Bill C-67 (Historical)

Unanticipated Surpluses Act

An Act respecting the allocation of unanticipated surpluses and to amend the Income Tax Act

The enactment authorizes the Minister of Finance to make, in respect of fiscal years 2005-2006 and 2006-2007, certain payments out of the annual surplus that is in excess of the sum of $3 billion and the amount paid in respect of that fiscal year under An Act to authorize the Minister of Finance to make certain payments, being chapter 36 of the Statutes of Canada, 2005. It also authorizes the Minister of Finance to make, in respect of fiscal years 2007-2008 to 2009-2010, certain payments out of the annual surplus that is in excess of $3 billion. The enactment allocates the amounts authorized to be paid as follows: one third to tax relief, one third to spending priorities and the remainder to reduce the accumulated deficit for the fiscal year.
The enactment also provides a mechanism for increases to the basic personal amounts under the Income Tax Act for taxation years 2007 to 2010 in addition to those implemented in the Budget Implementation Act, 2005, so long as the increases are considered to be fiscally sustainable.

Unanticipated Surpluses Act

[Paul Szabo, Liberal, Mississauga South, ON]

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

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

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

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

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

[Paul Szabo, Liberal, Mississauga South, ON]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Gérard Asselin, Bloc, Manicouagan, QC]

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

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

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

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

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, that was really something. I know that the hon. member is an experienced member in this place and certainly he has been an experienced member of government, but he is simply all over the map. I will be asking him a couple of questions.

How does the government have an unanticipated surplus? How does that happen? If a person has some business savvy, understands how the country is being run and has a good handle on the money coming in and the money going out, how does that person have an unanticipated surplus? We are talking about a major surplus, such that we are going to have to pass a bill through Parliament to bring in additional spending to somehow get rid of it, instead of simply putting it on the debt, which would give us an immediate return and give future generations an immediate return.

I am going to suggest to the member that perhaps Bill C-67, an act respecting the allocation of unanticipated surpluses and to amend the Income Tax Act, could be changed. I would suggest that it be changed to state that it is an act respecting the anticipated election--not the anticipated surplus but the anticipated election--and an unashamed, bald-faced attempt to buy the votes of Canadians.

[Brian Jean, Conservative, Athabasca, AB]

Mr. Speaker, it is not often that I have an opportunity to stand in the House and actually agree with any policies or position of the NDP, but in this particular case I can say that I am prepared to do so because this bill is in large part a farce.

Some comments have been made about Alberta being in perfect shape and how wonderful Alberta is, yet we have a similar situation there. Our premier is planning to refund $400 to each and every taxpayer in a vote-buying scheme similar to what is anticipated to be taking place here. I would like her comments on that.

I live in an area in northern Alberta which has one of the most dangerous highways in Canada. We have been asking that it be twinned but it is not going to be twinned for some time. I do not think it is even planned on the books. We have a water treatment centre that has enough capacity for 50,000 people and yet 75,000 people depend on it. We have some water issues. Alberta has 15% growth per year, but no land has been issued for people to put houses on because the Alberta government controls that. I see what the Liberal government is trying here with Bill C-67 to be a similar situation.

The Conservative position is to lower taxes and to put more money back into the hands of Canadians, but to do so in a way that will not cost money. I know from a previous job I held that it would cost the college I sold to more than $100 to issue a cheque for whatever amount. This seems very similar. Instead of giving tax cuts and leaving the money with the people who know how to spend it best, the government takes the money and decides to roll it back in the form of vote buying. I would like to hear my NDP colleague's comments on that as well.

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

Mr. Speaker, I apologize to the member who I missed. He must not have been in his seat when I was speaking because there was not a person to be seen on the Liberal benches.

This is a Liberal government bill. We are talking about a proposition put forward by the Minister of Finance and not a single Liberal is in the House to talk about it, to hear our concerns and to address the matter.

This is a very important issue for all Canadians. We resent the fact that the government once again thinks it can toy with Canadians, that it can play with them in terms of their concerns about the future. We resent the fact that it has put forward another gimmick to deal with the surplus as opposed to a meaningful constructive suggestion that gets money into the hands of Canadians who need it most.

Let us be clear. As I said when I began my remarks, we are talking about a gimmick on the eve of an election. Just as the leaves turn colour in the fall, we hear another Liberal surplus promises an imminent election. That we find absolutely abysmal and appalling.

Every time there is an election we hear from the Liberals about some miraculous cure to deal with the problems vis-à-vis their ability to be fiscal managers. They compensate for the fact that they cannot run the store. Every year they keep disappointing Canadians with their inability to forecast and budget properly and, by consequence, to ensure that the priorities of Canadians are met. They do this every year.

That is the essence of the debate today. It is about some newfangled structure or model that someone on the Liberal benches thought up as a way to appease the concerns of opposition members or Canadians in an attempt to redirect attention away from the fundamental issues. This is about a Liberal attempt to obfuscate and deny Canadians the right to have a say in this place about where budget dollars should be allocated.

For years we have been raising this issue. We have been calling upon the government to come clean with Canadians about the dollars it is sitting on, all of which end up going to the debt because there has been no open discussion in this place.

If we listen, we will have heard members from all sides of the House say clearly that we want a balanced approach to fiscal forecasting and budgeting. No Liberal can stand in this place, as they are, and ask what is so wrong with having a surplus, as if anyone ever said there is something wrong with having a surplus. We have heard this in committee and we have heard it in the House. It is a deliberate attempt to distort the debate and to minimize the concerns of the opposition and Canadians, whose concerns are very legitimate and must be addressed by the government.

Time and time again we have come to the House to ask the government to stop its practice of deliberately low-balling the surplus. We have asked it to come clean with the numbers, to be transparent and upfront in its fiscal approaches so this place can have a serious debate about the economic and fiscal priorities of the country and represent the views of Canadians as we were elected to do.

The government has denied us that opportunity for all these years through a practice of manipulating the numbers to suit its political agenda. The government has very carefully stashed away $85 billion over the last decade without allowing for parliamentary debate and input by Canadian in terms of the allocation of $85 billion. Through that deliberate approach of low-balling and manipulating the numbers, it has allowed itself to decide on its own, in the most undemocratic way possible, where that money should go.

In this case it has come in handy when the government has needed to deal with a few projects. Most important, it has allowed it to cave once again to the corporate agenda of putting all of our eggs in one basket without concern for the needs of Canadians and their responsibilities.

Of that $85 billion, close to $65 billion has automatically gone to the debt. Nobody on this side of the House in the NDP, and I am sure any other political party, objects to some money going against the debt and meeting our obligations on that front. We know it is important to present a balanced approach to Canadians and to ensure that we pay down the debt and at the same time invest in the needs of Canadians. That would in effect grow the economy and thereby bring down the debt.

Members will recall that statisticians and economists, those who the government and others use, have shown that if the government took the surplus money and invested it in Canadians, invested in the deplorable housing, in the inadequate education arrangements, in poverty, in the deplorable situation of aboriginals on reserves, in the environment and in health care, it would create jobs, the economy would grow and we would pay down the debt in the same period of time as if the government took this money and put it directly into the debt which has been its practice and its habit.

This debate is about priorities, balance and addressing the reality of Canadians.

We have a bill that would allow the government to take the surplus money and automatically set aside $3 billion supposedly for contingencies. There is no debate on what is an appropriate contingency and prudence fund. That is part of the Liberal scheme to deceive Canadians. Here is the rest of it. First, it sets aside $3 billion. Then the government takes the leftover surplus and divides one-third, one-third and one-third. One-third goes against the debt, one-third is for tax cuts and one-third is for spending.

That arrangement tilts the balance automatically. It means $3 billion in contingency that goes against the debt, plus another third of the surplus. If there were something like a $10 billion surplus, as is forecast to be the case for this coming fiscal year, we end up with about $5 billion or $6 billion that would go against the debt and the rest would divided between spending and taxation.

Is that balanced? Does that address the needs of Canadians? Does that deal with the imbalance in the system created by the Liberals ever since they took office in 1993? Does that deal with the fact that the government, rather than have a balanced approach, decided to cut the heck out of health, education and social programs in the country? This created the most devastating consequences for people everywhere in our community. Is this what the Liberals mean by balance, keeping the burden on Canadians, telling them to tighten their belts because all that matters is its priorities and not the priorities of Canadians?

Today the government comes to us and says that it will work on this commitment to Canadians for a balanced approach by heaping more misery on misery, by making it more difficult yet again for Canadians to make ends meet?

Goodness gracious, all we have to do is look around us today to see what this 10-year legacy of the Liberals has meant for Canadians, this 10 years of investing in strictly tax cuts for corporations and debt reduction without investing in those things that build a country. We would not have a Kashechewan today. We would not have this kind of absolutely deplorable situation that is worse than Third World country conditions in the wealthiest country in the world. We would not have people with sores all over their bodies, or rashes or poisoning by E. coli if the government had done what it was asked to do back in 1993 and 1994.

The government was asked to start investing in aboriginal communities, on reserves, to help them deal with fundamental issues. This is about access to decent drinking water, decent housing, food, clothing and education, the basics that so many Canadians at the upper end of the income scale take for granted.

We should not have this situation today in Manitoba. Using pre-tax low income cutoffs, Statistics Canada shows that in 2003, 22.1% of Manitoba children lived in low income families. It remains virtually unchanged from the 22.5% in 1989 when the House passed a motion by my colleague from Ottawa Centre to eradicate poverty by the year 2000.

How many times do we have to recap that for the sake of the Liberals? How many times do we have to remind them of their obligations and of their cooperation with that 1989 goal, that vision of trying to eliminate child poverty in a country as rich as Canada? How is it possible that we are still talking about this? We are not talking about the situation simply remaining static. We are actually seeing poverty increase. The situation is becoming worse.

I would like the government to talk about Bill C-67 and its little magical formula of making surpluses appear and disappear, and having these one-third, one-third, one-third divisions. I would like it to take that to the family of Kathleen Beardy in my constituency, the young 11-year-old girl who committed suicide just a few weeks ago.

I would like the Liberals to talk to Kathleen Beardy's parents who have six children and are struggling to make ends meet. They are trying to find work. They are trying to be good parents with so many odds stacked against them. They would desperately like to be able to share in a bit of that vision of Canada, to live in decent housing without mould growing around them, without the plumbing backing up, without having to put three kids in one little bedroom, without water coming through the ceiling and without the foundation crumbling around them.

I would like the Liberals just for one minute to put themselves in the moccasins of the family of Kathleen Beardy, not to judge them or make generalizations, but to simply understand the realities of that life and decide that it is important to start addressing the real people in this country, the people who built this country and the people who want to make a difference in this country. The government must start to address their priorities.

I would like the Liberals to talk to Brian MacKinnon in my constituency, a teacher at R.B. Russell school. He has been trying desperately to gather some funds, to grab the interest and attention of the government for a program as simple as helping teenagers in the inner city and the north end go to the downtown Y so that they can benefit from some sort of a recreation program. In fact under the Liberals' legacy of cutbacks, the Y in the north end is gone. All of the recreation opportunities have been basically cut back to nothing. There is no opportunity for young people to be themselves, to stay away from gangs, to be part of a loving environment and to feel that they are part of a community.

Ten years ago Winnipeg's north end community was struggling, but it had all kinds of hopes and ambitions. Community groups were working to turn things around. However, the Liberal government dealt our community a blow the likes of which we have yet been able to recover from. That blow set us back a good couple of decades.

The housing stock was already old but people wanted to renovate, to build, to construct, to clean it up. They wanted to have beautiful neighbourhoods, but the government came along and killed the national housing program. It took away any opportunity for people to get the much needed funds. It took away the opportunity to actually beautify neighbourhoods, to stop the erosion.

The government is complicit in allowing the degradation to continue, which people in communities like the inner city and north end of Winnipeg are still struggling to overcome, and they will do it. We will do it, but not with the help of the Liberals. It is too late for them, just like it is too late for the banks which have all left our community. We will do it on our own. We will fight for a better day. We will fight for a time when government takes the needs of ordinary people seriously. Our day will come.

The bill seems to be nothing more than a gimmick. I have outlined the reasons. It is not a genuine balanced approach. We have seen the past behaviour of the Liberals when it comes to the surplus. When it is convenient for them to pile up the surplus without reporting to Parliament, they do so and they let it go to the debt. When the political heat gets too much, then they say, “Oh, we had better do some quick spending, make sure that the surplus disappears”. They wave the magic wand, as they did just this past month, and suddenly the $8 billion surplus that was there and which was acknowledged by all independent forecasters, becomes $1.6 billion.

The Liberals were able to find some programs that had been sitting around for a while but suddenly this year they needed attention. Suddenly they decided that there were a number of five year funded projects that had to be collapsed into one year. Suddenly they found a way to take an $8 billion surplus and make it $1.6 billion. It is interesting that it is much lower than the $3 billion they feel is necessary to keep on a contingency basis.

Let us go back one more step to a previous attempt by the Liberals to address the surplus issue. Let us go back to the 1997 election campaign when the Liberals suggested that they would be operating on a fifty-fifty formula, not a one-third, one-third, one-third formula. Fifty per cent would go to program spending and 50% would go the debt and to tax cuts.

Did anyone here see that fifty-fifty formula take place? It did not happen by all accounts. Guess what? It was a 90:10 split. There was 10% for Canadians and meeting their needs, like the reserves, the Kashechewan First Nation and the aboriginal people in the north end of Winnipeg. There was 10% for all those folks and 90% for the government's corporate allies, for its buddies in the banking world and the corporate world to give them $100 billion in tax cuts over five years and to put the rest against the debt.

That is anything but a balanced approach. This proposal is not a balanced approach. We will look at the bill more carefully and study it. We look forward to the bill going to committee. I will not comment on our final disposition pertaining to the bill at this moment. I am anxious to see how much willingness the Minister of Finance and his parliamentary secretary have in terms of making this a proper, balanced fiscal framework for future surplus situations. I am anxious to hear how the government is prepared to address the real needs of Canadians to ensure that everyone in this country is able to live with decency, dignity and with some semblance of justice and fairness.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member has been here a long time. I have come to know that he is a very skilled debater. It depends on whether or not we are talking about a piece of legislation on the revenue side or on the expense side, because if it has to do with an issue on spending, his is always the argument about a provincial jurisdiction staying a provincial jurisdiction. However, when there is money or revenue on the table, it is that the government has to do this and get the province the money, as the member laid out, for post-secondary education, for health care and for social assistance. In other speeches, I have heard him argue exactly the opposite about staying out of provincial jurisdiction. He cannot have it both ways.

It is an excellent argument, even on behalf of the Bloc itself, as to why the federal and provincial governments have to continue to cooperate to ensure that we deal with the priorities of Canadians.

The final comment I want to make before I pose my question is with regard the fact that a balanced approach to priorities is simply necessary. It is not going to be good enough to say that Canadians who live in Quebec should not have tax reductions. They are entitled to tax reductions. They are entitled to have debt being paid down so that we have the interest savings and so that there will be more money. They are also entitled to program spending, which also includes transfers to the provinces so that provinces can exercise their discretion with regard to the priorities for the people within their provinces.

My question really has to do with the importance of having a balanced approach, but first with how we must not assume that Bill C-67 replaces a budget. The bill only has to do with surpluses in excess of $3 billion at the end of the year. There is a budget, however, which will address a whole host of the important priorities that have been debated in Parliament and with Canadians in a consultation process, in which the hon. member participates, in the finance committee. In addition to that, there is the process under Bill C-67 which will give Parliament the tools to fine tune that and to do it in a balanced way.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

That is not too bad for a government that claimed it was on a tight budget and could not meet the basic needs of its citizens in the areas of health, education and support to the disadvantaged. Not too bad for a government that claimed it had to tighten its belt because the public purse was in a bad state.

This year again—as my colleague from Medicine Hat has said—we in the opposition parties have retained the services of a group of independent experts so that there will not be the usual criticism that the Bloc Québécois, which has been within 3% in its estimates of the surplus at the beginning of the fiscal year ever since 1998, is exaggerating. In fact, the Standing Committee on Finance has hired independent experts who come and report to us every three months on the changes in public finances and provide us with their estimate of the surplus.

This year again, the Conference Board predicts a surplus of $10.2 billion, and Global Insight $12.4 billion. We ourselves estimate it to be between $10 billion and $11 billion, yet the government says it is in the $3 billion to $4 billion range.

That is utter nonsense. Since 1998, they have been hiding a margin of nearly $235 billion that could have been used for something other than enhancing the government's visibility. We will come back to that.

Not only has the government been hiding its considerable margin from us since 1998 and continues to do so, but it also continues to deny the fiscal imbalance and future structural surpluses, even though it acknowledges their existence through Bill C-67.

Despite this large margin, there have been some unbelievable inefficiencies in the machinery of government since it has been posting surpluses. When you are swimming in someone else's money and you have the authority to spend it, it is only human nature to waste it. I am referring to the numerous scandals. In fact, the sponsorship scandal is one of many. For example, we are still looking for the billion dollars that Human Resources Development Canada lost a few years ago, when the current Minister of Foreign Affairs was in charge. We are still looking for an explanation for the shameless waste of $1.5 billion in the gun registry, a program that was supposed to cost between $10 million and $20 million.

As you can see, the Bloc Québécois cares about sound fiscal management. Since the beginning, since 1993, we have been concerned about the sound management of the taxes paid by Quebeckers and Canadians, especially the $40 billion Quebeckers send to Ottawa. Nonetheless, we have noticed that since there have been surpluses, the federal government spending machine has been set in motion. In other words, it has taken the bit in its teeth.

Two years ago, the Bloc Québécois set up a committee that we christened the Léonard committee, after the former president of the treasury board of Quebec, Jacques Léonard. He wanted to get involved, as did my colleague, the hon. member for Joliette, my colleague from Drummond and myself. My colleague from Portneuf—Jacques-Cartier also joined the committee.

We conducted an in-depth examination of all bureaucratic spending by the federal government, and the results are disgraceful. From 1998 to 2003, when cumulative annual inflation was approximately 9.6%, federal government spending increased by 39%. We have verified these figures for the past two years. We discovered that during that period, while cumulative inflation hovered between 4.5% and 5%, federal spending increased by 20.4%. This is an outrage.

Yet, everyone was asked to tighten their belts before 1998, in order to eliminate the annual deficit. People have made sacrifices. However, the government has been hiding surpluses since 1998 and is therefore preventing the governments of the provinces and Quebec from fulfilling their fundamental mandates in health and education, and helping the most vulnerable members of our society.

Other people's money is being frittered away on operating budgets and bureaucratic spending in Ottawa. This is money that would normally go to the unemployed whose EI fund surplus is being stolen year after year. These surpluses correspond to employer and employee contributions; the federal government does not contribute one red cent. These are contributions from sick people who are waiting for treatment. There is not enough money for health care. The accord reached over a year and a half ago, thanks to which victory was declared and the federal government could appear to be a great saviour, was only enough to run the health care system in Quebec and the provinces for nine days. In the meantime, bureaucratic spending went unchecked.

The Léonard committee provided another important statistic. From 1998 to 2005, in other words from the time they started to generate surpluses using other people's money, on the backs of the unemployed, the sick and students drowning under student debt, payroll expenditures increased by 55.6%, an annual increase of 6.5%. This is more than double the inflation rate. This makes no sense whatsoever.

The government made major cuts to social programs, particular from 1995 on. They changed the criterion for social transfers for welfare, post-secondary education and health from needs-based to population-based. “They” means the present Prime Minister, and former finance minister, that man of great compassion. He is the one responsible for the drastic cuts since 1995. During that same time, the government's increasing revenues were being added to the savings achieved at the expense of our society's most vulnerable members.

Since 1995, federal revenues alone—not the savings in expenditures—have gone up by $76.6 billion. Over that same period, transfer payments to Quebec rose by $794 million, 1% of that figure. One per cent of the additional $74 billion has gone to increase transfer payments to Quebec since 1995. Disgraceful.

The Prime Minister, and former finance minister, achieved those budget cuts at the expense of the least advantaged members of society, including the unemployed excluded from EI because of tighter eligibility criteria. Otherwise, if the surplus had been reinvested in broadened accessibility, none of them would need to be on welfare now. The government is responsible for people having to move from EI to welfare, the latter being the responsibility of the Government of Quebec and the provinces.

At the same time as the provinces and the unemployed were being deprived of funds, the provinces' expenses were being increased, since they had to support people who had been literally thrown out on the street. This is the work of the Prime Minister, he who is so full of compassion for Canadians, whom he says he wants to help out of poverty. Come on, now, he is the one who has been putting them in it up to their necks since 1995.

If the transfer rate had been maintained for funding health and post-secondary education—that is to say colleges and universities—and to help the most disadvantaged, an additional $16.1 billion would have been transferred since 1995 to the governments of Quebec and the provinces for them to carry out their basic responsibilities.

This morning I heard the Minister of Finance talking about incredible tax cuts. In reality, Bill C-67 provides for the allocation of the “surprise” surpluses that the government might realize over the next few years. We call it a “surprise” even though we know about it a year in advance because we can figure it out with a little pocket calculator bought for $ 2.49 at the corner store. But for him, these are surprises. I do not know what they like about surprises; it is more fiddling with the figures.

Under this bill, if surpluses are anticipated at the end of each fiscal year, one third will be allocated to paying down the debt, one third will be allocated to tax cuts for taxpayers, and one third will be allocated to programs, but according to the government's priorities. These priorities could change along the way though, still according to Bill C-67, if the government so desires.

In reality, the government will continue doing over the next few years exactly what it has been since 1998. It will use its discretionary power to choose its own priorities, not those of Quebeckers and Canadians. That is what it has been doing since 1998. So what has changed?

In regard to these fantastic tax cuts, I would like to provide a small example of what they could be. Suppose that the surplus is $9 billion this year. Three billion would have to be set aside in a contingency fund. This has been automatically allocated to the debt since 1998. So we can forget this first $3 billion. There would be around $2 billion for new expenditures. These would not be the next expenditures but expenditures already included in Bill C-48 passed last June before the House adjourned for the summer. That is what would become the priority.

Therefore, $4 billion in surplus will remain after the reserve fund and the commitments under Bill C-48 have been satisfied. Let us suppose that if the surplus were just over $4 billion, $2 billion could be used for personal tax cuts. Do you know what that would mean for the 15.5 million taxpayers in Canada? That would represent $129 for one year. That is wonderful! We must applaud the government. A tax cut of $2 billion for 15.5 million taxpayers in Quebec and Canada would give them each $129. It is a joke to talk about whopping tax cuts; it is sheer visibility.

In reality, the federal government has sacrificed the economic and social development vision a government should have for visibility alone.

We have become accustomed to this government's finery: Canadian flags everywhere, cheques for fuel, etc. They are looking for visibility. You cannot run a society and make progress with visibility, you need a vision for development to do so.

We have just toured through several regions in Quebec. We have seen this government's lack of vision. Despite the billions of dollars in surplus it is been amassing since 1998, this lack of vision is killing entire communities, especially in the outlying regions. The remote regions have been totally abandoned.

All this visibility for a measly $129 cheque or a personal exemption for the same amount at the end of the day. This is a lot of talk for so little money.

We are talking about $2 billion for 15.5 million taxpayers. If the government was thinking about a vision instead of visibility, it would see that this money represents half the new investment the underfunded colleges, CEGEPs and universities have needed over the years. Last week's demonstration by students calling for $4 billion more did not come out of nowhere. It came from the fact that for the past 10 years, the Liberal government's savage cuts have not made it possible to give the colleges and universities the funding they should have received.

This too is the result of another of the Prime Minister’s promises which he has not kept and which has bit the dust. In the election campaign, when he was on the ropes, he was offering things to everybody. He promised students in the colleges and universities of Quebec and Canada to invest $4 billion in the education system, which is now suffering from underfunding. Fine words in an election campaign, aimed at saving his skin. They talk about the future of our children. They say the future of the Canadian economy depends on the education of our young people, on their knowledge, since ours is a knowledge-based economy. But when the time comes to act, there is no follow-up. They say that enough money has been invested in education. What lack of vision. So that every taxpayer can be offered an annual cheque for $129, we are in the process of sacrificing the education system of Quebec and Canada.

A sum of $2 billion, that is also what Quebec is lacking in equalization. If they corrected the formula and used real figures, a real method of calculating the pan-Canadian standard—that is, taking the ten provinces into account—and property tax, Quebec could obtain $2 billion with the equalization adjustment. That is the very amount we are scattering on needs of visibility and electioneering, that is, needs of very little importance which testify to this government’s lack of vision.

I listened to the Minister of Finance when he presented his bill. He said it was in line with what the opposition had asked for. What demagoguery. We made our request last spring, before the budget was tabled and before the revelation of the surplus figures for the last fiscal year. What we were asking for in the short term was to start correcting the fiscal imbalance by increasing transfers to the provinces for education, health and disadvantaged families, as priorities. We said that later, in the intermediate term, the government should sit down with Quebec and the provinces to work out a lasting solution for the fiscal imbalance.

We did not ask it to amass surpluses and plan a long-term distribution, but to correct the fiscal imbalance through a transfer of fields of taxation, such as the GST, and by correcting equalization. That would have ensured stability in Quebec and the provinces. But there is nothing in this bill that will correct the fiscal imbalance. They do not have the will, even though they recognize, by the very existence of Bill C-67, that there will be structural surpluses in the years ahead. This is testimony to the ongoing fiscal capacity of the federal government to generate surpluses, even though it does not need them to carry out its core mandates, and to the undercapacity of the governments of Quebec and the provinces to carry out their own mandates and provide direct services to the population, for lack of money, because that money is being siphoned off by Ottawa.

So we are going to oppose this bill. We will attempt to amend it so that there is a permanent and lasting solution to the fiscal imbalance. However, we cannot support the fact that, on account of the fiscal imbalance, it may be necessary to distribute in the coming years, at the rate of one third, one third, one third, the surpluses that the government will continue to outrageously accumulate.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, it is a pleasure for me to rise and speak about Bill C-67, which at least gives us an opportunity—because this is the only benefit of the bill—to debate the question of whether or not there are structural surpluses in the federal coffers.

We have been estimating the surpluses since 1998 and we know that there is an imbalance between the financial capabilities of the federal government and those of Quebec and the provinces. On the other side of the House they have always denied the existence of the fiscal imbalance. Today, though, they confirm it for us through Bill C-67. It is a bill spread over the next five years. They anticipate, therefore, that there will be surpluses over this time, just as there always have been since 1998.

I would like to be very clear. The Bloc Québécois is totally opposed to this bill and will not support it. It is unacceptable in regard to both its arrangements and its substance concerning the existence of the fiscal imbalance. Nothing is corrected, and although the federal government recognizes the existence of the fiscal imbalance, it shows no desire to fix it.

So now the government says, “This is a bill for distributing the surpluses, but there will not be all that much in the future. There will not be any windfalls”. I am quite willing to think that there will not be any windfalls, but when we look at the tax cuts—and we will return to this in a minute—we see that the surpluses will generally be quite large.

Over the last few years, or at least since 1998 when the federal government has been taking in surpluses, about $75 billion in surpluses have been accumulated at year's end. But every year the government says: “There will not be a surplus or it will be minimal if there is one. We need to tighten our belts. We must be careful. Even if the post-secondary education system is collapsing and health care waiting lists are very long, the surplus will not be large enough for us to meet the demand”. And then every year, especially since 1997-98, the federal government's annual surpluses are a big surprise, like a rabbit they pull from a hat. We could not see it coming. It was unanticipated. What good government that gives us these surpluses at the end of the year thanks to its perfect management.

Perfect management it was not; it was a sham. Every year since 1998, some $75 billion of the surplus has been kept out of public debate. We could have been able to discuss allocation of those surplus funds, to focus even more on the matter of fiscal imbalance, and to find remedial measures precisely to enable the provinces and the Government of Quebec to fulfil their mandates duly set out in the Constitution, such as health, education and support to disadvantaged families.

But instead, they have concealed the surplus from us year after year. Not only had some $75 billion accumulated since 1998, but as well $160 billion had been allocated to new federal government initiatives. Not bad, that; it means that the government's margin of manoeuvrability, taking into account all that money since 1998, was in the order of $230 billion or $235 billion.

[Gérard Asselin, Bloc, Manicouagan, QC]

Mr. Speaker, Bill C-67 concerns the allocation of surpluses. Why are there surpluses? It is because the Minister of Finance inaccurately forecasts his budget. He inaccurately forecasts the surplus. Each year, the Bloc Québécois proves that the Minister of Finance never fails to underestimate the anticipated surplus.

Why is there a surplus? First, $4 billion is taken each year from the EI fund. Now, we wonder how the surplus will be allocated. Given that fact, the minister should at the very least have improved EI and returned to seasonal workers the $48 billion he has taken from the fund over the past decade.

Today, the minister has had to introduce a bill setting out how the surpluses will be allocated, knowing full well that, every year, $4 billion is being taken from the unemployed, seasonal workers, women and the jobless. He is increasing the poverty level in the world and especially in Canada.

I want to ask the following question of the Conservative Party member who just spoke. Would it not be logical, in his opinion, for the government, which has taken $4 billion each year from the EI fund, to improve the EI program and give back to the workers the money—$48 billion according to figures provided by the Auditor General—that it has taken over the past decade?

[Ralph Goodale, Liberal, Minister of Finance]

Mr. Speaker, I was interested in the hon. gentleman's remarks. They were fascinating if not fanciful in both his analysis of the economic situation and his depiction of the relative position of the Conservative Party and others on economic affairs.

He was very critical of year end spending decisions by the government over the last number of years. However, I look at those spending decisions on things like: assistance to farmers to alleviate the burden for mad cow disease; special measures to deal with the SARS outbreak; money to the provinces for health care; a trust fund to launch the child care initiative; special money to British Columbia to help fight the mountain pine beetle; measures to deal with national security after 9/11; measures to deal with foreign aid and so forth. I wonder in all of this criticism which of those things the hon. member would have chosen not to do.

The hon. member also talked about the tax relief measures in Bill C-67. He implied that the tax relief in the bill is only in the nature of one time annual rebates. That is not true.

I would point out first and foremost that our government has already implemented $100 billion in tax reductions; two-thirds of that going to individuals. There was another $13 billion in tax reductions contained in budget 2005. About half of those have already been implemented and the other half are still in the process.

I would point out to him that it is the government's intent in future budgets, just as has been the case in every budget since we balanced the books, that there will be positive steps taken in the main body of the budget to reduce taxation, especially personal taxation. Bill C-67 provides not just for rebates on an annual basis but in fact for permanent ongoing tax reductions to improve the disposable incomes of Canadians.

The member said that taxpayers would have seen zero in benefit under this legislation last year. That is not true because there was $13 billion worth of tax reductions in the main body of the budget itself. That is what the hon. gentleman tends to ignore.

I quoted the hon. gentleman from the National Post of about a month ago where he was in fact supporting a mechanism like this. I would point out to him that at the finance committee in June in the debate on Bill C-48 the hon. member himself moved an amendment that was virtually identical to Bill C-67. He has just swallowed himself whole and I ask him, what will he do about his gross indigestion?

[Monte Solberg, Conservative, Medicine Hat, AB]

Mr. Speaker, when did it go to Canadian taxpayers, the people who earn that money and who need that money to look after their families? It has not gone to them.

My colleague across the way said that the government cut taxes. If that is true, why are Canadians not seeing it on their bottom line? Canadians need some tax relief so they can look after their families and their future. No one can look after their families better than they can themselves, certainly not the Minister of Finance and not a bunch of bureaucrats either. It is time for tax relief for Canadians. Why are we not seeing it?

My friend across the way said, “Say that outside,” when I said David Dingwall's name. He raised the issue so I will address it. I do not think one Canadian believes he or she can quit his or her job and get a king's ransom in a severance package from the employer. That is exactly what is going on today because the government has not changed its stripes.

The Liberals did not learn anything from the ad scam. They said that they would clean up government and quit rewarding their friends but the first chance they had to prove they would not be the same way, they blew it and defended David Dingwall. They defend their practices of featherbedding and looking after their friends.

All that tells me is that the Liberals have not learned a thing. And, guess what? No surplus is safe from Liberal friends, which is why we are opposed to Bill C-67. Liberal friends will always be rewarded first and it will always be taxpayers who get looked after last. In fact, if we were to use the formula last year, Canadian taxpayers would see zero for a rebate. That is one of the primary reasons that we oppose Bill C-67.

I want to point out that it was the Conservative Party that moved an amendment to the throne speech asking for independent forecasters to be hired by the finance committee so we could provide a different opinion of where government surpluses were going. I should say taxpayer surpluses because they are the ones who provide them. This was passed on, I think, December 1, 2004. The point of that exercise was this. All three opposition parties agreed that the government had been manipulating the surpluses and the books for its own ends. I mentioned a minute ago that the unanticipated surpluses, or the surpluses the government would not admit to, amounted to about $90 billion.

We moved our amendment back in 2004, which passed, and the government reluctantly went along with it. We now have a situation where these independent forecasters come to the finance committee every quarter and provide independent analysis of the size of the surpluses.

Last year the government said in the budget that the surplus this year would be $4 billion. The independent forecasters just came to the committee and said that was absolutely wrong, that the surplus would be well over $10 billion. This comes on the heels of a situation last year, which my friend from Wild Rose has already pointed to, where at the end of the last fiscal year the government said that the surplus would be $1.9 billion and it turned out to be $9.1 billion.

We cannot allow the government to continue manipulating the books to come up with numbers that suit its ends. One of the great flaws in Bill C-67 is that it does not commit the government to live within its budget. Therefore it can, at the end of the day, manipulate the size of the surplus and ensure there will be no surplus to divide up. I think the amendment was one of the great triumphs of the Conservative Party. I should acknowledge that it was the leader of the Conservative Party who brought this to Parliament, that we can at least hold the government to account to some small degree for this manipulation that goes on at the end of every fiscal year.

I urge all members around the House to oppose Bill C-67. It is clearly a bad move for Canada and it is simply a cynical attempt to buy votes as we get into an election campaign.

[Monte Solberg, Conservative, Medicine Hat, AB]

The minister is urging me to do that so I will. I want to explain why the Conservative Party is very much opposed to Bill C-67.

Bill C-67 is indicative of a government that is out of gas and out of ideas. When the minister raised the fact that Canada is facing a productivity crisis, he brings in legislation that economist after economist has criticized as being absolutely antithetical to the idea of solving our productivity challenge. I want to explain what I mean by talking a little bit about the particulars of the legislation.

Bill C-67 would take unanticipated surpluses and divide them into three. One-third would go toward paying down the debt, one-third toward a tax rebate and one-third toward increased spending. Let me tell the House why that is unbelievably simplistic when we are facing this great productivity challenge. It is wrong for a number of reasons.

The government has used its ability to manage the size of the surplus a number of times to get around the normal parliamentary scrutiny that should be brought to government spending when we are talking about spending billions of dollars.

Since 1997, so-called unanticipated surpluses have amounted to about $90 billion. Independent forecasters knew these surpluses were coming. It is the finance department that claimed it did not know these surpluses were mounting. As a result Canadians have had no input on where the money should go.

What happens is that very often at the end of the year the government would go on a year-end spending spree. Sometimes the money would go to important things but a lot of times it would go to things of questionable value. I can think of one year, on the last day of the budget year, when the former prime minister bought two Challenger jets for his own travel at the same time that the Canadian military was looking for all kinds of equipment to move our troops around.

It is a dangerous when we have a government that manages the numbers so it can lowball expectations about surpluses and then use those surpluses at the end of the year for its own ends. We are concerned about that.

As members will know, at the end of last year Parliament's own independent forecasters projected a surplus of over $6 billion but the government engaged in a bunch of accounting tricks at the end of the year to reduce that surplus down to $1.6 billion.

When the government maintains the ability to manage the size of the surplus by introducing a bill to divide the surplus into equal parts, where Canadians think they will get a rebate at the end of the year, it is not going to happen because the government can eliminate the surplus if it suits its ends, which is what happened last year. We had a surplus at the end of the year of only $1.6 billion, which means there would be nothing to divide up. Canadians would see no tax relief, no debt repayment and no increased spending.

As long as the government maintains the ability to spend more than it said it would spend and manipulates the size of the surplus, having a bill that divides the surplus up is meaningless.

However it goes beyond that. We have other criticisms beyond that. One of the great criticisms that has been levelled against the government is the fact that it has not taken any steps to enhance our productivity. I touched on this a minute ago. The problem with Bill C-67 is that if one-third of the surplus were given back to Canadians in the form of a rebate, it would not do anything to enhance productivity.

One of the great arguments for tax relief is that lowering particular types of taxes provides an incentive for taxpayers to engage in certain types of behaviour. If taxes are lowered on investments, then people invest more, which, obviously, is something that enhances productivity. If personal income taxes are lowered, then people tend to produce more because they are not so heavily punished when they earn more money.

Economists have argued, and they are absolutely right, that instead of providing this one-third formula the government should just lower taxes for middle class Canadians. I know the government always pleads poverty but we have seen spending go up 52% since 1999. Money has gone to public service, Liberal friends and to David Dingwall. We have seen it go to the NDP.

[Monte Solberg, Conservative, Medicine Hat, AB]

Mr. Speaker, it is my pleasure to address Bill C-67, the surplus allocation bill.

I know the minister would not want to mislead Canadians about the true facts regarding either the history of his own government's performance or even the history of other governments' performances, so I just want to start by addressing some of the issues that he raised in his speech and then I will say a little more about the bill in particular.

First of all, the minister said a number of times that his government balanced the budget, but that is not true. In fact the taxpayers balanced the budget and they paid a very heavy price to do it.

As the minister knows, first of all his government cut health care. It made the deepest cuts in Canadian history to balance the budget. It did not cut all the transfers to spending for grants and contributions. It did not cut them at all. In fact those stayed steady through that period, but the government certainly cut health care. In other words, Liberal friends were well looked after during that period but health care had the deepest cuts ever in Canadian history. It really was not the government that balanced the budget. It was health care workers, patients and Canadians.

During that time, we saw a number of tax increases, 67 tax increases, typically small, sneaky tax increases through that period. Who bore the brunt of that? It was the taxpayers. It was not the government that balanced the budget. It was the taxpayers who balanced the budget.

I also have to point out that GST revenues were very important in helping to keep that budget in balance, and that is the government that said it was going to get rid of the GST. Last time I checked it was still there. We are still paying that 7%. I see it every time I purchase something. The government certainly counted on the GST to balance the budget, even though the Liberals said they would get rid of it.

I noted another thing, and the minister partially touched on this. He talked about all the revenues coming in. I note that many of them are resource revenues and in fact revenues from companies that do business in the United States all the time. They are bringing in lots of revenue. The Liberals said they were going to get rid of the free trade agreement. They were going to rip up NAFTA but thankfully it is still there and it is providing a lot of these revenues.

Therefore, I just reject the premise of the minister's argument.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I first want to thank the hon. member for his words of congratulation to me on my common sense. I appreciate that.

With respect to the $9 billion in the surplus from the previous fiscal year, when that was announced was exactly the time when I indicated that Dr. Tim O'Neill would be invited to examine the fiscal forecasting process. He has made 14 recommendations. We are in the process of implementing those very recommendations.

The only one of his recommendations that we did not agree with was the one where he said it would be okay from time to time to run a deficit. We do not think that is consistent with the views of Canadians. We do not think it is consistent with the views of members of the House. We think the budget should be balanced or better every year.

Dr. O'Neill anticipated that we might not agree with his point that it would be okay every now and then to run a deficit, so he said that if we are going to stick to the no deficit rule, we have to have a mechanism to transparently deal with those extra surpluses. That is exactly what we are doing with Bill C-67.

On the aboriginal evacuation that is taking place in Ontario right now, I would point out that the responsibility for that evacuation is in fact under provincial jurisdiction. The Government of Canada's responsibility is to pay for it and in fact we are picking up the entire bill for that situation.

With respect to the issue about farmers, I am happy to tell the hon. member that during the time that I have been Minister of Finance, since December 2003, the Government of Canada over and above all of the normal safety net programming has invested an additional $2.8 billion to support agriculture in this country. We will stand by our farmers every step of the way.

On hepatitis C, the House discussed the process and the hon. gentleman, I am sure, is very aware of that process. It involves a court controlled fund that we are in the process of negotiating with the relevant parties. We are hopeful we can achieve the kind of solution that will in fact allow those revenues to flow.