Debates of Nov. 30th, 1994

Budgetary Policy

[Yvan Bernier, Bloc, Gaspé, QC]

Mr. Speaker, I listened to the comments by the deputy whip. I wish to draw my colleague's attention to a point: she talked about the finance minister's budget, about the red book's objective of 3 per cent of GDP. She repeated what people in her riding told her. I would like to remind her that someone in my riding said that the Liberal Party's objective of 3 per cent of GDP was like being in a sinking ship and worrying about peeling paint.

With this comparison in mind, my question to my colleague is this: What does she think of the lifeline thrown by Premier Jacques Parizeau regarding areas of overlap? There are firm proposals on manpower training, so that we can make rational use of your surplus public servants. What do you think of transferring job training to the provinces? That is a nice lifeline.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, my colleague knows full well that we are carrying out a full review of federal government programs and how we deliver them to Canadians. One of the goals of our review is certainly to identify duplication and overlap and reduce problems in this area, because it is indeed a form of waste when two levels of government deal with the same problems and programs.

Although my approach to the division of responsibilities would be different from that of my colleague, we are certainly trying, in co-operation with all the provinces in the country, to rationalize services in order to reduce overlap and duplication.

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, I would like to ask my hon. colleague her definition of the relationship between the increasing debt load and the level of employment. If there is such a relationship in her mind, how is it affected by the fact that the target of 3 per cent really does not eliminate the debt load? It is increasing the debt load.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, there are members in this House who have different levels of private wealth or income. I represent people who earn different levels of income. The ability to borrow, the kind of mortgage you can carry and afford depends on your income and wealth. It is the same with a country. That is why we have chosen to express our debt and deficit target in terms of the GNP, which is the wealth of the nation.

Obviously if you have an income of $100,000 you can afford a different kind of mortgage and can afford to borrow and pay more for a car than if you have an income of $20,000. It is that simple. That is why linking what is an appropriate target for reduction of debt and deficit to the GDP is a proper way of doing it.

I will answer the question, but not quite in the way I think the member wanted an answer. I believe very firmly that in large measure the debt and deficit have risen because of our declining level of employment in this country. It has been increased by major steps over several decades. Clearly if there are 10 people contributing to paying for a project, it is more expensive for each one of those 10 than if there are 20 people contributing to pay for the same project.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, unlike my colleagues, I am not too pleased to speak on Motion No. 17, because for me it is a waste of time. This motion is mainly about tabling a committee report. Imagine the time we take while people, taxpayers, Canadians are worried and unemployed and have no solutions. What Canadians and Quebecers want is a government that acts, a government that will present programs and do things to put people back to work and give them some pride. That is what Canadians expect of us.

Excuse me, Mr. Speaker. I forgot to tell you at the beginning that I was sharing my time with my colleague.

In the present economic situation, of course, the debt is $150 billion-everyone says so and condemns it. Everyone knows the cuts that could be made when preparing a shopping list but no one ever makes them. We are not presented with anything to do it. When facing such an economic situation, of course they want to hide and above all they want to avoid debating the government's finances.

Why? I ask you why they want to avoid this debate. It is time. The people have been consulted. It is time to come up with something.

Are we ashamed of the budgetary policies that they want to bring in to control the deficit? Are they ashamed to apply them? Of course I would be ashamed to hold phony pre-budget consultations, if my budget strategy, already established in

advance, was to reduce the deficit on the backs of the poor, welfare recipients, the unemployed and especially students and to slash transfers to the provinces. This is what the Liberal government wants to do, but it does not dare to put it on the table for discussion. It holds phony consultations. It wants to limit debate so as not to make too many waves.

The government set a target for deficit reduction of $39.7 billion. This same government also says that a change of policy is needed to put its finances back in order. This government's budget policy has three main thrusts: economic recovery, attacking the poor and cutting transfers to the provinces, as I shall explain.

On the subject of economic recovery, the Minister of Finance says that 80 per cent of the federal deficit is structural. The fact that it is structural means that the deficit has nothing to do with the current economic conditions, or with the unemployed. Contrary to what this government thinks, Quebecers and Canadians are faced with a structural unemployment problem and they are not out of work by choice.

The Liberals sincerely believe that a large proportion of jobless people are lazy and are unemployed by choice. The Liberals also think that they will stimulate employment by forcing many unemployed individuals to look, and I emphasize the word look, for work. Yet, jobless people constantly come to our constituency offices to find out about programs. But these programs are in a state of chaos. Employment centres cannot keep up with the demand for work. The fact is that our unemployed are energetic and more than willing to work. It is the structure which is at fault.

The government's policy consists in targeting the poor by making cuts in social programs. The government wants to cut $7.5 billion in the budget allocated to these programs. However, it will not eliminate the deficit by targeting the poor. Instead of making thoughtless cuts through their social program reform, the Liberals should define clear and specific objectives, and they should also develop a job-creation policy, as they promised they would in their red book and during the last election campaign. They have failed miserably on this one. Indeed, they only managed to create a few temporary jobs through the infrastructure program.

The Liberal government also wants to reduce the deficit by making unilateral cuts, with no compensation, in transfer payments to the provinces. The Minister of Finance is once again passing the buck to the provinces. The debt will not go away by depriving the provinces of $2.6 billion. Other solutions are needed to eliminate that debt, as well as the deficit.

The Minister of Finance keeps asking us for suggestions. We say that the time has come to eliminate duplication and overlapping with the provinces. Ottawa must withdraw from those sectors which fall under provincial jurisdiction, and it must compensate the provinces accordingly. Eliminating federal interference will translate into savings of $3 billion for Quebec alone. Moreover, Quebec would finally be able to devise its own integrated policy regarding job creation, a policy that would really answer the needs of Quebec men and women.

However, the Bloc Quebecois agrees with the Minister of Finance when he says that the deficit cannot be eliminated simply by cutting government spending. This is why we have made fair and equitable proposals that would lead to savings of $34.5 billion. These proposals should be taken seriously by the government, because they are far above the $25.6 billion savings that the government wants to realize at the expense of the neediest, mostly by cutting unemployment insurance and transfer payments to the provinces for education.

The Liberal government should draw up a budget which would focus on cuts in government spending and in subsidies to companies which do not undertake to create jobs, in its deficit reduction measures. Programs should be managed more efficiently, that is to say we should have sound management of business subsidies. We should stop giving money to companies which are neither productive nor competitive, money which is very often a form of patronage. We are talking about $3.3 billion here. It is high time that the minister and his government look squarely at the problem and stop dumping their problems on the provinces.

The red book promises jobs, and the Liberal government must adopt concrete job creation policies to bring us back to pre-recession employment levels. We need close to 825,000 new jobs, a far cry from the 45,000 temporary jobs they created during the past year. They still have a long way to go.

Let the government keep another one of its promises: not to raise taxes. To this end, the time has come to review certain tax loopholes enjoyed by high-income earners and big corporations. We all know in this House that family trusts, which are an important tool used in tax planning, are for the government a source of losses we can assess. According to some tax experts, they amount to several hundreds of millions of dollars.

The government has the tools to disclose the value of the assets in these trusts. Let the government tell us how much money is lost in tax revenues. This question was raised on several occasions in different committees. We never got an answer. But above all, let the government be true to its position when it was in the opposition, when it opposed delaying payment of taxes on capital gains until the death of the last beneficiary.

The finance minister and his government must come forward and say how they intend to deal with the nation's finances. Let them stop procrastinating and let us start tackling immediately one of the most pressing problems for our future, namely public

finance. This is the reason why the Bloc Quebecois is going to vote against the motion.

[Mac Harb, Liberal, Parliamentary Secretary to Minister of International Trade]

Mr. Speaker, I listened with great interest to the presentation made by my hon. colleague from the opposition. In his remarks, he attacks the federal government on the grounds that apparently, the federal government does not work in co-operation with the provinces.

In fact, this is exactly what this government is doing. With the Minister responsible for Intergovernmental Affairs, we are presently reviewing all federal programs to find out the best way of delivering these programs. If, for example, it turns out that the provinces are the ones in the best position to look after a given program, this program will be transferred to the provinces. If the most appropriate level of government is the municipal level, then the program will be transferred to the municipalities. That is how this program review works.

As for federal transfer payments, the problem we used to have in the past is that the provinces did not know from one year to the next how much they would be getting from the federal government. Our government has assured the provinces that arrangements will be negotiated to cover more than a year, at least five years, so that the provinces will know in advance how much they will receive from the federal government.

I can assure my colleague that, when he talks about education, whether the money comes from the federal, provincial or municipal government, the money all comes from the same place, out of the same taxpayers' pockets.

Social services programs do not require additional funding, but the system certainly needs to be simplified. Efficiency has to be improved and money spent more wisely, especially in education, where we spent $50 billion each year. This is more than in almost any other country in the world. All these programs must be assessed to ensure adequate program delivery. We must make sure that essential services, national services, remain national essential services. That is why a review is necessary.

If my colleague wants the federal government to introduce new programs, he is going to have to tell us where to get the money. However, the idea is not to turn off the tap, as our colleagues from the Reform Party are suggesting, and leave all existing programs as they are. How can one eliminate the deficit in this manner? They have yet to bring forth in this House a single proposal as to how they plan to eliminate the deficit within three years.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I will be brief. I am quite pleased with the comment that my colleague just made. He is ready to transfer programs to the provincial governments. They are analyzing them and want to disperse them either to the provincial or to the municipal level.

That is what Quebec has been asking for for a long time; that is what Quebec has been telling you for a long time, to eliminate duplication and return jurisdiction to Quebec and also to the other provinces. We quite agree on that.

Except that this government is not facing up to its responsibilities. Why? Because it is not making any decisions in this area. It is indecisive. Make some decisions and tell us what field of jurisdiction you want to return to Quebec and to the other provinces. That is what we want to do here.

The Liberal government should table a list of programs where overlapping is very expensive so that these programs can be administered directly by the provinces concerned. Do it and table it so that we can discuss it as soon as possible. Quebec could save $3.3 billion as a result. That is one reason we want a sovereign country.

[The Deputy Speaker]

Hon. members, before giving the floor to the member for Anjou-Rivière-des-Prairies, pursuant to Standing Order 38, I must inform the House of the questions to be raised tonight at the time of adjournment: the hon. member for The Battlefords-Meadow Lake-Northern Tax Allowance; the hon. member for Calgary Southeast-CRTC.

Resuming debate.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, for someone who did not feel like speaking to Motion No. 17, my hon. colleague from Chicoutimi has delivered quite a passionate speech.

I, for one, am pleased to speak to this motion, which I would like to read for the benefit of the Canadians who are listening to us. It reads as follows:

That this House take note of the opinions expressed by Canadians on the budgetary policy of the government and, notwithstanding the provisions of Standing Order 83.1, authorize the Standing Committee on Finance to make a report or reports thereon no later than December 7, 1994.

The committee was supposed to table this report on December 2. The motion under consideration asks us to authorize the committee to postpone this report until a later date. This will reduce the time allocated for consideration of this report. It is an old magic trick involving reducing the attention span of those who should be looking at this report, that is, the people of this country. This is one of the numerous magic tricks being used by the government to hide from citizens what they should see. Let me give you a specific example, a simple magic trick now being performed by the government.

We know how magic tricks are done in general. We know how they are performed but we still get fooled, so I will explain again for the benefit of the people. Magic tricks are always simple: the magician hides with the right hand what he wants to hide while moving his left hand to draw the public's attention. That is why people do not see what is really happening. What is the government holding in its right hand? Things that are totally amazing.

First of all, every year, the Auditor General of Canada tells us about the shameful waste of billions of taxpayers' dollars. Every year, it is the same story: we talk about it for two or three days before shelving these reports, then the cycle repeats itself.

There is also the issue of overlap, which my hon. colleague tackled just before me. The inefficiency cost of this overlap of federal and provincial programs was estimated at $3 billion per year in Quebec alone.

What lies under the right hand? Family trusts, where we find enormous amounts of tax-exempt money that the federal government refuses to disclose. There is no way to find out how much money is involved.

We also have tax havens. On this subject, in 1992, the Auditor General pointed out that many big companies had invested some $16 billion worth of profits in tax havens around the world, thus avoiding payment of their fair share of taxes. We are not talking about peanuts but about $16,000 million.

The right hand also hides smuggling rings whose traffic in cigarettes, alcohol, guns and drugs amounts to several billions of dollars every year. They are apparently unable to solve this problem.

Furthermore, the Auditor General has just told us about $6.6 billion in uncollected taxes.

Then there is the issue raised by the Liberal member for Gander-Grand Falls, who just wrote to the minister, to the effect that Canadian companies use a forward averaging provision to defer the payment of $40 billion in taxes.

In his letter, the hon. member also mentions that 1,200 companies with profits of over one million dollars do not pay taxes.

Then there is the Hibernia project. Huge amounts of money are poured into this project which will never be a profitable venture, and the government tries to keep that a secret.

There are also more mundane current issues such as the situation of CN's president, Mr. Paul Tellier.

Mr. Tellier, whose annual salary is $345,000 and who made cuts in CN services to streamline that corporation, received, on top of a $52,000 yearly allowance for petty expenses, an interest-free loan of $432,000 to buy a house, all this at taxpayers' expense. It goes without saying that Mr. Tellier's case is another issue which this government does not want to publicize too much. This is what the right hand is doing.

Then there is the case of Gary Anstey, which was discussed today and yesterday, during question period. After four months on the job, Mr. Anstey, who was executive assistant to the Minister of Fisheries, received a severance pay of $31,000. Mr. Anstey was rehired last month at a salary of $93,000 per year. He kept the severance pay, even though he voluntarily quit his job.

As you know, people who have a job and who voluntarily leave that job do not get any UI benefits. Yet, the executive assistant of the Minister of Fisheries got $31,000 from taxpayers. Fishermen in the Gaspe Peninsula certainly have the right to wonder who the real suckers are.

Then there is Operation William Tell, during which the Canadian Armed Forces had a good time in Florida, from October 10 to 23, 1994, with artillery pieces worth $395,000 each. Always in Florida; all this sun is good for the army. There is also a statement made by Mr. Yves Séguin, a prominent tax expert and a former minister in the Bourassa government, who said, not long ago: "In 48 hours, I would get $3 billion for the federal government by imposing a two per cent tax on shares".

Meanwhile, the left hand is getting a lot of exercise. They have to explain to the public what they are going to do to deal with the problem of our public finances which are, as you know, in a parlous state. It seems that the real problem in Canada, and the Prime Minister said so himself, is those beer drinkers slumped in front of their television sets, people who are totally unproductive. This includes all those unproductive people who lost their jobs at Hyundai, at CN, at CP, at MIL Davie in Lauzon, the refineries in Montreal, fishermen in the Gaspé who cannot go fishing any more because there are no fish, and miners who cannot go down into the mines because the money is being used to operate mines in Chile or somewhere else. So all these people are drinking beer in front of their TVs and that is where the cuts are going to be made.

They are going to traipse all over Canada, the MPs, the press, the media and they are going to ask people: "What do you think is the best way to cut these people's benefits?" They will cut unemployment insurance, cut welfare benefits, raise students' tuition fees, cut transfer payments to the provinces. They keep waving their left hand but never say what the right hand is doing.

Meanwhile, our social fabric is starting to unravel. People feel somewhat frustrated. So, as we saw yesterday in Toronto and as we saw not so long ago in western Canada, people are starting to fill the halls every time they organize meetings of committees on social programs. People are invading the halls and taking over the meetings from their members. They are saying: "Now you are going to listen to us". There is a basic feeling of frustration.

We also had students who demonstrated here on the Hill, at least 10,000 of them, and they told us they were not prepared to pay for the sins of others and pay the full shot, on top of that. These may not be huge demonstrations, but I may remind you, and you were probably there, that huge demonstrations are not necessarily the most effective ones. I remember an extraordinary demonstration held on Parliament Hill a few years ago, a demonstration by one person. This person went to the Prime Minister at the time, the Hon. Brian Mulroney, and told him: "If you touch our pensions, Brian, goodbye Charlie Brown!" That sent a shiver through the government. So I hope we will not be hearing that on the Hill.

Of course, some people are prepared to explain how this trick works, and they actually do that. There are at least two Liberal members, the hon. member for York South-Weston, for instance, who told us that for ten years they were in the opposition and they condemned what the Conservatives wanted to do, which was to cut the deficit at the expense of the most vulnerable. That is exactly what they are doing. I may remind you that the hon. member for York South-Weston is not a member of the Bloc Quebecois. He is a Liberal member. There was also the hon. member for Gander-Grand Falls, to whom I referred earlier, who at the end of his letter to the minister gave an excellent summary of our proposal, and he put it in these words: As you can see, you can get the billions you need simply by collecting taxes owing by the corporations that are making the biggest profits and do not pay taxes. That is also the position of the Bloc, and we will vote against the motion.

[Eleni Bakopanos, Liberal, Saint-Denis, QC]

Mr. Speaker, I am somewhat surprised to hear the Bloc, the opposition, say the same thing over and over. They keep saying that this deficit reduction effort will be at the expense of the disadvantaged, yet they have no positive alternative plan to reduce this deficit we are faced with.

I would have a question for the hon. member. I would like him to suggest some truly specific ways of bringing the deficit down to three per cent of the gross national product, as we have promised to do and the Minister of Finance fully intends to do. I would really like him to tell us how exactly, within our global budget, as relates to social programs in particular, we could manage to streamline this deficit we are struggling with at present.

[An hon. member]

We are all ears.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, I have just given a ten minute speech on the subject. I do not know if my hon. colleague paid close attention to what was said.

[An hon. member]

Of course I did.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Let me simply read this specific suggestion back to her, a suggestion coming from the Liberals themselves, from the hon. member for Gander-Grand Falls: go and get the $9 billion you need in the pockets of those who do not pay their taxes. Start there and see what will happen after that.

[The Deputy Speaker]

The hon. parliamentary secretary has 30 seconds to ask a question or make a comment.

[Mac Harb, Liberal, Parliamentary Secretary to Minister of International Trade]

Mr. Speaker, in my opinion, the hon. member did not answer my colleague's questions. We have put forth a proposal through the Minister of Human Resources Development, to receive feedback from the public. We would like to know what the Bloc has to suggest.

[The Deputy Speaker]

The hon. member has approximately 30 seconds to answer.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, here is a suggestion, the simplest one I can find in here: give us the exact amount, the exact current amount, of capital invested in family trusts in Canada.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, it is my pleasure to participate in this debate.

I intended to review some of the background of the consultation process but in view of the drift of the debate in the House I want to speak about specifics.

I would at least like to highlight some of the principles that the finance minister has articulated to the members of the House and to the Canadian public. He said that in approaching our budget for this year deficit reduction indeed is part of our overall strategy for jobs and for economic growth. He also stressed that fairness is paramount so that the most vulnerable in our society will not be left behind.

I think it is an extremely important part of the budgetary process to ensure that whether it is the social security review, the review of our social safety net, or whether indeed it is part of the budgetary measures, we are constantly going to focus on the needs of those who are most needy in our society first.

He also said that the deficit reduction must be selective and strategic, clearly reflecting our priorities. He said that budgetary action should weigh on the side of cuts in expenditures and not, and I stress not, on increased taxes.

Finally he said that the economic assumptions must be prudent to stimulate confidence so that our deficit targets would in fact be achieved. As you know, Mr. Speaker, a problem of former governments was setting targets that never were achieved.

I commend to all members and all Canadians the book Canada's Economy: What Past, What Future? This workbook which has been prepared by the Canadian Foundation for Economic Education is available to all Canadians in all public places; post offices, grocery stores, et cetera, and even through

their members of Parliament. I find, having gone through this a couple of times, that this is an excellent layman's language discussion on the kinds of issues that the government is addressing today in dealing with the challenges of balancing our budget over the coming years.

In the last couple of hours there has been quite a bit of discussion about whether or not the deficit should be eliminated in three years, whether it should be five years or whether it should be ever. These, as members well know, are the same discussions that went on during the last election campaign. I think that the Canadian people made their choice, a very clear choice.

Members may recall that the Conservative government proposed that it was going to eliminate the deficit in five years. The Reform Party said it would do it in three years. It was almost like a bidding war. The Prime Minister said during the election campaign that we have to be realistic, picking targets which are achievable within the time frames that are available to the government.

The Prime Minister made a commitment in his election platform that his government would achieve a deficit reduction strategy which would achieve 3 per cent of GDP by the end of the third year of the mandate. We are on target now. The minister has assured the House and Canadians that we will continue to introduce whatever changes are necessary to make sure that we stay on track and that we meet that target.

That means that by the end of the third year our deficit will reduce to some $25 billion. That is only an interim target. By the time that third year is over and we have hit that $25 billion target Canadians will have before them a further strategic plan for the next period to balance the budget for Canada.

Yet today the leader of the third party comes again to the House and reiterates: "We could do it in three years: We could slash that deficit".

I was at the finance committee when the Reform Party presented its program. I was astounded that of the $40 billion deficit the Reformers just said: "Here is our plan". They started off saying that $18 billion of the $40 billion deficit was going to be eliminated by economic growth. That has absolutely nothing to do with the Reform Party. It has to do with the initiatives that have been taken within our country to ensure that we stimulate economic growth in Canada. The Reform Party is somehow taking credit for some $18 billion reduction in the deficit.

The Reformers then went through a mathematical exercise to identify areas where they would cut. Not one explanation, not one rationale of how that would impact on the delivery of the services of those areas that they were going to cut; not one analysis or statement as to the impact on jobs for Canadians; indeed, not one indication of what that might do to the economic confidence that Canada has been developing over this period since the election.

The Prime Minister yesterday said in the House, and I quote: "If tomorrow we were to eliminate the deficit, $42 billion to zero, there would be a huge recession in Canada. The wise thing is to do it in a progressive way". I think that is the fundamental difference between the approach of the Reform Party and of this government, that we do have to keep control, we have to keep things in perspective.

I want to move on because I know that my time is very short. I want to share with Canadians a few facts which I think they may find interesting as they go through their assessment of where we are and the kinds of things that we should do. One of the key areas in which Canada would like to make progress and our budget would intend, and indeed our social security review, is to help Canadians to acquire skills. We have to help Canadians acquire skills to get jobs, to keep jobs and to find better jobs.

As Canadians know there has been much debate and much discussion about potential cuts in funding for post-secondary education. I want to share some figures.

Last year there was a 19 per cent growth in jobs for those who had a post-secondary education. At the same time there was a 17 per cent decrease in jobs for those who did not have a post-secondary education.

All of the experts say that over the next decade 45 per cent of all new jobs will require a post-secondary education. The government has included these facts, figures and initiatives in its priorities because our young people who are now in school must be given every incentive and opportunity to continue their education. We do not want them to be sitting on the curb watching the rest of Canadians go by.

During the 1990 to 1993 period, 190,000 jobs were lost during the recession. However, if we look very carefully at how that is composed, we find that 640,000 jobs were lost for Canadians who had a high school education or less. Offsetting that, 450,000 jobs were gained during the recession by those who had a post-secondary education. I think that indicates to all Canadians how important that education component is in terms of our overall strategy for Canada in the coming years.

The next area I want to share with hon. members is an analysis I did of taxation from 1992 as to who paid how much taxes and when. I found it very interesting that the top 10 per cent of taxpayers made $50,000 or more. That means if someone made more than $50,000 in 1992 they were in the top 10 per cent of Canadians. Interestingly enough, that top 10 per cent of Cana-

dians, approximately two million, contributed 32 per cent of all taxes paid and 44 per cent of all charitable donations.

When people start discussing should we tax more, should we raise our tax rates or should we go after the rich, they should first understand that they are talking about people who make over $50,000 and there are only 10 per cent of them.

Second, they have to understand that they already paid 32 per cent of all taxes and of their disposable income they are the major contributors to charitable donations. I find that very, very important to understand when we start discussing whether or not we should for instance cut RRSPs. At the $50,000 level one cannot even contribute more than $9,000 to RRSPs. Therefore, if the level were reduced we are basically talking about reducing it only for those taxpayers who are making much more than $50,000. Those things will have to be taken into account as we discuss the measures with regard to RRSPs.

With regard to matters such as employer paid health benefits, that has come up. Eight million employees receive employer paid health benefits tax free. The fairness of that has to be assessed.

Today in the newspaper it was reported that the mayor of my city, Mississauga, said that if the government raises taxes it is going to force more people into the underground economy than it has now. It is also going to force people to withhold taxes. I agree with the first statement but not with the second one.

With regard to the underground economy, there is no question about that. If we make serious and tough but fair cuts as a result of this budget there is no question that there will be increased pressure on the underground economy. As a result, I believe the government should as part of this consultation, and I hope members will consider this, have a parallel defensive measure to ensure that there is no increased pressure on the underground economy.

I have many more things to say but I will-

[The Deputy Speaker]

Order. The hon. member for Fraser Valley West.

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, the hon. member says Reform is taking credit for assuming some $18 billion in growth. On the other hand, the hon. member says the economy has grown since the Liberals were elected, taking credit for that of course.

I would ask the hon. member if he thinks that any growth in the economy to date is really due to the natural business cycle and not to the accomplishments of his Liberal Party? Surely he does not think that way. I would like him to try to express himself a little better as far as the business cycle as opposed to what the Liberal Party has done and forget the red book rhetoric.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am astounded that the member would not give some credit to what has happened in Canada since the election. One of the most important ingredients to growth in the economy is the confidence of the Canadian people, of the lending community and of business.

Three hundred and twenty-seven thousand jobs have been created since the government came to power. Much of that has to do with the confidence and credibility the Prime Minister has brought to political life, which the member enjoys as well. The hon. member should give credit where credit is due.

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

Mr. Speaker, I must agree with my colleagues in the Reform Party this time. The Liberal government has done nothing at all for the economic recovery. On the contrary. A few weeks after Mr. Martin tabled his first budget, interest rates shot up. That is why we will have to pay $2.7 billion more for interest alone.

Not only the finance minister's credibility, but the measures he advocated in his first budget did not help the economic recovery and job creation; rather, they hurt economic growth and the growth of employment. If he had taken effective-I would say tougher-measures on February 22, more jobs would have been created and the financial picture would have been much better in the last few months.

I ask him where the Liberal Party contributed to greater growth, when everyone says that it has not in the past six months?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member knows that the Government of Canada does not control global interest rates. The member is an economist. He knows the national debt is denominated in long rates, not in short. The Bank of Canada has influence only on the short end.

He is somehow suggesting the government has not done anything with regard to those rates. He is living in a fantasy world that somehow the government flips switches to make things happen. He knows interest rates have risen and are higher than the assumptions that were included in the finance minister's previous budget.

The finance minister has made corrections to ensure he meets his targets. That is responsible government. The finance minister understands the economy much better than the hon. member.

[Herb Dhaliwal, Liberal, Parliamentary Secretary to Minister of Fisheries and Oceans]

Mr. Speaker, it is with considerable pride that I stand in the House today to make my submission to the first significant prebudget consultation

process in Canadian history. On behalf of the constituents of Vancouver South I want to thank the Minister of Finance for this opportunity to express our views.

Let me begin by saying that there continues to be a tremendous amount of confidence within my riding for the Liberal plan for reducing the deficit to 3 per cent of GDP by 1996-97.

As many have remarked in the House before, this 3 per cent target serves as one of the major benchmarks for entry into the European Union. It is also a target that has not been achieved in Canada in 20 years. Still there are those on the opposition benches who continue to argue this 3 per cent target is not tough enough.

What is indisputable is that the Liberal government made a promise to the Canadian people on October 26, 1993. We promised Canadians we would meet this target within the specified time. Then we would begin our ultimate objective, the complete elimination of the deficit. I would like to quote the Minister of Finance: "Come hell or high water we will meet this promise to Canadians".

Recently the Reform Party attempted to bring some credibility to its original zero in three claim, which I know is very difficult for it to do. I am glad that today the leader of the Reform Party has changed that zero in three to zero in five, to do it in five years. He is learning that our goal is much more rational and balanced. He has moved from a zero in three approach to a zero in five. I ask my colleagues to check the record.

The members of the Reform Party have outlined a remarkably vague and draconian plan to cut a number of government programs. All one has to do is read the Edmonton Journal which is often quoted on the other side to understand about what has been brought forward.

This plan along with the announcement of more brutal cuts to come to programs like post-secondary education and old age pensions demonstrates what I will call the half-marble approach to deficit reduction, an approach that only deals with half of the whole solution. Dealing with the deficit in Canada requires a two-sided approach: decreasing government expenditures by streamlining programs and services and increasing government revenues by promoting a healthy and vibrant economy.

Trying to solve Canada's economic problems through extracting $25 billion from the economy in two years without any plan for economic growth is like trying to roll half a marble. Like the marble, it is an idea that will not go very far.

Further, anyone who believes that government revenues will not be seriously diminished through a plan which, while cutting regional development spending, also cuts Canada's social security system is not only trying to roll half a marble but is not playing with all the marbles.

If members take a moment to look at the plan of the Reform-I do not know from where it gets its economics-it thinks that by cutting $42 billion over three years that will somehow create great confidence in the economy and will create jobs. Then everybody will be spending money and we will get a tremendous amount of growth. The Reform Party has a lot to learn. What we are presenting is a much more balanced and rational approach. Canadians see that.

Recently I took the question of how to solve some of Canada's economic problems back to small business owners in my riding through the venue of a public policy forum. I would like to share some of their valuable ideas with the House today.

Overall, my constituents have requested that the budget continue to reflect the commitment of the government to promoting the health and growth of Canada's small business community. I am sure all my colleagues would agree with that.

With regard to access to capital, my constituents feel that the federal government should introduce strong measures to ensure that Canadian financial institutions are more equitable and accountable to small business owners.

With regard to federal deficits, my constituents feel that the federal government should do everything possible to find areas of waste and overlap, duplication and extravagance and eliminate them immediately. I know I will get lots of support from the other side on that issue. In terms of government expenditures on programs and services, there is considerable support among my constituents for the extensive program by program review currently under way.

With regard to taxation, they felt that the federal government should begin reducing the tax burden on average Canadians through a reduction in personal income taxes. It should begin harmonizing and simplifying the tax system so as to decrease administrative costs, expensive paper burden and overall taxation. It should lower payroll taxes through savings made through the UIC system. It should give serious consideration to the recommendation made by the Canadian Federation of Independent Business and supported by the region's small business working committee to increase the small business tax deduction to $400,000 from $200,000.

As I have noted before, this measure has not been adjusted since 1982 when it was first introduced and should be increased to the rate of inflation.

With regard to the most effective role for government, small business owners stated that they want their governments to offer a hand up not a hand out. They feel that the best route to take is not through grants, subsidies and expensive tax deductions, but

through addressing wide ranging concerns such as interprovincial barriers and global trade.

They feel that government should promote a healthy business environment with low taxes and minimal regulations and that they should support the business sector in meeting their own needs in job training and knowledge networks.

They feel that the federal government should target businesses operated by Canadians with special needs but should do so by reallocating current budget expenditures, not by making further expenditures.

With regard to women in small business, my constituents feel that the federal government should give serious consideration to a system of affordable national day care, allowing more women the freedom to begin small businesses. This can be done either directly through the federal government or with government support. They feel that the federal government should find ways of offering training which will help female entrepreneurs get started and expand their business operations.

In conclusion, there was a reason I went to my constituents for their advice. I knew the government was listening to Canadians. For the first time in Canadian history a government has gone to the people for their input on the budget before the budget is introduced. For the first time the government is making a genuine attempt to include Canadians in the decision making process that will affect them. These prebudget consultations, like the other extensive government consultations currently under way, are part of the Liberal election promise to do things differently, to make government more inclusive and to make government more responsive.

We promised to listen to Canadians and that is exactly what we are doing. I am proud to be a part of this government.