Mr. Speaker, before going on to my speech as such, I cannot help answering the Liberal member who just concluded by saying that we should be a "Bloc Canadien"-what a slogan. Maybe he should take the time to think about why we are proposing sovereignty for Quebec and why we were elected and realize that it is probably in the best interest of Quebec and Canada.
I would like him to take just a few minutes to think about it and see what kind of partnership there could be in future and maybe then he would start thinking more positively about it. Now, to reassure him, I entered politics for two reasons. Of course, I wanted to help Quebec fulfil its rightful destiny as a sovereign country, but I also wanted to improve the government's finances.
It is not true that we will continue to go deeper into debt year after year, because whatever happens on the political front, we must improve the government's finances in the short term. The Minister of Finance has not done much about it in the past year. When he presents his next budget, I expect him to rise in this House and say, "We have achieved our forecast; we will end the year with a deficit of $39.5 billion". And then you will see his colleagues rise and give him a tremendous ovation.
They will be proud to have such a high deficit, although the deficit was $41 billion last year and only the surplus in the unemployment insurance fund has made it possible for them to reduce the deficit this year, and by so little, $2 billion, just from the UI fund. Those people will be happy, they will be proud, they will feel like they are in control of the nation's finances.
To give an idea of the size of the problem, let us talk about the OECD. You know, the OECD compiles statistics. It is not the Bloc Quebecois but a very reputable economic organization and I want to give you some statistics from the OECD. You know, it is not true that we can explain what is going on here by saying that it is happening throughout the world. That is not true.
Canada's indebtedness is much greater than other countries'. I tell you that the net debt is rising much faster here.
Between 1985 and 1993, the ratio of the net debt over the GDP for the governments of OECD members, that is 15 countries including the G-7 nations, increased by 22 per cent. This is already pretty serious. However, for Canada, the increase for the same period was 77 per cent. I can just hear the Liberals say "There you go; this is what the Conservatives did". Well, let us look at another statistic. The national debt essentially increased between 1970 and 1985. If we use the same indicator again, that is the ratio of the deficit over the GDP, we went from a surplus of 0.3 per cent in 1970, to a deficit of 8.7 per cent in 1985, at the end of the Liberal government years.
This was an unprecedented high which has not been equalled since. Now that the Liberal Party is back in office, its Minister of Finance launches an unprecedented consultation exercise to say that the government will hit hard. That consultation might be something new, but the message conveyed is certainly nothing new. In the two years preceding the arrival of the current finance minister on the scene, his predecessors said the same thing, only to end up with timid measures in the budget itself.
For all sorts of reasons, people are skeptical about the minister announcing this year the cuts which he intends to make to reach his objectives. Indeed, there is such a thing as a political context and the government must show that the federal regime is good and that it benefits every Quebecer. Consequently, the Minister of Finance will once again only announce timid measures to slightly reduce the deficit.
But wait until after the referendum. This is when the major cuts will be made. Last Friday, I listened with great interest to the finance minister, who was Jean-Luc Mongrain's guest on his very popular program in Quebec. The Minister of Finance, who looked very serious and deeply concerned by the magnitude of the deficit, said: "This time, Mr. Mongrain, we have no choice and nobody will be spared". I will come back to this "nobody will be spared" later.
Now, all of a sudden, he says that we must reduce the deficit in order to improve the employment situation. He is saying the exact opposite of what his party promised during the election campaign. I must admit that I have not followed, day in and day out, all the statements made by the Liberals, but I seem to remember what the public has remembered, and that is the slogan they used and the fact that they were always talking about "jobs, jobs, jobs". They assured us that job creation would restore dignity. They have now found out that they must first deal with the deficit, and that will help to improve employment.
That sounds like what the Conservatives used to say. That is what the Minister of Finance used to say, and since the Minister of Finance is still at the helm, whether he is Liberal or Conservative does not change anything, the statements are all the same and Paul Martin, as Minister of Finance, is making the same old statements. Nothing has changed, except maybe for the colour of the cover page. He now tells us that, yes, these are the measures the government has to take.
The same thing goes for the monetary policy. It is amazing to see how members change their minds when they change sides in this House. The Liberals ferociously criticized the monetary policy put forward by the Conservatives, but now that they are in office, they keep quiet on this issue. They keep going in the same direction as their predecessors; all they have changed is the director, the Governor of the Bank of Canada, to replace him by someone who thinks alike.
Some experts, including Pierre Fortin, an economist at UQAM whom a Liberal member quoted extensively earlier, have told the finance committee that the government still has some leeway to toy with the short-term interest rates. The inflation rate is low, very low, in Canada, and the difference between the rates in Canada and the United States is still relatively high, compared to what it could be. Inflation is beginning to be felt a little more in the United States.
But we keep following the same restrictive monetary policy. Worse, we are now being told that both policies, the monetary policy and the fiscal policy, will be restrictive. This monetary policy, and especially the short-term interest rates, give you something to think about. But now they have gone back to their offices at the Department of Finance, and that is it.
Earlier, a Liberal member said, and this is typical, that economic growth would take care of everything. There is something fundamentally wrong about this reasoning. The figures we get from their own Department of Finance tell us that 80 per cent of the current deficit is due to structural problems. The structural unemployment rate is 8.5 per cent. This means that even with strong economic growth, the current deficit cannot be reduced by more than 20 per cent and the unemployment rate cannot be brought below the 8.5 per cent mark.
As far as structural problems are concerned, and I will get back to this later before I finish, the World Competitiveness Report provided some interesting information on Canada's competitive position and contained references to structural problems. I agree, these are complex issues which are not easy
to explain, but the people who are running the government should understand.
Here again, we see very little change from the previous government. So what is happening as far as the next budget is concerned?
I would like to comment briefly on the prebudget consultations. I was involved from the very beginning. I went on the tour of the Western provinces, and I wonder who was talking to whom. These prebudget consultations were planned some time ago, but the groups that appeared before the committee were informed only two or three days ahead of time. They appeared at the last minute and apologized, saying they had been invited on very short notice. How come? This was supposed to be the widest ranging consultation in the history of the Department of Finance, and people hardly knew about it. They were unable to make a good presentation, because they were pressed for time.
At this time of the year, the next budget is already at an advanced stage. One wonders how significant the committee's contribution can be, when we consider that from today onward, every day is almost a whole day too late. There will be a postponement until December 7. It could have been much later, but there definitely was pressure not to go any later than December 7.
I will now discuss the feelers put out by the Minister of Finance concerning RRSPs. It is incredible the kind of concern we are now seeing about RRSPs. All options were open, when I put the question to the minister on a number of occasions here in the House. Did he intend to tax capital accumulated in RRSPs? Reduce the maximum annual contribution? The total accumulated contributions? Not a word. The door is wide open.
One of Canada's weak points as far as its competitive position is concerned is its level of savings. In your first course in macroeconomics, you learn that one of the key variables that generate investment is savings. When you buy an RRSP, this is money you save which is then reinvested. If the Minister of Finance wants to play around with the savings of Canadians which are already very limited, we are not going in the right direction.
That is the signal he is giving people for next year. People will be concerned when it comes time to contribute to their RRSP. They will say to people who want to sell them RRSPs: "Yes, but if I put the money in, you say that it is a good vehicle, because it helps us improve our tax planning and defer paying taxes on our income until we are retired. But now, I am not so sure, because there are rumours the Minister of Finance is going to tamper with that". Even if he does not do it in the February budget, we have no guarantee he will not do so the year after. He should send a clear message to the public that he will not tamper with this vehicle and that it would be useless for him to do so. All he would be doing is siphon money out of retirement funds. At the present time we are borrowing, but this would drive us to borrow even more in the future.
What is going to happen when these people retire if there is less money in their retirement funds? What is going to happen? It will be a disaster. It is a very strange reasoning, especially when one considers that family trusts can defer paying any capital gains tax until the death of the last beneficiary, that is to say for 80 years if we limit ourselves to normal life expectancy. We are told: "No, we are not considering actualization every 21 years, as it was done previously. No, it is out of the question, it would be bad for the economy. It would serve no purpose". Yet, the government wants to impose it on individuals, middle-income taxpayers. They are told: "We are going to tax your future income right away".
There is a great lack of consistency there. This is a very skewed reasoning which will have to be explained. Of course, the government keeps the door open by saying: "Yes, we did not do it, but wait for the next budget. This is not too serious". We could have healthy consultations if people knew where we were heading. At present, everything is open, in any direction. It is not necessarily a bad thing to open everything for review, but when we look at the papers that the minister publishes, we see very strange things. Take fiscal spending for example, tax credits for charitable donations are considered almost like wasteful fiscal spending, when they are actually very good for the economy. They actually reduce the amount the government would otherwise have to pay. Expenses are only dealt with in terms of personal income taxes, not corporate taxes.
I would like to present a few statistics illustrating the depth of the challenge facing us since cuts are so often mentioned.
Let us have a look at the distribution of the population in terms of income brackets. This is based on income tax returns. About 20 million taxpayers file a return. It is rather shocking to see that 50 per cent of the population has an annual income of $20,000 or less; 50 per cent. If you go up to $25,000, you find that 60 per cent of the population has an income of $25,000 or less.
To balance the budget and bring the deficit under control, that means $2,000 for each and every person. Twenty million taxpayers at $2,000 equal $40 billion. Of course we could take the economic growth into account. However, we must keep one thing in mind, the interest on the debt is increasing because we are going deeper into debt. Every year, we must pay more interest. Economic growth allows us to generate additional revenues to pay increasing interests.
Now we are told that we must bring this problem under control, so the government targets the middle of the pyramid or the bottom half, where 60 per cent of the population is.
Cutting expenditures may affect everybody in pretty much the same way. But proportionally, it is those with an income of $25,000 or less who are going to be hit the hardest. You can see
right away that, if this is the way the government decides to go, it is going to be impossible, inhumane.
What is the alternative? Why not target the top of the pyramid? The middle class is not part of this picture yet, but if you want to go higher, you will find that 20 to 30 per cent of the population is in the $25,000 to $55,000 bracket. Right away, you can see what a huge challenge this is going to be; reduced spending alone will not be enough. We should take a look at fiscal expenditures. Now you should see how hard it is to get information. It is complex, it affects the economy, it hurts, whereas it does not hurt to attack the underprivileged, to cut benefits paid to the unemployed. They do not consume goods and services, therefore they do not contribute to the economy in the eyes of that party. Only the rich contribute to the economy. That is the myth. And the Reform Party is in total agreement. They think alike on this issue. They think that the rich drive the economy, not the middle class. This is a terrible thought.