of the lowest income seniors in this country finding themselves in the highest tax bracket, the 76% tax bracket, because of absurdities in the tax act. This is a form of tax unfairness that exceeds almost any other obscenity or absurdity that the government has sponsored in its 10 years in office. Surely it is time to remedy this obscenity.

Second, and equally absurd, is the reality that it continues to be available for corporations in some instances to write off as legitimate business expenses fines that have been imposed upon them for breaking the law. Whether it has to do with environmental issues, with environmental irresponsibility for which they have been convicted, or whether it has to do with labour practices that are completely unacceptable for which they are fined, such as violations of health and safety provisions, for example, or other forms of irresponsible, anti-social behaviour, it remains the law of the land, laws continuing to be supported by the government, that such offences can in some instances be written off by corporations.

Surely members of the Liberal government can understand the connection between the obscenity and the absurdity of those continuing practices of the federal Liberal government. The fact is that the member for Winnipeg Centre speaks from his heart about the high incidence of poverty in his riding and still in far too many communities throughout this country, because there is a connection. It is what budgets are about. We are here debating the budget implementation act.

What budgets are about are priorities. What budgets are about are what kinds of spending priorities a government adopts and what kinds of spending priorities the government ignores, priorities that ought to come to the fore. It cannot be an accident that we see juxtaposed here the kind of absurd tax unfairness and tax write-offs about which the member for Winnipeg Centre has spoken yet again. It is not just the continuing incidence of poverty in this country, but the growing gap. We have the growing gap between the rich and the poor in this country and the increasing squeeze on middle income Canadians.

I know that one of the things already addressed by my colleagues in the NDP caucus is the new provisions for the Canada social transfer. I do not want to use up my short amount of time to talk about the unhappy history of how we got to this point where now we have the government scrambling to try to repair the damage done when this government made a decision to effectively tear up or, perhaps a more appropriate image, smash the Canada assistance plan, toss the established program funding out the window and replace it with the Canada health and social transfer.

We know what has happened as a result of that. The increase in poverty, especially among the poorest Canadians, has been alarming, because the reality is that before the government tore up and threw away the Canada assistance plan, there was at least in place in the country a protection literally encoded in our laws which said that “as a citizen you will not go hungry and homeless”. That was the purpose of the Canada assistance plan.

Yes, the level of support under the Canada assistance plan often fell short of real needs, and yes, the adequacy of housing supplied often fell short, partly because the funds were inadequate from the federal government and also in many cases because the funds from provincial governments in the cost sharing of that were inadequate. But at least there was an assurance that people had a remedy in law if they were refused the basic subsistence requirements to put food on the table and to have a roof over their heads.

Has that been a priority of the government? No. We have seen the damage. Now the government brings in what is supposed to fix up the mess it created. The government has removed health so that we have a separate health transfer. That is some progress, because at least there was more accountability and it was clearer what dollars were going where for Canadians to see, to understand and to try to influence if they wanted to see change. But we still have in a kind of unaccountable lump together the remaining aspects of post-secondary education, income support and early childhood education and child care.

Again the government has not really learned its lessons and has not begun to address what is needed here. Let me say that I think this is an occasion on which we should be willing to recognize that one of the really important elements of the Romanow commission, the Commission on the Future of Health Care in Canada, was that there was a broad process of consultation around future health priorities. Although I think the government has fallen far short, and this is another criticism of the budget, of giving the resources recommended by the Romanow commission to repair the damage to our health care system and extend it as it needs to be extended to deal with unmet needs, at least there was a broad public consultation. There is no assurance whatsoever that the same kind of consultation is going to go on around the desperate problems created by the government's lumping together in an unaccountable way health, social welfare, post-secondary education and child care, and I think it is one of the flawed aspects of the legislation that it fails to do that.

Finally, I just want to say that it is very important for us to learn from our history. For that reason, I say and acknowledge that museums are important. It is also absolutely beyond the comprehension of most thinking Canadians how the government reached the decision to spend close to $100 million to create what I think we all fear is a history of political thought in the Liberal tradition in a political history museum here in Ottawa.

Instead of fictionalizing the flawed legacy of this Prime Minister's government, surely what it should be doing is fixing the misplaced priorities. That starts with adequate funding for existing museums struggling to keep the roofs from leaking and struggling to protect their exhibits, instead of creating what is surely going to become the ugliest part of the Prime Minister's legacy of all and will stand out there for all to see as a monument to the misplaced priorities of the Prime Minister's era in this political history museum, one hundred million dollars' worth.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I will take this opportunity to say a few words about Bill C-28, the budget implementation act.

I do not know if it is common knowledge but my riding of Winnipeg Centre is the third poorest riding in the country by whatever economic measurement we use, either by the incidence of poverty per the percentage of people living in poverty or by the average family income. By either of those measurements I am not proud to say that my riding of Winnipeg Centre, the core area of the inner city of Winnipeg, ranks third in the country. In fact, 47% of all the families in my riding live below the poverty line and 52% of all the children in the core area of Winnipeg live below the poverty line. It is even more severe in using that family income measurement.

I do not say this to complain or file a grievance of any sort but only to emphasize that we watch the introduction of new budgets with great interest. When so many of the people in my riding are marginalized or live close to the margin, government spending becomes key and paramount in their quality of life issues.

We looked forward to a return to social spending within the last budget with some optimism. As my colleague from Winnipeg North Centre, the riding next to mine, pointed out very capably and passionately, the budget was a great disappointment in many respects if we were looking for a return to social spending, but I am not going to dwell on that.

With the limited amount of time I have, I would like to point out two anomalies in the income tax system that could have been addressed and should have been addressed in the budget. Both are outrageous and both are unfair, especially to lower income, marginalized people such as those living in poverty in my riding.

First, surely Parliament never intended that breaking the law should be tax deductible when the Income Tax Act was crafted. Because of a 1999 Supreme Court ruling, businesses incredibly can deduct fines, penalties or levies from their taxes as a business expense provided the penalty was incurred in the course of earning income. Most Canadians would find that absurd. I find it outrageous. It is not only bad public policy to reward bad behaviour but it undermines the deterrent value of a fine, surely, if the guilty parties can have their fines automatically reduced by writing them off on their income taxes. It is crazy.

I have been badgering the government for years to plug that outrageous tax loophole. The whole issue could be resolved with a simple amendment to the Income Tax Act to make it clear that any fine or levy imposed by law on a taxpayer is not to be considered a tax deductible expense.

That is what the United States did 35 years ago and we have failed to do it. As a result, it is open season for anyone who incurs a fine, and that fine can be quite broad. In fact, chartered accountants across the country are advertising this on their web pages. Fully 36 chartered accountant firms we have found are advertising this on their websites. “Penalties, fines, we can help”, it says, “it should be noted that the Supreme Court is very clear that this case is not limited to the situation that it originally ruled on”. They say that other penalties incurred for the purpose of earning income, including GST penalties, provincial sales tax penalties, parking fines and it goes beyond that to workplace safety and health violations, environmental pollution, environmental degradation fines are tax deductible. They should not be.

I asked the revenue minister to address this issue back in 2002 as soon as I learned about it. It was actually the attorney general of Manitoba who wrote me and said “Can this be true? Can this be for real? Are you telling me that fines are tax deductible?”

I could not believe it, so I investigated it and sure enough, it was true. I asked a question of the revenue minister back in 2002. I cannot find the question now but I said that I could not deduct my parking tickets, so why could a business deduct its fines? At the time the revenue minister, to her credit, agreed and was reasonable about it. She virtually agreed with me that this had to be looked into because it did not sound right.

Six months passed and the government did nothing about it, so I asked her again. This time she hedged the question and said that it was really a matter for the Minister of Finance. I asked the Minister of Finance when he was going to correct this outrageous tax loophole. He said that we would be pleased with this year's budget, that the answer to my question would be found in this year's budget. Well, it was not there. The government decided not to plug that outrageous tax loophole.

Here is an example. Last November the courts penalized Canada Steamship Lines with the largest fine ever issued for ship source pollution, but the deterrence value of this fine clearly is undermined because our income tax laws allow CSL to write off the penalty as a business expense. We do not know if it will because that is private tax information and we do not have access to that information, but it could and many others do.

I can see why the former finance minister was loath to plug this outrageous tax loophole, but what about the current finance minister? What excuse does he have to not plug this outrageous loophole? That offends me and I raise it now and serve notice to members on the government side that I am not going to let this issue die.

I tried to introduce a private member's bill to this effect. The House leader blocked it, saying that to deny this tax loophole to criminal behaviour was tantamount to raising taxes and therefore it was a money matter, and therefore a ways and means motion was needed to precede the private member's bill. What an absurd argument, but it was upheld by the Speaker, I regret to say. That is the first issue that should have been addressed in the budget.

The second thing, with the little time I have left, is that many people would be surprised to learn that the highest taxed Canadians are not millionaires, nor are they people who make over $100,000 a year. People who make over $100,000 a year are in the highest category at 46%. We should know that, as that is the bracket in which MPs find themselves. The highest taxed Canadians are actually low income seniors whose earnings are so low that they qualify for the guaranteed income supplement.

Here is what happens to low income seniors. Anything they earn above the basic deduction is taxed at 26%, but dollar for dollar they lose their guaranteed income supplement at a rate of 50%. We are talking low, low income here. If seniors are lucky enough to enjoy some dividends from small investments they may have made during their lives which supplement their retirement incomes, but they are receiving some guaranteed income supplement, they are losing that at 50%, plus they are being taxed at 26%, for a total of a 76% tax bracket.

Low income seniors are in the highest tax bracket in the country and that is wrong. They are arguably the poorest people in society. Anybody who is poor enough to qualify for the guaranteed income supplement is very poor. However, because of an anomaly in the Income Tax Act, they are paying taxes at 76% on any dollars they make above the basic tax exemption. That is absurd. That is as outrageous as the tax write-off for business corporate fines.

Both of those things could have been and should have been addressed in the budget. We made the government aware of both of those issues and it consciously chose not to address them.

[Roger Gaudet, Bloc, Berthier—Montcalm, QC]

My colleague tells me it has been done. If anyone does not have a copy, I am prepared to provide one.

The bar associations of Quebec and Canada have spoken out against the federal government in connection with this bill. On April 30, 2003, the Trois-Rivières newspaper Le Nouvelliste ran an article reporting that “The Quebec and Canadian bar associations are opposed to a legislative amendment relating to the reimbursement of the GST for transportation services provided by Quebec and Ontario school boards”.

It went on to say:

The Barreau du Québec, and the Canadian Bar Association, have come out very strongly against Ottawa's intention to thumb its nose at a court decision and to legislate retroactively, somethingthey describe as a “dangerous attitude liable to undermine public confidence in the courts”.

The two associations have written the Minister of Finance... and the Minister of Justice to express their opposition to a legislative change outlined in the February budget.

This letter was sent on April 30, 2003. It goes on:

This measure, which involved the reimbursement of GST for transportation services provided by Quebec and Ontario school boards would have the effect of retroactively invalidating court decisions in favour of the school boards, not to mention reneging on certain previous commitments by the federal government.

With this attitude, the federal government “Is showing no respect whatsoever for these judgments and these commitments, which from our point of view represents a serious attack on the principle of the authority of a final judgment, and is contrary to the proper administration of justice. This is what the President of the Quebec bar association, Claude G. Leduc, wrote to the two ministers. Legislating in this way discredits the judiciary process and is liable to undermine the taxpayers' confidence in the courts”.

His Canadian Bar Association counterpart, Simon Potter, was equally critical. “We are convinced that the policy behind any retroactivity is totally unfounded and dangerous as well”, he wrote.

In October 2001, 29 Quebec school boards won their case in Federal Court, when it recognized that school transportation was a commercial activity and thus entitled them to full reimbursement of the GST paid. By virtue of the court decision, Ottawa was to reimburse GST overpayments totalling some $8 million.

After numerous technical wranglings, the case ended up before the Tax Court of Canada this past January. Here the federal government accepted a ruling that it would comply with the judgment at first instance, provided the school boards withdrew their appeal to the Federal Appeal Court. The federal government consented to apply the judgment to the Ontario school boards, whose case was still pending.

The budget presented a few weeks later totally altered this promise by the federal government . The amendment is currently being considered in committee, and school board representatives will present their points of view before the committee.

According to... the Bloc Quebecois MP, the government is going too far with this. We are entitled to expect the government to amend its legislation to reflect court judgments, in order to remedy shortcomings for the future. The retroactivity proposed by the federal government is problematic. “This may represent an extremely negative precedent... It will greatly weaken one of the pillars of democracy, which is the authority of a final judgment”, according to the Bloc Quebecois finance critic.

I wish to inform the House that I will be voting against the budget because of this clause concerning the school boards, clause 64 of Bill C-28.

[Roger Gaudet, Bloc, Berthier—Montcalm, QC]

Mr. Speaker, I would like to come back to the amendment of clause 64 of Bill C-28. When the budget was brought down on February 18, the Minister of Finance proposed a retroactive amendment that goes farther than the December 21, 2001, proposal, in that it circumvents the judgments obtained in their favour by school boards in Quebec and Ontario.

In order to start at the beginning of this, I have a letter from Stikeman Elliott dated January 15, 2002, addressed to the hon. member for LaSalle—Émard, former minister of finance, which reads as follows:

Proposed amendment to the GST/HST affecting school boards.

Mr. Minister:

This letter is in reference to the news release issued by your department on the evening of December 21, 2002, regarding the aforementioned subject.

We represent Consultaxe Planification (1996) Ltée, a firm of tax consultants from Montreal, and through them, 111 of the 415 school boards in the provinces of Quebec, Ontario, British Columbia, Alberta, Saskatchewan, Manitoba and Nova Scotia.

We have been instructed to inform you and your colleagues that our clients are completely opposed to the proposal contained in your release. Furthermore, they intend to rigorously defend their interests and their rights on this matter, as they feel they have suffered a serious injustice.

On October 17, the Federal Court of Appeal ruled unanimously in favour of the appellant school boards, the Commission scolaire des Chênes being the test case. The court ruled that studenttransportation is a commercial activity that is eligible for 100% input tax credits, under provisions of the Excise Tax Act (GST/HST) affecting school boards and their provision of student transportationservices.

The appellants were 29 Quebec school boards, whose cases were the first to be appealed.

The first cases started being heard in 1996 and over the years, these same school boards or the corporate entities that have replaced them as a result of the numerous mergers that occurred in 1998, submitted new claims. Also party to these claims were many school boards in Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and Nova Scotia. Most of these claims, at the time of the ruling, were pending before the courts while awaiting the judgment in the test case mentioned above.

At the time of the judgment, the amount of GST in question represented approximately $70,500,000.

On December 21, 2001, the Department of Finance proposed amending the act so that school boards could only claim a partial GST/HST rebate. This amendment,if adopted as proposed, will be made retroactive to January 1, 1991, the date the GST was introduced. The proposal mentions that “the proposed amendment will not affect any case that has already been decided by the Federal Court”.

This means that the initial claims of the 29 school boards in Quebec will be reimbursed because they were the first case to be heard by the Federal Court, but their subsequent claims, as well as those of other school boards whose appeal cases were before the Tax Court of Canada pending the aforementioned ruling, will not be reimbursed.

Amending the Excise Tax Act is one thing. However, our clients feel that amending it retroactively to eleven years prior to the date of the ruling, and affecting cases that are pending before the courts is an abuse of the law and power and constitutes flagrant discrimination against the school boards that have cases pending.

Given your considerable political experience, you can easily imagine the reactions from school boards that have been treated this way. These institutions with cases under appeal feel that they have been prejudiced and deprived of a fundamental right, that of having the government respect a ruling by a federal high court of justice. Your department will no doubt respond by saying that it is respecting the judgment because it did not set aside the ruling involving 29 Quebec school boards, insofar as concerns their initial claims. However, this disregards all of the other cases under appeal, which are based on the same fundamental point of law. In order to avoid incurring needless costs for all of the parties involved, including the federal government obviously, it was decided to suspend proceedings for these cases and proceed first with only the 29 school boards mentioned above. Once a final ruling was handed down by the courts, all of the other cases could have been resolved accordingly. However, the legislative amendment proposed by your department would have the effect of retroactively reversing this arrangement. Needless to say our clients feel that the Department of Finance is playing the role of the better who says: “Heads, I win; tails, you lose”.

Therefore, we urge you, Mr. Minister, to reconsider this proposed amendment in order to make it fair for all school boards in Canada who were involved in these claims. This amendment could be made retroactive only to the date of the judgment for all school boards in Canada with cases pending before the courts at that time.

Respectfully,

The Honourable Marc Lalonde

c.c.: Members of the federal cabinet

I do not know if all of the government members received a copy of this letter, but I am prepared to give them one.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I am pleased to have another opportunity to speak as loudly and as clearly as possible against Bill C-28, the budget implementation act.

Let me begin by saying it has been about three months since the government brought down its budget. The initial flash of the cash has had some time to wear off and Canadians have had time to take a closer look at the significance of the budget in meeting the pressing needs of Canadians.

The closer scrutiny has not favoured the government. As the hoopla dies down, more and more Canadians have come to the same conclusion the New Democrats have, and that is the government has failed to invest adequately in Canadians and has failed to invest in building the society that we want and need for the future of this country and of our children.

The inadequacy of the budget becomes very clear when we compare what the government has budgeted with what Canadians actually need. When we look at what the government has done with the fraction of the surplus it has left, after its ongoing tax cuts and the billions it continues to spend on paying down the debt, we realize just what a low priority the social needs of Canadians are for the government.

The government could learn from the Alternative Federal Budget process. The AFB builds its budget from the ground up, developing a coherent fiscal strategy toward achieving the social goals of Canadians, and it does it all within a balanced budgetary framework. It does not fudge surplus estimates to accomplish hidden agendas. In fact it has been far more accurate than the government in estimating realistic economic performance and surpluses over the years.

In looking at the budget, every sector of our society has come to its own conclusions. Let me just take a look at the issues pertaining to the status of women as one example.

Shocking to us all, Canada has been recently criticized by the United Nations for not living up to the Convention on the Elimination of All Forms of Discrimination against Women. What a scathing commentary on a country so wealthy and prosperous as Canada.

The UN has issued a report suggesting Canada has failed to move forward on a long list of measures to improve gender equality. One of the chief areas of concern was the disproportionate impact on women caused by the government's earlier cuts to social programs, cuts that happened under this government 10 years ago, under the member for LaSalle—Émard, and continued on by other members, including the present leadership candidates who are in the race today. The UN report calls on Canada to re-establish national standards in social programming.

The real test of Liberal commitment on this issue is not what the leadership candidates are saying but whether it is in this budget. Does the budget do this? Is the government's $25 million baby step toward a national child care program a sufficient response?

There are 4.9 million children in Canada under the age of 13. Three thousand child care spaces divided across the entire country will obviously leave hundreds of thousands of women without the support they need to work out of the home. Child care advocates have told the government time and again that even to begin building a national child care program about $10 billion will be needed during the first four years; $1 billion in this year alone.

This budget does not cut it. It does not advance the status of women and take us closer on the path toward true equality between the sexes.

The United Nations also has called for improvements to employment and employment insurance to make it easier for women to enter the workforce and stay there at better paying jobs.

What do we have? We have a government that makes it harder to benefit and keeps inflated premiums to the tune of $43 billion in a surplus. Did the government introduce changes to the EI system to help low wage part time working women access that huge surplus by expanding those covered or by bringing in programs to improve their skills and marketability? No. Not only has it not taken those initiatives, but it is still, as we speak, using public money to finance court battles to keep working women, like Kelly Lesiuk in Winnipeg, from getting the EI support they deserve. I am sure that impresses the world community.

The recent census information released earlier this month by Statistics Canada confirms absolutely that we have to do more. After a decade predominant with the Liberal government at the controls, single parent families, headed mostly by women, continue to lag more than 50% behind the national income average.

Violence against women is a very important area if we are to really deal with the status of women agenda and pursue women's equality. It is an area with a devastating impact on the lives of Canadian women and another area where the United Nations has called for action. Yet despite its acknowledgement of the ongoing violence against women, and tragically evidenced again last week in Mission, B.C., it is not a priority in this budget. For example, more second stage housing is urgently needed to help women re-establish themselves after escaping intolerable, violent or abusive situations. Apparently it is not a priority for the government.

There are so many other areas to address in this budget. I know my colleague, the member for Winnipeg Centre who has led a heroic battle at committee dealing with Bill C-7's aboriginal self government legislation, will have lots to say about how the government and how the budget fails first nations communities, how it has failed to address third world conditions on reserves and how the money in this budget is a drop in the bucket when it comes to that shameful aspect of Canadian history and society.

There is a gap in this budget when it comes to the rich and the poor, when it comes to first nations communities and other Canadians and when it comes to men and women. There is a gap when it comes to a government providing adequate housing, health care, education and child care. There is a clear gap especially in the area of health care, an area that has been an issue before the House time and time again. One would have thought that this budget would have closed the gap, would have avoided what we now know to be the Romanow gap, a shortfall of some $5 billion in terms of meeting the basic requirements of sustaining a health care system for the future.

We had thought we would get some clearer answers about what the share of the federal government is with respect to transfer payments to provinces for health care. We had thought, in the final stages of the budget process, we would get some answers but still we cannot get a straight answer out of the government on health funding; old money, new money, cash and tax points. This is exactly the situation that the Romanow Commission foresaw and tried to avoid.

We have a lot more to say about this budget and why we oppose it. Health care is one of those critical areas where the budget falls far short of what is required. The government's patchwork approach, whether in health, housing, community infrastructure, the environment, may serve the Liberals' short term political interests but it is ineffectual in providing the social investments Canadians need so critically.

Throughout our examination of Bill C-28, New Democrats have presented constructive alternatives and tried to focus the government on investing in Canadians. We have failed to this point. The government has turned away from us, from Canadians needing housing, women needing better employment support and an end to violence, children still mired in poverty, first nations living in third world conditions, those trying to ensure our very survival on this planet, and the list goes on. It leaves us no alternative but to vote against this budget and this bill.

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Mr. Speaker, this is the second time I have spoken on Bill C-28. In my previous remarks, I objected vigorously to clause 64 of the bill before us.

Even though my hon. friend from Trois-Rivières has stolen some of my thunder, I want to give the history of this from A to Z.

Clause 64 is going to punish your grandchildren and mine, and all students in Canada. The problem is that money is being taken from the pockets of the 415 school boards in Canada, including 72 in Quebec, and a serious shortfall is being created.

I will go on with my historical analysis. This shortfall will result in fewer services or higher school taxes in order to provide the same service to our students who use school buses. The majority of these are elementary students, not high school or university students. I think of my granddaughter and this situation upsets me.

I will remind the House of the problem of input tax credits as they apply to school transportation. In 1991, when the GST was introduced, the federal government, through the Minister of Finance, gave a 100% tax credit on school transportation. In 1996, a unilateral change was made by the Minister of Finance at the time—now the front runner in the Liberal Party's leadership race.

I will just explain how we use the word front runner in Quebec. It means the horse that leads the race, that is running at the front of the pack, the one that has a good chance of winning. That is the member for LaSalle—Émard. The runner-up, of course, is the one in second position. In this case, it is the current Minister of Finance. In his budget and in Bill C-28, he has clung to an invention of the Liberal Party's current front runner.

So, as I was saying, in 1996, the front runner in the leadership race reduced the input tax credits from 100% to 68%. Naturally, there was an outcry from the school boards. They stood up and fought the current front runner in the Liberal Party's leadership race. Nothing changed. The former finance minister was deaf, possibly blind, and possibly mute, but he never gave an answer. Nothing changed.

Finally, a school board in Quebec—the Commission scolaire des Chênes—filed suit and took the Minister of Finance to court. On September 12, 2001, at hearings in Montreal, Justices Alice Desjardins, Robert Décary and Marc Noël, heard the case with lawyers representing the school boards and Her Majesty the Queen.

On October 17, 2002, the three Federal Court of Appeal judges ruled unanimously in favour of the Commission scolaire des Chênes. What an insult to our front-runner. How did our-front runner resolve the problem?

He issued a press release dated December 31, 2001 which said, “No problem. What we will do is change the legislation retroactively to 1991 to get around or tie the hands of the three Appeal Court justices who handed down this judgment”.

We are talking about a judgment. This is truly an exceptional move. This is the first time in history that legislation has been passed in order to circumvent a judgment. This leaves the door open for any minister who has been taken to court and lost to decide simply to change legislation. This is precedent setting.

Perhaps unwittingly or without realizing it, the runner-up, the current Minister of Finance, just included clause 64 in Bill C-28. The last time I spoke on clause 64, I had a discussion with my Liberal colleague from Laval East—a nice lady with an open mind—who told me she was not aware this was going on. I said I had a huge file which I could show her, because as the revenue critic, I had the opportunity to meet people involved in this issue. She said, “I did not know; this is terrible. We are penalizing our children”. She was horrified, adding, “I will take this up with the caucus”. What happened? When the time came to vote on the bill following the clause by clause study, she stood up and voted against the motion by the hon. member for Drummond to delete clause 64.

This is an insult to all parents. I am begging you, Mr. Speaker, today. This concerns the school boards in the Cornwall region. They are experiencing a shortfall. I urge the hon. members across the way, members from every part of Canada, to push for this clause 64 to be deleted because it is penalizing their school boards and their children or, if they have grey hair like mine, their grandchildren. This is an important issue.

Now people are going to say, “There goes the evil separatist. This nasty Bloc member, this damn sovereignist is getting all worked up”. The fact is that I am not alone. I have here a three-page letter from former finance minister Marc Lalonde. I think that you know him, Mr. Speaker. He is one of your friends who used to be a minister—

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

Mr. Speaker, I am pleased to rise and debate Bill C-28, a bill to implement the 2003 budget.

First, I would like to congratulate my colleague, the member for Drummond, for having brought to the attention of the House section 64 of this bill, which deals with the government's attempt to recover GST rebates that Canadian school boards received.

We know that the GST is considered an input. This involves the whole system of GST inputs and outputs that the Liberals wanted to scrap a few years back, in 1992-93. Yet, today, they are such staunch defenders of it that they are prepared to violate the ruling handed down by a court. I say this because the court handed down a unanimous ruling saying that the school boards' position was perfectly right.

This involves public money at two levels, at the federal level and at the school board level. The provincial governments have not sat idly by, particularly given the amount of money involved--$70 million at the time the judgments were handed down. Their concerns are outlined in a letter written by the counsel for the school boards, who—by coincidence or very clever strategy by the school boards—hired the eminent legal expert, Marc Lalonde, a former minister of finance himself and colleague of the minister of finance at the time, the member for LaSalle—Émard, equally eminent, you will all agree. In his conclusion, the Hon. Marc Lalonde, counsel in this case, said on behalf of his clients, the school boards, and I quote:

Needless to say our clients feel as though the Minister of Finance is playing the role of the better who says, “Heads I win; tails, you lose”.

As I was saying, the court of appeal ruled in favour of the school boards unanimously on this matter. The government, in response, decided to pass legislation that would exempt it retroactively, in what can only be described as a flagrant abuse of power. Therefore, the legislation is retroactive, which exempts the government from any rulings against it in this matter. We cannot accept this type of retroactive legislation. This type of response must never be accepted.

This may illustrate the culture of this government, of the past Minister of Finance or the present one. Imagine what a fine choice there is: the old and the new finance ministers both prime ministerial hopefuls. Canadians, and proud of it, that's for sure. There is lots to be proud of when we see these two competing for a new job, given their recent past performances.

I would like to congratulate my colleague for having raised the consciousness of this House on this. I would also point out that, once again, we have total silence from the other side, from the Liberals from Quebec. They are keeping mum when there is anything to do with public funds, as I have said, not just at the federal level here but also in Quebec and at the level of the school boards. Once again, these members are not saying a word, rather than backing the cause that has been presented by my colleague for Drummond.

There is one other point I would like to draw to your attention concerning three flaws in this budget. The first of these is the total absence of any reference to the restoration of the older worker adjustment program or an equivalent. This is a program that was around in the 1980s and 1990s and one I had the pleasure of administering when a Quebec public servant, with the help of my federal colleagues.

This program started off as the workers assistance program and evolved into POWA, the older worker adjustment program. For the most part, it applied to major plant closings—a heavy blow to any community—and was for workers aged 45 and over who found themselves facing a somewhat closed labour market and saw themselves doomed to welfare, given their level of education.

So this was in addition to unemployment insurance and a highly intelligent and well-targeted measure that met an obvious social and economic need. It was well thought out and yet it was made to disappear arbitrarily, more or less. Now there is a refusal to resuscitate it, despite the sad situations I have seen in my riding, with the closures of Tripap and Fruit of the Loom, for instance.

Six hundred women have been forced onto unemployment and will soon be on social assistance. Representations were made, by us and by many of our colleagues in this place and probably others across Canada as well, to get the government to make amends by establishing such a program. It keeps turning a deaf ear, and this budget is no exception. I want to once again condemn this kind of mismanagement.

Second, as mentioned earlier, is an issue raised by my hon. colleague from Champlain which concerns tens of thousands of Quebeckers who are vulnerable or old: the guaranteed income supplement. This guaranteed income supplement augments the old age pension for a number of Canadians and Quebeckers who are unfortunately having a tougher time of it than others.

There is a supplement but because it is so very generous, as we know, the federal government is making sure that thousands of individuals who have neither the physical nor the intellectual capacity to demand this supplement never get it, because it is not sent out automatically. There is so much involved in applying that those who need it are deprived of the supplement. They are badly in need of it, but they cannot fill out the forms. That is what is likely to happen, if I understand correctly the problem very aptly described by the hon. member for Champlain, whom I want to congratulate once again.

So this government which is raking in billions of dollars—this will never be overemphasized—has no solution to offer, no sympathy, no empathy.

Perhaps because of my interest in and concern for foreign affairs, I would like to raise a third point: international aid. In spite of all these billions it has at its disposal, Canada will not go along with what the United Nations Organization is proposing. A member as prosperous and developed as Canada should allocate 0.7% of its budget to international aid, as do the Scandinavian countries. Instead of 0.7%, it is a mere 0.3%.

So, it is slightly disgraceful that a country that benefits from the international community's largesse, that is rich in natural resources, that has been developed, like others, at the expense of underdeveloped countries—there is no denying it—refuses to be more generous. It is a complete disgrace. I am certain, and I dare hope, that a sovereign Quebec would be much more sensitive to such concerns, as are the Scandinavian countries that have been such models for Canada. So, it is somewhat disgraceful to see the Canadian government behaving this way with regard to international aid.

I would like to give a quick overview, because ten minutes is not a long time. What is working in this country? I want to look quickly at this. Are things going well with regard to the fisheries? Air travel? Aboriginal affairs? Agriculture, shipbuilding, health? Is the federal government part of the problem or part of the solution in health? I think it is more part of the problem. Are things going well with regard to helicopters? Employment insurance?

In ridings such as mine, 85% of those who lost their job were entitled to employment insurance; under the party opposite, only 40%, if not 38%, qualify and the government refuses to relax the rules. It continues to enforce strict rules, despite statements such as those our hon. colleague from Toronto—Danforth made earlier, about the hotel industry being devastated by fallout from SARS. We are seeing the same rigidity with regard to softwood lumber. There is a lot of boasting going on, but what is going well in this country?

If we take off our rose-coloured glasses, things are not going so well. In my opinion, the government's sole aim is to have a hand in everything in order to create a centralized, unified country at the provinces' expense. It is perhaps not so terrible that it is being done on at the provinces' expense, but it is at Quebec's expense, because there is an attempt to minimize the Quebec nation. We will continue to speak out, as long as we are here.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, it is my pleasure to speak on Bill C-28 today, the implementation of the budget. It gives me an opportunity to speak once again on some of the issues I have heard about from hundreds of constituents, which we in this House all know translates into thousands of Canadians.

I would like to speak on a couple of issues. One of them is the impact the budget has on persons with disabilities. There is also the impact it has on people who work on and enjoy heritage, culture and creativity in this country. Finally, I would like to speak about the impact of the budget on the needs of native children and on children in general.

I will start by saying that I have spoken out many times in the House about the disability tax credit and the fact that it does not meet the needs of Canadians. I am afraid that continues to fall on the deaf ears of the government.

On May 12, I moved an amendment to the draconian changes to the disability tax credit. I moved to have those amendments withdrawn from the budget, but that was to no avail. These changes go completely against the will of the House of Commons as expressed on November 19, 2002, when we all voted together as a House on a motion put forward by the New Democrats, which was:

That this House call upon the government to develop a comprehensive program to level the playing field for Canadians with disabilities, by acting on the unanimous recommendations of the committee report “Getting It Right for Canadians: the Disability Tax Credit”, in particular the recommendations calling for changes to the eligibility requirements of the Disability Tax Credit so that they will incorporate in a more humane and compassionate manner the real life circumstances of persons with disabilities, and withdraw the proposed changes to the Disability Tax Credit, released on August 30th, 2002.

At that time the Minister of Finance reluctantly withdrew the changes, only to reintroduce similar ones in the bill. That was a very major disappointment to people in the disability community and to the House. We feel that it was a contemptible act on his part. This credit is already so restrictive that officials from the department have admitted at committee that Terry Fox, if he were alive today, would not be considered as having a disability under the draconian interpretation of this law.

This is not a bill that has persons with disabilities in mind. I would like to review some of the changes within the budget that impact on persons with disabilities. First, the employment assistance for persons with disabilities program was renewed, but only with a $13 million increase over five years, which is less than the rate of inflation.

The disability tax credit, which amounts to about $400 million annually and goes to 450 million Canadians, provides a reduction of about $1,000 per recipient. The budget adds another $25 million this year and $80 million more per year starting in 2004-05, so what is wrong with this picture? The tax credit is still not refundable, so Canadians with severe and prolonged disabilities with no or low incomes still get nothing out of this credit. The proposed changes in the amount of the tax credit are insignificant, other than the normal increase due to indexation. The proposed changes to eligibility are designed to restrict eligibility: to reverse court decisions that said the eligibility was too restrictive.

The pilot project to recognize episodic and mental health disabilities through a consultation group is a welcome first step, but these types of disabilities need to be incorporated into the mainstream programs under the DTC and CPP and probably will need more than $25 million.

The child disability benefit, which will provide $1,600 more per year for disabled children in families that are eligible for the national child benefit supplement, is a good measure, but only families earning less than $33,000 will get the full credit.

I would like to move on now to the area of culture. The budget shows, in my estimation, very little concern for preserving and promoting Canadian arts and heritage. There is not a penny for the CBC and there is minimal cultural investment elsewhere. Specifically, there were increases of $150 million over two years to the Canadian television fund to increase Canadian programming, $20 million over two years for historic places, and $17 million over two years for Katimavik.

For cultural and heritage programs, the government added $187 million over two years, $150 million to the Canadian TV fund over two years, and $20 million for historic places, as I have said. However, by not renewing the $60 million to the CBC there will be cuts to real annual programming of $29 million for English TV, $18 million for French TV, $5 million each to English and French radio, and $3 million for new media.

Critical to cultural survival in this country is the future of Canadian television drama. This budget cuts the Canadian television fund by $25 million for what appear to be unknown reasons. As time goes by and more and more people come to the House and talk about the crisis in Canadian drama, it is an absolute mystery why the finance minister will not put that critically needed money back into the system, where it would then go toward triggering other moneys.

As many people have pointed out, the changes that were made in the budget for the film and TV industry in fact take money from Canadians and give money to Americans. In fact, there is a tax break for foreigners producing in Canada and a cut for Canadians who are trying to make their own culture here. As a result of the reduction in CTF funds, many Canadian made shows may have to be cut and others are in peril. Canadian TV dramas have gone from twelve to four currently in production.

As well, thousands of jobs are at stake. An actor who was here recently pointed out that the $25 million means much more than its face value because the money is then matched by private donors. If our government is unwilling to support Canadian TV content, why would private donors be willing?

Nor is Canada unique in providing government funding for television production, because most countries around the world also provide support. I know that some people see television production as an extra or a luxury when money is needed for so many other things. However, without Canadian made drama we would be left living our experience through American made dramas and would have a completely distorted sense of reality.

Trina McQueen's report to the CRTC about the dire straits of Canadian drama quotes Canadian producer David Barlow, who said:

If a society consistently chooses the dramatic fantasies of another culture, they come to believe that their own reality is not a valid place on which to build their dreams. Their reality simply isn't good enough for dreaming.

In 2003, that is a sad and tragic state for us to find ourselves in.

As a playwright I know first-hand how difficult it is for our Canadian artists and creators to earn a living. It is amazing that they continue to persevere as they do. We are all richer for it, yet there is nothing in the budget that really acknowledges the sacrifices that artists make, particularly as their average income is about $13,000 a year.

This budget does not recognize the needs of income averaging for artists. The budget does not in any way reflect the needs of artists to be eligible for employment insurance. Another way to acknowledge the contribution of our artists is through income tax breaks on the moneys earned by artists through their creative works. This is what my current private member's motion proposes. I know there are government moneys available through agencies such as the Canada Council for the Arts, but the council, for example, accepts only about 25% of the applications, and artists can apply only twice over four years.

I know that some have argued against treating artists as a special interest group in the tax system, but the reality is that our tax system has had many special interests, including students, persons with disabilities and persons contributing to their RRSPs. Why not spend additional credit on our artists in acknowledging their contributions?

Money for culture seems to suddenly appear when the Prime Minister's legacy is at stake, such as the $100 million for the political history museum in Ottawa. One wonders how much of that will be devoted to the Prime Minister's wing. While money definitely should be allocated to Canadian museums, I am wary of opening up yet another museum in Ottawa when so many regional museums need funding and this is not allocated in the budget.

I recently spoke to people at the Dartmouth Heritage Museum about their situation. As other museums across the country are saying, they need money to keep the lights on. They need money to hire curators and to collect artifacts. The regional museums across the country, of which there are over 2,500, need money to provide clean, dry storage for their artifacts. They need money for promotion. They need money to make sure they can collect the pieces of heritage from their regions and put them in a form that local residents will be able to see, value and understand as being part of a larger patchwork of heritage across the country.

As I said, there are over 2,500 non-profit museums and related institutions across Canada, which attract more than 50 million visits each year. With few exceptions they have been languishing under severe funding cutbacks for many years and are not funded adequately. Many buildings are crumbling and roofs are leaking. Collections of great local and national significance are threatened. Our collective memory is fading.

I would like to say that this budget has been a major disappointment in terms of heritage. The Canadian Museums Association and the New Democrats are saying that what we need is a comprehensive museum strategy instead of haphazard announcements that are more political than anything. We need to make available more funding for existing museums, particularly outside the national capital region.

To go back to the whole issue of the importance of museums, it is important to realize that more Canadians--and this is a very interesting statistic--go to museums than they do to sporting events. Local museums are like canaries in the mines: if the museum is in dire straits, it likely means that the town is in dire straits and that in fact there is trouble in many other sectors of the community already.

There have been many disappointments in the budget, but particularly critical are the cuts we see to Native Friendship Centres and the lack of any really effective anti-poverty strategies that would benefit the lives of aboriginal children. I would like to talk about the need for funding for children's programs, particularly for aboriginal children.

I have had the pleasure since February of this year to sit on the subcommittee on children and youth at risk. We have been conducting a study on the conditions of aboriginal children in Canada, both on and off reserve. I have met some exceptional people through this exercise and have heard some amazing testimony. No one spoke of any kind of government dependency, but rather of partnerships and horizontal collaborations to create an integrated policy framework for the development of young first nations children.

It is important to look at first nations children because the aboriginal population is much younger than average. Children 14 and under make up 33% of the aboriginal population in Canada, compared with only 19% in the non-aboriginal population. As well, sadly, more aboriginal children live in poverty than any other segment of the population. In fact, aboriginal people in cities were twice as likely to live in poverty as non-aboriginal people, yet little attention is given to aboriginal children living off reserve, particularly in cities, where they are most likely to be in poverty.

One of the few places that provided programs and support uniquely for aboriginal children was the native friendship centres, but this bill reduces the funding to these centres. Native friendship centres offered programs such as head start for young children and went a long way toward building a happy and healthy future for these kids. Therefore it is inexplicable in my mind as to why this funding was reduced.

When a program is working well why is money taken away from it? Why is it not added on? Why do we not learn lessons from that and create even stronger programs?

The way to deal with poverty among aboriginal children is obviously to deal with the poverty that exists within aboriginal families and families living in poverty in general. The budget has been very weak in dealing with the real needs of poor Canadians. The budget does not deal with what we need, which is a truly effective anti-poverty strategy.

What the budget does not deal with is the fact that we need a national day care strategy inspired upon the Quebec model. We could also use a national initiative to raise the minimum wages in all jurisdictions above the poverty line.

We need a national welfare standard that is above the poverty line. We also need effective strategies for ensuring full access to comprehensive disability supports. A national poverty strategy would also look at an enriched child tax benefit with assurances that all welfare families would be eligible.

We need to see the elimination of inter-provincial residency requirements and fee differentials for long term care, all health procedures, post-secondary education and other services. We need a coordinated strategy to build low income housing and end homelessness. Of course a national poverty strategy would include the realization of food security for all in Canada and a substantial reduction in the rate and depth of poverty in Canada.

I now want to say a couple of things about post-secondary education. I think everyone in the House is on the verge of attending graduations at the high schools in their ridings. Each of us will sit there very proudly watching as these young people go up to the stage with their dreams ahead of them. Many of them will go on to universities with plans to go into medicine, engineering, the arts, social work or into working with children. However their dreams depend on being able to afford post-secondary education.

The budget has been a disaster in terms of providing any real moneys for young people and for universities to actually provide affordable education. We are all seeing students in our ridings who get into university and who get a student loan only to find out after a year or two that they cannot afford to continue. Some have to work at two jobs while trying to keep up with their courses but they fall behind. Their debts are growing, their marks are falling and they are becoming overburdened by debt at the age of 19 and 20.

We are seeing a huge tragedy occur among the people who we had hoped would step into our shoes at some point and provide the energy and the idealism to make this the kind of country in which we all want to live. Our young people have found a very hard rock and an unlistening government in this budget.

I feel that the budget has been unfortunate in so many ways. It has missed the point in being able to build a stronger Canada. For persons with disabilities, for artists, for first nations children and for our students, this budget, like the ones before it, continues to ignore the realities facing all Canadians.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, this is a good opportunity to rise today to speak Bill C-28, the budget implementation act. At the outset, the Canadian Alliance is very disappointed with the government in terms of its approach to the budget in this year of 2003. We believe it has taken the wrong focus and wrong approach to this budget, and there needs to be major adjustments, even at this stage, to the spending commitments it made.

This budget was brought in on February 18. It increased the amount of program spending by the federal government from $124 billion in 2002 to $150 billion in 2003, a $26 billion increase in three years. That is almost a 20% increase in spending on an annual basis, and clearly it is not sustainable. We pointed that out at the time, but it was pretty clear even back then that this was intended to be a legacy budget for the Prime Minister, and probably a leadership budget for the Minister of Finance.

What we told the Liberal Party and the people of Canada on February 18 is just all the more accentuated now because there are significant changes to the economy that would indicate the government simply has to move away from some of the budget commitments it made on February 18 in terms of the spending; spending increases that clearly cannot be maintained or sustained. The reason I say that is because we are seeing a lot of factors starting to gather. However even back on February 18 it was clear the economy was starting to slow down.

The United States economy was bumping along the bottom in terms of major changes such as the collapse of the IT sector, the information technology sector of the United States. Also the stock market had a big hit in the United States in terms of the confidence of the people who were buying stocks. By the way, that is a pretty big part of society in the United States. Almost 30% of the public own stocks and bonds. The Americans confidence was hurt by some of the scandals in the United States leading up to Enron and other matters, and it was clear the United States economy was not going to recover very quickly.

How can the Liberal Party suggest that Canada can go it alone in terms of growth in the economy if the United States is not growing or if the recovery is not underway? It was clear back then to us that could not be maintained. Now we see the Bank of Canada and other economists around the country saying that rates of growth have to be adjusted downward from those projections made by finance minister on February 18. He was talking about 3.2% growth for next year but it has already been revised down to 2.5% and may be revised down further.

We have a number of factors right here in Canada that are having a major effect on the economy. The rising Canadian dollar, or the depreciating U.S. dollar, is one of those. The 2% spread in interest rates between Canada and the United States is attracting investment in Canada and driving up the Canadian dollar. The huge current account deficit in the United States is driving down the U.S. dollar against other currencies around the world.

This should be a celebration for Canada. Canadians should be able to celebrate the fact that our dollar has appreciated. Unfortunately, past policies by the Liberal government and the other one sitting down the way, when it had its brief time in office, had a major detrimental effect to the Canadian economy. We are now only 80% as productive as the United States. Our living standards are only 70% of that of the United States. Clearly these have a big impact on us.

One would think that a rising dollar should be good news for Canadians, and it is for some people. However we are a major exporting country and as such, the cost of production in Canada has to be lower to compensate for the cost of the Canadian dollar. Clearly that is starting to have an effect on the economy. There are industries talking about layoffs as a result of it.

Over 30 years we have seen this long term decline. I do not think it was a natural decline. Back 30 years ago, and over the 100 years previous, the Canadian and the U.S. economies could be charted on an analytical basis. There are people who chart these things. Through good times and bad times, ups and downs, the graphs showed basically the same function for the two economies.

About 30 years ago that started to change and the Canadian economy started to dip. I believe it was because of public policies that were pursued by the Liberal and Conservative governments of the day that had a major impact. In fact the size of government in the United States has not changed much in 30 years, representing roughly 30% of the GDP of the country. In Canada in 30 years, those fellows across the way have grown the size of government from about 30% to 42% of GDP of the country. That takes up a pretty big chunk of the economy.

If this was all productive spending, it would not be too bad, but we know there is a lot of waste in government, particularly in this government, for things like the gun registry which has cost $1 billion and is still running. That really personifies what the problem is. The government has wasted $1 billion in the EI program. A lot of grants and subsidies have been given to the business sector, and some people would say that is a good thing.

If Canadian taxpayers wants to invest in General Electric or Bombardier, they can do that. There are stocks out there that they can buy. They should not have to do it as taxpayers of the country for something committed to by this Liberal government. Those are the kinds of things that have caused the Canadian government to rise as a percentage of GDP and a bigger take of the economy. This is part of our productivity problem.

Witness after witness appeared before the industry committee. Three major studies have been done at the industry committee about Canada's competitive position and our productivity. They have told us that we need lower taxes in Canada, probably lower than the United States, to have a competitive edge but we do not have that. The U.S. President pushed a package through Congress the other day for about $500 billion, Canadian, a further tax cut in the United States. We were already behind the United States in corporate and personal tax income rates and it is moving further. That will put us into a more uncompetitive position.

What we need is a realistic approach to this. The government has to have an economic statement recognizing the problems we have with the rising Canadian dollar. We need to recognize the slow down in the economy. We need to recognize that things like SARS and mad cow disease do have an impact on our economy. The closure of the Canada-U.S. border to imports of over $4 billion worth of beef has an impact.

The Canadian dollar rising 18% without any corresponding decrease in corporate or personal tax rates and red tape also have an impact. A canola farmer knows that instinctively. The price of canola went down from $8 a bushel to $7 a bushel just on the exchange rate. There is no corresponding decrease in the cost of production. This is hurting us and will continue to hurt us unless the government reacts by dealing with this productivity factor. The government has to lower tax rates.

I call on the government to accelerate its corporate tax cuts which are being done over five years. There are some budget measures on resource tax allowance and some things have been done on the capital tax. However they have long phase-out periods of five years. I call on the government to move quickly to bring those tax cuts in on an accelerated time schedule.

We have a problem here. The Liberal government is absolutely committed to spending. It is the old tax and spend regime. It is like the Trudeau era Liberals are back. These are the kinds of Trudeau era policies that got us into all this trouble to begin with. That government had spending rates of 6%, 8% or 10% a year. Under the current Prime Minister we are back to these rates. This year's spending alone has increased by 12% or 15%. How can that be maintained? It cannot be maintained, and it was clearly evident at the time the budget was brought down.

The Prime Minister and the finance minister buried their heads in the sand. The Prime Minister wants to do a bunch of social spending because he has to buy himself a legacy. That is a sad commentary, after 40 years in office to have to think of some way a new spending program can be invented in order to have a legacy for oneself. That in itself in my view is the legacy, and it is not a very good legacy at that.

The Liberals have put us in a very difficult position. They have a dug a hole for Canada of which it will be difficult for us to dig out. I believe we have the potential to have a far better and stronger economy than the United States. We cannot do that if we have been harnessed by bad policies over 30 years which have put us into a very uncompetitive position versus our major trading partner.

Why is it important that we compare ourselves with the United States? It is important because of the two-way trade flow and business we have between our two countries. We know that 87% of our exports go to the United States. The exports to the United States alone account for almost 40% of the GDP of Canada per year.

We have to think about what happens if we are not competitive and we lose manufacturing plants, such as DaimlerChrysler to the United States, because it is concerned about things such as border security. We know that 80% of the production of the automotive sector in Canada goes into the United States. Border security became a problem after September 11. The government clearly is not willing to talk with the United States about security issues. There is hardly a working relationship between the Prime Minister and the President of the United States.

Although, the Prime Minister finally did make a phone call yesterday after months of not wanting to talk to the President of the United States. I hear he talked about baseball. I hope he talked about things such as the Canadian border in relation to the BSE issue and about a number of other issues, such as security issues about which the Americans are clearly concerned. Like it or not, the Americans will take measures to deal with that security issue on the Canada-U.S. border. That could result in a slowdown of product crossing the border.

Two and a half years ago I was in a major steel plant. To illustrate how integrated we have become and how business works across the Canada-U.S. border, the steel rolled that day had been ordered about four months earlier. One thing I did not know is the plant makes about 200 different types of steel there. It is a very specialized business. The steel rolled that day was shipped out that very afternoon to a car manufacturing plant. It was stamped into fenders later that afternoon on a just in time delivery basis.

What does that mean? Why has the plant done that? It has done that because the cost of production has been too high. The plant had to get efficiencies into the system. The cost of carrying inventory is very high. Basically the steel plant eliminated that problem. It does not have to carry inventory any more as a result of delivering that product on a just in time delivery.

Why is that an important factor? It is important because any slowdown at the Canada-U.S. border influences that. All of a sudden if companies have to begin carrying inventory again, there is a massive cost to that. Therefore, the United States is concerned.

Companies that are thinking of new investment in Canada are concerned too because if there is a slowdown at that border and 80% of their production goes into the United States, then they might as well locate their plants in the United States.

There are a few other problems on the horizon that we have been dealing with for a while. They also have to do with a poor Canada-U.S. relationship. It is something the government has actually been very bad at. In fact I think the government enjoys tweaking the nose of Uncle Sam and sticking its finger in his eye. I am talking about duties that have been put on wheat for Canadian farmers.

I think this action is in direct response to a government that has not cooperated with the United States on a number of issues. We think the softwood lumber issue with the United States will be resolved in our favour but it has been a longstanding dispute. It costs our Canadian producers 27% duty I believe. On top of that the Canadian dollar appreciating has made it very difficult for our softwood lumber producers to compete in the United States. There have been some job layoffs.

These are the kinds of things that have to be addressed. This is the reason the government needs to come out with a new economic statement this spring. It has to recognize the realities that there is a changing situation with the economy. It has to recognize that it clearly made a wrong assessment, that the United States is not recovering as quickly as it thought it might.

United States interest rates are still only 1.25%. There is a concern about deflation in the United States and the economy is not responding very fast. So, between that and the rising dollar as a result of the depreciating U.S. currency, these are causing us a great deal of difficulty.

I call on the government to bring in a new economic statement where it would accelerate corporate tax cuts and take into account what the United States just passed through its congress, a massive tax bill of over $500 billion dollars over 10 years. Some people think that this may be picked up and continued on, and it may be a lot more than that.

We were far behind in terms of charging too much in taxes. Now the United States has moved the yardstick even further and it is clear that Canada must react. The finance minister is finally admitting that the economy will not perform as well as he suggested on February 18. If he has already made that assessment, perhaps he should come out with an economic statement that says we are prepared to make those necessary tax cuts on the personal income tax side and go further on the employment insurance rate cut so we stop overcharging Canadians.

Even this year the government is overcharging Canadians almost $3 billion in terms of excess employment insurance rates. This just goes into general revenue and as we know there is a lot of waste by the government. Day after day we hear about the ad contracts where millions and millions of dollars are being wasted.

The government and the finance minister are clearly distracted. He is running for the leadership of the Liberal Party. He is hardly ever in the House so that we can ask him a question. Clearly his focus is not where it should be. If he cannot handle the job, perhaps he should step down as finance minister and let somebody take over while he is running his leadership campaign.

We on this side have somebody we could suggest. We could clearly provide a few names for him in terms of doing that. If he is going to take his job seriously he had better come up with a new improved economic statement that would recognize the new realities of the Canadian economy and our major trading partner. We need to make the proper adjustments so that Canada can be competitive and get back on the road to improving our competitive position and productivity.

That is my challenge to the government. We want to see an economic statement this spring that would recognize all of those realities that I have just been talking about.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Madam Speaker, I knew there were questions and comments. I just did not think anyone would want to ask a question or make a comment on the speech of the hon. member for Regina—Qu'Appelle.

It is my pleasure to stand in the House and resume debate. It has been a long week, I can appreciate that. It has been a very exciting week for myself and my party with the byelection results on Monday evening. I know the weeks to come will be equally as exciting, particularly with the government trying to defend its budget when it comes to not just simply a byelection, but a general election. It is not only their budget the Liberals have to try to defend, but the mismanagement that has taken place by this government over the last 10 years.

The member for Regina—Qu'Appelle had indicated that it seemed the economy changed in 1993 when the Liberal government was elected. I know the member for Regina—Qu'Appelle would have to give credit where credit is certainly due, in that the policies that were put into place prior to 1993 were the policies that this government is now living on.

The policy of the GST, where we took the manufacturing tax off and put it on to a goods and services tax, I appreciate is not a tax that Canadians appreciate all that much. However when it was brought forward in 1993, it was with the understanding that it would be a tax that would reduce the deficit, which Liberals always talks about, the $42 billion deficit prior to 1993. It was that particular improvement which helped us find ourselves in the economy we have today.

It is the same government that will throw up its arms and say that the Tories left it with a $42 billion deficit, but it does not seem to always take the other highroad and mention the free trade agreement which was negotiated with our American friends at that time because we did have a relationship with our American friends. This is something the government does not have at this time. We were able to sit down at the table and negotiate a free trade agreement that allows us to flourish in the economy we have today.

I know the member for Regina—Qu'Appelle did not mean it when he said there were terrible economic times prior to 1993 and immediately when the government took office those economic times changed, because it did not happen that way. It certainly did not happen in this government. As a matter of fact, in spite of themselves, the Liberals have taken our initiatives and allowed themselves to balance those budgets that we would have had balanced certainly long before they did.

The budget which has been tabled today is only a reflection of what has gone on in years past with Liberal governments. It gives us the understanding of the old 1970s Liberal philosophy of spend, spend, spend. It is a legacy, and we keep hearing that word all the time, of a tired government and a tired Prime Minister telling us that they will shotgun this budget, that they will please just about everybody they have in their political pockets and that wherever the economy goes from here, it really does not matter.

We have returned to an era where the Prime Minister of the day was the previous finance minister. We have returned to an era of the Pierre Trudeau spend, spend, spend philosophy of the Liberal government. Canadians are not terribly pleased about returning to that. It is a shotgun approach.

Bill C-28 is the budget implementation bill that puts into place the budget the Liberals have tabled in the House. This is really an unfortunate happening for Canadians because the Liberals have now increased program spending in this budget alone, which means spending that was there for programs prior to the 2003-04 budget, by 7.3%. That is substantial. I do not think Canadian households have the ability to spend an additional 7.3% this year than they did last year. That 7.3% program spending increase is taking out of this budget the health care and the military expenditures, which by the way were absolutely required.

When we take out those extraordinary costs of health care and defence and the military, there is still a 7.3% increase in program spending. It is shotgun program spending, I might add. The Prime Minister probably had a dartboard somewhere in his office or maybe a putting green and he kept putting into different areas to decide which programs he was going to spend on. That is what it seems like. There was no logic to this; it was simply an ad hoc, shotgun approach to the budget.

There is a 7.3% increase in program spending. However, the finance minister of the day, who is up against that other guy from LaSalle—Émard for the leadership, says that the Liberals are going to find $1 billion somewhere in this morass of government bureaucracy that they are going to put back in that area of program spending and they are going to save $1 billion.

I will tell members how the government has saved $1 billion. It got involved in a gun registry that has cost Canadians about $1 billion over the life of that registry. It is not gun control, it is gun registry. The Liberals are going to save money in other areas to put it back into program spending, so maybe they will save money in different areas to go back into this black hole of the gun registry. From where are they going to spend some of this money? They are going to find some efficiencies in the military, the same area that Canadians and our own Auditor General have said is sadly and sorely lacking for resources.

We were supposed to put about $1 billion or $1.3 billion back into the military for this year just so it could continue in its operations. We did not. I think the military received $800 million in this budget. Not only did it get less than what was necessary as the Auditor General indicated, now it has to find $200 million in its operations to give to the finance minister to spend on the gun registry.

Taxation

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, the Minister of Finance had a very productive and very useful meeting with his Quebec counterpart yesterday. It is nice to see that we can do that with the new government of Quebec.

I would point out that one of the ways the member across the way could help is to pass Bill C-28 so that needed funds to go to health care in Quebec could be passed. That member unfortunately talks on one side but does not act on the other. Let us get on with Bill C-28 to get that money to Quebec and other provinces.

Budget Implementation Act, 2003

[Reed Elley, Canadian Alliance, Nanaimo—Cowichan, BC]

Mr. Speaker, I will be splitting my time with the hon. member for Surrey North.

It is my pleasure today to rise and join in the debate on Bill C-28 regarding the 2003 budget. Before the bill was tabled in the House of Commons, Canadians, and in particular my constituents in Nanaimo—Cowichan, were hopeful that the government would actually realize what was happening in the real world outside of Parliament Hill. Canadians were hopeful that the government would begin to come to grips with the disappointment and disbelief that has arisen out of past budgets presented by the member for LaSalle—Émard.

My constituents have expressed to me, in the strongest possible terms, the conviction that the government does not even know that they exist. My riding on Vancouver Island is one of the western most ridings in this country and simply put, out of Liberal sight, out of Liberal mind. Indeed, the staff in my riding at one point had a letter from the Prime Minister's Office wanting to inquire about someone who lived on Victoria Island. Members can imagine how crushing a blow that is to our ego out there to realize that the Prime Minister's Office does not even know the right name of the island on the west coast of Canada.

My constituents were truly hoping for tax relief, but received none. Instead, they received $17.4 billion in new spending initiatives over the next three years. The simple truth is, and it is an easy truth to understand, that while the government attempts to lay claim to tax reduction, the budget says that for every one dollar in tax relief the government puts in additional $7.56 in spending. That is the new math. That is not a tax reduction budget; that is a tax and spend budget.

I would like to speak to several specific points in the bill. There is no question that tax changes for small business and the eventual elimination of the capital tax would benefit many Canadians. We have called for this for a long time. The government has paid far too little attention to the small business community in this country. This is only a feeble step in the right direction. Small business is Canada's economic backbone and has been ignored for far too long.

I am pleased with the proposed 40% reduction in the air security charge, something that the former finance minister refused to do. I eagerly wait to see if the current finance minister will actually deliver on these promises or if there is any real difference between these two members as they vie for the leadership of their party. In a country the size of Canada and the speed at which business of all sorts is conducted, air travel is absolutely imperative. The current air tax reduction of 40% is a good start, but it will continue to discourage air travel in Canada. I know and have heard from many business people in my own riding about the negative impact of the air tax. This tax should now be eliminated, not simply reduced.

The next point is child care. The Canadian Alliance believes that child care options should be given to parents, not to bureaucrats. I believe that the family is the cornerstone of society and we will prosper or collapse on the basis of that strength. We support a $3,000 per child, up to age 16, deduction for families and therefore allow them to choose the best child care option for their children and family by keeping the money in their own pockets.

With the national child benefit, Canadians once again see how the Liberals give and the Liberals take. The Liberals give the national child benefit to low income families with one hand and then tax thousands of dollars away from these very same families with the other. If the Liberals were so concerned about Canada's working poor, why would they tax them so heavily? They tax them through rising Canada pension plan premiums. They overcharge them through their employment insurance premiums as well as through low income contingent GST credits. The Liberals simply have not given working poor Canadians a fair break in the budget.

The spending on health care is another issue covered by the bill. Perhaps there is nothing that affects Canadians more than health care. Whether it is for our aging parents, our growing children or ourselves, each one of us here and across the country is impacted by health care and the costs of the system. Simply put, the money is now on the table and it is time to get on with the job of real health care reform.

When will the federal government realize that it cannot stay mired in the past? This path of health care has led to the many problems that we are currently attempting to deal with in Canada. The Liberals balanced the books largely on the backs of the provinces' own health care budgets. This was not acceptable, and it is not acceptable today. The Canadian Alliance will hold the federal and provincial governments accountable to ensure that new health spending buys real change, not simply more of the status quo.

An issue that affects all Canadians, but most notably many constituents of mine in Nanaimo--Cowichan, is the budget allocated to aboriginal affairs. Despite the billions of dollars the government has spent on aboriginal programs over the past decade, the standard of living for aboriginal Canadians remains appalling. I have visited numerous reserves, homes and sat with councils and understand this issue as well as anyone in this chamber.

I support the reallocation of departmental funding for key issues such as health, education and capital infrastructure, such as water and sewage. Let me be perfectly clear on this. I do not support the role of an increased bureaucracy. The absolutely last thing that aboriginal Canadians need is one more hurdle to jump over, one more hoop to jump through and one more piece of red tape to cut through.

Aboriginal Canadians need real assistance. Neither native nor non-native Canadians can afford to be saddled with any more administrative costs with which to deal. The number of mouldy homes, non-potable drinking water and non-existent sewage systems is simply not acceptable.

This is not a problem that has just cropped up recently. This is an issue that has been with us for years. It is an issue that existed when our present Prime Minister was the minister of Indian affairs 40 years ago, and had an opportunity then to change things and make things right. Now aboriginal Canadians are living with the failed promises and the poor attitudes that were displayed in those days. The Prime Minister of this day did not do then what had to be done to change the life of aboriginal Canadians in this country.

The Liberal government likes to talk a good story under the guise of being protectors of the environment. The Liberals have already wasted over $3 billion without a plan for Kyoto, and at this date have absolutely no results to show for it. Throwing more good money into the Kyoto cookie jar will simply lead to more waste and misuse and will not protect the environment for Canadians. The Canadian Alliance supports the need for targeted funding for new green technologies that will bring real environmental benefits to Canada. There are viable options available, yet to date this government refuses to consider them or to implement them.

An issue that is important also to many Canadians, but in particular importance to the many active and retired Canadian armed forces personnel who live in my riding, is the appalling way this Liberal government has undermined our military. This also shows up on the radar screen of a lot of polling that we do. The Canadian Alliance agrees with the Auditor General as well as many other organizations calling for an immediate increase of $2 billion per year in our defence spending. The Liberal commitment of $600 million per year falls far short of what is necessary to sustain our armed forces let alone start to rebuild it.

The examples are almost endless and they are shameful, indeed scandalous: the ill-fated replacement helicopters that have caused the death of armed forces personnel; a lack of camouflage uniforms for Afghanistan and the necessary equipment when we sent our troops into battle zones or put them into harm's way; now the government's refusal to spend any money on any heavy lift capability, expecting our allies to do the job for us; as well as underpaid personnel which leads to a deteriorating moral among our armed forces personnel. That is simply scandalous. It has to change and a Canadian Alliance government would make sure that that change takes place.

The government is making some token gestures toward tax changes. The move to increase RRSP limits to $18,000 by the year 2006, to increase the small business deduction limit to $300,000, to eliminate the capital tax over the next five years and lower the resource tax rate in line with the general corporate rate are positive moves. Unfortunately, from our point of view they are being implemented far too slowly and they fall short of what could and should be done.

I presume that my time is drawing to a close, but I would like to say that there are other issues I would love to talk about such as foreign aid, amendments to the federal-provincial fiscal arrangements, the Canada Student Financial Assistance Act, the employment insurance compassionate care benefits and of course the Liberals favourite tax, which they were going to scrap and abolish, the GST. However I do not have time to speak about all those things even though I would love to.

The bottom line however is this budget is a tax and spend budget, not unlike many budgets that have been presented in the House by previous Liberal governments. It builds on the broken promises brought in by the current Prime Minister. It builds on the boondoggles to which Canadians have been witness at HRDC and the failed gun registry.

Canadians can see through this Liberal smoke and mirrors show. They recognize that there is no significant tax relief for them in the 2003 budget. Instead the Liberal government has increased spending by 20% over the next three years. I would challenge the government to go to the people and ask if they really feel that kind of spending is in line with the priorities of Canadians. Canadians are growing weary of this, and I will continue to oppose this budget until real tax relief is available to all Canadians.

Business of the house

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

Mr. Speaker, this afternoon we will continue with the opposition supply day motion that we commenced this morning.

Tomorrow we will resume the debate on Bill C-28, the budget implementation bill. This would be followed by Bill C-31, the pension bill of certain veterans and members of the RCMP. If and when this is completed, hopefully tomorrow, we would then resume consideration of Bill C-36, the archives bill, and possibly Bill C-17 on public safety.

Next week, as the hon. leader of the opposition in the House has stated, is a constituency week.

I have designated May 26 as an allotted day, although we are willing to have further conversations about that this afternoon.

On Tuesday, May 27, if Bill C-28 has not already been disposed of, we would at that point have to return to it. We would then turn to Bill C-25, the public service bill, followed by business not yet completed from this week.

This is the program at this juncture.

Excise Tax

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, again I point out to the hon. member that the letter of December 16, 2002 clearly says, notwithstanding those decisions, that retroactive legislation would come in. We know that the courts have upheld that. Parliament has the right to do that. The member knows that. We have debated that.

The fact that the member has not won the debate has obviously not stopped him from raising the question, which is fine, but the answer remains the same. We are moving ahead with Bill C-28 and that provision is in the bill.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, the member knows very well that when the Minister of Finance on December 21, 2001 issued a press release with regard to this issue, it said that we would be bringing in legislation which we have in Bill C-28. The member also knows that the 29 cases in Quebec are not affected prior to December 21, 2001.

The solicitors for those school boards have a letter dated December 16, 2002, knowing, notwithstanding any decisions by the court, that retroactive legislation would come in. The member knows that. I have repeated it umpteen times.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, despite the Bloc Quebecois' attempts to amend Bill C-28, the budget implementation bill, the federal government is going ahead with its plan to retroactively amend the provisions of the Excise Tax Act as it relates to school bus transportation.

Can the parliamentary secretary tell us why, when his government brought in legislation regarding the transfer of family trusts abroad, it was content to legislate for the future, without retroactively reversing the decision made earlier by public servants, but in the case of school boards, it overturns court judgments in favour of the other side?

Budget Implementation Act, 2003

[Val Meredith, Canadian Alliance, South Surrey—White Rock—Langley, BC]

Mr. Speaker, thank you for the opportunity to speak on the budget implementation act, Bill C-28.

I find the dialogue we have had very interesting. The Liberal government feels it has done a really good job and we in opposition have been challenging where it has been spending Canadian tax dollars. It gets down to the original premise of what is government for and on what criteria does it collect money from taxpayers.

Basically, one has to start on the premise of should government be all encompassing and huge, or should government be as small as it possibly can be and provide the necessary services to Canadians and, therefore, have a need for less money to do that.

There have been many debates. In the House we heard another debate on what the role of the federal government should be. In Newfoundland and Labrador some people feel the federal government should no longer be controlling the fishing off the east coast because of the poor policy decisions that have been made, which have cost Newfoundlanders and Labradorians their fishing industry.

People on the west coast feel the federal government has not done an adequate job in international trade in protecting our softwood lumber industry or, for that matter, our salmon industry, our fishing industry on the west coast.

As Canadians, we have to decide what is it we expect from our federal government that we are willing to pay taxes to support. The message I hear and have heard over the last 10 years from my constituents is they expect the federal government to decrease its size, not increase its size. Canadians would like to see smaller government and getting out of their lives in a meaningful way, rather than the government growing and becoming more involved in the ordinary day to day operations of taxpayers.

It grieves me to acknowledge that what we have seen in Canada over the last 10 years is not a decrease in government size but an increase. There has been a 20% increase of senior management in the federal civil service over the last number of years. That is not decreasing the size of the federal government. That is increasing the size.

Why does the government do this? Because the federal government is getting into areas where it does not belong. It is getting into areas of providing programs for Canadians where quite honestly it should not be. Then one has to ask why is the government doing this? The government is doing this to get credit for it from the taxpayers. A more cynical person would say that the government is buying votes because often it does these sorts of things right before an election.

One of my federal Liberal colleagues asked an opposition member where he would spend the dollar if it was up to the him. That is a question the one has to address. Where are the priorities? Where does the federal government accept the responsibilities given to it constitutionally and where are its priorities?

I think Canadians are starting to feel that the priorities of the government are very misplaced. We have a gun registry that will cost upwards of a billion dollars by the year 2005. I can talk about the fuel rebate program which the Liberals introduced just prior to the 2000 election. That cost $1.2 billion. Three years later we are still paying individuals, even though it was established as an emergency fuel cost rebate.

It is those kinds of programs. It is Groupaction. It is the problems that we had with money that was not very well managed in HRDC. It is the federal Liberal philosophy I guess of bigger government, more government, more civil servants, more programs and spending more money, and that money comes from the pocket of each taxpayer.

Day in and day out I hear taxpayers saying that they want less government. They want the government to get out of their lives and let them get on with looking after themselves.

The federal government does not belong in babysitting. The federal government does not belong in some of the programs it finds itself in. I call it photo op. It wants the credit. It wants ordinary Canadians to recognize the federal government is the one that is giving them money. Ordinary Canadians will have to realize that it is their own money. It is just going from one pocket through the Liberal government back into the other pocket. This realization has to come to Canadians in order for them to understand what it is that we in the opposition are trying to bring to their attention.

A colleague across the way said that the Liberals have paid down the national debt substantially. Percentages have been used. It is like an accountant. One can use figures to support any position one wants to take. Perhaps as a percentage of the GDP it has come down, but the net debt was revised up $27 billion to $563 billion from $536 billion in last year's budget. It is not that the amount has been decreased. The amount is actually being revised upward.

We talk about priorities again and managing the money that the federal government really should have. What we have heard from Canadians recently is that they want to see the federal government recognize its responsibility for national defence. In order to accommodate defending our country and our sovereignty and fulfilling the roles that we have internationally, more money has to be designated to it. That does not mean that it taxes us more. It means that it takes money from somewhere else and puts it into defence.

The Liberal government is the one that cut health care so substantially that it put our health care system into crisis. Yes, now it is putting the money back in, but is it being managed properly and is it sufficient? Should it be putting more money into health care and taking it away from some other field, like fuel tax rebates or some of the other programs where it is questionable that the federal government should even be involved? Canadians recognize that the federal government should be involved in national defence, immigration, international trade and foreign affairs, but I think a person could argue constitutionally whether it should be involved in all the other day to day operations that Canadians find the federal government involved in.

Having said that, one has to also look at what is the role of the national government. Quite honestly I think it is to concentrate on growing the economy of Canada. Part of that is making sure that our business community is in a position of not only competing internationally but of growing its business and creating more jobs. Anyone will tell us that the more cost to businesses through taxation, through government regulations and government fees for bureaucracies that they do not want in the first place, the greater taxation that businesses pay means less money that they have for growing their operations, for creating more opportunities and creating more jobs.

There is a relationship, whether or not the government agrees or wants believe it, between high taxation and Canadian companies leaving Canada and going into the United States or other countries, China or wherever, in order to be more competitive. If the Liberals do not think that is happening, I invite them to my constituency. Daily I see businesses that can no longer compete because of the high cost of doing business, the high taxation, high land costs, again taxation through a different form of government. They simply cannot remain in business and compete with their competition in the United States, Mexico or wherever under the circumstances they find themselves operating. The government needs to recognize that there has to be a reduction in taxation in order for the business community to grow, to grow our economy, to hire more people, to provide those jobs.

It is also a question of whether or not the government knows better than ordinary Canadians what to do with their money. I would suggest that ordinary Canadians would love dearly for the government to get out of their lives and give them more tax money to spend themselves. Let them set the priorities of who looks after their kids. Let them decide in what institution they want to be educated. Let ordinary Canadians have the ability to look after themselves and their families.

It can be done. The government can reduce the taxes for ordinary Canadians and still have enough money to use on the programs deemed necessary but there is not enough money to lower taxes if the federal government is going to get into all these spending programs it has gone into. In the budget the Liberals increased their spending by 20%. The interesting thing is that taking that extra spending, 22% of it goes to major transfers to people. That would be pensions, child tax credits and that sort of thing. Some 26% was for major transfers to other levels of government. That would be health care, education, welfare transfers to the provinces. And 52% of the increase was for direct program spending.

I find it interesting that the majority of that money can go for the federal government to increase its own spending programs. I do not remember specifically, but I think defence only got a very small increase this time around. I think the infrastructure program received a small increase from what was in the first program. Where is all the money going? It is going for those photo op programs so that the federal government before the next election can say “See what we have done for you. Here is the cheque. Look how good we are. Re-elect us”.

I hope Canadians will be smart enough to realize that the money that is being passed to them is their own money. It came out of their pockets and they have to do without in order to give the government their money in order for the government to give it back to them in specific programs.

When we talk about child tax credits and all the other programs for low income individuals, why not have anyone making $18,000 or $20,000 or less not pay income tax? Why not recognize that people making that amount of money are going to have a hard enough time paying the rent and buying food that they should not have to pay taxes? Why would we take it away from them on one hand and then give them a child tax credit on the other hand? Photo op politics. The government wants recognition for being the good guy.

It is time to stop that nonsense. It is time for the federal government to look at what are its responsibilities under the Constitution. It must look at what are the priorities of Canadians. It must stop giving corporate welfare. It must stop picking one company as a favoured child and giving it billions of dollars in contracts or billions of dollars to compete against some other company that does not get any of it. How fair is that? It is time for the government to stop this nonsense. It is time for the government to pick its priorities based on what Canadians are concerned about, not about getting re-elected in the next election.

It is time for the federal government to start being a good manager of money. I sit on the public accounts committee. I cannot tell members what it is like to sit there and hear the horror stories about how things are not recorded properly, how the rules of the game that Treasury Board has established for contracting and bidding processes are not followed through on, how the administration of the tax dollars is not being done in a forthright way with good management practices.

The gun registry is only one example. We could get into how the government has transferred land and released its obligations without any protection for the taxpayer dollars that bought that land in the first place. We can talk about all the different circumstances of where contracts have been let, looking at Groupaction, where there was nothing received for the money that we paid. We are talking about $500,000 one time, the second time $500,000 with nothing to show for it and a third time it was $500,000. We are talking about $1.5 million with very little to show for it. Not only was it badly managed, but the results were not there for the money.

That is just one example. There is a bunch of them. It is frightening to see how much of the taxpayers' hard-earned dollars fritter away and cannot really be touched.

The government has decided it is going to use third party entities for some of the program delivery. I am concerned that there is not any reporting mechanism or auditing mechanism written into it. When the government set up this arm's length organization it removed the auditing function from the Auditor General. Therefore we lost control over how that money is going to be spent or whether the rules are properly followed.

The government has to start dealing with the responsibility of spending tax dollars. It is one thing to collect more money than, I would suggest, the government should be collecting. However when it does not have proper controls and cannot go to the Canadian taxpayer and say “We have looked at how this money is being used and we can in good faith say it is being managed well”, we have a real problem in our country.

Not only is the federal government spending more money than it should, it does not have a vision for the country in growing our economy, in growing the jobs and being responsible for the spending of tax dollars. It is time that the government was replaced.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, I always enjoy listening to the remarks of my neighbour from Palliser. He does not have to stay to listen to mine. We will not put him through that kind of agony.

I am pleased to speak to the budget implementation bill, Bill C-28. The interesting thing is that when the Minister of Finance brought down his budget in February, he was very optimistic. Things were going along pretty good. We knew there would probably be a war in the gulf, but some of the things that have happened I guess none of us could predict.

However one of the things the now finance minister did suggest about 12 months ago was that Canada was coasting in terms of its competitiveness and that we were relying solely on the weakness of the dollar to compete. He is now saying that it is fundamentally wrong and suggesting that we have to pay attention to detail because we cannot rely continually on a weak dollar to compete internationally. That is the message that we have been preaching for a number of years.

In all fairness, it is a tough message to articulate in such a way that it will be understandable and accepted by the marketplace. Given the fact that 85% of our exports go to the United States, a 62¢ dollar comes in handy from time to time.

Obviously the Minister of Finance will not comment on the dollar. An historical fact is that finance ministers seldom do. However, I think the point the finance minister, who was the minister of industry at the time, was making was that he knew we were headed for trouble with that 62¢ dollar. His argument was that if the dollar were to go up in value in relation to the American dollar that we would be in trouble because we rely solely on the weakness of the dollar to compete, that we have not addressed things like competitiveness or productivity, that we are letting productivity slide because we are again relying on a weak dollar.

He did not mention things like research and development. He paid slight attention to that. He did not mention the education or re-education of our workforce, our capital cost allowances that would allow our companies to compete on a level playing field with the Americans, and other tax treatment issues, including income tax issues.

Those words were somewhat prophetic, although the minister will not admit to that. I did put that question to the minister in his absence. It was actually answered by one of the junior ministers the other day in the House. In fact, I wanted to put that question to the finance minister today but I did not have the opportunity.

The point is that in the few short months from the February budget to today a lot of things have changed and some of those statements that the minister made a year ago are now coming back to haunt the government. An example of that was last month where we had 19,000 job losses in Canada. Now the question would be why.

We also have the SARS issue, which I guess in a sense is a budget issue as well because in dealing with that it will cost the Government of Canada and taxpayers something. However there is no question that the mishandling of that issue has cost the Canadian economy and has cost us dearly. We could argue that some of those job losses were not a result of the increased value of the Canadian dollar but were a direct result of the SARS issue, or the SARS crisis. Transportation took a heavy hit. The hospitality industry and entertainment business took a heavy hit. Therefore at the end of the day 19,000 jobs were lost. Next month's figures, May's figures, I think will tell the story as to how much of an impact this has had.

I think the dollar has also had an impact on that. As the Canadian dollar rises, our ability to ship goods to the United States diminishes because we have not addressed those productivity issues that we should have. In other words, we squandered our opportunity through those days of continued growth knowing full well that when an economy slows down we have to be prepared for the tough times. That is exactly what we are in. I think our salad days are behind us. The government has not prepared us for those tough times where we actually have to get out and compete in the marketplace on the basis of a Canadian dollar that is a little higher than 62¢.

That is something that I think the government should have addressed and did not. I would like to hear the minister's response to that when he comes back to the House.

More specifically in terms of the budget, we have to go through some of the realities that are out there today. One of the things that the government has been very good at in the 10 years that it has been in office is its management of the economy. I think the government is giving itself more credit than it deserves, because a lot of that success is based on initiatives that were taken by previous governments, which spent political capital to do what was right for the Canadian economy. One of them, of course, was the dreaded GST. I can remember when I was in the House, on the government side at the time, having the opposition accusing us of creating a cash cow. I can remember that argument very well. Of course the Minister of Finance at the time was saying that it was not going to be a cash cow but that it would noticeably increase revenue, because otherwise why would the government bring it in.

The truth is that it has been a cash cow. Some of those surpluses that have been generated simply would not be there without the GST. I guess in terms of a budgetary measure it is probably one of the best unkept promises in the history of civilization when the present Prime Minister of Canada campaigned in 1993 on a promise to rid us of that dreaded tax. The fact that he did not is probably the thing that has basically saved the government, although we will never get the Prime Minister to admit that. I think the only cabinet minister who did admit that at one particular point is no longer here with us. It was Mr. Tobin.

The other thing we spent a lot of political capital on and which has created a lot of wealth in the country is the free trade agreement. It generates about $2 billion of trade per day between Canada and the United States, and there are all the jobs that go with that.

I think those are two examples which show that when we spend political capital on issues that are controversial and obviously difficult to implement if we are doing it for the right reasons it will pay dividends down the road. They may not be political dividends, but the truth is that we will prepare the country for the future in the way it should be prepared. I think those two initiatives have worked well, better for your government, Mr. Speaker, than the one I was in. I am not going to use the word “caucus” here again which would get me into trouble with you, Mr. Speaker.

The fact is that the government has been very negligent in paying down its accumulated debt. I think it is important to recognize that the deficit has been eliminated, that is, the year to year deficit in terms of spending. In other words, the government is bringing in enough to pay the day to day bills. At the end of the day there is a surplus and the government is not adding to the accumulated debt. However, the accumulated debt that we have today is greater than what it was when the Liberal government took office in 1993.

The Liberals paid scant attention to paying down our accumulated debt. As long as that debt is there, it is taking more than money than need be out of our pockets and every Canadian paycheque to simply pay the interest on that accumulated debt, which is $507 billion as we speak. The government has paid little attention to that.

In fact, the little bit of bookkeeping magic that the Liberals have been able to generate is the huge surplus that has been accumulated in the employment insurance fund, which is approximately $45 billion. That is $45 billion that they have taken out of the hind pockets of Canadians, more than was necessary to sustain the fund. Where did that money go? It is hard to say where it went, but certainly none of it went to paying down the debt.

Let us talk about some of the areas the government has completely mismanaged. One of them is the long gun registry. The government has now spent over $1 billion on a failed registry. That would be $1,000 million. I listened to someone speak about that the other evening back in my home province of New Brunswick. He pointed out that $1,000 million divided by 10 provinces would generate $100 million in each of those 10 provinces for things like health care and education, which of course are two areas that the present government has ignored over the last number of years. In fact, when it went about balancing its books, it did it at the expense of the provinces. It was better to download on the provinces than take a look at some of its own expenditures; the government has failed to do that over the years.

I do not want to sit down without talking about defence. I just want to put some of the defence budget into perspective in terms of how much attention or lack of attention the government has devoted to this issue in terms of dollars. The defence budget in 1993-94 was $12 billion. In 1998-99 it was down to $9.4 billion. That was a reduction of 22% in five years. The current budget is 1.1% of GDP. It is the third worst in NATO, better only than Luxembourg and Iceland. The committee wanted 1.6% of GDP and a one time investment of $4 billion. It got far less than that. The money that is in the budget simply would not pay for the equipment that is needed, for example, air lift equipment and sea lift equipment. The government simply has not addressed that in its 10 years in office.

On Canadian Forces strength, let us take a look at the number of people in the military. In 1991 we had 87,600 persons. In the year 2003, that is down to 57,000. The defence committee wanted manpower up to around 60,000. The Conference of Defence Associations thought it should be up somewhere around 75,000. With the navy it is the same situation. Specifically on the navy, there are 9,000 regular forces and 4,000 reserve forces. There are 16 destroyers and 12 coastal vessels. Of those submarines that were delivered, I believe only two are serviceable. The problems are so serious with the other two that it looks like a complete waste of money by the Government of Canada.

The story goes on with other examples of mismanagement by the government and issues it did not address. One of the things the government is good at is taxing the poor. The government taxes the poor and then gives the money back to them as tax credits.

I will give an example of what we might do. We propose to stop taxing the first $12,000 for Canadians and to stop taxing the first $24,000 earned by single income families. We do not believe in taxing the poor. The fact is that a family of two earning $24,000 is not exactly rich.

These are specifically some of the things that could have been in the budget but were not, and here is a clawback example of how the government is capable of taking back money that people earn. I will step through this very specifically.

A Nova Scotia widow has four children and an income of $33,500. She works overtime, as an example, to earn an extra $1,000, for whatever reason, let us say for graduation for her son or daughter. She faces the following clawbacks in taxes; this is what would come out of that extra $1,000 this person would earn in overtime. Federal income taxes would chew up $220 of it. The clawback of the GST credit would take an extra $50 from her. The clawback of the national child benefit would be $321. The clawback of the Canada child tax benefit would be $50. The CPP and EI, net of tax credits, would be $52, and Nova Scotia tax would come in there as well, because that is a percentage of federal, in all fairness. Then there would be the clawback of the low income tax credit in Nova Scotia as well. In total, after earning $1,000 in overtime this particular person in Nova Scotia would pay back $892, with $108 to be netted by this individual. This is an example of the unfair tax treatment of individuals across the country.

I have the same example with a family of three in Manitoba with an annual income of $29,000. Again, if they worked overtime and earned an extra $1,000, after all the various taxes, some of them provincial there as well, the total of all the taxes in Manitoba would be $702. Out of that, the federal government would take $160 in federal tax. The family also would lose on the tax credit of $50 and the national child benefit clawback of $321 for a total of $702 in taxes.

When we are talking about tax reform in this place and addressing those real issues, I think there is more that the Government of Canada can do and I think it has an obligation to do that. There has to be an incentive to work. When the Government of Canada takes too much money out of our hind pockets, it simply kills that initiative. There is no reason for people to get out of bed and do it for themselves. We do reach a point where we are overtaxed and I think we have reached that point in this country. The government has had 10 years to do something about it and it has not.

One of the things we do support is the federal government's infrastructure program, which I think has been very successful in many parts of the country. In fact, we have a couple of projects in my hometowns--I am using the plural--St. Stephen and St. Andrews, about $9 million in two projects, water works and sewage projects, which are very important. We completely support them, with the help of one-third from the federal government, one-third from the provinces and one-third from those local communities.

That was an initiative by the federal government which we support, but we are not supportive of the Liberal government's past record and ability to deviate from that funding core in terms of infrastructure, where it winds up spending money on projects that have basically no merit at all. I am talking about some of what we call boutique infrastructure projects, like the famous monkey pavilions, canoe museums and NHL hockey arenas. That is just another example of how sometimes the government loses sight of why these programs are implemented in the first place.

The government has had 10 years to do it. It has had some success but the fact is there is more it can do. It is time it started to at least listen to some of the arguments that we put up on this side of the House and maybe consider some of those in its future planning.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I am pleased to participate in the debate on Bill C-28, the budget implementation act. Lest anybody be surprised, members of the New Democratic Party will be standing in clear opposition to the Liberal budget of 2003.

The Liberal spin doctors, and they have many of them across the way, have tried to portray this as a social spending budget. In fact, the government did try to do two things in the budget.

First, Ottawa tried to replace some of what it hacked and slashed over the past decade, but it is worth remembering that program spending in the budget taken as a percentage of our gross national product is far below historical levels. It is roughly at the levels that it was at in the 1940s, the years of Mackenzie King, Babe Ruth and Rocket Richard. Our level of spending is stuck there and for that we can thank in large part the former finance minister and the man who would become the next Prime Minister.

Social historians will note that the changes after the second world war were very profound. When Johnny came marching home from the war, he wanted to ensure that there were significant changes made in the way the country would function in the future after battling and defeating Hitler and Nazism. We had the growth of the welfare state in the fifties and sixties. What we are seeing subsequently is the pull back from that and it is impacting negatively on our society as a result. It is not just New Democrats who are saying that.

Yesterday Statistics Canada published its final report on the census data for the year 2001. The headline in today's news media says, “1990s a good decade for the rich: Statistics Canada”.The lead paragraph said:

The rich got richer in the 1990s, while everyone else's before-tax income stayed just about the same, as did the number of children living in low income families, Statistics Canada said on Tuesday.

According to Statistics Canada there are more than eight million families in Canada and their average income went up over the decade by the magnificent sum of $500 on average, about $50 a year. Members opposite are congratulating and patting themselves on the back about what a wonderful job they are doing. But, on the other hand, families in the top 10% of the income pyramid made 28% of all the money earned in the year 2000, and that was up from a decade earlier. Hence, the rich get richer headline.

The poorest 10% of families accounted for a mere 2% of the income. They remained in the same rut they were in a decade ago. Many of the poor people are single parents and 17% of seniors live in low income situations. They are the people who built the country and one in six of them is forced to live below the poverty line. That is a shame and something that none of us should accept. Even more shameful is that 18% of children in Canada were living in low income families in the year 2000.

We all heard the bold promises from the previous Conservative government of Brian Mulroney and of the current Liberal government about how they were going to do away with child poverty by the year 2000. The Ed Broadbent amendment was introduced and passed unanimously in November 1989, yet the number of poor children in Canada is almost exactly where it was 20 years ago in 1981. We are simply treading water.

Food banks are the only ones in the country where the branches are growing rapidly. We see them from coast to coast. With the resources that we have, it is an abomination that it continues to be the case in a country as rich and diverse as Canada.

The New Democratic Party believes the true test of any economy is how well it distributes the benefits of citizenship and by that measure the government and the budget do not pass the test.

In the 1940s there was somebody who said it slightly differently and much better than I just said it and that was Tommy Douglas. He said that the true test of a society is not the height of its skyscrapers but how it treats its most vulnerable citizens. I repeat again that on that basis the government and this budget do not pass the test.

I am not alone in my observations. The Catholic bishops of Quebec released their annual statement a couple of weeks ago expressing concern about the number of jobs in Canada that are part time, short term and insecure.

The bishops of Quebec said that insecurity in the lives of workers erodes their dignity and turns the human person into just another marketable commodity. The bishops added that the rights and dignity of workers would be better protected if more of them were able to belong to trade unions. I wholeheartedly concur with that.

What has the government and the budget done for workers? I acknowledge that it does reduce very slightly the cost of employment insurance premiums. This is a small measure when we consider that the government has accumulated a surplus of almost $50 billion in the EI fund over the years. We all know that the government has fought the deficit and paid for its massive tax cuts by raising money through workers' employment insurance premiums and the payroll taxes of employers. Both of those groups pay into the fund but the government does not. It just directs where the money will go.

Let me turn to the issue of students and post-secondary education. We used to call them the workers of tomorrow. In many cases they are not that any longer because they are working at part time jobs as they continue with their studies to try and help defray the high costs and the growing costs of post-secondary education.

The Canadian Association of University Teachers predicts that the funding available for post-secondary education will fall dramatically from $2.8 billion in the current fiscal year to $1.8 billion next year. That is placing significant strain on students and their families.

The federal cutbacks in post-secondary education in recent years have had the effect of driving up both tuition fees and student debt levels. Average student debt when the government came to power in 1993 was $13,000. Today it is over $21,000. Tuition fees in short have exceeded inflation six times between 1991 and 2001.

As I indicated, it is not just the students, but their families as well. The Canada student loans program requires parents to contribute a portion of family income, if they earn over a certain level, to their children's education until four years following graduation from high school. That amount is deducted from the student's assessed loan amount.

The required parental contribution is based on a moderate standard of living, determined by a formula that includes family size, income and the province in which the student resides. By way of example, a Saskatchewan family of three with an income of $50,000 would be expected to contribute between $220 and $230 a week to their child's education, or about $5,500 for a 24 week school year.

Obviously, moderate income families have to make large sacrifices to help their children through school. Some students simply do not go on to school or they delay their education. In fact, the Canada Millennium Scholarship Foundation published a study recently which stated that only 3% of Canadian families are able to provide the level of funding that is required under the Canada student loans program.

This is clearly not working. It is bad public policy and it is certainly inequitable. In talking with some university presidents, they have indicated to me that they are concerned about whether or not children from low and moderate income families will indeed be able to continue their education, or whether we are going to revert to the 1940s and earlier when it was only the children of wealthier families who had the wherewithal and were able to go on to a post-secondary education.

For our part, the New Democratic Party believes that we need to reduce the cost of post-secondary education by reducing tuition fees and relieving student debt by having the federal government assume interest costs on student loans throughout the life of the loan.

We should certainly eliminate all taxes on scholarships, grants and bursaries. As I have said before in this place, if we can eliminate taxes on lottery winnings, surely to goodness we can do it on scholarships, grants and bursaries.

As the agriculture critic for my party, let me turn for a moment to that issue and say how next to impossible it is to critique the government's budget when it comes to agriculture. It is not because it is a great budget. It is for another reason and let me explain.

The Department of Agriculture and Agri-Food has requested about $1.3 billion for the current fiscal year, but the Minister of Agriculture has told us that he will be seeking another $1.4 billion during the year to implement the agricultural policy framework. This is absolutely astounding. There is $1.3 billion in the budget, but we already know from the Minister of Agriculture that he is going to come back and ask for more money than is currently in the budget. How in the world can we debate and discuss a budget like that? Try to run a household or a farm in that kind of scenario, and one would not last very long.

Looking beyond all of that, let us say it is $1.4 billion plus $1.3 billion equals $2.7 billion. The amount of $2.7 billion in agriculture in this current fiscal year represents about one-half of what the federal government spent on agriculture just 12 years ago. Let the spin doctors try to turn that dross into gold. Spending is $2.7 billion this year. It was $4.3 billion in 1991-92. Spending on agriculture as a percentage of total government spending has dropped by half, from 2.8% in 1991-92 to just 1.4% this year.

Agriculture Canada reported last month that realized net farm income will fall by a full 19% this year and by more than 50% in Saskatchewan. Saskatchewan farm leader Terry Hildebrandt describes this as devastating. At a time of great difficulty on the farm, one would think that Ottawa would help out, but it is clear that the new agricultural policy framework has been designed to limit what Ottawa spends on agriculture.

It was with great fanfare that the Prime Minister announced the new agricultural policy framework just south of here last June. It was to include new safety net programs to protect farmers against sharp drops in income.

We are now a month and a half into the new fiscal year and there are still no new programs in place. It is absolutely unbelievable. Farmers rely on a clear policy framework as an informal collateral to take out spring operating loans from banks and credit unions. This year, incredibly, they are going to these financial institutions with empty hands.

Quite simply, at a time when farmers' incomes are under severe stress and they need a safety net, the federal government is proposing a new set of programs designed to reduce its commitment to farm families in perpetuity. We have to ask why the income of Canadian farmers is taking such a hit. One reason certainly is the massive American and European subsidies that are driving down international prices for farm products. That has a direct impact on our own products.

Canadian farmers are suffering trade injury. It is estimated to be worth about $1.3 billion a year. Although the agriculture minister basically accepts that figure, he went out of his way last June when he was unveiling his new policy to say that this new APF did not relate to trade injury. He knows it is a problem but stubbornly insists that the Canadian government will not do anything about it.

The government, in our opinion, must protect the incomes of Canadian farmers and that means acknowledging the impact of those subsidies. Ottawa needs to consult openly with farm organizations and provincial governments to provide new safety net programs, safety net programs that work and are acceptable to the producers and the industry overall.

Housing and infrastructure is something the parliamentary secretary boasted about. The Federation of Canadian Municipalities said that it needed about $2 billion a year in infrastructure investment and we got the magnificent sum of $150 million in new money. It is simply not enough.

I want to talk about another issue related to the state that Canadian families and working Canadians find themselves in. It is the whole issue of work. There was an astonishing article recently. I spoke earlier about part time work and insecure work, but full time employees are literally working themselves to death. In fact, North Americans now work 1,978 hours on average annually, which is 350 hours more than western Europeans work. If we do the math, we will find that 350 hours means that North American workers who are employed full time generally are working nine weeks more than their counterparts in western Europe.

It is no wonder parents do not have time to look after their children, to help out in the community or perhaps to take care of older parents. Work and consumption have become the focus at the expense of everything else in our society. Surely all of us here need to find ways to encourage Canadians to lead more balanced lives.

Today when productivity is several times what it was in the far-off 1940s, workers find themselves unable to complete the work in less than 40 hours per week. Of course, the Ontario government has fixed that by saying that it is not allowing any overtime until someone has worked 60 hours a week. As a result of this, the poor are earning less in real terms.

Working long hours has many other effects besides the impact directly on families. It impacts our health care system to a significant extent. Stress is the leading cause of heart disease and overwork impacts and causes stress. The consumption of fast foods results in greater obesity and the onset of adult diabetes.

In fact, tests show that the productivity of a worker declines dramatically in the final hours of a very long work shift. With regard to the 12 hour shifts that nurses put in, I think studies show that those individuals are not nearly as productive in the last two or three hours of the shift as they were in the first two or three hours.

In this wonderful job of being a member of Parliament, I have had the opportunity to travel a little with committees. When I am in Europe I do notice that Europeans seem to live a simpler, more balanced life. They do that because they work fewer hours. People who happen to be in a city in Europe on a Sunday will notice that most of the stores are not open. People are not seen running around to supermarkets to do their shopping. The staff are enjoying a day off, a day with their families, a day to hang out. For example, 29% of Norwegians spend less time at work than their North American counterparts, but their average income is actually only 16% less on average.

This issue is going to be of greater concern as we go along. Canadians are feeling very tired with the rat race they are in. They recognize it is leading to debilitating family relationships and is having an impact. I think we are going to hear more about people taking back their time and trying to lead a more balanced life.

The parliamentary secretary said he does not like personal debt or government debt. However, he did not have any comment about the debt that families in the country are facing with credit cards and things like high tuition fees which have an impact.

We in the New Democratic Party acknowledge and celebrate Canada's wealth and promise, but we insist that the government employ that wealth and our many advantages in the best interests of all citizens. We submit that this budget simply does not do that and consequently, we are opposed to it.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to speak today on Bill C-28, the budget implementation bill. In speaking on this bill, I truly feel I am doing what the Bloc Quebecois was sent to Ottawa to do, which is to defend Quebec's interests.

What most observers and commentators have stated is that this bill will implement a nondescript budget that is more of an exercise in propaganda for Canadian federalism and for the Liberal Party of Canada. This budget is a budget of many measures. I counted them. There are 74 different spending initiatives and 14 tax measures.

Of the 88 measures in total, not one manages to capture the imagination of Canadians or Quebeckers. Why? Because none of these measures resolves a single problem presently facing Canada and Quebec.

And there is worse to come. We had hoped that the new Minister of Finance would not follow in the footsteps of the member for LaSalle—Émard whose reputation for lack of transparency in public finances was well deserved by the time he left the finance portfolio. When the estimate of future surpluses is sometimes off by 300%, that is not a coincidence. It is simply one way the federal government hides the true state of public finances from the people, in order to use the taxes paid by Canadians and Quebeckers for purposes other than those for which they were levied.

Thus, it is sad to see that the budget tabled on February 18 fits so well into the pattern of budgets we have grown used to ever since the Liberals regained power in Ottawa. The true figures have been disguised, especially since the surpluses began, which would be in 1997. This is a budget we must describe as non-transparent, particularly with regard to the issue of surpluses.

First, I remind the House that the new Minister of Finance has invented a new category in order to try to artificially reduce his surplus. During the previous finance minister's tenure, we saw the invention of a contingency reserve. It was about $3 billion. So, that was one part of the surplus camouflaged. Year after year, this contingency reserve, which had no real purpose, was supposedly used—and I shall come back to this—to pay down the Canadian government's debt.

This contingency reserve has now been joined by a new invention from the new Minister of Finance, a reserve for economic prudence. We might wonder what the difference is between a reserve for economic prudence and a contingency reserve. The answer probably is that a contingency reserve is created out of economic prudence, while a reserve for economic prudence is just in case there are any contingencies.

But no one is fooled. This is simply creating accounting categories in an attempt to camouflage the size of the surplus produced, year after year, by the federal government, on the backs of the provinces, and Quebec in particular, and on the backs of all the taxpayers, in Canada as in Quebec.

Of course, it is pretty obvious. For example, in his October 2002 budget statement, the Minister of Finance announced for fiscal year 2002-03 which just ended a $4 billion surplus. For the following year, he forecast another $4 billion surplus. But as I indicated, because of the contingency reserve and the economic prudence reserve, in both cases, there was no surplus in the end. For 2004-05, the forecast was for a $5 billion surplus.

Naturally, like the Bloc Quebecois, all commentators denounced this massaging of figures. It was clear that the surpluses would be much larger, not only this year but also in coming years.

In the budget tabled on February 18, the Minister of Finance had no choice but to change his tune somewhat. For example, for the fiscal year that just ended, he announced a $6.4 billion surplus. For 2003-04, it will be $8.2 billion. The forecast has increased from $4 billion to $8.2 billion. We are slowly getting a more realistic picture, but there is still a long way to go.

For 2004-05, a $10.7 billion surplus was forecast in the budget, while in the budget statement, as I said, it was $5 billion. The amount has more than doubled. Between October and February—we are not talking about several years here, just a few months—the surplus forecast has doubled. But that is not quite the reality yet.

In October 2000, we had come up with figures of our own; we stand by these figures, and we stood by them in February. For 2002-03, our forecast was $10.9 billion; for 2003-04, $11.6 billion; and for 2004-05, $11.5 billion. It is pretty simple to do the math. All one has to do is take a look at the economic growth, rate of inflation and historical figures to come up with similar figures.

Of course, the figures I am quoting here, our estimations, we have come up with before the accounting reform. This year—and we totally agree with the new approach—we will be moving to full accrual accounting.

So, taking this full accrual accounting into consideration, for 2002-03, the fiscal year just ended, the surplus will be not the $6.4 billion announced by the Minister of Finance, but $14 billion instead. For 2003-04, the figure will be $12.3 billion, and for 2004-05, $12.4 billion.

So, before the measures announced in the budget, the surplus for the three years I have just mentioned, that is the one that has just ended and the next two, totals $38.7 billion. We can see that this allows the federal government an absolutely phenomenal amount of leeway. With it, the true problems of Canada, Quebec and the provinces could have been addressed, But no, they preferred to announce a whole series of propaganda measures, a flurry of measures that, as I have already pointed out, have not attracted the attention of either observers or the public.

As I said, our estimates put the figure at $14 billion. It is interesting that the new Quebec finance minister, Mr. Séguin, has also come up with more or less the same figure. I will quote from an article in the Wednesday February 19 La Presse , that confirms the approach, or the analysis, of the Bloc Quebecois.

According to Mr. Séguin:

If we consider that the increase in projected spending up until 2005 is higher than the average for past years—

Obviously, this is one way the federal government, that is the Minister of Finance, has of camouflaging the surplus.

—and if instead we calculate the surplus based on the historical average of spending growth—

As the Bloc Quebecois does.

—we realize that the surplus for 2005 will be not the $5 billion stated in the budget but instead $15 billion.

This is the same Mr. Séguin who headed the commission on fiscal imbalance in Quebec, and is now Quebec's Minister of Finance. We are not, therefore, the only ones not to be taken in by the subterfuges of the Liberal government's Minister of Finance.

This year, as I mentioned, taking this full accrual accounting into consideration, there will be a $14 billion surplus before the measures announced in the budget. After spending for these measures, there will be $9 billion. This means that even with the $6 billion in measures announced in the February 18 budget, the federal government will end up with a $9 billion surplus, a surplus that it will say it is putting toward paying down the debt. This is not the whole truth, and I will come back to this later.

However, given that there is no shortage of money in Ottawa, the Minister of Finance is able to solve problems. The main problems that Quebeckers and Canadians want to see solved have to do with the fiscal imbalance, the employment insurance fund and a whole series of social measures.

Instead of solving these issues using the financial leeway available to him, as I mentioned, he fudged the numbers. How did he do this? It is interesting. First, he forecast revenues based on growth that was lower than nominal GDP growth. For the benefit of those following, it is important to understand that when we pay our taxes, we do not pay our taxes based on the real growth of the Canadian economy. We pay our taxes on real growth—the actual increase in wealth—and on the increase in prices. For example, if I get a 5% increase in pay and there is 2% inflation, the real growth in my purchasing power is 3%. The federal government, like other governments, will not tax me on my 3% increase, it will tax me on the nominal increase of 5%, which includes inflation.

What the Minister of Finance is doing is not very complicated. He underestimates the growth in revenues and underestimates the rate of inflation. When we look at the department's documents, we see that the inflation rates, that is, the nominal gross domestic product, are systematically underestimated.

And conversely, the federal government, through the Department of Finance, inflates its expenditures. They are talking about $6.4 billion in the budget. But everyone who has seen how the federal government operates expects this $6.4 billion to turn out to be $5 billion. It is easy to reduce these expenditures.

As I was saying, Mr. Séguin, in his article of February 19, has explained this operation, as we have.

The federal government underestimates its revenues, overestimates its expenditures and, year after year, accumulates surpluses which are not subject to public debate and therefore not available to solve the real problems faced by Canadians and Quebeckers.

They say that these surpluses, which are basically not forecast, must be used to pay down the debt. On October 31, 2002, in this House, the Prime Minister said that, under the acts of Parliament, at the end of the year, the surplus is automatically applied to debt reduction.

The next morning, the Auditor General took him to task saying, “That is not so; that is not true”. The Prime Minister was wrong. He should have said that, by virtue of the acts of Parliament, or simply by virtue of accounting practices, at the end of the year the surplus automatically reduces the debt. I will explain it very simply.

If you have a $100,000 mortgage on your house, then you have a debt of $100,000. If, over the years, you have been lucky enough to accumulate $10,000 in your bank account, at the end of a year, when your net worth is calculated, we will not say you have a debt of $100,000, but that your net debt is $90,000, that is, the $100,000 mortgage minus the $10,000 you have in the bank. But you have not used that $10,000 to pay down your debt. It simply reduces your liabilities because you also have an asset.

It is exactly the same thing for the federal government. When, at the end of the fiscal year, we look at the picture, all the assets of the federal government—including reserves and foreign currency—all these assets are counted toward reducing its liabilities. Thus, the debt is not necessarily paid off. Simply, it is clear that all surpluses and assets go toward reducing the debt.

This is why, for example, in 2001, the surplus was $8.9 billion, much more than the Minister of Finance had estimated. Only $6 billion of this amount was used to pay down the debt, and that is already too much. The remaining $2.9 billion was put into the contingency fund to support the Canadian dollar during difficult times, which is not currently the case, and a good thing.

What the Prime Minister was telling the House is not quite true. I know that he went to law school. In all likelihood, it has been a long time since he has taken any accounting courses, but it is easy enough to understand.

The federal government, with its unforeseen, artificial surpluses—and I explained all this earlier—could very well decide, as it has from time to time, to use this money to resolve the problems that Canadians and Quebeckers want resolved, such as the fiscal imbalance, the employment insurance fund and various other measures that I will come back to shortly. The federal government has the necessary leeway to do something about these things.

Now, the money is there. This would allow the problems to fixed. But, in order to have a real debate, the real figures are needed. Unfortunately, this is not the case with this budget. I must stress this point, because there can be no real debate on the budgetary choices made by the federal Liberal government as long as the true financial picture is unknown.

This transparency problem was once again raised by Mr. Séguin, as I was saying earlier. He was the president of Quebec's commission on fiscal imbalance.

In the La Presse article of February 19 already referred to, he said two other things of note. To quote:

In fact, the federal government is announcing for the current year, ending this March, an excess of revenues over expenditures of more than $6 billion. Taking into account the usual overage noted at the end of each year, the surplus can be estimated at close to $10 billion.

This is Mr. Séguin writing on February 19, 2003. I have said that the Bloc Quebecois estimate before the accounting change was $10.9 billion. So we are both at around the same number, a number that is very far from the underestimates of the Minister of Finance.

Later in the article, Séguin goes on to say this:

Accountability with respect to public funds requires the government to table a budget, get an appropriation act passed, and collect taxes accordingly. A systematic announcement in advance of a surplus, the use of which is never made clear by the government, creates a serious transparency issue and is obviously contrary to the interests of the taxpayers, the ones who will be paying.

There is a problem of transparency, of democracy, in the way the Liberal Government of Canada is administering public funds. Part of the situation is being concealed from us, which prevents Canadians and Quebeckers from being able to give any clear indication to this government of how they want their taxes to be used.

The reality, as I have said, and continue to say, is that there is money in Ottawa. What is lacking is the political will to solve problems, and the reason it is lacking is that the Liberal government's view of how Canada should be built and of the role of the provinces is incompatible with the 1867 Constitution. I will be coming back to this point later on.

We have carried out a very serious analysis. I have spoken of our estimate of the surplus for the next three years. In the Minister of FInance's budget statement, I took his own figures for the surplus. I complemented these with Conference Board studies carried out for the commission on fiscal imbalance and the provinces a scant few months ago. Over the next 10 years, using extremely conservative estimates addressing simultaneously economic growth, interest rates and inflation rates, the accumulated surplus is going to be around $162 billion at least.

This is $162 billion the federal government will be using in large part to pay down its debt or impose its priorities.

With this money, we could easily solve the problems that I mentioned earlier. For example, the Bloc Quebecois proposed a gradual reimbursement of the Government of Canada's debt toward EI contributors and the unemployed, who have been cut off in recent years. It is important to remember that only four in ten people who contribute to EI are eligible for benefits, based on the new rules the government adopted. These benefits are lower than before and are of shorter duration.

So, with this $162 billion we could very well reimburse the EI fund gradually, with $45 million over ten years. This would allow the fund to grow a reserve and increase access and the benefit rates for income replacement. It would also help stabilize the premiums. So, that is $45 billion that could go to toward the employment insurance fund.

We could correct the fiscal imbalance. By my reckoning, this would take $67.5 billion, not just for Quebec, but for all of the provinces. Remember, four out of ten provinces are already experiencing very serious financial problems, and this year, that number is expected to rise to six out of ten.

In fact, there is only one province that is not experiencing financial problems right now, and that is Alberta. The reasons for this are obvious; they have to do with oil. However, all of the other provinces are having financial problems, or are on the verge of them. A slower economy or an increase in unemployment would wreak financial havoc.

So there is money, then, to correct the fiscal imbalance. Once we have paid back our debt to the EI fund, once we have corrected the fiscal imbalance, the federal government would still have a budget surplus of $50 billion with which it could solve a number of problems for which it is responsible. I am not talking about interfering in the jurisdictions of Quebec or the provinces, but it could solve problems that come under its jurisdiction. I will touch on this later.

Clearly there is a transparency problem with the Minister of Finance's budget. There is also a problem of democracy. There is a democratic deficit. When we are not given the necessary information for debate, then the debate is based on false premises. The public is also given inaccurate information. For example, when we are told that, by statute, an unanticipated surplus must be used to pay down the debt, this is not true, according to the Auditor General.

The government should therefore start by making a special effort to provide the public with accurate information so that good discussions can take place.

As I said, the federal government would still have $50 billion over 10 years to solve a number of problems for which it is responsible.

I will start with employment insurance, because it is important. Over the years, $45 billion was misappropriated. The one making this statement is not me but the Chief Actuary of Human Resources Development Canada, in a September 2002 report. It had reached approximately $42 billion in 2002. When we look at the surplus forecast for this year—nearly $3 billion—we can truly say that, in recent years, $45 billion in contributions to the employment insurance fund designed to cover the income security plan for those who lose their jobs we misappropriated.

So, $45 billion has been used for purposes other than what it was intended for. One of this government's ministers said so himself. The money was used to a large extent to pay off the debt, but this is still money owed.

If I owed income tax to the federal government, the fact that I chose to use the money to buy groceries or a car would not justify my telling the government, “I am sorry, I did earn the money, but I spent it and now I cannot pay you because I have no money left”. The federal government would not go for that, and neither would any other government. It would tell me, “You owe us money; you must pay. We will make arrangements”. As far as the EI fund is concerned, payments may be spread over a certain time period, but this is still money owed. The money may have been spent, but that is not the problem of those who contributed, the unemployed. The money must be paid back. We are open to arrangements; I mentioned a 10-year term to pay it back.

Now is a good time, because the Minister of Finance can see clearly that it was not a good idea to grab that $45 billion. Year after year, month after month, week after week, people write to him. I saw a letter from the Canadian Federation of Independent Business that said that for two or three years the government has been promising to correct this situation, that there is still nothing happening, that the contribution rates are much too high in comparison with what is needed. The minister has decided to undertake a consultation on the contribution rates, and he even announced it in the budget.

Of course, contribution rates mean nothing on their own. Contribution rates are related to the coverage people want from the EI program, what type of EI they want, what kind of reserves are needed to stabilize rates, and what kind of rates are required. Thus, it is absolutely unthinkable to have a consultation, as the minister thinks he can, about the mechanisms for setting contribution rates, without broadening the debate. And everyone has understood that.

At a meeting on May 6 in Gatineau, Quebec's social action groups came to tell him that they want a debate on contribution rates, the level of reserves needed to stabilize contribution rates in the event of an economic downturn and increasing unemployment, and the kind of coverage wanted.

Therefore the debate must be broadened. Contribution rates are much too high. I know that the government regularly boasts about reducing the rates. Let us look at that. I will not go too far back, although I could go back to 1993, when the Liberals came to power, but that might bore you, Mr. Speaker. I will just go back to 1999.

As you know, the term “worker contribution rate“ , means that it comes from wage earning employees. In 1999, the EI contribution rate per $100 of insurable earnings was $2.55. This allowed the federal government to get its hands on a surplus of $6.8 billion. The rate that would have been needed at that time to provide coverage, again according to the HRDC actuary, was around $1.69. Hon. members can see therefore that the contribution rate was far too high compared to what was needed to sustain the program, which was $1.69. At that time, I would remind hon. members, the accumulated surplus was already in the order of $20 billion. That was back in 1999.

The government, through its finance minister of the day, announced in its budget that it would be reducing the contribution rate, and boasted for months about this. It brought it down from $2.55 per $100 of insurable income to $2.40. I am not talking about the present Minister of Finance; it was one of the candidates for the leadership of the Liberal Party of Canada.

At that time, still according to the HRDC actuary, what was needed was a contribution of $1.43. This means that, the government's boast of having lowered the rate notwithstanding, it had not been lowered enough.

It continued to amass surpluses from the worker and employer contributions and at the expense of the unemployed. That year, the result was a surplus of $6,8 billion, making the total $26 billion.

Obviously, this led to complaints. “How can it be that no one, or just about no one, is entitled to EI? We pay at the set contribution rate and the government accumulates a surplus and announces it will pay off the debt with the money”.

Of course, the Minister of Finance of the day again lowered the contribution rate. He took it down from $2.40 to $2.25 in 2001. But, according to the actuary, the contribution rate that was needed to cover the cost of the EI fund was $1.66. This means the figure was still far too high.

Last year, it was lowered to $2.20, and the contribution rate needed for the system was $1.87. Now, we are being told that the rate will be lowered to $1.98, when the rate actually needed tis lower still. So, there will be another surplus.

The government can brag all it wants about lowering contribution rates, but it has not lowered them enough, and it has not used these surpluses to improve the employment insurance fund. It will pay, I hope, the political price for this misappropriation of funds.

Now, this must stop. I hope that, in consultation with the Minister of Finance, an ideal situation will be found, where accounting for the employment insurance fund will be done outside the federal government's general accounting.

The deficits were eliminated a long time ago. The last deficit was in 1994, almost ten years ago. So, we do not want to hear that it is because there were deficits to deal with and pay off. Now, these deficits have been eliminated, and the surplus is over $45 billion.

The debate must be broadened. In consultation with the minister, I hope that common sense will prevail, which is rare for the government side. If common sense does not prevail, I am very happy to know that the Confédération des syndicats nationaux and the Fédération des travailleurs et des travailleuses du Québec have started proceedings. Since I was the secretary general of the CSN, I was a signatory, in 1998, to the first proceedings against the federal government to recover the funds stolen from the workers and contributors to the employment insurance fund.

The proceedings started a few days ago. It is quite likely that, in the end, the courts will force the federal government to correct this situation. It would be a terrible shame for the courts to have to ensure compliance with the spirit of the Employment Insurance Act.

There is momentum for the federal government and the Minister of Finance to correct this situation and to commit to refunding the $45 billion—the money is there—to look, along with the labour market partners, at the type of coverage we want for people who lose their job.

As I mentioned, the Bloc Quebecois, along with the human resources development committee, made several proposals regarding accessibility and the income replacement rate in particular. The rate is now set at 55% and everyone agrees that it should be at least 66%.

We need to ensure that almost everyone who pays premiums is eligible for benefits, and that they receive them for long enough to avoid the problem of the gap that currently exists in the regions. This is a glaring problem, especially with the crisis in the fisheries. Many people's employment insurance ends before they start their jobs, and they are obviously not eligible for social assistance because they have assets from having worked hard all their lives. We cannot ask these people to liquidate everything they have saved, especially when it comes to providing for their children.

We must ensure that we eliminate this problem with the gap. The federal government has money to correct this situation.

Earlier, the parliamentary secretary said—and the minister repeated it in the House—that revenues this year would be almost at par with benefits. I have no idea where these figures come from. As far as I know, this is probably another attempt at covering up reality.

Let me quote figures from the finance minister's October 30 budget statement, in which he announced that the contributions or revenues would be about $18.081 billion, while expenditures would be $15.284 billion. The figures speak for themselves. I did the math, that was not very hard. The surplus is $2.797 billion.

The budget announced a 2¢ cut per $100 of insurable earnings. The budget statement had already announced a reduction in contribution rates from $2.20 to $2. So by the time the budget came around, the big news was not a reduction in contribution rates from $2.20 to $1.98, but from $2 to $1.98. No one was fooled by the finance minister. I hope he does not think he fooled anyone. This measure will come into force in 2004; it has no impact this year. It means that, this year, the surplus will be around $2.797 billion.

Next year, in 2004-05, based on the figures provided by the Minister of Finance, there will be $18.307 billion in revenues and $15.883 billion in expenditures for benefits administration. The estimated surplus is therefore $2.424 billion. These figures date back to last October; they are not that old.

Adding the 2¢ reduction announced in the budget brings the shortfall in the EI fund to $53 billion. I therefore subtract $53 billion. Also, so-called compassionate measures were announced for workers who may want to use their EI to care for a seriously ill relative, to be financed to the tune of $86 million. That is in the budget.

If we subtract the funding for the measures announced in the budget brought down on February 18, the surplus decreases, from $2.424 billion to $2.285 billion. It does not melt away, it decreases very slightly. We are talking about $130 million or $140 million less than what was forecast in October.

Let us do the same for 2005-06. The minister tells us there will be $19.129 billion in revenues and $16.685 billion in expenditures, leaving an estimated surplus of $2.44 billion. I will run through this again: let us say that the contribution rate is kept at $1.98 per $100 of insurable income; there will be a revenue shortfall that year of $178 million. As for compassionate care measures, the program will be well established. So we are talking about $221 million, but there is still a surplus of $2.045 billion.

Thus, we see that if there is not a major course correction, a change of direction, surpluses will still be accumulating and the federal government's debt to EI contributors will soon reach $50 billion, it having once more victimized the people who lose their jobs and need insurance.

This is part of the federal government's responsibilities. If it wants to be of use to the world, to Canadians, to Canada, to Quebec, to Quebeckers, let it take care of its own jurisdictions, let it settle this employment insurance problem, let it reimburse the $45 billion it owes, let it set contribution rates based on reality, with a $15 billion reserve perhaps, and let it improve employment insurance benefits. That is within its jurisdiction.

There are people working in the softwood lumber industry who are losing their jobs. I think it is sad that a year has passed since the second phase was announced. In particular, I can see the face of the Minister for International Trade, who is sad because the government is incapable of respecting its commitments to the softwood lumber industry and its workers.

True, negotiations are ongoing and we will have a decision by the WTO. But people are losing their jobs. A number of them are in that gap situation I was talking about earlier, where they have no money whatsoever coming in. Some of them have gone on welfare. Some communities are threatened with closure.

In terms of softwood lumber, the federal government is responsible for announcing a second phase and seeing, along with the Minister of Human Resources Development Canada, to protecting seasonal workers in particular.

In terms of the crab fishery, the government could do something. But no. It prefers to interfere in provincial jurisdictions, in particular Quebec's judgments. Adélard Godbout must be turning over in his grave knowing that, through a constitutional amendment, he let the federal government have jurisdiction over employment insurance. I am certain that he is extremely unhappy about that, poor Adélard.

Unfortunately, instead of fixing the problems, the federal government prefers to interfere in areas of provincial jurisdiction, in particular Quebec's jurisdictions.

I already mentioned in another speech that we had made a list of all the new intrusions, not ones that already exist, by the federal government in Quebec's areas of jurisdiction in the latest budget; there are 28 intrusions, meaning 28 measures that infringe on Quebec's jurisdiction, for a total of $4.476 billion. This amount is proof of the fiscal imbalance.

If the federal government had only the money needed for its own areas of jurisdiction, it would not have enough money to meddle in those belonging to the provinces; the provinces and Quebec would then be able to levy the taxes needed to assume their responsibilities.

Rolling in surpluses, the federal government has been able not only to pay off the debt, because it is not putting this money toward solving problems that fall under its purview, but also to use some of the money to encroach on provincial jurisdictions, in Quebec in particular, and to enhance its visibility—it is not fooling anyone with that trick either—in an attempt to stifle sovereignist sentiment in Quebec. It has been at it for several decades, but that did not prevent the sovereignist movement from growing, with some ups and downs. Such is the history of an entire people, but at the same time people will not be bought with this kind of measure. The bottom line is $4.476 billion to encroach on Quebec's jurisdiction.

Yet, money could very well have been put into the infrastructure program to ensure that municipalities could solve a number of problems, with the provinces and Quebec, of course, remaining in charge. What was announced instead? An investment of $1 billion over 10 years in infrastructure. That is $100 million a year, including $25 million for Quebec. That is ridiculous. Across Canada, municipalities scoffed at the measure. Twenty-five million merely pays for 25 kilometres of highway. The municipalities condemned the measure. Greater things could have been done regarding the infrastructure.

As for the special tax of 1.5¢ per litre of gas introduced by the Liberals to fight the deficit, while the government has been rolling in surpluses since 1997, the tax continues to be collected and to generate surpluses that go to paying down the debt, at least that is what we were told. This tax of 1.5¢ per litre of gas could very well have been abolished, especially in the current context of volatile gasoline prices.

As for the air security tax, this morning Air Canada announced a first-quarter deficit of $354 million. The situation is a very serious one. A tax is imposed without anyone being able to explain its usefulness, to such an extent that the Minister of Finance has in fact reduced it. It should have been simply done away with altogether. Perhaps that would have helped. While certainly not the only measure the airline industry needs, a minimum of common sense would have indicated that it ought to be abolished. Probably the next budget of the Minister of Finance—who knows if it will be this one or another—will abolish it. The damage has been done, however, and it is going to end up costing the Canadian public purse dearly.

As for the excise tax on microbreweries, the Standing Committee on Finance recommended that, for microbreweries producing 300,000 hectolitres or less per year, there be a 60% reduction on the first 75,000 hectolitres. The Minister of Finance did not take this into consideration at all, and this sector is going through serious problems as a result.

As for the disability tax credit, the budget contains absolutely nothing. In fact, access to this tax credit has been restricted. It is ridiculous. The government is asking for doctors' reports that sometimes cost more than the credit itself. The tax credit is worth about $960 and sometimes people are asked to provide reports from psychiatrists that cost more than that. People are not making money off of the DTC. I saw a man who was having problems walking who was denied the disability tax credit by the federal government.

I also must raise the issue of the GST and school busing. I find it unacceptable that despite everything the parliamentary secretary and the ministers involved say, the principle of the authority of a final judgment is being ignored. I hope that common sense will prevail before this bill is passed. I hope it is not passed. We are talking about $18 million. This will not jeopardize public finances, far from it. However, it will violate a sacrosanct principle. The authority of a final judgment must be respected. Of course, cases that are pending can be overridden, but not cases that have already been determined.

In health, there has been much bragging from the federal government. They finally handed over $6.5 billion in new money, but there were $21.6 billion worth of needs.

This falls completely short of the mark.

In closing, I would like to quote a Quebec premier, who said:

We absolutely cannot sit idly by and watch the federal government introduce initiatives that would prevent us from exercising our provincial powers, even on apparently secondary matters. We believe that true respect for the legitimate autonomy of the provinces, and everything this entails, presumes that the provinces have what they need to effectively meet their responsibilities in areas under their jurisdiction.

Who said this? Was it Lucien Bouchard, Bernard Landry, Jacques Parizeau or René Lévesque? No. It was Jean Lesage, in 1963. I am happy to see that the Bloc Quebecois is continuing his fight to ensure that Quebec's jurisdiction is respected.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Mr. Speaker, I want to acknowledge the speech that was made by the Parliamentary Secretary to the Minister of Finance and recognize one of the major points that he struck which was that the 2003 budget is on fiscal fundamentals. He said that it is fundamentally correct and fundamentally sound because there is no deficit. That was the major plank in terms of its fiscal responsibility and fundamentals.

The other point my hon. colleague mentioned was that there is more transparency, a greater accountability.

I would like to point out that one of the major statements that was given to us as Canadians in the prebudget consultations was that this budget was designed to make Canadians more competitive.

I wish the hon. member had mentioned exactly what he meant by that. One way of measuring the competitiveness of Canadians would be to compare the relative tax that they have to pay to certain other people. He did use the comparison between Canadians and Americans.

I wish to draw attention to a particular category of persons in Canada and compare them to the United States. The example I will use is an individual who earns about $65,000 a year and has a $2,000 dividend income in his annual revenue.

Such a person in Canada would pay on the tax dividend of $2,000 a tax of $498. On the salary of $65,000 the person would pay income tax of $15,160 leaving a discretionary income of roughly $51,342 of the $65,000 that he or she earned in the first place.

Let us compare that to a person in the United States who earns $65,000 and has a $2,000 dividend. The taxes on the dividend would be zero, compared to $498 in Canada. On the salary the tax in the United States would be $3,795, for a discretionary income of $63,205.

There is a considerable difference between the disposable income of an American vis-à-vis a Canadian. If we want to make Canadians more competitive vis-à-vis an American, surely we would like to leave more discretionary income in the hands of the Canadian than of the American. This is one measure of competitiveness that we really want to address.

I am sure there are other members across the way who will say that is based on American dollars. Indeed the adjustment here is on similar dollars.

I do not want to go to that particular area any further. I wish to address a further issue with regard to budgets and with regard to fiscal responsibility and fundamental considerations as to what it means for Canadians and what it means to the economy generally.

Here I must address you, Mr. Speaker, and also the hon. member opposite that I am heavily indebted to the research that has been done in the comparison of economic freedom in North America, which was done in comparing the United States and Canada in terms of the relative economic freedom enjoyed by these two countries and the people in those countries.

The question I am sure listeners would want to ask is what in the world is economic freedom? I wish to address the definition as it was used in this particular study:

Individuals have economic freedom when (a) property they acquire without the use of force, fraud or theft is protected from physical invasion by others and (b) they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. Thus, an index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions.

That is economic freedom. What the researchers did is they compared the economic freedom of people in Canada vis-à-vis the economic freedom of people in the United States. They ranked on the basis of this index all of the states in the United States, as well as the provinces in Canada and guess what? Most of the provinces in Canada rank at the very bottom. In fact, Prince Edward Island is at the very bottom. The state of Delaware is at the top. Alberta is about halfway through and Ontario is quite a way down.

The study went on to describe this economic freedom a little further:

The freest economies operate with a minimal level of government interference, relying upon personal choice and markets to answer the basic economic questions such as what is to be produced, how it is to be produced, how much is produced, and for whom production is intended.

There are four elements.

As government imposes restrictions on these choices, the level of economic freedom declines.

From the earlier statement I made, we can tell that the researchers found there is less economic freedom in Canada than there is in the United States.

The research flowing from the data generated by the Economic Freedom of the World reports, a project the Fraser Institute initiated almost 20 years ago, shows that economic freedom is important to the well-being of a nation's citizens. This research has found that economic freedom is positively correlated with per capita income, economic growth, greater life expectancy, lower child mortality, the development of democratic institutions, civil and political freedoms, and other desirable social and economic outcomes.

The hon. member opposite mentioned the significance of dealing with child poverty. I agree wholeheartedly. We want to deal with child poverty. I would suggest that one of the reasons we have child poverty is because the parents are poor. One of the reasons the parents are poor is because their disposable income is down, and the reason that is the case is because their taxes are so high. If we really want to get serious about dealing with child poverty, let us deal with the disposable income of the parents.

Just as Economic Freedom of the World seeks to measure economic freedom on an international basis, Economic Freedom of North America has the goal of measuring differences in economic freedom between the Canadian provinces and U.S. states.

I just indicated that.

This study looks at the 10 Canadian provinces--excluding Yukon, the Northwest Territories, and Nunavut--and the 50 U.S. states from 1981 to 2000. Each province and state is ranked on economic freedom at the subnational and all government levels. This helps isolate the impact of different levels of government on economic freedom in North America.

It clearly suggested the relationship between the federal government and the provinces with regard to the national government in the United States and the individual states.

Let us now examine three elements of this economic freedom. They are subsidies and transfers that happen to individuals and provinces; the level of government employment; and occupational licensing. On transfers and subsidies:

When the government taxes one person in order to give money to another, it separates individuals from the full benefits of their labour and reduces the real returns of such activity. These transfers represent the removal of property without providing a compensating benefit and are, thus, an infringement on economic freedom. Put another way, when governments take from one group in order to give to another, they are violating the same property rights they are supposed to protect.

Is that not interesting. That is exactly what happens when this sort of thing is done.

Some form of government funding is necessary to support the functions of government but, as the tax burden grows, the restrictions on private choice increase and thus economic freedom declines. Taxes that have a discriminatory impact and bear little reference to services received infringe on economic freedom even more. High marginal tax rates discriminate against productive citizens and deny them the fruits of their labour.

That is part of the problem. That is why we on this side of the House have advocated and will continue to advocate the need to reduce taxes so productive individuals can become increasingly productive because they will have the incentive to do so. Take the example I mentioned earlier. Is it any wonder that people are attracted to moving to another country where they would have greater disposable income than if they stayed here. That is the issue.

We need to recognize what happens when money is taken from one group and given to another group. We are taking away the freedom from one group in order to exercise that. When we give money to someone freely, is that an incentive to continue to be productive or not or does that become a disincentive? There is a lot of evidence to indicate that it creates a disincentive rather than an incentive. I could talk for another couple of hours on that particular issue.

I want to move to the second point: government employment as a percentage of total state and provincial employment. Economic freedom decreases for several reasons as government employment increases beyond what is necessary for governments' protective and productive functions. This is the whole business of bureaucratic entrepreneurship and the business of hiring people to the point where it is unnecessary to have that many people in government employment in order to carry out the services.

There has to be a bureaucracy. There have to be employees of government, whether it is civic, provincial or federal. That is not the issue. The issue is, what proportion of the total employment group, the worker component, is in government service and what proportion is outside of government service? I do not have those numbers exactly before me, but I have looked at various statistics. There is an increasing proportion of the total labour force that is employed in government offices as compared with non-government offices. That is the issue we are talking about here.

This business of having an increase of that sort restricts the ability of individuals and organizations to contract freely for labour services, since potential employers have to bid against their own tax dollars in attempting to obtain labour. That is the issue.

High levels of government employment may also indicate that government is attempting to supply goods and services that individuals contracting freely with each other could provide on their own.

Government should not be providing goods and services that can be provided equally well or better in the private sector or by individuals. Government should not be doing those kinds of things. That is what we are talking about here.

It may also be that the government is attempting to provide goods and services that individuals would not care to obtain if they were able to contract freely. Maybe there are some services or goods provided that individuals would not buy or would not want if they had to provide them, because they are unnecessary and they are not a priority. Sometimes these kinds of things are invented for political advantage or for certain other advantages which have nothing to do with the improvement of the economic position in Canada.

We also indicate that government is engaging in regulatory and other activities that restrict the freedom of citizens. Let us talk to a small entrepreneur. Let us talk to a small business person. What is the number one issue they will tell us about? Number one is the tax level. The second one is regulatory infringement on their ability to do what they feel they want to do freely. These are very serious issues and I think they need to be addressed.

I know there was some indication that there is going to be a reduction of some of the regulatory functions. That is a good thing, but there are other areas where the regulatory function has increased rather than decreased. The issue here is that if we want to increase the economic freedom of Canadians we need to reduce regulatory intrusion into their activities.

Finally, high levels of government employment suggest government is directly undertaking work that could be contracted privately. When government, instead of funding private providers, decides to provide directly a good or service, it reduces economic freedom by limiting choice and by typically creating a government quasi-monopoly in the provision of services. For instance, the creation of school vouchers may not decrease government expenditures, but it will reduce government employment, eroding government's monopoly on the provision of publicly funded educational services while creating more choice for parents and students and thus enhancing economic freedom.

That is only one way of doing this sort of thing. We have had all kinds of other indications where parents should be given the choice. I will give one other example. I believe that it was the hon. parliamentary secretary who recently indicated that there was going to be a $3,200 child benefit so that parents could use that money, but it is going to be paid not to the parent but to these various institutions. Our position would be to reduce the taxes so that parents will have the freedom to choose where they are going to send their kids and how they are going to have them looked after, or to give the money directly to the parent to do that. To have government do this and dictate where they should go and how they should be treated there I think is an infringement on the economic freedom of individuals.

The third point is occupational licensing. I am sure, Mr. Speaker, that you know only too well what this is all about. It has to do with architects, engineers, doctors, nurses and teachers, a whole host of professions and special occupational categories. They are licensed on a provincial basis.

What is happening is that a person who is licensed in one province is unable to practice, in many instances, in another province. In order for a medical doctor licensed and practising in Ontario to take that Ontario licence to British Columbia, he or she would have to be licensed in British Columbia. They would be told, “Sorry about that. You have to be licensed in British Columbia and guess what? We're not going to give you a licence, because your licence is from Ontario, unless you take certain courses or re-write the examination or whatever. We're going to put a barrier in there”.

Not only does that exist for medical practitioners, it exists through the host of professions that I have listed and many more. That is a serious problem, because if a situation arises, and it has, where there is a real shortage of certain kinds of practitioners, and whether it could perhaps be a transfer of persons, they are unable to practise simply because of this barrier.

This is in effect a provincial barrier that exists in Canada and which in my opinion is absolutely atrocious, because if a medical doctor can perform laser surgery in Ontario, for example, why can he not do it in Victoria or Vancouver? He knows how to do that with that laser surgery equipment. This is absolute nonsense. It defies logic. These are the kinds of problems that exist. When these kinds of licensing practices exist, they interfere with the economic freedom of both the practising professional and the individual who wants to have the service performed.

These laws often protect the interests of “insiders” from potential competition. Is that really what we want to do? Do we really want to make sure that governments interfere in the opportunity for these people to compete with one another so they build artificial walls called licensing walls? Surely that is not what we want to do and yet that exists in Canada. I know it exists and I am sure, Mr. Speaker, you do too.

In Canada through the 1980s, economic freedom remained fairly constant at the sub-national level while it increased somewhat in the all-government level, perhaps as a result of a change of federal government and the resulting change in policy in 1984. In both indexes, economic freedom fell in Canada in the early 1980s and then began to rise in early 1990s. Federal, provincial and municipal governments began to address their debts and deficits, but typically more through increased taxation than through lower spending. However, as debts and deficits were brought under control, governments began to reduce some tax rates through the mid-1990s and particularly the late 1990s. Also in this period, fiscally conservative governments were elected in Canada's two richest provinces, Alberta and Ontario.

Without a summary statement on that particular part of it, it should be pretty clear that the fundamental talked about by the parliamentary secretary to not have a deficit is indeed a fundamental pillar and principle that is important, but what he did not say was that debt has to be planned to be reduced. We had all kinds of claims that the government has reduced debt over the last number of years, and it has. That is good. It has brought the deficit under control and it has paid back some debt, but there is no plan to repay the debt. Oh yes, indeed, there is a contingency fund of $3 billion this year, and if we do not need it for something else, then we will pay that into reducing the debt.

A great point was made about the proportion of the debt vis-à-vis the GDP, but as the GDP rises and the debt remains more or less constant or rises only slightly, small wonder. As a proportion of GDP, the debt takes a smaller portion. But the banks do not care about that; they care about the interest that they applied to the debt. Our interest charges on $536 billion of debt are exactly the same whether it is 50%, 10% or 60% of GDP. If we compare the interest payments being made by the Government of Canada today on our debt, they run around roughly the $40 billion to $42 billion mark. That is more than the government contributes to the health care program.

Another big point was made about the great contribution that has been made to health care. Yes, there has been an increase. Yes, money has been put back into the health care system, that is quite correct, and it is now at the level where the Liberals took it away in 1993. They have just now increased it back to that level. If one adds the inflation that took place during that time and the population increase, they are still in a deficit position vis-à-vis where they were. It is all very well to talk about accountability and it is all very well to talk about transparency, but then they must tell the whole story: “We took the money away first and then we gave some back but, guess what, we did not give you back as much as we took away in the first place”.

There is another dimension here. The money is there now, but what about the delivery of the service? It is very good that the money is there, but we now need to recognize that delivery of health care is every bit as important as the ability to pay for it. If we are inefficient at the delivery of the system, the waiting lists will not go down and the technology that should be applied will not be applied. The onus is now upon every administrative unit in the health care system to be as efficient and as effective as it can possibly be. I certainly hope that some of the elements that will be brought in with this money will in fact encourage the more efficient and more effective application of those funds in the delivery of the health care system so that we all have a timely and quality system there when we need it.

We also need to understand the impact of Canada's fiscal system. For example, let us consider a province that reduces economic freedom by increasing taxes. This is a uniquely Canadian problem:

This will likely have a negative impact on the provincial economy, as both the following results and international testing show. However, the weaker provincial economy means the province will receive an increase in federal payouts (or a reduction in the fiscal outflow if the province in question is a “have” province). The greater the reduction in economic freedom, the greater the negative impact on the economy and the greater the amount of money the province will receive from the federal government.

On the one hand, we have the province increasing taxes and reducing economic freedom and then getting money from the federal government, in which case we have the two things working one against the other:

This inflow of funds will, at least in the short term, partly offset the negative impact on GDP and mute the impact of the economic freedom, or its loss, on the economy. (In the longer term, the inflow of funds will also weaken the economy but this impact is likely beyond the time horizon of the tests conducted--

So there is a caveat in this whole thing. Nevertheless, the principle has been established:

On the other hand, if a province increases economic freedom, for example by reducing taxes [which Ontario and Alberta did]...the result is an increased outflow of government revenues to other jurisdictions and a heavier tax burden, given the progressivity of Canadian taxes, which in turn suppresses increases in economic freedom and economic growth. In other words, fiscal federalism mutes the impact of economic freedom in Canada.

It has done that. We can ask the finance ministers of Ontario or Alberta and we will find that this is exactly what they have experienced:

Economic growth itself, because of Canada's fiscal structure, reduces a province's economic freedom and thus brakes further growth [in the economy]. Despite the problems created by Canada's fiscal structure, economic freedom still proves to be a powerful stimulant for increasing prosperity in Canada.

What this really means is that both the provinces and the federal government should be looking at economic freedom and giving their respective constituents and residents greater freedom. One of the best ways to do that is to reduce government spending and to reduce taxes and to do that in such a way that the individual is granted greater freedom to apply the funds that they want to apply in the endeavours that they have for the goods and services that Canadians want and need.

The end result of all of this is that Canada's fiscal federalism seems to harm both rich and poor provinces. The discussion we have just gone through shows that:

...fiscal federalism frustrates the ability of some provinces to improve their economic freedom and, thus, their prosperity. However, the effects are at least as unfortunate in the poorer provinces, where a rich menu of government spending pushes out other economic activity and politicizes the economy. As a result, the rate of convergence of Canada's poorer regions is about a third to a half the rate of convergence of poor regions in the United States, Europe and Japan.

The incentives created by fiscal federalism are also damaging. Because fiscal federalism mutes the ability of provinces to move towards economic freedom and thus weakens the positive impact of economic freedom, the incentive for provinces to increase the freedom of their economies weakens.

Even worse, the elites--

I want to make it absolutely clear that these are the words of the authors of the study. This is their conclusion, their observation. They go on:

--the elites in “have-not” provinces have incentives to limit economic freedom. Low levels of economic freedom reduce economic activity and increase the flow of federal transfers. These transfers are predominantly captured by the political and business elites, meaning they face incentives to keep economic growth low.

That is exact opposite of what we want to achieve. It goes on:

As well, Canada's Employment Insurance system alters the incentives facing many voters, since they can benefit from the structure of the EI system, which also weakens economic growth by removing large segments of the population from the year-round workforce so long as the economic activity remains weak.

We have had all kind of debates on that particular one in the last little while. It goes on:

While all segments of the population would deny being influenced by such incentives, there has been no significant economic reform movement in Atlantic Canada, even though there is much evidence from around the world that the region's policy mix damages growth.

Those are harsh realities.

In review, “The Importance of Economic Freedom” is:

...why economic freedom is so clearly related to growth and prosperity, a finding not just of this paper but also many other empirical explorations of economic freedom.

In many ways, this debate goes back to the beginnings of modern economics when Adam Smith famously argued that each of us, freely pursuing our own ends, create the wealth of nations and of the individual citizens. However, the twentieth century was much consumed by a debate about whether planned or free economies produce the best outcomes. The results of the experiments of the twentieth century should be clear. Free economies produced the greatest prosperity in human history for their citizens. Even poverty in these economically free nations would have been considered luxury in unfree economies. This lesson was reinforced by the collapse of centrally planned states and, following this, the consistent refusal of their citizens to return to central planning, regardless of the hardships on the road to freedom.

I do not think I have to detail the names of the countries that we are talking about here. It goes on:

Among developing nations, those that adopted the centrally planned model have only produced lives of misery for their citizens. Those that adopted the economics of competitive markets have begun to share with their citizens the prosperity of advanced market economies.

That is their observation and I am sure that the observation of many members in the House. It goes on:

While these comparisons are extreme examples, from opposite ends of the economic freedom spectrum, a considerable body of research shows the relationship between prosperity and economic freedom holds in narrow ranges of the spectrum. While sophisticated econometric testing backs up this relationship, examples are also interesting. So, for example taking two peripheral European nations, the relatively free Ireland does much better than the relatively unfree Greece. In the United States, the relatively free Georgia does much better than the relatively unfree West Virginia. In Canada, an unfree Quebec does much worse than its free neighbour, Ontario. As with anything in the real world, exceptions can be found, but overall the strength of the statistical fit of this relationship is remarkable.

While this is hardly the place to review several centuries of economic debate, the mechanics of economic freedom are easy to understand. Any transaction freely entered into must benefit both parties. Any transaction, which does not benefit both parties, would be rejected by the party that would come up short. This has consequences throughout the economy. Consumers who are free to choose will only be attracted by superior quality and price. A producer must constantly improve its price and quality to meet customer demands or customers will not freely enter into transactions with the producer. Many billions of mutually beneficial transactions occur every day, powering the dynamic that spurs increased productivity and wealth throughout the economy.

Restrictions on freedom prevent people from making mutually beneficial transactions. Such free transactions are replaced by government action. This is marked by coercion, in collecting taxes, and lack of choice, in accepting services. Instead of gains for both parties arising from each transaction, citizens must pay whatever bill is demanded in taxes and accept whatever service is offered in return. Moreover, while the incentives of producers in a free market revolve around providing superior goods and services in order to attract consumers, the public sector faces no such incentives.

Members know this is the case. It goes on:

Instead, as public-choice theory reveals, incentives in the public sector often focus on rewarding interest groups, seeking political advantage, or even penalizing unpopular groups. This is far different from mutually beneficial exchange although, as noted earlier, government does have essential protective and productive functions.

In some ways it is surprising the debate still rages because the evidence and theory favouring economic freedom match intuition. Intuitively it makes sense that the drive and ingenuity of all citizens, harnessed to better outcomes through the mechanism of mutually beneficial exchange, will surely do better for themselves than will a small coterie of government planners, who hardly have knowledge of everyone's values and who, being human, are likely to consider their own well-being and the constituencies they must please when making decisions for all of us.

That is the problem of central planning in many ways. It should be left largely to the individual. They should be given the freedom to apply their funds, to make their decisions, to buy those goods and services that they want.

In conclusion:

The worldwide evidence on economic freedom suggests that Canadian provinces are poorly positioned to take advantage of economic opportunity. The provinces are clustered near the bottom of the ranking in all three areas, indicating that their governments have consumed and transferred more resources, imposed higher tax rates, and created more rigid labour markets than the governments of the US states.

We had witness on that here not long ago. In fact it is now currently upon us. I believe there is a province in Canada that is thinking of threatening to take the government to court. In Newfoundland and Labrador there is a very major issue, and this is exactly what the issue is about. It goes on:

The regression analyses [that is done by this particular study] indicate that growth in economic freedom and the level of economic freedom have a significant impact on the growth in per-capita GDP and the level of per-capita GDP. Since Canadian provinces have relatively low levels of economic freedom, Canadians likely are to continue to experience lower standards of living relative to the American states. Only two provinces, Alberta and Ontario, have high levels of economic freedom in the Canadian context, and the residents have seen the benefits of this.

That goes into the real basic fundamental of how to build a budget in Canada: provide economic freedom for the provinces, provide economic freedom for Canada as a nation and, in particular, to individuals to be free to choose.

There are a couple of things we really have to look at in some detail. I want to look at the air tax which the government has imposed upon Canadians.

A big point was made about the fantastic reduction from $12 to $7, a 44% reduction. That is true, that is a reduction and it is 44%, but it is still $7 per flight and $14 for a return flight. The research behind all this suggests that before the $12 tax was introduced, which is now $7, it cost the airlines $1.10 each way to screen a passenger. If it cost the airlines $1.10 to screen a passenger, why is the government imposing a $7 tax?

I will now go to the gasoline tax. The federal government collects 10¢ on a litre of gasoline and 4¢ on a litre of diesel fuel. The federal gasoline tax cost motorists $4.3 billion in 2000-01. On last year's average of, say, 64¢ per litre of gasoline, the government collected roughly $1.9 billion in GST. This went up when the price of gasoline went up, a windfall for the federal government.

In the United States the money that is collected for gasoline tax is contributed to the infrastructure of highways. In Canada a pittance is devoted to that particular expenditure.

While this is a great and wonderful announcement with regard to the infrastructure program, and a major part of it is for highways, a small proportion of those tax dollars collected on gasoline and diesel fuel go to that. The time has come for us to recognize that this tax, which is collected on a designated basis, perhaps should be spent on a designated basis.

In principle, for years in some of the positions of management I have held, I have never been a supporter of a designated tax. However the time has come to ask ourselves if we collect the tax on a designated basis, should it not be spent on a designated basis. It is a very real question. There are very sound reasons for putting it into general revenues but there are also some very sound reasons to recognize this and say that we have to be practical.

Right now, highway No. 1, the Trans-Canada Highway, in many areas is in a serious state of disrepair. It needs major improvement and yet the money that has been designated to do that is a pittance compared to what is necessary. That is a very serious indictment on the government. It goes directly to the whole idea of the economic freedom I talked about just a moment ago.

I want to go one step further on the point that the EI premiums have been reduced. That is true, they have been reduced. However I want to put this in the context of payroll taxes. It is very interesting what has happened. I want to compare only two years, 1993 and 2003. In 1993 the EI rate per $100 was 3%. Now it has dropped down below $2.10. The total spent in 2003 for EI premiums $819 for every $100. In 1993 it was $1,100. One might say that it is a big reduction, and it is.

Now let us look what happened to the CPP, which is the other payroll tax. The CPP tax was $752.50 in 1993 and in 2003 it was $1,810. Therefore, the total payroll tax has moved $817.20 higher than it was in 1993. It is all very well for the government to talk about what is has done with EI premiums and to say that it has reduced and slashed them but it then increases the CPP tax. Therefore the individual who is buying into this is paying more than in 1993. Such is the legacy of the budget making process across the way.

These are very serious issues and I think we have to come to grips with them in a very real way. There are good things about this budget but there are also some very serious shortfalls.

I would like to really endorse the fact that the government get serious about a plan to pay down the debt. It is time the government have a serious plan to reduce the capital tax totally. I know there is a plan to do that over five years but that is too slow. It is too little too late.

There are expenditures in goods and services areas, subsidies and things of that sort which have increased the expenditures of government well beyond the increase in population and well in excess of the increase in the inflation rate in Canada.

There are some serious shortcomings in the budget and we should change those shortcomings into positives before we approve Bill C-28.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, it is a pleasure to rise today on third reading of Bill C-28. We have had a lot of debate with regard to the budget implementation bill.

I want to again emphasize to members of the House that this budget is built on strong fiscal fundamentals. First, we have no deficit. We are paying down the national debt. We are the only G-7 state that continues to pay down the national debt. We have gone from 72.5% in 1996, down to 44.5%, and declining. We have had our sixth consecutive balanced budget or better. At the same time we are investing strategically in areas like health care.

The Minister of Finance made it very clear that he wanted to hear from Canadians. He wanted to know what kind of Canada they wanted, in terms of the budget. I would like to quote the minister. He said:

Canadians told us that the budget choices we make have to be about more than the tallying of accounts. Our choices must reflect the sum of our values. They must reflect Canadians’ pride in their country and, above all, their hope and determination that their children will inherit an even better Canada and a better world.

The minister's comments certainly are reflected in the work of the 2003 budget.

The budget responds to many challenges. It responds to the issues of health care. It responds to issues of poverty and affordable housing. It responds to issues dealing with our cities, ensuring that they become more competitive and that our communities become better places to live. Again, strong economic fundamentals is very important; no deficit. We will not go back into a deficit. The government has made that very clear, and that is what the Minister of Finance has delivered.

As far as our cities are concerned, as the former president of the Federation of Canadian Municipalities, I take great pride in the fact that it was the Liberal government in 1994 that embraced the FCM's 1983 plan for national infrastructure. It lay dormant under the Conservatives. The Liberal government came in 1993 and the next year implemented the national infrastructure program. We have built on that over the years.

For example, the current budget builds on the 2000 and 2001 budgets by providing an additional $3 billion in infrastructure support as a down payment over the next 10 years. The Federation of Canadian Municipalities has asked for years to have a 10 year program. Those of us in municipal politics know full well that to deal with capital issues and look at projects, it needs to be done over the long term, for 5 and 10 years. Fortunately the government and the budget has responded.

Two-thirds of this will be used to double the funding available under the Canadian strategic Infrastructure fund for large scale projects such as those located in Canada's major urban centres. As a member of the greater Toronto area caucus, I was pleased that the government announced $435 million, matched by local municipalities, by the GO, by VIA, to improve local transportation, rail, bus and otherwise, in the greater Toronto area, and this is leverage money.

Unfortunately the province of Ontario still has not responded to the announcement made by the government at the end of March. I hope, as it gets closer to an election, it will make an announcement because we are waiting, the commuters of the greater Toronto are waiting, so we can have a fund of about $1.2 or $1.3 billion to improve transit in the greater Toronto area. That is because the government has worked effectively with municipal governments over the years.

I quote from the president of the FCM. In a letter he says, “FCM wants to continue its positive working relationship with the Government of Canada”. This has been the cornerstone of the government working directly with our communities across this country.

The remaining one-third of the money of course goes to new municipal infrastructure funding and again we are looking at those details. As members know, we have agreements with each province.

The budget further provides an additional $320 million to the affordable housing initiative over the next five years. It provides $384 million over the next three years to extend the residential rehabilitation assistance program, something again for which municipalities have asked.

The budget invests $405 million in the next three years in supporting communities partnership initiatives to continue the fight for homelessness. We have to congratulate the Minister of Labour for her leadership in that regard. The Minister of Labour listened to this Liberal caucus when it came to the homeless issue. She has responded and she has worked very effectively with community organizations across this country. Again this has been well received across Canada.

The budget also invests in new technologies and alternative energy and begins to deal with competitiveness in the North American and global markets.

In addition, budget 2003 delivers security to Canadians in the quality of our society and the strength of our economy. Beyond these investments in our future, Canadians are expecting accountability from the governments. Again the budget delivers. In short, the minister said, with regard to this budget, that it was about the society that Canadians value, the economy that Canadians needed and the accountability that Canadians deserved. Many of these measures are addressed in the bill we are debating today.

The principal investment in this budget was health care. That was the number one issue we heard across this country, reinvesting in health care. To begin, the budget makes significant investments to address the concerns of Canadians about their health care system about waiting lists, about the availability of diagnostic equipment and accountability for their tax dollars. These investments, as agreed to by the Prime Minister and by provincial first ministers in the February 2003 accord on health care renewal, will help to improve access to the health care system for Canadians, enhance accountability for how dollars are spent in health care and ensure the future sustainability of the system.

The budget confirms $34.8 billion in increased funding over five years to meet the goals outlined in the health accord. Bill C-28 implements these measures in the important agreement between the Prime Minister and the first ministers. Investments agreed to in the health care accord and implemented in this bill include a five year, $16 billion health reform transfer. It is targeted to primary health care, home care and catastrophic drug coverage. I know, having held my own consultations in my own riding last year, these were the three key issues that were brought to our attention of by professionals and by members of the public.

Further investments agreed to in the health accord and implemented in this budget include: an immediate $2.5 billion supplement to the Canada health and social transfer, the CHST, to help relieve existing pressures on the health care system; an additional $1.5 billion over the next three years for the acquisition of diagnostic equipment and related specialized staff training; $600 million to the Canada Health Infoway for health information technology; $500 million to the Canada Foundation for Innovation for research hospitals; $75 million to Genome Canada for applied health genomics; and $70 million to the Canadian Institute for Health Information to enhance its capabilities to report on the health system and the health of Canadians. All of this is without going into a deficit. All of this is responding to what Canadians said was their number one priority, health care.

Following on the five year funding framework that was put in place after the September 2000 agreement with the Prime Minister and the first ministers, which agreed to health and early childhood development, federal support for the provinces and territories, the ones responsible for the delivery of health care in this country, the health care and social program transfers are further increased by $1.8 billion and funding is extended for an additional two years. This will ensure a stable, predictable and growing new five year funding framework. As a result, the total annual cash transfers for health and social programs will now rise to $26.1 billion in 2006-07 and then $27.7 billion in 2007-08.

In addition to further financing, the first ministers also agreed in the accord that the sustained renewal of a Canadian health care system needed structural changes. We heard that even last night in the discussions in the House. This is why they agreed to restructure the CHST into two separate transfers, and this is a very important initiative: a Canada health transfer and a Canada social transfer effective April 1, 2004.

This would ensure that the federal transfer support for health care is transparent to Canadians because there was an issue of transferring money to the provinces and no one knew where it went. At the same time the first ministers strengthened the equalization program by agreeing to permanently remove the ceiling on payments beginning 2002-03.

One of the most important foundations in our society are families and children. This budget would strengthen the government's longstanding commitment to Canadian children and families in several key areas. One of the most important measures, for example, would provide a six week paid compassionate care benefit, for the first time under the employment insurance program, to help families provide care and support to a gravely ill or dying parent, to a spouse or a child. We will continue to monitor this and look at the success of this particular important initiative that the government has undertaken.

Another important point would increase the assistance through the Canada child tax benefit for children in low income families. By 2007 annual benefits would increase to a maximum of $3,243 or up to $3,495 for a child under age seven. A third measure would allocate an additional $900 million over five years for investments in early learning and child care as agreed to by the ministers responsible for social services. The most important formative years are zero to five and we have responded to that.

For those facing the challenge of disability, a new indexed $1,600 child disability benefit effective this July would provide additional annual assistance to low and modest income families with a disabled child. In addition, the budget would provide $80 million per year to enhance tax assistance for persons with disabilities drawing on the evaluation of the existing disability tax credit and input of the technical advisory committee. We are continuing to improve with regard to the issues of people and children with disabilities.

Further, infirm children or grandchildren would be able to receive a tax deferred rollover of a deceased parent's or grandparent's registered retirement savings plan or registered retirement income fund proceeds. The list of expenses eligible for the medical expense tax credit would now include certain expenses for real-time captioning, note-taking services, voice recognition software, and the incremental cost to individuals with celiac disease of acquiring gluten-free food products. This new addition is as a result of listening to Canadians and responding in that area.

We know that better economic performance tomorrow requires a more productive, innovative and sustainable economy today. Improved skills and learning are vital to improved productivity and competitiveness, and a better life for all Canadians. That is why this budget takes action to help give Canadians opportunities to gain new skills by committing $60 million over two years to the Canada student loans program to put more money in the hands of students and better enable post-secondary students to manage their debt.

In addition, access to interest relief would be available to individuals who are in default of their Canada student loan or who have declared bankruptcy. This is another issue that we heard lots about during the prebudget consultation discussions. Protected persons under the Immigration and Refugee Protection Act, including convention refugees, would now be eligible to apply for student loans.

We looked at the tax system. We are in the third year of the largest tax cut in Canadian history, a $100 million tax cut. To further improve the tax system and enhance incentives to work, save and invest, the 2003 budget would build further on that five year tax reduction.

It would encourage savings by Canadians by increasing RRSP and registered pension plan limits to $18,000 over four years and indexing these new limits. So we are indexing them as well. It would extend the 12% federal small business tax to business income between $200,000 and $300,000 over four years. It would eliminate the $2 million limit on the amount of small business investment eligible for capital gains rollover. This is something we heard from small businesses and the minister has responded. Another measure would reduce business costs and complexity by improving the tax treatment of automobile benefits for employees and auto expenses for employers.

We know that a competitive tax system is necessary to attract investment to Canada and to encourage entrepreneurs to create and develop their businesses. It is the small business community that is the engine behind making the necessary jobs in the country. With this in mind, the budget would totally eliminate the federal capital tax over five years. This tax is currently levied on all corporations with more than $10 million of capital used in Canada. The first step in the phase out would raise it to $50 million which is the level of capital at which a firm begins to pay tax.

Additional tax measures would include: implementing the increase in federal taxes on tobacco, effective June 18, 2002, as part of our anti-smoking campaign; removing the 4% per litre excise tax on diesel fuel from biodiesel fuel; and providing authority for interested first nations, those first nations that want to, to levy a broadly based sales tax consistent with the same provisions as the goods and services tax.

The budget would also take action in such vital areas of public concern and support as climate change and the environment. The Minister of the Environment led a strong battle dealing with the Kyoto accord and the budget would assist the Minister of the Environment to ensure that the necessary dollars would be there to respond to public issues dealing with diversified fuels, for example. It would also respond to issues in the agricultural field. Again, the government is responding in this budget.

It seems clear that the scope of the budget plan is very broad. It is responding to strategic investments because this is what we heard when the Standing Committee on Finance visited constituencies across the country.

What is also important is the government's need to be accountable for the money it spends. I want to make it clear that the Minister of Finance has made it very clear that the priority is accountability. Canadians made that clear during the prebudget consultations. As a result, this budget introduces several new steps to make government spending more accountable and indeed transparent.

First, following up on the government's commitment to review the air travellers security charge, to ensure that the revenue remains in line with the cost of the new system, the budget would reduce the charge by just over 40% to $7 from $12 on each domestic flight.

Next, the budget announced the launch of consultations on a permanent employment insurance rate system regime for 2005 and beyond. As we know, for the last 10 years EI rates have come down consistently under the government. The minister wants to go further. He wants to have these consultations to ensure that, in setting the permanent EI rates, it is done in a transparent and open way with all stakeholders and that it provides employers and employees with certainty about contribution rates.

Until that time, this legislation would set the employment insurance premium rate for 2004 at $1.98. This is the 10th premium rate cut since 1994 and it would bring yearly savings for workers and employees to over $9 billion compared to the 1994 rate. As we know, before that they went up and since the government has come to power they have gone down every year. Based on private sector economic forecasts in the budget, it is estimated that this rate would generate premium revenues equal to projected program costs for 2004.

An improved accountability framework in the health care accord includes a commitment by all governments to report regularly to Canadians. This is another example of accountability and transparency. This framework would give Canadians more information about their tax dollars and how they are being used to bring in reform in the health care system. I know all members of the House would agree.

The government is also making foundations more accountable. Most of these changes would be made directly with the foundations involved. As we know, all foundation reports are public documents. The heads of those foundations would be called before various standing committees.

The Canadian Foundation for Innovation, the Canadian Millennium Scholarship Foundation, and the Canadian Foundation for Sustainable Development Technology were established by federal statute. As a result, amendments in Bill C-28 would ensure that any unspent funds would be returned to the government if those foundations were ever wound up.

The budget would terminate the debt servicing and reduction account which was established to pay interest on the public debt and ultimately to reduce the debt. There is no longer any need for this account since the debt servicing reduction account revenues must ultimately be deposited in the consolidated revenue fund.

Clearly we have a budget with no deficit. We have a new culture of accountability and transparency. I could go on and on about the investments we made in the military and elsewhere. We have been criticized by some members in the opposition about how the spending has gone up. The major spending component, of course, was health care. Members may want to debate the fact that we agreed to the first ministers accord and put the necessary dollars into health care. That is up to them. We wanted to address the number one issue of Canadians as well as issues of child poverty, cities, tax cuts and homelessness.

It is important that governing is about priorities. It is important to ensure that we listen carefully. The Standing Committee on Finance had 49 recommendations to which the minister responded to 34, in whole or in part. He responded effectively in ensuring that he listened to those concerns and invested in the needs of Canadian families.

We want to ensure that we not only have accountability, but that we have an atmosphere where the economy can continue to grow. It is important to note that expenditures are still significantly down from what they were in the 1990s, which was around 18% or 19%.

It is important to note that we are working on many fronts, but we are ensuring that we do so in a responsible manner. We would not have the kind of debt that we have seen for many years. We are getting the national debt down having eliminated the deficit. Whereas Japan is now about 130% of GDP in terms of its debt. It is going up. We are sliding the other way, the right way. We are going down and soon to be below 40%.

It is extremely important that we are doing it in the context of going from the bottom of the G-7 to the top. The economy is performing well. We are seeing that reflected in a number of industries. It is therefore important to pass Bill C-28 to ensure that those initiatives about which Canadians have talked about are addressed.

We cannot do everything in one budget so we have to build on it. As I said with regard to taxes, we addressed the issue of capital taxes this year. We dealt with personal income taxes and we will have more room in the future. We are working with members of Parliament, stakeholders, and Canadians generally on many issues.

It is important to work in a fiscally sound and responsible manner. There were too many years when we spent money we did not have. One of the things the government said when it was elected in 1993 was that it would deal with that issue. It dealt with the $42.5 billion deficit.

Government is about making choices. As a government we must make sure that we address these issues, but that we address them in a way which is fiscally responsible. In terms of many recommendations, we would have liked to have done more, but there is only so much fiscal capacity to do so.

Other issues which may not have made it into the budget may be addressed in the future. The fact is we have a budget today, a budget on which we have debated for many hours in the House.

The budget deals with issues on the environment which are very important to Canadians. We are taking very important strides in that area. I congratulate the Minister of the Environment because this is a very tough file. Again, $2 billion has been added to that file, making sure that we can address these issues in cooperation.

Government is about listening. It is about collaborating with the public. It is about making sure we do it in a way that we do not make the mistakes that have been seen in the past, that we do it in a manner in which we can say very proudly that we are not in a deficit, we are dealing with the debt and we are investing. If we continue to do that, future generations will certainly be thankful.

Unfortunately I am part of a generation that inherited lots of debt. Debt is a major concern to me and I know it is a concern to my colleagues across the way. I do not like personal debt and I certainly do not like to see government debt.

We have a contingency fund. The minister has set aside $3 billion. Fortunately the economy has been moving along, but we always have to be prepared. The minister has made sure that $3 billion is there.

More Canadians are working. There were 560,000 new jobs in Canada last year alone. It was the reverse in the United States, so we are fortunate. Many of those jobs are full time jobs in high tech, manufacturing and other sectors that are very important to the Canadian economy. It is important that we continue to see that and that we continue to assist and to listen both in terms of issues that affect the business community where we want to see jobs grow and in terms of the social aspect. As I have said, a budget is not simply a balance sheet. It is to make sure that the life of each and every Canadian is better than it was before and that we continue to build on that.

I am hopeful that after all the discussions we have had in the House we will move on Bill C-28, that we will continue to work together as parliamentarians. As we embark on the next round of prebudget consultations which is not very far off, we will continue to deal with the fundamental issues Canadians are telling us they want addressed but at the same time we will do it in a fiscally sound manner.

[Ralph Goodale, Liberal, for the Minister of Finance]

moved that Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003, be read the third time and passed.

Public Safety Act, 2002

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I believe you would find consent among members in the House that the vote on report stage concurrence to Bill C-28 be applied to the vote now before the House.

Budget Implementation Act

[Dale Johnston, Canadian Alliance, Wetaskiwin, AB]

Mr. Speaker, on Bill C-28 Canadian Alliance members will be voting no.

[The Speaker]

The House will now proceed to the taking of the deferred recorded divisions on the report stage of Bill C-28. The question is on Motion No. 13.

(The House divided on Motion No. 13, which was negatived on the following division:)

Budget Implementation Act, 2003

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Unfortunately, the member, should have continued.

Mr. Speaker, this morning, I will not necessarily be talking about the budget, which we are debating. Instead, I am going to talk about an amendment brought forward by my colleague, the hon. member for Drummond, which seeks to delete clause 64 on page 56 of the bill. This amendment reads as follows:

That Bill C-28 be amended by deleting Clause 64.

Everyone wants to know why clause 64 should be deleted.

It is due to a long-standing problem between school boards across the country and the Department of Finance. The school boards are entitled to claim 100% of input tax credits for student transportation under the Excise Tax Act, with respect to the goods and services tax and the harmonized sales tax, as they apply to school boards and the student transportation services they provide. This credit has existed for years.

The former Minister of Finance—now the frontrunner in the Liberal leadership race, I am talking about the member for LaSalle—Émard—decided to take this 100% credit and unilaterally cut it to 68%. Finally, the school boards protested by going to court.

On October 17, 2001, the Commission scolaire des Chênes won, unanimously, a ruling entitling Canadian school boards to 100% deductions. This deduction was authorized for all 415 school boards in the country, including the 72 in Quebec, 88 in Saskatchewan, 72 in Ontario, 7 in Nova Scotia, 60 in British Columbia and so on. So, all Canadian school boards were affected.

In a newspaper article on March 20, 2002, Gary Shaddock, president of the Canadian School Boards' Association, stated that this decision would cost approximately $150 million. This means that Canada would try to find a $150 million surplus within the school boards' budgets. This would have created a $150 million shortfall across the country.

Mr. Shaddock said:

The total financial impact for the federal government is not huge...but the impact for boards is significant.

In this same article, Mr. Shaddock states that the former Minister of Finance—and the new one, because this is in the new Minister of Finance's budget—was trying to sidestep a legal decision requiring that the federal government provide a 100% credit and that stated that government policy must not set aside court decisions.

That is exactly what clause 64 tries to do. The budget tells judges, “You did your job more or less well, and we do not like it. That is that”.

I would like to talk briefly about school boards in Quebec. André Caron, president of the Fédération des commissions scolaires du Québec, said recently that this was an abuse of the law and power.

By acting this way, the federal government will deprive Quebec school boards of significant financial resources used to organize busing for 650 students daily.

The fédération estimates the cost of the problem to be under $30 million. What kind of effect will this $30 million shortfall for Quebec's school boards have? They will have to increase school taxes for all parents of students in Quebec if they want to continue to provide an adequate busing system.

This is another method used by the federal government. It is pilfering millions of dollars from school boards, the EI fund, and everywhere. To do what? Perhaps to help out their friends and cronies. I do not know.

In closing, I have a letter from a large Montreal law firm, Stikeman Elliott. It is signed by a person whom I believe is a friend of yours, or someone you know quite well, the hon. Marc Lalonde, former Minister of Finance under the Trudeau government. He, too, is opposed to clause 64 in the budget, saying that it is unacceptable. I will read a few lines from Mr. Lalonde's letter. The former Minister of Finance, the member for LaSalle—Émard, said this:

However, the proposed amendment will not affect any case that has already been decided by the Federal Court.

That is what the then Minister of Finance, the hon. member for LaSalle—Émard, said in a release dated December 31, 2001, during the holiday break, so that nobody would notice. That is what he said, and it caused an uproar.

Mr. Lalonde had anticipated that reaction. Here is what he wrote the former Minister of Finance:

A man with your political experience can imagine the reaction of those school boards alienated in this matter.

I realize I have only two minutes remaining, and I think I will be able to complete my remarks. Here is another excerpt from Marc Lalonde's letter.

Once a final judgment had been handed down by the courts, every case thereafter should have been settled on the same basis. However, your department's legislative proposal would retroactively reverse such an arrangement. Needless to say that our clients feel that the Department of Finance is taking the attitude, “Heads, I win; tails, you lose”.

This is what Marc Lalonde wrote. I did not write these words. Marc Lalonde, a former Minister of Finance, did. I think that both the current Minister of Finance and his predecessor, the hon. member for LaSalle—Émard, should have paid attention.

Members can see why I am asking that the amendment put forward by my colleague, the hon. member for Drummondville, be accepted and that clause 64 be deleted.

I thank the House for this opportunity to speak on an issue dear to my heart, which concerns students throughout Canada.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I am pleased to have the opportunity to speak to Bill C-28, the budget implementation act, and to recommend to members in the Chamber the importance of the amendments before the House today.

I want the House to know that with respect to Bill C-28 the New Democratic Party took the process very seriously and made a number of amendments. We recommended those amendments to the House in order to make the budget a better document and ensure that budget 2003 reflected the priorities of Canadians.

As the House will know, from previous speeches on the bill, many members in the Chamber do not believe that the government of the day has truly reflected the priorities of Canadians or done everything in its power to ensure that the pressing needs and concerns of Canadians were addressed in the budget. This is at a time when surplus revenues are significant and when Canadians have a clear sense that social reinvestment is the order of the day and must be the priority for government action.

We have commented before on the budget and have indicated that there were some drops in the bucket that have made the situation better but that they did not actually amount to much when dealing with the poverty facing children, the housing conditions facing our aboriginal people on reserves, the juggling act of working women trying to provide for their children and ensuring quality day care, or when it comes to unemployed workers who are desperately trying to find some security at a time of great flux in the labour force today.

Today we are recommending that the government do more to invest in those priorities of Canadians. We are recommending that the government do that by deferring its tax cut agenda and putting on hold its plans to give tax breaks to big business and wealthy Canadians at a time when there are so many pressing social needs.

I want to quickly reference four or five of those pressing needs. The number one priority of Canadians is health care. We know the budget makes an attempt at reversing a decade of cuts to health care. We know the Liberals today have recognized the errors of their ways and are attempting to deal with a situation that they themselves caused. We acknowledge that there is some additional support for health care in the budget.

However the amount falls far short of what is required and falls far short of what has been recommended by the Liberal appointed commission on health care. Let us not forget that the proposals before us today leave a Romanow gap of some $5.1 billion, money that could have gone to ensure that provincial governments are equipped and able to deal with growing waiting lists, with a demand for community based primary care delivery systems and for action finally on the long awaited, long overdue promised national home care and pharmacare plans.

The first priority of Canadians is health care. The government has failed in that regard by refusing to use all resources at hand to backfill from those years of cuts and from the devastation wreaked upon this system going back to 1995 with the famous budget introduced and engineered by the member for LaSalle—Émard.

The second priority has to do with child care and meeting the needs of working women and families everywhere in our society today. I am glad the Minister responsible for the Status of Women is here. I hope to hear from her in this debate because I think it is acknowledged that while the budget makes a tiny step in terms of meeting a promise that has been the longest running one in the history of Canadian politics for a national day care program, this is not a national day care program.

Working women today, families everywhere, are still struggling to find appropriate licensed, quality, non-profit child care for their children. There is no question that when it comes to women's search for equality and the barriers and obstacles to their full participation in the labour force today, the number one priority is quality child care. The government has failed to ensure resources available to it, through the surplus which has been generated and through deferral around these tax breaks for big corporations and the wealthy in Canada. This would have gone a long way to address that issue.

Third, is the question of living conditions for aboriginal peoples and the state of housing on reserves across the country. The government should be embarrassed by the findings of the Auditor General's report which clearly indicated that many members of our first nations communities were living in third world conditions and in deplorable housing conditions. The government has failed to address that long overdue concern in today's budget.

It should also be embarrassing for the government to have to deal with a United Nations envoy which toured first nations communities in Canada and which reported on the deplorable conditions. It must be an eye opener for the government to know that UN officials, touring in Canada, have expressed shock, dismay, surprise and horror that a country as rich and wealthy as Canada has allowed these horrible living and working conditions to continue.

Finally, let me mention the issue of women in general and comment on the United Nations committee report overseeing the Convention on the Elimination of All Forms of Discrimination against Women. It should be an eye opener as well for the government to recognize that Canada is falling far short of its obligations under that convention and that in fact previous cuts to social programs and inaction by the government over the last 10 years have had a devastating impact on women and their families.

The result is that Canada falls far short of basic obligations under a UN convention requiring the elimination of all forms of discrimination against women. Surely, at a time of considerable budget flexibility and significant surplus, the government could find it within its powers to address the concerns of families, of discrimination against women, of children living in poverty and of first nations communities living in third world conditions. This is what we should be about today, and it is the obligation of government to address those concerns.

Today we present one recommendation to make that possible. We call on the government to scrap its proposals to give a tax break to wealthy individuals and big business, which it is doing by way of recommended changes to the RRSP contribution limit and by way of the changes to the capital tax. We are talking about one to two billion dollars in revenue that could be applied to the social priorities of Canadians, to the primary objective of reinvesting in the social fabric of the country and to ensuring that we as a collective, as a House of Commons, once and for all take on the challenge of the human deficit and the social debt in the country.

That is our recommendation today. We hope there is a receptivity to those notions and that members of the House will support our amendments.

[Ghislain Fournier, Bloc, Manicouagan, QC]

Thank you, Mr. Speaker.

The amendment moved by my colleague reads as follows:

That Bill C-28 be amended by deleting Clause 64.

With this amendment, we want to eliminate the retroactive aspect of this provision, which deals with the GST rebate for transportation services provided by Quebec and Ontario school boards and which would have the effect of retroactively striking down decisions handed down by the courts in favour of the school boards, not to mention that the federal government is also reneging on commitments made previously.

With this kind of attitude, the federal government is not complying with these decisions and not honouring its commitments. It is going way too far in acting this way, and it is not the only time it has done so. What about the historic surplus in the employment insurance fund, and the fiscal imbalance, where Quebec and the provinces are feeling the consequences of questionable management decisions. The House must show transparency.

For the 2003-04 fiscal year alone, the budget announces a record increase of 11.5% in spending, which will go up by $25.3 billion in 2002-03 and 2004-05. If there is one thing that stands out in the 2003 budget, it is the fact that the federal government has a lot of money at its disposal, compared to it needs. It is raking in the money, and piling up surpluses. It is collecting way too much tax.

Despite an 11% increase in spending—which is enormous—the Bloc Quebecois estimates that Ottawa will have a massive surplus of $14.7 billion over the next two years. This illustrates the size of the fiscal imbalance. Most of the provinces, on the other hand, will have deficits.

Is there anyone who still believes that the federal debt is higher than that of the provinces? From the way the Minister of Finance has decided to loosen the purse strings, he is sending a clear message: there is money; there will be more.

But how can anyone dare to spend public money this way? How can the fiscal imbalance still be denied? We asked the federal government to transfer additional fiscal capacity to the Government of Quebec and the provincial governments, so that they could intervene where needs are greatest. We asked for a tax point transfer, or additional fiscal capacity, of $4.5 billion in 2002-03 and $5 billion in 2003-04. The various measures in the 2003 budget will have no effect on reducing the financial pressure that is smothering the provinces. On the contrary, in the health sector, expenses are increasing faster than provincial sources of revenue, and part of that revenue comes in the form of transfer payments from the federal government to the provinces.

Quebec would have to have a surplus of $1.6 billion in order to provide services. Now, after the argument has been repeatedly made, despite the huge accumulated surplus, Ottawa gives Quebec a meagre $800 million. This proves that health is not a priority of the federal government. The figures speak for themselves. The federal government has announced an investment of $6 billion over three years, while it is hoarding a $30 billion surplus.

The first ministers asked that federal transfer payments for health be increased by 1% per year, until a 25% partnership level was attained, by the end of this decade. So, what happened to this realistic suggestion? Health is in the provincial jurisdiction. One day, the Liberals must understand and transfer the necessary funds the provinces are demanding.

The employment insurance situation is the best example of frustration one can find. Unions and employers are utterly frustrated with this diversion of the money in the EI fund. They support the Bloc Quebecois demand that this fund become a separate fund, so that the federal government will stop raiding it and contributors will set the contribution rates themselves.

The Bloc Quebecois was hoping the Government of Canada would create a separate fund before a new Prime Minister took up office. But, lo and behold, there will be a new round of consultations while billions continue to accumulate in the fund. Back in 1989, 93% of workers were entitled to EI benefits. We are down to 40%. It is unbelievable. Instead of lowering the premiums, the government should improve the plan so that 90% of workers qualify for benefits.

The unions and citizens' groups are in as good a position as you are to assess the needs. Why not listen to them? Your tendency to control everything is shocking.

What about the infrastructure program? The Bloc Quebecois has asked for the release of the money needed for the infrastructures that are necessary in Quebec. We asked for a substantial and long-term commitment. The increase in infrastructure spending is inadequate. On top of that, the government is in no hurry to transfer the money.

The Bloc Quebecois is asking for a massive reinvestment. There are still some communities in this country without roads and some of them are in my riding. In the easternmost region of my riding, from Kegaska to Blanc-Sablon, there is a 400-km stretch without roads. We know that region because it was hard hit by the fishery crisis. Of the additional three billion dollars announced in this budget, only 100 million dollars were allocated for the 2003-04 financial year.

That amount is totally inadequate given the huge needs; the health sector in Quebec should receive at least a fair share of the investment for 2003-04, and that means at least 300 million dollars more. After the next two financial years, of the three billion dollar total, only 250 million dollars will have been invested. Does the government not agree with Quebec and the other provinces that those infrastructures are badly needed?

We also ask that Quebec be in charge of all projects and resource allocation.

Since the period set aside for Government Orders is over, I will finish my speech tomorrow.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, I am pleased to join the budget implementation debate. I will do something that is unusual in two ways. First, I will talk about budget implementation, and second, I will talk about a tax measure which is unusual for me. It is something that I should do more often.

I understand that our taxation system is critical to productivity and creativity in the country. I tend to talk about other things. I would like to talk about report stage Motions Nos. 18 and 19 that deal with the federal capital tax. It is not the sort of thing that I would normally deal with, but these report stage motions propose to delete clauses 85 and 86 of Bill C-28. The two motions deal with the federal capital tax in different ways, but they are both in fact linked so I will talk about the two of them together.

Unlike income taxes which are paid when a corporation has taxable income, capital taxes must be paid even where a corporation has not been profitable. This is important because even people who are anti-business recognize that small and medium sized businesses are basic to our society, and in reasonable periods of time these businesses must be profitable.

Capital taxes, which are paid even when the business is not profitable, have been identified as a significant impediment to investment in Canada. That is a significant thing because we do need to attract business. A country of our size, although we are prosperous and wealthy, needs investment from outside the country.

The federal capital tax was introduced in 1989 as part I.3 of the Income Tax Act. The tax has been levied annually at a rate of .225% of a corporation's taxable capital employed in Canada in excess of a $10 million capital deduction. A corporation's taxable capital is generally described as the total of its shareholders' equity, surpluses and reserves, as well as loans and advances to the corporation, less certain types of investments in other corporations.

A corporation's federal income tax surtax, 1.12% of taxable income, is deductible against the corporation's capital tax liability. That is very clear and my colleague from Quebec understands that much better than I do.

In order to promote investment, the 2003 budget proposed to eliminate the federal capital tax over a period of seven years but beginning January 1, 2004. Clauses 85 and 86 of Bill C-28 would implement this proposal by increasing the threshold for application of the federal capital tax from $10 million to $50 million of capital for taxation years ending after 2003 and by reducing the rate of tax over the period 2004 to 2010.

Under the bill the federal capital tax liability would be eliminated for almost 5,000 medium-sized corporations in 2004. The federal capital tax would be fully eliminated by 2010. Report stage Motions Nos. 18 and 19, if adopted, would deny the benefits of these changes to Canadian businesses and would harm Canada's economy. Therefore, I will not be supporting report stage Motions Nos. 18 and 19.

There is an aspect of the budget I would also like to mention that is tiny in one sense and has not received a great deal of play. In the whole order of things, the billions of dollars we deal with and so on, it does not seem to be that much, and it is the palliative tax credit. This is the fact that at last, and I regret it is only in a very small way, people who give up work to look after a close relative who is dying will in fact get EI support, will get benefits from the system.

As a beginning, and I hope that it is just a beginning for this palliative care program, it is for four weeks. It may not sound like much, but people could take it and look after the person who is needing palliative care for four straight weeks. Or on the other hand, as I understand it, they could take a week at a certain point in the illness of the person and then go back to work and the person could be looked after by another relative and then they could take another week and a break and then another week and so on. In total, any way that they do it, I think it has to be a minimum of a week. It cannot be done a day at a time and I can understand that even though there might be some benefits from that particular approach.

I have to say that after many years of lobbying by some members, and by the way, members on both sides of the House, this is now in. Palliative care is a term which only a few years ago people watching this would not have recognized, but now in all of our communities there are groups and institutions devoted to the proper and appropriate care of people who are dying. Sometimes it is literally a bricks and mortar institution, a hospice, into which the sick person can move. Other times, as in the case of Hospice Peterborough in my riding, it is teams of people who work with the family and the dying person in their own homes. They will work around the clock if necessary, providing whatever care is necessary, ranging from counselling to the family to simply sitting with the family or with the sick person.

It is not a coincidence that this type of wonderful activity in our communities has arisen at the present time, because as we know our population is aging. There are great benefits to that. Years ago people used to die when they were 30 and 40. They were cut off in their prime from illnesses or overwork and their children would be deprived of them early in life.

Now people live to a much greater age, an extraordinarily greater age. This winter I have been to five birthday parties for people who were a hundred years old, in each case a woman. At these parties, the 100 year old person was not only present but was actively involved in the organization and what went on at those birthday parties. If I, as one MP, have been able to go to five in my riding, we can imagine how many more 100th birthdays there have been in my riding. Since I was elected nine and half years ago, I have sent greetings to over 200 people who were 100 or more. And you and I should know, Mr. Speaker, that all but one were female. Mine is but one riding of 301 ridings in the country, so that gives us an idea of how aging is affecting the pyramid. At the top of our age pyramid there are more and more people who, with their families, may not always but are most likely to need palliative care.

That is why I was particularly pleased that this time we started with this four weeks of palliative leave. I hope that future budgets and future people debating budget implementation will see a strengthening of that type of support for people looking after those who are dying and their families in this period in our history when our population is aging.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to enter the debate on the report stage amendments to Bill C-28, the budget implementation act, 2003. Budget 2003 was an important budget and another budget which continued the tradition of the government of dealing with deficits, creating more budgetary surpluses, reducing taxes, paying down the debt, and investing in priorities that are important to Canadians.

Budget 2003 was the fifth budgetary surplus that the government has experienced in the last few years. We have paid down the debt by $47.6 billion and reduced the federal debt to GDP ratio to 46.5%, which will diminish to just under 40% in the next few years. At the same time, unlike what the member opposite said, the government made some enormous investments in families through the Canada child tax benefit which it introduced. In fact, it will cumulatively reach just over $14 billion over the next five or six years, a huge investment which did not exist before.

Every single year we have introduced more measures to help those with disabilities and this budget was no exception. In addition to that, there were huge investments of approximately $3 billion in Canada's physical infrastructure which will invest in sewers, highways and public transit, and renew Canada's physical infrastructure.

The budget invested $35 billion in the health care system and called for greater accountability by the provinces so that Canadians from coast to coast to coast will have a better understanding of what their health dollars are purchasing, what outcomes are being obtained by the health care system, and how the health care outcomes in Yukon compare to those in New Brunswick. This will allow us to measure what health dollars are buying with the money, tax dollars which are very important to all Canadians.

In addition, the budget built on the measures of the past by protecting the $100 billion tax cut, the largest tax cut in Canadian history, and included other tax measures. It helped small businesses by eliminating or phasing out the capital tax, a tax which had no policy rationale and was basically a penalty on investment. It will be phased out and that is a very positive thing.

The small business tax rate limit was increased from $200,000 to $300,000 which will help small businesses grow and prosper in Canada. They are one of the largest engines of job creation in our economy. Again we will add to the favourable tax rates as they relate to small business in Canada.

I could go on and on about the attributes of this budget. That has been lacking in the debate heretofore apart from my colleagues who have studied the budget on this side of the House in more detail and are aware of the many attributes and positive things that this budget will bring to Canadians.

There were investments in affordable housing. In my riding of Etobicoke North we have an affordable housing crunch. I was pleased to see that the federal government and Ontario recently concluded an affordable housing agreement. We are working in Etobicoke North to capture some of the benefits of that by getting some initiatives moving. Too many people are paying too much in relation to their income on rents and too many people on fixed incomes are being forced out of their homes because of property tax increases. I was happy to see investments in affordable housing.

The budget covered a whole myriad of other things, but I would like to turn to debate the report stage amendments. These are amendments that came through the House of Commons Standing Committee on Finance. I believe there was a whole raft of amendments. I cannot remember the exact number, but these amendments were passed in committee and are now on the floor of the chamber.

I should say too that there has been some cynicism about whether the Minister of Finance and the government actually listen to Canadians. I am on the House of Commons finance committee and we do a prebudget consultation every year. We travel from coast to coast to coast, submit a report to the House and to the Minister of Finance.

Just out of curiosity, I wondered how many of the recommendations that were in our report made it into the budget. We went out and asked Canadians what priorities they felt should be reflected in the upcoming budget and they told us. We put those recommendations into a report, took it to the Minister of Finance and we tabled that report here in the House. Two-thirds, or thereabouts, of the recommendations of the House of Commons finance committee found their way into budget 2003.

I would like to congratulate the Minister of Finance and previous ministers of finance for listening to Canadians, for starting the process of prebudget consultations, for not staying in Ottawa to listen to the same old voices, but to actually go out and listen to Canadians across this great land, to find out their priorities, their needs and to listen to what they thought we should do in the next budget.

As I said, two-thirds of the recommendations that were in the finance committee report made it into the federal budget. My colleague, the member for York West, who chaired the urban task force of our caucus, also cited many of the recommendations that were in their task force report that made it into the federal budget.

Let me move on to Motion No. 13 which would affect school boards. It is a very important matter and it has to do with the GST and the application of the GST. Many school boards contracted out their school bus operations which created a GST issue. By doing that, it was argued, they should have a larger rebate than would otherwise normally be available to this type of institution. There were court cases on this particular point and the federal court ruled in favour of some of the appellants. However, at the same time, the government looked at this particular tax policy and said that it really was not its intent, that this was a misuse of that provision.

The government indicated through policy that it would react to that and change the policy, and change it retroactively. Some people might find that somewhat abhorrent. Frankly, the government uses that only in very rare circumstances, but there have been times when the tax policy has been interpreted in a way that clearly was not the intent, and any reasonable person would say that was not the intent or the spirit of the measure. The government did say that of the court cases that had been decided, those school boards would get the benefit of the higher GST rebate, but it signaled that that would be the end of it.

Notwithstanding that, some of the school boards continued through the court system, and therefore the act was changed to reflect the government's stated intention. This motion would undo some of that and it is for that reason that the government is not supporting it. Frankly I see the wisdom behind that particular stance.

We have had discussions here about the motions as they relate to the disability tax credit. By defeating these amendments, we would allow people who have a disability with respect to feeding themselves or dressing themselves, and it does not have to be in combination, the tax credit. It seems to me that is a very reasonable stance to take and I will be supporting that. I will be voting against that particular amendment, which for some reason would take that away from people with disabilities.

However, by the same token, the government is saying that it will not go so far as to say that people will be entitled to the benefit if they have certain allergies to certain types of food which increases their time for shopping, et cetera. I have some friends who have this type of challenge and, while we all empathize with it, the tax system is not really designed to deal with things like that.

I will end things there and say that I will be voting against those amendments and I encourage other members in the House to do the same. I would like to encourage members to support this budget, which is a very fine budget.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I want to say first that I am very pleased to speak on Bill C-28. However, I am not pleased to speak on the government's decision to implement a number of provisions that really go against Parliament's position. I will get to this later.

I want to talk specifically about the way the disability tax credit is now working. To be eligible for this tax credit, the applicant must have a severe and prolonged mental or physical impairment the effects of which are such that the individual's ability to perform one or more basic activities of daily living is markedly restricted, and this must be certified by a qualified medical doctor. Since this is a non-refundable credit, those who receive it must have sufficient income to pay federal tax. The maximum value of the current credit is just over $1,000.

The definition of “impairment” that the Department of Finance uses for disability tax credit purposes is the most restrictive in all the federal government. It is based on the individual's ability to perform basic activities of daily living, in accordance with the definition found in section 118 of the Income Tax Act.

If a medical doctor certifies that the claimant has a severe and prolonged mental or physical impairment the effects of which are such that the individual's ability to perform one of the activities mentioned is markedly restricted, he might be eligible. If he is able to perform these activities—even with medication or with a device—he is not considered as having an impairment for tax purposes.

CCRA officials have recognized before the committee that Terry Fox would have been considered as having an impairment according to the criteria of the disability tax credit.

The act now says:

(a) an impairment is prolonged where it has lasted, or can reasonably be expected to last, for a continuous period of at least 12 months;

(b) an individual's ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living;

(c) a basic activity of daily living in relation to an individual means

(i) perceiving, thinking and remembering,

(ii) feeding and dressing oneself,

(iii) speaking so as to be understood, in a quiet setting, by another person familiar with the individual,

(iv) hearing so as to understand, in a quiet setting, another person familiar with the individual,

(v) eliminating (bowel or bladder functions), or

(vi) walking; and

(d) for greater certainty, no other activity, including working, housekeeping or a social or recreational activity, shall be considered as a basic activity of daily living.

Canadians consider that CCRA is unfair in its administration of this credit. CCRA is notoriously harsh when it comes to rejecting applications on technicalities. For example, because the word “breathe” is not included in the legislation as an activity of daily living, the agency has refused the disability tax credit to Canadians who have breathing problems, who have cystic fibrosis for instance, because their condition does not come under the precise definition of “disability”.

Some very determined citizens sued CCRA over these restrictions, and they won. A recent victory worth mentioning is the decision made in Hamilton v. Canada, where the Federal Court of Appeal established that the legal standard, for the purposes of the disability tax credit, was the fact that the activity of feeding oneself is not just the act of putting food in one's mouth. Mr. Hamilton had celiac disease, a particularly severe form of allergy to gluten. He won on appeal the right to the tax credit because he has to spend most of his time, every day, to find and prepare in a special way the food for a medically prescribed diet.

Thinking this case could lead to heavy financial costs, the finance department brought in a bill amending section 118 of the Income Tax Act on a Friday afternoon, just before Labour Day, on August 30, 2002.

That amendment was to add the following to section 118.4:

(e) feeding oneself means the physical act of putting food in one's mouth or swallowing that food;

(f) dressing oneself means the physical act of putting and removing one's clothes.

Those new restrictions to the eligibility status meant that those claiming the DTC because they were unable to feed themselves could be refused if they could swallow or if they were able to put an artificial arm through a sleeve.

Members from all sides of the House were opposed to this amendment. The Bloc Quebecois collected 6,000 signatures on a petition opposing the new restrictions. The NDP collected over a 1,000 letters opposed to this measure, and moved an opposition day motion that was votable. It condemned the restriction and asked for the implementation of a unanimous committee report on the disability tax credit. The motion was adopted unanimously on November 2002. The Finance Minister was in attendance, but he abstained.

After dragging his feet in the House for one week, the Minister of Finance officially withdrew the planned amendments.

Let us see what is in the recent budget. On budget day, on February 18, 2003, nothing was said in the budget speech regarding disability tax credit eligibility. There was nothing either in the main budget documents. However, in the ways and means motion to be found in schedule 9 of the budget plan, there is a series of new planned changes to the definitions of “feeding oneself” and “dressing oneself” under section 118 of the Income Tax Act.

This is really slipping through the back door things the Parliament already voted on. When I say that Parliament voted on those things, I mean that on Tuesday, November 19, 2002, an NDP motion asking to turn down those proposals was adopted unanimously. What did the Minister of Finance do about this motion? If Liberal members vote against the budget bill, the government will fall. So he literally put the knife to the throat of the Liberal members if they did not support the bill. He had not voted on the motion. The only one who did not vote on the motion on the disability tax credit on November 19, 2002, was the Minister of Finance.

Now he has introduced a bill and hijacked the government and the Liberals by telling them, “You will vote my way or we will close down Parliament and call an election”. I cannot even use the words that come to my mind because I would be called to order. It is unacceptable for the Minister of Finance to go after the poorest people in our society, the disabled.

A women came to my office. She had only one leg and had to wear a prosthesis. She had been eligible for the tax credit for 10 years. Now the government is taking that credit away from her with a bill like the one the Minister of Finance is asking us to pass.

It is totally unacceptable when we see the Liberal government going after the disabled. Before that, it went after workers who have lost their jobs when it took in excess of $45 billion from the EI fund. Last week, I think it was the member for Beauce who was saying that there was no money left in the fund. As if it was not enough to have taken all the money from workers who have lost their jobs, the Liberal government is now going after the disabled. It is unacceptable.

Under this bill that they want to pass, a man like Terry Fox, a hero in this country, would not be recognized as disabled, as he would have been under the previous legislation.

How can the Liberals say that this is the right thing to do? How can they ask us to trust them when, financially, they are going after the poorest?

Let us take RRSPs for example. Rich people will benefit from large tax reductions, but there is nothing for the poor. And things are getting even worse: now it is the disabled who are the target. It is sad to see the direction that the Liberals are taking.

[Judy Sgro, Liberal, Parliamentary Secretary to the Minister of Public Works and Government Services]

Mr. Speaker, I am very pleased to have a few minutes to speak to the budget debate and say that I think it was an excellent budget. There are a lot of important things in the budget that will help us continue to build this country of ours. I chaired the Prime Minister's task force on urban issues and there were a variety of things, I think 28 different points in the budget that came out of the recommendations from our task force of 11 MPs and two senators.

One of the issues that came out of it we are speaking to today which is to amend the RRSP dollar limit and the RPP money purchase limit. People are trying to save for their future and to put more money aside for retirement and in case they fall ill later on in life, and increasing the RRSP limits allows that to happen. Aside from allowing that to happen it encourages people to save. The RRSP limits have long been at $13,500 and gradually they are going to be increased to $18,000 by 2005.

If we look at other countries which have this kind of program, they often have much higher increases than that and they are very good at encouraging people to save money. Setting appropriate limits on tax assisted retirement savings in RPPs, RRSPs and DPSPs is an important means of encouraging and assisting Canadians to save for retirement, reducing their tax burden on savings and in allowing employers to attract and retain key personnel.

The motions that we are discussing today would eliminate those improvements to the system that we are trying to promote as a government but would also reverse the increases that were scheduled to take effect next year under the existing income tax law and on which Canadians depend. As the task force did its round tables throughout the country over the 18 month period, we heard a lot from different people about the things that are needed to have a successful country. A variety of tax changes were promoted at that time. Some of them are in this budget which I am very pleased to comment on.

One of the other issues that was raised was the federal capital tax and how that was very much an impediment to investment in Canada. When it was compared to the U.S. and to other countries that encourage investment at a capital level, there were some significant problems with the fact that we did not encourage it in Canada and it was thought that we should. In order to promote investment, the 2003 budget proposed to eliminate the federal capital tax over seven years starting in January 2004. Clauses 85 and 86 of Bill C-28 would implement this proposal by increasing the threshold for application of the federal capital tax from $10 million to $50 million of capital for taxation years ending after 2003.

Under the bill the federal capital tax liability would be eliminated for almost 5,000 medium size corporations in 2004. The federal capital tax would be fully eliminated by 2010. With this and with the $100 million in tax cuts that is being promoted over this five year period, the government will seriously assist Canadian businesses and help to continue to move us forward with the very strong and effective economy that we currently have.

Another issue we are talking about with the amendments today is the disability tax credit. It has been mentioned by several people and is something that is really important. One of the members from Toronto who heads up the disability subcommittee has done an enormous amount of work with other members in the House trying to review the CPP legislation and how it affects people with disabilities and what we can do as parliamentarians to improve that whole program. As we are an aging population, more and more people are having to rely on CPP disability for assistance for themselves and their families and they are finding it very difficult.

Motion No. 14, which we will be voting on, would delete clause 74 from the bill. This clause provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding or dressing themselves for the purposes of establishing entitlement to the disability tax credit.

The Standing Committee on Human Resources Development and the Status of Persons with Disabilities recommended that the ambiguity about “and” or “or” be corrected. Accordingly clause 74 clarifies that an individual need not be impaired in both feeding and dressing but feeding or dressing would suffice. Many people have a problem with a disability of one or the other and not both.

Motion No. 15 would also delete clause 75 of the bill, another area that we needed to look at to see how we could assist people. Following consultations on draft amendments the 2003 budget proposed to rework the language of the proposed amendments to clarify again that feeding oneself does not include any of the activities of identifying, finding, shopping for, or other activities associated with preparing food. This aspect of the legislation is extremely important. It means that individuals who are markedly restricted in their ability to prepare a meal for reasons other than a dietary restriction will continue to be eligible for that disability tax credit.

It is also noted that these amendments were developed only after consultations with many of the affected groups. Many of these groups have ongoing discussions with the disability subcommittee.

In addition to Motion No. 13 and clause 64 affecting school boards, this is as a result of a recent court decision. It is not because we want to be difficult. It is simply because of a court decision affecting school boards that as a result is contrary to the longstanding well understood policy intention of the GST law. It is not that our finance minister woke up and decided that he was going to be mean and difficult to school boards.

Building this country is extremely difficult. It requires a lot of investment. I am proud to say that of the $3 billion that was put into the strategic investment fund in this budget we are speaking to, $2 billion of that is going to be there clearly to build the infrastructure of the country. There is an enormous void in having enough dollars to build water and sewer systems, bridges and so on in the country. This brings it to a total of $8.25 billion that has been put aside since the year 2000 strictly for infrastructure in Canada.

When that levers money from the province and the cities in matching funds, it brings it to $24 billion since 2000 that has been put on the table throughout the country, through all levels of government to ensure that the infrastructure of Canada is clearly there to help us move forward. One billion dollars of that has been put aside for the smaller municipalities so that they can access that for many of the areas in their communities where they have difficulty relying on a tax base. It is investments in our large urban centres, but it is also investments in the smaller communities.

Some $2 billion over five years has gone into advancing sustainable development. This will help us look at new technology, at a variety of things such as alternative fuels, things that tie in to the Kyoto protocol. It will help us focus on those investments to improve air quality, better assess and manage toxic substances, and further protect our species at risk and support implementation of Canada's commitment at the world summit on sustainable development.

There is $600 million over five years to upgrade, manage and monitor water and waste water systems on reserves.

I would hope that some of the lessons we learned from Walkerton will clearly show that we have to ensure that our municipalities have the dollars needed to invest in the infrastructure that helps us to move forward. On investments in supporting our skills and learning programs, there is $100 million for the creation of the proposed Canadian learning institute.

It is a good budget. There is a lot of money going into programs. We are continuing with our five year tax reduction plan. We are continuing to support families and our national child benefit program. We are encouraging savings and moving forward in a variety of ways. The strengthening of Canada's military again is important for all of us, as is enhancing Canada-U.S. trade.

This is a good budget. There are a lot of areas that we want to continue to build on. I am glad I had a chance to speak to it.

[Cheryl Gallant, Canadian Alliance, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, it gives me great pleasure to rise and speak to Bill C-28, the budget implementation act. This debate allows for the official opposition to voice its concerns in our critical roles as protectors of the public interest.

As the member of Parliament for the great riding of Renfrew—Nipissing—Pembroke in the province of Ontario, my voice and that of the member for Lanark—Carleton adds legitimacy to this debate. Too often the Liberal backbench MPs are expected to be cheerleaders for government legislation when the need for sober second thought is required before legislation reaches the other place.

I was shocked by the comments from the Solicitor General, the member for Malpeque, when responding to a question from the member for Yorkton—Melville over his enthusiastic support for the gun registry, from when he was a backbench MP and condemned Bill C-68. This is a clear example of the muzzling of government MPs and how the members of the official opposition are able to truly represent constituents in debate.

It is my intention to focus my comments on part 8 of the legislation where changes are planned for the GST. It is ironic that here we have a government that campaigned, and there are some who believe was elected, on the promise to eliminate the GST. The Prime Minister and his party were very clear in that election. “Just elect us and we will eliminate the GST”, the Liberals promised. Once elected, just like so many other election promises, like the one where there would be an independent ethics commissioner, it was quickly discarded.

In the case of the former finance minister, the GST became his tax and he greedily sought out ways to increase the take. I am surprised the heritage minister has not reminded the former finance minister that she resigned over the issue. At least the heritage minister understood the promise, which is more than anyone can say about her colleagues in the party.

Canadians, therefore, are not surprised that the federal government is back at the trough looking for new ways to increase the take from the GST. The decision to grant only a partial GST exemption of 68% to school boards for the supply of transportation services has meant that school boards have had to pay millions of dollars in GST payments to the federal government instead of applying the funds to important educational requirements.

In the case of the Renfrew County District School Board it has meant a loss of over $700,000 from the school transportation budget. As a consequence, the school board has been placed in the unfortunate situation of having to run a deficit in the amount allowed for safe transport of its students to school. This has meant the school board has had to look at making cuts to that budget to pay for the GST.

As there is a legal requirement to get children to school safely, the Renfrew County District School Board made the difficult decision to eliminate crossing guards to overcome the deficit in the school transportation budget. The amount of the GST claimed, which is not returned to the school board, is slightly more than the cost to provide crossing guards at dangerous intersections.

The following letter was sent to me from a concerned parent in Renfrew, though I can assure the House the concerns expressed in this letter have been repeated to me from across the county. It states:

I write to you for help.

I am a parent of three little guys that walk to school. I push them out the door to head to school so I can get to my job on time.

I do this because I know they have only one street to cross and most importantly there is an adult waiting to make sure they make it across unharmed.

I attended a school council meeting at my children's school this week and was appalled to learn that the treasurer of the school board could sit there and tell the roomful of parents that they are running such a deficit with the high cost of busing children all over this large county, ...and have decided to stop funding adult crossing guards.

So you can imagine how vulnerable we feel as parents of small children with the board saying anything we do will fall on deaf ears.

As our member of Parliament, I beseech you to help us--we need a voice to be heard...soon it will seem education is a privilege and not a right...surely the safety of our children should be first.

I wonder what the legal ramifications would be if a child dies.

Please be our voice.

That letter was from Sherry in Renfrew.

It is not only the Renfrew county district school board that is being penalized by the GST. The Renfrew county Catholic district school board is out almost $450,000 in GST to the federal government.

When the federal government started to collect the GST for school transportation costs it was taken to court and it lost. Now in order to get around the rulings of the court, this budget legislation is introducing retroactive law to overturn a decision of the courts that ruled in favour of the school boards. It is bad enough that the government has become such a strong supporter of the GST, a tax it said it would eliminate, and now it is resorting to retroactive tax legislation to make sure it squeezes as much GST from taxpayers as possible.

As a result of the original 29 school boards from the province of Quebec that made the initial decision to challenge the federal government over its decision to collect GST on school transportation, many more school boards have received favourable judgments. Bill C-28 will overturn these decisions by bringing in a retroactive amendment to tax legislation.

We cannot plan for the past. In addition to the Renfrew county public and separate school boards, Avon Maitland school board, Hamilton--Wentworth school board, Timmins district public and separate school boards, now the district school board of Ontario North-East and the Conseil scolaire de district catholique Grandes-Rivières, Haliburton county and Muskoka district school boards, the now Trillium Lakelands district school board, Simcoe--Muskoka Catholic district school board, Superior--Greenstone district school board, Limestone district school board, Upper Canada district school board, Upper Grand district school board, Kawartha Pine Ridge district school board, Grand Erie district school board and the Thunder Bay Catholic district school board have all had judgments rendered in their favour.

The following boards are waiting for consents to judgments on recovering the GST: Bluewater, Grand Erie, Greater Essex, Kawartha Pine Ridge, Near North, Niagara, Rainbow, Thames Valley, Trillium Lakelands and Toronto district school boards.

The total amount represents $11.675 million for school boards in the province of Ontario alone. School boards in the province of Quebec are owed $8.032 million.

By identifying the school boards from across the province of Ontario that are opposed to this measure in the federal budget, I hope the Liberal Party will understand just how unfair and unpopular this decision is.

In closing, I acknowledge the contribution of my colleagues in the official opposition and thank the House for this opportunity to speak on behalf of the people of Ontario.

[Geoff Regan, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to rise in debate on Bill C-28, the budget implementation act, and to have the opportunity to speak about some elements of the budget that I was unable to discuss in my first opportunity to talk about the budget after it was tabled.

One area of this budget which is very important for the country is the increase to the national child benefit supplement of the Canada child tax credit of $965, an increase of nearly $1 billion. This will be in place by 2007 and will bring the maximum annual benefit for a first child, through the Canada child tax benefit, to $3,243. This is a very important measure. We have come a long way to get to this point.

I recall back in the years between 1993 and 1995, leading up to the 1995 budget, when I was part of a working group in our caucus on child poverty that advanced the issue of finding new measures to combat child poverty. It was led by the member who is now the Secretary of State for Central and Eastern Europe and Middle East. He did an outstanding job of chairing that committee and leading our work toward a measure in the 1995 budget.

Of course we remember that the 1994 budget was a difficult budget. Cuts had to be made to get the accounts of the country in balance. We knew the next budget would also be difficult because more measures were needed. However we felt it was very important that the government take action to try to combat child poverty. Because it was a matter of federal jurisdiction, we focused on the working income supplement that went to low income working families. As I said, because the federal government had jurisdiction in the area of work, it meant the federal government could make an impact particularly with modest and low income families with children. To see that then change and become the national child benefit as part of the Canada child tax credit was gratifying.

We have seen that development over the past number of years. We saw it come into effect in the 1995 budget, and there have been changes since then. We have seen the increases year after year to that. As I said a moment ago, for a first child in a low income family, the parents now receive over $3,000 and lesser amounts for each child after that. Those are absolutely vital measures to help people get out of poverty, to help low income families and poor children in Canada face the difficulties we see today.

I know members on all sides are concerned about this issue and are concerned that we continue to work on the issue of child poverty across Canada. They would also want to recognize the good work that has been done in creating the national child benefit and increasing it year after year. No doubt that is important.

I am glad my hon. colleague across the way is talking about the clawback because I think it is unfortunate that the provinces have decided to do that in some cases. I am glad we have now reached a point where, with the latest increases, we will see an amount that they will be unable to claw back.

I have always been disappointed that the provinces would want to take the money we have given low income families and poor children, claw it back and use it in other areas. To me that is the wrong way to go. We need to see them move more in the way of allowing these families to access the money and keep it to put bread on the table, to clothe their kids properly and to provide what they need to succeed in our society.

Another measure that I thought was important in the budget was the $935 million over five years to help provinces, territories and first nations provide greater access to quality child care and early learning opportunities. We have heard a lot about the importance of getting kids off to a good head start in those early years, between birth and five years of age.

As I look at my NDP colleagues across the way, it reminds me of the fact that I was defeated in 1997. The funny thing is there was a silver lining to that for me. At the time I did not see it. I had a son who was born in 1996. When I was defeated, he was about eight months old. It meant that in the ensuing number of formative years, between one and five, I could be there much more because I was not in the House.

I am not looking forward to any more of those silver linings for a while. I am not anxious to look for those kind of clouds of silver lining, and neither is my son I am sure. However the point is we all recognize the importance to young children of getting a good start in life, of getting a chance to have an early education and a boost in education. That is why it is so important that this money go to where it is needed and for that purpose, and included of course in this is money for first nations.

We know the grave challenges in many first nations communities. I think particularly of the issues in Manitoba where the first nations population is growing dramatically and is becoming a much greater percentage of the population of Manitoba. They are facing grave challenges as young people are looking for opportunities and often not finding them. Funding education for those young people to help them have a good chance and a good start in life is absolutely vital and could not be better placed.

The budget also contains a new child disability benefit, with funding of $50 million per year. This is a brand new initiative and one I think that was applauded by members from all sides of the House. As I recall, it was recognized as a very important measure and one of great value for children with disabilities who really needed assistance. This will provide up to $1,600 per year to low and modest income families with a disabled child.

We can all imagine what it is like for a family who is trying to help a disabled child get ready for life, to help that child grow and to nurture that child. Families are faced with economic costs such as having to pay for maybe a lift in their house, or a wheelchair or many of the other costs. It makes good sense, as we try to ensure our society includes all these people, to have this tax credit for those children with disabilities, to help them take part in our society in a very full way, which is so important I think to all of us.

Another important area is homelessness. It is a concern across the country. I know it is a concern in my city of Halifax. It is a concern certainly in Toronto and in many other places. As members know, the government is working to combat homelessness in Canada's cities with an investment of $135 million each year, for three years. That is not peanuts. This important money will do important work.

As well, the government will address the housing issue, with $320 million over five years to enhance existing affordable housing agreements with the provinces and territories. This is not just to provide new funding, it is additional funding.

It is important to enhance those agreements. We will recall that the responsibility for housing was transferred to the provinces a few years ago. This is an important addition to help the provinces carry that load. I know it is important for my province, with its enormous debt. Unfortunately, the debt is growing still because the provincial government of Nova Scotia has not stopped the growth of it. It talks about having a balanced budget. Unfortunately I cannot see how it can call it balanced if it adds to the debt every year, as it has for the past four years, and I do not see when that will stop.

An area for me which has been important is cities and urban infrastructure. I was pleased the budget included an announcement of $3 billion more for urban infrastructure over the next 10 years. I hope we will see in future budgets significant additional dollars going to that cause.

My riding is probably the fastest growing area east of Ottawa and east of Montreal, although until recently Montreal has not grown that fast. However Halifax West has tremendous growth and we are facing lots of challenges because of that. I am pleased to see money going into that, into environmental matters and into other important measures.

I see my time has come to an end, and I appreciate the opportunity to rise in this debate.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, as you see, all things come to those who wait. I am pleased to speak today, albeit a little later than I expected, to share my opinion on Bill C-28, on implementation of certain provisions in the budget.

I could summarize my speech by saying that the federal government has a lot of money at its disposal, compared to what it needs. That is shocking, but also and particularly, unacceptable. Financially, the federal government has a lot of room to maneuver; $18.2 billion over two years, according to the present Minister of Finance, and $25.8 billion over two years, according to our calculations.

What is more, despite the fact that there is an 11% rise in expenditures, which is enormous, the Bloc Quebecois is of the opinion that the federal Liberal government is going to have a surplus of $14.7 over the next two years. This clearly illustrates the extent of the fiscal imbalance and clearly points to what I have already said in my summary.

I could also summarize what I have to say as this: the federal government is responding more to the needs of a Prime Minister in waiting than to the true needs of the public. It is doing nothing to correct fiscal imbalance, nothing to help the victims of the softwood lumber crisis, nothing to put an end to the pillaging of the EI fund.

The regions, which are dependent on the softwood lumber industry, the self-employed workers, whose existence is not recognized by the federal government, the aboriginal people, the unemployed, the workers paying EI premiums, are all part of the great forgotten as far as this budget is concerned. Middle-income taxpayers are totally forgotten as well.

Unions and employers are frustrated by the diversion of the EI fund, and are demanding an independent fund to stop the federal government from pillaging it, as well as for the contribution rate to be set by the contributors. This, of course, is what the Bloc Quebecois has been demanding for years now. We had even hoped that the federal government would create a stand-alone fund before the former finance minster becomes the future Prime Minister.

In addition to failing to create a stand-alone employment insurance fund, the budget announced a delay of nearly two years in the implementation of a new mechanism for calculating premium rates. However, employment insurance could generate a $3 billion surplus over the next fiscal year, according to our estimates, while the current Minister of Finance is promising, in the future, to strike a balance between employment insurance premiums and program expenditures. What a balance: $3 billion.

With regard to infrastructure projects, we had asked that the appropriate funds be released so essential projects could get underway in Quebec. We had asked for substantial long-term commitments. However the increase in infrastructure expenditures is insufficient, and the government is delaying in allocating the needed funds. I will repeat here that the federal budget meets the needs of an outgoing Prime Minister and a future Prime Minister better than the real needs of the people.

The budget provides for additional investments of $3 billion over 10 years. These investments have resulted in an additional $2 billion for the strategic infrastructure fund. This fund is increasing from $2 billion to $4 billion. Although we demanded massive investments in infrastructure, only $100 million, of the additional $3 billion announced in this budget, has been allocated in fiscal 2003-04. This nowhere near meets the needs.

This amount is clearly inadequate, given all the needs. We might have expected, at the very least, that a fair part of this investment, or $300 million, would be allocated in fiscal 2004-05. However, after the next two fiscal years, only $250 million of the $3 billion will be provided. This is disappointing, but I said this at the beginning of my speech: the federal government has a lot of money at its disposal, compared to what it needs. The simple conclusion is, therefore, that the federal Liberal government is not taking infrastructure needs seriously.

We have indicated that the Government of Quebec must remain in charge of the projects and allocating funds. However, the budget indicates the projects related to climate change will be eligible for funding through these infrastructure initiatives. Yet, it is very clear from the funding criteria for the Canadian strategic infrastructure fund that it is the Government of Quebec or the provincial and territorial governments that are responsible. Let us hope that the fund, bolstered by an additional $2 billion, will continue to operate in this way.

Another disturbing fact is that the budget mentions that $1 billion will go to municipal infrastructure. It is important to note that the federal government cannot provide money directly to municipalities. The Government of Canada must keep in mind that it must deal with the Government of Quebec, and not municipalities. Obviously, in counting on this $1 billion, Quebec will be able to better plan and coordinate spending on its own.

Even the Coalition pour le renouvellement des infrastructures du Québec was disappointed by this budget. According to the coalition:

It is unfortunate to note that, despite the intentions laid out in the Speech from the Throne, the priority given to repairing our infrastructure for roads, sewers and water is dangerously low. What is the point of investing in health if we are going to have less and less confidence in the drinking water infrastructure and roads? We are putting off repairs to basic infrastructure and what is worse, we are compromising quality of life for citizens and competitivity for business.

It is also important to mention the reaction from the office of the mayor of Montreal and the executive committee of the City of Montreal, which feel that the 2003 budget brought down by the government is disappointing. The chair of the executive committee said that the Liberal federal government's proposal was clearly insufficient, considering the needs of the City of Montreal to renew its infrastructure. The same is true for all municipalities in Quebec.

Once again, I submit that the federal government has a lot of money at its disposal, compared ito its needs. The Bloc Quebecois is not the only one to say so, it is being said by many stakeholders every day.

Another cause for concern is that there is no mention in the budget of any form of assistance for self-employed workers. From day one, they have been the forgotten ones in connection with the EI fund, since they are uninsurable under the act. Yet self-employed workers account for 16% of the active labour force. The Liberal federal government should have taken advantage of this budget to establish a framework to extend the application of the EI system, with respect to both regular and special benefits, to self-employed workers. Once again, this clearly shows that the objectives of this budget do not reflect the needs of the people of Quebec and Canada.

We must not forget the latest health negotiations. An agreement was reached whereby $800 million was transferred to Quebec. After this amount was reinvested by the previous PQ government, the media, hospitals, and the health care community in general, are already reporting noticeable improvement with this $800 million received. This amount is only about half the $2 billion originally requested. Now imagine what could have been done with $2 billion, as confirmed by the report on health care; it would not be so difficult to make ends meet and Quebeckers and Canadians would have the kind of health care system they need.

It is wrong to blame the problem on a government, be it in Quebec or elsewhere.

There are huge surpluses which contribute to the fiscal imbalance. All the provinces in Canada agree on this, starting with Quebec, which is spearheading the demonstration that a fiscal imbalance exists, and all the provinces agree with the Séguin report. Moreover, every opposition party in this House also agrees.

In addition, I am convinced that many on the government side are aware of the existence of a fiscal imbalance. But we know how it is: the executive claims that there is no such thing, and everyone remains silent. These were my comments.

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, I certainly did not want to jump ahead of one of my colleagues from the opposite side who I know have been following this legislation very closely and who I think have been contributing mightily to this debate.

I did want to involve myself on two points, Mr. Speaker, first and foremost, Motions Nos. 14 and 15 that deal with the disability tax credit. What the government was trying to do by sections 74 and 75 of the act was to clarify the eligibility for the disability tax credit in the context of individuals being able to feed and clothe themselves.

One of the things that was very noticeable when the government moved on restricting access to the disability tax credit was that quite a few people came into my constituency office and reacted negatively to it. There are two categories of these individuals. The first is that category of individuals who I could see really were unfairly affected by the tightening down of the definition of what constitutes eligibility for the disability tax credit.

For example, I remember vividly one lady who came into my office. She was arthritic and quite crippled. Her hands were completely twisted around. She had a lot of difficulty just moving, but this was an individual who had tremendous joie de vivre. She did not let this crippling illness prevent her from doing as much as she possibly could, but because she was perceived by the bureaucracy as being mobile and able to move around, she was declared ineligible for the disability tax credit. The reality was that because of the very twisted condition of her hands in particular, she genuinely had a real difficulty in feeding herself and she had to have assistance. So it was very important for her to be brought under the disability tax credit even though in every other sense she was mobile in society, or as mobile as she could be.

On the other hand, there were people who came in and complained that they were eliminated from the disability tax credit because they had a food allergy. This food allergy caused them to spend all kinds of time searching for the right foods, as a matter of fact, so much time that they could not effectively work or hold down a job and this kind of thing. Not wanting to categorize all of those people, there was a reality. One gets this sense when one is a member of Parliament in one's constituency office and deals with a lot of people. There was a sense that this category of individual was willing to surrender to their disability rather than fight it.

In comparison to the lady with the severe arthritis, these people seemed to be, to all appearances, very capable of moving about and contributing to society and contributing to their own care and looking after themselves. But there was a Federal Court ruling pertaining to the disability tax credit which basically suggested that people who spend an inordinate amount of time trying to look for the foods that they need in order to satisfy their allergies should be brought under the disability tax credit.

The government, in amending the legislation we see before us now in clauses 74 and 75, attempts to distinguish between these two realities, one a disability that genuinely does make it impossible to feed and dress oneself. I can assure members that it is very difficult, and I know this from experience, to do the most elementary things when one's hands are crippled.

Just briefly as an aside, I should say that I have some passing knowledge of this because on my 21st birthday my friend and I jumped the neighbour's hedge and I came down on my hands on a concrete sidewalk. While neither of my hands were fractured, all the ligaments on either side were strained. For about six weeks I could not use either hand, so I can sympathize with people who might have severe arthritis about how this makes it very difficult to do simplest things like feeding and dressing oneself.

While the original amendments in this section make this distinction, and they are good amendments, unfortunately the motions that are proposed would scrap both clauses 74 and 75 eliminating, in my view, this very necessary distinction between being physically crippled to do something that is essential and being what I suppose one could call emotionally disadvantaged or even emotionally crippled. Sometimes it is not wise to use the government's ability to assist people financially to address issues that are basically emotional. Sometimes it is better if these people delve into their own resources to find their own ways of dealing with these emotional disabilities.

I will leave that for a moment and take advantage of the few minutes that I have to comment on something else in the bill which I have not had an opportunity to comment on before. That is the introduction in this legislation of a first nations goods and services tax.

It is ironic because of course the goods and services tax is one of the most hated taxes in Canada. Although it is not being debated very much these days, I guess after almost 12 years in which it has been in place, people have given up on it and it is no longer the source of negative comment that it once was. However it is a very important method of raising revenue for the federal government.

Bill C-28 brings the goods and services tax into native self-government. It is a very positive step in that the government has been attempting, as a matter of policy, over the past five or six years, to bring in aboriginal self-government and make aboriginal communities as independent as possible. One of the ways to do that is rather than aboriginal governments, Indian governments and band councils being totally reliant on money coming from the federal government, they should be able to raise money by themselves within their own communities. This legislation introduces the ability among first nations to raise money through a goods and services tax within their own communities.

What is so relevant and so timely about that is the government has before Parliament, as we speak, a complementary bill called Bill C-7, which brings in self-government, provisions of transparency, accountability and standards of governance to some 600 Indian bands and communities across the nation. This legislation has been somewhat controversial because I realize some of the opposition parties are opposed to it. However most of the country, most aboriginals and anyone who has any familiarity with the problems that exist on our Indian reserves will appreciate this is extremely important legislation.

I point out that if one is to enable Indian bands and communities to raise money on their own, one has to have a coherent scheme of transparency, accountability and standards of governance in those band councils. It is all part of a package, Bill C-28 and Bill C-7. These are two very positive things on the part of this government.

[Rahim Jaffer, Canadian Alliance, Edmonton Strathcona, AB]

Mr. Speaker, it is a pleasure to rise and speak to the report stage of Bill C-28, the budget implementation act. I have had the opportunity to speak to this budget bill over the last few stages as it has been going through the House. Today we are dealing with a few motions, Motions Nos. 13, 14, 15, 17, 18 and 19, and I will try to do my best to address them as I continue with my speech, but I want to try to address a few of the things I talked about just quickly in the previous stages and how this particular budget has failed Canadians.

We hear over and over again from the government that it has reduced taxes. In some areas I will have to admit it has, but overall personal taxes for Canadians are still far too high and they leave us out of the loop when it comes to being able to compete effectively, let alone leaving more money in the hands of Canadians at the end of the day. That is something more and more Canadians are getting frustrated about, especially when they see the amount of personal taxes they pay on their paycheques. It is still something that they really would like to see the government move on.

Because personal taxes are too high, let us look at certain areas where the government could have done more to help Canadians directly. The government could have looked, as we proposed, at reducing the GST. It is a tax that the government actually said it would kill, abolish and scrap before it came to power. Now it seems that the Liberals have not met a tax they do not like, because they surely have not done that. Reducing it would have been great. It would have helped Canadians, even in light of the fact that we have had rampant problems with GST fraud. We have dealt with that in the House and talked about it. We know that Canadians would like to see some of that money left in their own pockets, not the government's.

In the area of payroll taxes, the government has said that it has reduced its overall payroll taxes. Even though we have seen some reductions in EI, unfortunately those reductions have been completely offset by the increases in CPP. At the end of the day Canadians are finding that payroll taxes tend to kill jobs. At a time when we need to support the economy and do more to stimulate growth, clearly payroll taxes would be an area in which we could reduce the overall cost to businesses and employers.

We know that at the end of the day there is a huge surplus in the EI fund. It would have been great to have been able to leave some of that money in the hands of the workers who deserve to keep that money, and not, unfortunately, spend it on programs where the government has thrown it away, like the gun registry, sponsorship, and a number of other things where there has just been a complete management bungling on the other side of the House.

Also we have heard it proposed that RRSP limits be increased, although not as high as we would have liked. In the finance committee the suggestion was to raise it to $19,000 but in fact the government over the course of the next four or five years is slowly going to be raising it to $18,000. Clearly that is something we need to address in the future. It is unfortunate that the government has not done more for Canadians to be able to address that.

The last time I addressed the budget, I talked a little about the customs agents, about the problems that have affected some of our customs agents and officers and the challenges they are facing on a daily basis. I know that the minister disagrees with me and we often get into heated debate, but she has not treated customs agents the way that they deserve to be treated. It is almost shameful. We have had comments in this place where the minister actually has referred to them, and I know she denies this, as bank tellers; she has done that in the past. She has even said that if they were armed there would be 3,000 accidents waiting to happen. She has used that here in this place and she has even gone so far as to refer to me as Charlton Heston.

I do not mind being compared to Moses, and quite frankly, sometimes when I look across the aisle I do think we live in the world of Planet of the Apes , but her slurs continue. It is unfortunate that she does not step up to the plate, try to take care of the problems at customs and resource those customs agents the way they deserve to be resourced given the fantastic job they are going and being stretched to the limit.

I talked about that in great detail the last time so I will not go back down that road right now, but we still have problems at customs. We have not dealt with the 40% of border crossings that still do not have the proper resources for computers and that are unable to stop and detain people entering Canada who may be dangerous, and obviously there is the issue of firearms, with which we know the minister does not agree at all.

Today we are dealing with Motion No. 13, the issue of GST on school buses, Motions Nos. 14 and 15 that deal with the disability tax credit issue and Motions Nos. 17 and 19 that deal with some overall tax changes. I wanted to talk a little about the GST on school buses issue, especially seeing that Motion No. 13 calls for Bill C-28 to be amended by deleting clause 64. We are going to be taking a position against the motion, but I wanted to talk about this particular issue seeing that we had to deal with it most recently in committee. Some of my colleagues in the House today will remember that.

We on this side of the House are concerned about this. Obviously we do not want to have a bias against contracting out to private services, especially if it means more efficiency, especially if it helps school boards to transport and do a better job for the students using the services, but obviously we need a system that works when it comes to the GST rebate system for public service bodies such as school boards.

The courts cannot decide Canadian tax policy. We should get that straight. That is the prerogative of the government and the House of Commons. Unfortunately we are seeing more and more that the government defers to the courts when it should actually be dealing with the issues right here and we should be making changing to the tax codes in the House rather than tying up the courts in determining what in fact should be fair and what should not be.

As I said, the issue came up in committee. The amendment to the Excise Tax Act is basically an amendment that would clarify the amount of GST input rebate that school boards would be entitled to with respect to school transportation. The amendment was made in response to a 2001 Federal Court of Appeal decision that school boards or provincial governments that contracted out school bus services to private companies were entitled to a 100% rebate of their GST costs rather than the 68% they are entitled to under the legislation.

The purpose of the 68% GST rebate is to match the tax rate under the old manufacturers' sales tax. The federal amendment in Bill C-28 would ensure that a school authority's supply of transport to and from school for students is exempt regardless of how the supply may be funded or provided. This is a prudent move. If we had left the court decision to stand, it unfortunately would have discriminated against school boards that supply their own student transportation rather than contracting out and would have opened the floodgates for other public service bodies to claim 100% rebate on the GST they spend. There could be an unfortunate snowballing effect and that was raised at the committee.

Exempt supplies are supplies on which there is no liability for the GST and therefore the tax is not charged to the end user or collected from the supplier. However, the tax on the portion of a public service body's total expenses used in exempt activities would qualify for a partial GST rebate. There are different percentages that vary depending on the services that are being provided. I know that for hospitals it is 83%, for schools, as was mentioned, it is 68%, municipalities 57%, and the list goes on. There are different levels. We know that municipalities are currently trying to win in getting that 100% rebate on their GST as well. We know that there have been huge costs associated with municipalities even when it comes to their transportation systems. I know that in the end the Toronto Transit Commission pays, even after the rebate, close to $50 million in GST, I think, since the amalgamation in 1998.

These are the kinds of things the government could do more in trying to help, especially for the challenges the municipalities are facing when it comes to infrastructure. We have seen such a drop in investment on that side of things. If they can actually claim back these rebates and reuse them, then I think there is no doubt it would help deal with some of the challenges municipalities have.

On the other amendments, I will say quickly that I believe we will be opposing almost all of them that we are debating even though there are positive merits in some of them, such as specifically the motion trying to ease the definition of the disability tax credit from feeding and dressing to feeding or dressing. We do support a portion of that, but ultimately there still are concerns about how much that would open up and what sort of negative effect it could have.

To wind up, I want to mention the issue of capital tax. The government has moved on this particular issue and will be reducing capital tax. We on this side of the House have always believed that if more money is left in the hands of the economy it will do more good. We would like to be able to eliminate the capital tax completely. That would give support to a lot of businesses and people who invest and get the economy going. I think it has been proven that in the long run governments actually benefit from that because more economic activity results in more government revenue. That is something we wish the government would have moved on also; we know that it is reducing this over a five year period, but it would have been great to see that reduction right now, helping businesses, individuals and society to be more productive.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the report stage debate on Bill C-28, the budget implementation act.

When I was elected in 1993, Canadians were faced with a fiscal house that was not in order. Canadians will remember that there was a $42 billion deficit for that fiscal year during which the government took office. One can imagine how difficult it was for the government to implement new programs and provide for the needs of Canadians at a time when it was dealing with such a large deficit. The thing that makes me most proud as a member of Parliament and a member of the government is that we were able to get our fiscal house in order and work toward bringing forward a budget, as was the case just recently.

The government presented a balanced budget for this year, the sixth consecutive balanced budget, and for the next two fiscal years as well. Canadians will be very comforted by that fact. The budget would restore the full annual contingency reserve and economic prudence factors which have been part of our budgeting process since the government took office.

The government recognizes the critical link between social and economic policy. I remember the finance minister of the day appearing before the finance committee in which he made a statement which stuck with me for some time. He said that good fiscal policy makes good social policy, and good social policy makes good fiscal policy. There is an important relationship there which we must continue to strive for.

However, governments must also understand that they cannot be all things to all people at all times. Governing is about making choices. It is about making sure that the significant priorities of the day are addressed first. I have often wondered whether governments could ever be totally popular throughout the country if they simply dealt with the significant priorities to the exclusion of others which might be important. For example, for years I have advocated an additional investment in public education regarding health matters such as fetal alcohol syndrome. We have done some work there. I wish we could do more, but I understand that when there are limited resources and the priorities of Canadians have been made known, it is important that we proceed with those because it is in the best interests of all Canadians.

This budget plays a critical role in building a Canada that Canadians want. It does so according to three themes. The government recognizes the critical link between social and economic policy and continues its balanced approach to managing our finances.

This approach plays a critical role in building the Canada that we all want. First, by building a society Canadians value through investments in individual Canadians, their families and communities. Second, by building an economy that Canadians need by promoting productivity and innovation while staying fiscally prudent, which Canadians have also asked for. Finally, achieving the objectives of the budget by building the accountability that Canadians deserve by making government spending a more transparent and accountable process.

There are many provisions in the budget that I would like to comment on. The government recognizes that skills development and lifelong learning are critical to the country's economic prosperity. Between 1993 and 2001 the Canada student loans program assisted more than one and a half million full and part time students, an investment of approximately $11.4 billion. In the 2000-2001 fiscal year the Canada student loans program provided $1.57 billion in full and part time student loans at an average of $4,554 per full time student.

The $60 million measures in the 2003 budget are expected to be implemented by August of this year. They include, first, putting more money in the hands of students by allowing them to keep a greater share of their income earned during their studies. The exemptions for income earned while in school would be increased to $1,700 annually, being a maximum of $50 a week, from the previous level of only $600 annually.

Second, extending access to interest relief, debt reduction and repayment measures would help student borrowers experiencing hardship in their repayments. As a result of these measures, borrowers in difficult financial circumstances could have their student loan debt reduced by up to $20,000 over three years.

I know how expensive it is for post-secondary education. I have three children. One has completed university, one is just finishing a master's program and the other one is in the middle of university studies. It is very important to understand that these programs do not necessarily give assistance to those whose family income is above certain levels. Those students will not qualify for student loans. However it is important that every person who wants to go to post-secondary and who has the ability to go to post-secondary should be there. The proof is clear: post-secondary education is an imperative, not an option for all those who have the ability.

I will complete my time by making a couple of comments with regard to health. Health and the well-being of Canadians has been the number one priority of Canadians. They have made that very clear. I think it is important for us to recollect that budget 2003 confirms $34.8 billion in increased funding over five years to meet the goals outlined in the health accord. Bill C-28 would implement these measures.

First, in terms of increased support through transfers, the budget builds on the significant federal support for health care already provided to the provinces and territories through the Canada health and social transfer.

Following the September 2000 agreements on health and early childhood development, the federal government provided provinces and territories with a predictable and growing five year funding framework to 2005-06 through the CHST. This established funding will be further increased by $1.8 billion and extended for an additional two years. As a result, the total yearly cash transfers to the provinces will rise to $21.6 billion in 2006-07 and $22.2 billion in 2007-08. Let me again emphasize that this is over $22 billion for that one year.

An immediate $2.5 billion supplement to the CHST will help relieve existing pressures on our health care system. This funding will be on a per capita basis to the provinces and territories to give them the flexibility that they require.

However the sustained renewal of Canada's health care system needs positive structural change as well as further financing. I think that goes for many government programs for which we constantly have to look at the accountability and sustainability of what we are doing.

When I first became a member of Parliament and a member of the health committee, I remember Health Canada officials coming before us to tell us what was happening within our health system. I will never forget that their suggestion at the time was that 75% of the spending on health care in Canada was for fixing problems after the fact and that only 25% was spent on the preventative side. They told us quite frankly back in 1993 that this was not sustainable. We know that is the case and, through actions such as those in the budget, we are making sure that we are continuing to invest in health care for all Canadians.

After listening to some of the debate by all hon. members, there is no question that Canada is on the right track. The fiscal strategy that we have exercised since 1993 has given us an opportunity to invest in the priorities that Canadians see are there, but we have also been able to deliver a program of $100 billion of tax reductions. We have reduced our debt to GDP ratio from over 50% to below 30%.

We have made very significant improvements, in addition to creating hundreds of thousands of jobs for Canadians because we have an economy that still has not reached its potential. I am sure members and Canadians will agree that this is yet another step toward moving us forward. It is built on those tough decisions we made back in 1993. I believe the government should be congratulated for yet again another responsible budget.

[Gurmant Grewal, Canadian Alliance, Surrey Central, BC]

Mr. Speaker, I am pleased to rise on behalf of the constituents of Surrey Central to participate in the report stage debate on Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003.

The theme of this year's budget is “money for everyone”. In fact it gives every appearance of being an election budget, with its focus on spending and its attempt to please every possible constituency. I call it an “ice cream budget”. There is something for everyone but by the time they taste it, it melts away before their eyes.

The budget announced $14 billion in new spending and a $25 billion increase in program spending by the year 2005. This year's budget increases federal spending by 11.5%, coming on the heels of 7% and 18% increases in the previous two budgets. By the year 2005-06, spending will have increased 46% from 1996-97 levels.

Government spending is growing three times faster than the economy. It can be said that for this government, the days of fiscal prudence are a distant memory.

Adjusting for inflation and population growth, this is the largest single year spending increase since the 1970s. The spending cuts introduced in the 1995 budget have now been entirely reversed.

While visiting Calgary during his prebudget consultations/leadership tour, the finance minister told his audience that Canadians did not want a laundry list of new spending. Canadians certainly did not want a grocery list either.

After all, these are Liberals. How can they ignore the urge to spend? The result is the worst of both worlds, spending too much, while at the same time spreading their money so thin, over so many areas, that it will have little positive impact.

We are now considering Motions Nos. 13 through 19, except Motion No. 16. Motion No. 13 was put forward by the member for Drummond. It seeks to amend Bill C-28 by deleting clause 64. The motion deals with the issue of GST on school buses.

While the Canadian Alliance opposes this bias against contracting out and privatization of services inherent in the GST rebate system for public service bodies such as school boards, the courts should not and cannot decide Canadian tax policy. That is the prerogative of the government and the House of Commons. Therefore I cannot support the motion.

Motions Nos. 14 and 15 are proposed by the member for Dartmouth. Motion No. 14 seeks to amend Bill C-28 by deleting clause 74, while Motion No. 15 seeks to delete clause 75. When speaking of the disabled, we are talking about the most vulnerable people in Canadian society.

It was an embarrassment last year when the government attempted to reduce its spending by removing resources from those most in need. This was yet another example of the misplaced priorities of the Liberals. We believe that 40% of Canadians with disabilities live in poverty and one-third of them are unemployed.

The Department of Finance announced amendments to the Income Tax Act that would make 30,000 Canadians ineligible for the disability tax credit. The Minister of Finance proposed limiting the tax credit to only those who cannot feed themselves. I strongly opposed these changes when I spoke in this place last November. The Canadian Alliance supports easing the definition of disability from feeding and dressing to feeding or dressing.

Motion No. 17 has been put forward by the member for Vancouver East. It proposes the deletion of clause 84. I am opposed to this proposed amendment.

The Canadian Alliance supports increasing the RRSP dollar limit more than the baby steps taken by the weak Liberal government. Increasing the allowable limit for RRSP contributions from $13,500 to $18,000 by 2006 would go a long way to securing the future of countless Canadians.

More and more Canadians are self-employed and do not have a company pension plan. Since they do not have pension plans, it is necessary for them to save for their own retirement. Needless to say, it would be foolish of them to rely on the Canadian pension plan for their retirement.

To understand the need for increasing the RRSP contribution limit, we should think of the situation facing realtors. Realtors are one professional group who rely mainly on RRSPs for their retirement incomes. Realtor incomes typically fluctuate from year to year. RRSP contribution levels are tied to income. If their income is low one year, their contribution level will be geared to that low level the following year. If their income rises substantially, their contribution is capped at $13,500 under the current system. This simply is not fair. I have spoken to many realtors and they tell me it is not fair to them.

The final two motions under consideration, Motions Nos. 18 and 19, are also proposed by the member for Vancouver East. Motion No. 18 seeks to amend Bill C-28 by deleting clause 85, while Motion No. 19 would delete clause 86. I support neither of these proposed changes. The Canadian Alliance wants to eliminate the capital tax. Reducing it does not go far enough, but it is a first step. The Canadian Alliance will oppose these amendments because they will do more harm than good to the bill.

The finance minister claims Canadians do not want lower taxes, so it should come as no surprise that his budget contains little in the way of tax cuts. There is no significant tax relief in the 2003 budget. The costs of the budget's tax cuts represent 12% of the total budget.

A Canadian Alliance government would create an economic climate in which businesses could thrive and grow, and with their success create quality job opportunities for Canadians. The Canadian Alliance would do so by providing deep, broad-based tax relief, ensuring a stable monetary policy, supporting essential national infrastructure in a non-partisan manner, and encouraging medical and scientific research.

The Canadian Alliance would create greater tax fairness for families by eliminating inequities between single and dual income families. The Canadian Alliance would move to more equitable treatment of choices in child care arrangements, including child care at home. We would integrate the tax system and social programs to better meet the needs of low income individuals and families.

We would ensure that taxes which are imposed for a specific purpose would be used for that specific purpose alone and would be removed once no longer required and not be allowed to be put toward general revenue, as in the case of the deficit financing tax of $1.50 per litre on gasoline. Once the deficit is eliminated, that tax should also be gone.

The government laid out its vision in the throne speech and then implemented that vision in the budget. The throne speech suffered from an old, tired vision. The budget suffered from that same flaw. If the vision is not right, naturally the implementation of the budget cannot be fair. The budget is yet further evidence that the government lacks vision and foresight.

The former finance minister, the member for LaSalle—Émard and heir apparent to the Prime Minister, made it clear last week that, as head of the government, he would not implement any bills that he did not like. With that knowledge, it is legitimate to ask whether or not the budget implementation act that we are debating today has the approval of the former finance minister? If it does not, then the government may simply be wasting our time.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I would like to address the amendments that have been put forward to the House today.

First, dealing with Motion No. 13. This amendment is being made in response to a recent court decision affecting school boards that has a result contrary to the longstanding and well understood intention of the GST law. The result of the court decision is also contrary to the manner in which school boards themselves have been complying with the GST legislation since 1991.

The government's decision to apply the amendment retroactively took into account the government's established criteria for making changes to the tax law on a retroactive basis. These criteria were enunciated in a 1995 report to the public accounts committee after the committee had declared, not only the appropriateness but indeed the imperative use of retroactivity in certain circumstances.

The government's announcement of December 2001 made it clear that the amendment would apply to all school authorities, with the exception that, in the case of the school boards which had received a court judgment prior to December 2001, those would not apply. This is in accordance with the federal government's practice of not reversing a court decision rendered in a particular case prior to the announcement in the change of tax law.

Those who pursued court cases after the announcement were clearly aware that retroactive legislation would be coming forth and proposed to Parliament. They chose to carry on in spite of that.

An amendment to substantially the same effect presented by the Bloc Quebecois was defeated at the standing committee.

Report stage Motions Nos. 14 and 15 propose to delete clauses 74 and 75.

I would point out that Motion No. 14 would delete clause 74 of the bill. Clause 74 provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding or dressing oneself for the purpose of establishing entitlement to the disability tax credit.

In contrast, existing text of the law provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding and dressing oneself.

In the absence of this bill, therefore, there is an ambiguity in the law to the potential detriment of Canadians with disabilities. Does one have to be impaired in both feeding and dressing oneself, or does either impairment establish an entitlement on its own?

The Standing Committee on Human Resources Development and the Status of Persons with Disabilities recommended this ambiguity be corrected.

Accordingly, clause 74 clarifies that an individual need not be impaired both in terms of feeding and dressing oneself to have access to the disability tax credit; one or the other will suffice.

Motion No. 14 would reinstate the ambiguity to the detriment of Canadians with disabilities and therefore cannot be supported.

Motion No. 15 would delete clause 75 of the bill. Clause 75 clarifies the eligibility criteria for the disability tax credit.

In March 2002 the Federal Court of Appeal rendered a decision that has been interpreted as expanding the eligibility for the disability tax credits to individuals who, because of food allergies or other similar conditions, must spend an inordinate amount of time to shop for and prepare suitable food.

Such expansion of eligibility goes far beyond the intent of the DTC and could increase the fiscal costs significantly, and certainly the New Democratic Party is well aware of that.

Following the consultations on draft amendments to clarify the DTC eligibility criteria that were released on August 30, 2002, the 2003 budget proposed to rework the language of the proposed amendments to clarify that the activity of “feeding oneself” does not include any of the activities of identifying, finding, shopping for or otherwise procuring food, or activities associated with preparing food that would not have been necessary in the absence of dietary restriction or regime.

This aspect of the legislation is important. It means that individuals who are markedly restricted in their ability to prepare a meal for reasons other than dietary restriction, such as severe arthritis, will continue to be eligible for the DTC.

Clause 75 also clarifies that the activity of dressing oneself does not include the activities of finding, shopping for and otherwise procuring clothes.

It should also be noted that the amendments were developed only after consultations with the affected groups. These amendments reflect those consultations.

Further, the 2003 budget proposed, and this bill includes, an extension of the medical expense tax credit for incremental costs of gluten free foods for persons who suffer from celiac disease and must follow a gluten free diet. In fact, we are expanding, not reducing, as some members might suggest, eligibility.

Motion No. 15 proposes amendments that would reverse the effect of the bill by explicitly extending eligibility for the disability tax credit to the activities sought to be excluded. As such, the motion goes far beyond the intended policy of the disability tax credit and does so in a manner that could significantly increase the fiscal cost of the credit. Therefore the government will not support Motion No. 15.

Motion No. 17 proposes to amend the provisions of Bill C-28 relating to retirement savings. Similarly, Bill C-28, in this case, includes clause 84 amendments to the definition “money purchase limit” , to increase the limit of $15,500 for 2003 to $16,500 for 2004 and $18,000 for 2005 and subsequent taxation years.

Setting appropriate limits on tax assisted retirement savings in RPPs, RRSPs and DPSPs is an important means of encouraging and assisting Canadians to save for retirement, reducing the tax burden on savings and allowing employers to attract and retain key personnel.

The proposed motions would not only eliminate these improvements to the system for tax assisted retirement savings, but would reverse the increases that were scheduled to take effect next year under the existing income tax law and on which Canadians depend. Clearly we cannot support that.

Motions Nos. 18 and 19 deal with the federal capital tax and are linked in substance. I will speak to both of them.

Unlike income taxes, which are paid when a corporation has taxable income, capital taxes must be paid even where a corporation has not been profitable. Capital taxes have been identified as a significant impediment to investment in Canada.

The federal capital tax was introduced in 1989 as Part I.3 of the Income Tax Act. The tax is levied annually at a rate of 0.225% of a corporation's taxable capital employed in Canada in excess of $10 million capital deduction. A corporation is taxable capital is generally described as the total of its shareholders' equity, surpluses and reserves, as well as loans and advances to the corporation, less certain types of investments in other corporations. A corporation's federal income surtax, which is 1.12% of taxable income, is deductible against the corporation's capital tax liability.

In order to promote investment, the 2003 budget proposed to eliminate this federal capital tax over the next few years starting on January 1, 2004.

Clauses 85 and 86 of the bill would implement this proposal by increasing the threshold for application of the federal capital tax from $10 million to $50 million of capital for taxation years ending after 2003, and by reducing the rate of tax over the period 2004 to 2010.

Under the bill, the federal capital tax liability will be eliminated for almost 5,000 medium size corporations in 2004. The federal capital tax will be completely eliminated in 2010, over the next seven years.

Motions Nos. 18 and 19, if adopted, would deny these benefits and clearly the government cannot support them.

I urge hon. members to defeat these amendments, which were defeated in committee, because they clearly do not reflect the fact of a very progressive budget moving on a number of areas including, as I say, capital taxes, as well as the disability tax credit to improve the lives of individual Canadians. I say, let us get on with it.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, I am pleased to take part in the debate today on the budget implementation act, Bill C-28. There are a lot of things we would like to see in the act but they are not in place. We would certainly like a vote of confidence from the Canadian public to give us the opportunity to see some meaningful tax relief in the country. Unfortunately we have to put up with what is in the act today. We see a lot of shortcomings in it, but I want to deal specifically with a few things covered by the motions introduced by the various members today, which have been grouped together.

I would like to start with the GST issue, specifically the GST on school buses which was brought to our attention by the Bloc through its amendment. We see a lot of things wrong with the GST, a GST that was going to be scrapped by the government when it came to power in 1993. At that time, it was generating about $15 billion of revenue for the government. Ten years later it was generating $25 billion. In this current year it looks like it is going to exceed $30 billion. It has become quite a cash cow for government. Over $4 billion dollars per percentage point is what it is generating for government.

The concern introduced in the amendment lies in the unfairness of the GST issue in terms of rebates for school boards. We are concerned that there is a problem. There is a problem in treating the private sector the same as municipalities or government; we think there should be a fairness there. The difficulty with this particular amendment, though, is that when this issue was taken over through the GST from the old manufacturers' sales tax, it meant that the school boards would have the equivalent effect of the manufacturers' sales tax when that was in effect for the purchase of school buses and all of the costs for having school bus service for schoolchildren. That equivalent at the time came to 68% of the GST.

Some school boards have found ways around this by contracting out their school bus service and therefore have asked for 100% of that contracted service to be rebated. The court found that this should be the case, but we believe that it is really up to Parliament to decide what the issue is here. Essentially what the court decision does is put the boards on a different footing depending on whether they contract out the service or provide it themselves. School boards tell me that if this court ruling were to stand they would have to move to a contracting system themselves because they would gain a considerable amount of money.

The government, through Bill C-28, has moved to close off this abrogation of what was happening to put it back to its original intent of essentially 68%. We support that, but we do see a lot of things wrong with the GST. We think it needs a general overhaul. In fact we would start by reducing the amount that the GST takes in per year for the government, partly because we think that the government does not need this extra income. As I said, it is raising $15 billion more now than it raised in 1990 when it first came into effect.

If it were just that the government needed the income, that might be a good argument for keeping it as such and not having to reduce the rate, but we see the government wasting a lot of taxpayers' money day in and day out in the House. My colleague from St. Albert had the waste report out the other day and gave a lot of examples of how that has happened. We think that giving business subsidies to huge corporations in Canada should not be what the Government of Canada is all about. In fact, if individual Canadians want to invest in Bombardier or Pratt & Whitney or General Electric, Canadians have the opportunity to buy stocks. They have that opportunity through their mutual funds. Why should the Government of Canada do it for them? The government is giving hundreds of millions and in fact billions of dollars to those corporations every year and mismanaging or wasting a tremendous amount of money.

Therefore, we think there does need to be an overhaul of the GST. We would start by reducing the amount that is brought into the government. One per cent equates to about $4.5 billion.

A couple of other issues have been identified in the amendments. I notice that the NDP would like to delete any changes to the capital tax. We want to get rid of the capital tax altogether, but the NDP sees it as another source of revenue for government.

When we travelled across the country with the finance committee we were told repeatedly that the capital tax was one of the most damaging taxes in order to attract investment to Canada. The reason is that it is a tax on a business. I would compare it in some ways to a property tax. Essentially, that tax is there whether the business makes any profit or not.

That does not make any sense to me. Canada has lagged behind pretty badly in investment. We have fallen off as a source of direct foreign investment for others to invest in Canada as a percentage of world investment over 30 years. That is a discussion for another day. Suffice it to say that public policy, largely by this Liberal government, accomplished all that in about 30 years. However we think the capital tax should be reduced and we would like to reduce it over two years, not over five years, as the government has suggested.

There are couple of other things we are dealing with today in the amendments that are before us. There are a couple of amendments on the disability tax credit for those people who have disabilities. We certainly have received a lot of mail on this issue. The government seemed to be sort of the grinch who stole Christmas in the way it treated people with disabilities. I notice that the Liberals have responded to some of that pressure and will be changing the wording to try to deal with that issue.

We support easing the definition of disability from “feeding and dressing oneself” to “feeding or dressing oneself”, which could make a considerable amount of difference for those who qualify. We would also support that the government stop harassing disabled people who have been receiving disability tax credits for a number of years only to find themselves reassessed and no longer receiving them.

I made the case in the House on previous occasions about a constituent who contacted me. He has lost a leg and has to wear a prosthesis to get around. He is a proud individual. He works in the oil patch. It is a problem for him to have to use a prosthesis in a very tough environment. However he wants to work and does not want to be sitting there on welfare. The disability tax credit allows him a little measure of comfort in being able to claim some of the extra costs involved to rig his van so he can drive and so on. The government took that away from him, as it did from many other Canadians.

I hope the government has learned its lesson and that some of the changes made to the tax act today will address that.

The other area the amendments deal with is the RRSP. I see the NDP would also like to cancel changes to the RRSP limit. We believe it is important for Canadians to have the ability to save for themselves and raising the RRSP limit is a measure that we would support. We would support it because it looks like Canadians will have to rely more and more on themselves for their own retirement income. They will not be able to rely on government, especially the Canada pension plan which has seen some fairly substantial losses in the investment sector over the last year. Be that as it may, we think the plan continues to be in trouble, partly because the former finance minister, the member for LaSalle—Émard, would not listen to the chief actuary of the Canada pension plan when he said that rates would have to be even higher than the 9.9% that it has risen to in the last couple of years. He also said that It was not sustainable. As the Canadian birth rate continues to decline, unless something changes, there will be a small amount of people working to support the system down the road.

While we agree with a lot of the measures being implemented in the act, in most cases they are half measures, such as the capital tax only going part way. We see no personal tax relief. Canada is falling generally well behind the United States in corporate tax rates again as a $600 billion tax package is working its way through congress at the moment.

Our productivity and our competitiveness will be affected once again and, with the rising dollar, I suggest that a lot of these chickens will be coming home to roost pretty quickly because the government has not made the changes on the side of reducing taxes in order to compensate for the rising dollar. This will continue to be a bigger issue well into the future.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, it is with pleasure that I rise today to speak on Bill C-28, the budget implementation act. Mind you, it is not with pleasure that I review the substance of the bill, because the budget is a return to the 1970s Liberal free-spending habits that have imperilled Canada's economic prosperity.

Instead of having a vision for the future, the government is wandering aimlessly with no vision whatsoever. The last time Canada witnessed program spending growth like we have today in this budget, the current Prime Minister was the minister of finance. This budget, and by extension the budget implementation act, can be characterized by one phrase: an irresponsible increase and commensurate growth in program spending.

The fact is that since 1998 we have seen growth in program spending that did not always reflect the priorities of Canadians, but this is the first year in which we have seen such a dramatic increase in program spending.

That said, some increases are badly required and desperately needed. Nobody disagrees with the notion that we want to see a greater level of investment in health care and in the military. Nobody would disagree with that. Health care and the military clearly represent the priorities of Canadians, but if we look at the budget implementation act and take the health care reinvestment portion and the military reinvestment portion out of the increase in spending, the fact is that there is a 7.3% increase in government program spending in the budget net of health care and the military.

The Prime Minister should have warned the Minister of Finance not to make the same mistakes he made when he was finance minister back in the 1970s: to simply say no to this kind of Liberal waste. But then again, we have to ask why the Prime Minister would worry about leaving the cupboard bare, because he is leaving soon so he does not really care all that much about it.

Why would the Prime Minister worry about being fiscally responsible when his government has been party to so many financial mismanagement scandals and deliberate cover-ups in this country? Let us look at them for a moment: Shawinigate, the sponsorship boondoggle and the HRDC fiasco, and they go on and on.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I have to say I was speaking really fast. When I saw you give the one minute warning I felt as if I had only been speaking for about three minutes. Then I started to increase the speed, but I will now slow down a little to get in the rest of my comments.

I was addressing the increase in RRSP contributions the government will allow in Bill C-28 if it is approved. This will cost about $295 million. As I said earlier, it will be used by people who earn more than $75,000 a year, which is about 5% of Canadians. This has to concern us because if we looked at an overall assessment of taxation and income, we would see that there is a widening gap between people who are very wealthy and people who are very poor in Canadian society.

A study released by the Canadian Council on Social Development last November found that the wealth of the poorest 20% of couples with children under 18 went down by 51.4% between 1984 and 1999, whereas that of the wealthiest 20% of couples at the highest end increased by 42.7%. There are other studies by the Canadian Centre for Policy Alternatives that bear out those findings. They point out that between 1970 and 1999 the wealth of the richest 10% of family units in Canada rose by a whopping 122%.

I want to contrast that kind of statistic and the proposal in this budget to allow a fairly major increase in RRSP contributions to seniors who are locked into fixed income support programs after retirement. They are the people who feel the worst effect of rising costs in our society. Many of those retirees spent their whole lives in the workforce helping Canada to be a prosperous and productive nation. They are now being forced back to work after retirement just to survive from day to day.

This is unacceptable and is not something we should accept as the status quo. It is not something we should accept as inevitable because it brings us right back to the structures of the budget and our taxation system.

There is a very strong argument to be made that over the last few decades there has been a massive shift in taxation from corporations to individuals. There has been a massive shift in taxation to provide more and more breaks for people who are wealthy and placing a greater burden on people who are at the lower end of the economic scale. Again I would argue this is not something that is inevitable; it is a matter of public policy that is determined by the Liberal government.

In the case of the RRSPs and the increase that is being allowed, obviously a lot of lobbying was done by various organizations on that basis. Our feeling in the NDP is that the government should have resisted that kind of pressure and those kinds of rewards that will benefit people who are actually doing very well and are very well off.

About one-third of Canada's seniors have such low incomes that they actually receive the guaranteed income supplement. What is astounding about that fact which we raised in the House just the other day is that the seniors who get the GIS--and there are a few hundred thousand seniors who do not get the GIS because they do not even know about it even though they may qualify--but the astounding thing is if seniors on GIS receive a little extra income over and above that for whatever reason, they are taxed at a rate of 75%, which would be the highest tax bracket in this country.

When we contrast that with this issue of an increase in RRSP contributions and the cuts being made for businesses for the capital tax, we begin to see the very stark reality of a government that clearly is making decisions based upon rewards and favours for people who already have huge benefits, and that is to the detriment of and certainly will have an incredible impact on people who have disabilities, as my colleague from Dartmouth spoke about earlier. That is where the hurt will really be.

These amendments try to redress that problem by eliminating these clauses in Bill C-28. I hope that members will consider these amendments. If we believe in the principle of equity in our tax system, they should be approved.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am very happy to follow my colleague, the member for Dartmouth, in speaking to report stage of Bill C-28. The bill implements the last federal budget. It is a very important debate because the bill lays out the priorities of the government in terms of where it is spending money and where it is also giving tax cuts. That is the issue at hand today.

From the NDP's perspective I will be speaking to Motions Nos. 17, 18 and 19. Two of the motions have to do with the elimination of the capital tax as outlined in the budget. One of them has to do with clause 84 regarding an increase in allowable contributions to RRSPs.

Clauses 85 and 86 on the capital tax are amendments that were brought forward by the government in the budget which would allow a huge tax break under the capital tax to Canadian businesses and corporations. The elimination of this tax would cost $695 million over three years.

We have to look at this in the context of the rest of the budget. We have to recognize that $1.2 billion was spent in new tax cuts in this budget over and above the $100 billion that was announced in the 2000 budget. This is yet another massive tax cut that is being awarded by the government to the country's corporate elite.

What this means if we want to look at this in terms of priorities of where our real needs are, it will be low income and middle income Canadians who will really feel the brunt of this. They will not receive any benefits from the tax cuts in this budget.

On the other side of the coin, we can see that the Liberal government's budget bill will spend five times as much scrapping the capital tax for businesses than it invested, for example, in affordable housing. I am the housing critic for our party and I have been one person in this house with a few friends, but not very many, who have been championing the critical need for a national affordable housing strategy.

We have been talking about the 1% solution for housing. We need to invest a further 1% in the provision of affordable, not for profit social housing. The government has put a paltry few hundred million dollars into the so-called national housing strategy. There is always the suggestion that is all it can afford. When we stack up the housing need against the tax cut of $1.2 billion just in this budget coupled with a $100 million, we begin to see there is a very different priority emerging.

We also are not in support of the government's plans to increase the RRSP limit from $13,500 to $18,000 by 2005. This will clearly favour about 5% of Canadians who are wealthy. It will again be to the detriment of low and middle income Canadians, particularly seniors who, in receiving the GIS, if they earn anything over the GIS supplement are taxed at a rate of 75%. Again, we can compare that in terms of who this budget is helping and who it is not helping.

Mr. Speaker, how much time do I have left?

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, it is with anger that I rise today and am forced to move the amendments asking for the deletion of clauses 74 and 75 of Bill C-28 which deal with the proposed restrictions to the disability tax credit. These clauses show contempt for the House. On November 19 the House unanimously passed the following motion:

That this House call upon the government to develop a comprehensive program to level the playing field for Canadians with disabilities, by acting on the unanimous recommendations of the committee report “Getting It Right for Canadians: The Disability Tax Credit“; in particular the recommendations calling for changes to the eligibility requirements of the disability tax credit so that they will incorporate in a more humane and compassionate manner the real life circumstances of persons with disabilities, and withdraw the proposed changes to the disability tax credit released on August 30, 2002.

The government reluctantly withdrew the amendments released on August 30 but injected them back into the ways and means bill in the February budget which was followed by clauses 74 and 75 of Bill C-28, the budget implementation bill.

Those clauses of the bill show that the finance department, the finance minister and the government as a whole cannot understand that Parliament is supreme. Parliament said on November 19 that the tax credit being dealt with should be reformed in a compassionate and humane manner reflecting the real life circumstances of persons with disabilities. What clauses 74 and 75 propose as changes to the eligibility criteria for the disability tax credit is to further restrict eligibility for this credit. That is contemptible.

The disability tax credit is already so restrictive that officials of the department admitted to the committee that Terry Fox would not be considered as having a disability under its draconian interpretations of the law. All of us should consider that for a minute. Terry Fox was a fighter and continues to live on in everybody's dreams for a better, healthier society where we all work on behalf of persons with disabilities and fight for people struggling with cancer. All of this is because of Terry Fox who lost a leg to cancer. At this point in time he would not be considered to be disabled under the laws of our government.

By proposing these changes the finance department is saying that people who have a hard time eating, those who are challenged every day because most of the food available to Canadians will kill them, should not be considered as having a disability. Finance department officials are also saying that just because some people have no arms and cannot dress themselves or need special clothes, they should not be considered as having a disability. Through these clauses the finance minister is saying that the amendments in the unanimous report of the HRDC committee are wrong and should be ignored.

Last week the finance minister clearly showed that he has no respect for the democratic process or for this chamber. He did this by reissuing an almost identical response to the committee's report that the House condemned in November. The committee and the House asked to have the system fixed and make the credit refundable. We have asked for the system to be co-ordinated and to make eligibility conditions reflect the real life conditions of people with disabilities. Here we see that the disability tax credit is still not refundable so that the vast majority of those who are most vulnerable, those with no income or a low taxable income, still get nothing.

I am proud to have led the fight to change this bad tax credit. I congratulate my colleagues on all sides of the House who have stood up against the Minister of Finance's proposal to further restrict who would receive this small tax credit.

Thousands of letters have been received from people across Canada. My friend from the Bloc received over 6,000 names on a petition. Every member of the House, with the exception of the Minister of Finance, stood up and asked that those restrictions be withdrawn.

I call on members from all sides of the House to once again show the finance department who runs the country and join with me to eliminate these clauses. Let us show the minister, the deputy and the department that they are not above the will of the House. What finance officials lost on the floor of this place last November, they are trying to sneak back in through those clauses in Bill C-28.

I do not believe the House will stand for that. I know that Canadians with disabilities are watching very closely to see how people on all sides of the House behave at this point in time with these critical amendments which will have a critical impact on the lives of persons with disabilities.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, the Bloc Quebecois' amendment reads as follows:

That Bill C-28 be amended by deleting Clause 64.

The amendment that I am moving in the House would delete this clause from Bill C-28, the Budget Implementation Act. More specifically, what we would like to remove is the element of retroactivity.

In his budget, the Minister of Finance announced his intention to retroactively amend provisions of the Excise Tax Act related to school buses. By doing so, the minister could establish a new rate for all school boards, despite judgments rendered by the courts since December 21, 2001.

The government is simply planning to override judgments that recognized that school boards were right on the issue of the refunding the GST paid for school transportation. This retroactive measure is a very serious departure from the rule of law and from the authority of a final judgment. This could be precedent setting in Canadian parliamentary practice.

In order to give members some context on this and to help them understand the scope of this situation, allow me to sketch a brief history of this issue and the actions the Liberal federal government has taken against the school boards.

From 1996 to 2001, Quebec and Ontario school boards submitted GST claims for the transportation of students. On November 17, 2001, the federal appeal court brought down a unanimous decision in favour of the first 29 Quebec school boards. I have the judgment relating to a board in my riding, Commission scolaire des Chênes.

Normally, school boards with cases pending at the time of the judgment ought to have been paid.

On December 21, 2001, the Minister of Finance announced his intention of making a retroactive amendment to the Excise Tax Act, which included pending cases. This measure is legal, but unfair. The school boards, and their federations, opposed it.

More than a year later, the school boards of Quebec and Ontario have obtained favourable final judgments that represent eight and ten million dollars respectively.

On February 18, 2003, when the Minister of Finance brought down his budget, he proposed a retroactive amendment that would go still further than the proposal of December 21, 2001, since it goes against the judgment obtained by the school boards of Quebec and Ontario.

School boards want the rights they had before December 21, 2001, which they protected by filing theirs claims with the Tax Court of Canada before that date and for which they received a successful final decision before the February 2003 budget, to be restored and respected.

What is it important to remember? Through clause 64 of Bill C-28, the federal government is preparing to disregard a court decision. Informed of this plan, the Barreau du Québec and the Canadian Bar Association responded quickly, describing the finance minister's plan as a dangerous approach that could undermine the public's confidence in the courts. It would seem that both associations wrote the Minister of Finance and the Minister of Justice, saying that they opposed the legislative change proposed in the last budget.

Here is what President of the Bar in Quebec, Claude G. Leduc, had to say about the federal government's approach:

It does not respect any of these decisions or commitments, which, in our view, seriously erodes the principle of the authority of a final judgment and is contrary to the sound management of justice. Such a legislative approach discredits the judicial process and is likely to undermine taxpayers' confidence in the courts.

Along the same line, Simon Potter, of the Canadian Bar Association, stated, and I quote:

—we are persuaded that the policy behind any such retroactivity is deeply flawed and dangerous.

In October 2001, 29 school boards in Quebec, including the Commission scolaire Des Chênes, in my riding, won their case before the Federal Court, the court recognizing that school bus services were indeed a commercial activity within the meaning of the act, which entitled them to recover all the GST paid. The federal government must therefore refund the overpayment on the GST. We are talking about approximately $18 million.

The case was next heard by the Tax Court of Canada last January. The case appeared to be over because the federal government agreed in a settlement to abide by the judgment of the lower court, on condition that the school boards withdraw their demand for an appeal before the Federal Court of Appeal.

To the astonishment of the school boards, the federal government did an about-face, pointedly ignored its obligations and, in the recent budget, introduced a clause that would completely change all its promises. At the Standing Committee on Finance, the present secretary of state did his utmost to try to remind us of what the federal government had published in a press release on this subject, but was unable to adequately defend the government in view of the letters from representatives of the bar.

The government's decision may not be unconstitutional, but the government should realize how dangerous such actions are to parliamentary democracy and the judicial system. The Minister of Finance should recognize that he made a mistake and give his support to our amendment which states:

That Bill C-28 be amended by deleting clause 64.

If the government takes a hard line, it will have to live with the consequences. This clause will do nothing less than weaken one of the pillars of democracy, which is the authority of a final judgment.

It has always been the case that school boards pay the GST. The government should rebate the tax because it is part of the commercial purpose of school transportation. But in this case, without warning the school boards, they withheld the GST and said, “The rules of the game have changed. And in addition, we are going to hold on to the four or five months you have already paid in advance”. That is what is known as retroactivity.

The school boards went before the courts and won their case because they are entitled to GST rebates. But in this case, the government, in addition to no longer providing rebates, is making this a retroactive measure.

There have been two decisions by the Court of Appeal, and the government is creating a precedent. This has never before been seen in the history of Canada. That is why we ask that clause 64 be deleted.

[Libby Davies, NDP, Vancouver East, BC]

moved:

Motion No. 17

That Bill C-28 be amended by deleting clause 84.

Motion No. 18

That Bill C-28 be amended by deleting clause 85.

Motion No. 19

That Bill C-28 be amended by deleting clause 86.

[Wendy Lill, NDP, Dartmouth, NS]

moved:

Motion No. 14

That Bill C-28 be amended by deleting clause 74.

Motion No. 15

That Bill C-28 be amended by deleting clause 75.

[Pauline Picard, Bloc, Drummond, QC]

moved:

Motion No. 13

That Bill C-28 be amended by deleting Clause 64.

[The Acting Speaker (Mr. Bélair)]

First, I would like to read a ruling on Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003.

There are 19 motions in amendment standing on the Notice Paper for the report stage of Bill C-28.

The Chair will not select Motions Nos. 1 to 3 and 5 to 7 because they could have been moved in committee.

The Chair will not select Motions Nos. 4, 8, 12 and 16 because they were defeated in committee.

All remaining motions have been examined and the Chair is satisfied that they meet the guidelines expressed in the note of Standing Order 76.1(5) regarding the selection of motions in amendments at the report stage.

Motions Nos. 13 to 15 and 17 to 19 will be grouped for debate and voted upon according to the voting pattern available at the table.

I will now put Motions Nos. 13 to 15 and 17 to 19 to the House.

The Liberal Government

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

Mr. Speaker, in reality, the situation is very different. We are dealing with Bill C-28 concerning the budget, the bills on national security, the national library and archives, human resources development, public safety, as I have said, election financing, first nations governance, and so on. We have a very full legislative agenda. Getting one of these bills passed requires the cooperation of hon. members, particularly the hon. member for Saint-Hyacinthe—Bagot.

Business of the House

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

Mr. Speaker, we had the curious scene of having the weekly business statement made in the lead off question and the lead off question made during business statements this week. Nonetheless, we all have very much confidence in the opposition House leader.

This afternoon we will continue with the opposition motion.

Tomorrow we will resume debate on the third reading of Bill C-13 respecting reproductive technologies. This will be followed by the report stage of Bill C-17, the public safety bill, as I indicated earlier, around 2:15 p.m.

On Monday we will commence report stage of Bill C-28. When this is completed we will return to the business not completed this week, adding Bill C-36, the archives and library bill introduced earlier this day.

On Tuesday evening the House will go into committee of the whole pursuant to Standing Order 81 in order to consider the estimates of the Minister of Health.

Next Thursday shall be an allotted day.

In terms of when we propose to consider the report stage and third reading of Bill C-24, the election financing bill, I understand the committee is doing tremendous progress, thanks in large measure to Liberal MPs on the committee, and we hope to deal with that shortly after the House resumes.

Government Legislation

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

Mr. Speaker, it is rather unusual to have the House business question being asked as the leadoff in question period as opposed to at 3:00 o'clock. Be that as it may, I am pleased to inform the Leader of the Opposition that the very important Bill C-13 on human reproduction will be dealt with tomorrow. This will be followed by the equally important Bill C-17 on public safety. We will then, thanks to the report tabled in the House earlier today, on Monday deal with Bill C-28, the budget implementation bill. Then we will consider, if not completed, Bill C-13, the human reproduction--

Committees of the House

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I have the honour to present, in both official languages, the fourth report of the Standing Committee on Finance on Bill C-28, the Budget Implementation Act, 2003.

Budget Implementation Act, 2003

[The Speaker]

Order. It being 3:34 p.m., pursuant to order made on Wednesday, April 2, 2003, the House will now proceed to the taking of the deferred recorded division on the previous question at the second reading stage of Bill C-28.

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Speaker, I am pleased to speak to Bill C-28, the budget implementation act.

It occurs to me that only in Canada could we have a former finance minister who owned a company that registered its ships in foreign countries to avoid paying Canadian taxes and wages. Only in Canada could we have a former finance minister who would reflag his ships in tax havens and replace them with Korean or Filipino crews because they were paid much less. Only in Canada do we allow that kind of behaviour and not hold our ministers to account. I cannot explain it, but all I know is it is completely inappropriate.

We had a new budget presented in February by a new minister. Many of us thought we would see a new course set in the new budget. What we continue to see is the same Liberal direction and the same misplaced priorities.

Canada is a trading nation. Our ranking in the world is dependent on trade. We are very dependent on trade, much more so than people in mainland China who are about 10% dependent on trade and people in the United States who are 15% dependent. Canada exports 45% of our GDP and imports 40% of our GDP, and 87% of that trade is with the U.S.

What is our most precious asset when it comes to trade? Obviously our relationship with the U.S.

We have $2 billion a day in two-way trade across the Canada-U.S. border. Given our need to diversify export destinations while at the same time addressing concerns of our southern neighbours who have expressed great security concerns about border issues and points of entry, the budget should have spent a lot of time addressing those issues and it did not. There was $11 million over the next two years and $5.5 million a year to add regional offices and increase consular presence in the U.S. These are insignificant moneys and much less than what was given to a simple PR program for the softwood associations in the U.S. to affect opinion makers in the softwood lumber dispute.

I find this problematic and I want to talk about some of those misplaced priorities. For example, Canadian infrastructure is a large and current but looming problem as well. We have major problems in the air, on land, and in the sea. The budget did not address those priorities.

Everything the government has talked about in terms of improving our land infrastructure border crossing needs is reliant on a $600 million announcement that is not going to cut it. That program was announced in 2002 and is only a start, it is not comprehensive.

The message that Canada has been sending to the U.S. on our domestic security, international security, border issues and military issues through the budget and in other ways, that we are all too familiar with in the House, is imperilling our long term trading relationship in a major way.

For example, the government collects $5 billion in fuel taxes every year and only a slight amount is returned to transportation infrastructure. In fact, 100% of those taxes go into general revenue. Last year only 4% was returned to highways.

There was a recent spike in gas prices at the pumps. If that 10% increase were to sit there for 12 months, it would represent $350 million in windfall revenue to the federal government. That little increment alone would be more than enough to pay for the spending promises for the Olympics and every other highway spending announcement in British Columbia that the government has made this year. In 2000, the federal government actually spent $400,000 on highway infrastructure in British Columbia alone. It was one-twentieth of 1% of fuel tax revenues taken out of that province. This large increase is actually still minuscule.

What is happening is that provinces are putting 92% of provincial fuel tax revenues into transportation related infrastructure. The federal government is putting in 4%. We need a new direction on this. The provinces and municipalities are the main responsible parties for land transportation and highways. We call on the federal authority to vacate its fuel tax room to the provinces and municipalities. This is essential to our well-being as Canadians.

We have another form of land transportation and that is rail. VIA Rail has cost Canadian taxpayers $3 billion in taxpayer subsidies over the last 10 years. That works out to $10 million per federal constituency. If the average constituency were to think about what it could do with $10 million, its wish list would include a lot things before it would include subsidizing the VIA Rail network. VIA Rail has become a self-protective, self-perpetuating organization which, once again, wants to enter into competition with Rocky Mountaineer, the very route that it wanted to abandon and that Rocky Mountaineer turned into a profitable route. VIA Rail now wants to get back in with a subsidy and the Minister of Transport is buying this argument. This is opposed by communities and chambers of commerce from Kamloops to Calgary, the very route that the rail would take.

I will give another example of misplaced priorities. We have a government committed to Kyoto. We have some exciting wind and wave energy projects on the west coast. Because of a lack of commitment by the government, those projects which have been moving along nicely on the promise of federal contribution have been pulled. That is not what I call commitment to Kyoto. That is something very hypocritical.

In the few seconds left I would like to say that there is a spending side and there is a revenue side. On the revenue side, one year ago Canada Customs and Revenue Agency hired 92 auditors for my province alone to go out and get new revenue. They are beating up on all of the wrong people. That is another misplaced priority and one the government should address.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I again have the privilege of standing in our House of Commons representing not only the people of Elk Island but also many Canadians right across this country as we debate Bill C-28, the bungle implementation act.

It was no bungle that I used the word “bungle” instead of budget. Bill C-28 is the bungle implementation act, the Liberal bungling of the finances of Canadian taxpayers.

We have had a little chat in the last couple of months about trust funds and the fact that there should be a blind trust for cabinet ministers when they undertake to become managers of large amounts of money so that there would be a reduction of personal gain by doing that. We had a blind trust suggestion. It is supposed to be in the rules for cabinet ministers. We found out, of course, that the former finance minister had a blind trust that was not blind at all. In fact, it came complete with a Seeing Eye dog, I guess.

The reason I bring this up is that unknown to many taxpayers in this country their money is in a blind trust. They send it to Ottawa and the government here manages to spend it at an astounding rate. It is mostly in a blind trust because no one really can account for where it went afterwards, so it is totally blind. I should not say totally, as we know where some of it went, but a lot of it is very badly mismanaged.

Over the last 10 years that I have been a member of Parliament and even before that, when I remember my dad saying it many years ago, I have had many people say to me they did not mind paying fair taxes. My dad said that he did not mind paying fair taxes, that “It shows that I have an income and I am very happy with that and very grateful to live in a country where I can earn money to provide for my family”. He used to say that he was certainly willing to pay some money for the privilege of living here and to make his contribution to the economic milieu in the country.

However, over and over in the last number of years I have heard people say that they do not mind paying a fair rate of taxation but they have two complaints. One is that the rate is not fair, that it is too high. Second, they tell me that when they send that money they are not content with the way it is mismanaged here. I had someone ask me, “How about these advertising contracts? How is it that somebody can get a contract with the government and not do any work for it but still cash the cheque?”

That is a very good question. The cabinet ministers on the front bench over there should be very concerned about the fact that they are not managing the financial affairs of this country properly and looking after the finances of the country properly. They are really mismanaging money that has been entrusted to them. It was given in trust, but they are not treating it in trust.

I want to mention something about the rate of taxation, and I do not know whether people are aware of it. I like to dabble in mathematics. There was one computation I did, although I do not remember the exact number. If all the money spent by the government of Ottawa, which over the year is around $183 billion, were paid out of Ottawa--and of course it is not, there are huge cheques and large equalization payments and health care transfers--by putting the loonies on a conveyor belt and shipping them out of Ottawa to wherever they go, or within Ottawa, that conveyor belt would have to be going at around 630 kilometres per hour. As I recall the number, that is what it would be. That is the rate at which the loonies are flying out of here.

We know that the loonies are flying in from the taxpayers at an even faster rate because we have been enjoying surpluses. Some of that money has gone to reducing the debt at way too slow a rate, while program spending is going up at the rate of 20% per year. That is not sustainable. That is another area where the government is mismanaging the money that is entrusted to it by Canadian taxpayers.

Certainly, there are programs that need more money. We have been calling for more money for the military. It is atrocious that we send a ship to attend a war that the Prime Minister says we are not in and the helicopter on board cannot fly. First there was the one that crashed on the ship and we had to bring it home. The next one went out, and when it arrived, it got a hole in the firewall and could not fly.

We are asking our servicemen and women to go out there with totally inadequate equipment and no moral or other support from the government, and yet they are putting their lives on the line.

That is an atrocious misuse of taxpayers' money as well because taxpayers are sending the money to Ottawa to, among other things, preserve the national interest. Certainly, as a nation we should be a major player when it comes to looking after the concerns of peace and fighting terrorism around the world. Yes, we would like to have more money there.

We have said since we came here that health care must be improved. I hesitate to use this example, but I will. On the day of my father's funeral just several weeks before Christmas, my mother fell and broke her hip. This happened in Saskatchewan, the province which is the home of medicare. She had to wait for 35 hours before she had attention to it and as a result missed dad's funeral. It was a pretty bad day. I guess that is an understatement.

However, for there not to be appropriate health care in a province like Saskatchewan because of lack of funding is atrocious. We know this because the federal government dried it up in 1993 and 1994 when it first took power. Afterwards the government comes here like a shining white knight saying it will fix medicare. First it gives it the fatal blow and then it tries to blow some breath back into it. Then it wants us to proclaim it a hero for doing it.

I had a phone call or an e-mail, I cannot remember which, from my daughter who lives in Regina. She told of two of her friends who had to travel out of the province in order to get needed health care because the province could not provide it. One was a mother with newborn twins. There was not a reasonable amount of equipment in Regina to look after these babies so they had to airlift this mother and her new twins in a makeshift apparatus to keep them alive until they got to Calgary so they could look after them. That is just not good enough.

We want our government to use taxpayers' money responsibly. I have said a number of times that the government would spend a billion dollars on registering duck hunters. That is a blatant waste of money. There is no proof whatsoever that even if the registry did work successfully that it would save any lives.

I did a little computation. A billion dollars would buy four MRIs for every riding in the country. A city of Edmonton has eight ridings, six in Edmonton and two right outside, one of them being mine. That would be 32 MRIs in the city of Edmonton. Members should ask those people what they would rather have, a registration system for their shotgun, or MRIs so that for serious medical problems they can get a proper diagnosis and receive treatment.

My big complaint with the budget and with Bill C-28, the bungle implementation act, is that the government is bungling the finances of the country and it is time that comes to an end.

[Val Meredith, Canadian Alliance, South Surrey—White Rock—Langley, BC]

Mr. Speaker, I am pleased to speak to Bill C-28, the budget implementation act.

It is interesting to note that every year the government tells Canadians how it is going to spend their hard earned dollars. I think Canadians are getting very concerned that the government seems to think money grows on trees. I think that Canadians have a general concern that the government, instead of reducing its spending and reducing its size, continues to grow beyond all necessity.

One of these interesting things was revealed just this week: that the executive branch of government, through the bilingual program, has grown by 20%. We are not talking about the entire workforce. We are talking about the executive branch or the bureaucracy. It is 20% more than it was two years ago. Canadians are concerned that the government, rather than reducing its spending, keeps increasing it.

The last budget that was tabled in the House calls for $14 billion of new spending. Canadians do not mind that 40% of that spending is for health care, but they are concerned that new money is always being added instead of the money that has already been paid into the pot being redirected. Particularly now, with the war going on in Iraq, Canadians are also concerned that the budget for the Canadian armed forces was not substantially increased.

It is not a question of new money going into necessary programs, but a question of the government's priorities and of the government reducing spending rather than always increasing it. Both can happen at the same time.

There is one other issue I would like to bring up and that is the issue of the national debt. The government seems to think that the debt will go away on its own, but it will not. Last year in the budget, the government predicted surpluses of $6.4 billion this year and up to $10.7 billion in 2005. To give the government credit, it has paid down the debt by $17 billion over the last six years, but the interest payment this year on the existing debt is $37 billion. That money could go somewhere else.

This is really of question of where we think our responsibility lies. Is it our responsibility to ensure that our children and our grandchildren are not going to continually fight this huge debt? Or should this money go into new pet projects that the federal Liberal government has on the table?

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, I also want to take a few minutes to say that we are in no hurry to pass Bill C-28 on implementing the budget measures. Many questions raised by all the parties remain.

The Bloc Quebecois, for its part, has said before and is saying again today that, when this budget was announced, the minister chose to focus on the wrong priorities. In particular, he focused on areas of provincial jurisdiction. Respecting provincial jurisdiction has always been sacred for Quebec. Furthermore, yet again, this budget is hiding an enormous surplus.

For each of the past five budgets, the Bloc Quebecois has always accurately forecast the next surplus. Whether it is deliberate, unconscious or the result of incompetence, the Minister of Finance has always been off in his forecasts, resulting in much larger than anticipated surpluses. This gives him the discretion to create last-minute programs, pay down the debt with the unexpected windfall, and infringe, mainly in areas outside his jurisdiction.

Worse still is this refusal to acknowledge the fiscal imbalance. Yet, an independent commission, the Séguin commission, was created; important experts were consulted; the amounts going to Ottawa and no longer to the provinces due to federal cuts were tallied; an undeniable conclusion was reached. The numbers all add up, and the report was unanimously accepted by the three political parties in Quebec. And here, the government dares to tell us that this fiscal imbalance does not exist and refuses to discuss it.

Yet, during the first ministers' conference, Quebec presented this report to all the Canadian provinces, and all the provinces reached the same conclusion, that this fiscal imbalance is clearly laid out in the Séguin report, and that it is hurting the provinces, particularly in terms of health care and education.

Hon. members will recall that the federal government put in 50¢ of every dollar spent in the provinces. Now it is barely 13¢ or 14¢, which is unacceptable, yet the federal government continues to collect the same taxes.

If it wants to pull out of health, no problem, but let it transfer the tax points, the GST, the taxation field, to the provinces. The provinces will then have the funds required to deliver the necessary care to their populations. But no, the government has dug in its heels on this. It is putting money into a multitude of things that are inappropriate or into areas that fall under provincial jurisdiction and are off limits.

It has always been said, and particularly since 1995, that this government has set itself a single mission: to establish national standards for everything. This is seen in health, and in education, yet it is a known fact that every time the federal government goes charging into provincial jurisdictions, it creates nothing but a huge mess by most accounts. It should stick to its jurisdiction and let the provinces stick to theirs. And it should never forget that the provinces created the federal government, and not vice versa.

With these national standards, the federal government has but a single intent, particularly in Quebec: to make it into a province like the others. The hidden agenda ever since the referendum has been to provincialize Quebec, to reduce French to a mere element of folklore, as happened in Louisiana. That is the goal of the federal government.

We have national standards in education, health and even agriculture. The Minister for International Trade now wants to be able to go to the WTO negotiating table and say “At last I no longer have those shackles around my legs, that ball and chain of the provinces with their flexibility in certain areas such as agriculture for the west, for Quebec, or the east.

No, as part of this strategic framework, the government wants to establish national standards. With these standards, it can go to the negotiating table, put supply management on the table, in part if necessary, and do whatever it likes in international negotiations, without having to consult the provinces. That is what it has in mind. That is the danger for the provinces. That is the danger when it comes to education, agriculture and health.

The government does not want to admit it, but this is the hidden trump card. We see it in every area. “National standards” is the new watchword. In the name of national standards, all provincial jurisdictions are being eliminated and the provinces turned into nothing more than villages with little village councils. That is the plan.

We see it as well in the creation of the Canadian Coordinating Office for Health Technology Assessment; in the allocation of additional funding to the Canada Student Loan Program; in the creation of the Canadian Learning Institute. What it is is interference in provincial jurisdictions, especially in Quebec in the field of education, and it is extremely serious. Back as far as Duplessis, no prime minister, no matter what his political allegiance, has ever allowed intrusion into this sector. It is sacred and off limits. Still today, even though they are in the middle of an election campaign, Quebec's three political parties condemn this state of affairs. They recognize the fiscal imbalance and are asking Ottawa to act accordingly, and not to infringe on provincial jurisdictions, especially in education.

I could go on. Speaking of fiscal imbalance, there is the issue of tax on capital. This budget also fails to create an independent employment insurance fund. In addition to interfering in areas of provincial jurisdiction, the government is collecting an indirect tax from workers and small businesses. The EI surplus should be given back to those who pay the premiums: businesses and employees. However, the government has shrewdly siphoned this money away into the consolidated revenue fund. As a result, workers and small businesses are paying an indirect tax. This money should be accounted for separately. When EI runs a surplus, the premiums should be lowered, or the benefits period should be extended, or else programs should be set up to help unemployed people who are having problems. When the fund has less money, the premiums should be increased.

An inverse relationship should be applied to the EI fund, and it should have a separate account. But no, the government is robbing the money from the EI fund, and employers are being taxed twice. This is an indirect tax and it is not acceptable.

I could also raise the issue of infrastructure programs. Quebec and the provinces have been calling for these programs, but the budget contains nothing but a few scraps. Why did the government not respond to the provinces' request in this area? Jobs could have been created and the economies of many regions experiencing hard times could have been jump started. But no, the government did not.

There is also the issue of the Kyoto protocol. The budget mentions Kyoto, mentions reinvestments and allocations, but Bill C-28, the Budget Implementation Act, goes against what Quebec and the provinces wanted. The government would have been more successful if it had listened to the provinces, if it had understood that it can look after federal jurisdictions, but that it has to respect areas of provincial jurisdiction, particularly education, health and agriculture. Quebeckers and Canadians would be much better off.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, we are now back to the main motion on Bill C-28. I have had an opportunity to speak to the bill so I do not intend to use my full time. However there is an aspect of the budget that I am very anxious to make mention of simply because budgets often contain numerous provisions which do not get the attention that they deserve.

About 20% of the constituents in my riding are aged Canadians. They require a great deal of care, not only by their families but by our health care system. The budget included a very important new provision, a new assist for families under the caption of compassionate care. I wanted to share this with the members because I am not sure how many members knew this item was there. I think it is important.

One of the most difficult times we can face is when a loved one needs palliative care and is dying or is at severe risk of dying. During these times Canadians often have to choose between caring for their loved one or staying at their job and hoping that somehow other arrangements can be made.

This is also a very important issue as it relates to women primarily because daughters are closer to their parents than sons would be.

A poll conducted in September 2002 revealed very strong support, some 81% for the Government of Canada providing some income support for working Canadians to take off work to care for a dying family member; 39% said that they had been in the situation of having to care for a gravely ill or dying family member; and 50% of Canadians who faced the situation said it conflicted with the demands of their job.

The 2003 first ministers' health accord included a commitment to introduce a compassionate care benefit to help support Canadians who required temporary absence from work when a loved one falls gravely ill.

I think this is a very important social initiative. We all will eventually face situations like this or we know someone close to us who is facing a situation like this. I think it is an initiative that is embraced by all members in this place.

Every year thousands of Canadians bear the stress of loss of income or possible job loss when they are forced to make a choice between a job and caring for a family member. We should never be forced to choose between caring for a loved one or our job. That is not the way it should be done. I am pleased the budget incorporated this new provision.

Compassionate care will be a new type of employment insurance benefit. It is estimated that 90% of individuals in paid employment, including those working part time, could potentially be eligible for this new benefit. I think that is significant. It is very important. It is estimated that 270,000 claimants will access the new benefit to care for 160,000 gravely ill family members each year, beginning in the year 2004.

On behalf of my constituents of Mississauga South, I want to acknowledge the budget provision with regard to compassionate care as an important provision for families right across Canada. It is a matter which I believe we should take to heart in terms of assessing all types of assists that we can give to ensure that families can discharge their responsibilities, not only to their employers but to their families, their children and those things that we value.

I believe this is probably a good time to move a motion. I move:

That the question be now put.

[The Speaker]

It being 3:05 p.m., the House will now proceed to the deferred recorded division on the amendment to the motion for second reading of Bill C-28.

Call in the members.

(The House divided on the amendment, which was negatived on the following division:)

Airline Industry

[John Manley, Liberal, Deputy Prime Minister and Minister of Finance]

Mr. Speaker, I think the hon. member would agree that every time there is an industry issue in any particular industry, we cannot respond by cutting all the taxes. It does not make any sense.

We know that in Bill C-28, which is before the House, we have proposed the reduction of the air transportation security charge by over 40%. The member's party has proposed that this bill not be dealt with for more than six months. Let us get on with things that actually can help people.

Budget Implementation Act, 2003

[Rahim Jaffer, Canadian Alliance, Edmonton Strathcona, AB]

Mr. Speaker, I rise to speak on Bill C-28, the budget implementation act of 2003. This is another budget brought forward by the Liberals that has failed Canadians. In fact, in my address in the reply to the budget on February 26, I enumerated several reasons why the budget has failed Canadians.

I spoke of the government's complete refusal to address GST fraud, which we all know is quite a large issue. I looked at the government's failure to address security concerns at our airports as well as the steps it has taken to punish those saving for their retirement through RRSPs. Payroll taxes such as EI and exorbitant income tax rates continue to kill the Canadian economy.

Still, the government claims that the budget is a success. It is not. The government should be ashamed of itself.

We are debating a bill that if passed will implement this failed budget. Needless to say, I, along with my colleagues from the Canadian Alliance, will be voting against this.

Why will I be voting against it? As I have already expanded in my previous speech on the macro reasons why this budget is a failure, let me instead focus today on one specific department within the government and on why the budget has failed that department and hence failed to protect the security of Canadians.

Specifically I would like to talk about the members of the Customs Excise Union, who do a great job at Canada's borders as front line customs officers and inspectors. Customs inspectors are part of the Canada Customs and Revenue Agency but do much more than the average CCRA employee. The fact is that our customs officers do a tremendous job, especially when we look at the number of statutes they are charged with enforcing, their limited resources and their inability to protect themselves from the potential dangers inherent in border protection.

We believe that Canadians and our customs officers would be better served by moving Canada Customs out of the tax collection agency it now falls under into a new law enforcement department or under the Solicitor General of Canada. Just as Canada Customs now enforces the statutes of several departments, it will continue to enact National Revenue's policies of trade liberalization.

The revenue minister has announced more money and the hiring of customs officers. She has fallen very short in addressing the deficit that existed prior to September 11, never mind today. The customs union is calling for 1,200 new officers. It is getting 130, but these new officers still will be unable to adequately protect our border because they will lack the tools to do their job.

It is evident that CCRA is a department focused on streamlining accounting systems and collecting revenues. It is not focused on security. The logical question is why the government continues to treat our border guards, Canada's first line of defence, as bean-counters.

Mr. Speaker, you are a logical person. If you witnessed a crime in progress would you call the police or your accountant? Clearly you would call the police. Why? Because they have the training, the knowledge and the tools to protect society and enforce the laws.

What do our customs officers need to do the job? They need full authority as peace officers to enforce the statutes they are charged with. That includes a need for side arms for their protection. The first step is to move customs away from revenue and create a police force at our border. Canada Customs enforces over 70 federal statutes from numerous government departments, including the justice, health, agriculture, immigration and finance departments, and the Solicitor General's department. The recent focus on Canada's porous border is not necessarily a reflection of Canada Customs as much as it is a deficit of legislation, mandate and resources focused on security and protection.

Bill C-7, passed in the 35th Parliament, moved the Canada Customs Agency under the jurisdiction of Revenue Canada, thus creating the Canada Customs and Revenue Agency. We were opposed to this move to facilitate trade and tourism while expediting the remittance of revenues to the Crown because of the lack of focus on security and protection.

The U.S. Department of Homeland Security believes that its primary function is law enforcement, whereas unfortunately Canada Customs claims to have a dual mandate: processing revenues and border security.

A greater focus on security is required to harmonize customs standards with those of the United States, which cannot be achieved under the current CCRA. The Canadian Police Association proposal of a national border protection service should be considered seriously as legislation. The association is calling for a border protection service to provide strategic and coordinated protection and enforcement across Canada's borders and points of entry, separate from the Department of National Revenue. Such a service must be endowed with full peace officer status and equipped with the required technological aids, including CPIC and FOSS computer systems as well as NCIC and Interpol and access to vital statistics.

Right now, and the House will be shocked, 45% of our borders do not have access to these law enforcement tools. Customs officers have no way of knowing if the person in front of them has a criminal record or is on the terrorist watchlist. There should be an immediate network hookup of all computers and all customs software at all ports of entry across Canada. It is unacceptable for some customs officers in ports across Canada to have limited or no access to electronic customs systems that provide intelligence and support to customs officers who must undertake interdiction and detention decisions and actions.

Indeed, the current attempt to share information with our government departments has been a complete failure. There should be an agreement among immigration, RCMP and CSIS to share information daily. Information should then be further shared with our American neighbours regarding exit and entrance data and criminal background checks.

The government must provide customs officers with the authority, support and equipment necessary to do their jobs. One piece of equipment that is necessary is side arms so that customs officers can protect themselves and Canadians. This should be done regardless of whether Canada Customs becomes its own separate agency or stays a part of CCRA. This is an issue of safety for these customs officers. I have already outlined how these officers are basically police without the formal title. They are police without the protection of the law.

The Canadian Alliance takes this issue seriously, but unfortunately the Minister of National Revenue does not. In the past she has called these agents nothing more than glorified bank tellers. As recently as March 26 she said to the House, “...giving guns to customs officers would be like giving 3,000 accidents an opportunity to happen”.

On March 28 I asked her to clarify her remarks in the House, and her response was to call me “Charlton Heston”. I do not mind being compared to Moses nor do I mind living here in what seems like the Planet of the Apes , especially with the government across the way, but to have the minister making light of the issue was an insult to customs agents. In fact, my office has received numerous e-mails and letters from irate customs agents asking me how the minister can make so much fun of them. My answer, unlike that of the Liberals, is that the Canadian Alliance has always believed and will continue to believe in respect for these people.

This issue of firearms is not one that the Canadian Alliance has invented on its own. It actually comes from a report by ModuSpec, which was commissioned by the government to examine this very question. The interim report called for an armed presence at our border and especially at some higher traffic border crossings where our customs agents are at higher risk.

What does this all boil down to? I will use four points to conclude.

First, there are not enough people, as I have outlined. There are one-person ports when there always should be two people working together. Currently there are ports that close at 10 p.m. and we argue that they should be open for 24 hours, especially some of the more remote ports where proper barriers are not even put in place once they close down in the evening. There are chronic staff shortages and not enough staff to accommodate shortages if training needs to be done.

Second, we often do not have the right people. Students do not belong at the front line without proper supervision and/or proper training.

Third, there is not the right equipment. There is no CPIC at the front line and there are no computers at 45% of our border crossings. As well, some facilities need rebuilding. For example, in Victoria they are working out of a 30 year old trailer at the ferry terminal, where almost a million people travel yearly.

Finally, they do not have enough pay. CCRA admits that its job classification system is archaic and fails to fully assess the value of jobs. CCRA is moving to a new classification standard. What about the fact that customs officers have been underpaid for years, up to and including today?

All these issues still have failed to be addressed by the minister. Quite frankly I think the minister has been an embarrassment because she has not represented the interests of security and protection for Canadians at our border.

[Rob Merrifield, Canadian Alliance, Yellowhead, AB]

Mr. Speaker, it is a privilege and a pleasure to speak to Bill C-28, the budget implementation act.

As senior health critic for the Canadian Alliance, it is very important as we look at this implementation act to discern just how many dollars are actually going from taxpayers' pockets into health care. It is very important that we discern where the numbers are. I would like to talk a little about how those numbers break down and what we need to do with those extra dollars that go into health care, whether or not they are adequate, and the state in which we find the health care system right now.

Before I get into that, it is very important that I spend a minute explaining our position with regard to the SARS virus that is presently upon our nation and the world. I am a little frustrated because last week the Canadian Alliance wanted to be very non-partisan in dealing with an issue of utmost importance that goes beyond any political issues. As an act of good faith, I talked to the Minister of Health and gave her the actual questions I was going to ask in question period with regard to this issue, so that she could put forward her message and relieve the pressure and the fear on most Canadians' minds with regard to the outbreak of the SARS virus.

That is the first time that has ever happened to my knowledge. It certainly is the first time I have done that. This is a political arena. We have tried our very best to non-politicize something that is of such importance in the national interest. Those are the facts.

The minister has been very weak in coming forward to alleviate some of the fears most Canadians have about the SARS virus. The quarantines act was implemented in 2000 to limit the amount of mosquitoes coming in on bamboo. An act was implemented to limit bamboo and mosquitoes yet the government is reluctant and very shy about imposing the quarantines act to deal with what could potentially be, as the World Health Organization stated, one of the largest crises the world has seen to date, spread by airlines.

I do not understand the reluctance of the government being so shy to do this. I want to spend a minute or two on that to explain our position. We will work to hold the government's feet to the fire to assist it in getting its message out to alleviate the fears regarding this virus and also to encourage it to not be shy in doing what needs to be done.

The issue is twofold. The spread of SARS has to be dealt with but even more important, we have to limit the collateral damage of a nation that could become quite phobic about how this is being dealt with. We have to discern both sides of it. There could be more individuals, more Canadians who would die because of waiting lists, those who are on waiting lists but are not able to receive the service, than actual numbers that would perhaps not make it through an attack of the SARS virus.

That is important as we discern the budget implementation act and the number of dollars going into our health care system. We have to look at the state our health care system is in nationally. Waiting lists have increased to unbelievable numbers. Tens of thousands of Canadians lack access to family physicians. Actually when we talk to most Canadians they say if they get to the service, Canadian health care services are actually very good and the service providers do their very best to provide the services needed. The problem is trying to get to those services.

A study was done at one of the hospitals in Hamilton last year where 50 patients died just waiting for heart surgeries. Therein lies the dilemma and one of the problems we have in our health care system.

It is very important that we stop the rhetoric and the dispute between the federal and provincial governments when we look at how money is being spent. This comes out of the health accord which provinces say they did not sign and the federal government says they wish they would have signed. It does not really matter. They took the money. They got up from the table having agreed on a process and at least $12 billion, and I will talk about the numbers in a minute, but $12 billion more going into the core funding of the health care system.

The important thing is to stop pointing fingers and blaming anyone. Let us start implementing the best measures possible so that we can have an efficient sustainable health care system into the 21st century. That is what is important. That is what we will hold both levels of government to because of what they did in the health accord.

There are some good things in the health accord and there are some things we wish were not there. Nonetheless, let us talk about some of those things.

The official opposition welcomes a lot of the measures in the health accord. It moves forward the agenda of health care reform in the sense that it does not limit the provinces from implementing reforms that would put health care on a sustainable footing in the foreseeable future.

It also would help to change the paradigm shift needed in health care away from the health care system to putting the patient's needs first and building a system that would provide services for the individual who is sick. The patient is the individual who pays for the system. That is what we really need to refocus our energy and our thought process to as we look at our health care system into the 21st century. It is very important that we discern that. It is very important that we get around the rhetoric and start reflecting on that whole idea and what is very positive about that.

We are very nervous about some of the health care reform measures. They could open up the system into home care, pharmaceutical care and palliative care, all of which are good and all of which the provinces provide in varying degrees in their respective areas.

Nonetheless, when we apply it through federal money and if we apply the federal money inappropriately and do not leave the flexibility, we will waste the precious health care dollars. We do not want to waste them. We want to make sure that every dollar that comes out of the taxpayer's pocket with regard to health care is spent in the most efficient way possible. Therein lies the ultimate goal.

Believe me, if people think that the system is stressed and stretched now, just wait until the demographic shift hits our health care system. Think of when the high costs and the dollars spent on our seniors at age 65 and beyond hit our system. As the bulging baby boomer generation hits that system over the next decade, the problems we see in health care now will look small in comparison.

We need to get over the rhetoric and deal with how we can effectively contribute to the debate on health care renewal and reform. That is very important. If we were to look back at the last decade, we would see a federal government that not only stopped contributing more money into health care but actually pulled money away from health care and allowed it to falter and drift into crisis. That is what we have seen over the last decade.

Some of the critics on the other side would say that is not true, that the health accord of 2000 solved that problem. Not really.

I was sitting on a regional health authority at that same time. We had to deal with the reduction in money coming from the federal government. What happened to the system at that time was absolutely devastating. Nonetheless we worked through it.

Almost 40% of provincial program spending is on health care. Mr. Romanow said that this year's federal contribution is 12% of every dollar that the provinces spend on health care. It is very important to understand the difference between the two and that the federal government has really neglected to apply the money.

The health accord of 2000 was a five year program. As of today we are into the fourth year of that program. The money did not got into the system until now. It was an illusion to think that the money would deal with health care problems at that time in the 2000 accord. It was more about winning an election.

Unfortunately, the Canadian health care system has suffered because of that lack of foresight. Hopefully that will not happen again. That was a missed opportunity in 2000 and there is another missed opportunity with the health accord right now.

Health care in Canada is all about values. Our values in Canada are that we will not allow an individual to lose their home or their security because of a serious illness. The Americans have a different value system. They say, “We will make sure that you stay healthy. We will provide the health care but we will allow you to pay for it and you could lose your home”. That is a different value system. I do not judge theirs and I am sure they do not judge ours.

We need to protect our values in our health care system and make sure that we sustain it. To do that over the next decade, we will have to use our resources not in a fight but in reforms that would actually sustain our health care system in the 21st century.

We need to put the patients first. It is high time we did that. It is high time we got there in health care.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Mr. Speaker, there are days when it is a pleasure to rise in the House to say some positive things about what is happening but, unfortunately, Bill C-28, the implementation of the budget, is not one of those times. In fact this budget is an HEC budget. It is hypocritical, embarrassing and confiscatory.

Why do I use those descriptors? First, I believe the budget denies the principle of being proud to be a Canadian. It is hypocritical because it pretends to do something which it really fails to do. I believe the Minister of Finance said that Canada needs to become a country that is competitive, that will compete successfully with other nations in the world.

Not long ago the executive director of the Business Council on National Issues published a book together with a fellow by the name of Stewart-Paterson. They did some very interesting things in the book. They showed very clearly that Canadians were not competitive in the global economy and that if we were to be competitive in the future, that we had better have a good look at that.

Let me give the House one particular illustration that I found most dramatic. It compares the competitive advantage of a Canadian earning $65,000 and an American earning $65,000. I will give some numbers and those people who are listening will find those numbers interesting. A Canadian earns $65,000 and we will assume he or she has a dividend income of $2,000. On $65,000 and a $2,000 dividend income the Canadian would pay a tax of $498 on the dividend. On a salary of $65,000 the Canadian would pay $15,160, leaving a discretionary income of $51,342 out of $65,000 plus $2,000 dividend income.

Let us compare that to the American. This is based on the recently proposed budget of President Bush. A U.S. taxpayer earning an income of $65,000 plus a $2,000 dividend income would pay zero dollars on the dividend income and on the $65,000 salary would pay $3,795, leaving a discretionary income of $63,200.

Let us compare those numbers now. The comparison of discretionary income with $65,000 and a $2,000 dividend income would be $51,342 for the Canadian. The American's income would be $63,205, so the American taxpayer would have $11,863 more than the Canadian. Even if we were to double the tax for the American taxpayer, which would then bring it up to $7,590, it would still not be comparable with the $15,000 the Canadian is taxed.

To say that we are making Canadian workers more competitive is simply false. It is hypocritical to make a statement that we are helping people in Canada to become competitive. Is it any wonder that some of our best educated, best trained and most skilled people are leaving Canada for the United States? We can give lots of examples of this.

The point here is that the finance minister said that he would do one thing but in fact he created a budget that does the opposite. Not only is it bad, it is also embarrassing.

My hon. colleague recently talked about how little money there was in the budget for the Department of National Defence, which is $800 million. The Auditor General said that what was needed was $2 billion. That is almost three times as much as what is in the budget. The Prime Minister built on this and said that we were not in the war. Yesterday, however, the Minister of National Defence admitted that we have soldiers at the front and ships in the gulf. This creates the ironic situation of having our armed personnel participating in a war that the government is not supporting. This is embarrassing.

I found out something last weekend that hit very close to home and it involved Canadians who were visiting Florida. On their way down to Florida they stopped at a service station to buy some gas. The service station attendant noticed their Canadian licence plate and told them they had better move on. He said that there was no gas for sale to Canadians at his station. I am sure that is not a common occurrence but it did happen, and that is embarrassing. What do we do in situations like that? How can we support a budget that does those kinds of things to Canadians?

I want to add a third description to the budget. It is a confiscatory budget. It confiscates money. We have already compared a U.S. taxpayer with a Canadian taxpayer. However the far more serious issue, because the government does not have a plan to repay the debt in this budget, is that it is not only confiscating our income, it is confiscating the potential income of our children and our grandchildren. That is where I draw the line.

What is happening here is that there are some expenditures included in the budget for which we are not prepared to pay. Somebody might say that the budget is balanced right now and that there is even a bit of a surplus. Yes, that is true, but that is because the government listened to what we had to say. The point is that the present debt is cutting into our current revenues in a major way. Service costs on the budget run around $40 billion to $42 billion a year. Imagine what would happen to the health care budget if we did not have to pay out the $42 billion in service charges. That would be a great advantage. The government is taking money that it should not take and it has no plan to pay the debt.

Some people might say that this is a prudent budget; $3 billion worth of prudence, and it is in the budget for emergencies. If there is an emergency, the money will go toward it. If there is no emergency, the money will be used to pay down the debt. Is that the way a prudent house manages its mortgage payments? Is that the way a prudent business manages its loan payments? No. They carefully analyze the situation and make sure money is available to pay down their debt on a systematic and regular basis.

The budget is called a prudence factor but it is not a prudence factor at all. It does not protect future citizens from paying the services charges on the debt. It bothers me a lot that there is no plan to pay down the debt.

I would now like to speak to the budget in a broader sense. The budget was supposed to be a budget that would help us to be more responsible in expending funds. What has the government done? It has increased spending by some $17.4 billion. It tells us that we will receive great tax breaks. It tells us that we will receive $2.3 billion worth of tax cuts. That is a net increase of $15 billion. Is that telling the truth about what is happening?

We also need to talk about health care. This is an example of another hypocritical position taken by the government. The government has said “Look at all the money we are putting into health care”. It is true, it is putting a lot more money into health care. In fact, it brought it up to the point of where it was at in 1993-94 when it took all the money out. However there is no accounting for the inflationary increase during that time. The government has misled Canadians into thinking it did a great and wonderful thing. It has done nothing of the kind. It simply brought the figure back to where it was and even shortchanged it by the inflation that is involved.

The time has come for us to be very clear and to recognize that this budget is hypocritical, it is an embarrassment to Canadians and it confiscates the income of future generations.

[Gerald Keddy, Progressive Conservative, South Shore, NS]

Mr. Speaker, I am pleased to be recognized to speak on Bill C-28, the budget implementation bill.

I listened to the comments of the members who spoke previous to me. Since there was no opportunity for questions and comments, I will add a few comments during my speech to the budget.

It was interesting to hear the member from the Northwest Territories speak about diamonds. It is an extremely new and valuable industry for Canada. Without question, I think there is probably as much opportunity or more opportunity in the diamond industry today than probably any other sector of the economy in Canada. It holds great promise for northern Canada, our aboriginal peoples and the newcomers to the north.

However an issue about diamonds, which the member did not bring up, is the fact that the diamond industry has flourished basically on its own. The government has ignored it. Perhaps that is to the benefit of the industry. Most things that the government pays too much attention to become overburdened with red tape.

If the member is really interested in the diamond industry, there are a couple of things she could pursue, and I would suggest she does. First, traditionally it has taken four and a half years to permit a new mine, which is ridiculous and entirely too long. Understand that these mines are environmentally friendly. They do not use a lot of noxious chemicals and they are in isolated areas. In some instances that process has been shortened to two years. With an industry that does not pollute, mines should receive environmental permits within a 12 month period, and everybody would be happy with the process.

Second, the government has ignored for so long the cutting and polishing industry. Finally we have a fledgling industry in the NWT in Yellowknife and in Edmonton. We should get rid of the excise tax. This tax is no longer relevant on manufactured jewellery and stones in Canada. It is time to get rid of the excise tax. If the government really wants to encourage an industry, then it has to do something about the tax system that holds that industry back. If the member would like to work on those issues, I am sure she would get some benefit and gain for her constituents.

The budget will be known as the Liberal spending budget of billions of dollars that Canadian taxpayers will be paying for a great many years.

What is in Bill C-28 is almost as noticeable as what is not in the bill. The Alliance member who spoke previous to me said that it was a shotgun approach. Those are exactly the same words I intended to use. It is a shotgun approach where a person has a shotgun with a load of No 8 shot, stands back about 25 yards points at the target and hits just about everything on that target. What is hit on the target is important. However what is even more important is what has not been hit on this target.

Our trading relationship with the United States has not been hit on the government target. It has been ignored. For example, again a member speaking to this budget bill mentioned the Canadian Food Inspection Agency. What has been the response from the CFIA on the American bioterrorism bill? Where are we in this country with north-south trade?

I will tell the House where we are with north-south trade after the actions of the government in recent weeks. We are in serious trouble with it. We are also in serious trouble in lack of response and lack of infrastructure to deal directly with the bioterrorism bill.

The basis of the American bioterrorism bill is to ensure food quality and food safety of all food products entering the United States. Part of the bill would mean that any exporter in Canada would have to give 12 hours' notice. There are all kinds of products that come out of Canada without 12 hours' or 24 hours' notice. The majority of Canadian products are on less than 12 or 24 hours' notice.

Fish products that come out of southwestern Nova Scotia from the South shore are about six hours from the Canadian border. They cross on the ferry in Digby, which is two hours from Calais and the American border. Fresh products destined for New York or Boston markets are expected to be there on same day delivery. Exporters cannot afford to have a 24 hour, 36 hour, 72 hour delay or whatever it may be. That delay is there now.

The best thing that the budget could have done would have been to shore up and guarantee our continued trade and therefore our continued prosperity with our major trading partners.

Let us take one example out of the budget which is the roughly $68 million which was voted for the gun control bill. The Liberals continually call it the gun control bill. It is not a gun control bill. It is for a registry that has milked money from Canadian taxpayers and if this bill passes through the Senate it will continue to milk money for generations and it will never stop.

It is even more interesting what the present and former ministers of finance are saying about this. The former minister of finance, when he was minister of finance, thought this was fine. It was okay to hide money from the Canadian public. It was okay to take money that was supposed to be in the main estimates and put it in the supplementary estimates. It was okay to move money from department to department through the Treasury Board. It was okay to hide the truth from Canadians.

Now, that same former minister of finance is saying that all members of cabinet must bear responsibility and that he is prepared to accept his share. That is a big statement to spend $68 million of taxpayers' money and $800 million in total, soon to swell to $1.2 billion, soon to become even more swollen to $1.4 billion, $1.6 billion, $1.8 billion, $2 billion and on into perpetuity.

What else did the former minister of finance say? He said that the cost overruns were revealed to Parliament. That would be incorrect. The cost overruns were not revealed to Parliament. Parliament found out about them.

He said further that what we must get the report the minister commissioned and w must ensure this kind of thing never happens again. Well, it happened on that former finance minister's watch. That is every bit a juvenile response to an excessive amount of overspending under the former finance minister's watch as the juvenile response that the present Minister of Finance has given to a similar issue dealing with Canadian security.

All of a sudden the present Minister of Finance is interested in talking about a perimeter with the United States for trade that would protect the Canadian economy in years to come. The Progressive Conservative Party has always supported a perimeter for trade. We think it is a smart idea. How much money, of the billions spent in the last budget, went into looking at a safe perimeter for trade and safety for the people of North America, Canadians, Americans and Mexicans? Zero.

I appreciate having the opportunity to speak to the bill and I am sure that there are many other members who will want to.

[Ethel Blondin-Andrew, Liberal, Secretary of State (Children and Youth)]

Mr. Speaker, it is my pleasure to speak to the budget implementation act, Bill C-28.

Budget 2003 reflects our government's commitment to make Canada a land of ever widening opportunity for all our citizens. It acts on the promise in the Speech from the Throne that benefits of the new knowledge economy will touch every community, every family and every Canadian.

When the House was not in session for two weeks recently, I took the opportunity to go to my riding. There are over half a million square miles to cover. I took the opportunity to travel to the upper part of my riding. I have 33 communities. I went to Paulatuk, Sachs Harbour and Holman Island. These are very remote communities but very thriving. In remote communities the cost of living is very high. Everything the government does really impacts on the lives of the people who live in the remotest regions of our country.

In the community of Sachs Harbour I was blessed to meet with the mayor and council and talk about some of their needs. It is interesting that the issue of policing came up. There are no RCMP stations. Mayor Andy Carpenter was very well pronounced on that issue.

We addressed the issue of aboriginal policing in the budget. That was very appropriate and might prove to be very useful.

I also went to Banks Island where there are 50,000 muskox. The Inuvialuit people of that region have taken it upon themselves to cull some of the herd. They use every part of the animal basically for food. They brought in a food inspector from Alberta to go through the whole food inspection process from the beginning to the end.

The hide of the animal is taken to a shearer in less than 15 minutes so it does not cool off. They use what is called the qiviut, wool of the finest quality that comes off of the animal. It is rendered into a wool that is like mohair. It is called qiviut in the Inuvialuktun language. It is an absolutely fabulous industry.

I wish I were wearing my sweater today. I know we are not allowed to use props but qiviut sweaters are absolutely beautiful. I was given one by Nellie Cournoyea, the chair of the Inuvialuit Regional Corporation. These products are rendered from all of the byproducts of the animal. The hide itself is rendered into different leather products. It is very stylish and classy.

One of the people who is forging ahead and working with the different government departments on this initiative is a guy by the name of Patrick Schmidt. The work this man does on behalf of the Inuvialuit is outstanding.

I am so proud of those people. The people in Sachs Harbour live in a small remote community. The weather was very bad but the plane landed in close to blizzard conditions. Travelling is an enormous undertaking. We provide some very good opportunities and good facilities for their undertakings. There is an airport.

I went on to Holman Island, the home of printmaking. It is absolutely fabulous. The land is so beautiful. As I flew from Sachs Harbour to Holman, I could see Cape Parry or Pin Main where the distant early warning system is quite evident. We get all of our information for the military in the remote regions of Canada through this system.

It is tremendous to think of the role my riding and the occupants of those lands play in the whole issue of Arctic sovereignty. That is very important as well.

Not all of the issues that relate to the military are necessarily financial ones. A lot of technically complicated international agreements speak to the kinds of things that are happening up there.

I also went to Paulatuk. Paulatuk is interesting because it has a young population, as do most of those communities. It is looking to build a youth centre. It is working with its young people to help develop the community.

I am supposed to be talking about the budget, but the budget relates to the way people live across the country.

Going back to Holman Island, the interesting thing about Canada is the kind of travel that people do. We went to the school in Holman. The teacher in charge is an Inuit woman who speaks the Inuit language. We went through all the cultural classes and looked at the quality of education the kids are receiving. It is awesome.

I also noticed that there is a high number of people from Newfoundland. Think of the distance between Newfoundland and Holman and how far those people have come. Those people are really resilient. The Atlantic sends a lot of people to that region.

It is awesome to do this during my time off because it really puts me in touch with the people at the community level. There are perhaps another 15 communities to visit before I have completed the cycle. The riding is so huge and the transportation costs are enormous.

Someone told me in Paulatuk that it costs $9 for a grapefruit. Imagine paying $9 for a grapefruit. Imagine what people pay to feed their families properly. That is why the communities are highly reliant on caribou and country foods. It is a very healthy way for the community to sustain itself and it is also why issues that affect that are really important to them.

The region I come from has a very young population. There are many things happening. We live in one of the most beautiful parts of Canada. All of the Northwest Territories comprise my riding. It reaches out toward Yukon, into the high Arctic, over to Nunavut and down to the Alberta-Saskatchewan-B.C. borders. It is absolutely phenomenal what is in the territories and the potential that exists right now.

The $2.5 billion annual federal investment on the national child benefit has helped to reduce poverty to the lowest level in 20 years. It has had a really good impact. That is important for my riding because it has a very young community.

I noticed another thing in my community. If we are going to do resource development, we have to invest money. I do not think we are a sinkhole for money in the Northwest Territories. We have the greatest opportunity to become self-sustaining. We need infrastructure. We need money to make it cheaper, for instance, for us to build a pipeline.

If we have a completed road, it will be cheaper for us to build the pipeline that we are talking about. I am convinced in my heart of hearts that we are going to build the Mackenzie Valley pipeline first. We need to get behind it and support it. It would be good for the north and for all of Canada. It is something we need to do to sustain our energy needs.

Along with infrastructure, I also wanted to talk about how we have managed to work with the new industry that has hit Canada. I am not sure we have done enough. There is a lot more to do with the diamond industry.

On July 15 I believe we will be opening the second diamond mine in the Northwest Territories. We are the top fourth diamond producing jurisdiction in the world and may end up being the first. We are exponentially putting money back into the fiscal coffers to the tune of hundreds of millions of dollars. We need to invest in that industry. We need to help those people to do a better job. We need to help the syndicated jewellers and the value added industry build a stronger economy in the north because the opportunity is there.

The other thing is in the north we have the absolutely best opportunity to set a template for the rest of Canada and the world because it is majority aboriginal populated. To build something that will sustain itself, the government will get money back if it invests in the north. That is absolutely important, and the budget speaks to that.

[Rick Casson, Canadian Alliance, Lethbridge, AB]

Mr. Speaker, it is with a feeling of responsibility that I rise today to address Bill C-28, the budget implementation bill and to voice my opposition to the bill. I will get into some of the reasons why as I go through the bill.

In simple terms for all Canadians the bill is a blueprint for the Liberals to spend freely taxpayers' hard earned dollars, establish a legacy for the retiring Prime Minister and create an even larger and more bureaucratic government. The last time I checked with any of my constituents, none of these priorities were at the top of their wish lists.

The Canadian Alliance believes that rewarding the taxpayer should be the primary goal in the country. The Canadian Alliance has not forgotten who pays the bills in Ottawa. It is a shame that the Liberals have.

In fact it is the middle to low income Canadians who need all the help and benefits that a strong federal government should provide for them. There was certainly more than enough surplus to finally reward these hard working Canadian families by lowering the GST and personal income taxes. Instead, the government has ignored the priorities of average Canadians and has created more slush funds for grand scale promises that inevitably will be mismanaged.

Before I jump ahead of myself to oppose the irresponsible spending promises of the Liberal government, let me take a moment to realistically look at the figures of the budget.

The budget announces $17.4 billion in new spending initiatives over the next three years but cuts taxes by only $2.3 billion. This represents an increase in program spending of 88%, an 88% increase in spending in comparison to a mere 12% for tax reduction. We cannot afford in Canada to keep building budgets that outstrip more than the economy is growing. By outstripping growth, we will be back in a deficit position if we continue to do this.

Why does the government consistently misspend and mismanage money from the taxpayers today, while ensuring that taxpayers tomorrow will be paying for these programs indefinitely. When I look at newly born granddaughter, I do not want her to foot the bills of this free spending Liberal government in the years to come.

The new finance minister had a golden opportunity to put the brakes to free spending and chart a new and rewarding course for the majority of Canadians. Unfortunately, this minister has opted to continue the path created by his predecessor. The Liberal track record of broken promises and boondoggle after boondoggle speaks for itself.

We have seen a 500-fold overrun in the net cost of the firearms registry, $1 billion spent and growing on fraudulent and inadequately administered human resources development grants and millions of dollars in advertising contracts that are now under investigation by the RCMP. It is a long list and it is not a list of which to be proud.

I would like to quote the leader of the Canadian Alliance on the government's wasteful record. He said, “Each wasted billion was a billion wasted opportunities for Canadians”. That is exactly what that is. For every dollar wasted--

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, I am happy to be recognized and appreciate the opportunity to speak to Bill C-28.

It was my intention to ask the hon. member to expand somewhat on the NISA program and the $4 billion that he maintains could be put to better use or put into the pockets of farmers instead of being lost to the bureaucracy. Even though I represent an area of downtown Winnipeg, I would not want to see an agricultural assistance program being used to create bureaucratic jobs or to do anything other than to provide much needed income maintenance for beleaguered prairie farmers.

I appreciated the hon. member's comments. He was bang on. Perhaps in another speech he will be able to enlighten us more about the five pillars he made reference to.

I would like to speak at some length to the last point the Alliance member spoke about, the EI program.

The federal government is very proud of its announcement of $100 billion in tax cuts. As the member pointed out, it seems that any of the government's good news announcements are sequenced and timed to come into play over a period of three years or five years. The amount is not as huge an amount of money as people might expect when spread out over that timeframe. The erosion of that amount of money during that period of time due to inflation also has to be factored in. That $100 billion will not really mean as much five years from now as it did when it was announced. The government is trying to get the maximum political bang for its buck.

We should point out to people who are listening today where that $100 billion the government has put into tax cuts came from. I can say that $45 billion of it can be traced to the pockets of hardworking Canadians and their employers. As people should know, the EI fund is strictly made up of contributions from employees and employers. The federal government puts nothing into that fund. Canadians have clearly overpaid into the EI fund to the tune of $45 billion cumulatively over the last couple of years.

If there is a surplus in the EI fund, there are two ways of looking at it. One legitimate argument was put forward by the Alliance that premiums should be reduced. We are paying in too much in terms of what is being paid out in benefits. The flip side of that coin, the NDP's argument is that benefits should be increased or the eligibility requirement should be lowered so more people who pay in would be eligible. Either one of those arguments is legitimate.

What is not legitimate is to use that money for some purpose other than income maintenance for unemployed people. I would go further and say that to deduct something from a person's paycheque for a specific purpose and then to use that money for something completely different is out and out fraud. At the very least it is a breach of trust.

A trust relationship has been created with that individual. When that individual allowed the government to deduct money from his or her paycheque for a specific purpose, a trust relationship was formed. That person trusted that the government would hold that money until such time as he or she became unemployed and needed it. To do anything else with that money is a breach of trust. To use money paid into the unemployment insurance fund to build roads, or for health care, or to give tax cuts to somebody, is a breach of the fiduciary trust entered into with the Government of Canada as employees.

I cannot emphasize enough our continued disappointment, shock and horror at the flagrant misuse and abuse of what was supposed to be an insurance program for unemployed workers.

I appreciate that there are still MPs in the House of Commons who raised that as an aspect of their comments on the budget. To not do so would be to resign ourselves to the fact that the Liberals have managed to get away with something again. Some of us are not prepared to do that.

To put in context the size of the surplus, I am fond of reminding people that the EI program is running a surplus of $700 million a month, not per year, per month. Every month that ticks by, people are contributing $700 million more than is being paid out in income maintenance to unemployed workers. Talk about a cash cow. Talk about the gift that keeps on giving.

The Liberal government cannot believe how lucky it is. It seems to have gone under the radar on this one. Most Canadians are not upset about it. We are upset. Those of us who know about it in the House of Commons are upset. We are trying to alert Canadians to the fact that they are being gouged, but seemingly the public has not really got up in arms.

Unemployed people are up in arms, but unemployment is relatively low these days with 7% unemployed. That is not enough to form a mass movement of people to object to the abuse of the fund. Unfortunately when Canadians do find themselves in the unfortunate position of being unemployed, they will also learn that under the current EI rules, less than 40% of them will be eligible for any income maintenance whatsoever. The EI rules are structured in such a way that only 40% of unemployed people qualify. What kind of insurance fund is that?

What if people were obliged to pay into a house insurance fund with mandatory contributions and if their house burned down, they would have a 40% chance of collecting any benefit?

Business of the House

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

Mr. Speaker, as you know there is no time allocation motion on the agenda. There is however a notice, should that notice need to be exercised.

It is the intention of the government to continue this afternoon and tomorrow with Bill C-28, the budget implementation legislation. I wish to confirm to the House that it is my intention to continue to do so notwithstanding the opposition's dilatory motion to stop the bill from proceeding which was introduced in the House earlier this day.

If and when the bill is completed, we will then turn to Bill C-20, the child protection bill, either tomorrow if the budget bill is completed, or if not, on Monday. This will be followed by Bill C-23, the sex offender bill.

I then propose to bring back to the House for third reading Bill C-13 on reproductive technologies, which was concurred in by the House yesterday. That would probably bring us at least some way into next week and there will be further consultations at that point.

There have been discussions among parties and it has been agreed that the House shall not sit next Friday, April 4. Given that is the case, I now seek the consent of the House pursuant to that consultation to move the following motion. I move:

That when the House adjourns on April 3, 2003, it shall stand adjourned until Monday, April 7, 2003.

Budget Implementation Act, 2003

[Geoff Regan, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

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

It is my pleasure this afternoon to join in the debate on the 2003 budget, the budget implementation act, Bill C-28. This gives me a good occasion to talk about the recent budget tabled by the Minister of Finance last month and some of the important measures that are in this bill.

There are a variety of topics that I am interested in and are covered in the budget including things like health care, infrastructure, defence, the environment, and many other issues, such as help for the homeless people in our country.

The budget process is the most important process of the year for the federal government and budget day is the most important day because it is the day when the decisions are announced on a process that begins many months before. In fact, shortly after the previous budget is announced the process begins for different departments, different interests, and different groups who have ideas about what should be in the budget. Whether they be groups of members of Parliament or groups in departments, they begin their initiatives to get their priorities included in the budget process by trying to get as much funds as they can for the initiatives they want to see funded.

When the budget day is announced, it is the accumulation of a long process of working through all these priorities and announcing what the priorities are for the government, and how the resources of the government and taxpayer dollars will be spent that year. It is an important day and an important process.

This particular budget was important in a variety of ways. First, it was important in terms of health care. I had a number of meetings in my riding of Halifax West in January of this year to talk about health care. I had a series of four forums across different parts of Halifax West and heard from people in my riding about their needs and concerns: to make health care our top priority and to keep health care a publicly paid system. They did not want a private system of health care. People in my riding have strong views about this and strongly stated that they want to maintain the publicly paid and publicly delivered system.

The increase in transfers for health care to the provinces in the federal budget was very satisfying. It was good to see that. Of course, we always want to see more money and the government puts in as much as it can. We must recognize that health care, while it is the number one priority of Canadians, is also one of many priorities. There are other important priorities like the environment, our cities and many other things.

Let us talk about some of the things that the budget did in relation to health care. It provides, for example, a five year, $16 billion health reform fund. This is the key to this because I heard, throughout the forums that I held with people in Halifax West, that people wanted to see the kind of thing that Roy Romanow talked about in his report. They wanted to see money being put into health care to buy change, to make a better system, and to build a system that is more sustainable for Canada.

That is exactly what this $16 billion health reform fund is all about. It is for the provinces and territories to target primary health care, home care and catastrophic drug coverage. Those are certainly areas of concern that I heard about from people in my riding. I also heard about it elsewhere, whether in letters to me, e-mails, or from people I run into at the local mall or wherever. These are big issues, particularly in relation to home care. I had a lot of people call me with their concerns about caring for elderly people, about getting home care for themselves, and about not having an adequate system in our province of Nova Scotia.

The problem in Nova Scotia has some similarities to the rest of the country. There are challenges in home care across the country, but I can tell members that in our province, where we have a $13 billion debt for a very small province, there is no question that it is a crushing burden on the ability of the provincial government to pay for services like this. Now, there are things that the province could do better, perhaps provide better services and do a better job on home care, but there are things this money would enable the province to do that it could not do before. Nationally, this $16 billion would be very important in terms of helping move forward the area of home care and other areas, in particular primary health care.

In fact, I am going soon to a clinic in the north end of Halifax which is already an operating example of primary health care in action. I look forward to seeing that because it is important to look at new ways to do things which will make more sense, provide better long term health care and also provide us with the maximum bang for our buck in our health care dollars.

Another item that is part of the health care expenditure is $9.5 billion in increased cash transfers to the provinces and territories over the next five years. That is important because clearly the provinces and territories have their own challenges to face in terms of meeting their current needs. It is one thing to put money in, change the system and create a better system. However, while we create that new system, we also have to maintain the existing system and obviously pay for the acute care that is so important to Canadians.

There is also an immediate investment of $2.5 billion through Canada health and social transfer to relieve existing pressures in the health care system. That is immediately, in this fiscal year which ends in a few days. That will be very helpful in the current fiscal year.

There is the $1.5 billion over three years for a diagnostic medical equipment fund to improve access to publicly funded diagnostic services. One vital thing is these funds are not only to be used to pay for new MRIs, CAT scans and even PET scanners, which I have learned about recently, but they also will be used to help provide new technicians and doctors who are trained to manage or to run these systems and to interpret what the diagnostic systems tell them. It is important that we move forward in this area because clearly one of the big concerns people have is waiting lines.

Not only is it important to have more people trained to run these machines and interpret and work with the machines but it is also important to co-ordinate better the system of using these machines. One thing Mr. Romanow talked about was this. How long people wait to get an MRI or CAT scan is not always a question of how many are available or how long the wait is overall. Sometimes it can be a question of people's doctors and how long their lists are. Really there ought to be more co-ordination among hospitals and doctors. There needs to be a better information system so that people are in line one after another and not depending on which doctor they have. There should be a proper system to get them there as quickly as possible. I think this will help to do that.

Another item is $600 million to accelerate the development of secure electronic patient records. One thing we heard through the process on the review of health care in Romanow report and the Kirby report was that patient information was not always shared properly. There needs to be a quicker way to do that. Putting money into electronic records will help doctors share information quickly with other doctors or hospitals. It will get information to a person's file quickly so medical personnel know about their health background and will enable them to help more quickly and avoid problems as well.

Another item is $500 million for research hospitals for the Canada Foundation for Innovation. Clearly putting money into research in a health care area is another priority for Canadians and another area in which they think is very important for us to spend.

I know I only have a short time left and there are many other issues I would like to cover. There are so many other things that are funded in the budget. I am pleased that I could talk about health which is clearly the top priority of Canadians. However there are other things we should talk about for a moment.

I want to talk about infrastructure because the budget provides more funds for infrastructure. I would like to see more over the long run. I hope we can increase those funds in the coming years. In ridings like mine, Halifax West, it is probably the fastest growing area east of Ottawa. The growth is not being met with the kind of facilities we need, whether it be roads, rinks, schools or various other kinds of facilities. We do not pay for schools through this program, but obviously there are other kinds of things which would be important to assist a growing area like mine that needs those kinds of facilities. Therefore I am pleased to see the increased investment on top of the $5.25 billion already allocated in recent budget for infrastructure.

After my work on the Prime Minister's task force on urban issues, I see this as a very important area. We have to keep working on this.

I am pleased to see money for the environment. I want to see us put more money into things like transit. I look forward to progress in these areas.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I am pleased to be able to participate in the debate on Bill C-28, the budget implementation act. You will know already, Mr. Speaker, that the members of the federal New Democratic Party caucus stand in clear opposition to the Liberal budget of 2003. We express again today our lack of confidence in the government and its current budget. That will not come as a surprise to you, Mr. Speaker.

I want to indicate to the House that while we have a lack of confidence in the budget before us today, we will work very hard and do everything we can through the legislative process dealing with Bill C-28 to make improvements and to try to convince the government to make the necessary changes that will reflect the realities of Canadians.

One would think in listening to the Liberals today and in the weeks preceding this debate that they have had an awakening, that they have had a sudden new enlightenment about the priorities of Canadians and have presented us with a budget that will correct the errors of their ways in the past and put us on a new course.

This is the question for us today: Is this truly an awakening or is it a snow job?

Many have commented on the real meaning of the budget, despite all the spin and some of the positive media coverage. In fact, I want to reference some analyses of the budget that may not have appeared in the mainstream media or have been covered by national media outlets. Here is the question that Andrew Jackson of the Canadian Labour Congress put to Canadians: Is this budget “a real U-turn or just a curve in the road to a much harsher Canada which we have been on for so long?”

That is an important question for us today. Is this a new beginning or is this simply a twist in the road that does not address the systemic issues and barriers facing Canadians' full participation in the life of this great country?

In an article posted on February 25 of this year, Andrew Jackson goes on to say:

There has certainly been a re-ordering of Liberal priorities from debt reduction and tax cuts to social spending. But this is still a Budget which continues the tax cut agenda, and will pay down debt. The brakes on new spending can be quickly applied. It is far from clear if we have seen a real break in the long-term trend towards erosion of the public sphere.

That is an important commentary on the bill before us today.

Let me go further and quote from an article that may also not have appeared in the mainstream media and the national journals of the day, one by Bruce Campbell and Todd Scarth, who are both with the Canadian Centre for Policy Alternatives. They wrote an article on February 18 entitled “The Real Chrétien Legacy Budget”. Pardon me, Mr. Speaker. I realize I should not use the name of the Prime Minister in the House and I will try to quote from this article without doing so. The authors of this article state:

In reality, the plan the Liberals announced yesterday is fiscally conservative dressed up as socially conscious, and fails to make needed social reinvestments. In other words, it is an appropriately weak legacy for a Prime Minister who oversaw the shrinking of program spending levels, relative to the size of the overall economy, to levels not seen since the early post war years.

Finally, I will quote the national president of the Canadian Union of Public Employees, Judy Darcy, who, I might add, has recently made an announcement that she will be retiring from her position as president of the Canadian Union of Public Employees.

I want to take this moment to put on the record the appreciation of members in the House, I assume from all sides, for the work of Judy Darcy over the years in representing members of her union but also for her leadership on social justice issues and her ongoing contribution to the struggle for equality in our society today and for a universally accessible publicly administered health care system and justice in the workplace.

Let me put on the record her words in response to the federal budget. She said, after welcoming the new funding for social programs, as all of us in the House have done, that the budget doesn't erase the Prime Minister's real legacy: a decade of budget cuts that have been devastating for Canadians. She stated, “After years of bread and water, a Timbit looks like a feast”.

I think those comments reflect what we are really dealing with. Those particular insightful looks at the federal budget put this debate in perspective, because there has been a tremendous amount of spin around the budget, a tremendous amount of hoopla and a clear suggestion that the budget represents a whole new direction which will ensure that the priorities of Canadians are addressed in full and that our country is now on a path to economic security and prosperity.

In reality, as these analysts have stated so well, through this budget the government in actual fact says to Canadians that if they have pressing social needs, they can wait. This is not, as the media or the Liberals themselves have said, a “spending spree” budget.

Let us put it in context. In the year 2001-02, federal program spending was running at 11.2% of GDP. With all the budget's heralded new spending, by 2004-05 it will only rise to 11.8%, and that is well below the 16.5% when the Liberals took power. So let us be real: This is not a big shift in terms of social spending. The government has created the illusion, perhaps, of big spending, but in real terms, in ways that will meet the needs of Canadians, this budget cannot be categorized in that light. It should also be noted that the headlines seldom point out that massive Liberal tax cuts will result in government revenue being lowered over the next two years from 15.7% to 15.2% of GDP.

One of the issues we have to deal with in the debate, which is particularly relevant today as we near the end of this fiscal year this coming Monday, is what the government has done in terms of the surplus and how it has tried to fool Canadians about the money it has collected from Canadians in terms of expenditures on their priorities.

I think the first question we have to ask is, which surplus? The government in fact makes Enron look like amateurs when it comes to keeping two sets of books. There is the initial fictional version and then later the non-fictional version. Sometimes one would think the Liberals just pick a number out of the hat. It is like Liberal election promises, would we not agree? Before the election is the fiction, then over the next five years they release the non-fiction version of what they really intend to do.

Let us remember that since 1993 the government has underestimated the surplus each and every budget year. We are talking about billions of dollars of surplus that have not been reported to Parliament and to Canadians. The government has exceeded its official budgetary targets for eight years in a row, by as much as $15 billion in one year. That is not an easy thing to do, but we have to call the government to task on it. What kind of game is it playing? Why is it lowballing the surplus? What does it mean in terms of this supposed set of estimates before the House reflecting the values of Canadians?

For this fiscal year, which ends on Monday, March 31, it is estimated that the surplus for the federal government is at least $4 billion. There are varying estimates and we will not know the real figures until well into the next fiscal year, but let us keep in mind that the alternative federal budget, which has been accurate year after year in forecasting the budgetary surplus of the government, predicted that the government would have a budgetary surplus for this year of $8.9 billion. That is not far out from the Conference Board of Canada, which said $8.7 billion. We cannot forget the TD Bank, which said $5.8 billion. The government's own economic and fiscal update said $4 billion.

Even if we take into account the fact that some of that surplus has been spent on programs, and even if we take into account the fact that there is, as the government states, an intention to put some of this money aside in the name of prudence on a contingency basis, it would appear that, come Monday, the end of this fiscal year, there will be $3 billion in surplus that will end up going toward the debt: not toward the priorities of Canadians, not into filling the Romanow gap on the health care front, not in terms of the growing concerns around the spread of HIV and AIDS, not in terms of child care and meeting the demands of working mothers trying to juggle parenting and work responsibilities. No, it will go to the debt.

We must keep in mind that it was this government that said in the 1997 election it was going to follow a balanced approach whereby half the surplus would go to the debt and half to new social programs. Did that happen? I do not think so, not by a long shot.

That pledge was repeated in the 2000 election, but let us look at the actual facts. I want to reference a study by the Canadian Centre for Policy Alternatives. Those who would question the validity of this study should keep in mind that the Centre for Policy Alternatives has been accurate each and every budget year in terms of the government's budgetary surplus. The CCPA found that over the whole period from 1997 to 2001 only 2% of the underlying surplus was allocated to genuine enhancements in program spending. The other 98% went to debt reduction.

We also know that the Auditor General has raised the issue about the reporting of the budgetary surplus. On November 4, 2002, the Auditor General accused the government of deceiving the public about the government surplus. She disputed the Prime Minister's assertion that “Under the acts of Parliament, at the end of the year, the surplus is automatically applied to debt reduction...”. She went on to say, “There is no law, there is no accounting rule, that says you have to pay down the debt by the amount of the surplus”.

All we are asking for today is that the government live up to its 1997 and 2000 election promises to take the surplus and split it in terms of half going to social spending and programs that need reinforcement and support from the government, and the other half going to the debt.

I could make a strong case for why I think the whole amount should go to social spending, given the fact that the focus has been on debt reduction over the years, and given the fact that our debt to GDP ratio is at an appropriate and manageable level, and that the money available today could in fact deal with the social debt for a change and deal with some of the gaps in services and programs that are still there after the budget is said and done.

I think we are dealing with a serious issue of budgeting by stealth. The way in which the government handles the surplus is one example. There are many others. Let me reference, in fact, how the government talks about increased transparency yet is slinking around outside of the budget limelight bureaucratically reallocating $1 billion in government spending over the next year without any public disclosure.

It creates a great deal of suspicion in the government's budgeting process. It calls into question its commitment to advance the ideas of transparency and accountability when on the one hand it gives us a budget, wraps it all up in nice ribbons and wrapping paper and says it is spending in terms of the priorities of Canadians and, on the other hand, turns around and demands that all departments come up with $1 billion over the next two years.

What kind of impact does that have? What does that mean? Let me give the example of the weather services in this country. Over the last 10 years the government has reduced the weather services budget by 40%. By its own reports, the system and the service is in bad repair. There are serious problems because of that kind of cutting, hacking and slashing. What does the government do at a time of some fiscal flexibility and a budgetary surplus? It chops the weather stations from 14 to 5. It puts the safety and security of Canadians further at risk.

How does that make sense? Would it not be reasonable to expect that the government would first do a cost benefit analysis to provide that information to members of the House and to Canadians? That is one example. There are many other examples of how the government has it both ways.

Let me give the example of employment insurance. It has a $45 billion surplus as a result of the government's changes to the EI program and the fact that it removed so many people from the EI rolls because of changes in policy, and yet it has the gall and the nerve to propose that all job search kiosks be shut down. That is what was done. I know because I happen to have in my constituency a job search kiosk in a public place that is the most heavily utilized in Canada. People turn to job search kiosks to do what the government wants them to do, which is to find a job.

How does it make sense for the government, with a $45 billion surplus as a result of cuts and changes to the EI program, to turn around and chop job search kiosks? It is certainly my hope that because of the community uprising and in light of this proposal that the government will change its mind and have second thoughts about that kind of silly decision making.

There are many other examples but what we really need to focus on in the few minutes that I have left are the priorities of Canadians and how the government has failed to live up to the fundamental issues so important to Canadians.

If the government were truly concerned about dealing with the social debt, surely it would tackle poverty, surely it would put in place a meaningful national childcare program, and surely it would allow women who work part time because they have to look after young children to collect employment insurance benefits.

Why in heaven's name would Kelly Lesiuk from Winnipeg need to go to the Supreme Court of Canada to get her rightful entitlement? This is a woman who worked part time so she could care for her children did not quite have the 700 hours required by the government. She won her case at the adjudication level and the government appealed it. Now the case has gone to the Supreme Court. Is that not a waste of money when what we are talking about is the fundamental right of equality and requires the government to simply rethink its arbitrary cuts and changes to ensure that women who work part time, and who do so on an ongoing basis, and who are part of the permanent labour force, are able to collect employment insurance?

Let me just fit in two more issues before my time is up. The government promised child care for 10 years. This year it says that it has done it. It has allocated $935 million for all the provinces and territories over five years, which means $25 million for this year. That means 3,000 childcare spaces over the next couple of years will be created, which is hardly commensurate with the demand and the need of working families and mothers who need quality, licensed childcare.

Let me put that in perspective and tell members what that means for Manitoba. It means $24 per month per staff or $12 on each pay cheque, or three-quarters of a space more per child care centre. Does that make sense? Is that a national child care program?

In conclusion, the government has failed in terms of ensuring that the Romanow blueprint on the future of health care was accepted and acted on. There is a Romanow gap in terms of funding and in terms of accountability which means privatization will continue. In fact, it means that our medicare system, our cherished national health program, is still in jeopardy.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, the reality is that the tag team of the Prime Minister and the former finance minister increased personal and corporate taxes 53 times since 1993. Budget 1994 increased spending $1.7 billion and increased taxes by $1.3 billion. Let us remember that the early budget of the former minister of finance had a deficit of $37 billion in it, $37 billion adding to that national debt. It was not until the budget of 1995 that the Liberals were forced to reduce spending but still managed to increase taxes by $1.4 billion. Then again, the deficit for that year was $28 billion.

The early years of the former finance minister, the member for LaSalle—Émard, what was his record? It was to increase taxes, increase spending and run another deficit. When those guys inherited the government from the Mulroney team the national debt, which is the accumulated deficit, was $508 billion. What did they do? They ran it up to $583 billion before the message got through that we simply could not do that any more.

What caused this change? What were the events that led up to the change in the Liberal philosophy of actually having some fiscal discipline for a few years? I think they were forced to the wall. There was the Mexican situation where the peso was in crisis in 1994, fears that New Zealand would fall into insolvency and Canada's own debt was downgraded by many of the debt rating agencies. The message was pretty loud and clear that the Liberals had to do something.

They did take some action. What did they do? This is important. Was it done fairly? No, not really. The former finance minister and his team took the easy way out. They offloaded their problem by slashing transfers to the provinces. According to national accounts, federal spending decreased by just 9% or $11.3 billion. This was a time of crisis. They had to get a hold on this so they decreased their own spending by 9% but slashed the transfers to the provinces for things such as health care by over 20%.

The crisis that we see in health care today, the money that had to be pumped in and today's fiscal problems between the provinces and their municipal governments, are a product of the Liberal government. It is a product of the government offloading its big problem to the provinces.

As soon as the Liberals had an opportunity, and once we started to get to the stage where we were no longer deficit spending, when the U.S. economy was growing by leaps and bounds, when 87% of our exports were going to the United States and when roughly 40% of our GDP came from exports, we were dragged along.

What did the Liberals do when they had the opportunity and things improved? They did not make the fundamental changes that were required. They returned to their old practices. They returned to their old tax and spend ways. It did not take very long. The aberration was only two years.

Federal program spending has been on the rise since 1997 and has increased dramatically since 1999. Those are all years that the former minister of finance was here. The tag team of the Prime Minister and the former minister of finance did it together.

Over the last two years federal spending has increased by 6% on average. That outpaces the formula for population growth and inflation by roughly 4%. Those are the kinds of things that put us into the difficulties in the 1970s to begin with.

The current finance minister, as I said, could have changed course but instead he opted to spend and spend. Federal spending is forecast to increase 83% faster than population and inflation growth between 1999-2000 and 2004-05.

I submit that budget 2003 is not an aberration at all. It really just ups the ante of the old Liberal spending patterns. As soon as the Liberals had a little cash in the bank, instead of improving the fundamentals, they went back to their old ways of tax and spend.

The Minister of Finance likes to brag about how Canada is a true northern tiger. He must know, as do many in government and the private sector, that despite recent reasonable economic times there is still considerable distance to make up for the bad public policies that the government and other governments have engaged in since the 1970s.

The industry committee conducted three separate studies in terms of Canada's productivity and competitiveness. What it found was a long standing decline in Canada's competitive position in the world going back 30 years. I submit that it is not an accident. This has a direct correlation to public policy. That public policy is just bad government not recognizing what Canada should be doing.

Thirty years ago the United States was number one in terms of productivity which equates to living standards. Canada was number two. That is a long term historical fact. The United States has not changed. It is still number one in terms of productivity and living standards, but Canada has fallen to 13th place in terms of productivity in the world.

In the Globe and Mail today, Canadian Manufacturers & Exporters reported that Canada's competitiveness has fallen to 50% of the G-7 average. The report prepared by Canadian Manufacturers & Exporters said:

The competitiveness of Canadian industries continues to fall compared with their G-7 counterparts, although this country's businesses no longer hold last spot--

It is no longer in last place. That is some consolation. It does not really address the issue of Canada and United States. Canadian Manufacturers & Exporters went on to say:

--the so-called excellence gap between Canadian industries and those in other Group of Seven nations has widened “significantly” since the period before the Sept. 11 terrorist attacks in the United States.

It continued:

The CME's last assessment, undertaken in the summer of 2001, put Canada's performance at 62 per cent of the G-7's overall best practice. Its most recent analysis, however, shows that figure has fallen to 50 per cent.

We have had a long term decline in the economy in Canada. We have seen it; we know it is there. We recognize it because the Canadian dollar is in big part a reflection of that. But this is 30 years of decline and 30 years of bad management by the government.

In the 1970s and onward we saw huge increases in government spending and in the design of government programs. Deficit spending was characteristic of the government and, in fact, it ran up the accumulated deficit to $583 billion. It now has it down to $536 billion and it is cheering that it is some kind of victory. I say it is not very much.

Decades of spending increases have increased Canadian tax burdens so now government represents 42% of all of the GDP of Canada. That is how much it is sucking out of the life blood of Canadians. Compare that with the United States where government takes 29%. If that was productive spending maybe we could accept that, but what do we have? We have waste in the government. We have a lot of misdirected industrial policies where it is pumping billions of dollars into so-called winners. I suggest that those winners are showing the tendency to be more losers these days than winners.

We have the aerospace sector, for example. The government has poured literally billions of dollars into that sector. I believe that it should not be involved and the Canadian Alliance believes that we should not be in the business of trying to pick winners and losers in our society.

Our standard of living has fallen to only 70% of that of the United States over a 30 year period. Canada has one of the highest personal income tax rates in the entire G-7. Once a historical home for direct foreign investment, our share of direct foreign investment has been falling over 30 years. Investors see other countries as better places to reap a profit. It is no wonder with the taxation levels on the corporate and personal side that we have in Canada.

Even Canadians are looking increasingly outside our borders, particularly in the United States, as a good place to invest. There is an article in the National Post today to that effect. Canadians are investing billions of dollars outside our country. Why? Because they see it as better place to get opportunity to have return on their investment. That should not be the case. It is tragic that it is actually happening.

Yes, they should have opportunity to look outside our country, but they should also have the opportunity to get good rates of return here. The government's response has been to devalue the dollar. We have become the big discount sale house of OECD countries. Our dollar has seen a little bit of strength in the last couple of months as the U.S. dollar is depreciating against European currency, but still we have seen a decline to where we are at 68¢ U.S. today. We have been as low as almost 60¢ and it is no accident that the dollar is a reflection of Canada's productivity and standard of living.

A National Post article today by Jacqueline Thorpe talks about the Conference Board study and what it is saying. Is it not ironic that our industries are now saying “Do not let the dollar go too high because we cannot compete”. Why can they not compete? They cannot compete because the government has not taken advantage of good times to make the fundamental changes that are necessary to allow that dollar to naturally rise and exporters to be able to benefit.

I am talking about tax decreases. Let us get off the backs of the corporate sector. Let them make a profit and we will see more investment in Canada. We will gradually see our Canadian dollar rise as it should. But the government has not taken that opportunity in good times. If it does not take the opportunity and make the fundamentals right in good times, when will it ever happen? It certainly will not happen in a downturn which we may be seeing.

This is the kind of problem that I am talking about, long-term historical problems where we see a Liberal government that has a total disregard not only for the economy and Canadian standard of living but also for its constitutional mandate.

It is clear what the division of powers were when the Fathers of Confederation designed the Constitution . The provinces were largely responsible for social areas and the federal government was responsible for foreign affairs, defence, trade, monetary policy and security. However, we have a federal government that has muscled its way into provincial jurisdiction. We see it in the budget of February 18 with all kinds of intrusions into provincial social areas, but what is the government's record in its own areas? I say it is dismal.

Let us take foreign affairs as an example. This House is being consumed with that issue in the last several weeks but it goes further back than that. Our place in the world has slipped dramatically. What are we doing to protect Canadian industries in trade agreements? What about agriculture, where we have been beaten up really badly? What about softwood lumber and defence policy? The government has deliberately gutted the Department of National Defence so it could use the money that it would save in the budget to throw at some of its special pet projects and patronage.

We have seen waste in government, and waste in the gun registry of $1 billion and running to $2 billion shortly. We have seen waste in the HRDC scandal where the minister was largely credited or discredited with blowing $1 billion, not knowing what happened to it. We have seen advertising scandals. And this is just the tip of the iceberg.

Together with waste and misdirected policy no wonder Canada has been in decline. We need the opportunity to get this country back on track. We need political parties that would get the federal government into the areas that it is responsible for and work cooperatively with the provinces in areas that the provinces are responsible for. That would seem to make perfect sense in a federation, but instead, that is not the case.

This country could get back on its feet fairly quickly if we had a party that would stand up for the things that Canadians should be standing up for and exercising responsibility that is really required. The Canadian Alliance has a totally different view than the Liberal government. We do not believe in intervening in the economy. We believe that we need to put the framework in place for business to do well, that we should be the stewards for Canadians, that we should not be interfering, and that we should not be investing in business.

It seems to me that the time has come for that to happen to get Canada back on track. We can no longer afford to have the kind of interventionist government and a poor public policy that has put us in this deep hole. It is a deep hole that I am concerned about. We are not recovering. In fact, it threatens our economic security.

It makes us so dependent these days that we have trouble acting. We are in a huge trade dispute. What is our answer? We have trouble defending our own economic sovereignty. The government has put us in a hole where we are $536 billion in debt. Out of every tax dollar 21¢ goes to Ottawa to pay interest on the debt. That makes us very vulnerable. The government did not do anything about it in good times, when is it going to? That is going to represent a bigger part of the total scene when things get bad and it may well happen.

The United States economy has not recovered. It had 12 years of growth and in any economic cycle we will see that growth period followed by a period of stagnation before it can happen again. Canada has not really entered into that although I believe that we are vulnerable.

These policies that we have in the budget would not protect us. They would not give us the kind of tax relief that we need to have to make this a more viable situation for Canadian individuals and companies.

We must ask the question, why would a party think that government needed to increase in size? Historically that has not been the case. In fact, we are pretty much out of the loop in terms of the business cycle in North America. At one time there was never a period when the economies of Canada and the United States did not act in a similar way. We can chart that over a hundred years. There are people that do that. It is an analytical way to approach business. They chart when business cycles are on the upturn, when there is inflation, and when there is a decline.

Up until about the 1970s we can see that the economies of Canada and the United States have been very closely together in terms of that economic cycle. However, after the 1970s there started to be a divergence which became fairly acute. People have been doing a lot of work to decide why that took place, what is this aberration?

Former Prime Minister Trudeau was successful in increasing the size of government with his public policies. There were a lot of social programs that were introduced. Even in Ottawa, during the days of the 1970s, the growth was phenomenal in the city, particularly the growth in government buildings.

Let us look at the employment insurance program, for example. It became not an employment insurance program any more because it also had a social element to it. Maybe there is a role for government in that, but we would not think that the government would expect employers and employees to fund it. However, that is exactly what it did.

The result is that Canadian unemployment figures are about 3% to 4% higher than that of the United States all the time. In good times and bad times they are 4% higher. That was not the case up until 1970. It was roughly the same. Our cycle might have been out a little bit but it was basically the same. Why is that?

The reason is that we have built a lot of components into the system. There are something like 40 different areas in Canada where qualifying for employment insurance is different. Maternity benefits are just one example of that and there are many others.

In addition to that, what did the government do with employment insurance when it came to power in 1993? It decided this would be the vehicle to generate a fair amount of money for the government. Even though the chief actuary said that in order to ride out a cycle in the economy we probably needed about $15 billion in the employment insurance account, the government decided that this was a cash cow that it simply could not resist. What did it do? It overcharged Canadian employers and employees to the tune of over $30 billion.

Supposedly, there is a fund somewhere that has $45 billion in it for employment insurance. We all know that is not the case because it went into general revenues and has long been spent. The government took advantage of this cash cow and how did it decide to spend this money? It spent the extra $30 billion of employers' and employees' money in a number of ways that I am not sure that employers and employees would think was reasonable.

There are regional development programs in many areas that take up billions of dollars a year. The Auditor General has been very critical of those programs from coast to coast. Whether it is western economic diversification or something else, no matter where it occurs, it is like pouring money into a hole in the ground.

In many cases once the money is gone and the business is no longer collecting the money, it cannot exist. In fact, some businesses receive money from regional development programs that their competitor down the street does not receive. For example, if someone receives a government grant and builds a service station and the existing one down the street goes out of business, is there any net gain to society? The Auditor General does not think so.

Billions of dollars have been wasted in that program, as well as billions of dollars in economic development programs. I do not think government is very good at this. That is one reason I do not think government should be in business.

Businesses in Canada have benefited from programs like technology partnerships Canada to the tune of billions of dollars. The aerospace industry, I pointed out earlier, is just one of those. Companies such as Pratt & Whitney, General Electric, Bombardier, some of the biggest companies in the world are receiving money from Canadian taxpayers.

In addition to the technology partnerships program, what else is there? There is Export Development Canada, a bank owned by the taxpayers of Canada. It subsidizes the credit so those companies can sell their products to Air Wisconsin and United Airlines in the United States at a lower than market price in terms of interest rates. Who pays the bill and who has the vulnerability if something goes wrong? There have been all kinds of cancellations for aircraft orders not only in Canada but in places like Brazil which have similar regional development and economic development programs. I understand our aerospace sector makes up something like 70% of the exposure at the Export Development Corporation these days. If something goes wrong, who pays for that?

Those are the kinds of misguided public policies which I think have gotten us into trouble. It shows why the government is addicted to having more taxes rolling in all the time. The government is going to have $195 billion in tax money coming to Ottawa in the next year.

The growth in the size of government is unprecedented. It is returning to the levels of spending and taxation of the 1970s. For 25 years the government seemed to be drunk with power and had to expand the economy not only in government, but in all kinds of pet projects that it thought was best for the country, such as economic development in certain areas, whether it was through business or regional development. Those are the kinds of programs that have to stop.

Canada has been a member of the World Trade Organization and the OECD. They are critical of a lot of those kinds of programs. They are critical of export credit. They want to move away from that. Canada should be a leader. Canada at one time was a leader, but I think we have abdicated our responsibility pretty seriously.

What is the role for government? What role should government really play? The Canadian Alliance feels that government has a very serious responsibility. It is pretty clear in the Constitution how it is set out. Traditionally Canadian governments moved into other areas such as health care. We do not disagree that health care funding needed to be brought up to new levels. We recognize the need for that. When the government in the 1970s brought in the Canada Health Act, it said that federal government funding for that program would never fall below 50%. What happened over time is the provinces could not trust the federal government. They simply could not trust it.

Spending levels by the federal government last year fell to something like 12%. Provincial governments were left with the balance, having to struggle with that even though they had this guarantee from the federal government that they would never fall below 50%. No wonder provinces are knocking at the door telling the government that it is putting the constraints on them in asking them to have a national system, which they accept, but the federal funding levels have dropped.

As I pointed out, it was a pretty easy target in the mid-1990s when the tag team of the former finance minister and the Prime Minister decided they had to do some cutting. They were sort of at the wall and were being downgraded in terms of credit and they had to do something about it. What did they do? They cut transfers to provinces. What is the largest transfer to the provinces? It is health care and $25 billion was taken out of the health care system during those years.

No wonder the provincial governments had trouble with their municipalities and their own services. Imagine a federal government that would hardly do anything in its own backyard in terms of cutting spending, but it would attack the easiest target. That was the easiest target, so it cut the transfers to the provinces. That is the type of thing that worries Canadians for the future.

The commitment made in the budget that the federal government put about $35 billion into health care is the kind of commitment that was needed to increase the health care funding to the required level. The provincial premiers and others must wonder what will happen the next time there is a bit of a downturn. What is the commitment worth from the federal government? The experience from the mid-1990s under the former finance minister was not that good. The government took the easy target.

The role of government must be to recognize the jurisdictions given to it in the Constitution and actively work hard to improve things such as relations in foreign affairs. Our relationship with our major trading partner is in serious decline. Historically we have had an excellent relationship with the United States. We are a next door neighbour to the United States. As I have said, our trade relationship has grown greatly, which seems to be a natural outreach.

Mr. Trudeau back in the 1970s decided that he wanted to distance himself from the United States. He wanted to direct business so that there was more trade between Europe and Canada and less dependency on the United States for trade. It was a pretty superficial look at it. At the same time the European countries were busy developing the European Union, which is a very inward looking organization. They were not looking at trade with Canada. In fact their trade with Canada declined dramatically during that time.

The natural consequence of being close to the United States and having similar cultures means that trade between Canada and the United States has grown dramatically. During the 1970s, 60% of our exports were to the United States and today it is 87%.

It would be nice to diversify that, but that is a pretty easy place to do business, or it has been until now. The government seems intent upon sticking its finger in the eye of the United States and souring that relationship. I wonder how much support there will be for the government when people start to lose jobs as a result of what members on the other side of the House have been saying recently about our closest ally and closest trading partner. It seems to me to be a pretty silly policy to tweak the noses of our friends in the United States, our major trading partner, because that is the kind of relationship we need.

Instead of working in the areas the federal government was given in the Constitution, in foreign affairs, to improve trade relationships, to do something about improving things so Canada is not hit with trade actions any more on a number of issues, what is it doing? Tweaking the nose of Uncle Sam. It is not good enough. The government has to do better. A Canadian Alliance government would take this role a lot more seriously.

We do have a place in the world. We are not a superpower but we are certainly a midsize power. There is an increasing capacity in the country, a potential to reach a much bigger proportion than we have today in terms of influence and also economic size. However it will not be done with a government that has such inward looking policies and policies of trying to be interventionists in a control command economy.

A free market economy is a very powerful engine. We should unleash it and let it work. We should take the constraints of high interest rates, high income taxes and high regulation out of the government, off of our industries and let them work. That could have a dramatic effect, but it seems the Liberals across the way do not share those views. They think that this sector has to be controlled.

Canada has a whole set of regulated industries. A lot of them are looking for the harness to be thrown off. Our telecommunications companies are asking for foreign investment limits to be removed. They want access to foreign capital. That has not been the case. The transport sector has been highly regulated and look at the results of that. It looks like the government is going to be pumping more money into Air Canada.

It seems that the Liberals have not grasped the idea of a market economy. Maybe there is a reason. Maybe they feel they have to have their hands on the levers of power so they can stay in power and grease enough palms along the way that the money will come back. That seemed to be working pretty well up until now, but it does not serve Canadians well.

Defence is an area of responsibility given to the federal government. A lot of people in the defence industries and analysts say that the defence department needs about $2 billion a year to help out in its capital expenditure to get it back to some reasonable level so our forces can perform in peacekeeping or peacemaking operations. It is sad that our fighting men and women who belong to this organization do not have the ability to get over to the operations. We do not have the ability to fly them there. We have to rely on the United States to do that for us.

We rely pretty heavily on the United States for our defence. We are a member of NATO. Our funding level for our military in terms of GDP is the second lowest of all NATO countries. Luxembourg is the only country lower than us. Either we belong or we do not. This latest conflict in Iraq and the war on terrorism point to the need for Canada to do something to improve the morale and the conditions for our service men and women and improve the equipment for them.

The responsibility for defence was given to the federal government in the Constitution. Instead of working to improve things in foreign affairs and defence, what is it doing? The government is getting involved in provincial jurisdictions. It sees its role as being more that of a provincial government. Maybe that says something about the mentality of the government. It needs to respect the constitutional authority it was given and do something. It needs to improve the conditions. It needs to work in the areas it was given responsibility for, such as foreign affairs and defence.

What more could the government do in trade policy? In the next little while Canadian Alliance members will be speaking more specifically about a number of areas. Trade policy is one of them.

We need to be moving in areas such as agriculture. The Uruguay round only made small changes in agriculture. Huge subsidies are still being given by the European Union and the United States. Our Canadian farmers have been beaten up badly as a result. In addition, even with the small amount of progress that was made, 15%, in the Uruguay round, what did the government do? It went beyond the cuts that were necessary according to our contribution level and it cut heavily in the area of agriculture.

Some would argue that New Zealand does not have any subsidies and that is a good thing. However, when other countries are subsidizing very heavily, such as the United States and the European Union countries, we get frozen out of market share. There is work to be done to bring some discipline and some trade rules to other sectors of the economy in agriculture in other areas such as the European Union and the United States. Canada has a dyslexic position and I do not think it is respected very much. More work needs to be done in trade areas.

Let me talk about monetary policy for a moment. Canada has a 68¢ dollar today versus that of our major trading partner, the United States. That is higher than it has been for some time. A lot of people think that the U.S. dollar needs to be lower than it has been because the U.S. has a fair amount of deficit in its current account. People thought it would come down over time. Not too long ago our dollar was almost as low as 60¢ and it could well go back there. What does that do to Canadians? Let me talk about farming for a second because I was on that subject.

Combines do not cost $100,000 any more, but let me take a figure of a piece of farm equipment that would cost a Canadian farmer $100,000. That same equipment made in the United States would cost a farmer $68,000, and most of the equipment is made there, so we have to import a lot of product into Canada. That puts us a disadvantage.

Some would argue that of course we have our exports that take advantage of the low Canadian dollar. Yes, they have, but to some extent it has been a bit of a crunch. The proof is when we see the Canadian dollar start to go up a bit, Canadian companies start to get concerned. They say that they cannot compete because taxes and regulations are too high.

I want to introduce a motion, but just before that I want to conclude by saying that things could be a whole lot better. Public policy is directly related to how well the country does and how our badly our standard of living has slipped. The Canadian Alliance will be outlining that over the next few days in this debate. I move:

That the motion be amended by deleting all the words after the word “that” and substituting the following: “therefore Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003 be not now read a second time but that it be read a second time, this day, six months hence”.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, I am happy for the opportunity to speak today to the budget implementation act, Bill C-28, but I must say that the Canadian Alliance has a lot of concerns about the budget which was introduced in the House on February 18.

The new finance minister could have chosen to change the course set by that of his predecessor in the last several years but he chose not to do that. One has to wonder why that is, although most reasonable people might expect that it had something to do with the Prime Minister's legacy program. When someone has been in office for 40-some years and he still has to buy himself a legacy in the last year out, that seems like a pretty sad commentary, but that seems to be part of budget 2003.

In addition to that, the finance minister perhaps is launching a leadership bid and that may be part of it and may partly explain why we see the kind of spending increases that we have identified in budget 2003: $25 billion in new spending over the next three years. It is not just spending, it is a smorgasbord of sloppy spending. Other than the $5.3 billion this year for the health care increases, it is spread so thinly in so many areas that it may be of little benefit to anybody.

What we have seen from the government is a pattern over a long period of time of trying to buy votes and not really caring what the outcome of the legislation will be as long as it looks good on the surface. It is like the Hollywood storefront image that we see in the westerns; nothing behind it.

The budget includes $2 billion in unspecified Kyoto projects and $1.5 billion again shovelled out to unaccountable foundations. The Auditor General had a considerable amount to say about that in the past, that this was not the type of corporate accounting that we accept in the corporate sector so why should we accept it from the Government of Canada?

The budget contains $1 billion for the national child care system which will bring it to roughly $10 billion. That money has to come from somewhere. Six billion dollars will be spent on the federal bureaucracy, an increase in spending that seems reminiscent of the 1970s.

The budget contains little tax relief and what tax relief there is, it is spread over several years. I am thinking of the capital tax, of which one portion will be phased out. I heard more about the capital tax than any other thing when our committee was travelling across the country. When I was the industry critic for our party we heard that this was a very discouraging tax on investment, but the government is only taking one part of it out and only doing that over five years. That is the type of example we see in budget 2003.

Many commentators have suggested that the budget was really the end of fiscal discipline in Ottawa, but I would like to demonstrate why that simply is not the case at all. It really is a return to old Liberal values. The fiscal discipline only took place in about 1996-97, for two years, because the government was driven to the wall and had to do something about it. I will make that case.

I submit that this is really a continuation of the Liberals' tax and spend policies that put political expediency ahead of good policy, wasteful spending over restraint and accounting trickery over transparency.

The reality is that since 1993 the Chrétien-Martin tag team increased personal and corporate income taxes 53 times.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, it is my honour to present Bill C-28, the budget implementation act, 2003, for second reading today.

In the course of preparing his budget, the Minister of Finance was advised by Canadians that it must be more than a tallying of accounts: that the budget must reflect the sum of our values as well. The budget the minister presented to the House in February meets the challenge in three arenas of national life.

First, it builds the society Canadians value by making investments in individual Canadians, their families and their communities.

Second, it builds the economy Canadians need by promoting productivity and innovation while staying fiscally prudent.

Third, it builds the accountability Canadians deserve by making government spending more transparent and accountable.

Just as important, the government is able to meet these challenges and pursue significant new investments, without risking a return to deficits, because of our continuing commitment to sound fiscal management. This commitment to fiscal responsibility is real and rigid, not just rhetoric, as demonstrated by the fact that we have already delivered five consecutive surpluses, a $47 billion reduction in the federal debt and the $100 billion tax reduction plan.

The 2003 budget is a budget based on continuity: maintaining the prudent, balanced approach to fiscal planning that has contributed so much, so directly, to Canada's economic stability and success. At the same time, it is a budget marked by milestones and major new commitments.

Economic success and fiscal discipline are only part of good government. They are a means to the much more important end of building the society that Canadians value, where compassion and social responsibility are constant, concrete facts of national life.

No social policy is more vital to Canadians than our publicly funded health care system.

The 2003 accord on health care renewal, agreed to by the Prime Minister and provincial first ministers in February, reflects a common commitment among governments to work together to improve access to the health care system, enhance accountability of how health care dollars are spent, and help ensure that the system remains sustainable in the long term.

Budget 2003 confirms $34.8 billion in increased funding over five years to meet the goals outlined in the health accord. Bill C-28 implements these measures.

First, in terms of increased support through transfers, the budget builds on the significant federal support for health care already provided to the provinces and territories through the Canada health and social transfer, the CHST.

Following the September 2000 agreements on health and early childhood development, the federal government provided provinces and territories with a predictable and growing five year funding framework to 2005-06 through the CHST. Now, this established funding will be further increased by $1.8 billion and extended for an additional two years. As a result, total yearly cash transfers to the provinces will rise to $21.6 billion in 2006-07 and $22.2 billion in 2007-08. Again, let me emphasize that this is over $22 billion for that one year.

Next, an immediate $2.5 billion supplement to the CHST will help relieve existing pressures in the health care system. This funding will be on an equal per capita basis, with provinces and territories having the flexibility to draw down their allocated share of funds, as they require, up to the end of 2005-06.

But the sustained renewal of Canada's health care system needs positive structural change as well as further financing. That is why the first ministers also agreed to restructure the CHST into two separate transfers, a Canada health transfer and a Canada social transfer, effective April 1, 2004.

Creating distinct transfers for health and other social spending will provide Canadians with information on the federal government's long term contribution to health care. At the same time, first ministers reaffirmed the importance of the equalization program in ensuring that all provinces have the ability to provide comparable levels of public services at comparable levels of taxation.

To strengthen the program, the federal government agreed to permanently remove the ceiling on equalization payments beginning in 2002-03.

All of these measures will provide a predictable, sustainable and growing long term funding and planning framework for transfers to the provinces and territories in support of health care and other social programs.

Bill C-28 would also implements other investments agreed to in the health accord.

In terms of health reform transfer, first ministers identified primary health care, home care and catastrophic drug coverage as priority areas where the provinces and territories needed to accelerate and reform to help their residents. The budget responds with a five year $16 billion health reform transfer to help in these priority areas with funds to be distributed on a per capita basis over a five year period beginning on April 1, 2003.

In terms of the diagnostic and medical equipment fund, the first ministers also recognized that more needed to be done to improve access to diagnostic services. The availability of equipment is a key factor in ensuring timely access to quality health care.

Building on the $1 billion provided for medical equipment in 2000, the 2003 budget responds with an additional investment of $1.5 billion over three years. This funding will enable provinces and territories to acquire diagnostic and medical equipment and train specialized staff to operate increasingly sophisticated equipment. Again funds will be distributed on an equal per capita basis and drawn down as provinces require up to the end of 2005-06. Under the accord, governments agreed to report annually on both the health reform transfer and the medical equipment fund so that Canadians can gauge the impact of the new investment.

Another area identified as a priority concern are electronic health records, which are an essential building block for a modernized, more innovative health care system. Under the September 2000 agreement on health, the government announced $500 million to expand the use of health information and communication technologies, including the adoption of electronic health records.

Canada Health Infoway will receive an additional $600 million to accelerate the development of EHRs, common information technology standards, across the country and the further development of tele-health applications.

Without a doubt, research is a vital component of Canada's health care system. The federal government currently provides significant funding for health research through its support for students, researchers, universities, research hospitals and other institutes and also undertakes research in its own laboratories. The 2003 budget recognizes that more can be done. Two such measures are included in this bill.

The first concern is the Canadian Foundation for Innovation, the CFI, which was established to support the modernization of research infrastructure in Canadian universities and colleges, research hospitals and other non-profit research institutions across Canada. The budget allocates $500 million to the CFI to enhance its support for state of the art health research facilities. At the same time, Genome Canada will receive $75 million for applied health genomics. It is perhaps the most exciting sector of biological research in today's world and one where Canada has developed a global reputation.

In terms of other health initiatives, the budget provides significant funding to support a range of other initiatives fundamentally linked to health reform. For example, the budget provides $205 million over five years for governance and accountability initiatives, including funding for the Canadian Institute for Health Information to enable better public reporting on the health system and the health of Canadians.

Funding will also be provided to support the establishment of a new Canadian patient safety institute, as well as to improve the timeliness of Health Canada's regulatory processes with respect to human drugs, to pursue a national immunization strategy and to better assess the use of new diagnostic and treatment technologies.

Another initiative covered by this legislation involves a compassionate care benefit under the employment insurance program to help ease the economic problems facing families who must deal with grave illness. The government recognizes that income support and job protection are key for workers who take time off to care for seriously ill family members, as they often lose income and benefits due to time loss from paid employment.

As a result, starting on January 1, eligible workers will be entitled to a six week paid leave to provide care or support to a gravely ill or dying parent, spouse or child. Also, to enhance its flexibility, the benefit can be shared among eligible family members. The compassionate leave benefit underscores a fundamental social fact, that central to the life of every Canadian is the welfare of their family.

There is no more important investment that we can make than in the opportunities we create for our children. Working through the bill before us, budget 2003 strengthens our longstanding commitment to Canadian children and families in several key areas.

First, annual assistance for children and low income families is increased through the Canada child tax benefit, the CCTB, to $10 billion by 2007 with annual benefits increasing to $3,243 for the first child, $3,016 for the second child and $3,020 for each additional child.

Next, the government recognizes that caring for children with severe disabilities imposes a heavy burden on families. To that end, a new indexed $1,600 child disability benefit, effective July 2003, will provide additional assistance of up to $1,600 annually to low and modest income families with a disabled child.

A third measure provides $80 million per year to enhance tax assistance for persons with disabilities, drawing on the evaluation of existing disability tax credit and the input of a technical advisory committee.

The budget also adds to and builds on the tax measures introduced in previous budgets to provide support to persons with disabilities. More infirmed children or grandchildren will now be able to receive a tax deferred roll over of a deceased parent's or grandparent's RRSP or RRIF proceeds.

The budget expands the list of expenses eligible for the medical expense tax credit to include, for example, certain expenses for real time captioning and note taking services and voice recognition software. In addition, individuals with celiac disease who require a gluten free diet will now be able to claim the medical expense tax credit for the incremental cost of gluten free food products.

Our ability to make major long term investments in boosting the quality of Canadian life without jeopardizing our fiscal balance rests on a healthy, growing economy. However better economic performance tomorrow requires a more productive, innovative and sustainable economy today.

As we know, improved skills and learning are vital to improved productivity, competitiveness and a better life for all Canadians. Budget 2003 takes action to help give Canadians opportunities to gain new skills by committing $60 million over two years to improve the Canada student loans program to put more money in the hands of students and better enable post-secondary graduates to manage their debt. In addition, individuals who are in default of the Canada student loans or have declared bankruptcy will now have access to interest relief. As well, protected persons, including convention refugees, under the Immigration and Refugee Protection Act, will be eligible to Canada student loans.

Canada's high calibre workforce deserves the support of a competitive tax system. That is why in the 2000 budget the government launched a five year $100 billion tax reduction plan, the largest in our country's history. This plan continues to deliver growing tax relief, about $24 billion this year and $30 billion in 2004.

To help sustain our economy, the budget further improves the tax system through incentives to save and invest, to help small and medium sized enterprises and boost Canadian competitiveness.

The legislation promotes savings by Canadians by increasing registered retirement saving plans, RRSPs, and registered pension plans, RPPs, limits to $18,000 over four years and indexing these new limits.

As well, we are providing concrete assistance to our country's entrepreneurs and small businesses, a key source of economic growth and job creation in Canada.

Employment insurance contribution rates will be cut by 12¢ to $1.98 per $100 of insurable earnings for 2004. This is the tenth premium rate cut since 1994 and will give a yearly savings for workers and employers to over $9 billion. While this rate reduction will apply to everyone, it will be particularly beneficial for small businesses.

The federal small business tax rate of 12% will be extended to business income between $200,000 and $300,000 over the next four years. This will result in an annual saving of up to $9,000 for many local Canadian companies.

Another measure eliminates the $2 million limit on the amount of small business investments eligible for the capital gains rollover. This will help small firms to assess the risk capital they need to expand and grow.

The bill reduces business costs and complexity by improving the tax treatment of automobile benefits for employees and auto expenses for employers.

A competitive tax system is necessary to attract investment to Canada and to encourage entrepreneurs to create and grow their businesses and the jobs that they bring.

The government's five year tax reduction plan is putting in place a tax advantage for businesses in Canada as a basic part of the strategy to foster a strong and productive economy. With the tax cuts implemented to date, the average federal-provincial corporate tax rate in Canada is now below the average of the U.S. rate. The budget builds on that advantage over the next five years, totally eliminating the federal capital tax, which is currently levied on all corporations with more than $10 million of capital used in Canada. The first step in the phase out will be to raise the level of the capital at which a firm begins to pay tax to $50 million.

As members can see, the scope of our budget plan is dramatic, and yet I have only covered a portion of the measures in the legislation before us.

We are also taking action in such vital areas of public concern and support as climate change, the environment and agriculture. For example, Bill C-28 includes $250 million to the Sustainable Development Technology Canada Foundation for the development of climate change and clean air technology. Bill C-28 includes $50 million to the Canadian Foundation for Climate and Atmospheric Sciences to increase climate and atmospheric research activities including research related to northern Canada. The bill also includes $20 million to support venture capital investment by Farm Credit Canada in the agriculture sector.

Bill C-28 also includes additional tax measures to confirm the increase in the federal taxes on tobacco products effective June 18, 2002 as part of the government's strategy to discourage tobacco consumption. The bill removes the 4¢ per litre federal excise tax on diesel fuel from bio-diesel. It also provides authority for voluntary arrangements with interested first nations to levy a broadly based sales tax consistent with the GST on first nation lands.

The budget provides important new investments to build the society Canadians value and the economy we need. Canadians have also made it clear that these investments must be backed by enhanced accountability to Parliament and the public. Several new steps will help to make government spending more accountable and transparent.

The budget follows up the government's commitment to review the air travellers security charge to ensure revenue from the charge remains in line with the cost of the enhanced air travel security system through 2006-07. Now that the review has been completed, the government is reducing the charge to $7 from $12 each way for domestic flights. That is by more than 40%.

Accountability is also the anchor of the new health accord. The accord sets out an improved accountability framework that includes a commitment by all governments to report regularly to Canadians. This framework will give Canadians more information about how their tax dollars are used to bring about reform in the health care system.

The government is also making a number of changes to improve the accountability of foundations to Canadians and parliamentarians. Most of these changes can be made through changes to the funding arrangements with the foundations.

However the Canada Foundation for Innovation, the Canada Millennium Scholarship Foundation and the Canada Foundation for Sustainable Development Technology were established through federal statute. Under the existing legislation, unspent funds are distributed among the eligible recipients that receive grants, but the Auditor General believes these moneys should be returned to the government. There will now be provisions that the responsible minister may, at his or her discretion, recover unspent money in the event of winding up a dissolution of these three foundations and return the funds to the consolidated revenue fund.

Finally, the budget terminates the debt servicing and reduction account, the DSRA, which was established to pay interest on the public debt and ultimately reduce the debt. There is no longer any need for this account since the DSRA revenues must ultimately be disposed in the consolidated revenue fund.

Budget 2003 delivers a dramatic range of action while maintaining our commitment to prudent fiscal planning for balanced budgets. The budget takes serious steps forward in the quest to build the society that we value, the economy we need and the accountability we deserve. It is based on sound fiscal management and responsible stewardship of our resources, but is rooted in our values as we seek to give Canadians the tools they need to realize their potential. Above all, it recognizes the crucial link between social and economic policy and how an integrated approach produces policies that benefit all Canadians. The result is a better, more compassionate and competitive Canada today and an even stronger, more prosperous Canada in the years ahead. I urge all hon. members to support the legislation.

[Wayne Easter, Liberal, for the Deputy Minister and Minister of Finance]

moved that Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003, be read the second time and referred to a committee.

[John Manley, Liberal, Deputy Prime Minister and Minister of Finance]

moved for leave to introduce Bill C-28, An Act to implement certain provisions of the budget tabled in Parliament on February 18, 2003

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