Bill C-24 (Historical)

An Act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other Acts (fiscal equalization payments to the provinces and funding to the territories)

This enactment amends the Federal-Provincial Fiscal Arrangements Act to authorize the Minister of Finance to make fiscal equalization payments to the provinces for the fiscal years beginning after March 31, 2004 and to change the manner in which those payments will be calculated. It also authorizes the Minister to pay, under a new legislative regime, grants to the territories for the fiscal years between April 1, 2001 and March 31, 2005 and territorial formula financing payments for subsequent fiscal years. Finally, this enactment also makes consequential amendments to that Act and to other Acts.

Canada Elections Act

[Stephen Owen, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I am pleased to rise today on behalf of the Liberal opposition and address Bill C-54. I must say at the outset that the government House leader was not able or willing to answer my earlier question about the disclosure of the Prime Minister's leadership funders in 2002.

He did not address that topic, but I think this House needs to know that, particularly in relation to the comments that the government House leader made about the open disclosure of all loans, of all lenders and all amounts by the Liberal leadership contenders last year. Clearly they were acting beyond what the Canada Elections Act required, in good faith and with full disclosure. Everybody knows both what is going on there and the rules that apply to it.

As for the Prime Minister bringing forth this legislation, I think the government House leader suggests that he is somehow on the road to Damascus, leading this House in some epiphany in terms of loans and the way they are treated. Perhaps he was waylaid, misled or turned around and is actually on the road to perdition, because this bill of course has a perverse consequence. It is a non-accountability act. Again, it is Orwellian in many of the impacts that it will have. I will take some time to explain exactly why this will make democracy weaker in many ways in our country if it goes ahead as it is written, without amendment.

The Liberal Party is certainly very much in favour of transparency and accountability and will be looking toward a bill that properly and effectively tightens up the application and the use of loans in political financing in this country wherever it might be necessary. However, we certainly will also want to ensure that as the bill goes forward the proper amendments are made so that it does not, whether consciously or unconsciously, create a barrier to entry to the political process for those who do not have access to funds or friends who have access to funds, or to financial institutions that reflect their willingness to give loans because they realize that these people already have money, or they have people who will sign for them and back them up with money. We have to be very careful that this is not a barrier.

Let me go back to January 2004, when the former Liberal government brought in the most dramatic changes to electoral financing in this country's history with Bill C-24, and indeed perhaps the most dramatic change than had happened in any democratic jurisdiction in the world, which of course reduced the union and corporation donation limits per year to a mere $1,000. That is almost meaningless when we are talking about a nation this size. To suggest that a $1,000 donation by a corporation could buy favour across this country in an electoral process is beyond imagination. In any case, we effectively took that out and left the donations at a $5,000 level for individual members of the public, who are of course the basic building block and the basic unit of democracy. That is where it should be. That was an extremely important step. It was a dramatic step in the political history of this country.

Bill C-24 also did some other things. It introduced an aspect of proportional representation. I know that many members in the House in all parties are interested in seeing us proceed with consultations and consideration of that. However, when the private money was taken out to such a dramatic degree, Bill C-24 provided for public funding of electoral processes by providing $1.75 for every vote that any party received in the general election nationwide.

That allowed for a proportionality that corrected some of the difficulties with the first past the post process, where often the number of seats in this House achieved by parties bears very little relation to the proportion of the vote they get. As an example, the Green Party got 600,000 votes in the last election. Under that provision, it received over $1 million, which allows its members to express the views of the people who voted for them through the financing of their political activity, although not yet representation, across the country. That is a first tentative but important step. It was part of that groundbreaking electoral financing legislation.

Let me correct a perception that the government House leader gave, which was incorrect. He suggested there were no rules now covering loans and the disclosure of loans. In fact, the current statutory provisions require the disclosure of all loans. They require the disclosure of the lenders and the guarantors of those loans.

Another misconception is that there are no consequences if these loans can be written off. In fact, there are consequences. Those loans must be repaid within an 18 month period or they fall under the political contribution rules, which are very strict.

It is not a way to have money given. It is money loaned for a period during an electoral process, either a leadership process, as was involved last year with the Liberal leadership, or perhaps a nomination process where someone does not have access to party funds or riding association funds. If people were unable to take a loan, that might well be a barrier to entry into the political process for people who were not of independent means. There are consequences. Those must be converted and that is an important aspect to it.

Who owns the Prime Minister? The government House leader raised the issue of the Liberal leadership candidates and the influence of big money, but we still have not had an answer about who financed the leadership bid of the Prime Minister in 2002.

Why do we want to know that? We want to know that for the very reason the government suggests we need the bill. We already have provisions in the Canada Elections Act that cover both disclosure of loans and repayment of loans and consequence if we do not. In any event, why do we want to know? It is an immensely important question. Is it U.S. gun lobby? Is it big oil? Who made those contributions to the Prime Minister's leadership race in 2002? We will come back to that until we get a proper answer, until the Canadian people get a proper answer. These are important issues.

Let me talk about the name of the act, the accountability with respect to loans act. It could be called the new Conservative bank of Canada act. It is big money that would get more influence because of the way the act is written currently. We will seek amendments to ensure it does not simply limit the influence that can be exerted to those with money or have access to big money. Let me tell members why.

Financial institutions are the only ones that can make big loans to individuals. If people are maybe from a disadvantaged group or an under-represented group who have not been in politics before, who seek a nomination in a riding, those people do not have independent wealth, they do not have a riding association yet to loan them funds, as is allowable under this bill, and they do not have, perhaps, credit worthiness to go to a bank. What does that person do? The individual is left out. They simply cannot, effectively. With the limits under this, there is a barrier to entry into the nomination process.

If we look at the Liberal leadership process that went for nine months of fulsome discussion and debate across the country, presenting 11 candidates for scrutiny by the public in a highly open and democratic process, those were expensive. We cannot do that in a country the size of Canada without having some funds to expend for it.

Those should be under rules, and there are rules. There may be some tightening up that the bill can do, and that is fine. However, to say that people taking out loans so they can exercise their right to take part in the democratic electoral process for leadership, for nomination, is going down the wrong road.

In fact, the bill, as written, does not, as Bill C-24 previously did, take out corporate money and put in public money that was properly and evenly distributed according to the proportion of the vote achieved by each party that ran candidates. This cuts out the public and brings in the big money.

Who can get a loan from a bank, from a financial institution? It is someone with a lot of money or property to put up as collateral, or someone to co-sign or support the loan. Those are people of influence and money. This is letting the money in. It is not keeping the money out. That is what we will have to see. I look forward to working with members of the Bloc, the NDP and the government to see if we can get some amendments so we do not create a barrier to entry for people who have no means and are not yet part of the political process. That transparency is immensely important.

We have an organization called Equal Voice. All members of the House will be well aware of and knowledgeable about it. The organization seeks to encourage women to enter the political process so we can rise above the deplorable disproportion of men to women in the House of Commons, with 20% representation by women.

The leader of the official opposition, the leader of the Liberal Party, has pledged that in the next election one-third of the Liberal candidates will be women. We are well on the way in the nomination process to achieving that. This is a demonstrative move to try to get a proper proportion of gender equity into the House.

If this goes to committee, I am sure Equal Voice, representing all parties and all people across the political spectrum, will be very interested to come to talk the committee and to give evidence, as will many other groups who represent disadvantaged or under-represented sectors of this society. They will want to come and give their evidence on it. I hope we will take instruction from them as to how, perhaps unintentionally, the unavoidable consequence of this will be, to exert more power, not less, in those who have access to large amounts of funds.

This new Conservative bank of Canada act is interesting. It may tighten up the rules a little. It is not so that the Canada Elections Act now does not require loans to be repaid or be converted into contributions under the very restrictive rules. It is not so that contributors, lenders or co-signers do not have to be disclosed for political loans. They do have to be.

I am as anxious as anyone else in the House to see that this process is not abused, and if we can tighten it up, all the better. However, we have to ensure there are no unintended consequences of creating barriers to disadvantaged and under-represented groups.

The government House leader took some time to describe a number of what were called democratic reform bills, or statutes, in the House as brought forward by the Conservative government, and it is worth talking about a few of those.

One is Bill C-2, the Federal Accountability Act. Members of the House and the committee of the House spent a great deal of time on this as did members of the Senate. In fact, unencumbered by a set deadline that was forced on the House committee in the House, the Senate put forward dozens of amendments through its careful review of that act, even under the constant shrill criticism of the government that it was slowing things down.

Regarding slowing things down, royal assent was given to the Federal Accountability Act on December 15, 2006. Here we are, almost five months later, and one of the central parts of that act was the appointments commission. Amendments by the NDP sharpened that up. We had two choices. The Liberal opposition put forward amendments. The NDP put forward amendments. All of them would have been effective, and will be effective, as it was finally passed, but all these months later, all of these appointments later, dozens of them, and we still do not have the appointments commission. This was one of the key things that was said by the government to be so important about the Federal Accountability Act. We do not even have a commission.

We continue without the proper controls. We had suggested that the Public Service Commission take over this role, that there be amendments to its mandate to apply the same rules, competitive process and objective criteria used in the public service for any order in council appointments, but we still do not have that.

I would be very interested to hear from the government when it is going to proceed with that important part of Bill C-2. There were so many complaints about it being delayed when in fact there were a very large number of responsible, thoughtful and careful amendments suggested by the Senate, and actually passed into law.

Bill C-16 deals with fixed dates. We supported that on this side of the House. There was no delay. There was careful consideration in the Senate. There was a thoughtful amendment put forward. It was brought back to the House with that amendment. We on this side offered the government, before the Easter recess, to pass the bill through all processes in the House, back to the Senate, hopefully, for royal assent in the day before we broke. That was rejected. We would have needed unanimous consent, but we did not get it from the government.

Bill C-43 was mentioned by the government House leader. It is not a Senate elections act; it is a consultation act, with provincial elections. It is being put forward as a great democratic reform. I think all members of the House believe, as do probably all members of the other place, that the Senate needs reform in becoming a fully democratic legislative chamber, and we should all work toward that. This is going at it piecemeal. We get criticisms of trying to block the incremental reform of the Senate, but the fact is it all fits together and it must be dealt with at once.

There are three critical aspects of the Senate that have to be considered together.

One aspect is the selection process, which could include elections or involve terms. The term limit is suggested in Bill S-4.

Another aspect is the mandate. In the future how does the mandate relate to the mandate of the House of Commons? Will it be a mirror legislative body with the same electoral validity that will then lead to gridlock. We have to do to deal with that area of comprehensive reform is to have some kind of dispute resolution mechanism whenever the legislative powers mirror each other in the House and the other place.

Then we have the distribution. We cannot do anything else with the Senate until we work out the distribution. It is amazing that the Prime Minister, and all members of the government, would consider doing something to give a greater validity, greater power to the Senate without fixing the very unfair, inequitable distribution of seats to western Canada, particularly to British Columbia and Alberta.

For all of us from British Columbia and Alberta, it is extraordinary that we might think of increasing the power of that body without fixing the horrible lack of fair distribution to western Canada.

Bert Brown has been mentioned in the House by the Prime Minister as being the senator in waiting, to be appointed sometime this summer. He has played a very important role in the political life of Canada. He did not play that role by plowing one E into his barley field or a wheat field. He plowed three E's into it. To try to deal with just one E at once in a piecemeal incremental way, as the Prime Minister says, is not in the favour of Alberta, from where that fine gentleman comes. Nor is it responsible reform in the comprehensive way to properly bring the Senate into the modern age of a democratic legislative chamber. We have to work together to do that.

We often hear about the ghosts of Meech Lake and the ghosts of Charlottetown. We also hear that we cannot go near the Constitution because, my goodness, we might all get distracted and not be able to do anything else in this country and we will never get anywhere. Thank goodness the Fathers of Confederation were not so shy about dealing with the Constitution. We should take on that responsibility ourselves.

[Raymond Simard, Liberal, Saint Boniface, MB]

Madam Speaker, my hon. colleague makes a very good point. Most of the discussion this afternoon and morning did not focus on the bill at hand. What the minister indicated earlier on today was the importance of us following through on a commitment and not allowing the period to elapse, ending up with a very untenable situation. I believe everybody here is very much on board in terms of whether we should discuss Bill C-3 and Bill C-24. We should review them at the same time. I think everybody agrees with that. I do not think there is a dispute there at all. It only makes a lot of sense.

My feeling is that if we had kept to the discussion at hand, we would be talking about a government that is prudent, that ensures that we do the right thing in a minority situation.

When it comes to electoral reform or democratic reform, my colleague makes a very good point. One thing I would like to talk about, which I have not heard here, is free votes in the House of Commons. On this side of the House, we have had the most free votes in a long period of time. I am very proud to talk positively about that. I am not sure I can say the same thing about the other side of the House, but my colleagues will confirm that.

Again, with respect to private members' business, we have been very aggressive in ensuring that private members get their say and get to discuss their bills in the House.

In terms of democratic reform, we have absolutely nothing of which to be ashamed.

[Raymond Simard, Liberal, Parliamentary Secretary to the Minister of Internal Trade]

Madam Speaker, it is important for us to get back to the bill at hand which is Bill C-63. The minister spoke earlier about the fact that it was very important to link Bill C-3 and Bill C-24. Would my hon. colleague agree with that? It seems to me that it would be reasonable for the process to be done at the same time. When we are talking about the government not allowing the review to take place, the opposition has a majority on the committee and in fact control the outcome of the review. Maybe the member could respond to that.

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Madam Speaker, the minister earlier was constructing a narrative about why he had to put forward legislation that would remove the sunset clause in Bill C-3 rather than engaging in a review of Bill C-3, the legislation that deals with smaller parties and the potential for money to be given to organizations that masquerade as parties. That is the purpose of the bill.

Now his narrative goes like this. I use the word “narrative” because it has only a marginal connection to the truth. It is not a lie; it only has a marginal connection to the truth.

First, he said that the bill was passed days prior to the election of 2004 so there was no time for any review at that time.

Second, he said that the bill must be reviewed in connection with Bill C-24, the electoral finance law, which deals with among other things restriction of individual donations. He asked the committee in a letter he sent out in November 2004 for this to take place, and nobody objected. He got no response to the letter.

I have my researcher trying to find the letter, the existence of which I have to admit was a mystery to me. Perhaps I did not see that correspondence. The parliamentary secretary sits on the committee. One might have thought that at some point he would have said a response was needed to the letter. The minister could have done it. The minister crosses the floor to chat with me all the time. This was almost a year ago and I do not recall this. Anyway, nobody objected and therefore it must be done in conjunction with Bill C-24.

Finally, he said that the Chief Electoral Officer's report on Bill C-24 was delayed and it would not happen until later. Therefore, we could not review Bill C-24 so we could not review Bill C-3 either. This meant we would miss the legislative deadline, which meant it would be irresponsible to go ahead and not pass a law getting rid of the sunset clause, ensuring we could deal with Bill C-3 and its subject matter off at some distant time. I want to emphasize that this is nonsense, and I will ask my hon. colleague a question that relates to this.

However, first, with respect to the logical link to Bill C-24, one would expect to see this in the original letter that was sent to the procedure and House affairs committee. A letter was sent by the prior minister for the portfolio dated February 10, 2004. Members will note that this was not right before the election. It was long before an election. In it, he asks the committee to take a look at this. He makes no reference to any connection with Bill C-24. In the letter to the committee he says:

Let me be clear that I am not suggesting that the Bill is necessarily a permanent solution. The Supreme Court's ruling in Figueroa is complex and may well have broader implications, which the Committee should have a full opportunity to assess.

For this reason, I would invite the Committee, following its consideration and reporting of the Bill, [Bill C-3], to begin a more extensive study of the wider implications of the Figueroa ruling on the Canada Elections Act. I also welcome the Committee's views on other aspects of the electoral process that it believes warrant attention.

There is no necessary connection to Bill C-24.

The review could not begin until right before an election. However, the letter was sent out. That minister then became minister in June and proceeded never to bother following up. Where does the fault lie? Is it with all those incompetent members of the committee who just could not get around to it or is it with one minister who just could not remember to take care of his own portfolio until a year had gone by?

[Jay Hill, Conservative, Prince George—Peace River, BC]

Madam Speaker, I appreciate the member's comment and the respect he showed me by not rising on a point of order. Of course, what I was doing was citing many examples of why the opposition distrusts the government when it comes to a bill like this that is going to commit the House to a review to take place in two years.

As I pointed out through all my examples, when it comes to parliamentary and electoral reform the government has come up short time and time again. This is just the latest example. I am sure when my colleague speaks to the bill he will as well cite some examples of how the government consistently comes up short.

The issue at hand is the government's suggestion, followed by some suggestion from the committee, that somehow we should link the review of Bill C-3 with Bill C-24. As my colleague from Lanark—Carleton addressed during questions and comments to the minister, once the government knew it had the responsibility to conduct this review in a timely manner and understood that it would be unnecessarily delayed by linking it to Bill C-24, it certainly had the wherewithal, as I indicated, to come before the procedure and House affairs committee, on which it had members, and suggest, in the strongest possible terms, that if the House must adhere to the law then the committee should undertake the study right away.

As my colleague said, there is no reason that the committee could not be seized with this and do it between now and the deadline of May 16. We do not need this legislation to remove the deadline and establish instead this potential two year time period, which once again could be ignored. In fact, if Bill C-63 were to pass, it would not surprise me at all that in two years from now, if I am lucky enough to be re-elected by my constituents, I might still be standing here and the government will be bringing forward a new Bill C-63 to once again extend the deadline.

[Raymond Simard, Liberal, Parliamentary Secretary to the Minister of Internal Trade]

Madam Speaker, I would like to indicate to the hon. member that I was going to rise on a point of order to bring him back to the topic at hand. However, as I know he is the opposition House leader and should know better, out of respect for him I did not do that.

However we should come back to the bill at hand. It is very important that we focus on Bill C-63. I did not hear my colleague disagree with the minister in terms of the importance of interlinking, for instance, Bill C-3 and Bill C-24. We feel they are very closely related. I learned, however, that my hon. colleague watches too much TV and too many Monty Python movies.

The mandatory review would be done by the procedure and House affairs committee. In fact, the opposition has a majority on that committee. It seems to me that we should be sending this mandatory review to committee and allow it to do its work. Maybe he could comment on that, please.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, if Parliament is sitting next May and this has not been addressed, then there will be a vacuum. That is a situation which should not be left to happen. Therefore, we are proposing an amendment to the Canada Elections Act which would give two years and oblige a committee to do the review that has not now been done, for the reasons I have explained.

There is absolutely nothing nefarious here. Everybody agrees that Bill C-24, political financing, and Bill C-3, political registration, are intimately linked and that the revision of both perhaps should be done at the same time. No one on the committee has disagreed with that and this is why we are now in this situation. There is absolutely nothing nefarious about keeping a window open for two years in order for a committee of Parliament and Parliament to reconsider the rules concerning registration of political parties.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, as my colleague opposite said, I wrote to the committee in November 2004 suggesting that it made sense to deal with the review of Bill C-3 at the same time that we were dealing with Bill C-24. None of the members of the committee, government members or opposition members, disagreed with that.

Only in August of this year did we find out that the Chief Electoral Officer's report vis-à-vis Bill C-24 would be tabled in the House later on, perhaps in December. Given that, we did the responsible thing and we suggested a course of action. If the committee wishes to act otherwise, it has the entire discretion to do so.

This course of action now is taking us into a situation whereby we could end up in May of next year with a vacuum in terms of rules for registration of political parties, which is an untenable situation, so the government is acting responsibly by presenting Bill C-63, which would add two years and oblige the committee to do a review of Bill C-3.

No one on the committee, government members or opposition members, disagreed with the notion that Bill C-3 and Bill C-24 are tied and interrelated and that the revision of both together would be a good thing to do.

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Mr. Speaker, the minister said he wanted to engage in a review of Bill C-3 and Bill C-24 together. That is peachy. However, the fact is that there is no legislative requirement. Bill C-24 is not about to expire. Bill C-3 will expire May 16, 2006.

There was over a year during which, with this minister as the minister for this portfolio, a review could have taken place. In fact, virtually that entire time, with the exception of the first month of that two year period, he was the minister. During all this time, this review could have taken place. There is almost exactly an additional seven months before May 16, 2006 when this bill will expire.

The question I am working up to is twofold. First, why did he wait an entire year, as minister, indeed why did he wait an entire 16 months now before bringing this matter before the committee or before the House, when he had this large amount of time set aside to deal with the bill?

Second, we still have seven months before the expiration of Bill C-3 and the provisions it contains. That is plenty of time to bring witnesses before the committee and to hear from witnesses who could be chief electoral officers, for example, of other jurisdictions or other provinces to take a look at what they do.

Why the rush to simply replace the sunset clause, which forces his government to deal with this, with something that means that a review is not necessary when his record clearly indicates that the government is not going to respect the kinds of reviews that are put into legislation, that it is not going to follow through? Why would we want to replace a mandatory review which now forces the government to take action with a non-mandatory review which means it can dither around for another year or never get around to dealing with the bill?

[Mauril Bélanger, Liberal, Minister for Internal Trade]

moved that BillC-63, An Act to amend An Act to amend the Canada Elections Act and the Income Tax Act, be read the second time and referred to a committee.

Mr. Speaker, it is a pleasure for me to begin the debate at second reading of Bill C-63, which is entitled an act to amend An Act to amend the Canada Elections Act and the Income Tax Act.

We are referring here to a change to the act providing new rules for the registration of political parties, passed by this House in 2004 under the name Bill C-3. I will provide an overview today of the context in which the new rules were adopted in 2004 and will speak to the need to act quickly in order to preserve the system for registering political parties.

Bill C-63 proposes to do this by abrogating the sunset clause included in Bill C-3. It would be replaced by a provision requiring mandatory review of the new registration rules by a committee of this House.

The party registration rules adopted in 1970 required a party to endorse 50 candidates at a general election. It was believed that this would ensure that opportunistic groups masquerading as political parties did not gain access to the public funding that flowed from being a registered party.

The adoption of new rules was made necessary after the Supreme Court of Canada struck down the 50 candidate threshold in the Figueroa decision. The threshold was found to be contrary to the right to vote and to be a candidate as guaranteed by section 3 of the charter. The Supreme Court suspended its decision for one year to provide an opportunity for Parliament to amend the Canada Elections Act and it was in this context that Parliament considered Bill C-3.

Bill C-3 was introduced on February 10, 2004 to lower the threshold to just one candidate and make other changes to prevent abuse of the public funding of political parties.

In particular, there is a new definition of “political party”. It states that one of the fundamental purposes of a party must be to participate in public affairs by endorsing one or more candidates in an election. To determine the eligibility of a party that applies, the Chief Electoral Officer will require a valid declaration from the party leader that his or her party meets this definition and he or she must be satisfied that it does.

During the various steps in the study of this bill, many people raised concerns about the new rules under consideration. Some wondered whether setting the threshold at a single candidate would not allow opportunistic groups to get public funding. Others were concerned that as a result of the one-year suspension of the Supreme Court decision, no complete examination had been made of the Canada Elections Act to identify other provisions that might be challenged like Figueroa. Finally, the Chief Electoral Officer was opposed to this new job of evaluating whether applicants meet the definition of a political party.

In view of all these concerns, all parties agreed to add a two-year sunset provision to Bill C-3.

Since the former Bill C-3 came into force on May 15, 2004, the two year sunset will operate on May 15 of next year, if it is not repealed beforehand. The sunset of the former Bill C-3 would mean that there would no longer be rules for the registration and deregistration of federal political parties. Such a closed system would be contrary to the charter and would be contrary to the democratic standards of Canada.

Some may question why a review of the new rules was not carried out previously within the period of time of two years provided in the sunset clause.

In response, it is important to remember that the adoption of Bill C-3 was closely followed by the dissolution of Parliament nine days later. The minority Parliament that resulted from this election was opened on October 5, 2004.

Soon after, and at the request of the chair of the Standing Committee on Procedure and House Affairs, I wrote to the committee to suggest that the government's preference would be to review the new registration rules at the same time as the statutorily mandated review of the political financing regime adopted in 2003 with Bill C-24. Indeed, since these issues are intricately linked, such a joint process still makes sense.

The review of the new political financing rules will be carried out by the Standing Committee on Procedure and House Affairs once the Chief Electoral Officer issues his recommendations on political financing.

When I wrote to the chair of the standing committee in November 2004, the Chief Electoral Officer's report was expected in the spring of 2005. However, due to the need for his office to focus resources on election preparedness, because of the minority Parliament, the Chief Electoral Officer has since indicated that his report would only be submitted this fall, in two volumes.

In the first volume submitted in September, a few days after the opening of this session of Parliament, dealing with non-financial matters, the Chief Electoral Officer recommended that the sunset clause in Bill C-3 be removed. His second volume of recommendations, dealing with political financing, will be submitted later this session and a joint review of Bill C-3 and Bill C-24 would then be possible.

Given the need for a comprehensive review, and the government's commitment to hold an election 30 days after the issue of the final Gomery report, the government's proposal in the bill is prudent and responsible. Bill C-63 would provide a two year period during which this review is to take place to account for all contingencies, including election scenarios.

I want to close by saying that the registration and financing rules for political parties are closely linked. Registration gives parties access to public funds, which allows them to take part in the elections and maintain their registration. Bill C-63 will lead to a full examination of these fundamental aspects of the Canada Elections Act.

For all these reasons, I am calling on the hon. members to support Bill C-63 and to refer it to a committee for consideration so that we can pass it as quickly as possible.

Thank you.

Criminal Code

[Vic Toews, Conservative, Provencher, MB]

Madam Speaker, it is my honour to rise today in the House to address Bill C-53 as the justice critic for the Conservative Party, the official opposition.

The key purpose of the bill is to provide a reverse onus of proof in proceeds of crime related to organized criminal activity. The provisions in the bill have long been a part of the Conservative Party platform and I hope to see the legislation passed as quickly as possible. Indeed, it is noteworthy that the bill generally speaking enjoys all-party support, something that is all too rare in the House of Commons.

I hope that some of the explanation that the parliamentary secretary gave just a moment ago in the House will assure some members of the New Democratic Party that the interest of innocent third parties are preserved. The bill does not need too much retinkering or amendments. I am concerned that the bill, which appears to be on the face of it a relatively good bill, not be held up any further.

The reverse onus provision for proceeds of crime was recommended by the subcommittee on organized crime but was not included in the government's last bill addressing organized crime, Bill C-24, which was tabled and passed in 2001.

I want to note that there are serious shortcomings in our organized crime legislation. This is an important step to address some of those shortcomings, but there are many other issues that need to be addressed.

I know that it is quite onerous now when we are prosecuting organized criminal organizations that in each specific case there has to be a reproving of the fact that the organization is a criminal organization. Quite frankly we should adopt some of the legislation from other jurisdictions and I specifically refer to the RICO laws in the United States that have been very effective in attacking organized crime. We could learn a lot from that legislation. It respects I believe due process. It respects the constitutional safeguards not only in the American constitution but in the Canadian constitution as well. We should not hesitate to adopt similar procedures where it is in the best interest of Canadian public security.

I make the comment that we do not consider this the fight against organized crime to be at an end simply because we are agreeing to what is an important amendment because in the overall picture it is still a relatively small step.

I feel compelled to point out that the Liberals did not act on the reverse onus measure until they faced significant provincial pressure from the provincial ministers of justice as well as the opposition justice critic since the beginning of this minority Parliament.

I know that certain provinces, including my home province of Manitoba, have passed similar legislation. I do not think we should hesitate in moving forward with federal legislation. The provinces did so out of desperation. They were not receiving any help from the federal government and quite frankly had to move ahead. I support what the provinces generally speaking have been doing. However, it is a much more cumbersome process that the provinces had to adopt.

I strongly believe that the level of government that is primarily responsible for the enforcement of the criminal law should also be responsible for passing appropriate legislation dealing with the proceeds of crime. We should not leave it to the provincial governments to do it under their constitutional jurisdiction under property and civil rights. It is cumbersome and not as effective. This is the right approach and we should not hesitate. I do not think there would be any province standing in the way of Parliament in terms of taking those steps.

Organized crime is a problem that reaches across nations, oceans and boundaries affecting communities everywhere. The violence, the welfare and the financial implications of organized crime are far reaching. Globalization and technological revolution has made it possible for organizations to exert enormous influence on an international scale.

Generally speaking, we are asking our police forces to face a 21st century problem with all of the technological advantages that organized crime has with essentially 19th century tools. Many of our evidentiary laws are old laws.

They are simply not updated often enough in order to keep abreast of the changes in technology, so we need to, on an ongoing basis, ensure that our police forces have not only the appropriate frontline police resources but indeed the legal resources in the form of effective laws. This is one such step in bringing our criminal law essentially out of the 19th century and into the 21st century. In that sense it is a quantum leap for Canada. Unfortunately, we have not learned from the examples which other countries have gained and therefore we are still far behind other countries in terms of addressing issues of organized crime.

The extent of collaboration within and among criminal groups has broadened greatly. The available technology has improved their ability to conduct organized crime by leaps and bounds, and therefore Canada has become a very attractive place for these types of criminals. According to Criminal Intelligence Service Canada, virtually every major criminal group in the world is active in Canada.

In 1998 the Department of the Solicitor General of Canada, now the public safety department, commissioned an independent study to assess the cost of certain activities related to organized crime. It was found that the economic costs of organized crime, I am not talking about the economic profits to organized crime, but the costs, amount to at least $5 billion a year. Frontline police officers who are struggling to maintain their fight on existing technology simply do not have the resources to compete with the new and emerging technologies to which these criminal organizations have access.

The reverse onus provision for proceeds of crime is vital for an effective war on organized criminal activity. At present, in order to obtain an order of forfeiture, the Crown must prove on a balance of probabilities that property is the proceeds of crime and that the property is connected to the crime for which the person was convicted. The Crown must prove that the accused or convicted person owns the property and that the property is the proceeds of crime.

Again, given the resources available to many criminal organizations, accountants, lawyers and the like, they have learned to distance themselves from their assets. Often criminal organizations do not use the regular types of security that other businessmen would have to use. They enforce their security in ways that legitimate business people do not and should not.

If there is no connection between the offence and the property established, the court nevertheless may order forfeiture of the property if it is satisfied beyond a reasonable doubt that the property is the proceeds of crime. That is the existing law now.

The amendments introduced in Bill C-53 provide that once an offender has been convicted of the appropriate crime, that is a criminal organization offence or certain offences under the Controlled Drug and Substances Act, the court shall order the forfeiture of property of the offender identified by the Crown unless the offender proves on a balance of probabilities that the property is not the proceeds of the crime. Once the conviction is made now, any property belonging to the accused is forfeited unless the accused establishes that the property is not the proceeds of the crime.

There have been some concerns about the constitutionality of the legislation. I think, however, it is very clear that there are no constitutional problems. The reverse onus provision does not impinge on individual liberty rights secured by the Constitution, but rather relate to property rights once he or she has already been convicted of a criminal offence.

We are not talking about double jeopardy. We are not talking about reverse onus in the establishment of an essential element to a criminal offence. This is an appropriate constitutional response of the federal government under its criminal law powers or a provincial government under its rights to regulate property and civil rights.

I am quite pleased to support the bill. I would urge my colleagues, not only here in the House but in committee, to move this bill through as quickly as possible.

An Act to Authorize the Minister of Finance to Make Certain Payments

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I want to correct a couple of things from the hon. member's speech.

First of all, with respect to enabling legislation, he gave a commentary on the issue that the legislation enables the finance minister to spend in these particular areas. I am sure that if the member reviews the language in Bill C-48, he will find parallel language in Bill C-43. He will find parallel language in Bill C-33. He will find parallel language in Bill C-24. All finance bills are phrased such that the minister “may” spend in these particular areas. I just wanted to correct this impression that he may have inadvertently left for people who are still listening, although I cannot imagine why, at 11:30 at night, people are still listening to this debate.

The other thing that troubled me about the hon. member's speech had to do with the other areas which the bill did not deal with. It is true that the bill deals with only four areas. That therefore means there are a whole bunch of other areas that it does not deal with, but that seems to me like complaining to Moses himself. The 10 commandments are only the 10 commandments; they are not the 20 commandments or 30 commandments or 40 commandments. There are only the 10 commandments.

I do not understand why the hon. member is complaining about Bill C-48 covering only four areas of anticipated spending as opposed to 40 areas of anticipated spending, let us say.

Main Estimates, 2005-06

[Mauril Bélanger, Liberal, for the President of the Treasury Board]

moved:

Motion No. 1

That Vote 1, in the amount of $125,413,000, under PRIVY COUNCIL — Department — Program expenditures, in the Main Estimates for the fiscal year ending March 31, 2006, be concurred in.

Madam Speaker, I am pleased to take part in this debate in favour of the motion to approve the budget of the Privy Council Office for 2005-06.

I find it unimaginable that anyone could be against passing the Privy Council Office budget and that some hon. members in the opposition intend to obstruct it. This shows a lack of understanding of how the Government of Canada works. Those who oppose passing this budget should take the time to learn more about the basic principles of public administration and government.

The Privy Council Office plays a central, not to say crucial, role in the planning and implementation of major government policies. As a central agency, the Privy Council Office conducts strategic analyses of complex issues and does a thorough review of proposals and government orders as they are presented.

That is what allows the Privy Council Office to advise the government on developing and implementing its policies. It is the central agency par excellence and ensures that the general policy objectives, as set by the government and by Parliament, are met.

One of the most important documents setting out the objectives of the government's policies and its plan of action for achieving them is the throne speech. It is not surprising, therefore, that the Privy Council Office and particularly the Clerk of the Privy Council are closely involved in preparing the throne speech as advisors to the government on the aims of its policies and its plan for implementing them, in close cooperation with the PMO.

It may rightly be said that the throne speech is the equivalent of a bible for the PCO, as for the whole of the government apparatus. It reflects the government's vision of the type of Canada it hopes to build through the policies and programs contained therein.

There is another analogy, which perhaps better explains the link between the PCO and the throne speech. The throne speech becomes a sort of routing slip. It defines the government's legislative program and the commitments to be met. It is in this statement that the PCO and the rest of the government machine find their routing slip. The PCO ensures the work is carried out.

It will be remembered that the October 2004 throne speech dealt with a number of broad themes, namely a vigorous economy; the health of Canadians; children, caregivers and seniors; native Canadians; cities and communities; our environment; an influential role of pride in the world and governing with a common goal.

With your permission, I will describe some and, if time permits, each of them, bearing in mind that I do not have time here to mention all the objectives the government presented in each case. We have either accomplished or are on the way to accomplishing many more than what can be mentioned in a single speech.

What I want to get across to my colleagues opposite—in case some have not yet grasped it—is that the PCO was closely involved in defining each of these strategic objectives. It would be unrealistic to think that a government can successfully manage such a large range of problems without drawing on the PCO's functions of analysis, coordination and critical examination.

So I will start with a vigorous economy.

The current government is working to lower the debt-to-GDP ratio to 25% within 10 years, a goal it reiterated in the 2005 budget along with its ability to reach that goal.

We said that we would review the expenditures and reallocate the resources as needed. The 2005 budget confirmed that the expenditure review committee has identified nearly $11 billion in cumulative savings over the next five years, which will be reinvested in core federal areas of responsibility.

The first part of our five-point economic strategy—building a highly skilled workforce, promoting learning in the workplace and updating labour market agreements—is on track, as the 2005 budgetary statement confirmed.

We announced the implementation of an action plan on labour market integration of immigrants trained abroad. This plan allocates financial support to facilitate the foreign credential recognition process, provide immigrants with better language training and develop a portal so future immigrants can better prepare for their integration into Canada.

There is also the learning bond program—an innovative incentive to encourage low-income families to save for their children's education—funded with money set aside in the 2004 budget and which is supposed to begin on July 1. We also improved the program so as to introduce more people to the registered education saving plan and encourage low-income families to take advantage of it.

The second part of our five-point economic strategy is also progressing rapidly. The National Science Advisor was appointed to help universities, colleges and businesses renew their commitment to establishing a real national science program.

The third element of our five-point economic strategy, which deals with a smart regulatory system, was proposed by the External Advisory Committee on Smart Regulation; it provides for a transparent and predictable regulatory system. Work in this area is being pursued at the cabinet committee responsible for domestic affairs. Bill C-19, to amend the Competition Act, has already been introduced in the House.

The fourth element, which is the reform of the equalization program, has led to the adoption of a new framework for equalization and territorial formula financing. Under that new framework, federal support will be increased by $33 billion over the next 10 years. Legislation on the reform of the equalization program is currently before the House in the form of Bill C-24.

We promised a strategy for the north, a first in Canadian history, and we have started work on developing that strategy.

The fifth element includes the promotion of investment through the adoption of a sound monetary and fiscal policy and a competitive tax system.

The implementation of this sound monetary and fiscal policy has already been completed. The 2005 budgetary statement provides for balanced budgets through 2009-10. The 2004-05 fiscal year marked the completion of the five-year tax reduction plan totalling $100 billion, which was announced in 2000. The 2005 budget contains measures to reduce the general corporate tax rate to 19% and to eliminate the corporate surtax.

Another aspect of the fifth element of our five-point economic strategy consists in building on the Smart Borders initiative to strengthen security in North America while facilitating the flow of goods and people across the border.

Let me turn now to the health of Canadians. Long before last week's Supreme Court decision, this government set out an ambitious, yet absolutely crucial, set of policy deliverables to ensure that Canadians would have the timely and quality health care they deserve.

This complex set of policy goals includes: reduction in wait times; establishing a requirement for evidence based benchmarks; comparable indicators; clear targets; and transparent reporting. It also includes an increase in the number of doctors, nurses and other health professionals; improved access to home and community care services; improved access to safe and affordable drugs; setting goals and targets for improving the health status of Canadians; an annual report on the health status and health outcomes; the promotion of healthy living; enhancement of sports activities at both the community and competitive levels; and health protection. It also includes working with provincial and territorial partners on reforms and long term sustainability of the health system and on health promotion.

The cornerstone of our health care agenda is the government's commitment at last September's first ministers meeting of $41.285 billion over 10 years. Budget 2005 will implement the first year of the funding commitments related to the 10 year plan to strengthen health care.

As regards reductions in wait times, budget 2005 provides $15 million over four years for wait times initiatives. The provinces and territories are engaged with the federal government on developing a process for wait time reductions.

Budget 2005 also provides $110 million over five years to improve the data collection and reporting of health performance information; $75 million over five years to integrate internationally educated health care professionals; $170 million over five years to help ensure the safety and effectiveness of drugs and other therapeutic products; $300 million over five years to encourage healthy living, and prevent and control chronic disease; and finally, increased funding for Sports Canada to $140 million annually.

This funding builds on the additional $2 billion health care transfer to the provinces provided for in budget 2004 through Bill C-18.

The next theme in the government's agenda that I would like to address concerns children, caregivers and seniors. As members know, this government has placed very strong emphasis on children and the need for a national system of early learning and child care. We spent the day debating that.

Budget 2005 provides $5 billion over five years to help build the foundations of such a national system. To date, we have signed bilateral accords to support the development of early learning and child care with Manitoba, Saskatchewan, Ontario, Newfoundland and Labrador, and Nova Scotia.

We have concluded an agreement with the government of Quebec to enable that province to establish its own parental benefits plan, with the federal government providing a one time start-up fund of $200 million and an annual premium reduction of approximately $750 million for the government of Quebec to use toward its plan.

Let me turn to our commitment to improve tax based support for Canadians who care for aged or infirm relatives or those with severe disabilities. The overall commitment of the federal government is $1 billion over five years. Budget 2005 is the first step toward a more comprehensive strategy to support unpaid caregiving.

Acting on the recommendations of the technical advisory committee on tax measures for persons with disabilities, budget 2005 proposes to increase tax relief for persons with disabilities by $105 million in 2005-06, growing to $120 million by 2009-10. In fact, with budget 2005 the government is acting on virtually all of the committee's recommendations.

It is important to note the impact of the reduced tax burden on low and modest income families which budget 2005 announced. By 2009 the amount that an individual can earn tax free will increase to at least $10,000 and most of the benefit will go to those with low and modest incomes.

The Speech from the Throne committed the government to do more for Canada's seniors. Specifically, it committed the government to continue the new horizons program and explore other means of ensuring that we do not lose the talents and contributions that seniors make to our society.

In the February 2004 Speech from the Throne, the government announced a new deal for Canada's cities and communities. The government also established a new secretariat for cities and a new federal department of infrastructure and communities. We said we would make available a portion of the federal gas tax to municipalities to enable the containment of urban sprawl and to invest in new sustainable infrastructure projects in areas such as transit, roads, clean water and sewers.

Budget 2005 has $5 billion over the next five years in gas tax revenue to be given to the cities and communities. It also adds new funding of $300 million to green municipal funds. This builds on budget 2004 in which the goods and services taxes paid by municipalities were rebated entirely by the federal government

The Government of Canada has now signed gas tax revenue sharing agreements with three governments: British Columbia, Alberta and Yukon. Two more are anticipated before the end of this month. They are with the governments of Ontario and Quebec.

In addition, the government committed to move quickly to flow funds within existing infrastructure programs. Significant infrastructure investments have been announced. There is the $1 billion funding package for the Toronto Transit Commission; $500 million for the expansion of the Vancouver Convention Centre; and significant projects undertaken at major Canada-U.S. border crossings such as Windsor-Detroit.

We have reached agreements with Quebec on financially supporting Quebec municipalities with the challenges of renewing their infrastructure; with Ontario in support of improvements to Ottawa's public transit system, and of course with the expansion of the Congress Centre also in Ottawa; and with Prince Edward Island on infrastructure funds for P.E.I. communities.

Other policy deliverables by the government to support and improve the quality of life in our cities and communities include the affordable housing initiative, the supporting communities partnership initiative for the homeless and the residential rehabilitation assistance program.

I may not have time to deal with the initiatives that we have taken on the environment and the numerous initiatives we have taken on Canada in the world.

I would like to provide an overview of the government's agenda as it relates to a role of pride and influence for Canada in the world. The government promised and released a comprehensive international policy statement which provided an updated and integrated approach to Canada's foreign policy objectives: trade and investment needs, defence requirements and the development assistance program.

One of the first actions of the government after the February 2004 Speech from the Throne was to develop and approve Canada's first ever national security policy. Considerable work has been undertaken since then in implementing the new security policy and a progress report on implementation to date will soon be released.

The government established a cabinet committee on security, public health and emergencies and has appointed a national security adviser to the Prime Minister. Separate legislation to create the Department of Public Safety and Emergency Preparedness has been passed and the new Canada Border Services Agency legislation is before Parliament.

We have taken steps to build a more sophisticated and informed relationship with the United States. As part of the new enhanced representation initiative, the new Washington secretariat has been established and has commenced operations. Other projects are under way to advance advocacy, support policy coherence and share information among all levels of government.

Earlier this spring the Prime Minister, President Bush and President Fox announced the security and prosperity partnership launching a series of negotiations among the three countries on key aspects of security, prosperity and quality of life for North Americans.

On the defence front, our chief policy deliverable was to invest more in our military. Budget 2005 provides $12.8 billion in new money for defence over five years. It provides $3.2 billion over five years to strengthen military operations by improving training and operational readiness, enhancing military medical care, addressing critical supplies and repair shortages, and repairing infrastructure.

We have promised investments in key capital equipment, for example, new armoured vehicles and replacements for the Sea King helicopters. Budget 2005 provides more than $2.7 billion for new medium capacity helicopters, utility aircraft and military trucks.

We are increasing regular forces by 5,000 and the reserves by 3,000, and training regional peacekeepers, such as in Africa for the African Union mission in the Darfur region of Sudan.

The February 2004 Speech from the Throne promised the creation of the Canada Corps to help young Canadians participate in international assistance; provide to developing nations Canadian expertise and experience in justice, in federalism, in pluralistic democracy; and to bring the best of Canadian values and experience to the world.

The new Canada Corps was mobilized successfully and effectively for monitoring the elections in Ukraine last December, which we all remember with great pride.

Budget 2005 commits to doubling aid to Africa by 2008-09 from its 2003-04 level. It also provides additional funding to combat disease in developing countries and $3.4 billion over the next five years in increased international assistance. We are maintaining Canada's leadership role in the creation of a new international instrument on cultural diversity and continue to participate actively in a number of international organizations, be it the Commonwealth or the Francophonie.

This is not the complete list of the government's policy goals and the actions we have taken to achieve them. In each and every item that I have described to the members in this House, the Privy Council Office is right there helping to analyze and develop the policy, challenge any weakness, exert due diligence, bring together disparate parts from across the breadth of government, tie together the loose ends and manage the preparation of legislation and its follow-up.

In short, the Privy Council Office is engaged in all aspects of the cabinet's work in governing the country. Voting against the motion to support the approval of the Privy Council Office budget for fiscal year 2005-06 would cause considerable damage to the functioning of government as a result. It would most certainly be against the interests of all Canadians.

I therefore encourage and exhort all hon. members of the House to do the right thing and to vote in support of the motion. To do otherwise would be unconscionable. It is rather surprising that we would be confronted with a motion that would remove the entire funding for the Privy Council Office. It is a demonstration of a lack of understanding of how government functions.

In concluding my remarks, and I know I will have occasion to answer some questions if there are any, we definitely urge all members of the House to consider seriously the implications of not supporting this motion, which is central to the ability of government and Parliament to function.

Government Contracts

[Mauril Bélanger, Liberal, Deputy Leader of the Government in the House of Commons]

Mr. Speaker, the Elections Act is quite clear. All funds received have to receipted and are declared.

After the passage of Bill C-24, if there were any funds in riding associations, these riding associations could register with Elections Canada and transfer all these funds, and that has occurred. As far as I know, there are no trust funds.

[Mauril Bélanger, Liberal, Deputy Leader of the Government in the House of Commons]

Mr. Speaker, Parliament has enacted Bill C-24, which allowed riding associations of all parties in the country to transfer any money they had into political associations registered with Elections Canada. As far as I know, that has been done and there are no trust funds to speak of.

Supply

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, I am very pleased today to take part in this debate on the Bloc Québécois motion. Our motion seeks to amend the Criminal Code so as to reverse the burden of proof in our legislation.

This motion was moved by my colleague from Charlesbourg—Haute-Saint-Charles, and seconded by my colleague from Saint-Hyacinthe—Bagot. First, it is important to read the motion:

That, in the opinion of the House, in order to better fight crime, the government should introduce a bill by May 31, 2005, to amend the Criminal Code by reversing the burden of proof as regards the proceeds of crime, requiring the accused, once found guilty of a serious offence, to demonstrate on the balance of probabilities that their assets were not obtained using the proceeds of their criminal activities.

First, I want to remind the House that the motion introduced today comes as no surprise. The Bloc Québécois has been working for many years and has led a real crusade since the 2000 election campaign to get the federal government to introduce measures and amend the Criminal Code to include this reversal of the burden of proof.

On this side of the House we thought, and still do, that we needed to provide police officers and crown prosecutors with every possible means to combat organized crime better, since it is has such a social and economic toll on society. As early as the 2000 election campaign, the Bloc Québécois had been calling for amendments to the Criminal Code, thereby providing law enforcement officers with more concrete measures and more suitable provisions to deal with this scourge.

The government did, of course, respond in part to what the Bloc Québécois was calling for by passing Bill C-24 in this House in June 2001. This amended the Criminal Code to enable law enforcement agencies to seize, block and confiscate the proceeds of organized crime.

It is important to keep in mind that organized crime is not restricted to motorcycle gangs. Any group of more than three individuals involved in criminal activity can be considered a criminal organization according to the law. These individuals can therefore be found guilty by virtue of the amendments adopted by the House of Commons in 2001 in the form of Bill C-24.

As I have indicated, however, the Bloc Québécois supported the government's Bill C-24, and as I also said did not deem it to be sufficient. We have several examples proving that the bill has not necessarily achieved its initial objective: attacking organized crime. This is why my colleague from Charlesbourg—Haute-Saint-Charles introduced Bill C-242 in October 2004. This bill basically was a remedy for the government's inaction in connection with the impossibility of including the reversed burden of proof in the Criminal Code.

So, four years later, we have decided to present this motion. The ancestors of that motion were the Bloc and the hon. member for Charlesbourg—Haute-Saint-Charles, whose major crusade has led to the motion before the House today. As my colleague from Chambly has said, to our great surprise, today the government is supporting our motion.

I recall that when Bill C-242 was introduced by my colleague, it received support from a number of members of the House, in the NDP and the Conservative Party. They all agreed that legislative amendments would be needed in order to include this reversal of the burden of proof in the Criminal Code.

What is interesting is that my colleague was the first one on a path later followed by even the federal and provincial ministers. They expressed their agreement with this approach to reverse the burden of proof in June 2004—that is, quite recently—at a federal-provincial conference where the issue was actually discussed. The provincial ministers gave their support to the approach recommended by the Bloc Québécois, not only during the 2000 election campaign, but also more concretely in Bill C-242, introduced in the House of Commons by the hon. member for Charlesbourg—Haute-Saint-Charles.

Thus, all of Canada is lining up behind the Bloc Québécois. The newspaper Le Devoir had a comment on this recently, in February 2005, and I quote:

The Bloc Québécois, the first political party to propose the reversal of the burden of proof, in Bill C-242, introduced in the Commons last fall, has taken this idea to heart. “It is a suggestion that pleases the Bloc”, confirmed the member for Charlesbourg—Haute-Saint-Charles—

In this respect, it is very clear that my colleague from Charlesbourg—Haute-Saint-Charles has been a real trailblazer on this issue.

Why do we have to fight organized crime by adding the reversal of the burden of proof to the Criminal Code? First, because of the huge social and economic impacts.

How can we agree, in this Parliament, that people—whom I dare not describe as ordinary—the citizens of Canada and Quebec who earn their living honourably, who must pay income taxes and other taxes to the federal government and who do so fairly and honestly, see these people, these organized groups, these criminal gangs, finding all sorts of devious ways to practice what amounts to tax avoidance.

It means significant losses for the Canadian government and, in the end, for the social, education and health services that the taxpayers are entitled to receive. Meanwhile, these organized criminal gangs laugh at the world and in the faces of people who earn an honourable living, and meanwhile, we, the elected representatives, look at the situation and refuse to act.

This is nothing new. This comes as no surprise. Many countries have adopted this same approach at various levels. Some countries partially reverse the burden of proof. Others, like Australia, fully reverse it. France, New Zealand, the United Kingdom and Germany have decided to include this important concept in their legislation.

It is a question of social justice, individual rights and justice. Provided the motion is unanimously passed by this House in the next few days, it should inevitably lead to the tabling by the government of a bill to recognize this issue and to give effect to the motion by my colleague from Charlesbourg—Haute-Saint-Charles and the Bloc Québécois.

I can assure you that we will be vigilant over the coming months and weeks, should the government decide to table a bill. We will work at the parliamentary committee and we will make sure that the very spirit of the motion tabled by the Bloc Québécois—that could be passed by this house—is reflected in this bill.

Often the government opposite refuses to keep its word.

What we are hoping for today is for this motion—tabled in the House of Commons and votable—to be reflected in a bill.

Partisanship aside, the Bloc Québécois will be proud to support the bill that is tabled. We must never forget that the hon. member for Charlesbourg—Haute-Saint-Charles and the Bloc Québécois were trailblazers in this.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I was told I had 20 minutes. I believe that the two other 10-minute speeches were to come a little later on.

This year is the 100th birthday of Einstein's theory of relativity, so I was wondering whether I was the first human being to experience the effects of that scientific phenomenon.

As I was saying, I was very proud to be part of that group in 2000. Our efforts during the election campaign brought the battle against organized crime to the forefront of the campaign issues. Because of all the other things that were going on, like Shawinagate and the sponsorship scandal, we did not have as much success with the organized crime issue. . As a result, at our request, and with pressure from the public as well, from public opinion as a whole, the government introduced Bill C-24, which amended the provisions of the Criminal Code. It was passed on June 13, 2001, with our support. We had after all indirectly instigated it. It came into effect on February 1, 2002.

Thanks to this bill, amendments to the Criminal Code have given law enforcement additional tools, for example, on the issue of the proceeds of crime. So there have been many more indictable offences that have been covered by the amendments to the Criminal Code.

Previously, only 40 crimes were categorized as organized crime offences. With the new provisions, we will be talking more about designated offences, which will encompass the indictable offences covered by the Labour Code and other federal statutes, apart from a few exceptions established by regulation.

So the broadening of the application of the provisions of the Labour Code to the proceeds of crime now enables law enforcement to seize, block and confiscate the profits that can be derived from possible criminal activity and are connected to and facilitated by organized crime.

Of course this was an important step forward, but we must go further still. That is why we are proposing in this motion another provision which should be added to the Criminal Code to address organized crime specifically. This is true in Quebec as well as, unfortunately, all over the world. So it is time for the Parliament of Canada to acquire this additional tool of reversal of the burden of proof with respect to the proceeds of crime, plus the introduction of the notion of the balance of probabilities.

As was mentioned by the previous hon. member, there was a federal-provincial-territorial meeting last January 23 and 25, at which the justice ministers discussed an amendment to the Criminal Code. There might be reason to make a minor correction to what the Liberal member for Anjou—Rivière-des-Prairies said about certain provisions proposed by the Quebec justice minister and not by the federal justice minister, who subsequently endorsed them—I will not get into this—which were intended to reverse the burden of proof.

This proposal of the Quebec justice minister Mr. Jacques Dupuis was endorsed by all the provincial justice ministers as well as the federal minister. At the conclusion of discussions on this proposal, the ministers supported it, considering that it was necessary to facilitate confiscation of the proceeds of crime. The federal justice minister then said that it was necessary to improve the confiscation rules and that he would quickly produce amendments that were in compliance with the Charter of Rights and Freedoms. This had been mentioned by the previous Liberal member. Therefore, in my view, including this cut-off date of May 31, 2005 in the motion will assure us that the Minister of Justice will take action on what he said in late January.

It may be important to point out also that this proposal stems both from a suggestion made by Quebec's justice minister and from Bill C-242 introduced last October by the hon. member for Charlesbourg—Haute-Saint-Charles.

It is interesting to read the following about the Bloc's position on the issue of reversing the burden of proof in the February 5, 2005, edition of Le Devoir , a newspaper read by few people in English Canada unfortunately:

—The Bloc Québécois, the first political party to propose reversing the burden of proof, with its Bill C-242 introduced in the Commons last fall, has adopted the idea. “This is a proposal that the Bloc likes,” confirmed Richard Marceau, the party's justice critic. We will have to wait and see which offences will be listed in this new bill, which, according to Mr. Marceau, should be introduced in the spring by federal justice minister Irwin Cotler.

Indeed, as everyone knows, May 31, 2005 falls within that timeframe, springtime.

At present, subsection 462.37(1) of the Criminal Code places on the crown prosecutor the burden of proving that the property to be forfeited is proceeds of crime related to the offence committed. This means that the Crown has a double task: first, get the accused convicted, and second, prove that the property in the possession of this person was illegally acquired. Then, of course, steps have to be taken to obtain its forfeiture.

Thus, we see that, with the proposal to reverse the burden of proof, we will greatly facilitate the task of the Crown who, once there is no longer any reasonable doubt as to the guilt of the accused, will throw back on the accused the onus of demonstrating that they did not obtain the property or the assets with illegal money.

I would like to get back to the initiative of Quebec's justice minister by reading what he wrote in the major Quebec newspapers at the beginning of February. It would be important for people who are listening to take note of this. Concerning subsection 462.37(1), Mr. Dupuis, who is the justice minister and attorney general of Quebec, came to this conclusion:

If the proposed amendment is enacted, an accused who is convicted of an indictable offence will be required to satisfy the court, on a balance of probabilities, that the property in respect of which the Attorney General is seeing forfeiture is not proceeds of crime related to the offence of which the accused has been convicted. Our proposed amendment goes further than the amendment in Bill C-242 recently tabled in the House of Commons in that it applies to all indictable offences, not only criminal organization offences.

Here, the proposal of the Quebec justice minister goes even further than what we have in Bill C-242. The federal justice minister is obviously free to go further than what we have proposed. We will obviously see the proposed provisions after studying the bill, which will be introduced before next May 31.

However, in the case of the Quebec justice minister, he proposes not just crimes related to gangs or organized crime but all criminal acts. He continues:

Despite the expertise Québec has developed and our success in offence-related property forfeiture (since 1996, property worth a total of $32 million has been forfeited)—

That is not chicken-feed, but everyone will agree that it is not very much in comparison with the proceeds of crime.

—it remains difficult to prove that a particular item of property is in fact proceeds of crime. Establishing that proof is a lengthy and painstaking process. Our proposed amendment to reverse the burden of proof will further enhance the claim that crime does not pay

It was the Quebec justice minister who wrote this in the large dailies in Quebec.

So there is evidently a broad consensus now. I can see it in this House as well as in Quebec society. While still complying with the human rights charters, the burden of proof is being reversed for criminals who have been found guilty beyond all reasonable doubt.

The balance of probabilities is also extremely important. Ordinary citizens are not happy that criminals famous for their illegally acquired riches can avoid their responsibilities because no tax is paid on what is not declared.

One of the aberrations to which this has led is the fact that they have been entitled to legal aid in some trials. This leaves the public cynical.

With the adoption of this motion and the introduction of the following bill, we will help to reduce this cynicism and clear up the general climate in Quebec and Canada, and in the end, strengthen democracy—something that is wanted by everyone in this House.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Mr. Speaker, I rise today to express my support for a Charter of Rights and Freedoms viable reverse onus of proof in the proceeds of crime cases.

Currently, the Criminal Code does allow for the forfeiture of proceeds of crime allows the forfeiture of the proceeds of crime, upon application by the Crown, and after a conviction for a designated offence. Once culpability has been proven, the Crown must show on a balance of probabilities that the property is the proceeds of crime and that the property is connected to the crime.

If no connection between the offence for which the offender was convicted and the property is established, the judge may order the forfeiture of the property if he or she is satisfied beyond a reasonable doubt that the property is proceeds of crime.

Although these provisions have been in force for quite some time and have in fact been successful to a significant degree, we need to work towards ensuring that criminals, especially those primarily motivated by financial benefit, do not profit from their ill-gotten gains.

Committing crime for financial benefit is the hallmark of organized crime. Whether these crimes involve drugs, prostitution, fraud or whatever, organized crime is fuelled by greed.

It is the proceeds of this criminal activity which allow organized criminals to commit further crime, recruit further members and facilitate generally the criminal operation of these groups. Organized crime demands specific, focussed and sustained responses.

We as a Liberal government have taken significant steps over the past few years in the fight against organized crime, first with Bill C-95, in 1997, and, most recently, in 2001, with Bill C-24.

Bill C-24, which came into force in 2002, included a simplified definition of “criminal organization”, three new criminal organization offences and tough sentencing and parole eligibility provisions.

These amendments also improved the protection from intimidation for people who play a role in the justice system and broadened law enforcement powers to forfeit the proceeds of crime and seize property that was used in a crime.

This clearly demonstrates that this Liberal government is committed to combating organized crime.

These and other tools found in the Criminal Code are being used by law enforcement and prosecutors in the fight against organized crime.

Despite significant legislative activity in this area recently, we need to evaluate whether prosecutors have all the necessary tools to advance on this front, as organized crime groups are now becoming increasingly sophisticated, complex and adaptive in their criminal ventures.

Clearly, this assessment should examine whether a reverse onus in proceeds of crime cases would contribute to the disruption of criminal organizations. In my view it would.

As this matter advances, it is important to have the views of the provinces on this issue. In many cases, their prosecutors are the ones bringing the proceeds of crime applications, given their authority to prosecute most Criminal Code offences.

As a government, we have taken a step in the right direction. In January 2005, federal, provincial and territorial ministers for justice discussed proposals to change the Criminal Code to create a reverse onus for the proceeds of crime regime.

According to joint news release issued, and I quote:

All Ministers agreed that the ability to obtain the forfeiture of proceeds of crime is needed and the federal justice minister said he intends to move forward as quickly as possible with changes that meet charter requirements.

The federal-provincial-territorial forum is useful in gauging provincial support on issues such as these. Based on the outcome from this meeting, it appears there is general support for the need to advance a reverse onus provision that is within the parameters of the Charter.

The requirement that any advancement in this area be viable from a charter perspective is a very important one. A balance must be struck in crafting a reverse onus scheme which represents a useful tool for prosecutors, over and above what is now available under our current proceeds of crime scheme, while doing so within the limits prescribed by the Constitution.

This is a very important consideration as charter viability will ensure that our prosecutors will have this tool, and that it will be effective to take away criminal profits for years to come.

This motion is directed at ensuring that criminals are not permitted to financially or materially benefit from the commission of criminal offences. It is one which is targeted at fighting crime in the most effective way—by taking the profit out of it.

[Réal Ménard, Bloc, Hochelaga, QC]

Mr. Speaker, I would like to start by congratulating my colleague, the member for Charlesbourg—Haute-Saint-Charles and the Bloc's justice critic for introducing this motion and working so diligently to ensure that it reflects the wishes of all the parties in the House.

I must say that, in the history of the Bloc Québécois, the effective and intelligent struggle is constitutional, as our colleague from Abitibi—Témiscamingue has demonstrated. It must be said right away—and I will return to this as well—that it is a matter not just of an effective and intelligent fight against organized crime but of a fight that should be consistent with the constitutional guarantees, of which, at the top of the list, may be found the right to be presumed innocent, with all that implies in procedural terms, as the Supreme Court did.

I was saying that, in the history of the Bloc Québécois, we were able—whether it was my old colleague, Michel Bellehumeur, or other colleagues, such as the member for Saint-Hyacinthe—Bagot—to take an interest very early in the history of our party in the struggle against organized crime. We will all recall that very publicly. Of course, people a little older than I will no doubt remember the CIOC. There was a bit of a lull in public opinion. However, what catalyzed a heightened awareness of the extent to which organized crime was threatening our communities was certainly the car bomb attack on August 9, 1995, ten years ago already, in Adam St. in Hochelaga—Maisonneuve, killing young Daniel Desrochers. We know that this meaningless attack was related to a motorcycle gang war, in which there had been 147 deaths and 150 attempted murders.

These were important issues in 1995, 1996, 1997, 1998 and even 2000. They were so important, in fact, that the Bloc Québécois devoted one of its opposition days in 2000 to the formation of a special committee of the Standing Committee on Justice, on which I sat along with Mr. Michel Bellehumeur, who has been elevated to the bench. We are all familiar with his talent and persistence. At the time, 13 recommendations were made, all related to the issue of gangs.

My colleague just recalled Bill C-24, but we must first remember that it took three years before we got an anti-gang law. I must say that the Bloc Québécois played an extremely important part in this. The first anti-gang act, which had been Bill C-95, did not work. Why not? Because five people who had committed five crimes punishable by five years in prison, in other words serious crimes, were needed.

Law enforcement agencies were telling us that in the branches in 1995, 1996, 1997, there were, for the Hell's Angels for example, 38 chapters in Canada. Young people with no criminal record were being recruited. It was clear that the organized crime offence in the Criminal Code could not be used.

There were all kinds of provisions. In fact, about a dozen laws had been passed to fight organized crime. Among others, there was a witness protection program. In addition, the member for Charlesbourg—Haute-Saint-Charles—he will correct me if I am wrong—had sent a message to the Association of Chiefs of Police. He had introduced a bill to withdraw the $1,000 bill. If I recall correctly, it was in early 2000, 2001, 2002.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Mr. Speaker, I will be splitting my time with the member for Hochelaga.

I want to thank the member for Charlesbourg—Haute-Saint-Charles for this motion, which raises awareness of the extreme importance of the issue we are debating today. This issue deals with reversing the burden of proof for criminals who have been found guilty.

I must say at the outset that I am a lawyer and that I practised criminal law as defence counsel. Therefore, I have a very good understanding of this issue, which has been a sensitive issue in the organized crime community for a very long time.

The Bloc Québécois has put a lot of pressure and made numerous requests to bring the federal government to pass legislation to fight organized crime, which has been present in our country for way too long. In Quebec, in particular, we saw unfortunate events, horrible events, that made the public realize that enough was enough and we had to put a stop to that. That is why Bill C-24, amending the Criminal Code, was brought forward and passed. Then there was section 426.3 of the Criminal Code. I will not go into any details, but many of my colleagues and myself have made arguments under this section on several occasions, saying that it was incumbent upon the Crown to demonstrate that the offence was linked to organized crime. It was indeed quite a burden.

Not only was it necessary to demonstrate the individual's guilt with regard to the evidence against him and the crimes of which he or she was accused, but the Crown also had to prove that the assets obtained were linked to organized crime, which meant that there was a direct connection between these assets and the offence for which a guilty verdict was rendered. The burden of proof was very difficult for the Crown in those cases.

We believe that this is a very good bill, which should be brought before Parliament, and that this motion should be expedited so as to put an end to the Crown's obligation to assume a burden which, quite often, is very heavy. Especially since the motion tabled by my colleague, which I invite the House to adopt unanimously, is recommended by all the attorneys general of Canada and the justice ministers of all the provinces, including Quebec. We believe that the Minister of Justice of Canada would be well advised to table a bill on this subject promptly. That is why we are proposing this motion today.

I want to stress that the motion and the bill that might result from it are closely related to the offences of organized crime. Obviously we could not ask to have it apply to all crimes. It has to be related to organized crime.

I would draw attention to the fact that organized crime does not simply mean crimes committed by motorcycle gangs or groups of that ilk. Very often a criminal organization is very very difficult to dismantle.

A criminal organization, within the meaning of the Criminal Code, is three persons who together facilitate or commit criminal offences. So this must be demonstrated before one can say that a person is charged with organized crime. Quite often, alas, the Crown withdraws that charge because it had or will have difficulties proving the link between the three individuals, the link they would have had to commit the crimes.

Now, quite often, when the Crown manages to prove that these persons have committed crimes and so form a criminal group within the meaning of the Criminal Code, the assets seized—since very often a huge amount will be seized—must on a balance of probabilities constitute proceeds of crime obtained in connection with that designated offence. Hence this is a burden of proof that is extremely difficult, if not almost impossible very often, for the Crown to demonstrate.

The objective of this motion is to force the government to table a bill to stamp out organized crime and in particular money laundering. I emphasize that an individual who is found guilty and convicted will not be at the end of his pains, for he will have to demonstrate to the court that these assets were acquired legitimately.

Allow me to emphasize this. It is not the purpose of this motion and this bill to limit the presumption of innocence, which is extremely important. In our criminal law in Canada and Quebec, anyone appearing before the court is presumed innocent until the Crown has proven beyond a reasonable doubt that he is guilty of the crime with which he is charged.

So this motion, which I hope will lead to a bill, would have the proposed reversal of the burden of proof apply only once the accused has been found guilty of a criminal offence. It is very important that this take place only at the sentencing stage, so that it does not violate the principle of presumption of innocence. Of course, I am offering you the example of a case that occurred recently right here in the Outaouais region, in spring 2001. Individuals were arrested all across Quebec, who were suspected of being members of an organized gang—what we call it is not important—whose seized assets were valued in the tens of millions of dollars.

The bill we want to see introduced in Parliament by our Minister of Justice would ensure that, once found guilty, the accused could no longer benefit from being presumed innocent because they have been found guilty. The burden of proof will be reversed and they will have to demonstrate that their assets that have been seized were not obtained with drug money, for instance.

That is what we could have used in the cases or events that have come up since 2001. However, the Crown has used plea bargaining to make sure individuals plead guilty, saying, “If you plead guilty to this offence, we will drop the gangsterism charge and allow you to recover some of your property”. Under the current motion and the resulting bill, this would be impossible. The onus will rest entirely on the individual.

I will conclude by saying that when the bill is passed—which I hope will happen as soon as possible—I call on Parliament and Canada, through its Minister of Justice and international relations, to tell the world that we have joined Australia, Austria, France, New Zealand, Germany and the United Kingdom in sending a message to criminals, “Be careful, if you want to do business in Canada, you will pay a high price”.

[Mauril Bélanger, Liberal, Deputy Leader of the Government in the House of Commons]

Mr. Speaker, I will be sharing my time with the member for Thunder Bay—Rainy River.

I also rise today to speak to the Bloc motion encouraging the government to introduce a bill to amend the Criminal Code by reversing the burden of proof in proceeds of crime cases. This would require accused, once found guilty, to demonstrate on the balance of probabilities that their assets were not obtained from proceeds of crime.

The underlying message behind this motion is that criminals, especially those motivated by profit, should not financially benefit from their criminal activity. We agree.

This motion, and the message underlying it, are consistent with the government's recent legislative, operational and international initiatives aimed at disrupting and deterring criminal organizations in Canada.

We took a significant step in the fight against organized crime in 1997, with amendments to the Criminal Code through Bill C-95—which created the indictable offence of participation in a criminal organization and provided law enforcement with additional significant investigative powers.

Two years later, in 1999, amendments to the Criminal Code, the Controlled Drugs and Substances Act and the Corrections and Conditional Release Act barred those convicted of offences related to organized crime from access to accelerated parole review. While, that same year, amendments to the Competition Act and other acts created new offences for deceptive telemarketing and defined these crimes as enterprise crimes subject to the proceeds of crime regime.

Further, in 2000 the Proceeds of Crime (Money Laundering) Act was enacted and provided for mandatory reporting of suspicious financial transactions and created the Financial Transactions Report Analysis Centre of Canada to receive and manage this reported financial information.

Most significantly in the fight against organized crime, the government brought forward amendments to the Criminal Code and other acts through Bill C-24, which came into force in 2002.

Bill C-24 provided substantial new measures directly targeting criminal organizations, including a simplified definition of “criminal organization”, three new criminal organization offences separately targeting those participating in or contributing to the activities of a criminal organization, those who commit indictable offences for the benefit of, at the direction of, or in association with a criminal organization, and an offence directed at all of the leadership levels in criminal organizations. Under these provisions, penalties range from a maximum of five years imprisonment for participation, to life imprisonment for leaders. It is important to also note that consecutive sentencing applies to all three of these offences.

Bill C-24 also improved the protection from intimidation for people who play a role in the justice system, and broadened law enforcement powers to forfeit the proceeds of crime and seize property that was used in a crime.

Finally, amendments were made to the Criminal Code in 2004 through Bill C-13 in order to enable investigators to better obtain documents or data from third parties through judicial production orders. This investigative tool is now available in respect of all criminal offences and is expected to be of particular assistance in the investigation of criminal organization offences.

In addition to the legislative measures that were passed and previously mentioned, the Government of Canada has taken major operational steps to fight organized crime.

Of particular relevance is the creation of Integrated Proceeds of Crime Units in Canada, first launched in 1996. These units are found across Canada and are staffed with federal, provincial and municipal police officers, Justice Canada Crown counsel, customs officers, federal tax investigators, and forensic accountants. They support other law enforcement units by undertaking the investigation and prosecution of the proceeds of crime aspects of organized crime.

They also support other anti-organized crime initiatives, and help to fulfill Canada's international commitments, particularly those set by the multilateral Financial Action Task Force in which Canada plays a leading role.

Canada is also working internationally to combat organized crime. In this regard, in 1997 Canada and the United States established a Cross-Border Crime Forum to strengthen cooperation and to focus law enforcement efforts on such issues as cross-border crimes, telemarketing fraud, money laundering, and high-tech crime.

In addition, Canada played a key role within the United Nations in the development of the United Nations Convention Against Transnational Organized Crime, signed in December 2000, providing countries with a shared framework to enhance international cooperation.

It is clear that the Government of Canada has taken many deliberate and effective legislative, operational and international steps in the fight against organized crime. It is this proven commitment, giving the tools to our dedicated law enforcement and Crown prosecutors, which seeks to ensure that criminal organizations in Canada are disrupted, deterred, and dismantled.

Organized criminals commit crime predominantly for monetary benefit. These financial gains sustain these criminal groups and facilitate their growth, both in numbers and influence.

It is for this reason that I support the development of a charter compliant reverse onus in proceeds of crime cases.

With this enhancement of the law, coupled with the other existing tools outlined previously, we would be in a better position to thwart the plans of criminals motivated by material gain or profit in Canada.

[Benoît Sauvageau, Bloc, Repentigny, QC]

Madam Speaker, today it is my great pleasure to speak to the motion put forward by my friend, the hon. member for Charlesbourg—Haute-Saint-Charles. Before I begin, however, I too would like to pay tribute—unusual in this House, but hon. members from all parties have done so—to the hon. member for Charlesbourg—Haute-Saint-Charles.

This motion appears to have the approval of all parties. That too is unusual in the House of Commons, although not a first, since it happened earlier when there was a motion on the Holocaust. We should also remember that the hon. member who is proposing this bill is the same one who proposed a bill to eliminate $1,000 bills, also intended to thwart the activities of organized crime and prevent money laundering. Moreover, this is the same hon. member who proposed a bill or a motion concerning the appointment of judges. That issue was studied in committee. We can also point out that it was the Bloc Québécois that introduced the forerunner to today's topic, which was Bill C-24, to specifically recognize organized crime in the Criminal Code, through the work of my former colleague, the former member for Berthier, Michel Bellehumeur. Today we have this motion before us.

I would like to digress for a moment to go over the three or four points I have just mentioned. People listening to us, and our colleagues here in the House, if they have a somewhat open mind, can see that even if an idea comes from the Bloc Québécois, it may be quite sensible. Too often, the Canadian public and our Liberal and Conservative colleagues cover their ears and say that if it comes from the Bloc it is no good.

Today, happily, there is none of that attitude. And so I hope that this will get our colleagues thinking about other topics we might bring forward, and how even if the sovereignists introduce these topics and they are not related to sovereignty, but to society, they may be of interest to the entire community. That is another reason I want to pay tribute to my friend and colleague from Charlesbourg—Haute-Saint-Charles.

The motion he proposed to the House this morning reads as follows, since I believe it is important to refer to the wording of the motion before debating and discussing it:

That, in the opinion of the House, in order to betterfight crime, the government should introduce a bill by May 31, 2005, to amend the Criminal Code by reversing the burden ofproof as regards the proceeds of crime, requiring the accused,once found guilty of a serious offence, to demonstrate on the balance ofprobabilities that their assets were not obtained using theproceeds of their criminal activities.

The Bloc Québécois has been pressuring the federal government for a number of years to bring in effective legislative measures against organized crime. As I have already said, Bill C-24, which was passed in 2001 with the support of the Bloc, and came into force in February 2002, is one of the bills we supported in the battle against organized crime. Thanks to Bill C-24, the provisions relating to the proceeds of crime set out in part XII.2 of the Criminal Code are applicable to virtually all criminal acts.

That was one step in the right direction in the battle against organized crime. But during the election campaign the Bloc Québécois continued to reflect on ways to move further in the battle against organized crime and on behalf of safer communities. It therefore felt that another amendment was required to specifically target organized crime in Quebec and Canada. As a result, on October 28, 2004 our colleague from Charlesbourg—Haute-Saint-Charles introduced Bill C-242, to reverse the burden of proof, requiring a person found guilty of an offence related to organized crime—and that point is important—to prove on the balance of probabilities that his assets were lawfully and legitimately acquired.

Following this reflection process and the introduction of this private members' bill, Le Devoir wrote the following about the Bloc Québécois and its position:

—the Bloc Québécois, the first political party to propose reversing the burden of proof, with its Bill C-242 introduced in the Commons last fall, has adopted the idea.

At the federal-provincial-territorial ministers' meeting, other stakeholders got behind the idea. The other parties eventually came around.

“This is a proposal that the Bloc likes,” confirmed the member for Charlesbourg—Haute-Saint-Charles.

The Bloc was recognized as the first political party to have put this idea forward in the House of Commons. The idea was discussed at a federal-provincial-territorial meeting at which the justice ministers agreed in principle with the idea presented to them.

When we take a closer look at the motion from the point of view of organization and procedures—the idea has been put out there—we can see that it is relatively detailed. Nevertheless, it will be refined in committee to eliminate any concerns or irritants with respect to protecting the presumption of innocence as well as the safety of the accused. The idea is definitely not to have everybody go before a court and tell the judges and defence lawyers how their assets were acquired. So, in committee, we will refine the proposal and make sure that it will be respectful of the rights and freedoms of the individuals to whom this bill does not apply.

Let us get into a little more detail. Since it is important to respect the presumption of innocence of the accused under the Charter, it is essential that, before any reversal of onus take place, the Crown first prove beyond reasonable doubt that the accused is guilty. This means that the accused has to be found guilty beyond reasonable doubt.

Here are the main points that the Bloc Québécois would like to see in a future government bill on the reversal of the burden of proof. The Crown must prove beyond a reasonable doubt that, first, the accused is guilty of an indictable offence and, second, that he benefited directly or indirectly from an asset, benefit or advantage because he committed the offence for which he is found guilty. We could add that, with a few exceptions, the accused must belong to a criminal organization. Once these three conditions have been proven beyond a reasonable doubt, the accused would have to demonstrate on the balance of probabilities that the assets which the Crown wants to forfeit were obtained in a legitimate fashion.

Currently, here is how things work: an accused—as the hon. member for Argenteuil—Papineau—Mirabel so aptly showed—can file a tax return which indicates that his annual income is around $19,000, but he can still own a lavish property along a lake, a condominium in Florida and another one in the West Indies, a Corvette and a boat, and everything is just fine.

If the accused is found guilty, the courts must prove that he got his assets illegally. Under the motion now before us, which reverses the burden of proof, the contrary would happen, in that once the accused is found guilty beyond a reasonable doubt of committing a crime and, with a few exceptions, of being a member of a criminal organization, he will be the one who has to prove that his assets were obtained legally and legitimately.

This suggestion by the Bloc Québécois which, as I said, seems to enjoy the support of the House, is a precedent in Canada, but not in the world. A number of countries, including Australia, Austria, France, New Zealand, Germany and the United Kingdom have already legislated in that sense, to various degrees, and included in their legislation the reversal of the burden of proof as regards the proceeds of crime. The financial action task force on money laundering, which is an international organization, proposed a similar measure in 2003.

In conclusion, this is a motion on which there is a consensus and one which would benefit Canadian society by making our communities safer and by impeding even more the activities of criminal organizations.

The hon. member for Charlesbourg—Haute-Saint-Charles deserves to be praised for his motion and so does the House which, I hope, will support this initiative and act quickly, so that it can be implemented without delay.

Federal-Provincial Fiscal Arrangements Act

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Natural Resources]

Mr. Speaker, thank you for the opportunity to introduce at third reading Bill C-39, which provides for $41 billion in new funding for provinces and territories under the ten year plan to strengthen health care.

Canadians are justly proud of their social programs and are determined to see them maintained and improved. In particular, Canada's publicly funded, universal health care system stands as a clear testament to its commitment to ensuring equality of opportunity for all Canadians.

The Government of Canada recognizes the importance of providing growing and predictable funding for Canada's health care system to ensure its vitality. It also recognizes the importance of improving transparency and accountability of health care spending.

After all, Canadians want to know that their tax dollars are being spent wisely.

In short, the government is committed to strengthening Canada's publicly funded health care system. It is committed to working with the provinces and territories to make sure that happens. As the Prime Minister has said, Canadians want solutions to health care problems, problems in their communities, problems that affect their families. Canadians also want to know that the health care system will be able to provide the services they need in a timely fashion. They also want to know that the health care system is secure for future generations.

Governments recognize the need to strengthen our health care system. We understand the challenge. It is a challenge that falls to us and we must act.

Last fall, federal, provincial and territorial governments all signed the 10 year plan to strengthen health care. Bill C-39 would implement the federal commitment supporting this plan by providing $41 billion in new federal funding for provinces and territories for health.

Indeed, the 10 year plan will strengthen ongoing federal health support provided through the Canada health transfer, or CHT, as well as to address wait times to ensure that Canadians have timely access to essential health services and to provide additional funding for diagnostic and medical equipment.

Before I outline the details of this ambitious new plan, I would like to first provide some history of recent federal health care funding in Canada.

In September 2000, hon. members will recall an agreement by first ministers for an action plan to renew our health care system. In support of that agreement, the federal government invested $23.4 billion through the Canada health and social transfer and targeted spending, including funding for medical equipment, to accelerate and broaden health renewal and reform.

Drawing on that agreement, first ministers met again in February 2003, committing to the first ministers accord on health care renewal. In response to the important reform and reporting objectives it contained, the 2003 budget increased federal support for health care by $34.8 billion over five years. It also contained an additional payment of $2 billion contingent on funds being available in 2003-04.

In January 2004, the Prime Minister announced that an additional $2 billion would be provided to the provinces and territories. This brought the total increase in federal support over the five year period of the 2003 health accord to $36.8 billion. The majority of this funding was provided to the provinces and territories through increased transfer payments, including $16 billion over five years through the new health reform transfer; $14 billion, including the $2 billion in additional funding, for increases to health and social transfers; and $1.5 billion for diagnostic and medical equipment.

The remaining $5.3 billion was allocated to meet other commitments made under the 2003 health accord, notably increased funding for health programs for first nations and Inuit; the creation of a compassionate care benefit under employment insurance; support for research hospitals; and improved health care technology and pharmaceuticals management.

The Government of Canada's investments over the period covered by the health accord, and its other investments in health and social programs, were implemented as part of a long term legislated framework of predictable and growing support for provinces and territories that includes both cash and tax transfers.

I would like to move on to the 10 year plan to strengthen health care. Last September the Prime Minister and premiers signed a 10 year plan to strengthen health care. As I have already mentioned, the plan will provide $41 billion in new health care funding over the next decade. It also illustrates what we are capable of achieving when the federal, provincial and territorial governments work together toward a common goal.

At the heart of the 10 year plan is the commitment for stable and increased funding starting with immediate funding in 2004-05, to provide an additional $1 billion in this year through the CHT as well as an additional $2 billion in 2005-06.

These investments lead me to the second step, which is the establishment of a new $19 billion base for the Canada health transfer, beginning in 2005-06. The new and higher base level of $19 billion for the Canada health transfer includes $500 million in targeted funding for home care and catastrophic drug coverage, clear priorities for many Canadians.

The plan also proposes a 6% escalator to the Canada health transfer, effective in 2006-07, which will ensure predictable and stable growth in federal transfer support, an unprecedented move to ensure predictable and stable growth in support from the federal government. This commitment fully satisfies the recommendations of the Romanow report on the future of health care in Canada. In fact, this commitment exceeds the recommendations of that report.

Just what action does the 10 year plan take to improve our health care system? It makes investments in these areas: reducing waiting times and improving access, which I know are big desires in my constituency; providing funding for medical and diagnostic equipment; and improving access to home care and catastrophic drug coverage.

I want to talk in more detail about reducing waiting times. What united all the first ministers was a commitment to a meaningful reduction in wait times for health care services. The plan provides funding of $5.5 billion over 10 years for wait times reduction so that Canadians can see tangible progress, particularly in key areas such as cancer, heart treatment, diagnostic imaging, joint replacements and sight restoration.

It is important to mention that the government recognizes that not all provinces and territories are in the same situation regarding the implementation of their wait times reduction strategies. Funding of $4.25 billion from the total of $5.5 billion will be provided through a third-party trust. Therefore, as part of the 10 year plan, provinces and territories will have the flexibility to draw on the funding according to their individual priorities in meeting their wait times reduction commitments.

The funding can be used according to the respective priorities of each province and territory, such as clearing backlogs, training and hiring more health care professionals, building capacity for regional centres of excellence, expanding appropriate ambulatory and community care programs, and tools to manage wait times.

Beginning in 2009-10, $250 million will be provided through an annual transfer to provinces and territories in support of health care related human resources and tools to manage wait times.

Now I will talk about medical and diagnostic equipment, which is also very important in my riding. No health care system would be effective without medical and diagnostic equipment to support it.

That is why, as an integral part of a 10 year plan, the government will provide to provinces and territories a further $500 million for diagnostic and medical equipment in 2004-05. This funding builds on previous investments in diagnostic and medical equipment under the 2000 and 2003 health accords. It will help the provinces and territories continue to improve access to the diagnostic services their citizens need.

Now I want to talk briefly about home care and catastrophic drug coverage. Access to home care and catastrophic drug coverage is a concern for Canadians. As I mentioned earlier, the new $19 billion base level for the Canada health transfer includes an amount of $500 million, which is specifically aimed at addressing these concerns.

It is important to mention that the first ministers were committed to improving access to home and community care services and catastrophic drug coverage. Hon. members will appreciate the importance of improving the quality of life for many Canadians and ensuring that no Canadian suffers undue financial hardship in accessing needed drug therapies.

Now I will talk briefly about reporting to Canadians on these expenditures. As I mentioned earlier, Canadians want to know that their tax dollars are in fact supporting tangible improvements in the health care system. That is why Bill C-39 contains a provision for a parliamentary review of progress made in implementing the 10 year plan.

What I have described is not all the funding that is available to the provinces and the territories. In the debate about federal health funding to the provinces and territories, it is important to remember that this is not their only source of funds from the federal government. For example, equalization payments, which have been in existence since 1957, address horizontal fiscal disparities among provinces by ensuring that less prosperous provinces can provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

Hon. members will recall that last fall federal officials met with their provincial and territorial partners as part of the government's commitment to increase equalization and territorial formula funding by more than $33 billion over the next 10 years. Bill C-24, which is currently before Parliament, sets out this new framework.

This represents a fundamental reform of these programs and establishes the foundation for our commitment to bring greater predictability to the federal government's payments to the less prosperous provinces in support of key public services.

The $33 billion committed to equalization and territorial formula financing payments, when combined with the $41 billion ten year plan to strengthen health care, will result in federal transfers to the provinces and territories of $74 billion. This significant increase in federal transfers illustrates the government's commitment to provide stable and growing funding to provinces and territories.

Although the 10 year plan to strengthen health care makes it clear that money alone cannot sustain health care, the government fully understands the importance of stable and predictable funding to the provinces and territories in support of health and social priorities. In short, the $41 billion 10 year plan represents the best of what the Canadian federation can accomplish and underscores how cooperative federalism has built a country with a standard of living that is the envy of the world.

Before closing, I would emphasize the importance of the bill receiving passage by the end of this fiscal year so that the provinces and the territories can have access to 2004-05 funding and begin to plan for the future. I therefore ask that hon. members continue to provide the bill with timely consideration.

Supply

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

Mr. Speaker, it seems to me that the hon. member's support of the motion is based on the premise of failure, that somehow the negotiations which are currently going on with the auto sector are doomed to fail.

He asked about a backup plan. Presumably when we negotiate, we negotiate in good faith. When we negotiate in good faith, we indicate the target that we have set, that we want the auto industry to meet it and that we are going to be able to monitor that target.

If in fact there were failure, then I would presume we would have to go to the next step. However, the fact that this motion is before the House suggests somehow that there will be failure.

We have more confidence in our negotiators. We have more confidence in the fact that the industry, which has signed 14 MOUs over the years, is prepared to work with the government. Members have talked about major contributors to parties. I guess they have not heard of Bill C-24. I guess they do not know what the workers in the auto sector clearly have indicated. As far as I am concerned we want to have jobs and a strong environment. If they cannot live with that, that is their choice.

What kind of negotiations is the member looking at when in fact we have set a target and we are asking the industry to meet it?

Federal-Provincial Fiscal Arrangements Act

[The Acting Speaker (Mr. Marcel Proulx)]

The House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-24.

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

[Charles Hubbard, Liberal, Miramichi, NB]

Mr. Speaker, I am very glad to take part in the debate today, dealing with equalization. As we know, equalization has been a long term program of our federal, provincial and territorial governments. It is enshrined in our Constitution. Last year it was up for debate. With the arrangements that were made between the Prime Minister, the Minister of Finance, federal officials and their provincial and territorial counterparts, today Bill C-24 arrives in the House at report stand and third reading stage.

We have had a number of meetings with provincial and territorial ministers. With those, our federal government is doing its best to work out programs in the interest of all Canadians. We have concluded a health care accord, and soon we will receive a bill in the House that will deal with health care arrangements.

The equalization arrangements are being debating today, after coming back from the Standing Committee on Finance. All parties involved in the meetings of the finance committee have given great support to the program and to Bill C-24.

We also have been negotiating with the provinces, dealing with child care and communities programs. I can assure the House that our federal officials, our ministers and Prime Minister work diligently and faithfully to try to conclude arrangements for the betterment of all Canadians.

I am a bit concerned, though, when I hear some people refer in the House and across the country to have and have not provinces. Really, there are no have not provinces. However, certain provinces within our federation have more capital, better assets and better programs and have the fiscal capacity to deal with their issues better than others. In terms of this arrangement and as of this date two provinces do not receive equalization payments while eight provinces and territories receive some response from these arrangements.

The fiscal imbalance to which some people refer is not due to the people living in those provinces, but more to the economy of this great nation of ours. Many areas of Canada buy products that are manufactured in certain provinces. They look to other provinces for their oil reserves. They look to the natural resources of all provinces and within that context, they attempt to make amicable arrangements by which the wealth of a nation can be shared.

It is important that our provinces and territories have room to negotiate and, above all, room to plan their activities over the next period of time. The bill gives an opportunity for provinces to plan their future activities and programs.

There is a guaranteed growth track within the bill and within its arrangements. The approach includes five key elements: a new minimum funding floor of $10 billion for equalization and a $1.9 billion for TFF for the year 2004-05; complete protection for provinces and territories against overall and individual declines in payments in that year; a level of $10.9 billion for equalization and $2 billion in TFF in 2005-06; a growth rate guaranteed at 3.5% until 2009; and an independent panel to advise on the allocation among provinces and territories.

Over the next 10 years and subject to review in 2009-10, the new framework will provide $33 billion more in equalization and TFF payments to provinces and territories. This is compared with the annual entitlements for both equalization and TFF, according to the estimates in the February 2004 budget and according to the official October report, of $12.5 billion in 2009-10, an increase of 42% over the next five years.

Again, starting in 2005 the Government of Canada will establish a legislated financial framework for equalization and TFF with fixed overall payment levels that provide predictable and growing funding. In 2005-06 funding levels will be set at $10.9 billion for equalization and $2 billion for TFF, the highest levels ever reached by these programs. Both amounts will grow at a rate of 3.5%.

In addition the Government of Canada will also launch a review by an independent panel of experts on how the legislated equalization and TFF levels should be allocated among provinces and territories in the next year. Provinces and territories have been invited to appoint two members to the panel.

This review, among other things, will evaluate current practices for measuring fiscal disparities among provinces and territories. It will examine alternative approaches, such as those based on aggregate macroeconomic indicators, for example, the GDP, disposable income, or expenditure needs. It will review the evolution of fiscal disparities among provinces and the cost of providing services in the territories, to help governments and citizens evaluate the overall level of support for equalization and TFF. It will advise whether the Government of Canada should establish a permanent independent body to advise it on the allocation of equalization and TFF within the framework of legislated levels.

The Government of Canada, meanwhile, will remain fully concerned about accountability and responsibility for all decisions and will continue to consult extensively with provinces and territories.

The mandate of the panel is an advisory one and the federal government will make decisions based on advice received from the panel and the provincial and territorial governments. This expert panel will report back by the end of 2005 in time to provide advice on equalization and TFF for 2006-07.

Above all there is a guarantee of a complete floor protection. The framework will provide a floor protection to every province and territory to ensure that entitlements for 2004-05 are no lower than the levels forecast in the 2004 budget.

The effect of these various programs that we are arranging, in fact the programs in terms of health care and equalization, will provide a cumulative increase of $74 billion over 10 years compared to the annual levels estimated in the February 2004 budget.

Finally, I would like to allude to my own province of New Brunswick, which is very happy with the arrangements. The premier has expressed his approval and the fact that he is able to continue to provide new programs for people in New Brunswick.

According to the data that we have before us, the province of New Brunswick will receive $1.181 million on a total of $9 billion in equalization in this fiscal year. It is about $1,572 per person. For New Brunswick it will mean about $152 million in additional payments and with it, New Brunswick over the next 10 years will receive more than $800 million in additional health transfers.

I am very happy with the bill. I hope it will proceed at high speed through the House and that we as Canadians, and especially as New Brunswickers, will receive the benefits of the new equalization program as we approach the next taxation year.

Taxation

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, presently before us is Bill C-24. Included in the bill is the creation of an expert panel to advise the government on the anomalies the current system presently produces. There is no system in the world that is perfect. Certainly the government and all governments can take advice from that panel as to what would be the appropriate weighting and recognition of revenue sources.

Fiscal Arrangements Act

[Loyola Hearn, Conservative, St. John's South, NL]

Madam Speaker, it is a pleasure to say a few words on Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act.

I listened intently to my colleague from the NDP. I agree with my friend from the Bloc who said that she raised some very pertinent points in relation to the whole matter of equalization. There are a lot of concerns about equalization. When we hear the word equalization, we think of equality and everybody being treated equally. We know this is not the case.

I was intrigued with one of the comments she made. She talked about the disarray leading up to the conference last fall and that a lot of provinces were not pleased with the final outcome. The parliamentary secretary yelled, “read the communiqué”. There is no doubt about the fact that at the end of any federal-provincial conference when an agreement is arrived at, even though it is one into which people might have been forced or even though it is one with which people do not totally agree, everybody comes out singing from the same hymn book. Reading a communiqué at the end of any of these meetings does not paint the picture.

What we should do is roll back the time to the weeks preceding the federal-provincial conference that dealt with equalization. Going into this conference, one wondered whether an arrangement or agreement could be reached at all. It was almost like anticipating what would happen when the NHL Players' Association and the owners got together. We had no idea. Everybody sat there hoping for an agreement so we could get back to some semblance of sanity on Saturday nights in Canada. Of course, it did not happen.

The provinces did get an agreement, but we certainly cannot compare them as apples to apples. The hockey players and the association can afford to push a hard bargain and wait until they get an agreement. The owners can do the same thing. In a case like this, the federal government might be able to sit back, wait and force an agreement, but the provinces could not. They had to accept the best deal that was offered.

Getting back to the communiqué, communiqués are very colourful. They can cover up a multitude of mistakes made during negotiations. That brings me to this morning.

This morning my province of Newfoundland and Labrador signed a very historic agreement, an agreement which will give my province, at least for a while, 100% of its share, not the total benefits from offshore which equates to about 47% of the total. The federal government and the country generally still take over half the benefits that come directly from revenue sharing on the offshore development.

This past fall before the conference on equalization all of us remember the concern expressed by the province of Newfoundland and Labrador. We remember the concern expressed by many members in the House, most of them on this side, that the agreement might never happen, that the signing, which we saw today, might never occur.

During the meetings on equalization and health care funding, the premier of my province, Mr. Williams, had to walk out of them because he was so frustrated with the way the Prime Minister had dealt with the commitments he had made. Not only did he walk out to draw attention to the mistreatment of the province by the government opposite, for a period of time the Province of Newfoundland and Labrador lowered the Canadian flag on all provincial buildings.

During that period, we saw almost consternation from the government opposite. It said to the people of the country that this was terrible. It said that if Newfoundland and Labrador wanted to negotiate a deal on the offshore revenues, the first thing it would have to do was raise the flags. Until then the government would not talk to a province that did not fly the federal flag over provincial buildings. We all listened to that. I thought of my colleagues to the left. They do not fly the Canadian flag over any of the provincial buildings, yet nobody receives more attention from the federal government than my colleagues to the left, the Bloc.

I have no problem with that. The Bloc can do whatever it wants. However, for a prime minister to say to any province that it has to fly the Canadian flag or the government will not talk it, or for him to close his eyes to another province, is not the way Confederation works. We are supposed to be in the Confederation. We are supposed to receive equal treatment from the government.

This brings me back to equalization and this morning, when the Prime Minister had the audacity to stand in front of the people of Newfoundland and Labrador. I will give him credit for coming through, signing the agreement and delivering on the commitment he made. He said, “I made a promise to the people of Newfoundland and Labrador and I have lived up to that commitment”. How hypocritical. The only reason the Prime Minister was in Newfoundland and Labrador this morning, signing an agreement with the province, was he forced into it by the province, first, and second, by the people on this side of the House, not on that side of the House.

The leader of the Conservative Party put into the election platform the commitment to the provinces that they would be the prime beneficiaries of the revenues from non-renewable resources. We are not talking about a promise thrown out in the middle of an election. We are talking about a solid, written commitment in our election document, our platform. That forced the Prime Minister into a corner. There were hurried late night meetings in Newfoundland and Labrador. He was told by his people there that either he made that commitment or the Liberals would be wiped out. At seven o'clock Saturday morning, he called the premier to say that he had accepted his offer.

Then when the Liberals won the election, we saw them back off. They were procrastinating. It was basically blackmail by the Minister of Natural Resources, who came in with an inferior deal and said that the province could either take it or leave it. Today, the people who did everything to keep us from getting that deal were praised by the Prime Minister as he took credit for delivering on his promise. He delivered on it because he had absolutely no choice. That is what is wrong our country, when we talk about equalization.

The member from the NDP is entirely right that provinces accepted a deal simply because there was no choice. It was shoved down their throats, up until now. Today turns things around. Never again will provinces, because they will follow the lead of Newfoundland and Labrador, have the federal government shove fiscal arrangements down their throats. From now on we will look for a fair share and if we follow the policies of this party, we can be sure to get it.

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

Madam Speaker, I am very pleased to have this chance to speak to a very important piece of legislation. Bill C-24 is about one of the fundamental defining features of this country. It is a matter of serious debate for all of us in the House.

One would think based on the parliamentary secretary's presentation that this is just a technical matter, that Parliament is just a rubber stamp and let us get on with the job. Certainly that is the way in which the bill has been handled all the way through the various steps of legislative scrutiny in the House of Commons. It is being presented to us today as a done deal, something the provinces have agreed to and therefore Parliament must simply give its blessing and let us get on with it. That approach would be doing a great disservice to Canadians if we did not elucidate for them the serious flaws with respect to this whole process, and the serious mistakes made by the federal government throughout this process of resolving the equalization formula.

This is not a matter of simply dotting the i 's and crossing the t 's; this is a matter that goes to the very heart of what this country is all about. If we make a mistake at this level and we do not address the root causes of unease and concern that are bubbling away below the surface, then we are asking for trouble. We are asking for serious threats to the very fabric of this nation and to the constitutional solidity of our country.

Today is a most interesting day for us to be debating third reading of Bill C-24, for having Parliament finalize debate on this legislation. Today is the day that our Prime Minister will be officially signing the side arrangements made with the provinces of Newfoundland and Labrador and Nova Scotia. Those deals run in the billions of dollars and were negotiated after the government bungled the entire process around equalization. Interestingly enough, we are here today to finalize Bill C-24 on such an occasion. This draws to everyone's attention just how flawed the process has been and just how wrong-headed our Prime Minister has been throughout this entire sorry saga in the history of Canada.

I want to quote from a CP article which appeared in March 2004 in a Winnipeg newspaper and probably in other newspapers across Canada:

Ottawa's equalization transfers--and its practice of special deals for some jurisdictions--could divide the provinces, says Manitoba's finance minister. “[It] could be perceived as a divide-and-conquer tactic”, Greg Selinger said in an interview. “If you keep doing specific, one-off side deals, even though each of them may have merit, you're really avoiding the overall issue”.

That says it all. That is exactly the kind of dilemma and the problems we are faced with today because of the lack of leadership by the government of the day. Here we are trying to finalize an equalization arrangement that will try to satisfy all provinces while the federal government at this very minute is signing side deals with a couple of provinces because it could not fix the problem at the very outset and deal with it appropriately.

Exactly what was prophesied is happening. Other provinces are asking where their side deals are. Saskatchewan has every right to ask, “How do we get in on this side arrangement dealing with natural resources?” New Brunswick is clamouring at the door. Ontario is questioning the whole process, and rightfully the province of Quebec has said that the whole process stinks and is tantamount to very serious divisions across the country, as if we do not have enough divisions already, as if we do not have enough wounds to heal and enough issues to deal with to ensure that the country is working together on a solid footing in the interests of all of its citizens.

It is a day of irony. We would be remiss in this debate if we did not point to the root of the problem and try to convince the government to use this opportunity in our history in terms of a minority Parliament, with such willingness to cooperate on all sides of the House, to reassess the damage that has been done and to commit itself to a much more positive and productive response to this situation.

As my colleague from the Bloc has done, I would also like to emphasize the importance of equalization. It is impossible to overstate the importance of the equalization process in terms of maintaining the Canadian identity. This is fundamental to who we are. It is part of our philosophy that says from each of us according to our ability to each of us according to our need. It is a philosophy that has permeated many aspects of parliamentary life and federal-provincial decision making over the years. It is at the heart of medicare and our national health care system, which is very much in danger today. There is a great threat to the loss of that fundamental program.

The principle is still maintained and Canadians still remain attached to those fundamental values of cooperation and community, of caring and sharing. That is the essence of who we are as Canadians and it is why the equalization process is so important.

There are many different reasons that equalization is important. I want to make reference to the Constitution and remind everyone of what we agreed to with the changes to our Constitution and the enactment of the Constitution Act, 1982. It states:

Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

Equalization is intended to secure horizontal fiscal equity to ensure that between provinces there is the capacity to generate broadly comparable revenues per capita without recourse to significantly higher than average levels of taxation. That is the fundamental principle of equalization. We need to remind ourselves of all those who fought so hard to get this principle enshrined in the Constitution, and in the way of doing business between federal, provincial and territorial governments.

A very important paper written by Errol Black and Jim Silver was prepared for the Canadian Centre for Policy Alternatives. I recommend it to all members as a very important contribution to the debate. The paper and its authors point out the following developments in our history pertaining to equalization.

First, they remind us that two decades ago the Parliamentary Task Force on Federal-Provincial Fiscal Arrangements reported that equalization was:

--variously described by witnesses before the Task Force as the 'glue that holds Confederation together' and 'a pillar of Confederation'.

The paper goes on to point out that in 2002 the Standing Senate Committee on National Finance stated:

We are united in our belief that this is an important, in fact a defining national program.

Furthermore the paper shows us that a recent academic study of the equalization program found:

The concept of equalization, enshrined in the Constitution Act 1982, enjoys almost unanimous support among Canadian politicians and academics.

Finally, the paper notes that the Economic Council of Canada reported that it considered the sharing of costs and benefits embodied in Canada's system of equalization payments to be one of the major foundations of Canadian nationhood.

This is the case whether we are talking about equalization in terms of nation building, or whether we are supporting equalization because it means citizens from one end of the country to the other are able to participate equally knowing that wherever they live, whatever they make, whatever their circumstances they are treated as equal citizens and are entitled to those resources to help them contribute fully and equally in society today, or whether we are talking about the social justice issues at hand. This reminds us that equalization should also be justified on moral grounds as a question of decency and social justice. That comes from constitutional authority David Milne who has been an outspoken expert in this area.

I could go on with all kinds of references to noted academics and experts in this field who point to the seriousness of the issues we are debating. They remind us of the responsibility we have as parliamentarians to do our utmost to make equalization work. Does Bill C-24 make sure that equalization is on a solid footing and that it works in terms of those broad principles and values that we hold so near and dear?

We have heard enough today to know that there are serious problems with this issue. The government has actually bungled the whole issue of federal-provincial relations vis-à-vis equalization.

The situation is hardly better than it was before the government sat down and forced a deal on the provinces. All the government has done is put off many problems that have to be dealt with at some point. By way of this legislation I guess we will get a chance in five years.

Goodness knows what could happen in five years' time. We may see more side deals struck between the Prime Minister and other provinces. All the more power to any province that can do that because it seems to be the only way that works with the government. The provinces have to fight for every little bit of turf because the federal government only works on the basis of the squeaky wheel.

The Prime Minister seems to bend every time there is a bit of pressure, as opposed to sticking firm to certain principles. His flip-flopping and dithering are becoming well known features of the Canadian political landscape. Nowhere is that more apparent than in the debate on equalization.

When we were debating this matter at committee and some of us were proposing amendments to the bill, it was suggested to us that this matter had been signed by the provinces, that it had been dealt with and that we had no business making any changes. We were told that the matter was over and done with.

It is fair to remind Canadians that in fact the provinces were dragged kicking and screaming into signing this particular arrangement.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Madam Speaker, it is a pleasure to address Bill C-24, a bill that authorizes greater and more stable equalization payments for Canadian provinces and sets into motion a review of the current equalization formula by a panel of experts.

Equalization is an important national program that helps to sustain provincial funding and services, and it needs to be there for the provinces and territories. As the official opposition intergovernmental affairs critic, I want to signal our support for equalization and for the escalator clause that is found within the bill.

We support the provinces in their push for greater stability and predictably within the system. The changes that will result over the next few years and the escalator clause will provide that predictability as will the floors put in equalization and the territorial formula financing. However, the Conservative Party has argued along with several provinces that Canada needs to develop an equalization system that is more sensitive to the local economies of particular provinces. That idea will take up the bulk of my comments this afternoon.

Even with the passage of this bill, the government does not seem to understand the fact that the equalization system and territorial financing do not sit in a vacuum. Instead, it is part of the financial arrangements that shape intergovernmental relations within Canada. These programs need to be considered within the wider scope of provincial economies and the ability of provinces and territories to both provide services and create a favourable business climate.

Finally, and this will come as no surprise to the government, I will comment on the subject of non-renewable natural resource revenues and why we believe that these revenues need to be taken out of the equalization formula.

The Prime Minister and finance minister have, in my mind, waited too long to deal with this issue. It has come back to haunt them first, in Newfoundland and Labrador and Nova Scotia, currently in Saskatchewan, and increasingly in Canada's northern territories. As well the government needs to take note of the current position taken by the government of Ontario with regard to equalization.

Primarily, I want to talk about the legislation but direct my comments more toward the expert panel that will eventually be struck. Sound ideas regarding equalization have been proposed to the deaf ears of the government, especially in the area of natural resource development. It is time the government took these ideas seriously.

My hope is that the panel will find a way to incorporate these ideas so that equalization and territorial formula financing begins to work in concert with the economic and social aims of provinces and territories instead of continually hindering their objectives. We said at second reading that we had no major objections with the bill. We believe that it did not go far enough in making real changes to equalization, but the fact that an expert panel will be established does show two things. First, it shows that the government's acknowledgement of the equalization formula is flawed. This is something that the provinces have said and this is something that our party has argued for quite a long time. Second, it shows that the government is completely out of ideas as to how to change the equalization system.

After the past 11 years it is refreshing to have a government that admits that it does not know what it is doing and that it might need some assistance.

Speaking of assistance, I am glad to see that the provinces will be able to nominate two members to the equalization panel and that the territories will be able to nominate a person to the territorial financing formula panel. As the government knows, there is difficulty in forging a consensus among provinces regarding the formula. The government also knows that different provinces and territories would likely bring new approaches to the equalization formula and it would be better to have these ideas on the table during the process rather than added after the fact.

This is important because Canadian provinces rely on the formula and territories rely on the territorial formula financing whose local economies are most affected by the formula. In fact, we already see provinces coming to the table with their ideas as newspaper reports this weekend have pointed out. Furthermore, whatever changes are recommended by the expert panel, it is fairly clear that provincial officials are going to have a greater sense of how these changes will affect the services that are provided by the provinces or how those changes will affect the business climate in each province.

I also hope that the expert panel will take an expansive view, a look at other measures and other equalization systems being used in federations around the world. As I will discuss later on, the member for Prince Albert has found some interesting statistics that show some of the flaws in the current formula. If there is a better way of measuring not only the capacity but also the fiscal means of each province, I would hope that the panel will have an opportunity to discuss these.

I would like to stress that it is imperative that no province is left worse off by any changes to the equalization formula. If there is one problem that I have with the panel of experts, it is not with the panel itself as much as it is with the government across the way. The government has retained the ultimate decision making authority so it is fair to ask, what assurances do we that the recommendations of the panel will actually be heeded?

It is important from our standpoint and in the view of the provinces that the government puts the recommendations of the panel ahead of political expediency. There are no guarantees in Bill C-24 that this will be the case. Instead we may be left with politics as usual, and given the importance of the equalization system in Canada, we cannot allow this to happen. It is in that spirit that I ask the government to pay special attention to the recommendations made by the provincial representatives on the panel.

I also think it is important in debating this bill that the House not lose sight of the continuing fiscal imbalance in our federation. The purpose of equalization is to ensure comparable services across the country. In Bill C-24, by ensuring stable and predictable funding, the government has at the very least signalled that it realizes that a system which encourages strong, self-sustaining provinces is the best way to ensure high quality and comparable services.

However it is important to remember that until the government recognizes the fiscal imbalance between the provinces and the federal government, it will always use equalization to hold provinces hostage and penalize them for developing strong economies.

Instead of giving more power to provincial governments, ceding more tax room to provincial governments and encouraging every province to continue to build high quality services, the federal government attempts to move into provincial jurisdiction and duplicate federal programs. We saw this last September with health care. We saw the minister's failed attempt at a child care deal this past weekend. It has been an ongoing problem on the Kyoto file. And I am sure we will see something like this in his cities file as well. Of course, the finance subcommittee on the fiscal imbalance will examine the fiscal imbalance and its related issues. However it is important that we keep this in mind over the next year as the panel of experts does its work.

The main point though that I would like to make in my address today is the one concerning natural resources. It is quite an important point and one that has caused great activity among the provinces over the past week. In my comments on this bill at second reading , I mentioned our disappointment with the fact that the contentious question related to natural resources was not solved in this bill, and instead was pushed off to a panel of experts. I also noted that this question would have to be resolved, especially given the Prime Minister's inept handling of the Newfoundland and Nova Scotia question. In fact, I said that any deal with Newfoundland or Nova Scotia would lead to calls from other jurisdictions for a similar arrangement, and today, while the Prime Minister signs deals with Newfoundland and Nova Scotia, this prediction has come true.

I would like to spend some time on this subject because it really speaks to the inconsistency of the Prime Minister's position, as well as his neglects of the very issue at the heart of Premier Williams' anger with him, and that is the right of any province to have full ownership over its natural resources. Provinces should be able to develop and enjoy the profits of these resources without the threat of federal penalty, and they should not have to negotiate this right from any federal government, and any province means any province.

No sooner than a week after the offshore deals with Newfoundland and Nova Scotia were finally struck, the Saskatchewan minister of finance asked for a similar arrangement for Saskatchewan's natural resources, which include oil, gas, potash, uranium, diamonds and others. Premier Calvert has asked only that should Saskatchewan again fall below the equalization standard, that the government stop clawing back the province's non-renewable natural resource revenue. This seems reasonable, especially given the arrangement that has been made with Newfoundland and Nova Scotia. Saskatchewan is quite a special case because it is now considered, via the equalization formula, to be a contributing province despite the fact that by any measures it faces significantly more difficult challenges than some of those provinces that are still beneficiaries under equalization.

As the member for Prince Albert has so astutely pointed out, Saskatchewan faces several challenges, including out-migration, a declining tax base, lower than average per capita income, longer than average wait time for MRIs and other concerns, yet because of natural resource development it turns out that Saskatchewan is considered a have province, but this does not seem to add up.

Yet when the member for Prince Albert asked the Minister of Finance why we still have an equalization formula that obviously needs to be fixed or why Saskatchewan is being penalized for developing its natural resource sector, the Minister of Finance responded that the current system is already more than fair to Saskatchewan. Again, this does not add up.

British Columbia has also signalled that it too would like to ensure that it receives fair treatment for its natural resources. British Columbia may one day develop the natural resources that lie offshore in the Pacific Ocean. Both the federal and provincial government know that there is a great deal of wealth off the coast of British Columbia and the province would like to have the opportunity to develop those resources without a federal clawback.

New Brunswick has also said that it would like to see a special arrangement made with respect to its natural resources. New Brunswick has a mining industry and would like to keep 100% of the revenue from those resources.

Ontario, on the other hand, is upset by the Prime Minister's signing ceremony today. Ontario sees the side deals for Newfoundland and Nova Scotia as unfair and is wondering about other side deals that might be signed by the government.

In response to Ontario's concern, the Prime Minister has said that Canadian is a wide and diverse country and that deals need to be struck to ensure all regions have the opportunity to succeed. We could not agree more. My question, however, is: Are these deals going to be struck under a consistent argument based on logic or are they one-off arrangements made out of political expediency?

For the Prime Minister, expedience carries the day. The problem, of course, is that the Prime Minister found himself down in the polls and he needed to find a way to boost his support in the east. Therefore he thought he would make the same promise that the Leader of the Opposition made.

However, whereas the promise made by our leader was one that he had consistently made and one that he had thought about within the entire range of equalization policy, the promise made by the Prime Minister was hasty and stood in direct contrast to his record on the subject.

The Prime Minister has spent the last 12 years coming up with every excuse possible to not allow Newfoundland and Nova Scotia to keep 100% of the profits from its offshore oil and gas industry. The Prime Minister has also done everything in his power to ensure that natural resource revenues remain within the equalization formulation. While we disagreed with his position, we could at least say that he was consistent.

That being said, when he made the promise to Newfoundland and Nova Scotia, he broke his consistency. He should not be surprised that provinces and territories now want him to be fully consistent on this point; that is, they would like him to fully embrace the policy of the Conservative Party of Canada. We cannot have one without the other. The Prime Minister cannot give a side deal to two provinces and not expect other provinces to want to benefit on equal terms. It is, after all, called equalization.

Our party does not have the difficulty that the Prime Minister does. We have always believed in giving Newfoundland and Nova Scotia the benefit of a deal that ensures that they have 100% of their resources , with no federal clawback. We think a deal like that would be good for the local economies of those two provinces. We think that by allowing those provinces to keep resource revenues they would have a fighting chance to develop their resource bases further.

We also think, however, that it should not just be Newfoundland and Nova Scotia that benefit from such an arrangement. Every province and territory ought to have the ability to develop its own natural resources and to keep the profits from those resources.

Of course the answer to all of these concerns is to wait for the expert panel to report. I guess that is what we will have to do.

However somebody should at least advise the finance minister that his Prime Minister has stirred up a political problem and has left him holding the bag. This is a political problem borne out of an inconsistent and not very well thought out position. Instead of developing a plan that would solve this problem up front, the Prime Minister has now shuffled it off his plate, much to the dissatisfaction of Canada's premiers. Either he still has not understood the inconsistency of his position or he realizes what he has done and is trying to find someone else to carry the file forward from here.

In any case, it is clear that natural resource revenues are the major issue for equalization. The right thing for the Prime Minister to do would be to follow the Conservative lead and take non-renewable natural resources out of the equalization formula altogether.

I should also say that it is not just the provinces that are watching to see what the government will be doing with regard to natural resources. We also know that Canada's northern territories are watching this file closely. Territorial formula financing is different than equalization in that there are added components to ensure that the north can provide comparable services despite the fact that it has a small population base spread out over large territories of land.

This legislation is, in the short term, a positive development for the territories in that it would provide stable and predictable funding.

However the legislation itself does not have a wider or a longer view with regard to natural resource revenue sharing or territorial devolution. Of course much of this is found within the northern strategy. However it seems important to me that we start to develop the fiscal framework of devolution immediately.

Given the Prime Minister's musings on territories becoming provinces, one would think there would be something in place in this bill to help all the territories get there.

The file is most urgent for the Northwest Territories, which has an abundance of oil, gas and diamonds that are exported around the world but Yukon and Nunavut are developing natural resource bases as well.

With an appropriate resource revenue sharing agreement in place, there is no question that the Northwest Territories could be a have jurisdiction. This is Premier Handley's point, which is why he has asked for a similar deal to the one that Newfoundland and Nova Scotia are receiving.

The oil and gas fields in the Northwest Territories are rich in potential. Diamond mining is a $3 billion per year industry in the Northwest Territories. The territorial government sees exactly zero dollars from either of these industries.

Nunavut and Yukon would also like to reach self-reliance through resource revenue sharing and strategic economic development, and these territories have both the resources and the capacity to become have jurisdictions over time as well.

In Nunavut, natural resource development is still in its formative stages. One of the challenges that Nunavut faces is that there is not an accurate assessment of the true abundance of Nunavut's resources. The knowledge is there, however, that mineral deposits exist in places like the Jericho diamond mine. The government needs to develop its physical capital as well as its human capital in order to get those minerals out of the ground.

However, as both the Government of Nunavut and the Conference Board of Canada have suggested, the key to this development is ensuring that the people of Nunavut have greater control over the resources and greater self-reliance in the future.

It is becoming clear that when companies find the way to efficiently harvest the natural resources of the north that the north will contain Canada's next resource based economic boom. It is just a matter of getting from point A to point B. However the problem, as it relates to Bill C-24, is that with regard to territorial formula financing the federal government has not made the commitment that is necessary for northern development.

Territorial transfers are based upon an abstract formula that takes into account revenue raising capacity and the capacity gap that exists between provinces and territories. The formula falls short, however, because it fails to address the real needs of the north. The current formula does not take into account the fact that due to its remoteness the costs of energy, construction, transportation and infrastructure, all the things that are staples of government activity and that are necessary for harvesting natural resources, are significantly higher in northern Canada than in the provinces.

In Bill C-24 there is no commitment toward the development of a formula that results in adequate fiscal capacity for the territories reflecting the real costs that face Canada's northern territories.

When we take equalization and territorial formula financing together, with one the government penalizes those provinces that attempt to generate revenue from their natural resource base, and with the other, the government is not taking the necessary steps to ensure revenue sharing and an even larger northern resource development sector.

The system needs to be changed to fairly address the natural resource issue, and my feeling is that this change could be done right now. It does not require a year of study. It is already apparent that this has become a political issue for Canada's provinces, territories and the federal government. For every year of delay, that is more provincial money going into federal coffers and less toward provincial economies.

It is quite ironic that we are debating third reading of Bill C-24 today. For the benefit of the House, it might be helpful to recap the Prime Minister's path to this legislation.

The bill is a result of a federal-provincial agreement that was struck in late October 2004. By looking at Bill C-24, one would think that conference had been a roaring success. However it was at the equalization summit that Newfoundland and Labrador Premier Danny Williams walked out because he was tired of the Prime Minister attempting to control the natural resources of his province. Premier Williams was tired of having to negotiate a deal out of the Prime Minister just to get the Prime Minister to keep his promise. Today the Prime Minister is signing an agreement that he should have signed on June 29 because that is when this party would have signed the agreement.

As I said at the beginning of my remarks, our party supports the bill but the House should not forget about the things that are not in the bill. Bill C-24 would set into motion an entire process of review and it is in that review and a subsequent federal-provincial-territorial meeting that the Prime Minister's handling of the resource revenue issue will come to light once again. My hope is that in the meantime the government will not jeopardize the intent and the spirit of the equalization program.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Mr. Speaker, it is correct to say that Premier McGuinty was at the negotiations in September and agreed to the terms of this agreement that is laid out in the framework of Bill C-24, but something has happened in the meantime and that is of course the deal signed today on offshore profit sharing with Newfoundland and Labrador.

I know that the panel of experts is going to look at the issues of non-renewal natural resource revenues, as it should have years ago. Would the member comment on how that has changed, having a one-off deal for Newfoundland and Labrador, which we are very happy about on this side of the House?

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I thank the House for the opportunity to speak to Bill C-24, the Federal-Provincial Fiscal Arrangements Act.

Hon. members will no doubt recall that the Government of Canada's new approach to equalization and the territorial financing formula was first presented to premiers and territorial leaders in September 2004 at the first ministers meeting.

In October the Prime Minister announced the details of the new framework which, subject to approval by Parliament, will increase the support provided to the provinces and territories under the equalization program and the TFF by $33 billion over 10 years. The increased funding will assist Canada's less prosperous provinces and three territories in meeting their commitments under the 10 year plan to strengthen health care as well as other priorities.

As the Prime Minister said at the announcement of the equalization and territorial financing formula framework, this framework reflects the most significant improvement in the program's history. By providing predictability, stability and increased funding, the framework will play an essential role in ensuring that all Canadians no matter where they live will have access to comparable public services.

I will outline the details of the framework shortly, but first it is important to provide some history of the programs and how they work.

The equalization program has been one of the pillars of the Canadian Confederation for more than four decades. It has been with us since 1957, almost 50 years. The territorial financing formula program has been in effect since 1985. That is coming up to 20 years. Both of these programs have been successful in providing support to the so-called have not regions of Canada by allowing them to provide services despite the existence of fiscal disparities with other regions.

I am sure hon. members will agree that the concept that Canadians should have access to quality health and social services regardless of where they live is fundamental to the fairness and integrity of the Canadian federation. Indeed, equalization has played an important role in defining the Canadian federation, so much so that it is unique among federal transfers in that its purpose was entrenched in the Canadian Constitution in 1982.

Section 36(2) of the 1982 Constitution Act states:

Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

In other words the intent of the equalization program and the territorial formula financing is to ensure that all Canadians no matter where they live in this great country have access to reasonably comparable public services, without the provinces or territories having to resort to economically punishing levels of taxation to fund the provisions of these services.

I will now explain how these programs operate. Equalization and TFF are the most important federal programs for reducing the differences in the abilities of the provincial and territorial governments to raise revenues. Equalization payments are calculated according to a formula set out in the federal legislation and adjust automatically in response to economic developments in the provinces.

For example, when a province's economy is booming relative to other provinces, its equalization payments automatically decline under the formula, reflecting the increased prosperity of that province. Some think that this only works one way. Conversely, when a qualifying province's fiscal capacity declines relative to the standard due to a slowdown in its economy, its equalization transfer automatically increases.

In this way the equalization program acts as an automatic stabilizer of provincial government revenues. Equalization payments are subject to a floor provision. This provision offers protection to provincial governments against unexpected large and sudden decreases in equalization payments.

Similar to equalization TFF provides payments to territorial governments to assist them in providing services. TFF is based on a gap filling principle that takes into account the difference between the expenditure needs and revenue means of the territorial governments. Federal and provincial officials review these programs on an ongoing basis to make sure that the differences are measured as accurately as possible. In addition the programs are renewed every five years.

I would like to return now to the changes in the equalization and TFF frameworks, the details of which are contained in the bill presently before the House. The framework includes five elements: a new minimum funding floor of $10 billion for equalization and $1.9 billion for TFF for the fiscal year 2004-05; complete protection for provinces and territories against overall and individual declines in payments for 2004-05; a level of $10.9 billion for equalization and $2 billion for TFF in 2005-06; a growth rate thereafter of 3.5%; and finally, an independent panel to advise in the allocation among provinces and territories.

What do these changes mean in dollar terms? Equalization payments will increase from $8.9 billion in 2004-05 to $12.5 billion in 2009-10. This over a five year period is a 41% increase, a substantial increase by any standard and well beyond the anticipated growth in the economy.

Starting in 2005 the Government of Canada will establish a legislative financial framework for equalization and TFF with fixed overall payment levels that provide predictable and growing funding. In 2005-06 the funding levels will be set at $10.9 billion for equalization and $2 billion for TFF, the highest levels ever achieved by these programs. Starting in 2006-07 both amounts will grow at 3.5%. As I already mentioned, the bottom line is an additional $33 billion over 10 years in federal support for Canada's provinces and territories.

The government recognizes that just pumping money into the system is not enough. We need to look at how the current legislation on equalization and TFF allocates money to the provinces and territories. That is why as an integral part of the proposed changes in the funding framework, an independent panel of experts on how legislated equalization and TFF levels should be allocated among the provinces and territories in 2006-07 and thereafter will be established.

Provinces and territories have been invited to appoint two members to the panel. Among other things, the review will evaluate current practices for measuring fiscal disparities among provinces and territories. It will examine alternative approaches, such as those based on aggregate macroeconomic indicators--for example, the gross domestic product, disposable income, et cetera--or expenditure needs.

It will review the evolution of fiscal disparities among provinces and the costs of providing services in the territories to help governments and citizens evaluate the overall level of support for equalization and TFF. Finally it will advise whether the Government of Canada should establish a permanent independent body to advise it on the allocation of equalization and TFF within the framework of legislated levels.

I would like to make it clear that the Government of Canada will retain full accountability and responsibility for all decisions. It will continue to consult extensively with the provinces and territories as before.

The mandate of the panel is that of an advisory one. The government will make decisions based upon advice received from the panel, provincial and territorial governments, and indeed all Canadians.

The expert panel will report back by the end of 2005 in time to provide advice on how equalization and TFF should be apportioned among the provinces and territories in the fiscal year 2006-07. The government is committed to having any changes in allocation for 2006-07 and future years in place by April 1, 2006, about 14 months from now.

The proposed framework contained in Bill C-24 also provides additional floor protection to every province and territory in order to provide greater stability to provinces and territories in 2004-05. That means the Government of Canada will ensure that equalization payments total a minimum of $10 billion over 2004-05, and the TFF payments total a minimum of $1.9 billion for 2004-05.

In addition, each province and territory will be guaranteed its equalization or TFF claims for 2001-02 to 2004-05 will not be lower than what was estimated in February 2004 and included in the budget 2004 for those years.

It is important to mention that equalization and TFF payments are not the only sources of federal assistance for provinces and territories.

At the same first ministers meeting last September, the Prime Minister and all the premiers and territorial leaders signed an accord agreeing to work together to develop a 10 year plan to strengthen and enhance our treasured system of publicly funded health care. The government has committed to provide $41.3 billion in new health care funding to provinces and territories.

Critical to this effort to provide access to quality health care will be the need to improve access to doctors, nurses and other health providers and to reduce waiting times for key treatments and tests.

As so many of the provinces and territories have demonstrated through innovative efforts in select areas, shorter waiting times and better wait times management lead to better care for patients, more efficient health care and greater public confidence in publicly funded health care.

We have created with our territorial and provincial counterparts a shared agenda for the renewal of health care in Canada. The agenda is built on three key elements: one, an agreed upon 10 year plan to ensure that Canadians have access to the care that they need when they need it; two, new federal funding of $41.3 billion in support of the 10 year plan, ensuring that provinces and territories have predictable steady increases in cash transfers for health; and three, support for increased use of evidence based benchmarks and comparable meaningful information on system performance and health outcomes to guide decisions and to allow Canadians to monitor progress.

I trust hon. members can appreciate that putting in place a 10 year plan for health care will require cooperation and collaboration by governments, health experts, stakeholders and Canadians themselves.

Just look at the benefits to Canadians of the health plan when combined with the new $33 billion equalization and TFF framework. That $33 billion put together with more than $41 billion of health enrichments that I just outlined will result in a cumulative increase of $75 billion over 10 years compared to the annual levels estimated at the time of the February 2004 budget. That is a $75 billion increase beyond the base levels in the 2004 budget.

This illustrates the government's willingness to work with the provinces and territories to find new ways to improve the quality of life for Canadians.

To sum up, Bill C-24 underscores the priority that the Government of Canada places on the equalization program and territorial financing formula. Both of these programs help to ensure that receiving provinces and territories continue to have the resources to provide the services their people need and want.

I would like to conclude with a quote from the Prime Minister at the October announcement of the new funding framework:

This new partnership will be essential to our success as we move forward together on the other key policy issues outlined in the Speech from the Throne, such as child care, cities and communities, and the environment.

I urge hon. members to support this legislation without delay.

Business of the House

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, today and tomorrow we will continue third reading of Bill C-29, the Patent Act. This will be followed by second reading of Bill C-31 and Bill C-32, respecting international trade and foreign affairs.

We will then proceed to second reading of Bill C-28, which amends the Food and Drugs Act; report stage of Bill C-8, the public service bill; report stage of Bill C-3, the Coast Guard bill; and report stage of Bill S-17, respecting tax treaties.

On Monday we will begin with report stage and third reading of Bill C-24, the equalization bill. If this is completed, we will then return to the previous list where we left off.

Tuesday and Thursday of next week shall be allotted days.

Next Wednesday we will commence second reading of Bill C-38, the civil marriage bill.

With respect to the question on the Judges Act, that will be forthcoming in due course.

Federal-Provincial Fiscal Arrangements Act

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I am pleased to introduce at second reading an act to amend the Federal-Provincial Fiscal Arrangements Act and to enact an act respecting the provision of funding for diagnostic and medical equipment. It is a very long name, possibly befitting the enormous sums of money involved and the importance of this agreement to all Canadians.

Canadians have told their governments that health care is of primary importance to them. As such, they have asked governments to work together to strengthen the health care system, to improve access to essential services and to reduce the wait times.

Canadians want to ensure the health care system is there for them today and sustainable for future generations. Governments are working to meet those expectations.

In September 2004 all first ministers signed a 10 year plan to strengthen health care. In support of the 10 year plan, the Government of Canada committed to increase its transfer to provinces and territories for health by the sum of $41 billion over 10 years starting in this fiscal year 2004-05. The increased funding of $41 billion will do three important things.

First, it will strengthen the Canada health transfer, the largest federal transfer supporting health care. It will both increase the base level of the transfer and establish an automatic 6% escalator, which is an unprecedented move to ensure predictable and stable growth in the federal transfer support.

Second, it will create a wait times reduction transfer to assist provinces and territories in reducing wait times according to their respective priorities.

Third, the new federal funding will provide an additional $500 million to provinces and territories for diagnostic and medical equipment, helping to improve access to publicly funded diagnostic services. The commitment to provide an additional $41 billion to provinces and territories will help ensure that current and future generations of Canadians have timely access to essential quality health care across the country.

At the September 2004 meeting of first ministers, a broad consensus emerged between governments on a shared agenda renewal of health care in Canada. That agenda focused on ensuring that Canadians have access to the care they need when they need it. As a result, federal, provincial and territorial governments agreed upon an action plan to ensure viable health care for Canadians setting out commitments to improve access and to reduce wait times.

The federal government is committed to doing its part to support the needed renewal and reform of health care. As part of its contribution to an effective working partnership on health care, the federal government brings a commitment to a growing, stable and predictable health care funding so that provinces and territories can plan for the future.

The bill before us today would provide for new federal funding over the next 10 years in support of the agreement signed by the first ministers on health.

To that end, the Government of Canada commits $41 billion in new federal funding over 10 years to meet those goals set out in that 10 year plan. Bill C-39 would implement those funding commitments.

To accelerate and broaden health care renewal and reform, the federal government will take a number of steps to strengthen the Canada health transfer, otherwise known as the CHT. It will invest an additional $3 billion in CHT in 2004-05 and 2005-6 to close the so-called Romanow gap.

A second important initiative is establishing a new, higher base for the Canada health transfer beginning in 2005-06. In that year the new CHT base will be $19 billion.

This commitment fully satisfies and in fact exceeds the recommendations made in the Romanow report on the future of health care in Canada. That new and higher base of $19 billion includes $500 million in targeted funding for home care and catastrophic drug coverage, clear priorities to many Canadians.

This funding for home care and catastrophic drug coverage recognizes and supports the first ministers' commitments to improve access to home and community care services and catastrophic drug coverage. These commitments are important to improving the quality of life of many Canadians and to ensure that no Canadian suffers undue financial hardship in accessing needed drug therapies.

Also of note, the health reform transfer created as part of the 2003 accord is now being rolled into the CHT effective 2005-06 and beyond. This consolidation of federal support for health reflects the continuing commitment to enhanced transparency and accountability and to support reforms established in the 2003 accord, including primary care, home care and catastrophic drug coverage.

To ensure predictable and sustainable growth in health care funding through the CHT, the government has committed to legislate an automatic escalator. An automatic escalator of 6% will be applied to the new health care transfer base of $19 billion effective in the fiscal year 2006-07.

This rate of growth is higher than the projected rate of nominal GDP growth, the rate of growth of the Canadian economy and, therefore, growth in total federal revenues over the periods 2006-07 to 2013-14. This rate of growth is fully consistent with the recommendations of the Romanow report. In other words, the federal government has agreed to increase the funding to CHT faster than the economy will grow and faster than we anticipate that federal revenues will be realized.

Foremost in the 10 year plan is the need to make timely access to quality care a reality for Canadians. The government remains committed to the dual objectives of better management of wait times and measurable reduction of wait times where they are longer than medically acceptable. All jurisdictions have taken concrete steps to address wait times, particularly in such priority areas as cancer, cardiac care and diagnostic imaging. The bill provides for an investment of the Government of Canada of $5.5 billion over 10 years in wait times reduction transfer.

Funding of $4.25 billion will be provided through a third party trust and accounted for by the Government of Canada in 2004-05. The government recognizes that not all provinces and territories are at the same stage in implementing their wait time reduction strategies. Provinces and territories will now have the flexibility to draw down funding according to their respective jurisdictional priorities to meet their wait time reduction commitments.

This funding will primarily be used for priorities identified by each jurisdiction. These priorities include: clearing backlogs, training and hiring more health care professionals, building capacity for regional centres of excellence, and expanding appropriate ambulatory and community care programs and tools to manage wait times.

Beginning in the fiscal year 2009-10, $250 million will be provided through an annual transfer to provinces and territories in support of health human resources and tools to manage wait times.

The government will also provide to provinces and territories a further $500 million for medical equipment in 2004-05. Building on previous investments in diagnostic and medical equipment under the 2000 and 2003 health accords, this funding will assist provinces and territories in improving access to publicly funded diagnostic services by providing funding for new equipment and the related specialized staff training that is required to operate this new equipment.

The $500 million more than fulfills the government's commitment that additional revenues from the goods and services tax as a result of the spike in gasoline taxes would be redirected toward further investments in medical equipment on a one time basis.

As a result of these commitments, total federal cash transfers in support of health are scheduled to rise to $30.5 billion in the years 2013-14 from $16.3 billion in 2004-05. The bulk of this new funding is being provided through the Canada health transfer, which will grow by 6% annually from its new base of $19 billion in 2005-06 to nearly $30.3 billion in the year 2014. This represents a significant and continuing federal investment in the Canadian health care system.

In addition, all funding will be distributed to provinces and territories on an equal per capita basis in order to ensure equal support for all Canadians regardless of their place of residence.

The new federal support of $41 billion for 10 years builds on previous federal investments in provincial and territorial health care achieved under the 2000 agreement on health and the 2003 first ministers accord on health renewal.

In September 2000 first ministers agreed to an action plan for health care renewal. In support of the first ministers agreement for health, the federal government invested an additional $23.4 billion through the Canada health and social transfer to accelerate and broaden health renewal and reform.

Drawing on the 2000 framework supporting reform and renewal, in February 2003 the first ministers accord on health care renewal set out a plan for reforms to improve access to quality health care for Canadians. Building on the significant investments in 2000, the federal government provided $36.8 billion in support of the initiatives outlined in the 2003 accord.

In addition to increased federal financial support, the first ministers also agreed in the 2003 accord that the sustained renewal of Canada's health care system required structural change. That is why they agreed to restructure the Canada health and social transfer into two separate transfers: the Canada health transfer and the Canada social transfer.

The Canada health transfer was designed to provide growing and predictable support for health. It also improves the transparency and accountability of the Government of Canada's support for health. And through the new CST, provinces and territories have continued flexibility to allocate federal funding for post-secondary education, social assistance and social services, including child care programs, according to their respective priorities.

In addition, these transfers meet the recommendation in the Romanow report for the creation of a dedicated cash transfer for health.

These measures contained in the 2000 and 2003 accords provide a predictable, sustainable and growing long term funding and planning framework for transfers to the provinces and territories in support of health care.

The new funding of $41 billion in the 10 year plan builds on the significant federal investments in health care in the 2000 and 2003 accords. This new funding confirms the government's commitment to making major reinvestments in health a clear priority for Canadians.

Improving our health care system is not just about money. It is about results. All orders of government remain committed to an action plan that achieves results. As such, first ministers recognize that making health care sustainable and able to adapt to the ever-changing needs of Canadians will take time, sustained commitment and adequate resources.

Under the 10 year plan, the governments agreed to report to their residents on health system performance, including the elements outlined in the communiqué of September 16, 2004. In fulfillment of its commitment to Canadians, recognizing that it has authorized significant new expenditures of Canadian taxpayers' money, Bill C-39 includes a provision for parliamentary review of progress in implementing the 10 year plan.

As the hon. members know, at the first ministers meeting this past October, the Government of Canada announced fundamental changes to Canada's equalization program and territorial financing formula. These changes will bring stability, predictability and growth to the overall level of funding for these programs.

Bill C-24, currently before Parliament and just reintroduced into Parliament from the finance committee as of this morning, sets out a new $33 billion framework for equalization and territorial formula financing. When combined with the $41 billion health accord, these investments will total a cumulative increase of $74 billion in new money transferred from the federal government to the provinces and territories over the next 10 years. This illustrates the government's commitment to ensuring that all provinces and all territories can offer the best possible services to their citizens.

In summary, Canadians have told their governments, year after year, to work together to ensure that our health system will be there for them and their children. Governments have responded.

On September 16, 2004, all the first ministers signed the 10 year plan to strengthen health care. As stated in the Speech from the Throne of October 5, 2004, “the Plan sets out a clear commitment, shared by all provinces and territories to achieve tangible results--results for patients”.

The 10 year plan provides $41 billion in new federal funding in support of these commitments. This is new funding that goes directly to provinces and territories in support of health care services that Canadians need.

The funding strengthens core support for health care and the principles of the Canada Health Act through increases to the Canada health transfer. It helps provinces and territories reduce wait times through the targeted wait times reduction transfer, and it provides additional funding for diagnostic and medical equipment.

The federal government has confirmed its commitment to health care reform and renewal through the tabling of this legislation to implement the funding commitments of the 10 year plan and provide growing and predictable transfer support for provinces and territories.

The $41 billion in increased federal investment represents the firm commitment of the Government of Canada toward ensuring the sustainability of the health care system and that all Canadians have access to essential health services when they need them.

Hon. members can no doubt appreciate the importance of passing the bill in a timely fashion so that provinces and territories can have access to the 2004-05 funding and begin to plan for future programs. I therefore urge all hon. members to support the speedy passage of the bill.

Committees of the House

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I have the honour to present, in both official languages, the sixth report of the Standing Committee on Finance on Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other acts (fiscal equalization payments to the provinces and funding to the territories), and agreed on Wednesday, February 9 to report it with amendment.

Federal-Provincial Fiscal Arrangements Act

[The Acting Speaker (Hon. Jean Augustine)]

It being 5:30 p.m., the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-24.

Call in the members.

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

[Bill Blaikie, NDP, Elmwood—Transcona, MB]

Mr. Speaker, it is a pleasure to be able to say a few words today about Bill C-24 at second reading. Hopefully we will be able to dispose of this bill, at least at this stage, later this day, have a vote and get it off to committee, where we can continue this debate about equalization.

Certainly equalization is a very important part of how the country is constituted. It predates the Constitution of 1982. I think it goes back to 1957. In the process of patriating the Constitution in 1980-82, we enshrined the principle of equalization. I was here at that time. I think that was a very important thing to do: to establish at a constitutional level the fact that as a country we want provinces to be able to provide reasonably comparable levels of public services.

In order to do that without so-called have not provinces having to tax at a level that would make them uncompetitive and therefore create an even worse economic situation for them, there is a pooling of resources at the federal level pursuant to a particular formula by which provinces which fall below a certain fiscal standard, shall we say, receive equalization payments.

It is also timely that we are having this debate this afternoon, because we have in recent days witnessed the Atlantic accord between the federal government and Nova Scotia and Newfoundland and Labrador. This bears on the equalization debate, because what was at stake there was a feeling on the part of Newfoundland and Labrador and Nova Scotia, first of all, of course, that a promise the Prime Minister made during the election campaign be kept. That promise had to do with how and when the equalization formula is amended as a result of wealth that accrues to provinces as a result of new revenues, in this case oil and gas revenues. The federal government reached an agreement on January 28, 2005, whereby Nova Scotia and Newfoundland and Labrador can keep 100% of their offshore energy revenues.

This we welcome, but it also at the same time creates questions about how other provinces are being treated. For instance, it creates questions, I know, in the minds of many people from Saskatchewan.

Indeed, my leader, the hon. member for Toronto—Danforth, asked a question today in the House with respect to what the government intended to do in regard to Saskatchewan. Because although Saskatchewan is happy for Nova Scotia and Newfoundland and Labrador, it hopes that this ultimately means good news for Saskatchewan too. It feels that at the moment as a result of the Atlantic accord an argument could be made that revenue from natural resources is being treated differently depending on what jurisdiction that revenue is being raised in.

For instance, looking back over the last 10 years, Saskatchewan makes the argument that a similar deal for Saskatchewan would have realized over $4 billion for the Province of Saskatchewan if the federal government had not taxed back its oil and gas revenues, that is to say, when it was in the have not status. Saskatchewan is no longer in the have not status, but when it was, this is the amount of money that was lost to the Province of Saskatchewan because it did not have the kind of deal that Nova Scotia and Newfoundland and Labrador now have with the federal government with respect to their oil and gas revenues.

It is not surprising that the Government of Saskatchewan, and I believe with the support of the opposition in Saskatchewan and I am certain with the support of the people of Saskatchewan, feels that some similar treatment of the revenue from its energy resources is due to Saskatchewan, if fairness is to be the rule of the land.

I think we will see a growing debate about the ramifications of this welcome agreement between the government and Newfoundland and Labrador and Nova Scotia, a welcome agreement but nevertheless an agreement that has ramifications for other provinces that feel they need to be treated somewhat differently now as a result of that agreement having been reached.

We hope it is not the case that the only difference between Saskatchewan and Newfoundland and Labrador, for instance, is that the Prime Minister did not go there in the dying days of the election and make a promise he had no intention of keeping in order to save Liberal candidates in Saskatchewan. I hope members would not think me cynical to suggest this, but maybe it was because there were no Liberal candidates to save in Saskatchewan, except the Minister of Finance himself, that no such promises were made.

The fact of the matter is that the Prime Minister made this promise in Newfoundland and Labrador. If it is a promise that was rooted in a commitment to fairness and not just rooted in the politics of the moment, a promise which the Prime Minister came to regret and then had to live up to as a result of pressure from those provinces, if it is a promise that was rooted in fairness, then ultimately this Prime Minister is going to have to deal with the legitimate feelings of the Saskatchewan government and the Saskatchewan people that something different is due to them as a result of that promise made and the promise ultimately kept to Newfoundland and Labrador.

The Government of Saskatchewan, for instance, argues that its province loses on average about 90% of all the provincial royalties and taxes collected on oil and gas developments. In fact, it claims that in some years Saskatchewan has lost in excess of 100% of all its provincial energy revenues. This means that the people of Saskatchewan have been realizing very little financial benefit from the depletion of a non-renewable resource. I do not think that is fair, particularly when one considers that now Nova Scotia and Newfoundland and Labrador can retain 100%.

It is only fair, it seems to me, that the case of Saskatchewan be looked at. I understand that Saskatchewan will be making its case to this independent panel that has been set up to advise on the equalization program.

With respect to Bill C-24, we are supporting it at second reading. We want to get it into committee but we certainly do not think that this is by any means a perfect piece of legislation. We feel that we should look at amending Bill C-24 to ensure that, at a minimum, growth in the equalization program keep pace with growth in the nominal gross domestic product. Hopefully this is something the committee can look at.

Under proposed paragraphs 4.1(1)(b) and (c), growth in total equalization payments is being arbitrarily constrained to 3.5% per year. The result of this is that the value of the program will continue to be eroded over the next several years and will increasingly be inadequate to meet the commitment of the federal government to address fiscal disparities under section 36(2) of the Constitution. Thus, we have a formula here that is not sustainable from the point of view of the provinces. Certainly I know that this is how the Government of Manitoba sees this formula that would be enshrined through Bill C-24.

It is widely understood, I think, and accepted, regrettably, that the federal government's financial commitment to equalization has declined over time. Equalization as a percentage of GDP fell from about 1.1% in the mid-1980s to just 0.7% by 2003-04.

This has occurred for the following reasons, the following actions on the part of the federal government. It has happened because the government is now using a five-province standard instead of a more rational all-province standard. It has occurred because, in the same vein, the federal government has made unilateral changes which made coverage under the program less rather than more comprehensive.

I think the provinces welcomed the October 2004 decision by the federal government to boost base funding in 2004-05 and 2005-06 although, as I have already said, they are concerned--and we share that concern--that the escalator being set at just 3.5% will undermine the improvement that this represents over time unless it is changed to reflect economic growth.

It may be that during committee deliberations and perhaps at report stage the bill could be amended. Proposed paragraphs 4.1(1)(b) and (c) could be amended so that rather than 3.5%, total payments under the equalization program could be set at the average rate of growth in Canada and Canada's nominal gross domestic product for the three previous years beginning on April 1, 2006.

It is clear that the federal government is in a position to do this. The provinces are not asking the federal government to do something that is beyond its fiscal capacity to do. When we look at the history of federal surpluses, $61.3 billion between 1997-98 and 2003-04, and the federal government's projections of future surpluses, $61 billion between 2004-05 and 2009-10, the projections made by the Liberals themselves in their own platform, the modest cost associated with the kinds of changes the provinces are looking at is easily affordable. What we are suggesting is easily affordable.

Assuming nominal GDP growth would average about 5.5%, the extra cost of ensuring the value of the transfer is not diminished would be less than a quarter of a billion dollars per year, a drop in the bucket when we think of the overall fiscal surpluses that the federal government is now dealing with. This would go some way but certainly not all the way toward addressing the problem of the équilibre fiscal that my colleagues in the Bloc talked about. It would also go some way toward addressing a concern that we share about the fiscal imbalance that now exists between the federal government and the provinces. Here would be an opportunity, at one level, to address that fiscal imbalance and the government seems unwilling to do the right thing.

I am sure that at some point a Liberal will argue that the government is putting an additional $33 billion into the equalization program with the October 2004 deal. The provinces consider this number to be wildly exaggerated in terms of the actual increase in funding, especially in the medium and long terms, because before that increase in October 2004 funding for the program was at an all time low, both as a per cent of GDP and as a per cent of federal revenue, and would have rebounded in any case over time as the Ontario economy recovered along with the economies of the other provinces.

So the $33 billion improvement that the Minister of Finance likes to talk about is the sum of all additional funds and is based on the naive assumption, or certainly the convenient assumption, that equalization would have remained unchanged at its 2003-04 low point for the entire 10 year period. This is the kind of manipulation of figures and statistics that the federal government is famous for in its dealings with the provinces.

The federal deal actually provides less than what provinces would have received if the federal government had listened to the premiers and moved to the all-province standard with full revenue coverage, something that was also recommended by the Senate standing committee.

These are some of the things that I think need to be put on the record as we move into the closing stages of this second reading debate on Bill C-24.

I hope that the federal government will listen to these arguments and see that it has an opportunity to really live by the spirit of equalization that was enshrined in our Constitution in 1982, and which has been a feature of the Canadian social fabric ever since I was knee-high to a grasshopper.

We look forward to being able to make these arguments along the way and hope that the recent accord reached between the federal government and Newfoundland and Labrador and Nova Scotia will also provide an opportunity for the concerns of Saskatchewan, and perhaps even other provinces to be revisited in a way that leaves no Canadian, no matter where they live, feeling that somehow they have been treated unfairly by the equalization formula or treated unfairly because it just so happened that the Prime Minister did not go to their province and make a last minute promise in the desperate last days of an election campaign that was almost lost by that Prime Minister.

[Guy Côté, Bloc, Portneuf, QC]

Mr. Speaker, Bill C-24 implements the results of the conference on equalization held on October 26, 2004, results that were imposed upon Quebec and the provinces by this federal government. We are going to vote against this bill.

Why are we going to vote against it? For a number of reasons. First of all, Bill C-24 does not in any way correct the fiscal imbalance. The funds available, considerable though they are, will not solve the problems, as they are still far from enough.

Second, there is no in-depth reform of the equalization program, so the problems that have been pointed out, by Quebec in particular, are still there and will continue. Worse yet, the proposed changes to the equalization program will potentially worsen the fiscal disparity between the provinces.

Certain specific agreements have been negotiated by the federal government, with Newfoundland and Nova Scotia for instance, but these are not covered by the bill. As a result there is a major problem of unfairness and the very spirit of equalization is being violated.

The very essence of this bill is flawed. Indeed, this agreement includes, among other things, an allocation formula between the provinces that is unchanged. This bill includes an individual threshold provision to guarantee that no province will get less than what had been estimated at the time of the 2004 budget. While this may seem interesting at first glance, it is always difficult—and the Minister of Finance is an expert when it comes to underestimating—to come up with accurate estimates.

In fact, under Bill C-24, Saskatchewan and British Columbia are the only ones that benefit from this measure, to the tune of amounts estimated at $581 million and $191 million respectively.

For the second year of its implementation, the bill sets out the equalization payments to be made to receiving provinces under the program. In the case of Quebec, for example, we are talking about $4.798 billion, or 44.2% of the total amount. What is rather peculiar is that the allocation between the provinces has already been definitely determined—and the term “definitely” is key here—for a fiscal year that will end in March 2006. However, we all know that the relative economic situation of the provinces does not necessarily evolve in accordance with the forecasts.

In light of the lack of accuracy of federal budget forecasts, how can this government claim to do better when it comes to the provinces? Once again, we are dealing with a federal government that claims to know the affairs of the provinces and of Quebec better than its own jurisdictions.

Third, under this bill, overall funding will increase by 3.5% for the year 2006-07, and for each subsequent year. I should point out that this is by default. A group of independent experts will conduct a review to re-examine the allocation and determine if adjustments should be made.

This committee will give advice to the government, but will not have the authority to change the overall amount. It will merely be consulted. It is the federal government which will continue to make all the decisions. When it comes to equalization, we are far from stable and predictable funding. Again, this government will make unilateral decisions, and that is very unfortunate.

As I mentioned earlier, the bill is far from solving the fiscal imbalance issue. Yet, during the last election campaign, the Prime Minister said he would launch a new era of cooperation with the provinces. The bill before us does not fulfill that objective.

The government had even agreed to amend its Speech from the Throne to include a part on the fiscal imbalance, as we call it. They call it financial pressure. Everyone but the government calls it fiscal imbalance. In its Speech from the Throne the government agreed to correct it. Bill C-24 fails to do so.

The Prime Minister has proven it. The election is over and there are no more fine speeches. He has imposed his priorities, choices and methods on the provinces despite some serious resistance. The Prime Minister did not take any account whatsoever of the true needs of Quebec and the provinces.

No change was made to the calculation method that penalizes Quebec and results in unstable and unpredictable payments.

Furthermore, the Prime Minister not only did nothing to resolve the fiscal imbalance, he still refuses to acknowledge it. Yet, a few moments ago, the Conservative colleague made reference to it: Ottawa is up to its neck in surpluses. We are talking about $60 million in surplus since 1997-98. According to the Conference Board, these figures have been raised often in this House. Bear in mind we are talking about some $166 billion by 2015. I am sure that if we updated these figures, the amount would be even higher.

In the meantime, the provinces—except Alberta—are no longer able to pay for their public services properly. A very large portion of funding in the provinces and Quebec goes to health, a very important sector, and the provinces and Quebec have great difficulty funding their other obligations.

Again, the Conference Board estimates that by 2015, the combined deficits of Quebec and the provinces will be $68 billion, another good example of the democratic deficit the Prime Minister talks about .

The democratic deficit is also a political imbalance because the government does not look after its own areas of responsibility. It can barely handle its own as it is. It is busy interfering more and more in areas under the jurisdiction of Quebec and the provinces.

From 1997-98 to 2000-01, we estimate that Ottawa spent nearly $16 billion on new initiatives in areas under the jurisdiction of Quebec and the provinces. That is outrageous. In 2003 alone, intrusions represented $81 billion, or 44% of federal spending and 55% of the government's operating expenditures. Nearly half of the spending of this government, which claims to be a federal government, was directly in areas under the jurisdiction of the provinces and Quebec.

How could we support this bill after all that I have just demonstrated?

Not only is Bill C-24 inappropriate, but the government itself is indirectly acknowledging it. How? It is acknowledging it by signing specific agreements with other provinces. Following a basely election-minded promise and an inappropriate agreement on equalization, the government had no choice. So, on January 28, the government entered into an agreement on oil revenues and equalization with Newfoundland and Labrador and Nova Scotia.

Even that agreement recognizes that Bill C-24 does not work. Under it, Ottawa will reimburse the two provinces for any loss in equalization due to offshore oil revenues until 2012. It represents a huge amount. Naturally, we are delighted for the people of Newfoundland and Labrador and Nova Scotia. We wish them all the best.

Still, we are talking about approximately $2.6 billion for Newfoundland and Labrador between now and 2012, of which $2 billion will be paid immediately in 2004-05. As for Nova Scotia, the amount involved is $1.1 billion, of which $830 million will be paid immediately. For 2004-05 alone, the amount paid to Newfoundland and Labrador will represent $3,868 per capita. For Quebec, this would mean $29 billion.

If Bill C-24 were really great, there would have been no need for an agreement on equalization. Moreover, it is an unfair agreement. Equalization was designed as an equity measure, to ensure that the provinces could provide comparable services. As they becomes more prosperous, equalization declines, and that is how it should be. The principle of equity is thrown into question by this agreement.

While Newfoundland and Labrador and Nova Scotia can get rich without having their equalization payments cut, Quebec's equalization payments are cut whenever it receives hydroelectric revenues. Is this normal? I think not. We have said it a number of times in this House: the solution lies in resolving the fiscal imbalance.

I cannot wait for June 2, when the Standing Committee on Finance's Subcommittee on Fiscal Imbalance will issue its report.

There are ways to resolve these problems. One of them is to abolish the CHST; in other words, transfer responsibility for the GST or personal income tax to the provinces.

That way, the provinces could secure more stable funding and pick their own priorities. Consequently, they would not be driven by the federal government which can change things almost at its own discretion.

However, since the reality is the equalization program does exist, it has to be improved. Bill C-24 does not meet these objectives. Why does this bill not take into consideration the fiscal capacity of ten provinces, commonly called the ten-province standard, instead of just five, as is currently the case. Why are the floor and ceiling provisions not eliminated in this bill. It would be much fairer.

The government must fully respect the representative tax system approach. This means that measurements of fiscal capacity must be based on reality and not on current estimates that can change over time. Otherwise, we end up in situations where overpayments might be made and then Quebec and the provinces have to make repayments.

Of course, this does nothing to foster balanced budgets in Quebec or any other province. This is exactly the situation in Quebec City, where the finance minister, Mr. Séguin, is trying to square the circle and, unfortunately, he will find it very difficult to make ends meet.

Many of the problems of Minister Séguin in Quebec are the direct result of the actions of the federal government, which does not take into consideration the real needs of the citizens who benefit from services provided by the provinces, specifically Quebec in the case that I am referring to.

Earlier, I mentioned the ad hoc agreement reached with Newfoundland, which also opens the door to injustice. Since revenues will be assessed by using a different formula from one province to the next, we can only arrive at results that do not accurately reflect the tax resources of each of them. Consequently, we are making equalization payments that do not meet the objective of equalization. Yet, this objective is simple: it is to ensure, through taxation, that the quality of public services is at a comparable level from one province to the next.

The Bloc Québécois, like the Séguin Commission, feels that ad hoc solutions create problems of fairness between receiving provinces and that they go against the spirit of the program. This program should normally smooth out the relative disparities between the provinces, not increase them.

As I mentioned earlier, the agreement proposes to arbitrarily exclude certain revenues, but not others. On what basis? We are not quite sure. The provinces have their own sources of revenue, including natural resources, energy, income tax, property taxes and commodity taxes. In order for the equalization program to be fair, all of these revenues must be taken into consideration. They also include royalties from mining or oil activities, and revenues from hydro dams.

Under this agreement, when it comes to calculating equalization payments, offshore oil revenues are not taken into consideration, but revenues from mining or hydroelectricity continue to be taken into account. This is not fair to Quebec. This is not a good agreement for Quebec which, incidentally, is not the only loser. Earlier, an hon. member mentioned that Saskatchewan also has problems with this agreement.

Bill C-24 does not at all alleviate the concerns that we are expressing in this House. This is unfortunate. Despite the fact that this is a minority government, all too often we feel that it is not listening to the other parties in this House.

This is unfortunate. However, we remain hopeful. We repeatedly tell them what Quebec's needs are. We repeatedly tell them what the real concerns of Quebeckers and Canadians are. We remain hopeful that, one day, they will understand.

We must not forget that this agreement gives subsidies to the oil-producing provinces. We have talked a great deal about the Kyoto protocol and its implementation. It is an example of misrepresentation by this government that, on one hand, claims to promote the Kyoto protocol and its implementation and, on the other, through special agreements, gives subsidies to the oil-producing provinces. As a result, the bill is paid by those provinces that generate hydroelectricity, a much cleaner energy source. So, once again, we come back to the polluter-paid principle and not the polluter-pay principle.

This agreement is not satisfactory for any of the provinces. Bill C-24 does not work. What do we have to do to get them to open their eyes? This agreement does not resolve the real problems of the equalization program. The current equalization formula is inadequate in terms of both its objective and its operation because the standard is inadequate. Ottawa does not take into account the revenue of all ten provinces. Thus, the average revenue is artificially lowered.

As a result, the recipient provinces have $297 less per capita than the average of the ten provinces to deliver public services. Equalization is, however, supposed to make things essentially comparable. The widest gaps are not taken into account, so the average is skewed.

Ottawa does not gauge revenues properly either. To take property tax revenues as an example, rather than measuring the tax base according to property values, the federal government has arbitrarily invented a complex formula that takes into account a whole set of economic and demographic variables.

For example, in Quebec in 2002 the residential real estate wealth per capita was $30,621. Using the federal formula, which is complex, convoluted and all but obscure, Ottawa assesses it at $71,406, 133% higher. Naturally, equalization payments are reduced accordingly.

The Minister of Finance has the nerve to tell us “Oh my, we have an unexpected surplus. We did not see it coming”. Yet when we look at calculation methods like those, we should not be surprised that the federal government has money coming out of its ears, so much so that it does not know what to do with its revenues and so takes it upon itself to interfere in areas that are the provinces' and Quebec's jurisdiction.

It is the same thing for other types of revenues, so much so that Ottawa's creative calculations no longer reflect the provinces' fiscal capacity in any way. What is more, the overall amount is clearly inadequate. In fact, calculation of the amounts of equalization does not reflect the reality of provincial tax revenues. Ottawa leaves half the provinces out of its calculations, as well as not taking all revenues into consideration, and assesses them wrongly.

This is the recipe for a financial catastrophe, and unfortunately that is just what is shaping up in the various provincial legislatures and in Quebec. Bill C-24 is badly put together and does not meet the needs of the provinces and Quebec. I will be very pleased to vote against it.

[Ted Menzies, Conservative, Macleod, AB]

Madam Speaker, it is an honour to rise in the House today to talk about Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act. It speaks to one of the most fundamental elements of Canadian character. This legislation is a step toward the modernizing the way Canada operates as a nation and one that is typical of the Liberal government: overdue and incomplete.

For context, it is important to note that section 36 of the Constitution reads:

Parliament and the legislatures, together with the Government of Canada and the provincial governments, are committed to the following three things:

(a) promoting equal opportunities for the well-being of Canadians--

A Conservative priority if I ever heard one.

--(b) furthering economic development to reduce disparity in opportunities--

Again an idea I could get behind.

--and (c) providing essential public services of reasonable quality to all Canadians.

I believe all Canadians and parliamentarians should strive for these objectives.

Further, subsection 36(2) reads:

Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

There is no question that the Liberal government has not lived up to this commitment. Year after year the premiers have been forced to tell the Prime Minister that they are not receiving sufficient funds. We cannot make this country stronger if we accept that citizens in one region are less valued or eligible to receive services than another. Enactment of this bill will increase equalization payments by 42% from 2004-05 until 2009-10. This means $8.9 billion in 2004-05, increasing to $12.5 billion in 2009-10.

Again I go back to overdue and incomplete. While the increase in payments is needed, the Liberal government has had to set the total level of equalization on TFF for years to come. It is clear that the Liberals have not set the total levels of payments because their formula has been ineffective in setting the total levels of payments.

Also, the bill does not spell out how these payments will be divided among the provinces and territories in the future. Instead, the federal government has launched a review by an independent panel of experts on which the provinces and territories have been provided with two seats. However the federal government has retained decision making authority on how future levels should be allocated.

While the Conservative Party of Canada has repeatedly called for a panel, we must be conscious of Liberal manipulation in this endeavour. The panel could be used as another Liberal delay tactic at best, or simply a ploy to fool stakeholders into thinking that they had input into the process. This also gives the Liberal government one of its favourite escape hatches. When things go wrong, it will now have a fall guy to take the rap. “It is not our fault we got it wrong”, the Liberals will scream, “the experts made us do it”.

It is also important to note that the bill does not deal with non-renewable resource revenue within the current equalization formula. The Conservative Party has long sided with the concern expressed by the provinces with respect to the inclusion of non-renewable resource revenue in the current equalization formula. Under the current formula, provinces that benefit from non-renewable resource revenues are subject to a clawback that results in lower equalization payments. This is unfair and unacceptable.

I come from a province that has prospered enormously from its natural resources and it is inconceivable that the same opportunities and potential for economic growth are not available to Nova Scotia and Newfoundland and Labrador. The Conservative Party, along with the majority of the provinces, have long advocated for the removal of non-renewable resource revenues from the equalization formula. This would ensure that the spirit and intent of the program remains intact and to encourage the development of economic growth in the non-renewable resource sectors all across Canada.

I am proud to stand with my Atlantic colleagues to say in the House that the Conservative Party supports the efforts of Newfoundland and Nova Scotia to receive 100% of their offshore oil revenues outside of the current equalization formula, with no cap and no restrictions.

I believe that all regions of the country should benefit from changes to the equalization formula to encourage the development of natural resources and economic growth. Therefore the Conservative Party of Canada would remove non-renewable natural resources from the equalization program and change the formula.

The territories are an important element to consider as well. Bill C-24 does not address the outstanding concern that the Conservative Party and the territories have in the need to develop a resource revenue sharing agreement between territories and the federal government.

The TFF is an important and necessary grant mechanism to address and present the needs of the territories. The Conservative Party supports the TFF but also believes it is imperative that the federal government take steps to develop a resource revenue sharing agreement with the territories to facilitate their desire for control over their own economy and move to economic independence.

It is important that no province or territory suffer financially under the new formula, and I do not say this lightly. The Liberals portray themselves as the only national party but they stake that claim on the smallest of toeholds in many provinces, and after this summer's election they could not even secure a majority of seats in the House.

Nonetheless, they govern with the arrogance of a Liberal government of the past. I have seen it over the years, especially on the issues that face the agricultural industry. The Liberal government loves to divide and conquer. Whether it is region against region or commodity against commodity, the Liberals are almost automatic in their rush to create a domestic squabble to distract Canadians from their inability to get the job done.

The Conservative Party supports the equalization program as an essential component of Canada's nation building efforts. In order for Canada's provinces to grow and prosper, it is important that an effective equalization program be in place. Equalization is a difficult issue to address. By even using the language “haves and have nots”, this is inevitably causing discord and rancour.

As Canadians we have chosen to govern our country as a Confederation. The balancing of regions and provinces has historically proven a challenge. Some governments have managed the project better than others but citizens across the nation have felt the benefit in many small and subtle ways.

As I stand in the House today, I would like to leave the members across the floor with a final message. It is not just the Canadians who voted for them that deserve the respect and commitment to their best interests. It is not just their friends and cronies who should benefit from the power of governance. This issue, this act, is only one element of ensuring all Canadians prosper. The Conservative Party of Canada is proud to stand with every one of them to demand better.

[Paul Szabo, Liberal, Mississauga South, ON]

The member says it is not a tax cut, but before we indexed it members opposite were saying that because it was not indexed we in fact were raising taxes because there was no inflation put in. They cannot have it both ways.

Even when we talk about child care, the fiscal responsibility issue can really hit home. In the throne speech we talked about a significant contribution to child care because of its importance. We know it is a provincial responsibility, but the health and well-being of people is still the responsibility across the board with regard to the Government of Canada. We cannot ignore a need where it is demonstrated.

We had a program of early childhood development to which moneys were contributed. Reporting was required from the provincial governments with regard to where they spend it, how was it applied and how did it meet the targets that were set. We are now looking at the same situation again with regard to the investment in child care. It may be a provincial responsibility, but the health and well-being of those children, our future leaders, are very important to us.

Providing daycare may be someone's choice, but it may not be everyone's choice. How do we deal with that? That is another area. That is why I said at the very beginning, every time we touch an item in this place, whether it be Bill C-24 and the fiscal arrangements act, or health care or child care, there is a ripple effect. Some get it, some do not. Every budget is not a stand alone budget. It has to be taken in a context of every budget that came before it.

Responsible government is all about that. It is about making tough decisions. It is about establishing priorities. It is about delivering on those priorities. It is fiscal responsibility as well as social responsibility. As a rule of thumb, good fiscal policy makes good social policy and good social policy makes good fiscal policy. That is exactly what the government has delivered.

Then we look at issues such as cities and communities. The government will be making an investment. We have already forgiven the GST. We are also now looking at 50% of the gas tax. These moneys go not just for cities, but for communities as well. I heard the member for Yukon speak earlier. He is a member of Parliament who digs into his own community and shares with the House some of the issues that are so important; 33,000 people, each one of them a Canadian, each one of them entitled to share in the wealth and the riches of our country and to fully participate in national programs.

Those are the kinds of things we have to hear. When we hear stories like that, we hear how we are fighting to ensure that everything which happens from coast to coast to coast is linked into the overall objective. The member for St. John's South—Mount Pearl said that section 36 of the Constitution is about nation building. We have to continue to talk about nation building.

It has been helpful to the House to have the debate about the offshore oil reserves. The member across has raised issues about Saskatchewan. Is it really a have province now? It is an interesting question. It is probably a surprise to many Canadians that all of a sudden Saskatchewan is labelled as a have province because it has been the beneficiary of high oil prices. I am not sure if that is sustainable. I am not sure if oil prices will remain at those levels.

I asked the member for St. John's South—Mount Pearl a question. When we deal with an equalization formula and when we deal with the unique situation of Newfoundland and Labrador, as he put it, the pendulum swings. We help sometimes and sometimes we need some assistance ourselves. Here is an opportunity. I asked him once the oil revenues brought Newfoundland and Labrador up to the Ontario standard or a standard at which the province would no longer be eligible for equalization, what then? I think it will be a long time coming before we get the answer.

Newfoundland and Labrador has an interesting history, a very proud history. However, there have been many attempts in the past, whether it be through special fisheries, et cetera to try to get the fisheries industry back on its feet again. It has not happened. There have been tremendous economic development programs through ACOA to get new business, new enterprise going there. Many of those things have been false starts. I am not sure why. We need to know more about that. As we get to the point where there is a non-renewable resource that will generate revenue for the province of Newfoundland and Labrador, what happens next?

That was the question to the member. Where do we go from there? Where do we invest? How do we stop the brain drain from that province? The young people are not staying. There is no work. There is no economic development. There is no challenge for them there. Newfoundland and Labrador needs help. Is this is a situation where we need special arrangements to ensure that we can help a province that has had a very difficult time? Maybe it is. It is tough decisions.

I know the premiers, particularly the Premier of Newfoundland and Labrador, have made passionate arguments about why it needs this. Why does Saskatchewan not need it? What happens if Alberta says that if oil revenues all sudden are not going to be included, maybe it should exclude them in Alberta, maybe Alberta would be less of a contributor. It is kind of an interesting argument, but it is quite unlikely. This demonstrates that tough decisions have to be taken.

I also wanted to make mention of the environment. Recently, I had a conversation with the member for Ottawa South about the environment of Canada and how it related to our overall responsibility for the health and well-being of our people and how important it was that we needed to start reassessing the priorities with regard to renewables and sustainable energy development.

When moneys are transferred between province and province and the federal government tops up this and cost shares on other things, all these add to the pool. However, each and every region of the country has a responsibility to look at the health and well-being of its people. I know, as past vice-chair of the environment committee, we talked an awful lot about the health connections to the environment. We talked a lot about the need for people to understand Kyoto. We talked about the need to understand what buying credits would do for it. We talked about the need to assess the fact that we have a neighbour, the United States. It has coal generation in the Ohio Valley, which contributes probably most of the environmental problems to the GTA particularly, given the prevailing wind parameters.

We also talked about the need to develop renewables, about wind power and about solar. What were the opportunities? Somehow this has lost its position on the table. I encourage members to move on and to start to talk about how we convince Canadians that investment in the environment is an investment in the health and well-being of Canadians. That is not just the responsibility of the federal government. It is the responsibility of each and every level of government right down to the municipalities, to those who have the authority to generate initiatives that will help us to meet our goals and targets. One important target is to continue to improve the health and well-being of all Canadians.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I am pleased to participate in the debate on Bill C-24. I did have a much longer speech, but I listened very carefully this afternoon to a number of the members. We have strayed quite a ways from Bill C-24 from time to time, but I think it is important because virtually everything we do in this place is inextricably linked to everything else that happens.

Having said that, I have often thought that the measure of success of a country is not an economic measure, but rather a measure of the health and well-being of its people. When we went through this debate today, one of the things we talked about was fiscal imbalance. It seems to connote that something has differed from region to region and from province to province and that something in our system somehow does not quite match up.

The Constitution, under section 36, provides for equalization, but it is this act that Bill C-24 is amending, the Federal-Provincial Fiscal Arrangements Act, that provides the detail on how it would be divvied up in accordance with the agreement between the provinces and the federal government.

I was going to talk about some of the numbers, but I think I want to go back to this whole concept of fiscal imbalance. I was looking at some briefing notes and I noticed that fiscal imbalance in fact has two different forms. One is horizontal and one is vertical. We have to start thinking about some of this.

The horizontal actually refers to the imbalance province to province to province. That is exactly what equalization intends to try to cover. If we were to look, for instance, under the Canada Health Act, we would see that we have the five principles of medicare, those being universality, portability, accessibility, comprehensiveness, and public administration.

The portability one certainly touches on this aspect of horizontal balance, or imbalance as some might argue. Can we say with some certitude that we have portability, comprehensiveness and accessibility province to province to province? I am pretty sure that we cannot. I am pretty sure that we cannot go to every place in Canada and expect to get the same level of comprehensiveness and accessibility in all disciplines of medicine.

So are we really meeting the objectives under the Canada Health Act? Or are there other ways to do it given that we have geographic disparities in our country and we also have other problems?

Money deals with part of that, but the other part, the more important one, which I think members have talked about a lot more, is called the vertical fiscal imbalance. This is between the federal and the provincial governments and whether or not there is enough money being transferred down.

I can recall giving speeches in this place where I talked about what provincial governments were doing at the same time that the federal government was trying to fight a $42 billion deficit back in 1993. How did this go forward? I talked a lot about it and I tried to stick to my own turf about Ontario. All I know is that at the time Ontario was cutting taxes. That was the big deal: to cut taxes. Suddenly today we find that Ontario is in a deficit position. At the same time, to deal with it, what were they doing? Not only was the Conservative government cutting taxes; it was also downloading costs to the municipalities to deal with their problem and then it was blaming the federal government.

Sometimes provinces will argue that all the problems they have are federal, but let us look at what the facts are. Provinces in fact have every opportunity to raise money that the federal government does. The provinces have the ability to charge personal income taxes, which they do. Corporate income taxes, sales taxes and payroll taxes all are common to the federal and provincial governments.

In addition, they also can tax resource royalties within provincial jurisdiction. That is unique to the provinces. The provinces also have control over gaming and liquor profits, and I believe there are some other ones, but they are uniquely provincial, and then there are property taxes within the non-federal jurisdictions.

To the federal government's credit, we have revenues from custom import duties and taxes to non-residents.

The point is that provincial governments have all the tools to raise the revenue to do what they need to do to meet their obligations under the Constitution. It is the Constitution that provides the division of responsibilities between governments.

If the provincial governments want to play a different game, that is their own purview. If they need funds to meet their obligations, how can they cut taxes? How can the Province of Ontario cut taxes, put itself into a deficit and say that it needs more help?

The federal government is still ultimately responsible for everything to do with the health and well-being of its people, so that we work with the provinces, whether it be on the health file or whatever file, and members will know that the health of Canadians and our health care system is the most important priority of Canadians.

How about an issue such as cities and communities? Why is it, for instance, that a municipality that charges property taxes to take care of infrastructure, with capital payments as well as operating expenditures of a municipality, suddenly is getting help from the highest level, the federal level of government, to assist with roads, bridges and sewers? Then it turns around and starts using the savings it has from not funding its own infrastructure to do other things that have nothing to do with the critical priorities of the community.

We all pay property taxes so we can see that level to level to level there are decisions to be taken, but if we look at what has happened in the Ontario model, for one, we see that we had a situation where, notwithstanding the pressures that are put on to deliver health care services, child care services, infrastructure assistance and environmental investments at the provincial level, the province substantively has seconded that responsibility to the federal government.

Can the federal government say no? Let us consider where we have been. The Government of Canada, through good fiscal management, has been able to produce surpluses and to pay down debt as well as provide tax cuts and enhancements to social programs. It is a balanced approach. It is the balanced approach that has not occurred in the provinces consistently. That has not been fiscally responsible.

All members of Parliament have to make sure, notwithstanding the specific case with regard to the resource revenues for Newfoundland and Labrador and for Nova Scotia, that in the broader context every level of government has to demonstrate fiscal responsibility.

Maybe it is time we had a report card. We need a report card to the people of each municipality, to the people of each province and to the people of Canada on whether or not fiscal responsibility has been achieved, whether or not they have taken on their responsibilities as outlined in the Constitution and as outlined in the provincial revenue-sharing agreements they have with the municipalities and the regions.

I will give hon. members one example, even in Mississauga, and then close. When I returned to my constituency last Friday, I received a note from a senior, a lady I know who keeps me informed about seniors' issues, to advise me that on December 8 there is a meeting at city council where there will be a vote to increase the cost of seniors' transit passes by an additional 25% each year for the next four years. Is this fiscal responsibility?

I am sure we can all find examples. Fiscal responsibility must occur at all levels. I believe that members will find and all agree that in Bill C-24 the arrangements made with the provinces with regard to the $10.9 billion that has been--

[Greg Thompson, Conservative, St. Croix—Belleisle, NB]

Madam Speaker, equalization is one of those arcane debates where not only members' but the listening public's eyes tend to glaze over because it tends to get very complicated and controversial. However, it is worthwhile to lay out what equalization is for our listening audience, if we have one, which I think we do, and maybe for some of our members to remind them what equalization is all about.

Equalization is a constitutionally entrenched program which allows all provinces to offer “reasonably comparable levels of public services at reasonably comparable levels of taxation”. Its goals are “to promote equal opportunities for the well-being of Canadians, furthering economic development to reduce disparity in opportunities, and to provide essential public services of reasonable quality to all Canadians”.

It is a fancier way of saying sharing the wealth with other areas, which is truly one of the unique features of Canada. We cannot say that for all countries. We cannot even say that for our neighbours to the south of the border despite the fact that they do a number of things well. Equalization is unique to Canada. We have to be very proud of it, but obviously it is ridden with its problems and difficulties. We are always trying to strike a balance that works at both the federal and provincial levels.

I want to point out what some of the premiers are saying, and then I will go on to our position as a federal party. The province of P.E.I. is an example. We have heard from Nova Scotia and Newfoundland today in the House, but I wanted to point this out because Newfoundland is obviously missing members of Parliament on the Conservative side. I guess we will have to work on that problem in the next election.

The treasurer from P.E.I., Mitch Murphy, is suggesting that cuts to equalization payments may be unconstitutional. He suggests that those cuts to equalization, what we are hearing now and his up to date figures, would indicate an additional $25 million loss, which would bring the total loss in revenue to P.E.I. in the next year to something like $78 million, a substantial amount of money. In my home province of New Brunswick, the premier is looking at a loss of about $100 million this fiscal year if the current formula holds.

What we are discussing now is Bill C-24. Bill C-24 is a bill that would bring in some changes to the arrangement, but I want to put on the record where we stand on it as a party, the Conservative Party of Canada. The Conservative Party of Canada views the equalization program as an essential component of Canada's nation-building efforts. In short, we support it in order for Canada's provinces to grow and prosper. It is important that a strong and effective equalization program be in place.

We accept some of what is in Bill C-24 because in fact the government accepted some of the ideas that we have thrown out during the election period and right here on the floor of the House of Commons. Bill C-24 addresses some of the concerns shared by the Conservative Party of Canada, the provinces and territories, notably the provisions for additional federal equalization and TFF, territorial funding formula, and a structure that sets the total level of funding going forward, not backward. These changes are an admission by the Liberals that their methods are flawed, were flawed in the past, and that the Conservative Party and the provinces have been right in calling for changes. Some of those changes again are inherent in this bill.

Unfortunately, Bill C-24 does not address how the equalization and TFF will be allocated among the provinces and territories from 2006-07 forward. We have to look into the future. One of the things we are suggesting, which again is in this bill, is that it examine the report or the future funding levels through a panel of experts. The government is doing that and it has bowed to some of the pressure we have put upon it to do that very thing. At the end of the day, the federal Liberals will retain the ultimate decision-making in the equalization formula. Although the panel of experts is a step in the right direction, at the end of the day the government will basically call the shots.

Again what I am suggesting is that the government is putting its own political agenda ahead of the provinces and the need for a fair and sound formula. Then there is the other point I want to make about what it does not address. This is a point that the members from Newfoundland and Labrador point out every time they are on their feet on this side of the House, although there is an absence of that on the other side of the House in terms of debate.

Our members from Newfoundland and Labrador and Nova Scotia consistently have talked about the inclusion of non-renewable resource revenue in the current equalization formula. Under the current formula, provinces that benefit from non-renewable resource revenues are subject to a clawback that results in lower equalization payments. We are saying that this should be included in the bill. We support the ending of that clawback so there can be no disagreement.

As you know, Madam Speaker, although your riding is far removed from Newfoundland and if I am not mistaken is in the heart of Ontario, during the election the Prime Minister made that promise in Atlantic Canada. He did that when the bottom was falling out of his campaign and he did it for one reason only: votes. It is very simple.

In the middle of the election he made a promise to the Canadian people, particularly those in Newfoundland and Nova Scotia, for votes. As some members have already mentioned, we probably should have had the Prime Minister put that in writing and sign it. But he is on the record. He was on national television. He went over there and made that promise to resurrect Liberal fortunes on the Island, in Nova Scotia and in Atlantic Canada in general, and he has reneged on those promises. That is wrong.

In terms of the Conservative Party policy, we have four recommendations.

The first is to allow reforms in the 2004 budget to take effect.

The second is to provide a formula driven approach. We have always been in favour of a formula driven approach that works and is consistent.

The third is to provide incentives for sustainability by carving out resource revenue from the equalization formula. I have spoken on that previously.

The fourth is to remain committed to the five year renewal schedule.

I believe that we can do better, as I have pointed out. I will leave my arguments at that and look forward to questions and comments from my colleagues.

[Bill Casey, Conservative, North Nova, NS]

Mr. Speaker, I will be sharing my time with the very distinguished member for New Brunswick Southwest who was recently elected co-chair of the Canada-U.S. Committee. We are all very honoured to be in his midst. He is a very distinguished member. We are pleased that he shares this House with us.

We agree with the direction and concept of Bill C-24. We certainly agree with the concept and principle of equalization. As this country's fortunes shift from province to province and region to region, it will always be an important part of our being and our whole essence that parts of our country that are more prosperous and have more resources share some of their resources with areas that are not so prosperous.

I think it was the member for St. John's South—Mount Pearl who told us how Newfoundland and Nova Scotia used to send salt cod to Alberta. I am sure it appreciated that at the time. I do not know if Alberta would appreciate it now or not, but it appreciated it then. However, it just goes to show how fortunes have changed. That proves the point that this equalization formula is fair and is necessary for our country.

It is not a figment of our imagination either. People should know that it is in our Constitution. Subsection 36(2) reads:

Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

I think that is a fair assessment of what we are talking about here today. Another part of this whole concept of equalization that we have been pushing in the Conservative Party is the concept of removing the natural resources revenues from the equalization payments. Basically a province that has a defined quantity of a natural resource would have a very short window of opportunity to pull ahead and become a have province rather than a have not province.

It is such a shame to see a province like Newfoundland or Nova Scotia that has a resource which is defined and will be gone some day. It is a shame to see all those revenues clawed back by the federal government and at the end of the day when the resource is gone, Newfoundland, Nova Scotia or another province, that has a resource that has been totally exhausted, is right back where it started. The resource did no good for the province or for the region.

We would like to see the natural resources revenues removed from the equalization payments because these are finite amounts of resources. They come and go.

In the case of Newfoundland, I understand that 40% of its gas or oil resources, I am not sure which it is, has already been exhausted. It will not be long before all its resources are exhausted, a matter of a decade or two, whatever, and then it will be right back where it started. It needs that money now. It needs that money from these natural resources to build alternatives, to build economies, and to build infrastructure so that it can compete with the rest of the country. It is critical that these natural resources be removed from the equalization formula. It is not in Bill C-24. However, it is something we would like to see in Bill C-24.

This brings us to the promise that was made during the election, that all offshore gas and oil resources revenues would go to the provinces of Nova Scotia and Newfoundland. We now know that the provinces are trying to negotiate to get this deal back. The way I look at it, the Prime Minister went to Newfoundland and said--he obviously knew they would lose seats in Newfoundland--that if Newfoundlanders voted Liberal, he would give them 100% of the gas and oil revenues. Newfoundlanders, to a great extent, kept their end of the bargain. However, as soon as the election was over, the Prime Minister said that we have to negotiate.

It is interesting that today the Prime Minister said how much better his offer was than the opposition's offer. I am not sure which offer he is talking about. I am not sure if he is talking about the offer made during the election or the offer he is trying to slam through now.

Newfoundlanders and Nova Scotians will stand their ground and insist to get the deal that was made during the election because that affected a lot of votes. The Liberals said, “You vote for us, we will give you 100% of the revenues. No time limits. No caps. No nothing”.

Now of course we know that they are trying to negotiate another deal. The Prime Minister refers to their offer as a good deal. Perhaps it is better than what was there before, but it is not the deal that we were promised during the election. In my view, the Prime Minister has a verbal contract with the people of Nova Scotia and Newfoundland and he must honour that deal.

I find it interesting that in the debate tonight the Liberal members are talking about a lot of numbers and I cannot even follow them. I cannot follow all the tos-and-fros and the complex arguments they are making when it is really quite simple.

It is about keeping commitments and keeping one's word, and helping provinces that need help. When Liberals stand up to make a speech, I cannot follow them. When we make a point about keeping our offshore gas and oil revenues in Nova Scotia and Newfoundland, they stand up and say we are not talking about Bill C-24. What is the point of talking about anything if they do not keep their word in the first place.

The commitment by the government to allow Nova Scotia and Newfoundland to keep 100% of their gas and oil revenues is very much a part of the debate tonight. It may not be actually written in Bill C-24, but it is the word of the government that is at stake. If the government makes promises and does not keep them, then Bill C-24 or any other commitments are really not worth a lot anyway.

We are very much of the opinion that gas and oil revenues should be taken out of the equalization payments. I go back to 2001 when Premier John Hamm from Nova Scotia started this debate with the campaign for fairness. The fairness component referred to when Alberta was starting to realize it had gas and oil revenues and started to realize the benefits. It was allowed to keep its resource revenues from those resources 100%, no clawback, no caps, no limits, no nothing.

Premier Hamm's position was that Nova Scotia, Newfoundland and the other provinces on the coast should have exactly the same deal. He called it the campaign of fairness. He waged that war for a long time all by himself. It turns out now that the groundwork he laid was very effective. Newfoundland got involved with it during the campaign.

Premier Danny Williams, another Conservative premier, asked the Prime Minister if he would match the opposition's proposal to remove gas and oil revenues from the equalization formula and the Prime Minister agreed. He said yes publicly, on camera and on the record, that Newfoundland and Nova Scotia can keep 100% of their resource revenues and it will not be part of the equalization formula.

We know what happened since the election. The government tried to negotiate a much different deal. That goes to the point of credibility of the government. We can talk about Bill C-24 and equalization payments, but if the will is not there to keep its commitments and its word, then it hardly matters what we do in the House, unless the government will honour its commitments.

That is our position. We support Bill C-24. We would like to see the gas and oil resource revenues removed from the equalization payments. We want to see the minimum amount of money that the Liberals have committed to the programs stay in so there are no giant fluctuations. However, we should all understand that the concept is solid and valuable, and the circumstances of today will certainly not be the circumstances of tomorrow. Wealthy areas of Canada that are experiencing good times now may some day not have those good times and this money may shift around.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Speaker, it is a pleasure and an honour to speak this evening to Bill C-24. Canadians understand that equalization has been one of the pillars of our federation for more than four decades now. To begin with, the equalization and the territorial formula financing programs ensure that all Canadians, no matter where they live, have access to reasonably comparable public services. This commitment helps to ensure that all Canadians are treated equally from coast to coast to coast.

However, the provinces and territories have been complaining for several years now about how the federal government funds the equalization and territorial formula financing programs. They have spoken about the planning difficulties they face as a result of the year to year swings in the amount of payments they receive under these programs.

These are legitimate concerns and our government has done everything we can to address them. However, the very good news is that on October 26, Canada's premiers and territorial leaders agreed to the government's framework for equalization. This new framework represents the most fundamental and sweeping changes in the program's history. The goal of this new framework is nothing less than to make payments to the provinces and territories more stable and predictable, while significantly increasing the overall level of funding.

The new framework includes five elements: first, an overall floor of $10 billion for equalization and $1.9 billion for territorial financing for the current fiscal year; second, complete protection for provinces and territories against overall individual declines in payments in 2004-05; third, an increase in the funding base for 2004-05 rising to $10.9 billion for equalization and $2 billion for territorial financing; fourth, a guarantee that equalization and territorial formula financing payments starting in 2006-07 will grow by 3.5% per year until 2009-10; and finally, the creation of an independent panel to provide advice on allocating these moneys among provinces and territories.

Let us take a look at what these changes will mean. Over the next decade, this new framework will provide $33 billion more in equalization and territorial financing payments to the provinces and territories. That is an astonishing sum of money. For the sake of comparison, it means that equalization payments will increase from $8.9 billion in 2004-05, what they would have been without the new framework based on the earlier estimates, to $12.5 billion by 2009-10. That represents an increase of 42% overall, or more than 7% per annum on average.

The idea that Canadians should have access to the same high quality of health and social services regardless of where they live is so fundamental to the fairness and integrity of the Canadian federation that it is protected by the Constitution in the form of equalization.

In short, the equalization program transfers money to the less prosperous provinces and territories in accordance with a formula based on the revenue raising capacity of each province. This means that as a province becomes more prosperous, its equalization entitlement declines.

In fact, equalization payments are designed to make up the difference so that Canadians in any part of the country have access to the quality social and health services they expect and demand.

As well, they prevent the less well-off provinces from having to resort to tax rates that would be bad for the economy in order to be able to afford to deliver such services.

In order to cast some light on the importance we assign to the equalization program, I would remind hon. members that the Prime Minister has announced an improved equalization framework. This new framework represents probably the most important change in the program in its history.

The intent of the changes is to bring stability, predictability and growth to the overall level of funding for these programs, in accordance with third party advice on the best way for the Government of Canada to allocate payments among the provinces and territories.

The changes to the programs would encompass three important elements: complete protection for provinces and territories against overall and individual declines in payments in 2004-05; a new framework for equalization and territorial financing starting in the fiscal years 2005-06; and an independent review of the programs by a panel of experts.

The new framework will, therefore, make payments to provinces and territories more stable and predictable, and ensure the sustained growth of financial assistance.

With respect to the financial impact, over the next 10 years the new framework for these programs will be $33 billion more in equalization and TFF payments to provinces and territories than the amounts estimated at the time of budget 2004, a significant increase.

The equalization program is a faithful reflection of the sense of sharing that characterizes the Canadian nation.

I would also be remiss if I did not point out to the House that our government is committing an additional $41.3 billion for health care as part of its 10 year action strategy on health, agreed to by the Prime Minister and the provincial and territorial leaders last month. This brings me to my closing point.

This new $33 billion framework for equalization and territorial formula financing, when combined with the $41.3 billion in new health care funding, will result in a cumulative and whopping increase of $74 billion in new money transferred from the federal government to the provinces and territories over the next 10 years. By any stretch of the imagination, this is a huge sum of money and it illustrate's our government's commitment to ensuring that Canadians are treated fairly and have access to reasonably comparable levels of service, no matter where they live in the country.

The significant influx of new money to support health care and other national priorities is the direct result of two specific initiatives. Let us give credit where credit is due. First, the hard work and sacrifice hundreds of thousands of Canadians who helped boost our economic performance to a level that is the envy of our G-7 counterparts and a host of other industrialized nations around the world. Second, it is also a product of our government's commitment to disciplined spending practices, balanced budgets and debt reduction.

Since 1997, we have posted seven consecutive balanced budgets and reduced our federal debt by more than $61 billion. This has freed up an additional $3 billion annually and lower interest charges to help fund the priorities of Canadians.

Our government recognizes the need to ensure that all provinces and territories can offer the best possible services to their citizens. The equalization and territorial formula financing programs are clear evidence of our commitment in this area.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member for St. John's South—Mount Pearl has been a very forceful speaker on behalf of Newfoundland. It is helpful for the House to hear that perspective.

The member laid out in his speech that the nation-building principle is enshrined in our Constitution, but that indeed it is the Federal-Provincial Fiscal Arrangements Act that from time to time is amended to take into account new cooperation between the federal and provincial governments.

Having said that, we seem to drift a little bit away from Bill C-24, to be generous. However I know this is very important to the member and to all Canadians, quite frankly, because the measure of success of a country is not an economic measure; it is a measure of the health and well-being of its people and dollars simply will not do it.

The hon. member concluded by saying that this is what they would like to have, so that once they achieve some parity with, for instance, the Ontario benchmark, as it were, then equalization could kick in again to help other provinces. That is an interesting perspective. My question relates to what happens after that.

What happens once Newfoundland has been able to bring its dollar figures up to that Ontario standard with a non-renewable source of revenue from the oil? There has to be something after that. Maybe the member would like to share with the House how we start working on what happens after. What does it mean in terms of how we make sure that there is not a false start yet again when we consider all of the moneys that have been invested over a large number of years in programs that have not been able to trigger that self-generated economic growth and well-being for the people of Newfoundland? It is important to hear the member's perspective.

[Loyola Hearn, Conservative, St. John's South, NL]

Mr. Speaker, I am delighted to have the opportunity to say a few words on Bill C-24. I thank my colleague from St. John's East for sharing his time with me.

When we talk about equalization, quite often we hear people saying, “There goes Newfoundland and Labrador again, looking for more money”. Let me just put on the record quite clearly that our province is not the only province that gets equalization.

Newfoundland and Labrador, according to the legislation, next year will receive--and there is some argument about this--$860 million, probably closer to $861 million, but Manitoba will receive $1,600,000,000, twice as much. New Brunswick will receive $1,347,000,000, almost twice as much. Nova Scotia will receive $1,343,000,000, almost twice as much, and Quebec of course will receive $4,798,000,000, which is just about six times as much.

So right from the start let us make it clear that Newfoundland and Labrador is not the only province in the country that receives equalization.

The legislation itself, as far as it goes, basically just legalizes a process of delivering the equalization payments to the province, adjusting the formula somewhat and legalizing payments. As far as it goes, we have no problems with it. It is where it does not go that causes us real problems.

Equalization has its basis in section 36 of the Constitution. It is a redistribution program aimed at nation building. I want members to remember nation building, because I will come back to it in a moment.

The formula itself is not in the Constitution. Instead, it is set out in the Federal-Provincial Fiscal Arrangements Act. And here is the thing that worries us, particularly in light of negotiations that are going on at present. It has changed a number of times since its inception in 1957. It has changed a number of times and the concern of course is that if it changed once, it can change again. The enactment does not deal with non-renewable resource revenue sharing outside of equalization, and that is the other thing that scares us.

Let us talk about nation building and just talk about what some of the hon. members opposite think about equalization as it deals with nation building. Let me quote one of them. He said:

--we are now 10 independent little countries.

I respectfully submit there is no sense of nationhood or nation building out of these moneys. We have 10 little emperors. Each has his hands on ridiculous amounts of money. They erect trade barriers which interfere with each Canadian's ability to move from province to province and to practise his or her trade.

If I had any impact on the finance ministers of Canada, and that is somewhat dubious, I might ask some rather fundamental questions. How do these equalization transfers help build Canada? How is Canada better off at the end of the day once these transfers are done? How will Canadians know that their money is well spent?

The hon. gentleman actually went on to say:

I cannot quite fathom how we should take $1 billion worth of transfer moneys given to the Government of Newfoundland [and Labrador] own funds, not call on the federal transfer and still complain.

One would wonder who would say it like that, first of all to ridicule 10 provinces and 10 premiers and say they are a bunch of greedy little emperors with their grubby little fingers out reaching for federal dollars, and then to complain that Newfoundlanders or perhaps people from the north or any province with natural resources would sit back and not try to develop their own resources because Ottawa is passing out the money to them.

The interesting thing about it is that the statement was made by the member for Scarborough—Guildwood when he was the member for Scarborough East about four or five years ago.

So when we hear the hon. member, now the parliamentary secretary, constantly belittling equalization and trying to prevent the government from proceeding with its deal to give provinces that have non-renewable resources a fair shake, to develop these resources outside of equalization until and only until they become contributing provinces, this is where the problem is coming from, from people like that.

There he is on the record proving himself to the people of Canada. Maybe his own party will look at him and others who are the naysayers, including the President of the Treasury Board, by the way, and show some leadership.

The Prime Minister today in question period, in answering the question from the Leader of the Opposition, in referring to the deal the federal government has offered Nova Scotia and Newfoundland, said how much better off “our offer is than the Conservatives'”.

The offer that the Prime Minister made was a very good one. The offer he made Newfoundland and Labrador, the offer he made Nova Scotia, was a very good offer. He promised it during the election campaign. The problem is that it does not matter how good the offer was if he has no intention of delivering on that promise or the offer, if the little minions on the other side are saying to him, “You cannot, you cannot, help. One of these days these provinces might be as rich as Ontario. We can never let that happen, Mr. Prime Minister”.

We have a Prime Minister who came to Newfoundland and Labrador, who came to Nova Scotia, and in the case of Nova Scotia the day before the election, to try to save a few seats and save face, and promised to do what any good Prime Minister should do: give them a fair shake.

Do members know what are we asking for? Remember Oliver Twist and “Please, sir, I want some more”? That is almost the position we are in. We are not asking for anything from this government, or anything from this House, or anything from this province, or anything from this country.

What we are asking is that we can keep our share, not the whole amount but our share of our resource, which in reality is less than 50% of the total resource. We get less than 50%. The province gets to keep about 30%. The federal government wants to claw back 70% of our share, less than 50% of the total, on top of the 50%-plus that it has anyway. All we are saying is please let us keep our own revenues until we become a contributing province. Then the government can take equalization and help those who need the help.

Equalization in itself, as we know, is a bit of a joke, because the funds certainly do not equalize anything in this country. It just helps, however, some provinces that are not in a position to help themselves.

Therefore, let us say when we look at a bill like this that as far as it goes all it does is legitimize the delivery mechanism for the next round of equalization payments. That is fair ball as it goes. However, here is what we must look at and why we have so many concerns. When we hear a Prime Minister talk about an offer which he has no intention of fulfilling, when we see members throwing in every monkey wrench they can, when we see that there is no protection in legislation that the equalization will not be changed next year or the year after, is it any wonder that we are holding out for a good deal? No, it is not, and let me tell this House that until we get the deal we want, we will not be signing anything.

[Norman Doyle, Conservative, St. John's North, NL]

Yes, Mr. Speaker, I have something to say about Bill C-24. We as a party support certain components of Bill C-24. The fact that this particular bill will be the subject of a review by a panel of people who will meet over the next year or so to make recommendations on equalization is a positive step.

However I think a full year to review equalization is too long. When we have been talking about equalization for the last 20 to 25 years, I do not know why we need a full year to talk about equalization again. It seems that when the government introduces a committee or a study, it is given a full year. The Gomery commission is one example. I wonder if the government is contemplating an election in the spring when it can tell the people that the sponsorship scandal cannot be talked about because it is before a committee. The equalization will not be a factor in that election because the committee looking at equalization will not report for a full year.

It seems to me that we are supposed to feel and think that the federal government is taking the right direction here but after talking about equalization for 20 years I fail to see why we need another full year to study this particular issue. However we in the Conservative Party at least support the fact that we have a panel of experts to look at this particular issue because it is an important issue facing the people of the country.

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I listened to the hon. member's speech but I did not hear too much on Bill C-24, the bill that is in front of the House. I heard a lot about offshore accords but I did not hear much on the actual subject matter that is before the House.

I wonder whether the hon. member has anything to say with respect to Bill C-24.

[Norman Doyle, Conservative, St. John's North, NL]

Mr. Speaker, I will be sharing my time with the member for St. John's South—Mount Pearl.

I want to make a few remarks on Bill C-24, an act to amend the Fiscal Arrangements Act. It is quite a complicated act, but what it means is that we are making some changes in Canada's equalization program.

Bill C-24 is quite timely given the current set of negotiations that are ongoing between the federal government and the Governments of Newfoundland and Labrador and of Nova Scotia regarding the division of offshore oil and gas revenues and how equalization could very well factor into all of that.

While Bill C-24 does not address that issue directly, it is nonetheless a bill that acknowledges that some changes are needed in equalization as it currently is and how it applies to various provinces in Canada.

First let me say that the Conservative Party views the current equalization program as an essential component of Canada's nation building. In order for Canada's provinces to grow and prosper, it is important that we have a good, strong equalization system in place and it is equally important that this equalization program effectively deals with the problems that have not provinces have. By striking a panel of experts to revisit the current equalization formula, the government has acknowledged that there are problems with the current formula.

We are pleased that the government has bowed to a little bit of pressure from the provinces to hold this review and we, in the Conservative Party, are eagerly awaiting the results of that review.

One of the drawbacks of the equalization program that I and my colleague, the member for St. John's South—Mount Pearl, have raised consistently over the past seven years has to do with the clawback of a province's non-renewable resource revenues by Ottawa through corresponding reductions in the equalization payments.

I do not know if all members are aware of this but at present, for example, Ottawa claws back 70% of Newfoundland and Labrador's provincial oil revenues. Under that kind of an equalization system, a province is prevented from economically drowning, as we are all aware, but the clawback effectively prevents that province from making any progress on its own. The clawback provisions so far have seen the lion's share of Newfoundland and Labrador's oil money, for instance, ending up in Ottawa.

When we were embarking on the oil industry in Newfoundland and Labrador, that was one of the reasons the province insisted on an extensive multi-billion dollar concrete production platform for its first oil field, which was Hibernia. If the province had gone through a cheaper Hibernia production system and more revenues, most of these revenues would have ended up in Ottawa. Knowing it would have had the money clawed back under the current equalization program, the province instead opted for jobs and industrial benefits.

The equalization clawback became a major election issue in Newfoundland and Labrador and Nova Scotia in the most recent federal election campaign. As a result of that, the Prime Minister and the Minister of Natural Resources called Premier Williams and promised that Newfoundland and Labrador and Nova Scotia would get to keep 100% of their offshore oil revenues without those revenues being subject to the clawback provisions of the equalization formula that we operate under today. At the moment of course we are waiting patiently for the Prime Minister to keep his election promise.

Unfortunately, the Minister of Natural Resources turned the province down and broke his promise and said essentially to the people of Newfoundland and Labrador that here were a few crumbs and that they could take them or leave them. That was his attitude.

We are hopeful that the Prime Minister will keep his promise because we already have a promise in writing from the minister who represents Newfoundland and Labrador in the federal cabinet, the Minister of Natural Resources.

Some observers of the June 28 election have been saying that the province should have received the Prime Minister's promise in writing. However, given that the Prime Minister had made his promise on prime time television, that was not a major consideration at the time. As I mentioned earlier, the Minister of Natural Resources did follow up on the Prime Minister's verbal promise and provided a written statement to the people of Newfoundland and Labrador, specifically to the people in his own riding. I have a copy of a flyer he sent out to people in his riding which states, “The Prime Minister has given me the responsibility of finalizing a deal on the Atlantic Accord as soon as possible that will bring Newfoundland and Labrador 100% of its offshore oil royalties without having any effect on the province's equalization payments”.

It could not be said a whole lot clearer than that.

I am at a loss to understand why the federal government, right in the middle of this equalization debate that is going on across the country, is dragging its heels on this issue and why the Minister of Natural Resources, who represents the province of Newfoundland and Labrador, would offer the people a few crumbs and tell them to take them or leave them.

I have spoken on a number of occasions to this particular issue because it is an important issue to the people of Newfoundland and Labrador. I feel in my heart of hearts that the Minister of Natural Resources should apologize to the people of Newfoundland and Labrador for breaking that promise. He should apologize to the people of Newfoundland and Labrador for his lack of concern for the struggle that Newfoundland and Labrador has had to undergo ever since Confederation to get its rightful place in the Confederation of this country. The minister, most of all, should apologize to the people of Newfoundland and Labrador for putting the party first instead of the province. He should be ashamed.

I have absolutely no reservation about standing here today to repeat in this equalization debate what I have said many times before since the promise was made by the Prime Minister of Canada to Newfoundland and Labrador. I have absolutely no reservations in saying to the Minister of Natural Resources that he should resign rather than break such an important promise to the people of Newfoundland and Labrador.

This is a very important issue and it gives the member for St. John's South--Mount Pearl and myself the opportunity once again to talk about the most important issue facing the people of Newfoundland and Labrador, and that is the broken promise of the Prime Minister and the broken promise of the Minister of Natural Resources concerning equalization.

As a result of that I feel very strongly that the minister should resign. The least he should do is apologize to the people for his broken promises and the fact that he would tell the people of Newfoundland and Labrador to heck with the promise and then offer them a few crumbs saying that they could take them or leave them.

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Natural Resources]

Mr. Speaker, I am pleased to speak to Bill C-24 today. I am going to talk first about the equalization environment but most of my time will be spent on how this will affect the territories and particularly my riding of Yukon. I know that my colleague from Mississauga South will elaborate in great detail on the formula as it relates to the provinces.

On October 26, as everyone knows, the Prime Minister met with the provincial premiers and territorial leaders to discuss the changes in the equalization formula and the territorial formula financing programs that were put forward by the federal government in the September meeting. My colleagues in the Bloc were complaining that the parliamentary secretary said it was almost historic. It was not almost historic; it was historic. This is the most significant improvement in equalization and territorial financing programs in their history.

By providing predictability, stability and increased funding, the new framework will play an essential role in ensuring that Canadians no matter where they live have access to comparable public services.

The new framework for equalization and territorial formula financing will increase the support provided to provinces and territories by $33 billion over 10 years. Regardless of the details of the changes in the mechanism, I think the bottom line will be a huge increase in funding of $33 billion.

Officials in the various provinces and territories will be happy to have an increase in the funding available to them to provide their services. This will assist Canada's less prosperous provinces and the three territories in meeting their commitments under the 10 year plan to strengthen health care as well as funding for other important social and economic development.

As members know, an historic health care agreement was signed recently and the federal government has put in a substantial amount of money. But of course the provincial and territorial governments have to come up with a major share of the funding and this increase in equalization will also help them with their health care over and above the extra funds we have provided in this area.

The spirit of cooperation in which this agreement was developed so new in this mandate is of course very important because it reflects on a lot of other agreements and on a lot of other work that we have to do with the provinces and territories.

We are working on the new child care deal and the deal with cities and communities. We have work to do on the environment and a number of projects with the provinces and territories, so the fact that they have been able to work closely together with the federal government is an excellent start to this mandate.

These increases are not going to stop this year but will carry on. In 2005-06, the funding levels will be set at $10.9 billion for equalization and $2 billion for the territorial formula financing, the highest levels ever reached by these programs. It will go on from there and still increase, because both amounts are going to increase by 3.5% a year starting in 2006-07. Equalization payments will therefore increase from $8.9 billion to $12.5 billion over the first five years of the new framework, a 42% increase.

Just to ensure that when the new formula comes into effect no one goes backwards this time related to the old formula, there was also a floor put on it so that no province or territory will receive less than was originally predicted in the 2004 budget under the old system.

I want to talk more specifically about the territorial financing formula, because it is a different scenario than equalization financing. At the time of the meetings, the equalization process and the territorial financing formula were quite different. They have somewhat different objectives, and I will get to that later on.

At the meeting held from September 13 to September 16, changes were made to the territorial financing formula that are the most significant in history. The changes were made to try to make these payments more stable and more predictable for the territorial governments. The old formula had a lot of determinants and was very complex. Several years behind the statistics arriving, it could result a reduction in funding that made it difficult for the territories to cover certain fixed costs.

To address concerns about the levels of financing and increasing financing, beginning immediately the government will provide protection against those declines, thereby providing stability. The overall level of 2004-05 for the three territories will be protected with $1.9 billion. There of course will be a guarantee that no territory will receive less than was estimated at the time of budget 2004.

The new framework will establish fixed payment levels, and provide predictable and growing funding for the territories. As the provinces will go up, the territories will go up and their funds will go up to $2 billion. It will also grow at a rate of 3.5% a year. Over the next 10 years and subject to review after the first five years, these changes will provide an estimated $4 billion in territorial formula financing, compared to the annual amounts in 2004-05. There are all sorts of challenges to governing in the territories and I know this $4 billion in extra funds will be well received.

All this of course is on top of the extra funds of $41 million in the health care agreement that was signed and invested in the provinces and territories over the next 10 years. This is an excellent sign for future fiscal cooperation. Within a few weeks, the new House has a historic deal on health care and then a historic deal on equalization,

I want to speak about how the agreement and the funding will affect my riding in the Yukon Territory. Once again, it would like more funds and it would like stability in its funding to help cover fixed costs.

The current data indicates that the Yukon Territory will receive about $448 million in this fiscal year of 2004-05 representing $14,907 per person. Even though the territorial financing in Yukon has increased each over recent years, and it has been growing steadily, there were still concerns about the adequacy of funding. I am sure in that respect Yukon will be happy for this additional funding.

The economic environments in the territories are a boom and bust cycle. As I said earlier, if certain parts of the formula were to go down there could be a sharp decrease in the funding available and governments have fixed costs.

Therefore, the territorial financing is slightly different in purpose from equalization. My territory wants to ensure people understand that equalization is to ensure that as the various provinces exceed in prosperity, whereas others are having a rough time at a particular time, then there is equalization of funding so that they can provide similar equivalent services. At any particular time one province could be having a rough time in obtaining equalization payments and at another time it may have a boom and prosper, and can help out those provinces that are less able.

The territories have a fixed challenge that will be there all the time, in that they have a very northern harsh climate and it is very costly to deliver government service. Relative to the rest of Canada there are few constituents in a very large area that increases the costs of delivering government services. There are of course very few taxpayers to fund those services.

Therefore, just the challenge of operating a government in such a harsh situation requires added funding. That is the purpose of territorial financing. It is to ensure that there is increased funding to cover these added costs.

There are always fixed costs. To have a government in place, there are fixed costs regardless of the situation in population, the economy and taxes available. We can only go down below a certain level. The floor permits those funds from going down.

A member suggested earlier in the debate that the government may not recognize the added funding requirement to do business in the north. That is not true. There has been a tremendous recognition by the government. I know that northern members have been very excited and happy about some of the special arrangements that have been made for the recognition of these added costs in the north.

I will refer to a couple of examples of the recognition of the added costs of doing business in the north, which is why we have extra money in the territorial financing formula to help cover those costs.

The first example is with health care. As we know, there was a historic agreement between the federal government and the provinces for health care in 2003. Every province and territory received funds, but in recognition of the added costs of health care in the north, the territories were provided an extra $20 million in that agreement.

Coming along to the new agreement on September 13 to 15, as everyone knows, there will be $41.3 billion provided to the provinces and territories over the next 10 years. Of that, my riding in the Yukon Territory received another increase in funding for health care. Our proportion was at, first of all, $3 million for the health transfer, $34 million for the Canadian health transfer base and $.5 million for medical equipment. That is more than $37 million in additional funds. I am reading out of the November 23, 2004 Hansard . That is another $37 million in recognition of the added costs of providing services like health care in the north.

In places like Vancouver or Toronto when a serious incident occurs, someone could get into an ambulance for very little cost and in very few miles that person would be in a hospital. Whereas, such a situation in Nunavut, the Northwest Territories or Yukon could take $5,000, $10,000, $20,000, or $25,000 simply in Medivac fees for small planes, and in special spots large planes, to get these people to a hospital where major surgery could occur. Of course, with only 100,000 or so people in the north, there is not a large enough volume of people to maintain specialists in every discipline there. That would not make any sense either, so people have to go outside for those specialists and that is another tremendous cost in the north.

We are absolutely delighted that the government has recognized those special costs in the north with the $20 million in 2003 and the extra $37 million in this year's agreement. In this year's agreement there will also be other moneys that will be very helpful in the northern parts of Canada. There was money for aboriginal people related to health care. About 23% or so of my riding is made up of aboriginal people. We are very happy with the attention being paid to aboriginal people.

The first part of that money is $200 million for the health care transition fund. As we know, there are a number of programs delivered by various bodies to aboriginal people and this will help ensure a seamless service there.

There is also, as I mentioned in the debate this morning, $100 million for the aboriginal health human resources initiative. I applaud the government and the Canadian Medical Association for trying to ensure that there are more aboriginal people and professionals working in the health care system.

There is also $400 million over the next five years for health promotion and disease prevention for aboriginal people. In my personal opinion, this was one of the exciting components of the 2003 agreement because the money invested in prevention and promotion is certainly saved many times over when dealing with the health care system.

All the money has been given especially to the north to deal with its special problems, challenges and extra costs in health care. Over and above all of that, the Minister of Finance made a special deal due to these extra costs and provided in the deal in September for an extra $150 million over five years, $65 million for the territorial health access fund, $10 million for the federal-territorial working group, and $75 million for medical transportation.

This kind of money can be used for services like Telehealth, which is an essential way of reducing the Medivac costs. If it can be done with modern technology, where I think we are leading in some ways, medicine over the computer with screens and X-rays can sometimes prevent a trip south and save the costs I was speaking about earlier of $10,000, $20,000, or $30,000, but more important, it can save lives. It was very heartwarming for me to hear about a person whose life had been saved by some of that recently funded equipment.

The other example for my colleague opposite who suggested that the difference was not recognized in the north relates to the infrastructure programs. As we know, when these programs first came out, they were totally done on a per capita basis. For the reasons I stated earlier, this would not make any sense in the northern territories. We could not possibly make enough progress. We have vast areas to cover. If we are building a road, or a sewer along that road, there may be only two or three taxpayers, whereas in an urban area, there would be many taxpayers. That particular sewer could buckle due to permafrost and heaving. We would have all sorts of extra heating costs. In fact, sometimes we would even have extra freezing costs because we do not want the infrastructure to thaw and, therefore, buckle. It is much more complicated, much more expensive, and there are less resources available.

When the strategic infrastructure program came in, the government very kindly agreed to the point made by the members from the three territories. Instead of providing roughly $600,000, which might fix the length of one road and one sewer in a community, and I could tell members that we have needs, the government said, “We will give you a base amount”. A few years ago I saw one of those sewers that was being replaced by the infrastructure program and it was still made out of wood staves. We got $20 million per territory so that we could realistically deal with those challenges in the north.

Subsequently, the strategic infrastructure program was very successful across the country. With major projects being done that could not be funded by all the projects that were done under the smaller community and rural infrastructure funds, that were also very popular, this program was increased again. Once again, instead of getting a few hundred thousand dollars, the territories got $20 million. I know in my riding, for instance, we are finalizing the rebuilding of the Alaska Highway with that money, which is important to our economy, resource extraction and tourism.

When the municipal rural infrastructure fund comes in, all of rural Canada has to thank the government because most of that fund goes to rural Canada, and it is a big chunk for the north. We would have received $600,000 if it had been done on a per capita basis but, instead, our riding will be receiving $15 million. The eight municipalities and the first nations in my riding have a lot of projects waiting for that fund.

Over the next 10 years there would be $4 billion of extra funding for the territorial funding formula. I thank the government and congratulate it on its success in this new regime.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, it is a strange ritual that goes on with questions and answers when the parliamentary secretary spends the first half of his time seeking clarification as to whether we are supporting Bill C-24. As I said in my speech, yes, we are.

Secondly, he wanted to know whether we favoured the new formula that is contained within the bill. Yes, we do, which is why we are supporting it. However we can turn around a lot of figures, and to every single household, especially low and modest income households, it sounds like a pile of money to say that as a result of this new formula that Nova Scotia will get $151 million extra dollars. That is a large amount of money but it absolutely pales in comparison to the massive blows, and we are not just talking cutting and slashing, but almost death blows that have been dealt to a good many basic services that had to be cut back or eliminated in Nova Scotia over the last number of years.

I will cite one example. While I was in my riding on Friday, I met with a tremendous young woman who heads up an organization that works on behalf of persons living with disabilities. It is devastating what has happened to persons living with disabilities on their own and to the families working to support family members living with disabilities as a result of the combined impact of the cuts to education funding, the cuts to health care funding and the cuts to public transit. For persons living with disabilities to get to a doctor's appointment with three weeks' notice on accessible transportation is challenge enough, never mind the persons living with disabilities who are ready, willing, able and qualified to fill jobs in the community but cannot fill those jobs because they have no way to get to work.

If that does not demonstrate how pathetically short-sighted, never mind mean-spirited, the hacking and slashing has been over the last eight years, I do not know what else does. Yes, $151 million more into Nova Scotia's coffers will be welcomed, but they will not come close to repairing the damage.

I could cite a lot of other statistics about the size of the student debt load. The average debt load for a student graduating in Nova Scotia the year before last was $25,000, and we know that has been growing significantly. It is a disaster at the undergraduate level and an even bigger disaster at the graduate level.

I had representations over the last while from people in the health care field who said that high tuitions have made it virtually impossible for young people from low and modest income families to seek professional training and then to go back to the communities where they are desperately needed, communities ethnically and geographically, returning to rural areas where there is severe underrepresentation of trained health care personnel. The reason for that is that graduating students with debt loads are compelled to go to the bigger and more prosperous centres to try to get that debt load off their back but they end up not returning.

The tuition for students going into medicine rose 16.7% last year and for law it rose 19.4%, which is on top of previous massive increases. This simply means that we will not have representation on our health care professional teams from those lower income areas, from ethnic minority communities and from rural communities, because they simply cannot leap that gap. Nothing in the short term, even with the $151 million extra that would go to Nova Scotia under this new equalization formula, will begin to clear away those obstacles to accessibility that had been erected by the government's reckless short-sighted decisions over the last eight years.

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am working on the assumption that the member and her party will be supporting Bill C-24, so I am somewhat hesitant to be critical of her somewhat wandering ways on a variety of issues.

As I said earlier, this has nothing to do with the offshore accords. The offshore accords are altogether separate and, as the member rightly points out, will require separate legislation.

The other point is that for this fiscal year, Nova Scotia will receive an additional $151 million to do with as it sees fit, in that we are bringing the threshold for this fiscal year up to $10 billion and Nova Scotia's share is an additional $151 million. That will translate into about $1,250 per person. Thereafter, Nova Scotia's share under the bill will be $1.343527 billion. That is something that the premier and the finance minister of Nova Scotia have spoken to us directly about. I assume the hon. member supports the representations made by her premier and finance minister.

I wonder if the hon. member would mind commenting on the fact that the Government of Canada has essentially bought down the risk of the equalization receiving provinces by implementing a formula that is $10.9 billion in the next fiscal year and a 3.5% escalator thereafter, which is a guaranteed floor to the equalization receiving provinces. Effectively, that means that if Ontario, which is the largest contributor to the federal revenues, were to have a bad year then the federal government would be forced to find revenues somewhere else while guaranteeing the equalization receiving provinces from the economic shocks of Ontario.

I wonder whether the hon. member in general thinks that is a good idea, or should some other way be introduced that would in effect be the current situation, which is that the equalization formula goes up and the equalization formula goes down largely in accordance with Ontario's economy. Which does she prefer, the guaranteed floor or the equalization variables that currently exist?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am very pleased today to have an opportunity to participate in the debate on Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other acts that are impacted by the changes in the fiscal arrangements act.

All members of the House are aware that this is a bill that received first reading in late November. It essentially reflects the new equalization and territorial funding formula framework that was agreed to by the first ministers in late October.

I have been listening to the debate so far and there is no question that there is a certain amount of acrimony and a certain amount of frustration being expressed on behalf of a great many Canadians, not because of the provisions of the bill before the House but because of the context in which this bill is being introduced.

A tremendously acrimonious environment has been created by the tremendous hardship that was imposed by the massive unilateral measures, the massive cuts that were introduced by the Martin budgets of 1996 as well as those that followed.

Everyone knows it was a big job to get us back on a more constructive course. It is important, as we get into this debate, that we remind ourselves that equalization payments are not a handout from one province to another. Often that is the sense that is created. There is a sense that it is the wealthy provinces that give money to the have not provinces, either cheerfully or reluctantly and sometimes it is expressed as reluctant.

That is not what is meant by equalization payments. It is important for us to remind ourselves of that. Equalization payments are from taxes that are paid by people in all parts of Canada, not a payment from richer to poorer provinces. We are committed to the important concept that we should have equality of access to the important programs and services that make up the quality of life. It is to ensure that we have a floor below which Canadians cannot fall, given the immense resources of this nation as a whole. It is important that we think of it in those terms.

It is truly what creates a situation in this country where we do not have, or we have no excuse for having, the kind of growing gaps between haves and have nots that we have seen in recent years as a result of the massive unilateral cuts that were imposed in transfer payments and then the arbitrary cap that was set on equalization payments.

I had the privilege in the early nineties of being at the Constitution table. Some would say it was a questionable privilege because it was a very dragged out process, to say the least. However, at that table, one of the things that was established was that the equalization formula should in fact become part of our constitutional framework. It is extremely important that it now exists.

It would be easy to spend the short time available to go on at great length about the immense damage done as a result of the massive unilateral cuts at the federal level, the damage done to our health care system and education system. The cost of that is being borne more and more and being heaped onto the shoulders of our post-secondary education students.

It would be easy to dwell on what a setback this was for environmental remediation and environmental protection measures for public transit, in particular, the advancement of the cities agenda. The federal government turned its back on promising a national child care program and then said that it could not be afforded for now, even though Canada reached a level of 3% growth within a couple of years of the Liberal government taking office and it could indeed have been afforded.

I want to take a few minutes this afternoon to focus on a couple of positive developments that I see across the country and in particular in my own riding, which I think is typical of many of the areas that have been so hard hit by the federal arbitrariness in the cuts and constraints applied to our equalization payments and transfer payments.

I speak directly about a community consultation this weekend. Basically a chamber of commerce exercise has been conducted over the last couple of years addressing the whole question of the economic potential, in this case focused on what is called HRM. I have to say honestly, I am delighted to be the member of Parliament for Halifax, but to live in a city which now calls itself HRM and not Halifax I think raises the question of how a city called HRM can actually have a soul, because it is just such a nebulous, meaningless notion.

Looking at the greater Halifax-Dartmouth area and all that includes, there has been a wide consultation process conducted to look at the future potential for growth and, one hopes, meaningful development and genuine economic progress. It is not just growth for growth's sake, because growth can be positive or negative depending on how the benefits of that growth are redistributed and how the growth is achieved. On another day we will have more opportunities to talk about that.

The engagement in the community and the leadership shown by the chamber of commerce in bringing many different elements of the community together around these issues helps to focus on not just how much damage has been done as a result of the massive unilateral cuts of the federal government starting in the mid-1990s, but also to focus now on some of the solutions.

It is extremely instructive and I welcome this. We needed to turn the corner on this. I welcome the recognition that some of the greatest impediments to genuine economic progress in many parts of the country and in this instance on my community of Halifax have been the major erosion of funding to things as critically important as education.

It was highlighted over the weekend that we need to be very careful not to lose sight of the fact that the tremendous burden of debt heaped on our post-secondary education students sadly has also been mirrored and paralleled by a serious erosion, at least in the Nova Scotia context, of the quality of our public education system from primary through to grade 12. We have a repair job to do here. We know how incredibly important education is to the future economic growth of our communities and the future genuine progress of our communities.

In supporting the bill that is before the House, we acknowledge that this is a step forward from what we have experienced, the harsh effects of the inadequacy of the formulas. It is not perfect, but it is an improvement. It has been arrived at through the agreement reached with all provincial premiers.

What is now important is that we make sure the lessons of the past are acted upon, with the government turning the corner on its treatment of equalization and transfer payments. We need to make sure that we repair the damage done to the education and health care systems.

We are getting there. Important steps have been taken in that direction. The same kind of pan-Canadian context provided by the Canada Health Act is what is needed with respect to education as well, something that has standards and enforceability mechanisms. That work remains to be done. The bill before us with respect to fiscal arrangements does not get us to where we need to be in that regard.

It was very encouraging over the weekend at the economic potential consultation wrap-up held in Halifax when it was acknowledged that there is a critical central role for arts and culture. There is an economic impact of arts and culture on community. We must recognize that it is the kind of creativity which is stimulated by having a very solid commitment to funding of arts and culture that will allow us to make the kind of judgments that are needed and come up with creative solutions that are desperately needed in this very complex challenging world in which we live.

There are similar considerations with respect to the erosion of our public transportation system, and that applies especially to public transit in the urban context, but also more regionally. Tremendous damage has been done by the massive cuts and frankly, in many cases the blind embracing of purely market driven solutions with respect to an area such as transportation. It clearly does not work for the less prosperous areas and the less populous areas in the country. That certainly is the case for the Atlantic region in general and certainly for my own province of Nova Scotia.

It is important for us to recognize that a lot of damage has been done. Even in instances where it was clear that the government's cutting and slashing was going to heap burdens on the most vulnerable citizens, the government was not prepared to back off, even after it began to introduce surplus after surplus. After seven straight years of surplus budgets the government continued to resist repairing the damage and making the changes needed in the fiscal framework that would enable us to get on to a path of rebuilding.

One cannot speak about this subject without recognizing the massive gutting of employment insurance benefits to create a false impression about the size of the surplus. This has yet to be repaired. It seems so easy for the Liberal members to beat on their chests and talk about the great job they have done in generating this surplus. They conveniently ignore the fact that the surpluses have been achieved by heaping the burden on those who should least likely have been asked to bear the costs of the mismanagement of the Liberal government over the last decade.

The government has conveniently ignored the fact that a big chunk of that surplus has actually been generated by taking money directly out of--and I am going to say--the mouths of children in a lot of cases. This has happened in families where members of the workforce have found themselves without employment through no fault of their own. They have contributed in good faith to the employment insurance fund over the years and have built up that surplus. Then they have found that such restrictive eligibility measures have been introduced that they simply have never been able to draw from the employment insurance fund.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Mr. Speaker, as this House knows, the Conservative Party supports the equalization program as an important and necessary means of building our nation. It is responsible for creating, or at least attempting to create, the conditions for relatively equal social services for Canadians regardless of where they live.

We also support the intent of the equalization program to, in conjunction with other federal fiscal structures, help provinces create the conditions that can lead to stronger local and provincial economies.

Over time, the formula calculating the amount of equalization paid to each province has changed. For example, as I told the House earlier this month, when Alberta was a have not province from 1957 to 1965, the oil and gas revenues the province earned were not clawed back by Ottawa under the equalization program. This allowed Alberta to build its oil and gas industry by using the profits to reinvest in the industry.

As we all know, that arrangement does not exist today for provinces like Newfoundland and Labrador, Nova Scotia and Saskatchewan, nor does it exist for the territories. I will talk quite a bit about the treatment of non-renewable natural resource revenues within the equalization formula today, because I think it is an issue that must be examined as we move forward with the renewal of the program.

Over the past several years, Conservatives have argued in favour of moving from the five province standard to a 10 province standard and for the removal of non-renewable natural resource revenues from the formula. We also believe that it is essential to provide for a phase-in period if any such changes are made to the existing formula to ensure that no province is hurt in the transition period.

We are disappointed that the government is not dealing with these issues head-on when there is such a wide consensus among territories and provinces on the changes necessary, but we support the review process that is under way and look forward to hearing from the panel on these very important issues.

The bill makes basic changes to the act, which were necessary to ensure certainty within the equalization program and to allocate the necessary payments over the next year. For that reason, we support it.

The bill sets a minimum funding floor of $10 billion for equalization and $1.9 billion for territorial formula financing for 2004-05. This is something that provinces and territories have called for as a means of protecting provinces against overall and individual declines in payments in 2004-05.

It also ensures that no province or territory receives less than the levels forecasted in the 2004 budget, thereby setting $10.9 billion for equalization and a total level of $2 billion for territorial formula financing in 2005-06.

In the middle of all this, a 3.5% per year escalator has been created for equalization and territorial formula financing, going through until 2009-10.

Finally, the bill offers a breakdown of provincial equalization allocation for 2005-06 and a breakdown of territorial financing allocation for 2005-06.

Very clearly, the bill recognizes, finally, what the provinces, territories and the Conservative Party have called for, that is, greater certainty for payments. However, there are many outstanding issues that need to be addressed and are not reflected in the bill.

The bill does not specify how the equalization in territorial formula financing levels will be allocated among the provinces and territories from 2006-07 forward. The federal government has launched a review by an independent panel of experts, on which the provinces and territories have been provided with two seats. However, we remain concerned that the federal government has retained final decision making authority as to how future levels should be allocated.

Most important, the bill does not remotely address the long-outstanding concerns the Conservative Party and the provinces and territories have had with respect to the inclusion of non-renewable resource revenue in the current equalization formula. Under the current formula, provinces that benefit from non-renewable resource revenues are subject to a clawback that results in lower equalization payments.

The bill also does not deal with non-renewable resource revenue-sharing outside of equalization, which means that the bill does nothing to solve the Prime Minister's ongoing broken promise to Newfoundland and Labrador and Nova Scotia.

Equally as important, the bill does not deal with non-renewable resource revenue sharing outside the territorial financing formula. The territorial financing formula is an important and necessary grant mechanism to address the present needs of the territories. The Conservative Party supports it, but we also believe it is imperative that the federal government take steps to develop a resource revenue sharing agreement with the territories to facilitate their desire for control over their own economy and movement toward economic self-sufficiency.

Non-renewable natural resources and how they are dealt with under the current equalization formula has become a major concern, an economic inhibitor for provinces and territories that wish to have full access to these revenues to develop their resource sectors further and to have control over their economic future. Equalization can and should be restructured to deal with non-renewable natural resources like oil and gas in Newfoundland and Labrador, Nova Scotia, Saskatchewan and the territories.

Newfoundland and Labrador presents a timely and interesting case study for this policy. We and many Canadians watched the equalization meeting in October very closely, and were disappointed at the Prime Minister's refusal to honour the promise he made during the election to both the Premier of Newfoundland and Labrador and the Premier of Nova Scotia. The Prime Minister attempted to use the equalization program as leverage to water down the commitment he made to these premiers during the election. The premier of Newfoundland and Labrador was not going to let that happen, and he rightly walked away from the equalization talks.

As I have told the House before, our party supports Newfoundland and Labrador's position with regard to its offshore resources. We will continue to advocate for the Prime Minister to keep his word to Newfoundland and Labrador. Put simply, the Conservative Party supports the efforts of Newfoundland and Labrador and Nova Scotia to receive 100% of their offshore oil revenues outside of the current equalization formula, with no cap and no restrictions.

I have raised this issue because, again, the manner in which the formula accounts for non-renewable natural resource revenues is one of the main points of contention regarding equalization in Canada. While this party believes that it is ultimately good that the government bring more certainty regarding aggregate amounts to the equalization program, we remain clear that we support the demands of the provinces and territories to see changes in the way that non-renewable resource revenues are accounted for within the formula.

I have also raised this because it highlights the neglect of the government on this issue. This is an issue that has been ongoing and needs to be dealt with immediately. Because the government has not addressed this issue, it has become a crisis in places like Newfoundland and Labrador. Other provinces and territories are watching closely to see what kind of deal the Atlantic provinces may receive.

If Newfoundland and Labrador is successful in achieving a deal, then other provinces and territories will ask to receive a similar deal, and for good reason. They are experiencing similar economic clawback due to their resource sector revenues. Of course, changes to the formula of this nature would mean less money in the federal coffers and more money in provinces. Therefore, provinces would have a better chance of providing social services and creating conditions for economic development on their own without the interference of the federal government.

This is a political non-starter for the government, which has for the past 11 years used the fiscal imbalance and the relative poverty of provinces and territories compared to the federal government to push its own agenda in areas of provincial and territorial jurisdiction. If the government were to amend the formula to remove revenues and royalties from non-renewable natural resources, the provinces in question would have the opportunity to use those revenues to further build their industry and infrastructure. The province would take income from taxes paid by companies and employees, which would be accounted for in the equalization program.

The federal government would still benefit from the personal income taxes that workers pay to provinces and to the government. The federal government would also benefit from corporate income taxes paid to the provinces and the government. Under the sort of change about which I am talking, it is not just the local province that benefits; all of Canada benefits.

When we consider economic development, then we start looking down the road, we can open the door to working with provinces to develop economic potential in those provinces and can realize that everyone benefits from a strong and economically vibrant and diverse Canada. By looking at provinces as places of potential, we have the opportunity to see what we can do through economic development to increase quality of life, social services and economic opportunity for young people in every region of our country and help provinces and territories realize their goal of becoming economically self-sufficient.

When we talk about equalization, equity remains the main perspective, but I would argue it is only part of the picture. Talking about equity, especially within the context of the equalization program, has taken on a form of a static conversation. Conversants assume that provinces will remain relatively the same in relation to one another. Ontario and Alberta are the have provinces, Saskatchewan and B.C. flirt between have and have not status and Manitoba, Quebec, and the Maritimes are the less well off provinces.

Taking this arrangement as a perennial constant, those who talk only from an equalizing perspective need to assume that this ranking of provinces in these groups will remain constant, which on the flip side assumes no changes in economic performance. We know this to be untrue. We know that every province works toward developing its economy and we know that all provinces and territories are making successful gains in economic diversification and the raising of quality of life within provinces.

This being the case, equalization program reforms need to be done with an eye toward economic development as a means of raising the quality of life of all Canadians. After all, the end goal of every province is twofold: first, to be able to provide increased and efficient services so that citizens have a better quality of life; and, second, to do it themselves, that is to become so successful that the province in question will not need a federal equalization payment.

It is within the context of an equalization formula, which is cognizant of economic development, that I raise concerns over the place of non-renewable natural resource revenues in any reformed formula. We are not there yet and it will take a Conservative government to get us there.

We also need to have a better sense of how non-renewable resources are accounted for with regard to Canada's territories as well. Bill C-24 does not address the outstanding concern that the Conservative Party and territories have in the need to develop resource revenue sharing agreements between the territories and the federal government. The territorial formula financing is an important and necessary grant mechanism to address the present needs of the territories.

We support the territorial formula financing, but also believe it is imperative that the federal government take steps to develop a resource revenue sharing agreement with the territories to facilitate the desire for control over their own economy and move to economic independence. Yukon has a devolution agreement with the federal government which would make it more independent and give the territory greater freedom in the management of its own affairs. The Northwest Territories is working toward a devolution agreement, and Nunavut is doing what it can to bring the federal government to the table with regard to a devolution agreement as well.

Part and parcel of devolution is greater control over natural resources found on territorial lands. Agreements such as these are important for practical reasons. If we talk to representatives from northern Canada, they will say that most of the money that goes north is actually spent in the south. For example, consider health care. As of now, if a major surgery is required, the northern government will pay for the patient to fly south, receive treatment, stay overnight, perhaps in a hotel, purchase food and then fly back. While a northern government foots the bill, it is the provincial economy in the south that benefits.

A different side of the same problem exists when it comes to resource extraction. Companies are often based out of a centre in the south. Workers often come from the south. These companies pay taxes in the south, as do the workers who do not claim official residence in the north. Likely, many of the workers are supporting families that live in cities like Edmonton, Ottawa or Quebec City, among others. They fly north, work as long as their rotation is in and likely fly home to be with their families or send cheques home regularly. The money is not spent in the north. The taxes are not paid in the north.

It is thus very important for northerners to have a greater say over their resource sector so the government can retain more money and so more year round northerners are working in the sector, thereby giving the government a stronger tax base. With that tax base, northern governments could attack their key priorities: economic development, stronger northern health care, a better education system and affordable housing. This is where they need to go and to get there they need certain adequate territorial financing, as well as an agreement regarding natural resource revenue sharing.

It is disconcerting for me when the Prime Minister goes overseas and muses about territories becoming provinces, when he is not engaging in the proper steps necessary to help territories with their most pressing concerns. That is to secure a resource sharing agreement to create the conditions they need so they can build a strong economy which will create more jobs in the north for both indigenous northerners and southerners and lead to greater self-reliance for northern governments.

One of the other concerns I have with the bill is around the new equalization floor. The bill introduces a new equalization floor which provides certainty for have not provinces that are attempting to create budgets and would like to know in advance roughly the amount of money they will receive from the equalization program. In terms of creating certainty, this is important. A floor protecting have not provinces from drastic changes in the economy already exist. However, while introducing a new equalization floor that better shields have not provinces from potential downturns in the economy, it provides less protection for have provinces and the federal government.

For example, situations may arise where the minimum equalization payments agreed by the federal government are higher than the payments dictated by the formula. In this instance, have not provinces may actually be equalized to a greater fiscal capacity than the national average. This belies the equality that stems from the equalization formula. Further, the equalization floor created in the agreement is based upon the largest federal payout in the past decade and then is escalated.

Looking at this from purely an economic perspective, we know that Ontario accounts for 50% of the economic activity measured by the equalization formula and a significant portion of federal revenues. As the province with the most exposure to the U.S. economy, Ontario faces economic risks created by increased U.S. deficits, risks created by the amount of U.S. debt held by China and Japan and economic shocks created by global uncertainty. These risk factors could conceivably add up to slow Ontario's economic growth to a point where the equalization formula would dictate that payments should be lower than the floor agreed to by the federal government. At the same time economic trouble in the Ontario economy would have a drastic impact on federal revenues.

In this scenario the federal government would have to make up the difference between the formula payment and the floor payment out of shrinking general revenue. By building in such a generous floor, the federal government effectively detaches have not provinces from potentially adverse economic realities.

Placing a fiscally imprudent floor in equalization payments, coupled with other significant fiscal commitments in health care, raises the risks associated with economic downturns. Certainly, these commitments limit the ability of the federal government to respond to a fiscal slowdown with measures such as tax cuts or targeted investments. Governments cannot rely on blind economic optimism when creating fiscal policy, especially in the face of current global volatility.

I want to return to another aspect of our policy, which is that no provinces should receive less money simply because the formula has changed. This is an important point. Provinces that need equalization need it to provide important social services to its citizens. A simple change in a formula does not change the overall economic picture of a province, but it could change the amount a province receives.

The shock of receiving less money is usually followed by the result of providing less services. Therefore, when the government makes these changes, it ought to be careful that provinces are treated fairly and do not end up with the short end of the stick. This side of the House will be watching very carefully to ensure that this problem does not exist and if it does, we will work to correct it.

However, we know the numbers involved are more certain and we look forward to the ideas that will be put on the table in the course of the review process. It is our hope that the end results of these ideas will ensure an equalization system that both fairly and adequately provides funds to provinces and at the same time does not hinder economic development as the current formula does.

We will have to wait for the panel of experts to present its recommendations before we say conclusively whether we fully support the process which the bill sets into motion. However, we agree there needs to be a step toward a system that is predictable. At least in perception, the bill is a good beginning.

As I noted earlier, we would have liked to have seen greater provincial involvement. Given the importance of the equalization program for the efficient functioning of provincial governments and the certainty of provincial economies, their voice would have been welcomed. I am sure they would have welcomed greater opportunities to express their views.

While the government did bow to pressure from the provinces for greater provincial involvement, in my mind it was not enough. If there is a chance that we could see greater involvement from provincial governments, we believe that would be appropriate and we would support such a move.

One thing missing in the reforms, which were implemented in the 2004 budget, is a reform that would have allowed provinces that which were overpaid a longer period to pay back their overpayment. These provinces, which are struggling to provide social services and infrastructure needs to their citizens, should not be forced to redesign their entire budget because the federal government has made an accounting error.

As for predictability, we also would like to see a moving three year average used to calculate payments. This would help to smooth out situations where provinces are over or underpaid and at the same time it would provide greater predictability to the provinces.

Finally, we are glad to see the government is now committed to a five year renewal schedule. Remaining committed to the five year renewal, again provides provinces with greater predictability and certainty and also gives the federal government the opportunity to utilize medium term economic forecasts when considering changes.

By moving to a 10 year plan or commitment, we see greater risk within the program's payment schedule and we are also concerned that the government's flexibility in administering the program is negatively affective.

In the end, our party will support the bill because it is the beginning of much needed changes to the equalization formula. It is an admission by the Liberal government regarding the problems that have plagued equalization in the past and it is a step in the right direction toward making the equalization program a better program. In this light, we anxiously await the report of the expert panel, and hope to see our recommended changes included.

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, my challenge this afternoon is to keep members awake while we talk about equalization. It is an arcane piece of legislation and an arcane concept which is watched by quite a small number of very interested people because it affects how budgeting takes place, both here at the federal level and at the sub-national levels.

This has nothing to do with the offshore accord. That is entirely a separate negotiation. Bill C-24 has to do with the direct results of the first ministers meeting that occurred in September between the Government of Canada and the provinces, where they announced fundamental changes to Canada's equalization program and the territorial formula financing arrangement.

The framework was announced in response to concerns raised by equalization receiving provinces about the funding of equalization and the planning difficulties they have experienced in recent years caused by the swings in equalization payments. A number of finance ministers made the point as we travelled across the country that it was very difficult to make up a budget on the basis of equalization payments if in fact it is not known what it will be year to year.

The government heard that concern and has tried to address that concern through this bill by effectively setting floors and ceilings and a predictable stream of money for each equalization receiving province. This new framework represents probably the most important change in the program in its history. The legislation before us today is integral to effecting that change.

The intent of the changes to the equalization program and the TFF, the territorial funding financing arrangements, is to bring stability, predictability and growth to the overall level of funding for these programs, and to have third party advice on the best way for the Government of Canada to allocate payments among the provinces and territories. As the Prime Minister and premiers negotiated this formulization, it in fact achieves that. I hope this bill will enjoy the support of all hon. members in the House.

Bill C-24 proposes to provide these issues of stability, predictability and growth. I will outline shortly the legislative proposals contained in Bill C-24. However, first, it is important to present some background to the equalization and TFF programs in order to provide some context so that we can say this is where we were yesterday, this is where we are today, and this is where we hope to be tomorrow.

The program was put into effect in 1957 and the territorial program was put in place in 1985. The equalization part of the program has certainly been with us for quite a while and in part is how Canadians see themselves in terms of sharing the wealth of this great country. Both of these programs have been largely successful in providing support, while reducing regional disparities.

The intent of these programs is to ensure that all Canadians, no matter where they live, have access to reasonably comparable public services, that is the key phrase when we are looking at measuring the test of whether this program succeeds, without having to resort to economically damaging levels of taxation to fund the provision of these services. Those are the two ideas that we want to achieve here, having reasonably comparable public services without having resort to economically damaging levels of taxation.

The idea that Canadians should have access to the same high quality of health and social services regardless of where they live is fundamental to the fairness and integrity of the Canadian federation. This is so much so that it is protected by the Constitution in the form of equalization.

In short, the equalization program transfers money to the less prosperous provinces and territories in accordance with a formula based on the revenue raising capacity of each province. This means that as a province becomes more prosperous, its equalization entitlement declines. In effect, equalization is there to fill in the gap to ensure that all Canadians have access to high quality health and social services that they have come to expect and demand, regardless of where they live in Canada.

Moreover, it ensures that less prosperous provinces do not have to resort to economically damaging levels of taxation to fund the provision of these services.

Again, we are working on a balance here. In the less prosperous areas, they have limited ability to raise taxes, yet, simultaneously, Canadians, wherever they live, are entitled to a certain base of services. Hopefully that base will be achieved in part through the distribution of moneys under the equalization program.

I would like to return to the funding arrangements to the provinces and territories. The changes to these programs encompass three important elements: first, the new framework for equalization and territorial financing starting in the fiscal year 2005-06; second, an independent review of the programs by a panel of experts; and third, complete protection for provinces and territories against overall and individual declines in payments in 2004-05.

I would like to expand on each of these three elements: first, the new framework for equalization; second, the independent review; and third, the protection that is afforded in this fiscal year.

I will begin with the new framework for equalization and territorial financing. Starting in 2005, the government will establish a legislative financial framework for both equalization and territorial financing. The new framework will establish fixed payments levels, which will provide predictable and growing funding for provinces and territories. Funding levels for 2005-06 will be set at $10.9 billion for equalization and $2 billion for the territorial funding. These amounts thereafter will grow at a rate of 3.5%.

When we talk about the stability of predictability, there we have it. We know exactly the floor that we would be starting from. We know exactly the amount by which the program would increase.

The government is committed to reviewing the overall funding levels of equalization and TFF after five years. If appropriate, the government will make adjustments in 2010-11, taking into account evidence based measurements of the evolution of disparities and costs to the territories.

Let us hope, Mr. Speaker, that neither you nor I is talking about equalization in the fiscal year 2010-11.

The second point has to do with the expert review panel. The second element of the changes to the equalization is the establishment of an independent expert review panel. Our government recognizes that simply pumping more money into the system is not enough. We need to take a hard look at how the current level of equalization and territorial financing allocates moneys to the provinces and territories. That is why the new framework calls for a review to be conducted as to how the legislated equalization and territorial financing levels should be allocated for the provinces and territories in the fiscal year 2006-07 and beyond.

We start with a legislated amount of $10 billion in 2004-05. Then we move that up to $10.9 billion in the next fiscal year, and it is 3.5% thereafter. Hopefully the panel of experts will be able to tell us the best way in which to distribute that money among the provinces.

This review will, among other topics, look to the following priorities.

First, to evaluate the current methods for measuring fiscal disparities among the provinces and territories.

Second, to examine alternate ways to distribute equalization and territorial financing, including the possibility of bringing these allocations on economic indicators, such as GDP or disposable income, or based upon the expenditure needs of the province or territory.

Third, to review how fiscal disparities between various provinces developed over time, and to look at the costs associated with providing services in the territories.

Finally, to advise the government on whether it should set up a permanent independent body to advise the government on the allocation of the equalization and territorial financing payments.

I would like to stress that although the panel's role would be advisory in nature, our government is committed to listening to its recommendations and making decisions based upon that advice in consultation with the provinces and territories.

If this framework is adopted by Parliament, the panel would be asked to report back to the government by the end of 2005, which would be within a timeframe to have an effect on equalization and territorial financing allocations set for the fiscal year 2006-07.

This brings me to the third element if I may of the changes to the equalization and territorial formula financing arrangements providing fiscal protection for the provinces and territories. In order to provide greater stability to provinces and territories in 2004-05, the Government of Canada will ensure that equalization payments total a minimum of $10 billion.

As I said, we set a floor of $10 billion. Next year it is a ceiling of $10.9 billion and each year thereafter it is $10.9 billion multiplied by 3.5%. The territorial financing payments will have a minimum of $1.9 billion in 2004-05 which will go up to $2 billion in the years thereafter.

In addition, each province and territory will be guaranteed that its equalization or territorial financing payments for 2001-02 to 2004-05 will not be lower than was estimated in the February 2004 budget and included in the budget for those years.

With respect to the financial impact on the new framework, over the next 10 years, and subject to a review after the first fiveyears, the new framework for these programs will be $33.4 billion more in equalization and TFF payments to provinces and territories than the amounts in the 2004-05 estimated at the time of budget 2004, $9.5 billion for equalization and $1.8 billion for territorial financing.

That is $33 billion over 10 years on top of what already exists. This is no small change. In fact these proposed changes to the equalization and territorial financing formula framework amount to about $33 billion. This represents the most significant increase ever to these programs.

It is also important to point out that equalization and territorial finance payments are not the only sources of federal assistance for the provinces and territories. We have the Canada health transfer, the Canada social transfer, the equalization payments and then we have a number of other direct programs where the federal government provides assistance to the provinces in the delivery of services to all of our citizens. This money is in addition to that.

Indeed, hon. members will certainly recall that the Prime Minister and all the premiers recently signed the 10 year plan to strengthen health care, which will provide $41.3 billion in new health care funding. Therefore, we have the $33 billion in equalization and the $41 billion in new health care money.

The health plan includes key elements of systemic reform and the best terms ever for reporting and accountability. By meeting and surpassing every financial standard identified in the landmark report, known as the Romanow report, it turns the corner on the annual intergovernmental feud about health funding.

The health accord puts everyone's focus where it should be: on shortening waiting times; getting more health professionals and better equipment; improving primary care, home care and drug coverage; better services in the north and for aboriginal people; more health research and innovation; and improved public health and wellness.

It is important to note that the $41.3 billion health accord, when combined with the $33 billion for equalization and territorial financing, will result in a cumulative amount of 74 billion additional dollars expected over the next 10 years. It is new money transferred from the federal government to the provinces over that period of time.

By any stretch of the imagination this is a huge sum of money and it illustrates our government's commitment to ensuring that Canadians are treated fairly and have access to reasonably comparable levels of service no matter where they live in the country.

Our government recognizes the need to ensure that all provinces and territories can offer the best possible services to their citizens. The equalization and territorial funding formula programs are clear evidence of our commitment in that area.

To sum up, under the bill, $33 billion will be allocated for equalization payments over the next 10 years, $41 billion to the Canada health transfer allocated over the next 10 years. We have a commitment to an expert review panel so that it will know whether there is a better way in which to provide the program.

We have put forward a program where we think we have met a number of the stability and predictability concerns raised by the premiers and finance ministers with respect to them trying to set their budgets. They now know that they have a fixed base and that their base will increase on a regular annual basis.

There is no doubt in my mind that the commitment of the government, in partnership with the provinces and territories, is to continue to work toward improving the standard of living of Canadians from coast to coast to coast.

As I mentioned earlier, the legislation I outlined today reflects the most significant investment ever in the equalization and territorial financing framework. The legislation is vital to ensuring that Canadians, no matter where they live, can count on comparable levels of health care and other essential services.

I encourage hon. members to support the legislation as it was negotiated by the Prime Minister and premiers. I hope all members of the House will find themselves supporting the legislation and the work of the Prime Minister and the premiers.

[Raymond Chan, Liberal, for the Minister of Finance]

moved that Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other Acts (fiscal equalization payments to the provinces and funding to the territories), be read the second time and referred to a committee.

Business of the House

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue with the opposition motion. Tomorrow we hope to complete third reading of Bill C-7, respecting parks second reading of Bill C-22, the social development legislation, and second reading of Bill C-9, the Quebec economic development bill.

Next week we will give priority to second reading of Bill C-24, the equalization legislation. We also will try to complete any business left over from this week.

When bills come back from the Senate or committee, as the case may be, we will add them to the list. Hopefully this will include Bill S-17 respecting tax treaties and Bill C-5, the learning bonds bill. By the end of the week, we hope to be able to proceed with Bills C-25, the radarsat bill, and Bill C-26, the border services bill.

Next Thursday shall be an allotted day.

Federal-Provincial Fiscal Arrangements Act

[Joe Volpe, Liberal, for the Minister of Finance]

moved for leave to introduce Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other acts (fiscal equalization payments to the provinces and funding to the territories).

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

Canada Elections Act

[Mauril Bélanger, Liberal, Deputy Leader of the Government in the House of Commons]

Mr. Speaker, when Parliament passed Bill C-24 on election financing, it provided for a statutory review following the tabling, in the House, of the recommendations of the chief electoral officer, which are expected early in the new year.

At that time, the act that was passed will be reviewed, as provided in the legislation.