Debates of Oct. 25th, 1994

Supply

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

Mr. Speaker, I thank my colleagues from the Reform Party for providing an opportunity to return again to the topic of public finances and to discuss a motion they introduced today concerning a detailed plan, or should I say the lack of a detailed plan, to be tabled by the federal government outlining its approach to the budget.

In contrast to my Reform colleagues, I would say that there is most definitely a plan and that it has been in place since last February 22 when the Liberal government tabled its first budget. If we are to believe the initial measures introduced by the federal government at that time, and if we are also to believe the various measures it has introduced and the numerous proposals it has made since then, this plan consists in slashing benefits to the very people in Quebec and in Canada who can least afford to do without them-the unemployed, recipients of social assistance, those with health problems and senior citizens as well.

There is clearly a plan, a very detailed and specific plan, to transfer the financial problems of the Canadian government onto the backs of those who least deserve them, who certainly do not deserve the insult of being abandoned by a government that won the election on a campaign that emphasized the dignity of having a job, the dignity that we owed the least fortunate in our society. This is the very group of Canadians that the government is insulting today.

What most struck me in the speech by the Minister of Finance was not the size of the deficit and of the debt; this is not news to us or to anyone else. We know that the federal government has been in the red, not just for one year but for ten. For ten years now, this government's approach to public finances has been building up to this impasse. I would remind the hon. members across the way that it was under a Liberal government that things first began to go badly. The deficit began to grow between 1970 and 1985. And it was when the present Liberal Prime Minister was Minister of Finance that the financial problems started.

Between 1970 and 1985 the deficit grew from 0.3 per cent of the Gross Domestic Product to 8.7 per cent. Fifteen years of Liberal rule led us to disaster. It is this legacy we are dealing with today. This Liberal legacy has led to drastic cuts-again, Liberal cuts-to solve the very serious public finance problem.

I noticed that in his speech the Minister of Finance mentioned a serious matter, namely that the current problem is essentially a structural one. It means that even with ideal conditions for economic growth and employment development, the system is so tainted and its financial and economic impact so serious that Canada's unemployment rate can never go under 8.5 per cent and that the structural deficit-again, even in ideal economic growth conditions-will stay at a minimum of around $30 billion year after year.

The minister's response to these structural problems was to propose more cuts, which will not do anything to solve these structural problems because what is needed-as Quebec sovereignists, and the Bloc Quebecois in particular, understood-is a comprehensive reform of the system. Sovereignists have decided to get out of the vicious circle by reforming the system. This system is impossible to sustain. It is also impossible to reform because if that had been the case, the Liberals across the floor would have spent their first year in office trimming off the fat, reducing the bureaucratic structure, eliminating inefficiency, and decentralizing as much as possible by transferring to the provinces all levers of economic and social development.

Instead, they take drastic measures that hurt, that show their lack of compassion for and attack the unemployed without solving Canada's fundamental public finance problems.

How much credibility can this government have, when all the commitments made by the Liberal Party of Canada during the election campaign are not being honoured? I will give you a few examples.

In the last week of the election campaign, the current Prime Minister said that a Liberal government would never increase taxes in its first two years in office. What did the Minister of Finance present us with last week? The possibility of tax increases.

The Prime Minister also said in this House that he did not rule out the possibility of tax increases this year. What credibility can this government have, when in less than ten months those people go back on the commitments about taxes that they made to the taxpayers of Quebec and Canada?

What credibility can they have when the Prime Minister and all his ministers led Quebecers and Canadians to believe during the election campaign that they would abolish the GST? What have they done since then? Not only have they started to soft-pedal on the promise of abolishing it but they have tried to find an alternative to the GST in a sneaky, even dishonest way. Not abolishing the tax but an alternative that is as bad as the original tax and even worse in some respects. Month after month, they have tried to make the provinces, Quebecers and Canadians take it.

What credibility can those people have? What credibility can the Minister of Finance have when he talks about the largest process of consultation ever undertaken by a federal government since Confederation? We had a consultation process before his budget was tabled: forums here and there and everywhere. I participated in those forums. Of course, a few representatives of organized labour and community organizations were invited to each of these forums, for the sake of appearances. Ultimately, what happened is that $5.5 billion was cut from unemployment insurance and $2 billion from funds allocated to the provinces.

Who said to do that? Who presented such a recommendation in the pre-budget forums that year? No one. But those forums made the Minister of Finance look good. Again he will make himself look good by saying that he consulted Canadians and that they said to cut another $7.5 billion from post-secondary education, health and, once again, unemployment insurance. That is how the Minister of Finance consults.

Who will believe in that? Who will believe in this desire for democracy expressed by the Minister of Finance and his government?

I think that after a year of this government, Quebecers and Canadians are starting to realize that those people have lied to them and not told them the whole truth, that they are going back on their commitments and throwing them in the garbage. They are not inclined to keep the commitments which got them elected.

Several months ago, I heard the Prime Minister refer to the unemployed and welfare recipients as lazy beer guzzlers who should go back to work. I understand why: the Liberals' detailed plan is to cut at the expense of the unemployed and the poorest people in society. That is the plan. Since the last budget came down, I have gone to my riding and met people who suffer as a result of the savage cuts this government has made to unemployment insurance, which force whole families onto welfare. Whole families are discouraged and depressed and have lost the dignity which the Prime Minister says they should have regained with his government.

I suggest to Liberal and Reform members that they go back to their ridings and talk to people affected by these cuts. I would advise them to go easy on slick rhetoric and go out, maybe once every couple of months, and meet some of these people in your ridings. It is important that these members go and talk those who suffer, and who will continue to suffer, because of them. I have met some of these people, as have my colleagues from the Bloc. I can tell you that I was deeply moved to see mothers rush to get social assistance when they had never contemplated such a-

[Martin Cauchon, Liberal, Outremont, QC]

Bleak reality.

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

-bleak reality.

Mr. Speaker, Liberal members are cynical to the point of putting words in my mouth to describe their own harmful actions to Quebec and Canadian families. It is terrible to see them behave like that!

The Minister of Finance tabled an elaborate strategy to solve the problem of the deficit and the debt, a problem which everyone recognizes, but that strategy targeted the poorest in our society. Consequently, the Bloc Quebecois made detailed suggestions which respect the dignity of people, of the poor, of those who are looking for jobs but cannot find any, and of those who are depressed and who get even more depressed when they see the Liberal Party of Canada continue to make them pay a price which they should not have to pay. I did present these suggestions to the Minister of Finance and to those cynical members opposite.

In fact, we presented an eight-point proposal to the government. The minister should stop saying that we only complain. We do make constructive suggestions which could allow us to recover over $12 billion in the first year alone, without making the plight of our poorest ones worse.

For example, we suggested to the Minister of Finance and to the Liberals that the government should completely withdraw from fields which fall under provincial jurisdiction, instead of continuing to invest in those, as proposed in the Axworthy reform regarding education and health, but-

[The Acting Speaker (Mr. Kilger)]

I simply want to point out, in the course of this vigorous debate, that hon. members should remember to refer to the minister by his title and not by name. I know it was an oversight, because the hon member for Saint-Hyacinthe-Bagot has acquired some not inconsiderable skills during his first year in the House. I simply wanted to remind him.

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

I apologize, Mr. Speaker. It was said in the heat of the debate. Everyone refers to this reform by the minister's name, so I forgot we were on the floor of the House and that ministers should not be referred to by name.

Last week, we suggested to the Minister of Finance that the federal government withdraw from all areas of provincial jurisdiction and not, as is the case in the social security reform proposals presented by the Minister of Human Resources Development, maintain and reinforce the federal government's involvement in areas that are the exclusive jurisdiction of the provinces, such as health care and education.

Since in its discussions on relations between Quebec and the federal government, the Bélanger-Campeau Commission concluded that at least $2 billion could be saved by getting rid of all this duplication and overlap, I do not think it would be an exaggeration to say that at least $3 billion could be saved in the process. For a start, the government could do, as suggested by the Bloc Quebecois last June, and abolish the GST, give this tax space to the provinces and let them be responsible for introducing a consumer tax. As a result, hundreds of millions of dollars in GST administration costs could be recovered. Our second constructive suggestion for the minister was to cut many of the subsidies now being given to businesses. As you know, these subsidies represent a total of $3.3 billion. I am not saying they are all useless, but many are given as a form of patronage to businesses that are not efficient and not competitive, at a time when the stakes have changed as a result of globalization of world markets and international competition. There is a potential savings of $3.3 billion here for the Minister of Finance.

The same goes for the defence budget. In its election platform, the Bloc Quebecois proposed a 25 per cent reduction in the National Defence budget. So far, we have seen a 10 per cent cut in the last budget, or $1.1 billion. We have other positive and constructive suggestions to allow the Minister of Finance to cut another $1.6 billion from the defence budget.

According to all Quebec and Canadian experts we consulted, it is possible to get this extra 15 per cent without reducing or watering down the Canadian Forces mandate. Fourth, we asked the Minister of Finance to immediately stop government financing of Hibernia.

A total of $3.3 billion has already been sunk into this project without any prospect of profits and without knowing when the first barrel of oil will be extracted. If I remember correctly, the price of a barrel of oil must reach $26US for the Hibernia project to merely get to the point where it is no longer losing money on every barrel of oil is extracted from this drilling rig, without considering past losses. This year alone, another $250 million will be sunk into this project. Next year, another $250 million or even $300 million could be spent on this project, according to the finance minister's projections, without any hope of profitability.

How many more billions of dollars will the federal government sink into this project, when it is asking all Quebecers and Canadians, especially the poorest, to tighten their belts? Fifth suggestion, we asked the Minister of Finance to read again the last three reports from the auditor general, which reveal blatant carelessness, again, in government program management as well as a bureaucracy which-in some respects-is still overspending and wasteful in 1994, when we are told that public

finances must be brought under control and be more balanced over the next three years than they have ever been. This is our fifth suggestion to the Minister of Finance.

Sixth, we suggested that the Minister of Finance improve tax collection and tackle the recovery of bad debts. The auditor General says that there is $6 billion to pick up here. This amount of $6 billion does not even include contested debts. This is $6 billion that the federal government could get, but because of its laxity, we have a deliberate shortfall of over $6 billion this year.

The same goes for our seventh suggestion to the Minister of Finance and, strangely enough, these suggestions do not appear in his documents. We asked him to reform the Canadian tax system, but not by cutting the age credit, not by taxing RRSPs, not by attacking the middle class and the poor; we asked him to eliminate undue advantages for family trusts which benefit wealthy Canadians. I would recall a rather significant statistic. Ernst and Young surveyed 121 trusts-we only have surveys to go on because the Department of Finance and the Department of Revenue do not want to do a comprehensive analysis of family trusts-and I will give you some figures about them.

The average value of the assets in 121 trusts was $47 million. These are not family trusts for middle-income or high-income people, according to our own definition; these are $47 million in assets belonging to very rich Canadians. These family trusts held up to half a billion dollars. Indeed, that was the amount held in Trust No. 121 in the sample, which was the highest one. Five hundred million dollars. Five hundred million dollars in a trust which, year after year, and possibly until the death of the last beneficiary, benefits from a tax exemption on capital gains. If this beneficiary is lucky and lives to the age of 84, he may benefit from this tax exemption until he is 80 years old, on capital and assets which may be in the millions of dollars.

The same goes for tax conventions. We told the Minister of Finance but he is refuses to listen because he does not like the idea of targeting his friends, the friends of this government. We said that, even after the changes made to the taxation system last February, Canada still had tax conventions with 16 countries and these are considered to be tax havens.

The government loses hundreds of millions because Canadian corporations and very high income earners use these countries to avoid paying taxes. It is time to eliminate such loopholes and it is time this government realizes that it was not elected by major corporations or by those very rich Canadians who have family trusts with, on average, assets of $47 million and sometimes as much as half a billion dollars. It was elected by those people whom the government has been targeting since it took office.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I have a question for the hon. member of the Bloc Quebecois.

Just imagine for a minute that Quebec is a separate country. I would like to ask him what kind of system, what kind of tax reform he wants for Quebec? You referred to problems arising from Canada's complex system. I would like an answer to the following question: As far as tax reform is concerned, what kind of system would you have if you became a separate country?

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

Mr. Speaker, the hon. member's question reflects the tendency of these people to evade the issues. Today, the issue is not Quebec's sovereignty. We are talking about their government's budget process. We are talking about their government's inertia. We are talking about the flabby approach of the Minister of Finance, who has spent the past year-I want to say this because it is true-colouring the Conservatives' blue book purple because they are even more conservative than the Conservatives and telling us we are in the red.

So the issue is the consultation process that is going on now. The issue is the measures this government is taking at the expense of the most vulnerable in our society. Sovereignty is not the issue.

However, I would like to answer a small part of his question. Look at how the sovereignist movement has operated in Quebec for the past 30 years. It has not operated on the basis of a rightist philosophy, like our Reform Party friends have done since they were elected a year ago. It has not operated on the basis of a philosophy that is very close to the right, which is the approach being taken today by the Liberals. It has operated, from the outset, in accordance with the views of Mr. Lévesque. It has operated on the basis of a profoundly democratic society that is intent on the well-being of its most vulnerable members and that wants to provide for a fair distribution of our collective wealth, and I think that once Quebec is sovereign, we will have some really exciting projects.

As soon as we get out of this system, we can go ahead with some very exciting projects to create full employment, increase our collective wealth and regional development and give people new hope and dignity. We will provide real projects to help people recover part of that dignity, without pretty speeches like the Prime Minister gave us when he referred to people who had lost that dignity as beer drinkers.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I am curious about a couple of comments made by the hon. member. One was with respect to business subsidies. He said that in many cases subsidies are made to businesses that are uncompetitive.

I guess he is implying that it is okay to make subsidies to businesses that are competitive. In that case, it is kind of redundant in my judgment. I have to wonder whether the member, given his remarks, can justify any subsidies to business at all.

Is the hon. member so committed to deficit reduction that he would give up his MP's pension, should he ever be lucky enough to get that far, given the Bloc's stand? Would he go on record today saying that he is opposed to MPs pensions as they stand now, especially considering his stand on things like family trusts which he would argue confer special privilege?

Obviously that is what MP pensions do. Let us hear what the member has to say on that issue.

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

Mr. Speaker, about the $3.3 billion budget for subsidies to business, during the year we have been here, we have asked the Minister of Finance to put everything on the table and allow a parliamentary committee to look at federal government spending in a very thorough and specific way. We have always included the $3.3 billion in subsidies to business, in order to scrutinize what type of subsidies were involved and who the beneficiaries were. Did they really have a structural impact on the economy enabling us to face the challenges of internationalization and international competition?

We never received a reply from the minister in this regard. But, as you said, logic dictates that a normally competitive business should not need subsidies. However, we are now faced with radical economic changes.

The mere fact that the latest GATT agreement signed last December will bring about tariff reductions of about 75 per cent over the next six years is already a lot to deal with.

Although tariffs between the most industrialized countries already averaged five or six per cent, it still makes a difference, especially when, according to most experts, the value of the Canadian dollar remains very high despite some drops in recent months.

We are again in a situation where the slightest tariff protection can compensate for the fact that Canadian businesses are not as competitive, probably in part because of the Canadian dollar.

I submit to you that a normal, competitive business should not be subsidized. Often, all these subsidies to business do is generate competition between Quebec or Canadian firms because one received a subsidy while the other did not. I think that this system must be totally revised. I would say to you that most of this $3.3 billion should go.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, I want to return to my opening question. The member who is the finance critic for Her Majesty's Loyal Opposition criticized some of the areas in the tax design with which he did not agree. By the way, I share his views in a couple of the areas.

However, he is here to lead his province out of Confederation. He stated that in his speech. That is his democratic right, but Quebecers and Canadians would like to know what type of tax regime, tax design, tax system Quebecers will have in this new country that they are designing?

It is very important for the member, who has this lead role, to tell Quebecers what this system is. We would also like to know what this system is because it might contain a couple of ideas we could implement now. Specifically, what will the tax regime look like in this separate Quebec?

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

Mr. Speaker, we would have a normal tax system for a normal modern industrialized country. We would surely have a more equitable system that would not favour only the very, very, very high incomes. I am not talking about high incomes in the definition we have. I just gave you the example of family trusts, with an average of $47 million in assets and as much as half a billion. It is not right that these people pay no capital gains tax year after year for 80 years.

As we have shown from the beginning, sovereignists care about tax fairness, and I suppose that in a sovereign Quebec such treatment would be called into question. The same goes for the 3,400 Canadians who did not pay a cent of income tax to the federal treasury last year, even though they had a very high income. I think that we would also try to correct that effectively.

I would remind you-I know that I have only a minute left-and you will tell me that it is not related to the question, but it is related to the question, quite a bit in fact; I would remind you that sovereignists care about the collective well-being. We have also shown that we want to reduce the contribution of big corporations and big lobby groups to the financing of political parties as much as possible. That is why the Parti Quebecois, just as the Bloc Quebecois, is financed by the people.

That is why a sovereignist government in Quebec, unlike the Liberal government in Ottawa, is not subject to undue pressure and influenced by gifts, in some cases, from lobbyists for very rich Canadian families with assets of $47 million to half a billion that are not taxed for 80 years.

This already gives us a good idea that the prime concern of a sovereign Quebec will be the majority of the people, not an elite who provides the funding, as it does for the Liberal Party of Canada, so that this government has its hands tied and the

Minister of Finance does not put the real tax loopholes in his paper but goes after the tax breaks affecting middle- and low-income people.

So this gives you some idea of what sovereignty would mean for us.

[Ray Speaker, Reform, Lethbridge]

Mr. Speaker, on behalf of the whip of our party and pursuant to Standing Order 43(2), Reform speakers will be dividing their time.

In speaking to the resolution before us, presented by my colleague from St. Albert, we must recognize its focus and concern. The major focus is a request that the government look at balancing the budget. Instead of meeting targets that leave major deficits, it must look at balancing the budget and bringing the deficit to zero. That is what we are focusing on today, indicating to the government that there is some urgency in working toward that kind of target.

The other thing we make reference to in this resolution is a plan which the government could implement. We are requesting the government not hide behind the 3 per cent that it set for Canadians, that it will reach supposedly and hopefully in three years. We are saying it is owed to Canadians that we should go further, that the red book plan should be extended to a point at which it details and outlines programs within departments, the priorities which will be set with regard to social spending, the projections with regard to growth in the economy that will move us to the most important target, balancing the budget.

No government can sit and wait beyond one term to reach necessary objectives. The way the government is moving at the present time it is saying to Canadians: "We are going to leave you at the end of our term with at least a deficit of $25 billion". It wants to go back to the people at that point and say: "We did our job. We reached our 3 per cent". That is hiding behind the real problem, which is a truth that must be revealed. I hope the discussion on this resolution today reveals some of that truth.

Today is the anniversary of all of us being elected to the House of Commons. At this point we all have more confidence as to our purpose, our focus and the reason we are here. As finance critic, I have been given the responsibility of dealing with the finances and the budget of Canada.

One of the motivations and the reason I left my responsibilities in the Alberta government, moved to seek the nomination for the Reform Party, got elected and came to the House of Commons was a very focused purpose. When I lived in the city of Edmonton a number of young people from the University of Alberta were in my home day in and day out. Those young people were good, quality students with very excellent averages and tremendous abilities.

They said to me day after day: "We are going to get an education. We are going to be qualified to do something. But what is there out in the Canadian community that will offer us a chance to perform as we wish, to use our talents and our abilities? Will there be a job available?".

I examined that discussion and thought about it. I said to those young people that I thought there was only one place where we could resolve the problem we have, that is in the House of Commons and in the federal political arena. That was one of the reasons for making the decision to come to this assembly. I am here now and I believe the job must be done.

What do I believe? What do I believe is the secret or the road to dealing with the problem? Much of it is set out in the rhetoric and comments in the document presented in the finance committee called "Creating a Healthy Fiscal Climate". A lot of good objectives are established by the Minister of Finance and the Government of Canada. They want to work toward balancing the budget. That is a good objective. They also say that some very immediate things must be done. They set out a relationship between bringing the deficit into line, bringing it to zero, dealing with the debt and balancing the budget. In turn if those things are dealt with they will bring about growth in the economy and job opportunities for Canadians.

That is the sequence I agree with. I was very disappointed, I must say, with the red book plan of the government. In the campaign a year ago it was clearly stated by the candidate in my constituency, and I am sure by other Liberal candidates and those who were elected, that they were going to create jobs for Canadians. That is the wrong approach to job opportunity. Government cannot create jobs. It absolutely cannot create jobs.

The government initiated a program of infrastructure for Canadian municipalities in a variety of jurisdictions in Canada. Certainly there were jobs made available to Canadians. Those jobs were short term, for six months, a year or maybe two years. They were jobs made available to Canadians. They were not jobs created by the economy that would be there for a long period of time, would be self-supporting and would be part of the private sector or the private economy of our country. If those kinds of jobs are created they are long term and will will benefit our country. Certainly the Government of Canada will benefit by increased revenues into its coffers to take on its responsibilities.

In this term of office, between now and the next election, we have the opportunity to reach the goal of bringing the deficit to zero or near zero. The government must be more aggressive. I looked back on this year's performance of the Prime Minister and of the Minister of Finance. I thought about that last night and I asked myself how I could describe what they were doing. Why is it that the Prime Minister on his first anniversary is high

in the polls, at 60 to 70 per cent in terms of popularity? That is very high. Why is he so popular?

If we re-examine what is being done there is not very much being done in Canada, not very much in terms of the government. There are a lot of studies, a lot of reviews and a lot of procrastination. The only concrete thing I can see is with regard to infrastructure. That was put forward by the minister. It is implemented and it is there.

How do I describe it? We have what I would call sort of a pied piper syndrome in Canada at the present time. We have this popular leader who is leading us down the road while playing a beautiful piece of music. The people of Canada are saying: "Things are okay. It is all right. Things are going to work out". A nice song is being sung but they are not focusing on the problem.

The deficit is being ignored because of the comfort zone being given to Canadians by our Prime Minister and the Liberal government. Some day they will wake up to the fact that the pied piper is taking us down the road. I recall my father telling me the story many times. The pied piper led the children into the river and they all drowned. My father had another innovation where they went into a cave and a heavy rock rolled over its entrance and the kids were lost to the families of the town.

The same thing is going to happen here. The people of Canada are being led down the road to where they will fall into the debt hole. We are going to have a crisis because we are going to fall into the debt hole and the government is not dealing with it. That was said in the document presented to the finance committee called "Creating a Healthy Fiscal Climate". Page 25 of that document states very clearly what the circumstances are. This is the government's document. The Minister of Finance presented it to the committee on October 18, 1994.

It says that by fiscal year end 1994-95 the net federal debt is expected to be $548 billion. It also says that if program spending remained roughly in balance with revenue, compound interest alone at today's average rate of about 8 per cent would cause the debt to grow by almost 50 per cent, to more than $800 billion within just five years. That is before the turn of the century, before the year 2000. It goes on to say that by then the annual interest payment would be about $64 billion or $20 billion more than this year's forecasted debt charges. Can we imagine $64 billion out of the budget? Our budget now is $127 billion in terms of revenue, and $64 billion will be paid out of it. That is how serious it is.

The Prime Minister is getting all the laurels, all the credit, but he is leading us into a debt hole and into a crisis. The government must come up with a plan and give the people of Canada some details on how we are to be led out of this grave and difficult situation.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I want to make one short comment and then ask a question.

I think the member is not being reasonable on the infrastructure program. During the establishment of infrastructure the job time might be for three, six or nine months but the actual completed infrastructure provides an environment. As the Parliamentary Secretary to the Minister of Finance said, the new transport system from the airport in Winnipeg will be there for 30 or 40 years. It will allow for the economy in that sector to move forward in a more efficient and productive way in terms of exports to the southern United States.

However I want to ask the member a question about the deficit and the debt. As the Parliamentary Secretary to the Minister of Finance said in his remarks this morning, if our interest rates were to go up by half a point it would cause an added burden of approximately $3.5 billion in service charges. Obviously we have to create an environment where we can stabilize our interest rates and create a system that would put downward pressure on interest rates, which subsequently would allow us to have a lower cost in servicing the debt of the country.

Does the finance critic for the Reform Party believe a tax system that is fair and promotes entrepreneurship could reverse capital flows that are currently leaving the country? By capital flows reversing and coming back to Canada a downward pressure could be put on interest rates. Does the finance critic believe that comprehensive tax reform could create that possibility?

[Ray Speaker, Reform, Lethbridge]

Mr. Speaker, I thank the hon. member for his questions.

In terms of the infrastructure question that he raises, if a government must invest in some type of job opportunity or in some infrastructure project maybe jobs are created as a side benefit. However, if our country has good infrastructure such as roads, et cetera, the private economy has a good base from which to work. That is a very proper function for government and I agree with it.

The point I was making with regard to infrastructure is that it is not the solution to the problem. It is very short term. It is not a long term solution. We cannot keep borrowing money and investing it. Somewhere the hole gets a little too deep and we get into trouble.

I will deal with last question the hon. member raised.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

With regard to the downward pressure on interest rates and tax reform.

[Ray Speaker, Reform, Lethbridge]

A fairer tax system would have a reflection on interest rates. What has to go along with that is certainly the deficit reduction we are talking about to deal with confidence in our country.

A number of investors in our country right now are looking at us. Those who judge our credit as a country are asking if we have dealt with the deficit and saying if we have not it looks like it is getting out of control. Then our interest rates go up and we have some problems. It is not only a proper tax system that deals with a rise in interest rates. It is certainly a question of whether the government has shown the will and dealt with the matter of the deficit.

[Jim Hart, Reform, Okanagan—Similkameen—Merritt, BC]

Mr. Speaker, it is an honour to rise today to participate in debate on the motion brought forward by the Reform Party requesting that the government bring down a plan of action.

I was going through my files today on this very subject and found a headline that caught my eye: "Slashing the Deficit in Just Two Hours". This was the heading of a column in the June 13, 1994 edition of Maclean's magazine by Diane Francis. She has a plan. I might not agree with all the things in her plan, but at least there is a plan and there are topics that can be discussed.

We are here today to find out some ideas and put some thoughts on the table about how we can reduce the deficit and the debt. As we all know politics is the art of possible. Let us try to make things possible by reducing the deficit and the debt. For far too many years the country has been living off its credit. Like other spendthrift debtors there comes a time when they finally have to pay the piper. They either quit spending more than they earn and begin to repay their debts, or the banks foreclose on their homes, seize their cars and they are bankrupt.

The bank is getting ready to foreclose on our mortgage, to repossess our car and to cut up this nation's credit cards. Finally the country and its government have to wake up and face this reality. No longer can it be ignored. The finance minister has finally heard this message and I congratulate him for having the courage to admit it in his statement.

The Reform Party was catapulted here one year ago by common sense Canadians. We have been trying to get this message across to the government from the first day of this Parliament. Decades of spendthrift management and extremely poor decisions have entrenched programs and attitudes that have led the nation to spend its birthright and mortgage its future. We must for our children's sake get this mess under control.

The finance minister has said that each one of us must decide which government services we personally can do without. No longer can Canadians take refuge in the attitude that someone else can pay, that someone else's services can be cut. We must let Canadians prioritize our spending, prioritize our programs, something again that the Reform Party and its members on this side of the House campaigned for rigorously during the last election.

Governments have often sought to supply services through crown corporations because it was felt these were necessary, that these services could not be provided by the private sector. Perhaps at one time this was true. Perhaps there was justification for pouring funds from the public purse into these uneconomic businesses, but it is an expensive proposition and one that has stifled competition.

This philosophy has also cost this country greatly in dollars and lost opportunities. Over the years crown corporations have contributed mightily to our monstrous national debt and high taxes which have stunted growth and discouraged innovation in this country. There comes a point when these crown corporations no longer fill any real need, when inertia is their prime reason for being. We can no longer afford this.

Today we are a nation of some 28 million people. Times have changed. Our needs have changed. Yet still we ladle public money into ventures best left to the private sector and in the process we smother competition and eviscerate the entrepreneurial spirit. The people of this country have been led down a perilous path.

The plain and simple fact is that goods and services are provided more efficiently, more effectively and with better quality by the private sector in a competitive environment. Why then do we still maintain crown corporations and agencies that meddle in the free marketplace on the strength of huge dollops of money from the public purse?

Even at a time when there was justification for government owned broadcasters which gobble up close to $1.2 billion a year, how can it be justified today? For instance the CBC was created so that Canadian culture was sure not to be lost, but things have changed. Technology has changed. An example of that is the private cable companies.

Private cable companies across this nation supply community access channels. In my own riding of Okanagan-Similkameen-Merritt, Shaw Cable provides access to a community channel for cultural programming, for interest groups to make programs. This is something we should look at. How can $1.2 billion a year to the CBC be justified? Would this money not be better spent on educating and training our youth so that they can have productive futures, so that they will have no need for expensive UI programs or welfare?

We must set realistic priorities. We no longer have the luxury of wasting precious tax dollars on foolish spending. Of course the other side will criticize me by saying: "The hon. member is saying he is just going to cut everything". I want to make it very clear that is not what I am saying. I am saying that every single government department, agency, crown corporation and marketing board should be evaluated for its relevance in today's economic climate. If the same function is or could be provided

by the private sector, that government body should be disbanded immediately.

Organizations such as the Canada Council defy common sense. When we are talking about shrinking funds for education and health care, how can we as responsible members of this place support any endeavour which is not necessary for the well-being of the people we represent, all Canadians?

Last summer the Minister of Transport announced a move to place more of our transportation system in the hands of the private sector. This is a positive change which will benefit all Canadians. The minister has recognized the fact that these services can best be provided by the private sector. The people of Okanagan-Similkameen-Merritt have supported this concept in town hall meetings across my riding. As well the same thoughts were heard at every one of the government's prebudget consultations earlier this year.

In the prairies farmers are demanding that the Canadian Wheat Board be reformed and that producers be given the opportunity to sell their grain to whomever they choose. One producer who operates a small milling operation with its head office in Penticton has detailed years of interference with his business by the wheat board. This interference has severely limited his opportunity.

Let us explore this for a minute. The Canadian Wheat Board is an interesting topic. It is widely known that western Canada produces the world's best durum wheat. It is ideal for pasta products. I am not a farmer. I am a common type of person, but I must scratch my head in wonder. It would seem there is a tremendous opportunity in western Canada for someone to go into the pasta production business. It is also interesting to note that there is not one pasta producer in western Canada. Why is that? Let us look at some examples.

North Dakota, which grows about as much durum wheat as the province of Saskatchewan in a good year, has four prosperous pasta operations. This House should know about a real success story for the North Dakota growers in the village of Carleton. They built a plant without any state or federal government assistance. They have the most modern equipment. It runs 24 hours a day and has 240 employees. It processes 250 tonnes of wheat daily into highly valued privately packaged pasta products that are shipped all over the United States. There is more good news: expansion plans are under way.

Why then does western Canada not have a pasta producer? In western Canada, durum growers owning their own mill would be in the same position as if they were trying to sell their wheat product independently. They would be forced to sell it to the Canadian Wheat Board at the board's prevailing initial price. Then their company would be forced to buy that wheat product back at the board's selling price.

Durum wheat growers could not legally sell directly to their own company in this country, nor could their company buy their own wheat. It is just ridiculous. In other words, any benefit durum growers who are also the investors in the private company would have in the pasta plant would have to be shared among all the wheat producers in Canada.

I am not saying that the Canadian Wheat Board is stifling competition in this country. Just a minute, maybe I am, but then again maybe I am not. What I am saying however is that we should put it on the table, discuss it and evaluate it. It appears this country is missing yet another golden opportunity.

My time is running out so I will close by saying it seems that the national economics elude the test of common sense every family must face when handling their finances. Canada's deficits are not insurmountable. Canada's deficit and debt are merely symptoms of an inept and cowardly leadership.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I will begin by commenting on the last point the member made on creating a value added pasta plant for our durum wheat. The member has brought a new insight to me. I will give him an undertaking that I will take his point up with the Minister of Agriculture and Agri-Food.

I do not know the issue well and there may be some technical points which make this not as easy as the member describes it. However, I think the member has raised a very insightful point. Any time we can create a value added opportunity with a resource like this we should look at it.

This goes back to the point I wanted to make. In the last nine months this government has taken on a very thorough review of all crown corporations. If they do not meet the public policy objective that we all believe in then a lot of those crown corporations have had their budgets cut, some of them severely. It would be inappropriate to leave Canadians with the impression that we are not reviewing and evaluating all crown corporations.

In fairness to the member, he did acknowledge that the Minister of Transport has done a very good job in commercializing all the airports in Canada, privatizing and offloading them to local authorities. Some would even argue that he is moving too fast. I know the Reform Party feels quite comfortable with that. However, I caution members opposite that when we are dealing with a complex department like transport, which traditionally has galvanized the spirit of this country and helps pull this country together because it deals with rail, transport and sea, before we just cut and offload it we have to make sure we are doing it in a manner that does not fracture the very fabric of the country.

[Jim Hart, Reform, Okanagan—Similkameen—Merritt, BC]

Mr. Speaker, I appreciate the comments by the hon. member. Whenever we come up with value added ideas such as I have mentioned here today we should explore them at every possibility.

There is a misconception on that side of the House of what the Reform Party is saying should be done. We have said this very clearly but it has fallen on deaf ears at times that the items Canadians feel are the most important should be prioritized. It should look like a balance sheet. I know the hon. member has spent many years in business. It is very similar to what someone would do in their own business when they found that their outflow of money was larger than what they were bringing in.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

This is not a business.

[Jim Hart, Reform, Okanagan—Similkameen—Merritt, BC]

The hon. member says that this is not a business. But Canadians are saying they want government to use common sense principles like the average person uses in Canadian society, whether it is in a business or whether it is when they are working out their family budget at home. These things have to be prioritized and then everything else should be put on the table.

What the Reform Party has been saying is the items which should be saved and protected for all Canadians are things like the federal funding for the health care system, federal funding for the Canada pension plan and for old age security where it is directed to those people who are most in need. We are saying that funding should be maintained for those areas and possibly more if need be. We are saying that education funding is a priority in this country.

There are about three or four items on the balance sheet that pertain particularly to things that should be saved. On the other side are the things that should be cut. Those things are the things we are talking about that are on the table.

[The Acting Speaker (Mr. Kilger)]

Colleagues, there is a housekeeping matter I would like to dispose of.

I wish to inform the House that pursuant to Standing Order 33(2)(b), because of an earlier ministerial statement Government Orders will be extended by 32 minutes.

[Barry Campbell, Liberal, St. Paul's, ON]

Mr. Speaker, I welcome the opportunity to speak to this supply day motion. It allows me to review a very important policy paper concerning the government's economic strategy that the Minister of Finance presented to the Standing Committee on Finance just last week.

Obviously the member proposing today's motion must have been occupied elsewhere when the Minister of Finance tabled "A New Framework for Economic Policy" on October 17. Perhaps the length of the document, 87 pages, was too much for him to absorb. He may still be waiting for the Cole's notes version. I know on their side of the House it is all about simple problems with simple solutions that pop into their heads, so they must be right.

If I appear a little sarcastic, frankly that is the only reasonable response to a motion that calls for the government to table "a clear statement of its vision of the role of government in the economy". That comprehensive statement has already been tabled. It made headlines across the country.

If the hon. member or any Canadian phones the distribution centre of the Department of Finance, the phone number is 613-995-2855, a copy will be provided immediately.

I suspect if the hon. member takes the time to study this document, which he has not apparently, he will appreciate its significance. Canadians have seen only too often what happens when a government implements policies without clear guiding principles. The result is like building a house without a blueprint. It is chaotic, it is costly and the roof leaks.

Canadians deserve to know the principles which guide the Canadian government. That is why this government has set out the framework for the economic policies we intend to build upon. This paper, "A New Framework for Economic Policy", is a clear statement of objectives that will guide what the government will do and what it will not do. It provides the very vision that the hon. member wants Canadians to debate.

Before I get into details, let me set the scene by describing the underlying principles of the framework. This government has one overriding goal: jobs and economic growth. While a strong economic recovery has taken hold, the fact remains that our unemployment rate is too high with Canadians paying a tragic price. That price includes lower government revenues and higher costs, problems that contribute directly to the deficit dilemma they are so concerned about and we are concerned about.

Sound economic policy and good social policy are linked. Sustainable social programs depend on a sound economy. Canadians need more jobs and better jobs. Jobs create dignity and wealth and enable us to sustain our commitment to social justice.

Common sense suggests, and the hon. member must agree, that a country that is to continue to care for its citizens must be a

country that pays its bills. That means living within our means and creating jobs through economic growth.

The fact is the logic and approaches of the 1960s simply are no longer good enough in a 21st century arena. We cannot afford them and we will not succeed with them. Previous generations responded to the challenge of their times by building the physical and social infrastructure of Canada. We have a similar challenge and our own responsibility to create the infrastructure for our times and for that of our children, the infrastructure of ideas and innovation.

It is innovative combinations of people, capital and ideas which will place us at the cutting edge of economic change and growth. Working people harder and making government meaner is not the key. Working smarter and making government more effective is what Canadians want and need. To work better and smarter the very nature of government itself must change. The time is long past when governments can or should do everything.

We need a partnership that gives responsibility to those who are best able and suited to do the job, be it government, business, labour or the volunteer sector. That requires a government that knows where its true potential lies and what its real limitations are.

There is a difference between Liberals and the member who sponsored this motion. We believe government has a role to play as catalyst, as facilitator setting goals and monitoring performance. I believe government should get out of the way but not stand aside. That is Liberalism for the 1990s.

Like countries everywhere Canada must adapt to the powerful trends that are shaping the global economy, the global financial market, the dynamic growth of economies in the Pacific rim and parts of Latin America, South America, and the impact of information technology. Each of these has dramatically increased the competitive stakes. The bottom line is clear, to become more competitive Canada must become more productive.

Productivity is about how well ideas, workers, resources and investment are brought together in a country's economy. Productivity is about ingenuity, about better management, paying attention to the common sense of workers. Productivity growth is the basis for a better standard of living for every Canadian.

Some Canadians fear that productivity is a code word for fewer jobs, greater hardship. They are mistaken. History shows the compelling relationship between productivity and employment. Between the fifties and early seventies productivity growth was high, averaging 2.3 per cent. During those decades unemployment was low and incomes rose at a steady pace. The picture changed from the seventies to the nineties. Productivity dropped by more than half, unemployment soared and the growth in incomes slowed to a virtual halt.

How do we improve productivity? First, we improve skills. We must become more innovative and provide a welcoming climate for investment. We must remove the disincentives we have created for business and individuals, disincentives that hold us back because they encourage dependence or block opportunity.

There is another critically important imperative for a more productive, prosperous Canada, as our framework paper emphasizes. We must get our fiscal house in order.

Let me turn now to the objective for jobs and growth the government has set out in "A New Framework for Economic Policy". There are five key areas which we must focus on. I will be interested to hear if the hon. member opposes any one of them.

The first is helping Canadians acquire skills, the skills to get jobs, keep jobs and find better jobs. The facts are clear. Jobs for people with high school education or less are shrinking while jobs for those with beyond high school education are growing. In fact projections show that almost half the new jobs created during the nineties will require more than 16 years of education and training combined.

I should add that there is a particular element of this challenge that engages small business. They do not have the resources that large firms have to help employees acquire the new skills that the information age demands, much less basic abilities in literacy and numeracy. Small business depends on a public education system that is doing its job.

In terms of education, the challenge in Canada is not money. We spend more on education than just about every other country. What we need are better results. Individuals, employers and government must co-operate and share responsibility in improving education and training.

The second part of our framework is encouraging Canadians to adjust to change. Economic progress depends on a willingness to embrace new opportunities. It is our view that protecting and subsidizing business is almost always the wrong way to go. For that reason the government may change the entire approach to subsidies.

Equally, we believe regional economic assistance should focus on genuine opportunities such as tourism that have great potential to be self-sustaining. Government should focus on winning industry sectors, not specific enterprises. Government has not been terribly good at picking individual winners.

At the individual level the existing unemployment insurance program must be changed. It is bad economic policy today and bad social policy. We intend to take measures to bring it back to what it was, insurance, and to create programs that foster job readiness.

Further, we believe high payroll taxes are nothing more than a tax on hiring. We have taken steps to reduce UI premiums and will do more in the future.

The third element of our framework is getting government right. Our attitude is straightforward. It is time to make choices. We must eliminate or reduce lower priority activities and target scarce resources to the highest priority programs, helping those in need, ensuring that people get the training and the opportunities they require.

We are also trying to drain the swamp of federal regulations which costs Canadian businesses tens of billions of dollars each year. Regulatory reform has the potential to increase productivity, stimulate investment, create more cost efficient government. We have reviewed more than half of the 3,000 regulations on the book. We have eliminated more than one quarter and left another one quarter in place. The rest are in the process of being revised and examined.

Providing leadership in the economy is the fourth objective. While the private sector creates jobs, the government has a clear role in creating a healthy economy which gives the private sector the confidence to add jobs.

In our knowledge based economy success depends on skills and innovation. The government can contribute by gathering and disseminating information and ideas about technology and new markets. As well, it can play an important role in bringing businesses together, something that is critical in an economy where many new firms are small and highly specialized.

One priority is to do more to harness science and technology in order to improve productivity and growth. Government can help by building better links among industry, universities and government labs. It also has a particular role in making sure small business benefits from the latest know-how in the high technology sector in particular.

Trade is another area where government involvement is essential for success. Today more than ever Canada is an exporting nation. It is vital that more companies become exporters and that we look beyond our traditional markets to the emerging economies of Asia, Latin America and eastern Europe. Here the government can help by providing more information and ensuring that small business has access to export financing. We must work toward an end to export subsidies by foreign countries. Until that day we must do what is necessary to ensure that our exporters can compete with foreign competitors.

The fifth and final objective is absolutely essential to the others. We must create a healthy fiscal and monetary climate. If we do not, as the finance minister told the Standing Committee on Finance, we will fail at everything else. That is why we have staked out a firm commitment to bring the deficit down to 3 per cent of GDP by 1996-97, effectively cutting it in half from its present level. That is why we have also made it clear that this deficit target is an interim step in meeting the ultimate goal to eliminate the deficit completely.

It would be absurd to claim that a single policy paper has all the answers to secure Canada's economic future. Other papers on specific issues are being completed. I suggest that no government in recent memory has demonstrated our commitment to providing Canadians with factual, accessible information on its economic principles, its strategic agenda and the fiscal situation.

Examples include not only the framework document, but its companion financial update entitled "Creating a Healthy Fiscal Climate". There is also the first ever annual financial report of the Government of Canada that was released earlier this fall as suggested by the Auditor General. To me and I hope to all Canadians the evidence is clear. Our government has a vision of the role of government in building a more prosperous nation.

The hon. member opposite would better serve his mandate and the interests of the entire nation by providing meaningful alternatives, if he has any. Motions calling for statements that already exist do nothing but pass our time. Let us dismiss this motion and get on with the real business of future building.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, I appreciate the hon. member's speech. I did not hear him comment too much about the fact that given the government's current plan for budgetary spending, our debt will grow by $100 billion in three years and our deficit will still be $25 billion a year after three years. These are the government's projections. Our annual interest bill will go from about $40 billion to $50 billion a year. This is in spite of a time of economic growth in Canada. At the end of these three years we may face a recession given the cycle of business and the international marketplace.

Would the member comment on whether he thinks the current 3 per cent of GDP deficit ratio is acceptable in light of those statistics?

[Barry Campbell, Liberal, St. Paul's, ON]

Yes, Mr. Speaker. It is not only acceptable, it is achievable. It is an interim step on the way to addressing what I know the hon. member opposite wants to address, the overall deficit and debt problem. We are starting down that road in the right direction with an achievable target and we are going to get there.