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House of Commons Hansard #113 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was finance.

Topics

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11:05 a.m.

Winnipeg North Centre Manitoba

Liberal

David Walker LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, it is very rare that as Parliamentary Secretary to the Minister of Finance I actually want to jump to my feet to participate in a debate. After listening to the first half hour of debate, we have to bring a little intelligence and hard work to this debate, with the exception of the Parliamentary Secretary to the Minister of Industry whose interventions were both intelligent and thoughtful.

There is an obligation in the House of Commons when we have these debates that the opposition brings to bear a different perspective than that of the government and does it through research, through common sense and through bringing to the attention of the House the concerns of their constituents.

I happen to know the city of St. Albert and I know how intelligent its voters are. The member who preceded this member is a very intelligent person from the Conservative Party and a very wise man. I am sure the people of St. Albert would want their member to bring to the House some facts and figures to support their case and not just sitting here and talking.

My hon. colleague behind me from Peterborough can tell the House, as he too, like myself, taught at a university. From our history departments, we all know that if we do not learn history we repeat the same mistakes of an earlier generation. In fact, the opposition is repeating so many mistakes that the former Prime Minister from Alberta was quoted in the papers this morning as saying that he thinks it will be quite easy for the Conservative Party to come back. When a party of one person or two people think they can overtake the new opposition it just shows everyone how weak they think it is let alone how we think it is.

Does the parliamentary secretary realize that this is the first opposition day offered up by the Reform Party since we have come back this year?

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11:10 a.m.

Reform

John Williams Reform St. Albert, AB

It is the first one you gave us.

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Liberal

David Walker Liberal Winnipeg North Centre, MB

What topic do they choose? They choose the financial structure and budgeting process of the country.

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Reform

Charlie Penson Reform Peace River, AB

That is what Canadians choose.

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11:10 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

What is the great strength of this government?

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11:10 a.m.

Reform

Ian McClelland Reform Edmonton Southwest, AB

You tell us.

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11:10 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

It is the financial structure, the reorganization of the government, the production of an excellent first budget and, for the first time in the history of any government, the production of a prebudget process with documents from the Minister of Finance to show Canadians exactly what we have to do to get ourselves reorganized.

On our anniversary date they give us our strong hand to talk about it. Thank you very much, team. This is exactly what we need.

Let me just talk about some of the things that we have done for the last year. In this very instructive book called "The First Eight Months of the Liberal Government-Promises Made, Promises Kept", 43 areas are mentioned in which we said before the election we would proceed. These areas range from fairer taxes, federal-provincial fiscal arrangements, GATT, the goods and services tax, job creation, North American free trade, prebudget consultation, reducing the deficit, removing interprovincial trade barriers, child support payments, literacy initiatives, social security reform, unemployment insurance, youth employment and learning strategy, the Atlantic groundfish strategy, building Canada's infrastructure, Canadian space program, protecting fish stocks, the reintroduction of the residential rehabilitation assistance program, the science and technology review, supporting small and medium sized businesses, the commissioner of the environment and sustainable development, international leadership, protecting Canada's

wildlife, the end of tobacco smuggling, the enhancement of Canadian cultural identity-

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11:10 a.m.

Reform

Ian McClelland Reform Edmonton Southwest, AB

It's like talking to a divorce lawyer. You have done nothing.

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Liberal

David Walker Liberal Winnipeg North Centre, MB

Mr. Speaker, in this document are the most amazing facts about how the government has worked hard in the first year.

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Some hon. members

Oh, oh.

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11:10 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

In category after category we have set out a plan of action which opposition parties, not only in Canada but anywhere in a democratic society, would ask how these guys accomplished so much so quickly. I would say that it is through the hard work of the Prime Minister. He has set the standard for the rest of the caucus and we have proceeded to work on our plans.

The motion today asks us to move toward a balanced budget immediately. I would say to the Reform Party that everyone in the House, I think, and judging from what happened in the finance committee, is absolutely committed to making sure that we get our House in order. There should be no doubt about it. The Bloc has said the same. The Reform Party has said the same. Therefore, the question becomes one of how do we do it. What is the best topic? What is the best strategy? That is where I return to the organized strategy of the government.

We set out in our first budget certain objectives of how to manage the deficit. We are right on course. The Minister of Finance has said on several occasions that we will meet our target each and every year. The critical issue facing Canadians after the last 10 years of government has been the complete lack of credibility in the financing of the country. We have proceeded to deal with the issue of credibility.

I am very proud to be working with the Minister of Finance who has in every statement systematically re-established a credible framework for the governing of the country and putting our financial House in order. The strategy was reaffirmed last week in our economic and fiscal update. This important paper set the parameters for a public budget consultation that is both unprecedented and fundamental to fostering economic growth and jobs.

Let me remind the opposition that when the Minister of Finance spoke to the House committee on finance he zeroed in on our fiscal challenge. He said:

Facing up to the debt challenge is the keystone of responsible economic policy. If we fail at that, we fail at everything else. It is not a question of focusing on jobs or the debt. It is a question of focusing on both.

From time to time we hear the opposition party taunting. We have asked the opposition parties on several occasions to give us some ideas, to help us out with this very difficult process. There are going to be tremendous tradeoffs. There are going to be a lot of people hurt in the process. The purpose of government is not to hurt Canadians. It is not the fault of the poor that we are bankrupt. It is not the fault of the elderly that we are bankrupt. It is the fault of government after government which has refused to deal with the fiscal crisis.

It is a question of fair taxes. We set out that we would deal with fairer taxes. We started out by dealing with the $100,000 capital gains exemption. The corporate income tax deduction and the GST tax credit for meal and entertainment expenses were reduced from 80 per cent to 50 per cent. Large private corporations with capital over $15 million are no longer eligible for the small business deduction.

New measures will prevent Canadian based companies from using foreign affiliates to avoid paying Canadian taxes. We will ensure that the income from securities held by financial institutions is measured appropriately for tax purposes. Corporate tax rules relating to tax shelters, research and development incentives, debt forgiveness and asset sales are tightened.

The first $25,000 of life insurance benefits provided by employers will no longer be tax exempt. The threshold for the 29 per cent tax credit on charitable donations is lowered from $250 to $200. The age tax credit for hiring seniors will be progressively reduced over the next two years. The taxation of family trust, a very difficult issue in which I know the Bloc has a particular interest, has been reviewed by the House of Commons finance committee. We know there will be positive recommendations for change coming out of that.

The difference is that we have our facts and we have organized a program to achieve success. We are not just rambling on. We are not just using up the time of the House of Commons for polemics and rhetoric. There is a real job to be done.

At the time of the first anniversary of the last government-and the Parliamentary Secretary to the Minister of Industry was there-there was no reason to celebrate. It had not kept its promises from 1984, let alone the promises from 1988. It was met with dull silences. Its members wore little flowers to promote the Prime Minister, but what did that mean in terms of substance? It meant absolutely nothing.

There can be no doubt about our commitment to meeting the 3 per cent deficit target we have set out for 1996-97. There should be no question that this is a vital first step forward toward an ultimate goal: a balanced budget.

I am sure the House needs no reminder of the price Canadians are paying for decades of surging deficits and debt. It is measured in higher taxes, high interest rates, too few new jobs and too little growth. We have started out on the deficit reduction track to bring the deficit down to 3 per cent of GDP in three years. Canadians should understand why that 3 per cent target is so important. In the words of the Minister of Finance, we will reach that target come hell or high water.

Reaching that level will mark a turning point in the battle against the debt. It will mean that the economy will be growing faster than the debt. In other words the debt will finally begin to shrink in relation to Canada's economy. This will be happening only for the second time in more than two decades.

We can look at the issue in another way. The federal deficit currently near 6 per cent of GDP has not been as low as 3 per cent since 1974-75. There is another point that is just as important to emphasize. It underscores why it is better to move ahead by concrete steps than to issue wishful, long term plans for deficit elimination. Setting firm deficit targets for the near future represents a major change from the past.

Because Canadians have become cynics about federal deficits, because they have suffered too many years or rosy long term promises, we have set out realistic targets and will take the actions needed to deliver bottom line results. Our success will strengthen credibility for our long term objective: eliminating the deficit completely.

This strategy is based on fundamental, political and public reality. We believe it is best to set out short term targets, concrete milestones and hit them. With short term targets there is no excuse for delay and no acceptable grounds for not taking tough action to address the problem. When unrealistic long term goals are set, we can always find a reason to avoid tough action today, tomorrow and the tomorrow after. That was the Tory record and it is a legacy we refuse to accept.

I want to highlight another aspect of the political and public reality of deficit fighting. The previous government believed in imposed solutions that did not draw upon real national discussion and consensus. Now it is Reform that looks for instant slash and mash solutions.

Our government is a national government committed to democratic principles of openness, access and consultation. It is those principles at work that govern our approach to winning the deficit battle. The Minister of Finance made that point clear when he addressed the House of Commons finance committee. I quote the minister:

During our first round of prebudget consultations, Canadians told us they wanted clear targets to which they could hold the government accountable. We have provided those milestones.

Canadians can now judge if we keep our word. That is why our target is not cast ahead into the fog of some far off future. It is only two years away.

That is why we have set year by year milestones on the way to that target-so that we can be held to account. That is why we have used very prudent assumptions in determining how our targets can be met. And that is how we will restore confidence in the financial credibility of the Government of Canada.

These are not just words. It is a formal pledge. That is why we took several concrete actions in the last budget and that is why we have achieved our targets.

Several issues are still confronting the government. For example interest rates, triggered by the U.S. federal reserve fight against inflation and compounded by worries about Canada's fiscal burden and the Quebec situation, are much higher than anyone expected. Because of the size of our debt even small changes in interest rates have mammoth effects on our carrying costs.

The fiscal update sets out the dimension of the challenge we face under different and increasingly prudent interest rate assumptions. Based on the current outlook and the average of private sector forecasts we would still need an additional deficit action of $2.3 billion in 1995-96 and $5 billion the year after.

If we assume interest rates that are half a percentage point above the average private sector forecast without any new budget action, we risk falling short by $3.1 billion of our target next year and by $6.3 billion in 1996-97. The numbers are even worse if we assume interest rates a full percentage point above the average forecast and growth that is half a percentage point lower. Then the deficit could be $5 billion above our target next year and $9 billion off the target in 1996-97. The combination of high interest rates and a large debt poses a major challenge.

In the discussion in the finance committee last week the Minister of Finance indicated several principles. First, the deficit reduction must be part of a strategy to create jobs from growth. Second, the actions must be fair, making sure that the most vulnerable are not left behind. Third, deficit reduction measures must be selective and strategic reflecting clear priorities. Fourth, we must be frugal with taxpayers' dollars and, finally, budget action should weigh on the side of cuts and spending rather than increases in revenue.

As we seek these reductions we should keep another thing in mind, another lesson from the past. Under the previous government the problem was not the 10 or 15 per cent that was lopped off in each year's last minute frenzy. Rather the problem was that no one paid attention to doing better with the remaining funds. We will not make that mistake. Canadians do not expect smaller government. They demand smarter government. That is why the Minister of Finance went to the finance committee last week.

I want to take a minute to explain the significance of this action. Under Standing Order 83(1), accepted by all members of the House last spring, the government committed itself to the first prebudget review in the history of any western democracy, particularly in the parliamentary system. It has not been done in Britain. It has not been done in Germany. The American model

is much different. It has been tried in selective ways in the provinces of Ontario and Saskatchewan.

We want to have Canadians involved to understand how difficult some of the choices in front of us might be. There is the law of unintended consequences that we learn when studying history wherein we do one thing and have a number of side effects that we did not want. We want Canadians to get into active discussion with us about what those tradeoffs might be.

We have presented a two part plan for creating jobs, for the reorganization of the government and for the establishment of new priorities. When the Minister of Finance was before the committee he raised three questions he wanted the committee to look at. First, are the economic assumptions for growth and interest rates appropriate? Second, what should be the balance between cuts in spending and measures to raise revenues? Third, what specific actions should be recommended? We want to move away from the scenario of not in my backyard.

I am sure members of the House hear the reactions, for example to the social security review. People are saying that we should not touch a particular program, not even discuss it. When we move into financing the country we cannot have little cubbyholes or little special tax situations that we cannot talk about. We want everything on the table.

We want opposition members to participate in the round table discussions we are to have across Canada. We want to hear their suggestions. When we report back to the House in December we want all members of the House of Commons to have an opportunity to make their own contributions. In late December and in January when the serious work on the budget begins to take a shape the Minister of Finance can look at the report of the House of Commons finance committee, thank Canadians for their support and thank the House of Commons committee for organizing their comments in a constructive fashion.

It is not an easy process. I thank members of the Reform Party for bringing these issues to the attention of the House. I wish they would be able to contribute a little more positively. Perhaps other speakers during the afternoon will go back to their research bureau and say that the parliamentary secretary for finance was correct. We do need some more ideas. Let us sit down, maybe for the first time. I do not know how that party works but let us sit down, take a look at the problems facing the country, and use the time of the House of Commons effectively.

One of the great frustrations of Canadians watching the parliamentary channel is how many people are really contributing ideas. In our platform for the last year, the 43 areas in which we have taken initiative and the nine tax changes I think we provided a very specific idea. I see the lead critic for the Bloc Quebecois is beginning to warm up for his contribution. We will listen for his specific ideas.

We have in front of us an opportunity to debate and to present ideas on reduction. I know the Bloc has changed its views in the last couple of weeks and is now on the bandwagon. It is nice to have Bloc members aboard. We will look for specific suggestions. When it came to certain budget measures in the last budget-and it was difficult-Bloc members were on their feet in the House complaining about this cutback and that cutback. It would be good to have them understanding that in the overall framework everyone has to pay a price and everybody has to contribute in re-establishing the physical health of the country.

In conclusion I thank the House for the opportunity to participate today and for the opportunity to put forward some of the areas in which we have made major accomplishments. I look forward to the contributions of my colleagues on this side and my colleagues on the other side. Through questions and answers and good debate we will have a better idea of how to put the country back together.

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11:25 a.m.

Reform

Ian McClelland Reform Edmonton Southwest, AB

Mr. Speaker, I listened with great interest to the dissertation of the hon. Parliamentary Secretary to the Minister of Finance. He is a very influential person within the finance committee. He sits at the right hand of the Minister of Finance. Would this not then set fear into the hearts of the innocent when they wonder where is the plan?

It is not like these people came here yesterday. They were in opposition for nine years. They were the architects of the disaster we are living in today trying to get elected 35 years ago. They have had one year of power and what have they accomplished? Absolutely nothing.

The Parliamentary Secretary to the Minister of Finance stands there and says: "Well, what are your ideas? You are trying to smoke us out". They are going to get our ideas in black and white but they are going to get them after they finally put theirs on paper, finally.

What we have here are the Liberals in a new olympic Liberal sport: low hurdles. You set the hurdle low enough and you can crawl over it, which is about what they are doing. They are not going to wear themselves out jumping over high hurdles; they are going to wear themselves out tripping over low hurdles.

I ask the parliamentary secretary who has given us a litany of the 47 things they have consulted on so far to tell me one specific thing they have accomplished. Not the 47 they have talked about, just one they have accomplished.

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11:30 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

Mr. Speaker, the willingness of the Reform Party to give me an opportunity to expand on our good activities for the last year is exceptional. I appreciate the goodwill with which these questions are lobbed toward me.

Where do you start? You start with what we-

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11:30 a.m.

Reform

Ian McClelland Reform Edmonton Southwest, AB

Where do you start?

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11:30 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

I appreciate the inexperience of the Reform Party members in the House but it is still no excuse for not having any ideas on the table. They are adults and they should be able to participate.

Let us just talk about the infrastructure program. Let us talk about the way Canadians finally had a government that said: "You people need to get back to work. What we are going to do is we are going to start this project". In a classic Liberal fashion which I am very proud of we started out with a number of projects across this country-and you are smiling-

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11:30 a.m.

Reform

Ian McClelland Reform Edmonton Southwest, AB

Spending other people's money.

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Liberal

David Walker Liberal Winnipeg North Centre, MB

Do you know what they do not talk about in the House? Have they ever asked a question about Alberta projects in question period? They just say silent. Why? Because they understand that for Albertans the only piece of good news from any government is what this government is doing on infrastructure. It has not come from the provincial government. It has not come from this opposition party. The only good news has come from the minister of energy and her colleagues who work very hard for the province of Alberta. The best evidence of that is in infrastructure.

I know that in Winnipeg-

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11:30 a.m.

Reform

Ian McClelland Reform Edmonton Southwest, AB

Liberal road kill.

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Liberal

David Walker Liberal Winnipeg North Centre, MB

Liberal road kill.

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11:30 a.m.

The Acting Speaker (Mr. Kilger)

Order. In this-I do not know if I dare call it-I will just say it is the first anniversary and leave it at that.

Clearly, we want to continue what we have established over this first year as parliamentarians from both sides of the House and that is a respectful way of conducting debate, vigorously and sometimes more animated than others. Ultimately however we do want to retain decorum and respect for one another and for this great institution.

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11:30 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

Mr. Speaker, I share your respect for this institution. I apologize to you and to members of the House if my animation toward the good infrastructure program seemed to be-

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11:30 a.m.

An hon. member

You could not help it.

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11:30 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

It is hard not to get excited by this program.

I come from Winnipeg and quite frankly mine is one of the poorer constituencies in the country. Last summer is the first time since I was elected to this House that anybody has come up and thanked me that they had an opportunity to work.

Some people are snobbish about building roads, but there are a lot of people in this country who work building roads and they need those jobs. There are a lot of people who drive cars and buses over those roads. There is nothing to be ashamed of for creating a better infrastructure.

The Parliamentary Secretary to the Minister of Industry stays on top of all these issues. He points out that in Winnipeg we are going to be rebuilding the road system which allows trucks to exit from the airport more quickly to the south. Part of our overall plan to rebuild the Manitoba economy is around the airport and transportation. We used to be the gateway to the west but that economy has changed. We are now going to be the gateway to the south.

You cannot walk away from the project. It requires capital. It requires investment. The minister for human resources, who is responsible for western Canada and Manitoba, came forward to the provincial and municipal governments. Their response was: "Thank you for putting this together. Thank you for giving us the opportunity. We will throw in some money. We think it is important. Yes, we know it is borrowing money and we know this is expensive, but sooner or later people want to see their governments do something for them".

When I passed by people working this summer one came up to me and said: "Mr. Walker, I have been in Canada for 15 years. I am a little embarrassed. I am still just a road construction guy. My kids are going to college. However, I am working this year". It is important to him. He is not going to be doing anything else, but he is going to be working.

The cultural community in Winnipeg which is so important does not have the capital. However we came up and said: "We are going to help your fund raising effort. We are going to put some money into this. You go to the provincial and municipal governments and the private sector. Let us see if we cannot rebuild your facility. Let us see if we cannot build it up for the first time in a decade". From the looks on their faces it was apparent we were doing something so they might have an opportunity. I can only say this with passion. It must be understood that the relationship between Canadians and their governments requires governments to act on their behalf. There are some very needy people who need our response.

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11:35 a.m.

Reform

Philip Mayfield Reform Cariboo—Chilcotin, BC

Mr. Speaker, It is interesting to listen to the hon. parliamentary secretary. I would encourage him not to break his arm patting himself on the back however.

On this first anniversary I find it interesting that the Liberals come to the House of Commons saying: "Give us your ideas". After being in opposition for eight years and burning to take power with all they had to offer the country, they end up asking: "Well, what are your ideas?".

I find the credit they take for the infrastructure project interesting. This project will add $6 billion or $8 billion to the debt. It will provide jobs for a few months which our children will end up paying for. I find this very interesting.

The question on my mind is with regard to the consultation process. Two of these processes are taking place right now, one by the Minister of Human Resources Development and the other by the Minister of Finance.

The first consultation I mentioned is one for which Canadians are asked to give the government their ideas, but it is a process that makes it extremely difficult for Canadians to take part. After the minister's announcement they were given until September 7 to get their briefs in. This was after applying for the information on the proper procedure to follow.

As far as the people of British Columbia are concerned, these consultations are being held November 16 and 17. It seems to be a very short timeframe for filing briefs, one that is impossible for anyone but the special interest groups who already have their briefs in. As a result, members of Parliament are having to gather the information, take it out to their ridings and perhaps return it to the minister.

With regard to the consultation process with the Minister of Finance, it seems to be much more an exercise in rubbing people's noses in the mess that has been caused by previous governments over the past 25 years, to soften them up for the process of what is to take place. I really question whether consultation is being required as much as preparing people for the onslaught of what is to come.

The Reform Party provided a program during the election campaign a year ago in which by focusing resources upon those people most in need we would be able to eliminate the deficit in three years. This would be done without the harsh consequences the Liberals keep trying to portray us as bringing onto the country.

The question I would like to ask the hon. parliamentary secretary is when will the Liberals really take seriously the process of consultation and open the doors for Canadians as well as opposition members to provide the ideas they keep calling for?

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11:35 a.m.

Liberal

David Walker Liberal Winnipeg North Centre, MB

Mr. Speaker, first the addition of a $6 billion debt to the country is simply Reform Party arithmetic and has nothing to do with the substance of what happened.

On the question of consultation, if for some reason the member thinks the public is not being given a chance to be heard, I would ask the member why he did not read his House of Commons order book? That order and the description of the consultation process has been on the books for nine months. It is clear to everyone who is a concerned parliamentarian how the process is going to work. I can assure him on behalf of the Minister of Finance that everyone who wants to be heard will be heard. He might also be interested to know that next week when we are in Vancouver it is totally booked.