Debates of Nov. 28th, 1994

Budgetary Policy

[Marlene Catterall, Liberal, Ottawa West, ON]

I rise on a point of order, Mr. Speaker. I do not want to interrupt questions and comments for which there is still some time remaining but I did want to inform you that the next government speakers are the member for Elgin-Norfolk and the member for Notre-Dame-de-Grâce. I would like to give notice that pursuant to Standing Order 43(2) these two members will be dividing their time.

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

Mr. Speaker, when I hear the hon. member for Lethbridge say that his party is dedicated to helping the most vulnerable, I find that hard to believe, considering what was said on the finance committee by him and his colleagues about the Maritimes, Quebec, Ontario or western Canada. It is nonsense. It makes no sense at all to say that we should cut $16 billion in our social programs in the next three years, to help the most vulnerable. This is a complete distortion of reality.

They are not describing reality. They are distorting reality. When they say to the government that the only way to clean up our public finances is to cut unemployment insurance even more than the government has already done, and that it should do the same with the Canada Assistance Plan, post-secondary education and programs for senior citizens, is that what helping the most vulnerable means? Is that concern for social justice? On the other hand, when we talk about inequities in the tax system, they will not listen.

That is the extent of their real concern for the most vulnerable members of our society. Their only concern is that the privileges of very rich Canadians and very big corporations, despite the tax inequities applying to both groups of taxpayers are concerned, should be maintained. That is the only issue of interest to them in this debate.

[Ray Speaker, Reform, Lethbridge]

Mr. Speaker, in reply to my hon. friend from the Bloc Quebecois I want to say that our philosophies differ completely. There are two ways to approach the economic problems of the country, the major debt, a deficit every year of $40 billion and a growing deficit under the 3 per cent plan of the Liberal government. One is to be fiscally responsible and try to live within our means. The other is to increase taxes.

Since coming to this assembly I have learned that the Bloc Quebecois uses a socialist, NDP approach to resolve economic matters. Those members should be telling Canadians-and I hope Canadians hear this-that they want to increase taxation. They do not want to reduce expenditures in a responsible way. They believe there is some rich person out there who will fill the revenue coffers of the country so the government can spend more. We in the Reform do not believe that; we absolutely do not believe it.

We believe Canadians want more independence. They want to be free to spend their own money. They want to be able to have more capital so they can invest in their own future and their family's future. They want to be rid of government, to have less government. That is the best approach to dealing with our deficit and other economic problems.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I rise today to address the economic policy of the Liberal government which regrettably, like those before it, has failed to take the necessary steps to deal with the severity of our fiscal crisis, leaving Canada and Canadians on a track destined to bankruptcy.

While in opposition the Minister of Finance stated in his 1993 Tory budget response:

What is most astonishing about this budget is that while Canadian taxpayers seem willing to directly address the deficit, the Minister of Finance instead served them a rehash in a context as to make everyone dream.

He went on to say:

The Liberals propose to confront this challenge head on.

In his first budget the Minister of Finance joined the distinguished club of 20 years of finance ministers that failed to deliver what they promised in opposition.

The interest payment to service our national debt is now the largest single item in federal expenditures and is placing a major squeeze on the availability of funds for program spending. In 1981 each Canadian's share of direct federal and provincial debt was $4,500. Today that share per capita is over $25,000. Before a single dollar of income is redistributed, before a dime goes to social programs, before a penny is spent on any other government program, $2,200 must be paid yearly in interest for each and every person in Canada.

The sad part is that we are borrowing the money to do this, which simply adds to the overall size of our debt and our problems. The fact is that the current spending policies of the Liberal government are an immediate threat to the national well-being of all Canadians. The Liberals have admitted that by targeting the deficit to 3 per cent of GDP per year they will add close to $100 billion to the debt. How is that solving the problem?

By continuing with the philosophy of tax and spend the Liberals have changed nothing in the House but the seating plan, from this side to that side, and the faces of ministers. The cornerstones of our society like health care, education and the social safety net are in jeopardy because Canadians are forced to borrow $89 million per day or $625 million every week to finance the debt.

If the Minister of Finance truly believes this is fulfilling his promise to break the back of the deficit and attack it head on, I suggest he is incompetent. Double talk and inaction in the situation are inhuman. It is a great disservice to the country to play games with other people's money, tax money.

Our economy and incomes have consistently grown more slowly than our debt. We are now borrowing to pay the interest on our debt. This is not a sustainable situation. We are spending our children's and grandchildren's money. We are mortgaging their future at an alarming rate. I heard a baby up in the gallery this afternoon. That baby will have to repay the money that we borrow and are spending today.

Do our children have a say in how we are spending their future earnings? Does this not bother members of the Liberal government? When they go home tonight I suggest they look at their children and their grandchildren and think about what their lives will be like with carcass-like social programs. They were lost by a government that borrowed them into extinction.

The time to act is now. The government should priorize its spending. If health care is number one then it should make health care number one and stop cutting the share of annual transfers to the provinces. If the social safety net is number two then those programs should be restructured so that they are targeted at those who truly need them and not everybody and anyone.

It is all about common sense. Families have used it for years in their budgets and members of Parliament obviously used it to run their homes. Why is it that when they get to the House they forget about that? Why is it that they do not do it when they are in government and are ministers of the crown? Why do they not operate like they do at home when it comes to government moneys from taxpayers? Can they borrow money on their homes on which they have mortgages to make the interest payments? We both know the answer is no. The bank would repossess the house. Somebody is going to repossess our country and we

should do something about it before somebody takes it away from us.

Let us live within our means. If the federal government only has $126 billion in revenues, we should not be able to spend any more than that amount. What is so hard about that to understand? Why do we continue to fuel the debt by deficit spending all the time? Why do we not start on a curve where we live within our means with the money we know we can generate safely in the country from a strong economy and send the right signals and messages to investors and other countries?

Let us use Liberal ideology and take a walk into the future. Let us take a little walk through the Canada of the future under the Liberal government as though it were a house. First, the house would be mortgaged to the tune of $650 billion. This is just in a couple of years. The welcome mat would be subsidized. As we walk in, the first thing we would notice are the third rate snowboots and snowsuits hanging by the door. This is because corners had to be cut in the family budget to meet the mortgage payments and excessive taxes levied by the government.

That is okay because we notice that everyone seems happy as they huddle around the television to watch whatever magic the high salaried executives at CBC have conjured up that particular evening with our tax dollars.

Next we walk into the kitchen and notice grocery bills stuck on the refrigerator door. We are surprised at how expensive groceries are these days, but at least the Liberals kept their promise and killed the dreaded GST. Oh, wait, what is that we notice on the bill? Is it a national value added tax of 15 per cent? Disgusted, we turn around and notice a book of home remedies on the kitchen table and realize that Liberal cutbacks in health care have truly started to hit home.

At least after years of paying into the system we think to ourselves that the parents will have their RRSPs to fall back on. But, wait, the Liberals slowly eroded those programs through taxation and on capital gains too. What about the CPP? There is not enough money in the program to cover the revenue shortfalls.

With the current spending practices of the government this type of Liberal house is not that far-fetched. I do not want to live in it and that is why I am here speaking about the problems in the country and offering some solutions on how to solve them. Nothing less than a balanced budget in three to four years is acceptable. By adopting this Reform recommendation the new type of home we would find in Canada would be a big improvement over the Liberal version.

Let me review four advantages and benefits to all Canadians of a deficit elimination program. The first one is a smaller mortgage for the country of $580 billion versus $650 billion. That is significant. This means we would have affordable housing where we could start making interest and principal payments and over the term of 30 years pay off our debt. This is how we have to do it with our family homes.

Second, to balance the budget a full program of review would be required. It would allow the government to right size government operations. However it is not doing that. If it did a proper review instead of consulting special interest groups across the country, government departments would have to recommit to the good programs; decentralize some programs to eliminate duplication of services, thereby lowering costs; privatize some corporations which are better served by the private sector; and eliminate programs that on a priorized basis we either do not need or cannot afford.

This would enable us to determine what amount of money we need to raise as a federal government. Then we could lower the taxes. There would be savings under the process. That is the benefit to Canadians, the biggest benefit of all. We would be leaving money in the hands of the people who earn it and know how to spend it better than the people who come into the House and lose their brain power.

Increasing the wage earner's disposable income would kickstart the economy and would continue to fuel the current economic recovery rather than hurt it. Following the Reform recommendations would restore pride not only in ourselves but in our government.

This is at a time when politicians and governments are coming under the closest scrutiny by taxpayers, by editorialists and by people who know the problem is overspending. If the government does not get its spending under control the politicians in this room will lose the faith of the people which will slowly erode our political system.

Another advantage to following the Reform recommendations is that we have a solution for the province of Quebec. Our home includes Quebec. It includes the opportunity to get the best deal we can in Confederation without breaking the country apart, without tearing at the guts of the economy and without going into all the uncertainties that separation so-called provides in opportunities for Quebecers.

It is a very touchy subject. National unity is very important and I believe in the Reform economic program of deficit elimination. That is the difference between our proposal and the Liberals' so-called tough talk. It is all talk and no action. They are not solving the problems. They are just adding gasoline to the fire when trying to put it out. By increasing the debt they are hurting us. By increasing the debt they are increasing our problems.

We say we should get to a balanced budget within three years. There would be no more deficit annually. We would have a fixed debt or mortgage on the country. Then we could start addressing the amount of money spent, start creating a surplus and start making principal and interest payments on the home of which we are all so proud. We want everybody to continue to share the

benefits, but we cannot continue to do it with borrowed money and more borrowed money and adding to the debt.

The Liberal government should listen. We have been constructive. We have given it advice on where to cut and how to cut over a three-year period, and not in one year like it accuses us. Governments members like to play politics and we like to offer constructive solutions. It is time for the Reform type of house.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I thank the hon. member for his comments. Throughout listening to him I was mystified because he talked about specifics and the need to be specific. I did not hear him give one concrete proposal on where to cut government spending.

I wonder if the hon. member would come across and be clean about it. His arguments are sound but let us talk about something specific. Let us talk about the cost of operating the civil service. We have a combination of federal and provincial government employees amounting to about 886,000 people. The Canadian Federation of Independent Business tells us that on average they are paid something like 20 per cent higher than similar private sector wage earners.

What is the member's proposal to deal with that kind of problem? Does he propose laying off civil service workers? What is his concrete proposal?

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, as I said in my speech, this is what the Liberal government is doing. It is playing games. It is playing politics. All it wants to do is talk, and no action.

The member for Durham stands and asks for specifics. If he were paying attention in the House instead of having his nose buried in the red book, still trying to find out what he promised during the election, he would know that on Friday last week we filed in the standing committee a report of 25 specific cost cutting measures that would benefit the country and Parliament if the Liberal government were so wise as to listen to us, take what we suggest and implement it.

We have been very specific. To go through that in the time allotted to me in questions and comments would be repetitive. As the Prime Minister likes to tell us, read the red book. It is there. I would like to suggest to the member for Durham, read the report of the Standing Committee on Finance on budgetary policy that has been submitted by my colleagues. He will see that we have been very specific.

On the other item, getting specific about the public service sector, is that what the government is worried about, what the government employees in the bureaucracy are going to think of it, that it is not going to get re-elected, that it is not going to get votes? This is what we are sick and tired of in this country. That is trivial.

In addressing the public sector the amount of money is trivial compared with the overall problem of this country and the billions we waste in direct subsidies to businesses and the billions we waste on foreign aid.

In the one minute left to me, I would like to make one more comment. If we get our government spending under control we could then take a look at that abomination called the Income Tax Act and we could introduce a flat tax that would have a single rate for businesses and corporations. There is a member of the government who has made that suggestion. That government is so ignorant of the solutions for this country it will not even listen to that member. I am disappointed.

[The Acting Speaker (Mr. Kilger)]

Clearly the member for Calgary Centre underestimated how much time he had left because I have time to give another question, this time to the hon. member for Saint-Hyacinthe-Bagot.

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

Mr. Speaker, there are people here who are indulging in petty politics, and I am referring to the Reform Party. The Reform Party distorts all the proposals made by the Bloc Quebecois, which were about cutting the fat from government operations, the recovery by the federal government of $8 billion worth of accounts receivable classified as bad debts, which the Auditor General mentioned last week, and cutting into the $3.3 billion worth of subsidies to corporations. You never hear the Reform Party talk about that. Do you know why? Because they are both judge and jury. They have a vested interest.

There is a question I would like to ask them. I will read them something in English, because I think it is significant, and I will then do a proper translation. I would like to ask them whether they agree with an ad that appeared last week, which I found with the help of Léo-Paul Lauzon, the well-known tax expert. It says more or less the following in English, if you will excuse my heavy accent:

"Fiscal loss to sell. Our client, a cosmetic distributor, has important fiscal loss and he is looking for a buyer who is interested in using this fiscal deduction. Please call the following number".

Do you agree with this practice?

Is that why they will not look at the tax treatment of corporations, why they will not consider raising taxes, why they will not consider improvements so that everyone, individuals, corporations and SMEs, does their share? If their minds are closed to such suggestions, then they are doing the petty politicking, and they have no interest in the future of Canada, although they claim otherwise. They are doing the grand standing, in other words.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, we are very definitely interested in helping Canadians solve their problems. The difference between the Bloc Quebecois and the Reform Party is, after having worked with the hon. member in the Department of Finance, that when it comes to cuts it does not want to touch or look at social program spending whatsoever. That is a sacred trust to the Bloc Quebecois. It does not want to reduce one dollar of spending in that area. That represents 67 per cent of its overall budget. If it does not address its complete budget and only makes cuts out of the remainder of the 33 per cent, it is limited to how much it can cut. Social spending has to be addressed as the Liberal government has proposed in its grey book. It is important to discuss and it is important to do something about it.

The difference is that we are prepared to look at social program review and recommend some cuts but the Bloc is not. When it comes to taxation we say no increases in taxes. It says there is room for tax increases, go after the family trust, go after the RRSPs, go after all those wealthy people in our society and that will solve the problem. Those are the differences.

[Gar Knutson, Liberal, Elgin—Norfolk, ON]

Mr. Speaker, let me begin by saying that I agree with my colleagues in their concern for the debt and deficit. The deficit has reached a crisis proportion. I also agree with their concern for children.

I believe that we must move urgently to balance the budget but we must not use the budget crisis to deal with other pressing problems.

I commend the government for its commitment to lower the deficit to 3 per cent of GDP within three years of taking office. Believing that this goal is achievable, I also urge the government to move to balancing the budget in as short a time as is reasonably possible thereafter.

Some people ask why is the debt a problem. Annual interest on the debt is $44 billion; that is $44 billion that we do not have to spend on education, industrial infrastructure, research and a host of other important programs. Just as serious for more subtle reasons is the fact that the debt drives up interest rates for everyone.

Because of the size of our debt international lenders demand and receive a risk premium to hedge against a potential drop in the value of the Canadian dollar. This risk premium or extra cost affects the whole market for money and the cost for borrowing consequently is reflected in it. Consumers, homeowners, students and all other borrowers also pay this premium.

The size of our debt makes our nation extremely sensitive to a rise in interest rates in the United States. Canada is forced to pay a premium over American rates in order to attract foreign capital. When rates go up in the United States we have no choice but to raise them in Canada. Thus our sovereignty has been severely curtailed as we lose control over our monetary policy.

We are hampered from finding made in Canada solutions to Canadian problems. Losing control over our economic house diminishes our nation and everyone in it. All we can do is hope that international forces co-operate with our deficit reduction program.

Furthermore, as bad as our situation is now, it will be much worse if we do not act now with discipline and resolve.

Having outlined my views on the seriousness of the problem, I would now like to address the solution. The following remarks can be entitled a good way to balance the budget versus a bad way to balance the budget. Everyone agrees that government should cut waste. Cutting waste is a good way to contribute to balancing the budget. More often than not waste is designed right into programs and as such is not so readily apparent.

For example, the coast guard, Transport Canada and fisheries and oceans maintain separate fleets with overlapping duties. My own riding of Elgin-Norfolk covers approximately 100 miles of Lake Erie shoreline. One of the harbours in Port Stanley is operated well by Transport Canada. The other smaller harbours are managed by small craft harbours of fisheries and oceans. These harbours are often neglected due to shortage of funds. Regardless, we have two sets of bureaucrats managing a similar resource side by side. I would like to suggest that a single authority could manage the Lake Erie shoreline, do a better job and do it cheaper.

The military has recently been highlighted as having some waste. In the past this waste was designed in as we kept bases open only for political need rather than serving military purposes. While this is starting to change we need to go further to identity waste.

We spend large sums of money on high tech advanced equipment such as the CF-18. The CF-18 is not used in peacekeeping but would be used in the unlikely event of the breakout of world war III or as a token contribution to a gulf war like crisis.

Canada is currently the 12th largest military spender in the world. I believe we can cut military spending and find a large peace dividend, all the while maintaining our contribution to peacekeeping and our security needs.

The reserves offer great potential for a cheaper alternative to CF-18s and other high tech expensive weapons. In my riding the Elgin regiments have contributed nine people to the army who are now currently serving in Bosnia. These young men offer skill and commitment that represent a great value for dollar as citizen soldiers. Unfortunately the reserves often appear to be under equipped and generally under resourced.

I would now like to speak for a short while on tax policy. I accept as a given the government's apparent indication that a general tax increase is not in the cards. Certainly the middle class of this country will not tolerate a general tax increase. However, I need to point out that within this country there is a great inequity of income. The top 20 per cent of income earners receive over 44 per cent of national income annually while the bottom 20 per cent have approximately 2.7 per cent of national income. It is within this context that fairness in tax policy needs to be considered. There is nothing contradictory in fair taxation and deficit reduction. An increase in taxes on the top 20 per cent of income earners in this country I believe would entirely appropriate at the current time.

Furthermore, the government should look at tax expenditures. The government forgoes $860 million by not taxing lottery winnings. This should be changed. The marriage credit costs over $1 billion. The government should design it so that it benefits the lower and middle class primarily.

RRSPs have received considerable attention lately. My own view is that the annual contribution rate should be limited to $9,000 with corresponding change to private pension plans.

The people in my riding have just come through the worst recession since the 1930s. Very few of them can even consider saving $9,000 a year to put into an RRSP. The benefits of RRSP contributions fall most favourably on the rich, those within the highest marginal tax rates. This by itself is unfair. Without change to the current law the contribution limits are set to rise to $15,000 annually. This limit will have little benefit to the factory worker or the farmer in Elgin-Norfolk.

Lowering the limit will raise government revenue by an estimated $750 million to $1 billion annually. It will also restore in small part fairness and integrity to the tax system.

As we work toward a balanced budget there may be instances when for very good reasons spending more, not less, on a program is entirely appropriate. I would like to recommend that the government treat child poverty as an urgent crisis that requires more resources, not fewer, nor even a freeze. This may appear like a contradiction. I would like to assure the House that it is not.

The government has said that it needs to find over $6 billion in annual cuts within the next two years to meet its target to balance the budget and another $30 billion to $35 billion in increased revenue or decrease in expenditures. Within this context how difficult can it be to find an extra billion dollars for hungry Canadian children?

The Department of Human Resources Development has produced a supplementary paper to its green paper that outlines as an option an enhanced child tax benefit that would raise the benefit to $2,500 per child and be clawed back starting for incomes of $15,000 and dropping to zero for family incomes at $55,000. The cost of this program would be approximately $1 billion.

I would like to remind the House with the greatest respect that all Canadians are not participating in the recovery, nor are they likely to. If the government does not play a fair role in redistributing income this recovery will drive a wider wedge between the well off and the disadvantaged. Families that cannot compete in a quickly changing, knowledge based economy will be unemployed and their children will suffer the worst of the consequences.

In absolute terms over 1.2 million Canadian children, nearly 20 per cent of the child population, live in poverty in this country today. In most cases their parents are working. Even worse, in some provinces one-quarter to one-third of all children are poor. This is an obscenity. Even in times of cutbacks the issue needs to be addressed. The consequences of child poverty need to be addressed just as the consequence of the deficit need to be addressed.

Poor children are often poorly nourished. The Canadian Institute of Child Health states that without adequate nutrition children will suffer from stunted growth, intellectual impairment and a variety of infectious diseases. They will put an extra burden on health care and on prisons as they grow up.

To sum up, I agree with my colleagues that the debt and the deficit are serious problems. So too are a host of other problems and the one I have identified most significantly is child poverty. That is why I ask everyone in this House to join with me and ask the government for an increase in the child tax benefit and for some real solutions for child poverty.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I would have liked to hear my colleague opposite talk a little about unemployment insurance contributions. We know very well that last year the Liberal government increased contributions from $4.20 to $4.30 per $100 for employers, and from $3 to $3.07 for employees. This is money which is taken out of the market and that could create jobs instead of helping the unemployed.

Moreover, the proposed reform will cut $5.5 billion from unemployment insurance over three years. So, contributions were increased and spending is being cut by $5.5 billion.

Here is my question: What will happen with all that? What will happen to the unemployed? Is it just a matter of transferring people from the unemployment roll to the welfare roll, thereby putting the burden on the provinces which will have to carry those welfare costs by themselves?

[Gar Knutson, Liberal, Elgin—Norfolk, ON]

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

First I would point out that the UI program as with every government program has to be sustainable. I would suggest that a program that has grown from an expenditure of roughly $4 billion to over $18 billion in the space of 10 years is not sustainable. That is one of the reasons why the UI program needed to be reformed.

The other reason it needed to be reformed was that it did not do a very good job in terms of helping people get back to work. Consequently that is why the Minister of Human Resources Development announced or started his social policy review.

I think the issue of unemployment insurance needs to go hand in hand with the concept that the best social security is for someone to have a job. That is why we need to spend more money on training and that sort of thing and perhaps less on benefits.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I would like to ask the member who just gave his presentation a question.

Earlier today during statements by members one Liberal member indicated that the Reform's recommendation of $20 billion to $22 billion in cuts over three years is too draconian. The member following the presentation by my colleague from Lethbridge asked whether the severity or size of the cuts that the Reform is suggesting would hurt the economy.

The finance minister of the Liberal government said he is looking for $9.5 billion in cuts over two years. That is an average of $4.5 billion. We are recommending $7 billion a year over three years. The difference is $2.5 billion per year. Ours represents a 1 per cent reduction per year on the rate of the GDP.

I would ask the member if he thinks our cuts are severe. Are we really just debating over $2.5 billion per year? If so, what about the question in reverse. Does he not think $4.5 billion a year is too severe and too draconian from that side of the House?

[Gar Knutson, Liberal, Elgin—Norfolk, ON]

Mr. Speaker, I understand the question. I think the debate between the Reform Party and the Liberal Party is not only on the size of the cuts but where they are made. I do not want to underestimate the impact of that debate.

My understanding of the numbers is the finance minister is looking for roughly a little over $3 billion to meet his targets for the following February and an additional over $3 billion for a total of six. I may not have a proper understanding of that but I did not think it was nine. I thought it was slightly over six.

Whether it is $6 billion or $9 billion I agree that we need to make our target of 3 per cent of GDP within three years and some people are going to be hurt by that. I know the member did listen but I would like to remind him of what I said. I think some of the money should be found from a tax increase. I think it is outrageous when the top 20 per cent of income earners in this country are getting 44 per cent of the income while the bottom 20 per cent only get 2.7 per cent. It is patently outrageous. It is unfair and it is wrong.

I do not think we need a $15,000 annual limit on RRSPs. This limit helps people with an annual marginal tax rate of 50 per cent and that is the well off.

[Warren Allmand, Liberal, Notre-Dame-De-Grâce, QC]

Mr. Speaker, this debate is part of the process leading to the budget expected in February 1995 and in consequence we must presume that no specific measures have yet been decided by the government.

In scheduling this debate the government is asking us what direction the budget should take and what have Canadians been telling us about budgetary matters. Consequently I will make my remarks in that spirit, that nothing has been specifically decided, that budget policy is still open.

It is understood of course that the government intends to pursue the principles set out in the red book, to take the two-track approach, the first track being jobs and growth and the second track being deficit or debt reduction. In this respect, Mr. Speaker, the government as you know published several policy discussion papers. As part of its jobs and growth agenda it published the famous green book "Improving Social Security in Canada". Then it published two others. One is "A New Framework for Economic Policy" known as the purple book and "Creating a Healthy Fiscal Climate" known as the grey book.

It has asked two committees to undertake consultations with Canadians, the finance committee on the last two and the human resources development committee on the other. Both will report to the House before the budget. I have to make clear that the two are very closely interrelated. One of the goals of the social

security review is to decide whether our present social programs are affordable.

The three goals mentioned in that document for the social security review are fairness, effectiveness and affordability. It is this question of affordability which links the social security review to the economic and fiscal questions and to the budgetary review.

I want to take this opportunity to state categorically, and I am speaking on my own, that our traditional social programs are affordable. They are not the cause of the deficit. They certainly need improvement. Inadequacies must be corrected, but they should not be cut. They must be improved and in some cases expanded.

In this respect the discussion papers are sometimes ambiguous. For example this one is entitled "Improving Social Security in Canada". On the other hand it questions the affordability of those programs. As I said, our social programs are not the cause of our deficit. They are not the cause of our national debt.

Most of our social programs were started in the post-war forties, fifties and sixties and were built during that period. During that period we had one of the strongest economic growths in Canadian history. As we built our social programs during those decades, we attracted very strong capital private investment. It is the same with other advanced countries. We must take note that the countries with the strongest economies, the highest standards of living, and the highest quality of life have also the strongest and best social programs: Germany, Holland, Sweden, Canada, Japan.

The fact that they built those strong social programs did not deter economic growth and investment in their countries. Nor did they cause the economies to go into decline once those countries brought in these strong and very important social programs.

I have been listening to the Reform Party members. I believe that if we did what they suggested we would bankrupt this country. Not only would they not solve the deficit problem, they would drive the country and send it in exactly the opposite direction. We would end up a third world impoverished country. There would be a few rich people. If we did what they suggest, we would not solve the deficit. We would drive the country into almost a third world status.

The causes of our deficit have not been the social programs, but have been on the other hand the general weaknesses in our economy, high interest rates, unplanned structural change, unplanned globalization, monopolistic practices and unfair taxation-a lot of tax is not being paid that should be paid-and several others.

In the red book we said that the Conservative Party was obsessed by the deficit.

I want to refer to some of the things we said in the red book. At page 10 we said: "Without a doubt one of the greatest failings of the Conservative government has been the tendency to focus obsessively on one problem, such as the deficit, without understanding or caring about the consequences of their policies in other areas such as lost jobs, increased poverty and dependence on social assistance. Social costs are real".

At page 85 in the red book we said: "Conservative government decisions to cut social programs were made without acknowledging the effect these cuts could have on crime rates. Access to health care, housing, jobs and training is essential if crime is to be prevented".

We said on page 20 of our red book: "The goal of deficit reduction would be to cut the deficit to 3 per cent of gross domestic product by the end of the third year in office". We said: "In doing that expenditure reductions will be achieved by cancelling unnecessary programs, streamlining processes, eliminating duplication, and doing that in partnership with provincial governments".

We gave some examples of the things we would cut. We started off in the right way. We said we would cancel the helicopters, reduce national defence spending, reduce the $4.1 billion consulting and professional services budget, reduce grants to businesses, reduce the size and budget of cabinet ministers' offices and the Prime Minister's office. Nothing about social programs in there. On the contrary, in chapter 5 of the red book we said that they should be strengthened and improved.

At the very worst the social security review should be revenue neutral. If we really mean to improve the programs the review should not be a means of attacking the deficit. That is not what we said in the red book, that is not what we said in the campaign.

So far the government has been good in honouring the commitments to the red book. It should not forget what it said in that red book about social programs and the deficit.

It is interesting to note that not all but many of the businessmen who say we cannot afford such things as pensions, health care, day care, training, post-secondary education, unemployment insurance, a living wage for those who cannot work, day after day try to convince us to buy, to buy, to buy, more cars, more cameras, more TVs, more holidays, pet food, jewellery, camcorders, cigarettes and liquor, with more and more credit cards and no down payment. Obviously they either think we can afford those things or they do not care.

Is there not something wrong with a society where we are closing hospitals and schools, where there are more people living on the streets, where the gap between the rich and the poor

is growing, when at the same time the business sector is pressuring or encouraging us to buy more and more goods which really are not in any way as important as the things I have just mentioned. More yo-yos and less hospital care.

Those who talk about waste in government sell us products with built-in obsolescence so that after three or four years we have to buy more and more again. That is waste. That is real waste.

The whole question about affordability must be looked at in a much broader context as to what this country can afford. Can we afford more and more consumer goods that do not really count in our lives or can we afford better hospitals, better schools, better training, better pensions, making sure people are not living on the streets and that people who want to work can work?

In conclusion, if the government wants the views of MPs and their constituents this is what I am trying to deliver today. I had a townhall meeting in Montreal just last week. What I am telling you today is what these people told me at that townhall meeting. Cut the deficit, yes, certainly cut the deficit, but do it as we said we would do it in the red book, not by cutting social programs. We do not want the status quo. We have to improve things, we have to make our social programs more effective and better, but do not cut them. Do not cut the deficit on the backs of the middle class and the poor.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Beam me up, Scotty. Mr. Speaker, the hon. member for Notre-Dame-de-Grâce says he wants to cut the deficit all right but in doing so he is going to ignore the 63 per cent of our budgetary expenditures that are used in transfers. Then he makes this gigantic leap and says that all the cuts that would be made in those would be made on the backs of the poor. I have news for him. There is more money taken out of social programs by the middle class, including the upper middle class, than there is by the poor. He can read that in the statistics in his own reports.

I give the hon. member some credit for telling us that the programs work great as long as there is strong economic growth. That is what we have been saying all along but we cannot continue to throw money out the door with abandon when we have a weak economy.

Let us not say that these programs have never caused any economic decline in countries that have had them. Look at Sweden. Sweden has hit the wall economically. I have personal knowledge of that from people I am dealing with who are trying to get past immigration into Canada because there are no jobs in Sweden any more. Sweden is worse off than we are.

If as the hon. member suggests the deficit is not as great a problem as we Reformers suggest, I find it passing curious that the Liberals have accepted their half-hearted attempts at deficit reduction. Either we have a problem or we do not. Let us be consistent. Let us decide what we are saying here.

Finally, there is one part of his dissertation which I did find a little bit offensive. He said the government and taxation are not to blame for the deficit or government overspending. It is all those evil, ordinary little people who insist on wasting their money on consumer goods when mother government could spend it so much more wisely on their behalf.

I would like to hear the hon. member's response to my comments.

[Warren Allmand, Liberal, Notre-Dame-De-Grâce, QC]

Mr. Speaker, the hon. member has mentioned several points and I will try to deal with them all.

First, I did mention the middle class. I said not to cut the deficit on the backs of the middle class and the poor. That is what would be done if we seriously cut social programs.

Second, I did not say that the deficit was not a problem. It is a problem but deficits can be attacked in two ways. You can attack deficits by increasing revenue, by strengthening your economy and by putting people to work, or by cutting out programs.

A family that has debt problems can take their kids out of school, can sell the family car, their house and tools. They can probably reduce their debt that way, or they can go out and work harder and increase their revenue. By doing it the first way, they might end up getting rid of their debt but they would be in a serious situation of poverty.

I am suggesting that the second way be used. That is the way we said we would do it in the red book. We would do it by putting the emphasis on economic growth and jobs, by putting people back to work so that instead of collecting money from the government on unemployment insurance and welfare they are paying taxes. Yes, the deficit is a problem, but we do not attack it especially by cutting social programs.

The member referred to countries like Sweden. Since when is the cause of the recession in Sweden due to social programs? There have been social programs for a long time in Sweden, Germany and many other countries as we have had in Canada and they did not have the unemployment problems they have today. The unemployment problem they have today is due to many of the same things that I said were problems in Canada: increased interest rates, globalization, unplanned structural change, a lot of things like that, but not the social programs.

That is where Reform Party members make a serious mistake. They blame everything on the social programs. We had good social programs in Canada throughout the 1950s and 1960s and we did not have the problem we have today. The cause of the

problem we have today is not the social programs, it is other things.

The final point he raised is an important one. He says that I am criticizing the poor consumer because the consumer might want to buy consumer goods instead of spending money on things like health care and education.

There are certain things that are important for nations which nations can only provide for together as a people through their governments. The people decide together that they want to do that. A long time ago we decided to have free public education in Canada up to grade 12. I do not know, maybe the Reform Party would like to reject that and go back to private education.

There are certain things such as hospitalization, medicare, social welfare programs, public education, environmental programs, public highways and the justice system that can only be done by the public sector. If we ignore the public sector and simply put too much money into the private sector we have private sector spending but the country falls apart because we do not have the social capital and infrastructure needed to compete with Europe, Japan and countries in other parts of the world.

[The Acting Speaker (Mr. Kilger)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Bourassa-Immigration; the hon. member for Chicoutimi-Railway Transportation; the hon. member for Yukon-Health Care.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, to start with, allow me to thank my colleague from Saint-Hyacinthe for giving me the opportunity to speak today.

Of course, it will come as no surprise that I am going to deal with the financial aspect of the issue, particularly as it relates to native people. I just listened carefully to my colleague from Notre-Dame-de-Grâce, and I was pleasantly surprised. For us, it was a breath of fresh air to hear such a discourse, especially following his colleague from Bonaventure-Îles-de-la-Madeleine, whose stand was quite the opposite.

I do hope that what the member for Notre-Dame-de-Grâce suggested will have precedence in cabinet. I hope that this point of view will be adopted by the Liberal government. But judging from the various views expressed so far, sadly, my colleague from Notre-Dame-de-Grâce may well be the exception.

At any rate, I too have perused the red book. We all do, do we not, inevitably? This book is supposed to provide guidance as to the intentions of this government while it is in power. The thing about this red book that is noteworthy is that it embodied a fundamental principle from the very outset, and that is the principle of equity. It was clearly stated in this book that this government would not forget the underprivileged, but all we hear about these days, with the forthcoming ministerial social program reform in particular, seams to indicate and lead us to anticipate the worst for the underprivileged. Yet I do hope this will not materialize.

I just mentioned the principle of equity set out in the red book. But recently, certain lead ministers have indicated in their remarks that it was more a matter of fighting the deficit. We will soon be in a deficit and debt fighting mode, hence our fear that the underprivileged will be made, unfortunately, to foot the bill. Now, I am listening to what this government is telling us and I cannot help but be reminded that this is the government that was responsible for starting this national debt spiral in the years 1976, 1977, 1978.

I reviewed the facts carefully. As a matter of fact, the Prime Minister was the Minister of Finance at the time, and when he was the Minister of Finance, in 1977-I looked up the figures-the deficit grew from $3.3 billion in 1976 to $7 billion in 1977, when he became the Minister of Finance. It more than doubled. And the following year, the current Prime Minister, as Minister of Finance, brought down estimates indicating that the debt would reach $10 billion in 1978.

You can see that the debt spiral was instigated by the Liberals, who were however very quick to blame the previous Conservative government for it. But if you look at the situation since 1985, you can see that it is the debt and the interest on the national debt that have driven the deficit spiral.

I think that the Liberals can also blame themselves for this. I wish to respond to the comments made by my colleague from Bonaventure-Îles-de-la-Madeleine. I hope that he is now listening to me on the parliamentary channel. I do not agree at all with his statement that Canada has functioned admirably for 125 years. My findings are totally different.

It started off on the wrong foot with the Act of Union. We think that things started going downhill when the Act of Union uniting Upper and Lower Canada merged Upper Canada's debts with Lower Canada's sound management. Why are we in 16th place in terms of competitiveness when we used to be among the top five?

Why are we down in last place among G-7 countries? He keeps talking about the prestigious G-7. We should not forget that we are the poor relations of the G-7. How much overlap and duplication do we have and how much is it costing us every year? Very conservative reports now estimate that overlap is costing us up to $3 billion a year because the federal and provincial governments are continuously short-circuiting each other.

We are told that Quebecers' debt rate, I must point this out, is much lower than that of other Canadians. Quebec government management is in much better shape than federal government management. That is recognized by everyone.

As for the consistently higher unemployment rate, the Gaspé region, among others, is a typical example. The Gaspé is probably among the Quebec regions with the highest unemployment rates. Why is the unemployment rate in Quebec always higher than the Canadian average? I say that the system does not work and that as soon as Quebec gets hold of all the tools, I can assure you that its unemployment rate will fall substantially and compare favourably with countries that are much more advanced that the one we are now a part of.

I would like to add that the First Nations are concerned, and for the reasons I just enumerated. They think that this government will really go after the poorest people and hit the poor and middle classes in this society; if Canada has a class of poor people, it is certainly the First Nations.

Not only social programs, which are a sort of safety net for them, are endangered. In a few moments, I will tell you how we must get out of this trap. It is probably not by always giving the native people more social programs and making them more dependent; it is quite the opposite, as I will explain shortly. They are concerned not only with threatened cuts in the Department of Indian Affairs but also about other departments that have specific programs for the First Nations.

Take the Department of Health, for example, which has an annual budget of about $900 million for the First Nations. So clearly, if cuts are made in health, the First Nations will be affected and if there is a class of people in Canada who do not need to be affected by such cuts, it is certainly the First Nations.

It is the same in the Department of Industry and Commerce. This department has specific programs for the First Nations and so there is a danger that the economic development proposals of that department will make the First Nations even more deprived than they are now. Parts of other departments, such as Canadian Heritage, are concerned with Indian affairs.

In any case, we must realize that any cuts affecting the First Nations would be disastrous for them since they are considered to be Canada's Third World.

Although the government congratulates itself on having increased contributions to the First Nations by 119 per cent since 1983, the figures show that the money spent was already provided for in treaties, a point which is often made by the First Nations, and I think that they are right on that. Our predecessors signed a dozen treaties with the native people in Canada and these treaties required the government to provide some services and compensation; today, the commitments made then must be honoured by the government.

I remind you of the social contract of that time, because something incorrect is being put forward now to the effect that the government is trying to keep the First Nations under its wing.

It has often been said that First Nations people were all lazy. However, the social contract of the time was not about that at all. It basically said that the government would take 99 per cent of the land belonging to First Nations, and relocate these people on the one per cent left. The government would also develop all the resources. You will see later, in the proposals I am making, which are also those of the First Nations, a desire for better sharing as well as for putting an end to this paternalistic attitude and this dependency.

Here are some interesting figures. Native families receive about $7,480 yearly. Considering this annual income of $7,480, my earlier reference to third world people was not an exaggeration.

If you take the Canadian economy as a whole, it is very difficult for a family to make ends meet on $7,480 per year. In fact, this is unacceptable in today's society. Our society prides itself on having the best quality of life in the world, but if you take a close look at the situation of the First Nations and the poor in this country, you will notice an increasing gap between those who have money and those who do not. I believe that the First Nations are the real poor in Canada and in Quebec.

They have a very high degree of dependency, as confirmed last week by the Auditor General. Indeed, 43 per cent of natives are completely dependent on the government. The unemployment rate is seldom below 30 per cent. I visited some reserves where it was somewhere between 60 and 70 per cent. The only people who had jobs were those who were employed by band councils and were paid with money provided by the federal government. Except for these people, the others are totally relying on the government, not by choice, but because they find themselves in the ultimate situation of dependency and isolatin. They cannot get out of it under the present Indian Act. I will explain later how it would be possible to do so.

Over a period of ten years, the number of native people aged 19 increased 80 per cent; it did so in a situation of dependency, in the field of education among others. This situation puts enormous pressure on the education system.

I frequently receive First Nations people in my office who tell me that they cannot pay for the education of some children on these reserves, because they simply do not have the money to do that. They do not have the money, because the population under 19 years of age is growing at such a fast pace that the budgets cannot keep up. So, we will be faced with a problem not only in the education and health sectors, but in all the activities affecting our First Nations.

The rate of the native population growth has been increasing regularly since 1983 and has now reached 60 per cent, twice the rate of population growth for all of Canada. So, it is normal that the budgets will be getting increasingly tighter and more difficult to manage. The youth population is growing at such a breathtaking pace that young Natives cannot attend school and receive the same education that any other Canadian can enjoy.

Housing is also a problem. We addressed this issue last week during the debate on a private member's motion. Right now, we are 40,000 housing units short in all of Canada. This whole situation, as I said last week, was decried by the Auditor General, according to whom health and education related costs are staggering and sky-high, because these people live in undesirable and unhealthy conditions.

In fact, the Committee on Aboriginal Affairs, and I will come back to this issue later, stated in 1992 that 50 per cent of all housing units on reserves were practically unfit to live in. So, the housing policy needs to be reexamined. Unfortunately, it is not being reviewed. We are always told that there is the deficit and the budget is tight, but in the meantime people continue to live in crowded housing. The houses are inadequate and do not respect the Indian culture, but what is worse is that you can find up to four generations living under the same roof, as I have seen for myself. I think that is unacceptable in our society.

Budget decrease for native programs and services.

We know that the answer, and I am getting around to it, as I promised earlier, is for aboriginal people to take responsibility for their own affairs through more self-government and jointly administered programs, for instance. Normally, the government provides special allowances for aboriginal people so they can prepare their negotiations.

However, there has been a 7 per cent decline in the amounts allocated under these programs over the past few years. We have a situation where aboriginal people have to negotiate with a party that can afford the best lawyers and the best consultants. The federal government comes to the negotiating table in a position of strength, and the First Nations who want to face this impressive federal adversary are told: "Listen, we cannot subsidize your preparations for the negotiating process. You will have to make the best of it". I think the situation is even being used as a way to get a cheaper deal in negotiations with First Nations. I think that is also unacceptable.

I discussed at length the relative decline in subsidies for aboriginal housing. Of course, health problems, especially in connection with housing, are pretty obvious. As I said earlier, the Auditor General has been critical of the situation on many occasions. So that is not the answer.

What can we say about the participation of aboriginal people in the Canadian economy? So far, there has been a policy of exclusion. Only one statistic has gone up: welfare payments. In fact, that is something Quebec has criticized on many occasions. We represent 25 per cent of Canada's economy through our taxes and we never get the equivalent back, except in the form of welfare or unemployment insurance. We do not think that is the answer.

The answer to providing for the future of the first nations is not to tell them: "Here is unemployment insurance. Do what you can. That is all we are prepared to do". Obviously, a society based on joblessness and unemployment insurance is not a society that bodes well for the future, and I think we will have to change our approach here.

There is a better way to invest this money. But how? Probably through self-government. We have had a few examples in the Yukon. We had examples with the Sahtu Tribal Council in the Northwest Territories. Probably the first example we had in Canada was the James Bay agreement. If we look at the living conditions of the Cree in Northern Quebec today, I think there is probably not a single first nation in Canada that has reached the degree of economic development we see here, where the Cree have become quite wealthy, although I agree, they are not riding around in Mercedes.

In any case, a Mercedes would not be very useful on a Cree reserve. They would be better off with a snowmobile. In any case, compared with other first nations in Canada, these people would probably be the first to agree that the James Bay agreement was a model of its kind and that self-government gave them the tools for their economic development. This is proof that self-government is the way to go.

If I look at my Quebec counterpart, who is the Premier, since he is dealing himself with aboriginal affairs, he is also contemplating a new way of doing things: joint management. I talked about it earlier. At one point in time in the history of Canada and Quebec, we told these people: "Go live on a small piece of land, and of course it was often an unwanted piece of land, and we will pay for all the costs".

As of now, the Quebec government is thinking about a different approach, that of joint management. Therefore, in Quebec, probably with a bigger land base in mind, they will examine the possibility for these people to get part of the royalties for natural resources, among other things.

This is an example where not only native people will have a responsibility towards natural resources, but they will also have the opportunity to create their own wealth and give work to their

own people. Putting people to work is very important because it promotes pride. The right to work is there for everyone in Canada and Quebec and it should also exist for First Nations.

There are a few solutions. For example, the Minister of Finance says that everybody will have to participate in the effort.

I look at people of Third World countries and native people of Canada and Quebec and I say they have one thing in common, their despair. Some situations are absolutely outrageous. I said it before and gave a few examples, but I have others right here. Inadequate housing. I spoke at length about housing, but allow me to mention that overcrowding is 16 times higher for native people than for Canadians in general. The infant mortality rate is four times higher. The suicide rate among young people is six times higher. Life expectancy is eight years shorter for natives than for other Canadians.

The imprisonment rate is astronomical. In a given city where natives may represent 5 per cent of the population, you will find that as much as 25 or 30 per cent of the inmate population is aboriginal. That is an enormous problem. There are also problems of alcoholism and drug addiction. Finally, we can realize that, for the First Nations, the solution no longer lies in dependency, but that does not justify the minister in making all kinds of cuts there. It does justify maintaining the amounts going towards their safety net, such as social programs, and directing these amounts towards self-government and resource distribution.

Once again, I thank my colleague from Saint-Hyacinthe-Bagot for giving me the opportunity to speak on behalf of the aboriginal nations.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I noticed how you listened carefully to the description that my colleague from Saint-Jean just gave about native people. It needs no comments. With his statistics on their housing, health and education problems, he gave a very real picture of the situation. Of course, we realized then that unemployment was very high. Here again, we see that the reforms about to be introduced always go after the same people-the unemployed and the poor.

It is hard to ask a question following such a presentation. I will simply ask the hon. member for Notre-Dame-de-Grâce, who made a very impressive presentation that also struck me, to convey, besides the message he sent earlier, this message about native people to his Liberal caucus and to Cabinet. Given the presentation we just heard, I am sure that he will be able to make this reality sink in and that he will be listened to carefully by his caucus.

[The Acting Speaker (Mr. Kilger)]

Before resuming debate I want to verify whether there are any more questions or comments to the hon. member. I must advise the House that following the intervention from the official opposition the next group of eligible speakers would be from the government side. If someone rises from the government side he or she will partake in debate. Then of course we will continue and refer to the opposite side of the House.

[Yvan Bernier, Bloc, Gaspé, QC]

Mr. Speaker, I thank you for giving me the floor. I cannot help it if I am also interested in the native issue. I may have been faster on my feet than the government members. People in this chamber will draw their own conclusion.

The point I would like to raise today for the benefit of the finance minister, and I would like the member for Saint-Jean to comment on this, is the appalling situation of the native people that my colleague referred to. These people have their pride.

They said so to the committee on fisheries and oceans. They want the tools that would enable them to help themselves. My colleague for Saint-Jean pointed out their appalling situation but, on the other hand, the native people are asking us, in other committees, to give them the tools to help themselves.

I know that my colleague also met some First Nations regarding this issue. I would like to hear his comments on this. I know that it is difficult to settle this matter. Right now, I have no authority to do it, but the minister opposite does.

However, I would like my colleague for Saint-Jean to describe, first, how native people could help themselves in the fisheries area.

Second, he mentioned that the average native family income was $7,480. I would like to hear more about this. I know that, last week, the member for Saint-Jean asked the minister a question, but the minister did not say when nor how the situation will be remedied.

The cost of food in remote areas was also mentioned. I do not know if my colleague has more information on this topic, but I would like him to ask the government some pointed questions on this subject.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I would like to thank my colleague for giving me this opportunity to explain how we might be able to deal with the issue of fisheries, which is typical.

I think that the problem with the Minister of Indian Affairs and Northern Development or the Minister of Fisheries and Oceans, is that they decide on programs here, in Ottawa, without ever going in the field to see how these programs are experi-

enced, to see the level of poverty the aboriginal people live in. Were they to do so they would find that aboriginal people often have the solution to their problems. Decisions are taken in Ottawa, but the solution is self-government. We have to give aboriginal peoples the opportunity to take matters into their own hands, to develop windows of opportunity which will pull them out of the dependency they have been kept in for 125 years.

They were always told: "Do not worry, we will give you money". That does not solve the problems. The government committed itself to some movement in this area, but I am anxious to see how they are going to switch from talk to action.

In the Far North, another very good example mentioned by my colleague, the minister said last week that he had reached his objective, he had made me 60 per cent federalist on the issue of financing in the Far North. I know, Mr. Speaker, at 2.15 p.m. it is Question Period, not Answer Period. Still, I would have liked a more accurate answer. I know that the federal government spends $14 million in the Far North, but the grocery basket is still double what we pay here. The costs are twice what they are here, but the salaries are probably about half.

I went to Iqaluit and I made a speech on food distribution in the Far North. I took Madam the Acting Speaker shopping in the Northern Store in Iqaluit. I made a note of the prices. The pack of three one-litre bags of milk was $12, while here it costs only $5 or $6 and we earn twice as much as they do.

There are solutions and they all involve self-government of aboriginal people. The Bloc Quebecois will support any government initiative in this regard. I join the hon. member for Chicoutimi in urging the hon. member for Notre-Dame-de-Grâce to promote this idea among government members. We must not alter social programs, especially not social programs geared to native people.

[Susan Whelan, Liberal, Parliamentary Secretary to Minister of National Revenue]

Mr. Speaker, the motion we are debating today reads: "That this House take note of the opinions expressed by Canadians on the budgetary policy of the government". The reason we are having this debate is because of the foresight of the Minister of Finance who in his February 1994 budget launched the most extensive prebudget consultations in the history of the country for the 1995 budget.

In unveiling a new economic framework for the government known as the purple book on October 17 the Minister of Finance has identified five key areas: improving skills; adjusting to change; making government more productive; providing economic leadership; and getting the nation's finances in order.

The finance minister also released a second paper known as the grey book on October 18. It outlines the current state of federal finances fulfilling a 1994 budget commitment. The finance minister has made available to all Canadians through the offices of their MPs copies of a workbook prepared by the Canadian Foundation for Economic Education. This is a national non-partisan, non-profit organization with a history of efforts to promote economic understanding among Canadians.

According to the preface of the booklet the goal of the workbook is: "to provide you with background information that might be useful as you consider the issues and options that face Canada. We have tried to clarify the government's views so that you can decide whether you agree or disagree with the government".

The workbook poses questions such as: what should be priority areas for cuts; which government services should direct users pay a larger share; how can we deal with potential effects on other levels of government; and what is the right balance between cutting spending and raising more revenues.

The finance minister will not be able to read all the responses submitted but he will read a representative sample and a summary report of all the responses. As well, all responses will be reviewed by a team of officials in the department that will pass on to the minister any that are exceptional or unique. I encourage all Canadians to take the time to work through the book.

To support the minister's efforts the House of Commons finance committee has also travelled across Canada to listen to Canadians' proposals. In my riding I held a prebudget consultation meeting in order that the views of the constituents of Essex-Windsor could be submitted to the finance committee. I will be holding a second prebudget consultation meeting on Tuesday, January 17 in Essex, Ontario at 7 p.m. in the county council chambers to allow my constituents another opportunity to participate in the prebudget consultations and to respond to the finance committee's report.

In my opinion there are basically four things that can be done to address the national debt when considering a national budget. First, total government revenues can increase as a result of economic growth. Growth in sales and in income generate more tax revenues. Second, total government expenses can decrease due to economic growth. For example if more people are working and fewer people are collecting unemployment insurance or welfare then government expenses decrease. Third, total government revenues can be increased by changes in tax policy. Tax rates can be increased and more items can be taxed. Fourth, total government expenses can be reduced by cutting government spending.

Two years ago the current finance minister, then the finance critic for the Liberal Party, addressed these four points by arguing that there are only two tracks that can be followed to

tackle the national debt. The first track is to stimulate economic growth which increases revenues and decreases expenditures. The second track is to reduce government spending and/or increase taxes.

The minister correctly argued that to deal with the national debt government would have to address both tracks. The reason the former government's fiscal plan did not work is that it concentrated on the second track, increasing taxes and cutting programs while economic policies pushed the country into a recession which led to a reduction in economic growth. The end result was that the deficit remained relatively untouched.

In order to prepare for this debate I held a prebudget consultation session in LaSalle, Ontario. As well I have received hundreds of letters on the budget. I would like to report to the House the views expressed. I want my constituents to know I may not agree with all the suggestions but nevertheless I think it is important that they be reported. The proposals put forward by the constituents of Essex-Windsor at that meeting fall into the four categories outlined above and they do address both tracks.

To increase revenues and decrease expenditures through economic growth my constituents suggested that money needs to be spent in research and development to ensure growth in jobs and to ensure current jobs. They also suggested that eliminating RRSPs will hurt Canadian businesses as investments in stocks and mutual funds will be made offshore. This in turn will lead to slower economic growth.

They thought that taxing health benefits may be counterproductive. If people opt out of health plans then they will be sicker when they seek treatment. This will increase the cost of health care as more people are hospitalized and hospitalized longer. They also thought that cutbacks on health care can lead to increased health care costs in the long run. For example, in funding on education and research for AIDS, every person in which AIDS is prevented by education saves $100,000 in health care costs.

They also thought that we should be negotiating with the civil service. Federal employees account for only a small part of the government's budget. A result of the cuts has been poor morale which has not led to more efficient service. An efficient public service is also required to produce economic growth.

To tackle the national debt through changes in tax policy, constituents had a considerable number of suggestions. They suggested that RRSPs should not be eliminated as not only do they shelter income but they are responsible ways for planning for retirement. Responsible retirement planning will save the government money in the long run.

They also thought the government should eliminate the business entertainment tax deduction and that it should focus more on the underground economy as a source of revenue.

They thought that banks should pay higher taxes and that the GST problem should be fixed. They believed and were told when it was introduced that it was supposed to generate revenues to pay down the national debt. They also want the government to collect outstanding taxes. They believe that Canada's tax system should be reformed.

Most of the recommendations made dealt with the fourth option, when drawing up a budget in the face of such a large government debt: where and where not to cut. The constituents of Essex-Windsor made the following suggestions. We could reform MPs pensions, eliminate double dipping in the public service, reduce government overlap, allow legislation of whistle blowing so the waste of public resources can be reported, and eliminate the Federal Business Development Bank. A federal employee suggested looking at reducing the civil servant forced benefit package instead of reducing the number of federal employees. They want to reform Canada's social security programs.

Many of the items my constituents raised are ones this government is addressing. I would like to take a moment to address those. I started off my statement today by noting that the finance minister believes that we follow both tracks to tackle the problem of the deficit and the national debt. The minister's first budget demonstrates that belief and as a result of that the economy is growing.

Canada's economic performance in recent months has been very encouraging. I will repeat what I stated earlier today. There is real growth at 6.4 per cent in the second quarter, far outstripping the performance of any other G-7 country. Retail sales are up in the third quarter and up 7.8 per cent over last year. Real exports are up 5.6 per cent in the third quarter which is a record level and the fastest growth since 1983.

Employment is up by 307,000 jobs since January and these are all full time jobs. Employment growth in recent months has been the most rapid in almost six years. The unemployment rate has fallen from 11.4 per cent in January to 10 per cent in October. The help wanted index is up 2.1 per cent in October and stands 16.5 per cent above the pre-election level.

This economic growth pays dividends and has helped reduce the deficit. Over April to August the deficit is $4.5 billion lower than in the same period in 1993-94. Furthermore, it is results like these that lead the IMF to project that Canada will have the strongest growth in output and the highest rate of growth in employment in all the G-7 economies in both 1994 and 1995.

Another suggestion made at my LaSalle meeting was that the business entertainment tax deduction should be eliminated. It should be noted that the government's last budget reduced this

deduction from 80 per cent to 50 per cent. It also suggested that government revenues should be increased by clamping down on the underground economy.

In terms of the underground economy it is important to note that 95 per cent of all taxes are paid voluntarily. However, enforcement activities are also expected to add $3.8 billion to tax assessed in the fiscal year 1994-95. Revenue Canada's underground economy initiative alone will result in $750 million in additional taxes assessed before the fiscal year is over.

Another point raised by constituents dealt with the question of uncollected taxes. It should be noted that this money does not represent an untapped source of funds for the government to apply against the deficit.

As I told the Canadian Tax Foundation's annual meeting on November 23, 1994, these moneys will be collected with interest except where there are legitimate reasons to adjust the assessment such as additional information provided by the taxpayer or an error in the original assessment.

As I noted above, constituents suggested reducing government duplication and reforming social security as two means of addressing the deficit. The government is currently reviewing both social security and all government programs to ensure the most productive and efficient services for Canadians.

In addition to holding a consultation meeting, I also receive hundreds of letters from constituents in my riding offering their suggestions and comments. Two resounding themes were heard over and over ahead: first, that governments must cut spending; second, that painful measures that are implemented must be fair, equitable and not betray former trusts or commitments that governments made to Canadians.

On the first theme, there is recognition and an understanding that the debt and deficit must be reduced. Canadians understand that our total provincial and federal debt is approximately $700 billion. Furthermore, they recognize that if we want to pay off all our debt, both federal and provincial today, we would need more than $24,000 for every man, woman and child in Canada.

This figure is ominous, as well it should be. To further put it into perspective, they realize that interest costs on our federal debt alone are rising by $85,000 per minute. Last year, more Canadian tax dollars were used to pay interest on the debt than were spent on any other area, more than was spent on health care, welfare or programs for seniors, far more than was spent to run the entire federal government.

We spent $38 billion in interest payments on the debt. In comparison, we spent and paid $7.6 billion in UI transfers and $19.9 billion in transfers for seniors. Furthermore, our net foreign indebtedness is 44 per cent of our gross domestic product. It is the highest of all the G-7 countries. Italy comes second at 11.6 per cent and United States foreign debt is 8.7 per cent of GDP.

The workbook released by the Canadian Foundation for Economic Education states our problems best. In 1993-94, our deficit was virtually all interest payments, $38 billion of a $42 billion deficit. In 1994-95, this current fiscal year, our entire deficit will be due to interest payments on a debt. If things persist we will leave the next generation and future generations an extraordinary burden, a burden that would likely guarantee they experience a lower standard of living than those who preceded them and incurred the debt. It will be like leaving a mortgage still to be paid but no house to show for it.

A resounding theme that permeated from the numerous letters I received from my constituents was a plea to reduce government spending. So grave is the problem that many in their letters wrote: "I have never written a letter to any member of Parliament before but I feel it is necessary that representatives in government realize that we have had enough taxes and ask that spending be reduced co-operatively with the provinces".

One of my constituents could not have expressed the problem clearer. He wrote: "I am pleading with you to understand that new taxes are not the solution. Please reduce government spending drastically. If I am not making enough money to live the way I want to, it is up to me to come up with more money or change my lifestyle. That is my responsibility. I expect the government to change its spending style".

Another constituents wrote: "In hard times we do not have to give money away so freely. We should not give interest groups handouts at the drop of a hat. If all this nonsense was cut off we could probably do away with the GST. That money was supposed to pay off the debt and nobody seems to know where this money goes".

The second theme was the belief that painful measures that are implemented must be fair, equitable and not betray former trusts or commitments that governments made to Canadians. Along this line I received hundreds of letters on the issue of RRSPs. The message was: "When RRSPs were introduced, the government promised us that we would be taxed in the future when we used that money. Now I am shocked that you are considering breaking this commitment we both made to our combined future".

Further expanding on this theme the president of the Windsor-Essex County chapter of the Canadian Association of Retired Persons, known as CARP, stated: "Historically governments have encouraged Canadians to save for their retirement by investing in RRSPs. This has not only provided a tax deferral on earned income but has also allowed these contributions to grow tax free until such time as the funds were withdrawn. Now that millions of Canadians are using this investment strategy it would be a serious breach of trust to now start taxing RRSP contributions and earned interest prior to withdrawal".

The possible taxation of dental plans was also expressed as a matter of treating all people fairly. One constituent wrote: "Dental plans definitely assist individuals and families to visit dental offices on a regular basis for preventive dental procedures and dental treatment when required. To tax dental plan benefits would result in less net income for my family and myself because I have a dental insurance plan. I think that is unfair. I am sure that many people like myself will have to consider whether to continue their dental plan and be taxed or discontinue their dental plan and not be taxed. Without my dental plan I know my dental health will suffer but I remain unconvinced that this tax will provide the economic impact that the government is banking on. Don't betray a trust. Don't tax health".

Sustainable economic growth can only be achieved through solid planning and real productivity and growth. In the purple book the minister stated that productivity growth is the foundation of economic progress and must therefore be the primary focus of economic policy. A more productive economy is the only dependable route to more and better jobs for Canadians.

Research and development can assist in this goal. Between 1974 and 1993 employment in industries which use high technology grew almost three times as fast as in those that use low technology. It is estimated that almost half of the new jobs that are likely to be created during this decade will require more than 16 years of formal education and training combined. Government must maintain research and development in all areas.

Especially in my area one area of concern that has been brought to my attention is agricultural research and development. Without the agricultural research and development in my area, for example, Essex county would not have several flourishing wineries as it does today. It is important that we continue to promote such research and development.

In conclusion, these prebudget consultations have offered my constituents a forum for expressing their opinions and concerns. In summarizing their statements today the two recurring themes are that we need balance and we need fairness in the cuts which we make. That in my opinion is the answer. The 1995 budget must be fair for all Canadians. Only then will it be accepted.

[Jean H. Leroux, Bloc, Shefford, QC]

Mr. Speaker, I have listened to the hon. government member with great interest and I would like to tell her that the deficit we are currently experiencing was initially caused by the Liberals in previous years and then fed by this deficit caused by the Conservatives. So, the two old parties are equally responsible for the economic disaster we are now faced with.

The member delivered a speech fit for the Canadian Club or an audience of scholars at a university. Now I think that the House of Commons is a place where things have to be put in pragmatic and practical terms. Her speech was packed with lip service, with pious wishes as to what the government could do. However, the people do not want to know what the government could do, but rather what it will do to resolve the problem. That is what matters. Any member of this House can rise and say fine words that do not add up to much and I was very disappointed.

The people of Canada and Quebec expect from government that it take its responsibilities, but we have been denied this from day one by the government across the way.

We will recall, Mr. Speaker, that at the time the red book came out, we were supposed to be able to find all the answers in it. As it turns out, after all these consultations and delays, this government is no further ahead than it was a year ago, the reason being that it does not know what to do. It keeps delaying and delaying and delaying. The people of Canada want answers now.

The problem is that in the 1970s, this Liberal government took steps to distribute wealth, which in itself was very commendable, but now, it is distributing the deficit. I would like my hon. colleague to tell me how the government intends to distribute the deficit, all the while ensuring that the underprivileged, the poor and the middle class will not be targeted as the ones having to pay the greatest part of this deficit.