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.


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3:25 p.m.

The Acting Speaker (Mr. Kilger)

The hon. member for Longueuil, for a brief question.

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3:25 p.m.


Nic Leblanc Bloc Longueuil, QC

Mr. Speaker, I have the following question for my colleague and it is that for the past 20 years the government has been living on credit and has borrowed nearly $1 billion for every million people we have in Canada. Does this not prove the federal system does not work, that it is very expensive and that instead of blaming the government, perhaps we should blame the system? The Conservatives did not do a better job, the Liberals before them did not, and today's Liberals are not doing a better job either. So there is a problem, and the problem is not the government as such but the federal system, which does not work. Does the hon. member agree?

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3:25 p.m.


Richard Bélisle Bloc La Prairie, QC

Mr. Speaker, I agree wholeheartedly with the hon. member for Longueuil. The government's financial bankruptcy-its cumulative debt of more than $500 billion which goes back to the end of the seventies-proves that Canadian federalism does not work.

If you will allow me to use the following metaphor, it is as if Canada were a large multinational corporation with 10 branches in 10 different provinces or countries, and for more than 30 years, there has been constant squabbling between the branches in the provinces and the central government in Ottawa or somewhere else, and they can never agree on how to do things.

In the private sector, to keep the shareholders happy, they would have made the necessary decisions right away and either decentralized or created other independent corporations for these entities. What we are asking as Quebecers is to have an independent entity so that we are politically autonomous, which would not preclude administrative agreements or agreements based on an economic union with the rest of Canada.

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3:25 p.m.


Jane Stewart Liberal Brant, ON

Mr. Speaker, I appreciate the opportunity to participate in this debate.

I would like to start by thanking the third party for giving us yet another opportunity to crystallize for the Canadian people the differences that exist between the Liberal philosophy toward the role and responsibilities of government and the Reform philosophy in that same regard.

It was a year ago exactly today that the Canadian people elected 177 Liberal members to this House. I believe they did so because they believed and had confidence in our philosophy; one that said that it is important and necessary for the government to take fiscal management responsibilities seriously, that we must reduce the debt and the deficit. The Canadian people also agreed that there is more to the role of the Canadian government. They agreed with us that part of the role is to help create jobs and develop economic growth.

Contrast that with the Reform Party members who, as I saw them today in question period, were very happy to elect 52 members from one region of the country, a very important region but one region. Their strategy is very telescopic, very single-minded, and says that the role of government is really to

get into power, slash and burn, cut the debt and deficit, fold up the tents and get on with it, get out of town.

Every once in a while I wonder what it must be like to be a constituent in a Reform member's riding. I think of the young people who come to see me in my constituency, young people who have graduated from university and have been unable to get that important first job. They cannot get unemployment insurance and the alternative is welfare. They come to my office and we talk about the Canadian Youth Services. We talk about wage subsidies. We talk about different strategies whereby the government can impact and assist the young people in their search and their finding of a job.

I do not know what it must be like to be a Reform member and be unable to talk about these strategies, to talk about a government providing these kinds of opportunities and actions that do in fact help get Canadians into the workforce, contributing and productive in our economy.

We are here talking about the deficit and it is important. I have a few words I want to share in that regard. Many suggestions have been made about eliminating the deficit. Unfortunately, a significant number of those suggestions, including some made by hon. members in this House, are not based on a sound grasp of the facts.

This afternoon I would like to discuss some of these misconceptions. Let me begin with a remedy much favoured by certain members of the opposition, eliminating social benefits for higher income Canadians. Of course there are some potential savings here but they are much smaller than is often claimed. Why? To begin with, many social programs already target benefits on the basis of need or income. The guaranteed income supplement is an example. So are spousal allowances, the child tax benefit and the GST credit. Other social benefits are reduced or recovered as income rises. Old age security, for instance, starts being recovered at about $53,000. Unemployment insurance is recovered at about $58,000 and the age credit at about $26,000.

There is also an unfortunate truth faced by anyone who wants drastic cuts to elderly benefits. The fact is most elderly Canadians are at the lower end of the income scale. Almost three-quarters of our elderly have annual household incomes below $30,000. About half of all elderly benefits go to those who receive the guaranteed income supplement. That means individuals with incomes under $15,700 and couples under $23,800. In short, the notion that rich Canadians collect huge sums in social benefits is simply a myth and a mistake.

Another common belief about our social programs is that much of the social security spending goes to cheats but that too is a myth. Cheating is not the culprit behind the high cost of social programs. Chronic dependency is.

The rules for governing unemployment insurance for example have unwittingly encouraged chronic use, fostering dependency on certain industries and regions. This is precisely the kind of problem that calls for a careful rethinking of the way we structure our spending. What will be achieved by a draconian slash and burn approach? Does Reform believe that thousands of jobs will immediately appear for workers in depressed regions once they are forced off their UI dependency?

Another silver bullet solution held out by Reform members is to slash government operating costs. They see Ottawa as a fat city and the public service as an easy target for the resentment of heavily taxed Canadians. Yes of course the reduction of operating costs is an important goal, one to which our government has demonstrated a commitment, but it can never be the principal source of the savings needed to address the deficit problem.

The net cost of running the government and delivering programs represents only about 12 per cent of the total federal budgetary spending, about $20 billion. That is a lot of money but it is less than half the 1993-94 deficit. Even the most drastic cuts, even the absurd extreme of laying off every public servant would come nowhere close to solving our deficit problems.

Other facts speak loudly too. The cost of government has been repeatedly restrained in recent years including restraint measures in the last budget. In fact we have implemented 16 specific expenditure reduction exercises over the past decade of which 12 had a direct impact on operating budgets of the government departments but operating costs exist for a reason whether the mythmakers want to believe it or not. It is futile to repeatedly cut back operating costs in isolation from the programs that give rise to those costs.

There are other suggestions for eliminating the deficit that do not entail spending cuts at all. Some of these too are based on mistaken notions. For example we are often told that the government should sell off crown corporations. There may be good reasons for privatizing crown corporations but reducing the deficit is really not one of them.

The impact of privatization on deficit is extremely limited. That is because crown corporations are already recorded as government assets. As a result the only situations in which the deficit would be reduced by privatization are those where the assets could be sold for more than their current book value. I doubt whether there are many such cases at this time.

We also hear that the government could drastically reduce the deficit by lowering interest rates. People who hold this view forget that interest rates are not set by the government but by investors. The Bank of Canada can influence short term interest

rates but it cannot dictate long term rates or the cost of borrowing in international markets. Who would buy our bonds if we offered uncompetitive rates?

Occasionally the argument is still made that the government should increase the money supplied to finance the debt but history has shown time after time that this is a bogus and a bankrupt solution. Printing money to pay down the debt failed miserably. That is because it ultimately fuels inflation because people realize that their money is worth less. The ultimate result is that printing more money to solve your fiscal problems leads directly to higher interest rates and higher debt servicing costs. In the end the problem has not been solved. It has been worsened.

So far I have focused on a number of proposals for deficit cutting that are based on what we might call myths. My purpose in doing this is not to accept a defeatist attitude because the deficit must be wrestled to the ground and this government has and will do just that. But you cannot defeat the deficit with shallow snake oil solutions founded on illusion. What we need as I said earlier is a careful rethinking of the role of government and the way we spend. It is precisely what the government is doing.

As the finance minister has said the time of nibbling away at the margins is over. The government's comprehensive strategic approach is reflected in a new framework for economic policy that was released last week. It is also reflected in the comprehensive reform of our social security system that is already under way as well as the ongoing reviews of science and technology, defence and foreign policy, and small business policy.

I want to focus this afternoon on the federal program review. To my mind this is precisely the kind of meaningful selective approach to cost cutting that has been absent from deficit reduction exercises in recent years. It is precisely why earlier efforts have not succeeded.

What is program review? It refers to a fundamental review of all federal programs and activities besides the major statutory transfer payments to provinces and people which are being reviewed separately as I mentioned.

It includes examining grants and contributions, tax expenditures, cost recovery and overhead. The goal of this review is a more effective, smaller and affordable government, one that concentrates on its core roles and responsibility.

Each government department and agency has been asked to review and assess its activities against six guidelines. These guidelines are as follows: First, does a program area or activity continue to serve the public interest? Second, is there a legitimate and necessary role for government in this program area or activity? Is it really ours to control? Third, is the current role of the federal government appropriate or should the program be transferred to the provinces?

What activities or program should or could be transferred in whole or part to the private or voluntary sector? If a program continues how can its efficiency be improved? Finally, is the program affordable in light of the current fiscal situation?

As a result of this review some programs and services will be streamlined and some may be eliminated, particularly those that can be provided more efficiently by the private sector or that overlap with services provided by other levels of government.

Some of the changes resulting from the review will be announced in the 1995 budget. Others will be implemented over several years. The end result will be a smaller and more affordable government, but that government will continue to protect the most vulnerable in our society.

The federal program review is only one facet of the government's efforts to put our fiscal house in order. I have spoken of it at some length because I believe it provides an excellent example of the kind of approach that must be taken to deficit reduction; an informed, thoughtful and efficient approach, one that contrasts sharply with the draconian knee-jerkism proposed today by some hon. members.

I have had the opportunity to utilize this kind of approach with the private sector and it has worked very effectively to improve productivity, to help companies focus on what they should focus on. The strategy that I am proud of is part of our Liberal philosophy. It suggests that we understand that there are things that we cannot deny and that is that straight across the board cuts do not recognize differences in individual needs of Canadians and our institutions.

I would like to make one final point. In his presentation last week before the Standing Committee on Finance, the Minister of Finance emphasized that the government has clear principles to guide it in making the decisions necessary to achieve its deficit target. The minister said, for example, the deficit reduction measures should weigh on the side of program spending cuts over revenue increases, that selective, strategic cuts are to be preferred over across the board cuts and that the most vulnerable in our society must not be left behind.

The minister also made it clear that the government would not be making its decisions alone, that it wanted to hear from Canadians. I believe that the open, democratic consultation process that the government has put in motion is exactly what is needed if we are to put an end to the glib solutions and nibbling away at the margins.

I have every confidence that Canadians will recognize the importance of and contribute significantly to the kind of thoughtful approach our fiscal problems in Canada need.

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3:40 p.m.


Philip Mayfield Reform Cariboo—Chilcotin, BC

Mr. Speaker, I thank the member for her intervention. I thank her for indicating that this motion gives her party the opportunity to crystallize Liberal policy. That is exactly what this debate is about.

We would like to know what the Liberals really plan to do. We would like to know what the government process is going to be. We would like to know how they are going to reduce the spending she has talked about.

Despite the pejorative comments that have been made by the member about the Reform policies, there are still questions about what the Liberals are going to do. These questions are raised by this member's speech. She has discussed crown corporations. Should we privatize crown corporations? The question is also can we afford to continue subsidizing crown corporations at the rate at which they are being subsidized today?

She talked about the open consultation process. There is real doubt in my mind about this process. It seems as though people are being told: "Look how hard it is to cut expenditures". Nobody in this House believes it is easy, but to say to people: "Let us see how you can do it if we cannot" is not really a consultation process. There is nothing being put before the people for them to work with. Just to say how difficult it is and "can you show us how to do it" is not a consultation process.

The question still is how will the government reduce the deficit. That is what we are asking. We are not asking more questions about if, when and may. How will the government reduce the deficit? How will the government regain control of the financial position of our nation?

That is the question I put to the member, not to decry about other policies, not to say the member has not told us how to do it. What is in mind? The government has been waiting for years to take power. The problem has grown in complexity and intensity for those years. By the time all the processes are finished the problem will be advanced that much further. We will likely need to have more consultations.

How will the government reduce the deficit? What is its vision? That is what we are asking.

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3:45 p.m.


Jane Stewart Liberal Brant, ON

Mr. Speaker, I thank the hon. member for his questions. There are many in his intervention.

I think our process is very clear. I would refer him to the lilac book, as the member for Capilano-Howe Sound called it. A very clear set of documentation was presented by the Minister of Finance last week. He talked about our commitment and our role in economic development. He talked about our responsibilities in terms of fiscal management. He identified very clearly the areas that Canadians can address and look at as they make their considerations and deliberations on how we should manage the process.

In talking about the process of consultation I feel it is an exceptionally important part of the way we want government to behave and manage itself in the 1990s and into the 21st century. Canadians all through the course of the election campaign talked about feeling divorced from the government process, about the fact that they were never consulted or asked; things were just done to them. We are doing our best to change that. Through the formal consultation process, the process that will be held by the finance committee, Canadians will have a real opportunity to participate.

I would suggest as well that each individual member has the opportunity to participate at the grassroots level in his or her riding; to take documentation that has been presented and prepared for us by the Ministry of Finance and share it with individuals, with groups and with people in their ridings; to help work one on one with people to understand the issues; to discuss the strategies and the possibilities; and to bring that information to the standing committee, to the House and to the minister directly.

As for the question on whether or not the minister and our government will make the decisions, we will make the decisions. They will be very clear at the time of the budget. Prior to that the critical point is to talk to Canadians. We are talking about the need to make changes, the type of which we have never seen before. These issues will impact on each and every one of us and each and every Canadian we represent. They have every right to be consulted; they have every right to contribute.

In my role as a member of Parliament I have a responsibility to get that information from them and I will do that. The member should not be mistaken: our minister has made a commitment to reach our deficit targets and he will find them in the budget.

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3:45 p.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup, QC

Mr. Speaker, I listened to the member's remarks and I was shocked by her referring to "chronic use of unemployment insurance" as if implying that people who are on UI, year after year, or rather frequently, are doing it on purpose. I could not help but think of the peat bog workers in Rivière Ouelle, or the hotel and inn employees in Rivière-du-Loup, or the forestry workers in Saint-Jean-de-Dieu and wonder what they must think of what is going on in this government.

This government, which was elected to create jobs, has not been giving much hope to people in the regions. It has been telling them: "We are going to create a two-tier unemployment insurance system which will penalize those who use it often; at the same time, we are going to reduce the investment tax credit which allowed regions to create permanent jobs and seasonal workers to go on from seasonal jobs to regular jobs, all year round". By reducing the investment tax credit, the message the government is giving them is this: "It is your own fault if you

are still on UI. It is your problem and it is up to you to solve it". The government gives them a contradictory message.

In the outlying regions, people are reacting to the fact that the government is getting ready to cut transport subsidies in an unfair manner, without even looking at the economic impact. For the past 50 or 60 years, in eastern Quebec and Atlantic Canada, there has been a tradition of transport subsidies which could disappear without anyone knowing the impact it will have if the rules of the game, of the market, are not respected. People who work in these areas and who will be hurt by these decisions are wondering what is going on in Ottawa, and why decisions which are detrimental to regional development are made.

The other example is the government's withdrawal from transport, airports, harbours and railways. It is getting out of all these areas at the same time and people are asking me what a radio personality was asking me the other day, which is: Who is going to stop all this? Who is going to get a handle on this? I would like the member to tell me how she would cut wasteful expenditures and increase revenues since, in her remarks, she talked a lot about higher revenues and what we could all do to do our fair share. Would she consider taxing family trusts and thus bring some degree of fairness to our tax system?

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3:50 p.m.


Jane Stewart Liberal Brant, ON

Mr. Speaker, again a number of important questions were asked in that dissertation.

I want to make clear that neither my government nor I is pointing a finger at forestry workers or seasonal workers and saying it is their problem. Quite the opposite. We are suggesting that we recognize the system is at fault and the system needs to be repaired.

In response to the issue of dealing with subsidies and making cuts to agencies and other organizations, we are clearly and actively using a consultative approach to understand precisely what the hon. member is suggesting. We recognize that making cuts for the sake of cuts is not appropriate. We have to understand that when we make subsidy cuts there will be a response. Every action creates a reaction and we have to think them through before we slash and burn holus-bolus. It is not our strategy. It is not our philosophy. We will not do that.

Finally, we have to recognize that we are going through significant change. Government is going to change. Canadians will be dealing with change. We have to accept the difficulties there. Part of doing a credible job, a good job, is to involve Canadians in the process. I believe we have struck a perfect strategy to reach that goal.

Committee Of The HouseRoutine Proceedings

3:50 p.m.

Kingston and the Islands Ontario


Peter Milliken LiberalParliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I rise on a point of order. There have been discussions among the parties and I think you would find unanimous consent for the following motion:

That the Standing Committee on Finance, or any of its subcommittees, be authorized to adjourn from place to place within Canada during the week commencing October 31, 1994 and that the necessary staff accompany the committee.

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3:50 p.m.

The Acting Speaker (Mr. Kilger)

The House has heard the terms of the motion by the parliamentary secretary. Is there unanimous consent?

Committee Of The HouseRoutine Proceedings

3:50 p.m.

Some hon. members


The House resumed consideration of the motion.

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October 25th, 1994 / 3:50 p.m.


Jan Brown Reform Calgary Southeast, AB

Mr. Speaker, I am pleased to rise and join in the debate today. Here we are one full year to the day into our mandate. That is certainly cause for reflection but that is all, for we have barely moved from the status quo of doing nothing. Little has been achieved in addressing the deficit and debt problem. As I stand here I do not see myself slashing and burning, folding up the tent and saying let's go home as my hon. colleague from Brant suggested in her earlier remarks.

The presentation I would like to make today is focused. It speaks of an ideology that all Reformers carry, that is recognizing that we as a nation have difficult choices to make. We are burdened with a federal debt that is more than $535 billion. This bone crushing yoke demands more than $40 billion a year in interest payments. If we do not make some tough decisions today we will soon be unable to deal with it at all.

This is not fearmongering nor is it self-serving as some Liberals have been wont to say. Rather it is the tough talk needed to make every Canadian realize the magnitude of the problem we face. We in the Reform Party take pride in our approach, bringing difficult issues out into the open, addressing the problem and developing solutions.

The challenges that face us today as legislators are really quite unique. We have the privilege to participate in the changing of our nation. We recognize that this great country still in its youth is growing, changing and finding its own identity. Part of finding its identity is to throw off the old mantle of programs that worked in the past when the nation was young and to establish new and stronger programs that will take us further into its next phase of maturity.

The first step is recognizing that Canada now does too much for too many people and can no longer afford to do that. In attempting to be everything to everyone we have gone bankrupt. Our challenge is to determine what we need to do, to do it well, and to encourage individuals to assume responsibility for non-essential services.

I have always focused upon priorities during debate. I believe today is no different as I look at the choices we must make as a nation and as a people. We in the Reform Party care about preserving Canada for the future for our children and their children. We envisage a country that takes care of those not able to do so in order that they may be able to contribute to the well-being of their families. We envisage a country that educates its children, ensures that they can get jobs, contributes to the well-being of Canada and thereby focuses on its future.

There is no one in the House who lacks compassion at heart, and that is contrary to the somewhat pejorative suggestions of my colleague from Brant. Coupled with that compassion does come a practicality.

There has been no better contributor to our nation's ill health than the federal deficit and debt. The Liberals would have Canadians believe that the Tories are completely responsible for the debt problem, but in reality the Tories did not have the political will to address the problems created originally by the Liberals.

Let us consider these Liberals and their accompanying huge deficits while in power: in 1981, $14 billion; in 1982, $15 billion; in 1983, $28 billion; in 1984, $32 billion; and in their last budget in fiscal 1984-85 year, a deficit of more than $38 billion.

A combination of three things needs to happen to make the finances of government more manageable. We need to spend less. We need to spend what we have better and more efficiently. We need to lead by example in government. Therefore I have decided to focus my remarks today on a particular area, that is the Department of Canadian Heritage and all its funded organizations. It is possible to find $1.6 billion in savings there.

Let us be specific. If the finance minister wants to find cuts he can begin with what was once the department of multiculturalism. Multiculturalism is too costly. Canadians, especially first and second generation Canadians, do not support it. Multiculturalism funding serves only to disunite Canada by sectoring off parts of society instead of encouraging them to embrace their new nation. The responsibilities for race relations and cross-cultural understanding should be transferred to the Human Rights Institute and its accompanying appropriations should be discontinued.

The community support and participation program funnels millions of dollars into special interest groups and serves as a tool to garner votes for the government. Its funding should be discontinued. The heritage language and cultures program provides grants to special interest groups and promotes the disunity of the country. Its appropriations should be discontinued.

These arguments also apply for the community development program, the voluntary action program, the Canadian Multicultural Advisory Committee, the multiculturalism secretariat, the human rights program, the Canadian studies program and the open house Canada program.

These programs provide a service only to those who use them. These are the taxpayers who should support them, privately and independently. The minister will save some $50 million by cutting funding to these programs.

The single largest benefactor of the Department of Canadian Heritage funding is the CBC. This organization has enjoyed receiving parliamentary appropriations that have continued to grow on an annual basis. It now receives $1.1 billion a year from Canadian taxpayers. This creates an imbalance in a free market setting.

Yet the CBC continually comes back with cap in hand year after year for more money, for supplementary appropriations. It continues to say to the government and the Canadian public: "Oh dear, we just cannot fulfil our mandate without more funding".

Every year it gets an increase and every year it continues to be dissatisfied. At what level of funding will the CBC say it has enough to do its job? The CBC is the epitome of government waste. Do not tell me that it has a mandate to promote Canadian unity while it remains completely unaccountable to the Canadian public.

It is not subject to the Access to Information Act or to the Privacy Act. Further, it is exempt from sections 1 through 4 of part 10 of the Financial Administration Act, which makes the corporation also financially unaccountable to the Canadian taxpayer. These two factors give the CBC a further special status, giving it an even greater competitive edge.

We are looking at ways of cutting spending in government to make government better. The CBC should be required to do the same. The Minister of Canadian Heritage has recommended

that Canadians pay a new entertainment tax to generate revenue for the CBC. Canadians are already taxed to the hilt.

The finance minister said we do not need new taxes, we need to spend what we have more efficiently.

The Minister of Canadian Heritage has stated publicly that he favours partial privatization of the CBC. The government should order this forthwith.

While we are on the topic of efficiency, let us look at the bloated government bureaucracy in desperate need of downsizing. The Minister of Canadian Heritage is also responsible for the Public Service Commission. In light of the recent report in the Ottawa Citizen describing how seven people double dipped after receiving their severance packages, it is clear that there is much housecleaning that needs to be done.

The government should immediately adopt the auditor's recommendation and ensure that these seven people are appropriately punished for abusing the public trust. That is what this is all about, the public trust. This means in the very least recovering the amounts given in those golden handshakes with interest and the removal of those individuals from any positions they hold.

Going after these people is not going to save much money but it will send a clear and unequivocal message to the Canadian people and their public servants that the days of the abuse of public trust are gone.

Consider also as examples of government waste the following: the 13 members of the historic sites and monuments board who chalked up over $78,000 in travel expenses in 1993 and the 31 members of the National Advisory Council on the Status of Women, government appointed people, who spent more than $133,000 travelling.

The government does have a unique opportunity. There is consensus in this House that we need to cut our spending. What we now need is consensus on where to cut and how quickly to do it. I challenge the finance minister and the Minister of Canadian Heritage to take a good hard look at those programs currently funded by government and choose only those that the Canadian taxpayers will support.

It is the Canadian taxpayer after all who we are here to serve. I ask the government to support this common sense motion made today on behalf of all Canadians.

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4 p.m.


Bill Graham Liberal Rosedale, ON

Mr. Speaker, I would like to challenge the member for Calgary Southeast's assertions at the beginning of her speech to the effect that this government has no recognition whatsoever of the need to cut the debt and to deal with the deficit.

I cannot believe the member has not been listening to the statements of the Minister of Finance either in this House or outside the House that clearly indicate-surely she must give some form of recognition-that this government has recognized the problem of the debt. I have heard the Minister of Finance say over and over again that we cannot allow this debt to accumulate at the rate it is. He uses the same figures as the member uses. It seems to me that the difference is that we recognize the debt. We recognize that we cannot go on paying $40 billion a year in interest rates. When that represents the huge proportion that it does of the Government of Canada's annual spending of $160 billion it is totally intolerable. However, I have heard the finance minister say that before.

The difference between us is whether we go at this as a surgeon goes at a problem or whether we go at it the way a butcher would butcher an animal waiting to be slaughtered. That is the difference between the government and the approach which the member takes.

I sat and listened to her talk about the CBC, which I do not have time to comment on. I heard what she had to say about the heritage department and multicultural programs. I also heard her talk about the language programs whereby the multicultural and heritage language groups enable Canadians to maintain their languages.

I would suggest to the member that she speak to the trade critic in her party and find out the evidence we in the foreign affairs and international trade committee have heard about. There is a need for Canadians to be knowledgeable about other cultures and particularly the value which cultures such as the Chinese, the Koreans and others can bring with their own language and their own culture to advance Canadian interests. These are Canadian taxpayers spending money so that Canadians will benefit. We will receive tremendous benefits out of this in a future multicultural world that we are going into.

If we cut the programs the member suggests, I suggest to her that Canada will be less rich in a future world which will require more knowledge, more language and more competence among Canadians in the very areas she wants to cut out with her meat cleaver approach to deficit reduction.

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4:05 p.m.

The Speaker

I do not know if there was a question there. There was surely a comment. Would you like to address the comment?

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4:05 p.m.


Jan Brown Reform Calgary Southeast, AB

Mr. Speaker, I find it rather offensive to have comments that I have made today referred to as butchering. Something in my mind finds it rather repulsive when I think of the word butchering. I stood here and said that there is not a person in this House who does not have a compassionate heart, not one. I believe that as I stand here.

What we are involved in is a debate. Sometimes I find responding to the Liberals like playing dodge ball with a bunch of grade threes. Having said that, I would like to say that when I was growing up in my household, it was a multicultural household. My grandparents were from Norway and from Yugoslavia. While I was growing up the motto in our family was you pay for it as you go. All I am asking is that if you are going to use a

program or you want access to a part of Canada's heritage you pay for it yourself.

I am not saying anything about not coming to understand your country or coming to understand anything else about others who live here, but you pay for it yourself. That is how I grew up. I can stand here and speak from some experience in that regard because I saw my family do that. It paid as it went.

I have to tell the hon. member that there sure as heck was not very much money there sometimes either to do that but we all survived and survived very well, thank you. I have a great deal of compassion for others in this country who do come from other places in this land.

The last thing I want to say to the hon. member is that I am going to let the numbers do the talking. The federal debt accumulated in 1974 since Confederation was $25 billion. The total federal debt as of now at $535 billion-plus represents a 20-fold increase in 20 years. The total provincial debt is $186.5 billion. To say that we have to go slow and nibble at the edges, slash and burn, that is not what we are talking about here. We are talking about some rational decision making and some hard choices. Believe me Canadians, the ones I talked to in my riding, are certainly ready for those kinds of actions to take place.

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4:05 p.m.

The Speaker

I give the floor to the hon. member for Longueuil. We have about a minute and a half.

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4:05 p.m.


Nic Leblanc Bloc Longueuil, QC

For me?

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4:05 p.m.

The Speaker

For both of you.

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4:05 p.m.


Nic Leblanc Bloc Longueuil, QC

You will have to give me the floor another time, Mr. Speaker, because I have so much to say. I just want to say that I agree to a great extent with the member for Calgary Southeast.

But there is something I do not understand. For example, she did not talk about the efficiency of government management-she made a point of the fact that when we pay for a service, we must realize that we are actually paying for a service, but when it comes from Ottawa, people think that the money comes from somewhere like heaven, they do not know where it comes from. People keep making demands and getting things and do not know where the money comes from until they realize that Canada is broke.

That is what she did not mention and that is why I ask her if she agrees that radical decentralization would make people realize why they are paying and I ask her whether she agrees with me. If they realize what they are paying for, perhaps they will spend with less abandon.

I sincerely believe that we will have a prosperous future by decentralizing and making individuals responsible. That is what we want to do: decentralize. We want Quebec to be sovereign because we believe that the federal government is too centralizing. It centralizes so much that it makes good management impossible. That is why we want to go so far. That is what even the Reform Party is not able to understand and the Liberal Party has not understood it for a very long time.

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4:10 p.m.

The Speaker

Resuming debate. The hon. Secretary of State for Parliamentary Affairs. Excuse me. You will forgive a rookie in the Chair. I missed one. Excuse me, Alfonso.

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4:10 p.m.


Werner Schmidt Reform Okanagan Centre, BC

Mr. Speaker, I think you are doing a fine job. I am also a rookie. You are an experienced parliamentarian. I appreciate this opportunity to address the House this afternoon.

The resolution before the House requests the government to table a clear, detailed plan to show how and when it intends to balance the budget, including a clear statement of its vision of the role of the government in the economy in order for the people of Canada to debate the plan and vision.

We need that plan if we are to change the present course from government overspending to working within our means. To effect that change or any other change three things are required.

First, we must recognize the problem. As Andrew Coyne said so clearly in the Globe and Mail yesterday, the deficit is not the problem anymore. It is the debt. It was fine to aim for a balanced budget ten years ago, but $300 billion in debt later is simply inadequate. That is the problem, the debt and not the deficit.

The second thing that needs to be done to effect change is understand the implications of what will happen if we do nothing to solve the problem. Third is accepting responsibility to do what is necessary.

These are sound principles that all people who have anything to do with the change agree on and all sides of this House agree on. The grey book is full of sound principles but it falls short by failing to provide a means by which principles can be made practical. It is time that the government took control of accepting its own principles and put them into action, not just talking about them but showing the courage to act upon them. The key lies in knowing which principles are crucial, which principles will meet the challenge of reducing spending and create a dynamic economy.

First, knowledge and technology are the new natural resource. Second, translating knowledge and technology into practical, revenue generating services will provide jobs. Third, Canadians will require training and to continue to learn throughout their lives the skills necessary to harness the new natural resource. Fourth, regional development will be redefined and by doing so will redefine government relationships with industry where industry determines its requirements and is self-funding and lessens the reliance on government resources. Fifth, we need to

incorporate the global world into our marketplace and develop our exporting capabilities.

As associate industry critic for the Reform Party, I believe much of this responsibility will fall to the Minister of Industry. The Department of Industry will be integral in the development and implementation of the new natural resource. However the department has not yet adequately set its focus to accomplish that. It must do so before it will be able to set a responsible budget, and it will need to do that in consultation with the Minister of Finance.

We hope the program review currently under way will result in some answers. A noble start has been made in the recent science and technology review across Canada. If the Minister of Industry and the Minister of Finance truly recognize that knowledge and technology are the new natural resources of the country then we can reasonably expect to find answers to creating jobs and to reduce spending.

Industry must take the lead in job creation. The beauty of knowledge and technology based industry is that they are globally capable, prompting an expanded marketplace and a demand for a greater workforce. Industry in this way will generate employment.

Better implementation of research will foster development and Canada will begin to find practical ways of translating good ideas into revenue generation. With an increase in production and the revenue to support it, Canadians will be employed. Best of all, government will be able to reduce its expenditures.

With the creation of this new natural resource there will be no requirement for government to prop up industries and regions which have lost their economic livelihood through the depreciation of traditional resources. The new natural resource and knowledge and technology based workforce will no longer be indigenous to a particular part of the country. The have not status of some of the provinces will no longer exist. St. John's as well as Vancouver will be able to participate and benefit from the ability to farm the resource of knowledgeable people.

Costs to the government of $803 million in regional spending could be eliminated. Regional support which was created to lessen a reliance on traditional resources will no longer be required except on the very smallest of levels to assist industry through transition. In fact, the very notion of regions may well disappear and the restriction of provincial boundaries will be transcended out of necessity.

Industry will assume responsibility and take its rightful place as the generator of jobs and the patron of a sound fiscal environment. It is but one solution but a very important one. It will signal change, but a change that is essential and necessary. It will help government meet its main objective of reducing spending, creating employment, and ultimately fighting the debt. Only government can set the wheels moving in this direction but it must commit to these objectives and it must provide a plan.

As members in an employed society, Canadians will enthusiastically help to make that change. It can be done. I know it can be done. But we need the conviction of the government to do it, and we need it now.

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4:15 p.m.


John Bryden Liberal Hamilton—Wentworth, ON

Mr. Speaker, I congratulate the member for Okanagan Centre on his speech. Once the passions are defused from the House of Commons, I often hear very constructive suggestions from all members of the House, including members of the opposition.

I would like to ask the member a question concerning his formula for prosperity. Would he not agree that what we need to have is a strong central government to implement the kind of programs that he is suggesting?

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4:15 p.m.


Werner Schmidt Reform Okanagan Centre, BC

Mr. Speaker, I appreciate the question. The simple short answer to the question is yes, we need a strong central government. We also need strong decentralization so that the decisions that affect the people directly and immediately are as close to the people affected as possible. In many instances it requires that the local government and the provincial government play a very significant role.

We must remember it is the central government which creates the environment for the marketplace to operate, for industry to find its way, and for the lower levels of government to do their jobs more effectively so that there is not this duplication that exists at the present time and where there is not this predetermination to "fight for my turf and to get out of my turf". We need to co-ordinate these things and that would be my answer to the hon. member.

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4:20 p.m.

Saint-Léonard Québec


Alfonso Gagliano LiberalSecretary of State (Parliamentary Affairs) and Deputy Leader of the Government in the House of Commons

Mr. Speaker, Canada's fiscal consolidation is an essential component of our economic strategy. We are fully aware that the ever-growing debt has a negative impact on our whole economy.

A growing debt leads to tax hikes, as we saw under the Conservative government, discourages investors, pushes up real interest rates, forces us to reduce spending on important government programs and translates into a large external debt. For some years now, a larger portion of our budget has been spent on interest charges than on programs. The interest we must pay is now the main reason why the deficit will not go away.

That is why the government is determined to stop the gradual and rapid deterioration of Canada's public finances. Of course, our first goal is to eliminate the deficit and substantially reduce the federal debt. But, in the meantime, we set for ourselves an intermediate goal that we can achieve provided that we remain vigilant and that everyone shares the burden. Within two years, that is, by the 1996-97 fiscal year, we will reduce the deficit to 3 per cent of GDP, as we promised in the red book.

The last time the annual deficit was limited to 3 per cent of GDP was in 1974, 20 years ago. Of course, to achieve our goal, we must take measures that will affect everyone in one way or another. Attitudes must change. Innovation must be emphasized. The dependence of some groups and sectors on the government must be reduced. We will do it by working hard on two fronts, as we have done since we were elected a year ago today.

We will continue to stimulate the economy to create jobs and to increase our tax revenue; we will also continue to vigorously tighten our spending on all fronts and at every level. The engine of the economy is a dynamic private sector. Nevertheless, the government also has a role to play by showing leadership. In a knowledge-based economy, success depends on skills and the ability to innovate, two factors that can be influenced by government.

The government can play a complementary role to that of the private sector. It can contribute to the innovation process, especially in the early stages of research and development. It can also promote the diffusion of state-of-the-art technologies to small- and medium-sized businesses. The state can ensure access to markets for our exporters and help them get a larger share of emerging new markets. It can also help develop the export capabilities of small- and medium-sized businesses.

We feel it is important to keep the inflation rate between one and three per cent, in order to promote a stable economic climate. We fully recognize that we want to do a good job in that respect. In fact, our government made important decisions to that effect in the last year and the benefits are now starting to be noticeable. Indeed, over the last few quarters, businesses have seen their profits increase substantially.

The recovery is also apparent in that consumer demand increased by 3.7 per cent in the first quarter of 1994. Confidence is slowly being restored. Investments are on the rise and jobs are created. From January to September of this year, more than 327,000 jobs were created. Most encouraging is the fact that almost all are full-time jobs. This has a significant impact on the mood of Canadians who are now beginning to sense a greater stability and are regaining hope.

This is not to say that all the problems have been solved. Far from it. Unemployment remains high, much too high. Interest rates, which are largely influenced by the U.S. economy, have maintained their upward trend in all industrialized countries. And, more importantly, our national debt continues to increase.

Obviously, the issue of public debt in Canada cannot be solved through economic growth alone. Some drastic measures must be taken to reduce spending and improve our taxation system if we are to succeed in reducing the debt.

Our main target remains spending control. In order for our country to become more productive, the state itself must be productive. It must learn to become more efficient to help make our economy more productive. In this respect, I think everyone will agree that we are doing everything we can to implement the principles of sound management and to streamline expenditures. We want to eliminate or at least reduce government activities that do not have a high priority and concentrate our limited resources on the most important programs.

Mr. Speaker, I know that you yourself are involved in this ambitious effort to streamline our operating procedures. In fact, the implementation of the Gagliano Plan has already saved the administration of this House millions of dollars. We have taken initiatives at many levels: we use new technologies to reduce inventory; we have eliminated redundant services; we are asking certain sectors to be more realistic in the way they reflect market prices. We are asking everyone who works on Parliament Hill to do their share to reduce spending. Not surprisingly, the level of co-operation is very high. This is largely due, I am sure, to the spirit of fairness and equity that you, Mr. Speaker, have maintained during this process of rapid change.

All members of this House have also had an opportunity to help streamline federal spending in the course of the many debates we have had for a number of weeks on the restructuring of federal departments. There again, the achievements are impressive.

Under the previous government, the cabinet consisted of 40 people, all heading large bureaucratic structures. Today, we are doing a better job with only 20 departments. The best part is that restructuring not only helps us save money but ensures that government services are more flexible, more efficient and more accessible to the public.

Unfortunately, not all members opposite are taking the battle against the deficit seriously. The Bloc Quebecois members shout and hit theirs desks with their fists to show more forcefully that they want to fight the deficit but, everytime we propose concrete steps to do so, they are against them, especially if the cuts hit close to home. You should cut, says the Bloc, but not in our backyard. Are they really serious?

As to the Reform Party, their approach to deficit reduction is not only unrealistic, it is plain dangerous. If we listened to them, the country would be thrown into a recession which would last our lifetime. We must continue on the path defined by the Prime Minister and the Minister of Finance. We are going to carry on with our attack against the deficit and we are going to concentrate our efforts on job creation. Our goal is not only to increase the number of jobs, but also to contribute to the improvement of our standard of living and to the preservation of our principles of social justice.

The motion before the House leads me to believe that the earpieces of the Reform members are not working. It is either that or they have not been listening to the Minister of Finance when he has spoken on the government's fiscal policy. It also appears they have not read the grey book "Creating a Healthy Fiscal Climate". Had they heard the Minister of Finance speak to the Standing Committee on Finance or had they read the document they would know that our ultimate goal is a balanced budget.

Yes, we absolutely share their realization that the vicious circle of rising debt and deficits must be broken. As the minister noted in his recent speech to the finance committee: "If we don't do the job, we will fail at everything else". We will win. We will not fail. Our party, our caucus, our cabinet and the Prime Minister are committed to reversing Canada's fiscal decline. I realize the Reform is also interested in reversing Canada's fiscal decline. However, unlike the Reform Party, we have presented a realistic strategy so the Canadian people will realize our objective.

The fiscal update book sets out the scope of action needed to achieve the government's fiscal goals. It provides an accounting of government spending together with a detailed description of the source of government revenues. Reform does not have a grey book equivalent. In fact it has nothing but soft generalities, blanket statements about reducing the deficit to zero, or borrowed prescriptions.

This document that the Minister of Finance presented to the finance committee contains the information necessary to begin a broad public debate on the choices to be made and the actions to be taken in the 1995 budget. Its intention is to help focus the 1995 prebudget consultation.

Let me say here that this is the first time in Canadian history that a government has opened the budget process to consultation. Before, the process was that the Minister of Finance would meet privately in his office with pressure groups whether they were from business, labour or social groups. Only on budget night would we learn what were his positions.

A partial process was started right after the election last year. Through the reform of House procedures this year, we are able to have a process where every year the House finance committee will receive an economic statement from the minister and will go across the country to consult with Canadians and report to the minister. Then the minister can make his choice.

Let us not forget that Canada's fiscal position impacts on each and every Canadian, as will the action to bring our debt and deficit under control. That is why we are determined to work in partnership with all Canadians to determine and implement a solution.

The finance committee will hold nationwide public consultation on how to create an economy worthy of Canada's potential. The finance minister will be meeting with people from all walks of life to hear their ideas on issues. We want to know Canadians' budget policy views. They will assist us as we address the difficult choices which lie ahead.

In the grey book we have laid out some principles and values which will apply to the difficult choices which face us. I would now like to turn to those principles.

Principle number one without doubt is that deficit reduction and debt control are essential parts of our strategy to create jobs through economic growth. Indeed there is no greater economic priority than to resolve this issue.

Our government will reduce the deficit and control the debt. Doing so will certainly lower taxes and interest rates. This will ensure economic growth through increased productivity and investment, sustained job growth, entrepreneurial vigour and consumer confidence. However, the debt and deficit cannot be reduced overnight. To do as the Reform Party urged during the election and balance the budget in three years would unleash substantial and lasting economic difficulties on all Canadians. It would also violate the other guiding principles laid out in the fiscal book.

For example, fairness must be a principle characteristic of any action we take to bring our fiscal situation under control. We must ensure that the most vulnerable in our society are not left behind. Expenditure reduction must not be an excuse to abandon those Canadians in greatest need. That is exactly what would happen under the Reform's draconian suggestions. They forget that transfers to individuals was the largest component of program spending in fiscal year 1993-94, over one-third of all program spending went directly to individuals. That includes elderly benefits, unemployment insurance, veterans pensions and allowances and transfers to Indians and Inuit.

In all honesty I cannot find the words when I think of the conditions the most vulnerable would face if Reform were sitting on this side of the House. Deficit reduction would be a mere accounting exercise. Let us not forget it is not merely an exercise out of an accounting book. We are talking about people.

That will not happen with this government. Unlike Reform, we realize that deficit reduction has a significant impact on our broader economic and social goals. That is why in the grey book we have set priorities and made reasoned choices.

For example, we have announced an interim target of reducing the deficit to no more than 3 per cent of the gross domestic product by fiscal year 1996-97. At 3 per cent of GDP, economic growth will exceed growth of the debt. We will then have an extraordinary opportunity to move toward a balanced budget.

The question is: What actions do we take to get there? We believe that to hit our targets the budgetary action should weigh most heavily on the expenditure side. Canadians quite frankly are overtaxed. They know it and we know it. The government must do more with less. The bulk of our savings should come through cuts in program spending and not through higher taxes.

Of course, as the Minister of Finance noted, Canadians must realize that if they want to avoid more taxes they must be prepared to support smaller programs, including programs that benefit them directly.

That is why the Minister of Finance directed the committee to ask the specific question of Canadians who appear before it in the prebudget consultations: Where should we cut and by how much? Believe me, the minister is not looking for generalities. He gets enough of those from the Reform Party. He wants to know the trade offs, the details and specifics. He wants Canadians to put themselves in the government's shoes and make hard choices.

The minister also wants to know if Canadians believe that our economic assumptions are appropriate, if our growth assumptions and our interest rate assumptions are prudent, and the reason is simple. We believe it is essential that government make prudent assumptions to guide its economic and fiscal projections.

In my experience, and I have been in this place for about 10 years, the Conservative government, Reform's Tory cousins, proved that missing fiscal targets destroys credibility and merely postpones the need for tougher measures in the future. However, meeting targets establishes and strengthens credibility for the future and is also considered reasonable progress.

This Minister of Finance believes in meeting targets. He will meet his targets and we will have a better Canada.