Debates of Feb. 1st, 1994

Pre-Budget Consultations

[Francis Leblanc, Liberal, Cape Breton Highlands—Canso, NS]

Mr. Speaker, there is no doubt that there would be much less tax evasion and less tax avoidance with a simpler, more comprehensive tax system.

Indeed that is the system which we started with in the early 1960s with the Carter commission and its proposals for reform in the Canadian tax system. Progressively over the years, we have got away from that.

What the member for Broadview-Greenwood and others who are advocating a simplification of the tax system in various ways are saying is that by making the tax system more comprehensive we can lower the rates and burden on the middle class and all Canadians.

As well, we can eliminate a lot of unproductive activity which goes into avoiding taxes and which costs the economy much more than the revenue lost by taxation. It costs the economy jobs and real economic activity.

[George S. Rideout, Liberal, Parliamentary Secretary to Minister of Natural Resources]

Mr. Speaker, it is always a pleasure to rise in the House and be given an opportunity to expound on one's views.

This is a particularly unique circumstance to have an opportunity to talk about the budget and the process in advance of the budget. Usually we were taken by surprise and then had to react afterwards. I congratulate the Minister of Finance and the government for having the courage of its convictions to make Parliament a working Parliament rather than a rubber stamp.

I think the budget process also provides an opportunity to re-evaluate how government works. It is not just numbers. It is the whole concept of what government is all about. As I listened to the debate today I heard a lot of really good ideas, some good suggestions, some crazy ones, but all in all some good suggestions as to how we can make government work better.

I do hear from the Reform Party this idea that cuts are the only answer; the only solution is to cut, cut, cut. There are other opportunities available to us. My colleague from Dartmouth alluded to it.

We have to re-invent how we run government. We also have to look at the top line of the balance sheet once in a while to see how we can make the country more productive, the economy more productive, and thereby make government more productive with an inflow of revenue.

In my view, the critical role of government is summed up in a recent publication entitled "Re-Inventing Government". It makes a point which I think is something we should consider. It states: "The word governance is from a Greek word that means to steer. The job of government is to steer, not to row the boat. Delivering services is rowing; government is not good at rowing".

What we have to do is provide the general direction, the guidance, the approach. I am going to talk about a few of those things and some of the concepts that may be a little unique or may not.

For an Atlantic Canadian this is a crazy thing to say, but I think we have to look at the idea of getting out of the grant-giving business and government's role in trying to foster economic growth by grants, loan guarantees, interest deferments and things of that nature. If the enterprise cannot stand on its own without those supports it is going to die soon after they run out.

We have to take a look at how we do government.

The government should reassess its mission and look at the best way to fulfil that mission. All governments must work together to eliminate overlap.

We see a lot of duplication between the provinces and what we do. That is one of the areas we have to look at in re-evaluating government and reinventing it.

We have to look at some things here on the federal scene that perhaps will make a difference. We have to make government more competitive. Perhaps we should force government departments to bid on work that they now get automatically because they are government. Let government departments compete with the private sector and see whether we can get a better bang for our taxpayers' dollars.

We should also take a look at the budget and ask why we tolerate this incessant spending from February to the end of March: "Make sure that all of the money is gone. We don't want one penny left in our budget". Perhaps we should put into the system a rule that says: "If you don't spend all the money in your budget this year you can still keep it. You will be responsible for justifying where you're going to spend the money but you don't have to blow it all in February and March. It will still be available to you next year".

As we look at expenditures and the Auditor General's report which criticizes how the government spends money, the directions in which the money goes and how we have one boondoggle after another, perhaps for a change we should also ask the people the government serves whether they were served properly. If they were not, then maybe we should start re-evaluating what government is doing and perhaps the people who are doing it.

I think it would be interesting to know what the satisfaction level is with the clients of the government, namely the citizens and the enterprises, those that are dealing continually with government and those only once in a while. Rather than looking at the dollars and cents and where we could cut all the time, perhaps we had better look to see whether we actually do deliver a good service.

We have to start investing in our small and medium sized businesses and look at new ways to do things. I previously said that I think we should get out of the grant business. That is a process that we will have to wean parts of the country off. In the long run if we set up venture capital systems throughout Canada that will be the best system.

I want to offer an example of one that can work, in my view. It is going to require some tax changes and it is going to require some courage, but it is one I think we can use as a model proposed by an entrepreneur in Moncton, Dick Carpenter. He has suggested that we put together a meeting place for people who want to invest money, people who have ideas but need money to get started because the financial institutions will not finance them. What we want to do is set up a situation in which the people who want to loan money will receive a tax credit.

That requires a change in the tax system for provinces and for the federal government. Those funds that would be introduced into the system of venture capital would also be shored up by agencies like ACOA or western diversification. Therefore the person who makes this investment in the venture capital organization would not run the risk of losing everything. There would be the benefit of a tax credit and a shoring up of part of their investment by ACOA. What that will do is make ACOA a backstop rather than leading the process. In my view, that is a way for us to proceed.

I am very limited in time, so I want to move very quickly to another area of interest to me and that is in my role as Parliamentary Secretary to the Minister of Natural Resources.

What we do not realize in this country because we are always tied into new knowledge based technology and all of those exciting things that go with it, is that the resource industries of this country provide a million jobs and affect about 500 communities of this country. In 1992 natural resources accounted for 14 per cent of the GDP and generated $69 billion.

If one looks at the statistics, the trade surplus that we talk about in international trade, is in large part supported by the natural resources sector. The foundation of the economy of this country over the last 100 years is still there providing that foundation.

We have to be sure, in the changes that we make in the budget and in the directions that we proceed, we remain world competitive. We acknowledge the environment, safeguard our natural resources and the way that we utilize those resources so that we are providing sustainable development. We also have to stop, and stop quickly, the flow of capital out of this country to other countries. Canadians are not investing in our natural resources. They are investing in the natural resources of other countries.

We have to change the tax system to allow Canadians to invest and re-invest in the natural resources of this nation. At the same time we have to put those dollars and cents into research and development relating to natural resources so that we can market that technology in the rest of the world.

Again, we have to look at fine-tuning our tax system so that research and development by the private sector is encouraged through the benefits of tax credits and those types of things.

Rather than focus entirely on cuts and on the negative, let us focus on the positive. We have a great country with great resources and a great knowledge base. We have an opportunity to move into the 21st century as a dynamic economic force. If we sit with the naysayers who say: "No, we cannot; we must cut; we are going to fail", then we are going to fail.

I believe in this country. I believe that this budget process is going to put us on the right course.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup, QC]

Mr. Speaker, the hon. member's speech made me think about the issue of natural resources. I must say that I agreed with him, but I wish that we could find a way to ensure that the productivity gains made in recent years and which will be made in the years to come as a result of the use of equipment are channelled back to the forestry workers, because today, machines are being used to cut far more trees and far fewer workers are needed to operate this equipment. However, the resulting productivity gains stay in the companies and are not reinvested in workers who are laid off and often left to subsist on unemployment insurance or welfare.

I think the budget should contain mechanisms, through the tax system or otherwise, for putting workers back to work. For instance, in the forestry industry, some people do not get retraining, and not everyone can be retrained for high tech jobs. There will always be people who prefer and in fact have the ability to work in forestry operations.

Again, I agree with the hon. member who just spoke that it would be useful to find ways to involve these workers in the industry, so that the forest is given a chance to regenerate and become the forest of the future that can fulfil our requirements. Today, with our huge lumber exports to the United States, we may run out at any given time, and that is something we have to plan for.

The hon. member also made an interesting point when he said it might be a good idea for the federal and even the provincial government to withdraw from certain tax areas and let local governments manage local facilities. And of course in my case, the example that comes to mind is the wharves. It does not make sense for a wharf 300 kilometres from Quebec City and 800 kilometres from Ottawa to be managed by officials who have only seen photographs and plans and are not familiar with the day-to-day concerns and the importance of this infrastructure for the community. I ask the government to consider whether it would be appropriate to withdraw from an area where it cannot really play an effective role, and I also refer to what the previous speaker said.

[George S. Rideout, Liberal, Moncton, NB]

Mr. Speaker, I thank the member for his question. It highlights a number of points without going to great lengths in order to permit other questions.

In his second question he is talking about harmonization. As we look at the overlap occurring in government we are presented with an excellent opportunity to start to harmonize the tax system, harmonize the regulations, harmonize in a number of areas. If we did this, we could really do some very good things.

I am saying that maybe we can look at opportunities which will see the federal government getting out of certain taxing areas and the provincial government taking over. He mentioned the forestry industry and forestry in general. I have to wonder whether we need two departments, a federal department of forestry and a provincial department of forestry. In that sense, maybe we have to look at a more efficient way of dealing with those types of circumstance.

All resource based industries create a large amount of employment. I do not think there is any question about that. The issue is what is the best way to make our forestry industry competitive. It will mean, in all candour, more mechanization. More research and development will take place in that area so we can compete on a world-wide basis.

We have to look at ways to better utilize our forests. We must create a larger forestry industry and create employment that way rather than just creating employment and making our forestry industry, in effect, uneconomical. We have to find the right balance.

I thank the hon. gentleman for his suggestions. I am sure the Minister of Finance will respond to those as well.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, I would like to take this opportunity to discuss a very significant aspect of the subject before the House today, and I am referring to the close relationship that exists between the economic situation, public finances and international trade.

I think we cannot overlook the fact that the disastrous state of Canada's public finances has an impact on the competitive position of Canadian and Quebec companies on foreign markets. I will therefore attempt to put the problem of our public finances and the federal debt into an international perspective.

Canada's net public debt is now over 70 per cent of our Gross Domestic Product. This ratio is well above the average for the 17 industrialized countries in the OECD. Furthermore, 25.8 per cent of the securities issued by the Government of Canada to finance its deficit are held by foreign interests.

This means that annually, we pay more than $10 billion in interest to our international creditors. The problem is therefore a major one, something which a number of financial institutions, including the International Monetary Fund, have indeed pointed out to us. On February 11 last year, the IMF submitted a confidential report to the Canadian government on the country's economic situation and especially on the problems of the public debt.

Among other recommendations, the IMF advised Canada to deal with this problem, which was seen as giving rise to grave concerns about the state of the Canadian economy. The tenor of this report should surprise no one, since this was the IMF's third warning to Canada about its public debt.

The federal and provincial governments borrow massively on the domestic market, pushing up interest rates and thus depriving Quebec and Canadian companies of the capital they need to renew their production infrastructures and invest in new and more efficient production processes.

Furthermore, to make them more attractive to foreign investors, Canadian Treasury Bills must bear higher interest rates, thus pushing up the value of the Canadian dollar on international money markets and undermining the competitive position of Quebec and Canadian products on international markets.

Restoring our control over Canada's recurrent deficits would help provide companies with the capital they need, at a lower cost, to modernize their plant and would make the Canadian dollar more competitive with the currencies of our principal trading partners.

If the public debt problem makes our companies less competitive on international markets, conversely, international trade may prove to be one of the solutions to this problem.

In fact, Canadian exports rose dramatically during the first ten months of 1993. There is every indication that this increase, which was 16 per cent over 1992, should make this a record year for Canadian exports of goods and services.

It is important to realize the direct impact of exports of goods and services on the creation of jobs and the creation of wealth. According to recent studies referred to the Quebec bureau of statistics, every $10 million increase in exports generates more than 100 direct jobs. Moreover, these $10 million would include more than $6 million in added value.

There is no doubt about the correlation between exports growth and improvement of public finances. When exports grow, so does employment, therefore we see a decrease in public spending for social programs like unemployment insurance, welfare or health care, as well as an increase in revenues due to the greater number of employed people who pay taxes.

The government should see international trade as a factor essential to economic growth, and this is especially true in a country like Canada which derives a quarter of its GDP directly from exporting goods and services. I should point out that the Quebec economy is also largely dependent on exports of goods of services which account for almost 16 per cent of its GDP.

The warm welcome given to free trade with the United States and then the North American Free Trade Agreement in Quebec, by federalist as well as sovereigntist supporters, should surprise no one.

Quebecers understand that only the access to larger foreign markets will guarantee economic development to a small society of 7 million.

In that regard, the lack of enthusiasm for these trade agreements in English Canada seems rather strange. It is easy to see, as the data on recent export increases and on their positive impact on our economy clearly show, that better access to dynamic markets is a source of increased wealth for our country.

Therefore, government must examine without delay what measures to implement in order to promote international trade. They must, among other things, review in depth all assistance programs for small and medium-sized businesses which are the driving force of all economic activity in Quebec and Canada and the main source of job creation.

That review must be made with a constant view to eliminating the multiple overlappings and duplications that exist between federal programs and those of some provinces. We must optimize resource distribution according to the real needs of businesses. Those provinces who wish to do so should manage these resources directly in a way that will ensure they are best adapted to regional economic realities.

On the other hand, the government must ensure that business assistance programs take into account the service sector which is increasingly important in the context of international exports.

In conclusion, we must, once again, question the government's strategy and ask Parliament to participate in this new debate on public finances. We must, of course, welcome this new approach adopted by government which is a sign of increased openness and of greater respect for democracy.

However, given the scope of the financial disaster at the federal level, and given the determination shown by the Liberal Party during the election campaign, we had the right to expect the government to launch a much larger consultation process. Under such circumstances, it would have been appropriate to take measures more in line with the seriousness of the situation.

We would have liked the government to follow through with the request presented by the Bloc Quebecois several months ago, asking it to set up an ad hoc parliamentary committee to carry on an item by item review of federal tax and budget expenditures. The Reform Party, through the member for Calgary North, answering a question I asked her on January 21, and earlier today, through the member for Lethbridge answering a question from my colleague for Saint-Hyacinthe-Bagot, already indicated that it was willing to participate in such a process.

With such unanimity, the government had the opportunity to undertake a consultation of a magnitude yet unknown in the history of this country and ferret out all sources of waste, costly overlapping and excessive spending.

That exercise would have allowed the government to avoid having to consider easy solutions, such as increasing the already excessive burden on taxpayers or cutting social programs.

Instead the government chose the easy way out: business as usual! Yet, if I remember, this government was not elected for its lack of courage and determination. Nobody expected that it would quietly carry on a traditional policy of day to day management.

The government's answer to the proposal made by the opposition is that it would table the budget in a few days. Be that as it may, we will wait for the budget, but make no mistake, we will be ready for it.

[Ron MacDonald, Liberal, Dartmouth, NS]

Mr. Speaker, I am glad to see the spirit of cordiality that we started off with was evident in the member's speech.

I would hasten to say at the outset that this government does not believe it is business as usual. We have suffered through nine years of Tory mismanagement of the economy. We have seen a government induced recession. All of the policies of the last government were supported by the current leader of the Bloc Quebecois who is now the Leader of the Official Opposition.

Some of the new members on this side the House find it very difficult to listen to lectures from the Bloc Quebecois about what is wrong with Canada. They talk about how the economy has been mismanaged and that if they had their way things would be better.

I would like to indicate to the member opposite that many of his colleagues, indeed the only colleagues he has who have any experience in the House with the exception of one, sat as members of the Conservative government. Time after time when debates took place in the House those same members, when they were members of the Progressive Conservative Party, supported the very policies that have got us into the mess that we are in today. I understand he is a new member here. He has some very forceful points of views and I am pleased he put them in debate today but he has to recognize that you cannot have your cake and eat it too.

The individuals in this place that are the biggest proponents of the Bloc Quebecois are the same ones that ran on the Tory ticket in 1984 or 1988. Indeed some were in the cabinet of the previous government that voted for all of those measures, that saw not just the province of Quebec's economy go downhill but the economy of every province in this country go downhill.

I want to tell the hon. member it is not business as usual. This government was elected because it offered some hope and it offered some hope for every province in Canada.

I can speak quite eloquently about the problems in Atlantic Canada. They are tough and they are bad but I know that the vision, the policies and programs we have heard from this side of the House, and indeed the way we are approaching governance by open debates like this, show that times are different.

This is a different House. It is a different government. We have support from nearly 70 per cent of the electorate even in the province of Quebec.

I would suggest to him that this is the beginning of a productive time. If he listens long and hard I think he will find out that the processes and policies that are in the best interests of Quebecers are the same processes and policies that are in the best interest of Nova Scotians, Newfoundlanders, people from the Northwest Territories and British Columbia. They are policies that are good for Canadians.

I would close by asking the member why he believes, and I am sure that he believes strongly in his views on separation for the province of Quebec, that the pursuit of separatism, because it is not sovereignty association, it is separatism for the province of Quebec, is in the best economic interest of the people of Quebec when he knows full well it will lead to international instability in the investment market and it will probably lead, at least in the short term, to job losses for Quebecers as well as other people in Canada.

[Stéphane Bergeron, Bloc, Verchères, QC]

If you allow me, Mr. Speaker, I would like to have time to answer everything my hon. colleague just said.

First, I note with undisguised pleasure that every time we make statements, he and I are always together and I wonder if that will go on for long. I do not find it unpleasant, I must tell you, but I do find it interesting that the member lost his cool a little and immediately tried to defend his government. Could it be that his government has something that needs to be defended?

Also, my hon. colleague spent much of his speech explaining that some members of our party were once with another party that they left, I must remind my colleague, because perhaps they learned something after they had joined it. We should not keep going back to that because the fact that they are now sitting on this side of the House, under the Bloc Quebecois banner, means that they have done some thinking and that they realized something which has taken them further in their thinking about the political and constitutional future of Canada and Quebec.

I would remind my colleague that the government which got Canada onto this debt treadmill is not the Conservative government which he complains about having had to put up with for nine years; it is the Liberal government which preceded that Conservative government.

[Some hon. members]

Hear, hear.

[Stéphane Bergeron, Bloc, Verchères, QC]

Someone just questioned my right as a parliamentarian here to express my opinion on issues affecting the economic future of Canada, and thus Quebec, because Quebec is still part of this country called Canada.

I find it offensive that the member should have questioned Bloc Quebecois members' ability to speak in the House on the economic future of this country. We have the right, and if you paid attention for a few moments to the speech I made, you may find in it some good ideas for putting Canada back on track. Perhaps you should reread it.

Furthermore, I would point out that my colleague's argument had little or nothing to do with my speech and I must deplore that.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Mr. Speaker, as my colleagues have pointed out, the current economic situation in Quebec and Canada is far from encouraging. The unemployment rate exceeds 11 per cent and the federal deficit is growing steadily. These figures reflect an increasingly unacceptable reality: poverty has got its claws into the middle class now and there is no doubt that action is urgently needed.

In a context of scarse financial resources however, government action must be carefully targeted to achieve maximum effect.

As my colleagues said, the federal deficit results both from a structural problem and a-

Mr. Speaker, could you ask the hon. member for Kingston and the Islands to go and sleep it off somewhere else. For a member-

[An hon. member]

Lots of before-dinner drinks and after-dinner drinks.

[The Acting Speaker (Mr. Kilger)]

I know that members sometimes wish to discuss among themselves but in this case, I do not know.

Since the members in question have left I ask the hon. member to continue his speech.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

So, Mr. Speaker, the federal deficit is the result of a structural problem as well as of particular economic conditions. I will concentrate on this aspect.

The deficit resulting from economic conditions is enormous. It represents roughly half of the federal deficit. We must react right now if we do not want to jeopardize the future of our children. We must invest in projects which will foster permanent employment, as well as in promising sectors which will put our creativity to full use. We must take advantage of our expertise and of the relative lead which we were able to develop over the last few decades. We must promote projects which will give Quebec and Canada an international prestige that will allow them to export their technologies.

Economic recovery is based on projects geared to the industrial sectors which hold the most promise for the future. The Bloc Quebecois proposes a project which meets those two criteria: the development of a high speed link along the Quebec-Windsor corridor.

The Liberal government is aware of how important it is to invest in infrastructure programs in order to foster growth and employment. The Bloc Quebecois is also of that opinion. However, our concept of infrastructures is wider than that of the Liberal government which seems content with upgrading the road system. We recognize the importance of maintaining and repairing roads everywhere in Canada and in Quebec. Canada is a vast territory and it is absolutely necessary for it to have a quality road network to reduce transportation costs.

However, the upgrading of the road system will be totally insufficient to sustain economic recovery. Road maintenance does not generate permanent employment. The high-speed train or HST is an example of the type of investment needed.

A high-speed link along the Quebec-Windsor corridor would cost close to $7.5 billion over ten years. It would be financed at 70 per cent by the private sector, while the remaining 30 per cent, or approximately $2.3 billion, would be provided by the Quebec, Ontario and federal governments. By getting involved in the HST project, the government will help generate a $5.3 billion investment from the private sector in the Canadian economy, not to mention the indirect benefits of the project.

During the construction period, tax revenue generated by the project would reach $1.8 billion. This means that the financing of the project would be quickly made up for. This federal

investment would not increase the national debt and would allow us to make VIA Rail a profitable venture. The HST would create close to 120,000 person-years employment, of which 80,000 would directly be generated by the construction of the link and related equipment. Moreover, there would be 40,000 new jobs upstream and downstream of the project.

In 1991, the task force on a high-speed train linking Quebec and Ontario, which was co-chaired by the hon. Rémi Bujold, the former Liberal member for Bonaventure-Îles-de-la-Madeleine, made an important pre-feasibility study. Wide public consultation revealed that the communities affected by such a project support this initiative.

The crucial impact of the development of such a corridor on the national economy was mentioned on several occasions, as well as the need to make the cities in that corridor more efficient so that they can succeed in a competitive market.

The Bloc Quebecois proposes the development of an environment-friendly technology. Even at 300 km/h, the HST burns almost half as much energy per passenger as an automobile, and four times less than a jet used to transport people.

The use of a high-speed train would reduce government expenditures. A high-speed train would be a much cheaper way of providing inter-city passenger service than would the expansion of the country's road or air network. Rationalizing government spending is a critical factor in the economic recovery.

In a country as vast as Canada, the government must have an efficient public transportation policy. At a time when the government is thinking about dismantling the rail system in Canada, it cannot get around replacing it by a technology better suited to the challenges of our society.

The spin-offs of the high-speed rail project will help drive local economies. The European experience has shown that a high-speed rail venture stimulates job creation and economic recovery. High-speed rail attracts hotels, office buildings, convention centres, restaurants and other commercial or tourism operations.

During the election campaign, the current Minister of Finance acknowledged Montreal's inadequate industrial infrastructure and pledged to focus on ways of remedying the situation. The Minister of Finance diagnosed the problem as follows: Montreal's industrial infrastructure is outmoded and fragile and is not being replaced by new, dynamic and technologically advanced manufacturing firms. What is the government waiting for to follow through on its diagnosis? The Minister of Finance

is now in a position to perform the surgery that can cure the patient.

The government must respect the public's priorities. It must reduce the defence budget by at least 25 per cent and invest some of this money in projects that will be useful to society. The end of the cold war and the crisis in public finances do not justify directing funds to the military.

The $12.3 billion defence budget for 1993-94 represents a 3 per cent increase over 1992-93 levels. Is the federal government prepared to make a commitment to the people that it will slash the defence budget substantially and redirect the money to high-tech civilian projects? Is the government prepared to help companies such as MIL Davie in Lauzon become less dependant on military projects and convert their operations to civilian ship building projects?

The high-speed train represents a major industrial investment for Canada and Quebec. Our standard of living and our competitive position depend on decisions that are being made right now. We cannot mortgage our future by postponing the introduction of the high-speed train. The clock is ticking and time is not on our side. If governments take immediate action, we will have a strategic head start on the North American high-speed rail market. Twenty similar projects are in the development stages in the United States, where the market is estimated at more than $200 billion over the next 15 to 20 years. If we are the first ones in this market, our companies will be the ones to benefit from exports of this technology.

The Canadian government must demonstrate that it has vision and it must get the economy working again by implementing innovative projects.

[Simon de Jong, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, I listened with interest to the member advocating a high speed train between Quebec City and Windsor. I am certainly a strong supporter of the high speed train form of transportation. Ecologically and economically it makes so much more sense.

My concern in part is that the members of the Bloc envisage a separation between Canada and Quebec. My question to the member is would he feel that the government would be loathe to enter into long term, capital intensive projects in Quebec that might become difficult to resolve if there were separation? It is similar to a couple going through a divorce. Do not enter into new mortgage agreements and invest a lot of capital in long term projects. Would the member not agree that perhaps the uncertainty of the future relationships between Canada and Quebec might slow down the construction of a high-speed train between Quebec City and Windsor?

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Mr. Speaker, I would have been surprised if that issue had not been raised in this debate.

First of all, we must set things in the proper context. Every year, Quebec taxpayers pay Ottawa $28 billion in taxes. I hope that no one is operating under the illusion that, when the federal government invests in projects in Quebec, it is out of sheer benevolence. Benevolence it is not; they are simply giving us back some of our money. So, let us just be clear about that.

So, until further notice, until the people of Quebec have democratically decided whether to have a country of their own-and we are sure they will-until then, there is no reason not to go ahead with projects such as the high-speed train and I do not see why this train could not travel across two countries, as is the case in Europe and many other countries. The train would travel across Quebec, for the portion of the line between Quebec City and Rigaud, then from Rigaud to the border with the neighbouring country, Canada, in the province of Ontario. From the border to Windsor, it would travel across another country. I do not think that the future of Quebec lies in the feasibility of the HST project. I think that arrangements could be made, as they were in Europe.

[Paul Devillers, Liberal, Simcoe North, ON]

Mr. Speaker, as we approach this year's tabling of the budget the government is faced with a tremendous debt which has surpassed half a trillion dollars and a record deficit of nearly $46 billion. Given the magnitude of these numbers this government's fiscal and budgetary policies will impact many generations to come.

In the words of Mr. Leonard Cohen, we have a wonderful opportunity to steer this ship of state to the shores of need past the reefs of greed. It will take wisdom, courage and firm resolve to steer a course which will benefit Canada and be equitable to all Canadians.

Before going any further, I would like to congratulate the Minister of Finance for his pre-budget consultations with Canadians representing various views as well as with the members of this House. If we are to steer Canada in a new direction, we will need the support of all Canadians.

Over the past few years we have been told by some economists, bankers and business leaders that we can no longer afford the quality of life Canada has attained. This may be true. But should Canada abandon its commitment to its social programs, programs which are the envy of the world? Is our fiscal deficit the result of our aspiration to be a just and compassionate society? I think not.

I believe that by fine tuning and adjusting social programs, by plugging tax loopholes and by creating and maintaining incentives for all Canadians to work and contribute to our economy we will increase revenues and address the deficit and the debt.

I said earlier in this House that I believe we have a revenue crisis and not a spending crisis. A symptom that this is a revenue crisis is the way Canadians perceive Canada's tax system.

There is an unprecedented lack of trust in our tax policies among Canadians, as reflected by the increase in popularity of the underground economy, and particularly cigarette smuggling, following the introduction of the GST. If we want the Canadian people to obey the law, they have to be convinced that these laws are fair and equitable.

Patrick Grady's 1992 study clearly demonstrates that the tax burden has not been shared fairly in the past decade. Lower middle income families have borne the brunt of tax increases. An average Canadian family earning between $45,000 and $75,000 has had to pay an average of $1,900 more in taxes than they did a decade ago. However, the amount of tax increases paid by income earners making $150,000 or more has been $3,782. According to the author, this amount is much less in proportion to the middle income Canadians.

It is important to compare the proportion of taxes paid by individuals and corporations. Personal income tax is the biggest source of federal revenue, accounting for almost 50 per cent of total revenue. This proportion is bigger today than in the last two decades.

Meanwhile, corporate taxes are at their lowest level ever. They now account for 7 per cent of federal revenue compared with about 15 per cent in the 1970s.

While personal tax levels have kept growing in the last ten years, corporate levels have fallen from 36 to 28 per cent.

We must also examine the tax exemptions and deductions available to these corporations and wealthy Canadians. There exist loopholes associated with off-shore affiliates of Canadian companies, the family trust rules, deductions of limited partnership losses and non-taxation of lottery and gambling winnings.

Business people are allowed to claim 80 per cent of the cost of entertainment and meals. If this were reduced to 50 per cent, business would still receive a tax deduction. In addition, restaurant, hotel and resort businesses would continue to receive the revenue generated by these deductions.

There have been suggestions that this budget should reduce the amount of RRSP contributions. I do not support this proposal because I feel it would be a disincentive to the self-employed small business persons and professionals. These are the people who will provide the jobs called for in our election platform.

Also we hear that the Canada pension fund as is presently structured may not be able to provide for the retirement needs of Canadians. Therefore it makes little sense to restrict Canadians' ability to provide for their own retirement. We must also remember that the RRSP contributions are only tax deferrals and not complete tax avoidance.

I have already written to the finance minister asking him to extend the RRSP home buyers plan. The program has been very successful in enabling first time buyers to purchase a home that they otherwise would be unable to acquire. The RRSP home buyers plan has had and would continue to have a tremendous affect on our country's economic renewal. We must take into account that the immediate costs incurred by the federal government for this program will undoubtedly be offset in the long term.

I have cited some examples of revenue losses which must be corrected to bring fairness to our system. However we must also recognize that government can and must operate more efficiently in delivering services. The Auditor General's recent report underscores the need to evaluate every department and program. This should be done to fetter out unnecessary spending and waste while maintaining the integrity of these programs.

Simcoe North constituents tell me they want changes to our tax system and a full review of our social programs without a reduction in the quality of services.

I think this government has recognized that the problem lies with our tax system and that our social programs must be renewed. I am happy to know that the government will take action.

The throne speech clearly stated that our priority must be job creation. This approach is essential if we are to put our fiscal affairs in order and successfully bring the deficit down to an acceptable level. By putting people back to work we will not only save on unemployment insurance and welfare but also broaden our tax base.

In conclusion let me summarize what I suggest we need and what we do not need. We need to remember that job creation is this government's number one priority. We need more people paying taxes and not people paying more taxes. We need plans and incentives for those currently unemployed to gain meaningful employment. We need to examine the privileges and tax loopholes currently enjoyed by the wealthy while maintaining incentives for business to remain competitive and provide employment. We need to remember that our social programs require constructive reassessment to make them realistic and responsive to those in need.

We do not need a slash and burn approach that would ultimately deny social services to the poorest and most needy citizens in this country. We do not need reactionary simplistic solutions to complex problems. We do not need to abandon our liberal roots of tolerance, fairness and compassion by reacting in a knee-jerk fashion to neo-Conservative agendas.

I know we can bring in a budget that will promote wise and careful spending while increasing revenues by broadening the tax base to include Canadians moved from the ranks of the unemployed to employment.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, I listened to the hon. member very carefully and I must say that, on several points, he seems to agree with what I said in the speech I delivered in this House earlier today. First of all, he said that we are faced with a revenue problem, and I wholeheartedly agree with him. He used the words fairness and equity, which are key words in our taxation system. And I also agree with him on that.

He talked about the need to reform our tax system, not by targeting the middle class which is the driving force behind the economic recovery and which directly supports the economic cycle, but by increasing the tax base to reach those who do not pay their fair share of taxes. I would like the hon. member to comment a little further on this.

There is another issue I want to raise. In his speech, the hon. member did not mention spending cuts. Does that mean that he thinks the present level of federal spending cannot be reduced and that a revenue-based approach is the only way to put public finances back in order?

[Paul Devillers, Liberal, Simcoe North, ON]

The comments I made about the careful review that is required in federal spending has been highlighted in the Auditor General's report. If the hon. member will recall those comments I think they are the ones he is seeking clarification on on the reduction in spending. There are many programs with lots of room to cut spending while maintaining the integrity of the programs themselves, ensuring that we do not diminish the services for the most needy among our citizens.

[Jean Payne, Liberal, St. John's West, NL]

It is a pleasure for me to participate today in this most important pre-budget debate. I would like to begin my remarks by saying that this debate shows the government's commitment to listen to the opinions of Canadians as well as to make Parliament a more relevant institution.

The budget being prepared by the Minister of Finance will be the most widely discussed budget in history. The previous government left the country in a desperate financial situation. Their economic policies increased unemployment and caused corporate profits to decline. As revenues declined, spending on items like unemployment insurance and social assistance increased.

With a budget deficit of $46 billion, Canadians and this government are faced with some very difficult choices. Do we raise taxes, reduce spending, cut services, or let the deficit increase? Whatever decisions are made, they must be fair to all Canadians in all regions.

The people in St. John's West are facing a number of challenges. Unemployment is very high, business confidence is low, the fishery continues to decline and people are burdened with personal income taxes.

The crisis in the east coast fishery is a problem for all Canadians. It is not just a concern for Newfoundlanders. The fisher people and plant workers are not to blame for the situation they find themselves in. The previous government mismanaged the resource and pulled the rug out from under the people who depend on the fishery for a living.

As people adjust to the new realities of the fishery they need support. The former government set up a short term assistance program that is due to run out in a few months. What people need is a co-ordinated, long term assistance plan that will meet the needs of those involved in the industry.

The people affected need income assistance to compensate for some of their lost income. Useful retraining programs are a must for those who choose to leave the fishery. As well, more research on conservation and certain harvesting methods is necessary to ensure the future health of the entire industry.

The half-measures taken by the previous government simply will not do. I am confident the ministers of fisheries, human resources and finance will design programs that meet the needs of Newfoundlanders and still keep within the government's tight financial situation.

There has been a lot of talk recently about tax increases and broadening the tax base. Increasing the tax base is not a tax grab by government. It is a way to ensure that all Canadians pay their fair share of taxes.

For the past few years Canadians have seen their incomes decline and taxes increase. Consideration should be given to measures to ensure that wealthy individuals pay a fair share of taxes. RRSPs are a common tax loophole that many people will take advantage of. While governments should encourage people to save for their retirement, it is a fact that the more money they have the more likely they are to make use of RRSPs to reduce their taxes. Tax reductions for RRSPs should not be eliminated, but we should look at lowering the ceiling and reducing the tax break to those who are better off.

The number one priority of the budget must be job creation and measures to put Canadians back to work. The people of my riding are eager for the infrastructure program to move into high gear. I applaud the Prime Minister and the Minister responsible for Infrastructure for their efforts in getting this off to a quick start. However there is a greater need for job creation.

The federal government can do a great deal to stimulate job creation directly. It cannot create every job we need. That is where small businesses come in. Small business is the engine of the economy. Unfortunately the previous government did a terrific job of hurting small business owners and keeping them from doing what they do best, creating jobs.

A mixture of the GST, high interest rates, tight credit and problems with the Small Businesses Loans Act put a crunch on small businesses, preventing them from expanding or hiring new employees.

Our new government needs to address these problems. Small businesses need an understanding federal government. Businesses need access to capital to fund product and market development. The GST must be replaced with a tax that is easier for businesses to collect and that reduces the growing underground economy. Only when small businesses find their feet will the economy really begin to pick up.

All measures of the budget should be designed to increase employment. When people start working once again they will start paying taxes again. The biggest problem faced by the government is not where to cut or increase taxes. The biggest problem is the lack of people working and paying taxes. Instead of people drawing from the system, we need to have them paying back into the government purse.

The finance minister has a difficult job ahead as he tries to balance the need of Canadians to work and the government's need to reduce the deficit. The constituents of St. John's West are watching. I know the minister will do his best to strike the balance that is necessary to get this economy rolling once again.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, my question for the member concerns her comments on RRSP limitations. She spoke in favour of reducing limits for Canadians with above average incomes.

Does it also follow that the member believes retired Canadians who have above average incomes should not receive old age security benefits? If not, why not?

[Jean Payne, Liberal, St. John's West, NL]

Mr. Speaker, I am of the firm conviction that anybody who is receiving above average incomes or pensions should not be permitted to dip into the government purse.

I am not quite certain at this stage how the Minister of Finance is going to deal with this situation but, if in fairness to all Canadians it means having to claw back pensions from those people who are receiving above average income either by pensions or otherwise, it is my firm belief we should look at it.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I congratulate the member for St. John's West on a fine speech.

I note that she said there was a lack of people working and paying taxes and that in this country we have tax consumers and tax producers. She also spoke about the problems with small business.

However I find that very little was put forward as proposals to address the problems we have. I hear so much about how we must do this, how we must do that and how we must do something else. I hear that we have an abundance of unemployed and a lack of jobs available. I hear that we have too many people on welfare and not enough people working.

I am looking for some real answers as to what the hon. member would propose to get Canadians back to work and to bring the deficit down in order that we can look forward to some kind of reasonable future for our children.

[Jean Payne, Liberal, St. John's West, NL]

Mr. Speaker, I thank the hon. member for his question. I believe the Minister of Finance has made a fine start in the development of the infrastructure program he has put forward.

As I said in my maiden speech earlier this week, the people in my riding are very happy with the infrastructure program that has been put forward.

Again I say to the hon. member that in order to reduce the deficit I believe we need more people working, more people paying taxes than taking out of the government purse. The way to do that is to increase employment and the infrastructure program is certainly a good jump start in that respect.

[The Acting Speaker (Mr. Kilger)]

Before continuing with debate, I would like to preface my remarks by reminding all members that as your presiding Speaker at this time I am in your hands.

However I would like to make you aware that I have a list outstanding of nine speakers consisting of two government members, two members from Her Majesty's Loyal Opposition, four members from the Reform Party and one Independent.

I would be prepared at 10 p.m. not to see the clock but I would not want to extend today's sitting beyond this list of speakers. If I could add to my suggestion that if you were to forgo the five minutes of questions and comments for the remaining nine speakers for a total of 90 minutes, it would bring us to the end of the day at 10.10 p.m.

I am your hands and I am seeking your direction and your consent, if possible.

[Some hon. members]

Agreed.