Debates of Nov. 30th, 1994

Petitions

[Paddy Torsney, Liberal, Burlington, ON]

Mr. Speaker, it is my pleasure to present a petition with well over 1,000 names from residents right across Ontario who support Mrs. Mahaffy's efforts to have serial killer cards seized at the border.

The petitions were started well before the justice committee tabled its report to have the obscenity code amended to reflect these changes.

[Jack Frazer, Reform, Saanich—Gulf Islands, BC]

Mr. Speaker, pursuant to Standing Order 36 it is my duty and honour to rise in the House to present a petition, duly certified by the clerk of petitions, on behalf of 198 concerned citizens throughout British Columbia.

The petitioners humbly pray and call upon Parliament to refuse the government's proposed anti-firearms legislation and introduce legislation to convict and punish criminals rather than persecute the innocent.

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

Mr. Speaker, my constituents from Okanagan-Similkameen-Merritt call on Parliament to reject any proposals which might add to the existing regulatory restrictions regarding firearms; to respect the integrity of law-abiding, responsible firearms owners; to cause the Government of Canada to take such measures as are necessary to provide for strict enforcement of existing statutes governing the use of firearms in the commission of a criminal offence, with particular emphasis on the rigorous use of section 85 of the Criminal Code; and to provide strict sentencing guidelines and mandatory sentences for anyone convicted of the use or possession of a firearm in the commission of a crime in which violence is threatened or actually used.

I concur with my petitioners.

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, in accordance with Standing Order 36 I would like to present a petition signed by residents of the district of High Prairie in my riding of Athabasca.

The petition requests a referendum of the people binding upon Parliament to accept or reject two official languages, English and French, for the government and the people of Canada, the acceptance or rejection of the proposed amendments to be determined by a majority vote of the total votes cast in the whole of Canada, together with a majority vote in the majority of the provinces and with the territories being given the status of one province.

I present the petition and support the petitioners.

Questions On The Order Paper

[Hedy Fry, Liberal, Parliamentary Secretary to Minister of Health]

Mr. Speaker, I ask that all questions be allowed to stand.

[The Deputy Speaker]

Shall all questions be allowed to stand?

[Some hon. members]

Agreed.

[John Cummins, Reform, Delta, BC]

Mr. Speaker, I rise on a point of order. On September 28, I directed a question to the Minister of Fisheries and Oceans concerning the possible conflict of interest of members appointed to the Fraser River Sockeye Public Review Board.

The board has started public hearings and I have yet to receive a reply. Questions have been raised about the suitability of certain board members. I believe the public and Parliament have a right to know about the relationship of the appointees to the Department of Fisheries and Oceans before the inquiry proceeds much further.

My question deserves an immediate answer.

Motions For Papers

[Hedy Fry, Liberal, Parliamentary Secretary to Minister of Health]

Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.

[The Deputy Speaker]

The point of order raised by the hon. member for Delta had to do with questions. I assume the parliamentary secretary, who does not usually do this, will take it as representation and will try to speed the matter up.

Shall the remaining notices of motions be allowed to stand?

[Some hon. members]

Agreed.

[The Deputy Speaker]

Before recognizing the leader of the Reform Party I should indicate that pursuant to Standing Order 33(2) because of the ministerial statement Government Orders will be extended by 35 minutes today.

The House resumed from November 28 consideration of the motion.

Budgetary Policy

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I rise today to participate in the debate with three purposes in mind: first, to hold the federal government accountable for its management of public finances over the last year; second, to put forward constructive alternatives where the performance of the government has been weak or inadequate; and, third, by accomplishing these first two things to endeavour to assist the finance committee and the finance minister in the preparation of the 1995-96 budget.

The focus I would like to make is on five major deficiencies in the government's fiscal performance, all of which have negative consequences for the economy and, second, to make some recommendations for remedying those deficiencies.

The first deficiency pertains to the inadequacy of the government's deficit reduction targets. The government's target to date has been to reduce the deficit to 3 per cent of GDP in three years. The target is simply inadequate. It is too modest. The business community says that it is inadequate. The money markets say that it is inadequate. Just this week the IMF said in no uncertain terms that it is inadequate.

Why is it inadequate? It is inadequate because it does not get the job done, because it permits the government to add over $155 billion to the federal debt over the next two years, because it does not stop the erosion of social programs, because it creates upward pressure on taxes, because it fails to stimulate private sector confidence thereby retarding job creation.

Most important, the 3 per cent of GDP target is inadequate because it will not eliminate the deficit during the current upward swing in the business cycle. When the business cycle turns down, the deficit will not have been eliminated and it will be infinitely more difficult to make the spending cuts required under those conditions.

In other words, the government will have missed its window of opportunity for deficit reduction just as the Mulroney government missed its window in 1984-85. The reality is that the government's deficit reduction target is totally inadequate and our recommendation is that the government set a fiscally responsible deficit target soon. That target should be to aim to reduce the deficit to zero by the end of this Parliament.

The second deficiency is the inadequacy of the government's grasp of the real costs and benefits of social spending. Over 50 per cent of total federal government's spending is now spent in the social areas. Yet the Auditor General has pointed out that this is the area where the federal government has the poorest grasp of the actual cost of what it is doing and the values received.

If the auditors of a resource company that had over 50 per cent of its business in the oil and gas development area were to issue a statement saying that the company's accounting was defective with respect to both costing and values received in the principal area of its business, the stock of such a company would be driven through the floor.

This is, however, the great weakness of the discussion paper produced by the Minister of Human Resources Development: insufficient and inadequate data on the real costs of social programs and values received and virtually no data on the costs and benefits of alternative social programs proposed.

Professed social concern without fiscal responsibility makes a mockery of social service. In the 1990s the politician who is genuinely concerned about the well-being of the young, the old, the sick, the poor or the unemployed will ensure that the programs upon which those people are dependent are financially sustainable. The old style Liberal politician who fails to ensure that will do more to damage the people dependent on those programs than the most hard headed fiscal conservative.

Our recommendation in this area is to bring the Minister of Human Resources Development, the Minister of Health and the Minister of Canadian Heritage before the finance committee of the House and to grill them on the costs of their existing programs and proposed alternatives; to have that committee ask them the hard questions that they never ask themselves and are

rarely asked by their own officials; to have them answer those questions before they run the Canada pension plan into the ground, before they run medicare into the ground and before they run the Canada assistance plan into the ground; and to ask them those questions until they learn the meaning of fiscal responsibility in the 1990s.

The third deficiency concerns the insufficiency of the government's spending reduction proposals. In October the finance minister made a sobering presentation to the finance committee and the public, saying that he could not meet even his soft deficit reduction targets without cutting an additional $6 billion to $9 billion in spending. The minister presented no list of spending cuts. The minister was coy and he asked the committee and the public to provide that list for him.

Members of the business community have since presented such lists to the finance committee. Last week Reform members of the finance committee provided it with a detailed specific list of $10 billion in spending cuts outside major social spending areas.

During the same period of time, however, various parliamentary committees have been treated to the spectacle of ministers-the Minister of Foreign Affairs, the Minister of Canadian Heritage, the Secretary of State for Multiculturalism and heads of agencies like the CBC-endeavouring to protect and defend high levels of spending and high levels of overspending rather than putting forward responsible proposals for spending reduction, which is what the finance minister asked for. In other words they just do not get it. They are not listening to the finance minister. They are part of the problem, not part of the solution.

Reform members of the finance committee have provided that committee and the minister with a $10 billion spending reduction list. We challenged the committee to endorse it and to implement it. If we cannot persuade the government or Bloc members to support our list, perhaps we can stimulate their imagination to produce their own spending reduction list.

I ask Liberal members to put themselves in the place of the finance minister and pretend they have just received a call from their fiscal agent that the money markets are rejecting a major Canadian government bond issue. The Government of New Zealand once got such a call. The Government of Sweden got a call like that a little while ago. What then?

They would have to reduce spending overnight. Where would they make the cuts? They would have to produce the list. There would be no other alternative. We are saying produce the list now while there is time to buy time.

I ask the Bloc members to imagine themselves as finance minister of Quebec, the most highly taxed jurisdiction in North America, or soon to be.

They have just received a call from their fiscal agent saying that the latest Quebec bond issue cannot be sold. It has been rejected by the market. They cannot borrow any more. Quebec Hydro cannot borrow any more. What then? It would have to reduce its spending overnight. It would have to produce the list. We are saying why not produce the list now while there is time to make a difference.

The fourth deficiency: The incapacity of the government to estimate the employment impacts of either government overspending or deficit reduction. For 30 years the federal government has operated on the assumption that government spending and overspending is a stimulus to economic growth and job creation. It is finally discovering the falsity of that assumption. The finance minister acknowledged this in his grey paper.

If government spending and government overspending could indefinitely stimulate an economy and job creation, Canada would have the highest economic growth rate and the lowest unemployment rate of any country in the G-7. However, Canada has over one million people unemployed. The premise that government overspending creates jobs is false, particularly when you are overspending at high debt levels and high taxation levels.

Increased government spending and the increased taxation that goes along with that kills private sector job creation, particularly under those conditions. The policy models and the econometric models used by the government do not measure this. It is infected with the Keynesian virus that ignores the negative effects of government overspending and underestimates the positive employment effects of deficit reduction.

The premise that deficit reduction, particularly deficit reduction that leads to tax relief, is a powerful economic stimulus to the private sector is not built into the equations of those models. In effect we are flying blind when it comes to estimating the negative employment effects of government overspending and the positive employment effects of deficit reduction.

The finance minister is flying blind, the finance department is flying blind, the finance committee is flying blind and the Bank of Canada is flying blind on both of those issues.

Recommendation: That the finance department, with the assistance of the finance committee of the House and the Bank of Canada, issue a request for proposals for a new econometric model that accurately reflects the employment impacts of government overspending and deficit reduction. The finance department and the Bank of Canada need a new compass to chart their way through the years ahead and they should order that now.

The fifth deficiency: The unwillingness of the government to explicitly recognize the connection between the management of

federal finances and the management of the national unity issue. One of the principal arguments that separatists will make against the federal system is that the federal government systematically mismanages its finances and then tries to offload its mistakes and its debts on to the provinces.

The current size of the federal debt, the current size of the federal deficit, the current federal tax burden and the decline of federal-provincial transfers will all be offered as evidence in support of this thesis. These arguments will be made by separatists in Quebec despite the evidence shown every day in this House that most members of the Bloc do not have the foggiest notion how to balance a budget either federal or provincial.

Two recommendations, one general and one specific. If the finance minister and the government cannot be persuaded to redouble their efforts to eliminate the deficit in the name of fiscal responsibility, if the finance minister and the government cannot be persuaded to redouble their efforts to reduce the deficit in the name of social responsibility to preserve the financial underpinnings of the social service safety net, perhaps they could still be persuaded to redouble their efforts to eliminate the deficit in the name of national unity, to demonstrate that the federal government can balance its books thereby refuting separatist claims that it cannot or will not.

More specifically, before the national unity debate begins in earnest, federalism versus separatism, the finance committee should also make a specific recommendation to bolster the confidence of investors and lenders in the Canadian dollar and the securities of Canadian governments.

They should recommend that the finance minister, the Governor of the Bank of Canada, and all 10 provincial finance ministers, including the finance minister of Quebec, make a solemn public declaration that it is their intention to honour all the debt obligations of their respective governments regardless of the outcome of the federalist sovereignty debate or referendum. Such a declaration would be in the interests of all governments and the interests of all taxpayers no matter where they live in the country.

In conclusion, I have identified five major deficiencies in the government's management of the fiscal affairs of this country, deficiencies that have a major impact on economic performance. These are not insignificant things: the weakness of the deficit reduction target, the inadequacy of the government's data on real costs of social spending and values received, the inadequacy of the government's spending reduction proposals, its inability to measure the employment impacts of either government overspending or deficit reduction, and its unwillingness to recognize the connection between the federal deficit issue and the national unity issue.

On the positive side, I have made six major recommendations which I sincerely hope the finance committee, the finance minister and the government will take to heart: one, set the deficit reduction target at zero deficit by the end of this Parliament; two, drag the human resources minister, the health minister, and other soft headed ministers before the finance committee and grill them until they understand the meaning of fiscal responsibility in the 1990s; three, adopt the Reform Party's list of $10 billion in specific spending cuts in non-social areas or produce an equally specific alternative; four, issue a request for proposals for an econometric model that will actually reflect the employment impacts of both government overspending and deficit reduction; five, urge the finance minister and the government to redouble their efforts to eliminate the deficit not only in the names of fiscal and social responsibility but also for the sake of national unity; six, recommend that Canada's finance ministers and the Governor of the Bank of Canada issue a solemn declaration of their intent to honour the debt obligations of their respective governments regardless of the outcome of any federalist-sovereignist debate or referendum in 1995.

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

Thank you, Mr. Speaker, for this opportunity to direct some questions and comments to the leader of the Reform Party.

I listened carefully to what the leader of Reform Party had to say. In fact, I always listen very carefully to what Reform members have to say, and there are two points I would like to make. My first point is that the leader of the Reform Party does not have the foggiest idea of what is happening today in Quebec, of what is shaping and promoting the sovereignist option in Quebec to make a country out of the land we cherish. It is not because of poor management by the federal government. It is, first and foremost, about choosing the kind of society and country we want, and above all, it is about getting out of a system that is impervious to reform, a system that is doomed.

I think the Reform Party is accelerating the process in Canada, because last week they proposed cuts to all the symbols that are a source of pride for Canadians. I do not feel more Canadian than the Reform Party, but I think they lack vision.

They brag about proposing $10 billion in cuts, but just look where they want to make those cuts! It is so vicious and shortsighted, for instance, to suggest cutting and slashing and even destroying the CBC, as well as everything connected with the language, culture, development and international presence of the country they claim to defend. They want to save $10 billion by destroying the very foundations of what they claim to defend. This is odd, to say the least.

About a month and a half ago, we in the Bloc Quebecois presented proposals that would raise between fifteen to twenty million dollars. Mr. Speaker, consider the difference between our approach and theirs. Consider that $8 billion worth of unpaid revenue is out there, $8 billion owed to the federal government, a point that was raised in the Auditor General's report last week. They are not talking about going after those $8 billion worth of unpaid revenue and taxes, and do you know why? Because most of those accounts receivable are big accounts, people with very high incomes who owe money to the federal government and who can count on the right incarnate on our left-I know it sounds peculiar-to defend them with blind dedication. They know these people will defend them practically to their dying breath. They are not interested in those $8 billion because these are their pals out West.

They also ignored the fact that $1.5 billion could be cut in the National Defence budget, as we suggested. They did not even consider what the Auditor General had to say about wasteful spending at National Defence. Why? Again, probably because they have some friends there, so they will not admit there is any wasteful spending in the Public Service and at the Department of National Defence.

They did not take a look either-guess where, Mr. Speaker? At the tax treatment of corporations. They do not want to touch it. Why? Because they are so dogmatic. As far as the Reform Party is concerned, these big corporations can do no wrong.

I suppose if they are prepared to say it is morally right-they are very keen on morality-to have a classified ad in the newspaper that says "unused federal tax deduction for sale", and accept that, they will not look at the tax treatment of corporations, which I think is disgraceful. They have no social conscience and do not have the foggiest notion of what Canada is all about.

They approve of an outrageous family trust system which defers for 80 years taxes payable on capital belonging to the wealthiest in this country, and there again, I think they lack a sense of morality and they lack vision.

For all these reasons, I think it is disgraceful that Reform Party members set themselves up as great reformers. It looks more like they are out to destroy the country they claim to defend. We are anxious to get out of this country because we are sick and tired of these dogmatic speeches.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I thank the member for his comments. Let me respond on two fronts. I believe the member's comments demonstrate exactly what I was saying, that with all due respect the Bloc members do not have the foggiest notion as to how to balance a budget.

With respect to unpaid taxes, we could collect all the unpaid taxes referred to in the Auditor General's report, the $5 billion to $6 billion, every one of them, and we would not even help the finance minister to get up to his soft target. He needs $6 billion to $9 billion.

This idea that they can tax our way out of the problem we are in, either in Canada as a whole or in Quebec, is completely fallacious. Any government that attempts to do that will turn itself into the most highly taxed jurisdiction in Canada. If they followed their advice they would end up having the most highly taxed jurisdiction in Canada.

On the second point, that Reform goes after all the things that people hold dear, the $10 billion in spending reductions that we advocated in front of the finance committee are outside the social area. That is one of the reasons for focusing there first. Second, I challenge this whole thesis. It has been people who said: "Don't reduce your spending because all these things are sacred" in many other countries that have helped destroy those very things they said were sacred. They let the debt get higher and they let the interest on the debt get higher until it eroded every social service they considered important.

My point, and I conclude with this, is that to demonstrate social concern today is not to use the rhetoric of the 1930s that we need more social programs. It is to come up with ways of making essential social services financially sustainable. That is the social conscience of the 1990s.

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

Mr. Speaker, I cannot believe what I hear from the Reform Party leader. I want to ask him a specific question and I would like to get a specific answer. If he does not have it today he can table it some time soon in the House. Over and over again during the campaign the Reform Party told Canadians it would balance the budget in three years.

I want the hon. member to give me the specific programs that would be cut, the specific initiatives that would be undertaken, item by item, and table them in the House before the end of the week. Then we will see how they will eliminate the deficit in three years.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, we have done this over and over again for two years. We have tabled this already. We have tabled the Reform Party zero in three program for reducing the deficit. Now we are in the process of updating it, using the minister's latest figures. The first phase was the $10 billion in detailed, specific cuts that were laid before the finance committee last week.

The problem is not getting the list. The problem is finding a government with the political will to implement it.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, a point of order. I wish to advise the Speaker and the House that from this point on government members will be dividing their time, 10 minutes each.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, a brief question for the hon. member. He said in his statement that the government has not taken into account the impact of deficit financing on jobs, et cetera.

Does the member not agree that the impact on the Canadian economy of slashing the deficit at such a pace would drive Canada into a worse recession than we have just come out of and would create even more hardship on the Canadian economy?

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, the thesis that balancing the government budget in that three year period would create recession is a view that was in vogue 30 years ago if you subscribe to Keynesian economics. In our view it does not operate today.

The reason it does not operate is because at our levels of debt and taxation, a dollar left in the hands of a taxpayer, a lender or investor today is more productive than that dollar in the hands of a politician or a bureaucrat. That is the 1990s economics.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I am very honoured to take part in the debate on Canada's budgetary process.

It is important to spend a little time trying to realize how we got to where we are. Studying the history of where we are and how we got here may allow us to reach a conclusion on how to get back out. We got here by getting on what I call the STB formula for disaster, which is basically spend, tax and borrow.

The concept of spend, tax and borrow has caused a ratcheting effect, constantly spiralling interest rates with the debt expanding and growing ever faster. It is very much like a mortgage where you never pay the interest. It just keeps getting bigger and bigger until we get to the point where we cannot pay it off. That is what we have done.

We started back in 1982, just to use a very short period of time to reflect on. From 1982 until 1992 federal government spending increased from $67 billion to $141 billion, a 210 per cent increase. Governments have become insatiable spenders. We have been sold on the idea that somehow we can continue to enjoy services without paying for them.

It is partially the fruition of the baby boom generation. Some of this is psychological. The baby boomers believed they could continue to consume without paying. Politicians told us this was possible and we wanted to believe it.

The exasperating formula of STB is also partially related to the fact that there is no division of these powers within government. In other words, the power to spend, the power to tax, the power to borrow is all in the same hands. Some people have suggested that we should have a special commission, one that simply collects taxes so that governments would have to match their spending to the taxes that were available, rather than the other way around.

In addition to the spending we also started building up a huge civil service. Currently 6.5 per cent of our labour force, 866,000 people, is employed by government. We seem to have growth for the sake of growth.

In most of these areas we did not actually add any productivity into the economy. In spite of the fact we were told we could do this for free, taxes slowly started rising. Many people in the House have complained about the complexity of our tax system. They search for some kind of new Utopia, a flat tax, a simple tax. To me that is a recognition of not knowing why the tax system is what it is and how it got to where it is.

The tax system is designed to extract the maximum amount of money out of the pockets and purses of the people of Canada. It gets more and more intuitive and more and more inventive as our insatiable desire for more taxes increases. A simplistic tax system is very easy but it may allow the escape of some moneys in the system.

For instance, even in the Income Tax Act there is an anti-avoidance section, which simply says in layman's terms that if we cannot catch you somewhere else in here, we are going to catch you anyway; we can override the income tax system. I often thought that we should call the GST or a new value added tax the value added cumulative user utility method or vacuum tax which is basically what we want to do. We can put a vacuum into everyone's house and suck every last cent out of it.

Not happy enough to increase our spending, to increase our taxation levels to the point where people did not have any disposable income, we then started borrowing. First we started borrowing from ourselves. The baby boomer generation borrowed from its predecessors who knew how to save, who had gone through the depression and had great savings. Canadians were the second highest savers in the world. Even so, we outstripped that. We used all their savings.

Then we started borrowing from foreigners. We started borrowing from people in the United States. We started borrowing from people in Japan. Currently 44 per cent of our gross domestic product is accounted for in foreign borrowing. Twenty-five per cent of our total outstanding debt is owed to people outside the country.

This creates an additional problem. We have to keep getting investment money into the country so that we can earn foreign exchange reserves to pay the interest. We are caught in a constant ratcheting spiral.

Where are we today? People talk about continuing to spend. We have curtailed some of our spending. We have discovered that some of the benefits in our current governmental system are really earned by people going back to work, causing upward changes in our revenue and a downward push on the UI account. The reality is we continue to spend. Worse than that we continue to tax.

I have some interesting statistics on the average Canadian family that earns $57,696 in 1994. Here is the bill: social securities, unemployment insurance, Canada pension plan and medical taxes, $5,011; gas taxes, vehicle licences, $926; liquor, entertainment taxes, $1,274; property taxes, $2,041; federal and provincial sales taxes, $4,284; other taxes such as import duties, $2,630; income taxes, $11,037; total, $27,203 which is almost 50 per cent of what it earns.

During the recession this got worse. Suddenly some lost their jobs and half the income went out the window. The Auditor General reports that he is concerned about the over $6 billion in arrears of income taxes. What I cannot understand is why it is so low. The reality is that when people could not put food on their tables they stopped paying their income taxes. We only left a small pittance for these people to pay their mortgages, feed and cloth themselves and still we continue to borrow.

Some of our smarter people started thinking: "Wouldn't another country be better to live in?". Some people think we can continue to tax. People earning over $250,000 pay a 53 per cent marginal rate of tax. In the United States it is 32 per cent. In the United Kingdom it is 42 per cent. Suddenly people start thinking: "Let's get out of here. There are better places to live".

We talk about assisting small and medium sized businesses but in reality the federal government crowds out the capital markets. People cannot borrow. Why loan money to Joe's auto body up the street when you can get a mortgage on all the people of Canada?

The federal government, in trying to resist spiralling interest rates, started shortening the length of its debt instruments. Currently the federal government debt is out to four and a half years. That is the equivalent of refinancing your mortgage 25 per cent every year. What does it mean? It creates all kinds of volatility. What if some day somebody does not want to lend you any money? That is exactly what is happening. People are starting to look at Canada and wonder about our insatiable appetite for spending. They start debating whether they should lend to us at all. They certainly start pushing up the interest rates and for a short term period of time.

In September in the private sector there was the greatest conversion of Canadian denominated bonds in two years; $1.9 billion was converted into foreign currency away from the Canadian market.

Where do we want to go? We want to get the ratchet working the other way. We must look back at these three aspects of spending, taxing and borrowing, and reverse the process. We must cut spending but we have to be very judicious as to how we do it.

Public sector unions are trying to maintain their existing wage structure. The reality is that the public sector unions in all segments of their employment are paid 20 per cent higher than all private sector wages.

We have a guild system in our transportation network. These are things from the past, from history. We cannot afford to continue. Everybody, whether it is labour, business or government has to be part of the solution. Everybody has to realize that they have to accept less to make the country whole again.

As well as the Reform Party, I have made some suggestions. We should roll back RRSPs from $12,500 to $7,500. This would save the government half a billion dollars a year.

On the question of international aid, I do not think it is a matter of being mean. It is a matter of doing what we can afford as a country. Canada's foreign aid is twice as high as that of the United Kingdom as a percentage of our gross domestic product, twice as high as the United States, and a third higher than Australia. We simply cannot afford that degree of spending. By cutting foreign aid by half so it is consistent with all these other countries would save a billion dollars.

We have to restructure our social programs. This is not to take money from the people who need it, it is to make those systems work more efficiently. We are not eliminating them but we are trying to cut those areas of abuse from the system. Over $3 billion could be saved in this area.

Money could be saved in the area of the CPP. We could make it more efficient by being more efficient in collection methodology. That would save a quarter of a billion dollars.

We need a further cut of $2 billion in defence spending. By cutting the funding of cultural and advocacy groups a small amount of money, $.01 billion could be saved. Agricultural subsidies are another area that we are going to have to cut. We just cannot afford it, a billion dollars.

I looked at civil service wage reductions. How we are going to get them, I do not know, but the bottom line is savings of $3.6 billion. We can make our prison system more efficient by making it more income sensitive, saving half a billion dollars. By restructuring of our transportation industry, another half billion dollars can be saved. That is $12.36 billion.

I also estimate that a reduction of that magnitude will actually lower interest rates in Canada by 2 per cent. This will reduce interest on the federal government debt by a further $12 billion. That is a $25 billion reduction. These things are possible. These things are necessary. We have to do this and we have to get on with it.

In conclusion, regardless of whether they are in the labour movement or in business all people in Canada realize we have to address this problem. This country can no longer continue on the road to wrack and ruin. We can no longer afford champagne when we have a beer budget.

[Yvan Bernier, Bloc, Gaspé, QC]

I shall be brief, Mr. Speaker, because I believe we are allotted only five minutes.

One of the remarks that caught my attention in the speech of my hon. Liberal colleague is the one to the effect that perhaps civil servants are too well paid, unless I misheard because I was listening to the interpreters. I find this is shifting the blame onto someone else than oneself.

They are the ones, the Liberals, in charge of administering government finance. They are the ones in charge of giving instructions to civil servants. As far as I know, civil servants listen and do as they are told. Personally, I always asked my boss for pay increases when I was in the private sector, but I would assure him at the same time that he would get his money's worth.

The problem-and it is easy for the Liberals to put the blame on the civil service-is that employees are not given clear orders. They are not given a mission. They are not instructed to listen to what the public has to say. The message they get is: "Do as you are told and when you get on my nerves, I will beat you over the head". As I said, I think that using civil servants as scapegoats is cheap. They should instead be given clear instructions and mandates so that they can make savings. But you cannot put the blame on they if you did not listen to what they had to say earlier. This baffles me.

[Alex Shepherd, Liberal, Durham, ON]

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

The reality is there are all kinds of factors and forces within our economy. Needless to say in the public sector there are public sector unions. They have signed contractual obligations with the Government of Canada and the Public Service Alliance is also involved with the provincial governments.

The bottom line is that some bummer contracts have been negotiated over the years. The government has been very judicious at trying to reduce the civil service by way of attrition. It is not working in the sense that it is not working nearly fast enough for what we need to do to make us more efficient.

We have to look at all aspects of government spending. This is very much on the government's agenda, that is not necessarily rolling back public sector wages but to negotiate with the unions a more effective and efficient civil service.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, it seems like only yesterday that we were sitting here listening to the finance minister presenting the very first budget of this new government. It brings home the fact that there is precious little time left between now and the next budget.

The motion of this debate is that Parliament take note of the views of Canadians on the fiscal situation in giving advice to the finance minister and to the government of the day in developing the 1995 budget.

I know that many of us are out there consulting with our constituents. For the first time in the history of this country consultations on the budget are taking place not behind closed doors but in open and in public. In every corner of this land we hope to engage Canadians in addressing the fiscal problems we have, in addressing what kind of country they want and how much they are prepared to pay for it. In my view this is the way to do a budget.

I had what would be the first stage of input to the 1995 budget in Ottawa West several weeks ago when we held a consultation on the social programs review. The message that came out of that consultation which was attended by over 150 people was very clearly a budget message. The message was that yes, they are aware of the fiscal problems of the country. Yes, they want a sounder, economic situation for our country, but they want fairness above all and a country that is still committed to those values of sharing, of fairness, of compassion and of shared responsibility for the collective well-being and for the well-being of fellow citizens.

All of us have been receiving much input from our constituents as the media has speculated about measures that might possibly be taken in the budget. Therefore I certainly want to share with this House and with the finance minister what I have heard from my constituents and the specific messages around that fundamental message I am hearing.

People are very much aware of the fiscal situation we are facing. In the Liberal red book we said very explicitly that any responsible government has to have the goal of a zero deficit. We felt it was a responsible target to commit ourselves to reach 3

per cent of GDP, that is, cutting the deficit in half compared with our GDP in the first three years of our mandate, by 1997. That is the goal we set and that is the goal we intend to reach.

I will spend a couple of minutes on why it is important that we do that. For the people I am hearing from in Ottawa West certain things are important to them about this country's programs and values.

The fact is that the debt and deficit restrict our ability to move our nation forward and to build our economic prosperity. Right now close to one-third of every dollar we spend is being spent just to pay interest on the debt. That is money we do not have for other things that are important not only to the Canada of today but to the Canada of our children and grandchildren.

Let me talk a bit more about some specific issues people have been bringing to my attention. They realize that this level of debt and this level of interest payment on our debt restrict the sovereignty of a government. They restrict its ability to make decisions and to make plans for the country and for its people.

The question then to my constituents and to every Canadian is as to how they want us to deal with that, which means a better balance between what we are spending and what we have in revenue. That is what we are asking Canadians. How do they want us to achieve that balance?

We indicated our direction clearly in the last budget where cuts in spending were five times the increases in revenue. Those increases were achieved on the revenue side by getting rid of perceived special treatment for certain groups in society.

I want to express the concern that we not make decisions that look good in the short term but that impact on our ability to be strong economically in the long term. I am very concerned that we not harm our scientific and research base to the point where we may look better in this year's budget and in the budgets for the next few years, but we are starting to undermine our ability to have jobs 10 years from now.

I want to make sure we are not cutting back in areas now that are feeding the economic growth of the small and medium sized businesses. They provide 85 per cent of the new jobs in this country. I want to make sure we are not cutting back on our ability and our contribution to the development of countries around this globe that are our future customers if they can develop their economies and if they can develop their democratic systems of government.

Above all I want to make sure we are not cutting back on the development of our most important resource: the talent of our young men and women, the young boys and girls who will become our young men and women.

Fairness is a strong theme I hear. People want to know that everybody is paying their fair share. They want to know that they are not being targeted for cuts in benefits they now enjoy while others continue to get away with not paying their fair share into the pot from which we all benefit.

Seniors are particularly concerned. A very large proportion of them live in Ottawa West. They want to remind this House that old age security and the Canada pension plan are not charity and are not welfare. I read the debates again from the fifties when the old age security was implemented. It very specifically said that this pension is a right of citizenship and everybody is going to pay on their income tax for that pension. They did that and they continue to do it.

A few years ago it was rolled into the general tax rate, but it is still there, a special payment for old age security. That is a pension people have paid for. They want me to remind this House and our government how much they have sacrificed, the hardships they have put up with, the things they did without, to take responsibility for providing for their own retirement. They want me to remind this House that we owe a debt to them, a debt of gratitude and a debt for the quality of life we have in this country.

I want to talk a bit about the public service as my colleague before me has done. I remind the House that we could cancel the whole public service tomorrow and we would still have a huge deficit and a huge debt. We could cut all government spending on the actual operating of government tomorrow and it would not take care of our deficit and debt problem.

Everybody who works for the public service knows we are going through a tremendous period of change. They know that period of change will certainly mean changes in jobs and a smaller public service. Again we have to be sure that we are not targeting specific segments of our society, including the public service, to bear an unfair portion of the burden that belongs to all of us as Canadians.

We want to continue to reaffirm the value of government services across this country. They are the kind of services that keep our transportation and food supply safe, that keep goods and services moving across this country and without which we would not have an economy.

In the few seconds I have left I also want to say that above all my constituents want to keep reminding us that the best way to solve our debt and deficit problem is to have more Canadians working, more Canadians employed and contributing to the economy instead of requiring the assistance of their communities and their society.

They do not want us to lose sight, as we have not done, that our main target is jobs and economic growth, that fiscal responsibility is part of that but so is social responsibility. We should not solve our fiscal deficit by creating a social deficit. They remind

me and I remind the House that disparity is growing in this country, not decreasing. Those who are well off, those for whom the Reform Party seems to speak are better off than they have ever been. It is below that where everybody is a little worse off. That means our country is worse off.

Like the constituents I have spoken with, and I will be speaking with many more when we hold another consultation on the budget specifically on December 11, I wish the finance minister the best of wisdom in the deliberations he has ahead of him. I wish him above all an open ear to Canadians.