House of Commons Hansard #12 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.
Speech From The ThroneGovernment Orders
The Acting Speaker (Mr. Kilger)
It being six o'clock p.m., it is my duty pursuant to order made Thursday, January 27, 1994 to interrupt the proceedings and put forthwith every question necessary to dispose of the address in reply to the Speech from the Throne. Call in the members.
(The House divided on the motion, which was agreed to on the following division:)
Elsie Wayne Progressive Conservative Saint John, NB
Mr. Speaker, on a point of order. It was my intent to vote for the budget-I am sorry, for the speech from the throne. I might vote for the budget but I want to wait and see. I am sorry that I missed that. It was not my intent to vote against the speech from the throne.
Speech From The ThroneGovernment Orders
The Speaker
Colleagues, we are new at this game, especially me. Changing a vote would require unanimous consent. Is it agreed?
Herb Gray LiberalLeader of the Government in the House of Commons and Solicitor General of Canada
Mr. Speaker, I want to assure my colleagues that I do not intend to change my vote.
I have a motion that is customary to move at this point in the proceedings. I move:
That the address be engrossed and presented to His Excellency the Governor General by the Speaker.
(Motion agreed to.)
The House resumed consideration of the motion.
Guy Arseneault Liberal Restigouche—Chaleur, NB
Mr. Speaker, it is with great pleasure that I take part in this historical debate today. Before starting my remarks however, I would like to congratulate you, Mr. Speaker. I am convinced that, under your direction, the House of Commons will be run in such a way that the faith of the people of Canada in their government and in this institution will be restored.
I would also like to take this opportunity to thank the residents of Restigouche-Chaleur for their show of trust. I am grateful to them for renewing my mandate and I look forward to accomplishing great things with them in the years to come, not only for Restigouche-Chaleur, but also for Canada as a whole.
I want to thank the Minister of Finance for his speech this morning and for holding this debate. This kind of consultation reflects a major change in how power will be exercised under a Liberal regime as opposed to another one. I welcome such a change and hope that there will be many more debates like this one in the future.
A strong economy is the very foundation of a strong society. But how can we have a strong economy when we are facing numerous challenges as a nation and have many interconnected problems to resolve?
Soon after coming into power, this government took major steps relating to infrastructure and residential renovation. By the way, I would like to mention the excellent work my colleagues have done in quickly implementing these major programs.
Yet, much remains to be done. The federal debt and deficit are stifling this country's potential. I think that no one here can deny that. It is on the process of deficit reduction that we disagree.
I would like to remind the Minister of Finance of a few crucial words, and I quote: "Deficit reduction is not an end in itself. Its rationale is to improve productivity, real wages, and living standards of our children and their children. If the measures to cut deficits actually diminish GDP, raise unemployment, and reduce future oriented activities of government, business, and households, they do not achieve the goals that are their raison d'être: rather they retard them."
This quote is from Nobel prize winner James Tobin and appeared in the Liberal red book.
I urge the minister to take a balanced approach in reducing the deficit. The deficit cannot be further reduced on the backs of the middle class. Furthermore, any move toward further drastic expenditure cuts will undoubtedly lead to increased unemployment.
As part of a balanced approach the Minister of Human Resources Development began the process of renewing Canada's social safety net yesterday. Today's debate is an important step in renewing our budgetary process.
I would suggest to the minister that we take steps toward total tax reform. The GST did not bring balance to the Canadian tax system. Today the money that runs this government is coming in a disproportionate manner from the taxes paid by the middle class.
Over the course of the past decade the percentage of taxes paid by the middle class has risen dramatically while the taxes paid by corporations have declined. Moreover, the taxes paid on investment income have all but disappeared.
What kind of message is this sending to the Canadian public? It says that the most expensive way to make a living is to have a job working for someone else. It is time for everyone to pay their fair share of taxes. Corporations can no longer expect to gain from the numerous benefits of doing business in Canada without contributing to the system.
I would suggest that the minister take steps toward the institution of a minimum corporate tax. When one mentions a minimum corporate tax the business community cries that such a tax would make the cost of doing business in Canada unreasonable and therefore force it to relocate.
These are empty threats. Over half of the total untaxed profits in 1987 were derived from the top 145 corporations which reported annual profits of $106 million on average, while 2,000 firms earning on an average of $1 million accounted for 80 per cent of untaxed profits.
These companies are reporting profits, huge profits at that, and they refuse to pay their fair share of taxes.
I urge the minister to take steps to end this practice. A minimum level of taxation would go a long way toward resolving our deficit problems. May I add there are some individuals out here as well who pay no tax whatsoever and again we should look at making sure they pay their fair share of taxes as well.
I would also like to remind the minister that the big losers in this recession have been the very future of our nation, our youth.
The jobless rate among youth is unacceptably high. While some of the jobs lost by youth over the past few years have been recovered nearly 60 per cent of these new jobs were part time.
Our education programs must prepare our youth for the challenges that lie ahead. We must prepare them to face the 21st century. We must provide them not only with the knowledge and skills to meet the challenges that lie ahead, we must provide them with the hope of a better future.
The steps the government has made toward the formation of a youth apprenticeship program and a Canadian youth corps are important in this regard.
We must continue to increase the literacy and numeracy skills of our young people. We must work to ensure that there is increased co-operation between all levels of government and the establishment of national educational standards.
We must remember that our youth will be the driving force behind the economic recovery and we must provide them with the tools to effectively and successfully meet this challenge.
I realize that the Minister of Finance has been handed a difficult task. Expectations are high. I and the citizens of Restigouche-Chaleur understand that there are no easy solutions. We believe in a balanced approach, an approach that recognizes that the deficit must be reduced, but only in a manner that is compatible with putting Canadians back to work.
We believe in the evolution and renewal of our social programs so that they remain responsive to the needs of Canadians. We believe in major tax reform, a reform that sees fairness and equity as the basis of all future fiscal and monetary decisions by government.
Finally, we believe in our ability as a country to overcome our challenges and build an even better future.
Ron MacDonald Liberal Dartmouth, NS
Mr. Speaker, I listened with a great deal of interest to my colleague who has outlined a number of proposals that I think would be very constructive and I am sure that they will be considered by the Minister of Finance.
I have known the hon. member for a number of years. He has worked diligently over the years in trying to be productive and positive and constructive in this place and I think that he has contributed a great deal in his pre-budget debate that we are having in the House of Commons.
However, I just want to throw out a couple of other things that I think would aid not just the region but aid nationally in our two pronged approach. One is, obviously, to create jobs and to stimulate the economy through the budget that will be coming down. Another is to try as best as we possibly can to tame that demon that is called the national deficit and spiralling debt.
One of the things that I think clearly could be done, and my colleague here who is chair of the Atlantic caucus might wish to comment, is to have the Minister of Finance address the real problems affecting the competitiveness of the port of Halifax. That will impact on the entire Atlantic region and will create jobs all throughout the economy.
The problem with the port of Halifax and its competitiveness is not the port itself, it is the rail line which goes up through Nova Scotia, through New Brunswick and into Quebec. Over the last number of years we have seen that rail link become less competitive. The rates have not gone down, they have gone up. The on time delivery, the length of time that it takes have all impacted in a very major way on whether we have competitive businesses in Atlantic Canada and whether the port of Halifax would be poised to take advantage of the new global trade routes.
In the past I have raised in this House, and it was supported by members of the Atlantic Liberal caucus in opposition, that the Minister of Finance or the Minister of Transport of the day could look at two very simple things that would have a major impact on the efficiency and effectiveness of rail transportation in Atlantic Canada.
After all, if we do not have viable modes of transport in Atlantic Canada we will not have industry. It is as simple as that. We are not close enough to our markets.
One of the things that we have suggested is that the Minister of Finance look at the possibility of accelerating the rate of depreciation for new rolling stock. That would put Canadian railroads on an even footing with American railroads. It is budgetary. It is a fiscal measure that can be taken that does not really cost money but which could have a major impact on the competitiveness of products travelling over the rail lines in Atlantic Canada.
The second thing we could do, clearly, is to look at the avoidable costs of rail transportation. We need viable rail service in Atlantic Canada to be competitive. One of the things that has been suggested by the Atlantic Provinces Transportation Commission is that the federal government remove the excise tax on diesel fuel used for the transportation of goods by rail in Canada.
Those two measures alone, which we begged the previous government to look at, would increase in a substantial way the competitive movement of goods through the Atlantic provinces, not just into Quebec and central Canadian and western Canadian markets, but down into the midwestern markets.
I would ask the member who has just given his speech, and a very good address, if he could comment about those types of things, those regulatory changes which in a major way could have an impact on the viability of competitive industries, not just in Halifax, not just in Dartmouth, but in his area as well in New Brunswick.
Guy Arseneault Liberal Restigouche—Chaleur, NB
Mr. Speaker, I say to everyone listening that the hon. member for Dartmouth presented his case very well in opposition and in government. He has been a very forceful speaker and forceful lobbyist. I do not know if I can use that word; it is not really the right word to use. He has worked very hard for the port of Dartmouth and for his constituents. Time and time again I have sat through national caucus and Atlantic caucus. I have been in the House when he has asked numerous questions. He has made numerous speeches. He has the port of Halifax at heart as do all of us in Atlantic Canada. We are all one region. What happens in one part of the region affects the other economically.
Transportation is vital to Atlantic Canada. It is vital to the port of Halifax. I would have to go along with the member and say I agree wholeheartedly with his assessment of transportation in Atlantic Canada. I wholeheartedly agree with his assessment of rail transportation.
In northern New Brunswick rail transportation is very iffy at this point in time. I feel confident we will be able to maintain it. We have a mining area and we have ports. I think the suggestion of the hon. member that the rate of depreciation with regard to rolling stock be increased is a very good. It would make us more competitive with the U.S. The removal of the excise tax on diesel fuel whenever anything is transported via rail is also a good point. I hope the Minister of Finance will take them into consideration.
I would like to mention another point in closing. If no one else has a question perhaps the member could comment on it as well. I am referring to the establishment of a strategic procurement plan where the government, rather than give out contracts carte blanche, would try to use the plan to stimulate the economy, to see if companies would put money into research and development as a result of receiving contracts or make money available in venture companies as a result of receiving government contracts.
Jim Silye Reform Calgary Centre, AB
Mr. Speaker, I would like to begin by complimenting the government on its use of pre-budget conferences in the House of Commons. A debate like today is an attempt to open up the budgetary process to Canadians and House members. I realize there are problems with two-way communication because the government cannot do what everyone says, but the process will be a real sham if the finance minister suffers from selective hearing to justify his budget.
We look forward to his budget which will be the proof of his ability to listen and to keep his promises. Because previous Liberal and Conservative governments have neglected the deficit and the growing burden of debt for so long, the easy options for correcting the problem no longer exist.
As a constructive alternative today I forward the idea that less means more. Less taxation means more revenue for government and commerce. Less taxation means more money in the hands of people who know how to spend it better. Less government spending means more revenue can be applied to the debt. The vehicle through which the government can achieve economic revival is a new simple, visible and proportional tax which will also eliminate the need for the GST.
The need for tax reform is obvious. The Minister of Finance has said that many Canadians "have withdrawn their consent to be governed and are demonstrating that by resorting to the underground economy and refusing to pay taxes". The government is losing billions of dollars on an underground economy which is valued at $60 billion to $80 billion because the public has lost confidence in the government's ability to manage money, resources and live within its means like taxpayers have to do.
Even the Prime Minister himself has acknowledged the fact that our present system is not working. This is not surprising. The present tax system is too complicated, too high and too unfair. These factors in combination with consistent government overspending are stifling our economy. The current government is presently acting as though there is a revenue problem, not a spending problem.
However when we examine the facts we find revenues in excess of $126 billion. Total expenditures excluding the interest payments on the debt are less than $126 billion. It is the interest on the debt that creates the deficit. Does that sound familiar? Interest expenses on federal debt now total 33 cents of every tax dollar.
I submit it is the debt and the interest expense to service the debt that put in jeopardy the viability of existing programs. Therefore we should not be adding to the debt annually at a rate of $35 billion to $45 billion.
We have misspent and overspent money for the last 25 years. Since 1968 we have spent more money each and every year than was brought in. We cannot survive like this. Creditors are watching this 35th Parliament very closely. The problem needs solving now, not next year.
It is my belief that to stimulate the economy and to increase revenues for government, lenders, investors and consumers must possess a larger pool of disposable income. If the current government continues to take more money out of the economy through higher taxation, it will in actual fact serve as a deterrent to the economy creating higher unemployment and keeping us in this recession much longer.
That is why I recommend the implementation of a flat tax on individual and corporate income. A creation of a flat or proportional tax is a way to increase constructively the revenue side of the budget, remove incentives for an underground economy, restore fairness and, most important, stimulate economic growth which is a priority of the Liberal red book.
This concept is not new to the House or the government. The member for Broadview-Greenwood who supports a single or flat tax wrote: "Lower marginal rates and more take home pay would be an incentive to work harder and smarter. The new incentives plus elimination of avoidance and evasion would lead to this tax taking in more revenue, even with this lower rate".
The objective of this tax would be threefold. First, it would simplify current complicated tax forms so that all Canadians could understand them. This would increase savings for the Department of National Revenue in the collection of taxes and the monitoring of all personal and corporate tax exemptions.
Second, it would restore equity into the tax system eliminating the perception that one group of taxpayer is favoured over another.
Third, it would restore integrity and bring effectiveness to the system by eliminating the need for so many tax concessions and loopholes, an objective that was also stated today by the finance minister.
The finance minister said today that he planned to build equity into the budgetary process. He then proceeded to commit the Liberal government to the preservation of the current social system without reducing any expenditures on it and hinted that he planned to close tax loopholes and exemptions.
Our social programs are gold plated Cadillacs we cannot afford. They can be replaced with a less expensive model without hurting the efficient delivery of the same social programs. The finance minister stated that Canadians can expect another deficit in the range of $40 billion.
Once again for the 26th year in a row government will spend more money than it brings in. When will it stop? There is no commitment by the government to balance the budget or cut the deficit. One does not build equity as the finance minister wants by continually adding to the debt.
Should the finance minister be serious in his comments that he is seeking input on how to balance the fiscal scales, here are some suggestions. First, he could target social spending to the truly needy and perhaps eliminate OAS payments to seniors whose household income is in excess of the national household average of $54,000. The saving would be $2 billion to $3 billion.
Second, he could make UI self-sustaining, not by increasing premiums but by tightening benefits and eliminating payments to abusers and seasonal workers whose incomes are above $54,000 per year. The saving would be $3 billion to $6 billion.
Third, he could eliminate subsidies to businesses, megaprojects and regional development programs. The saving would be $1 billion to $3 billion.
Fourth, he could cut the Department of National Defence budget by 6 per cent. The saving would be $660 million.
Fifth, he could privatize crown corporations and apply the sale proceeds to our national debt. The saving would be $2 billion to $3 billion and perhaps a reduction of the debt by $5 billion to $10 billion.
Sixth, he could rationalize spending on government programs to generate growth and confidence in the economy and eliminate the money guzzling programs in government operations. The saving would be $600 million, plus or minus.
Increased taxation and a reliance on infrastructure spending alone will not significantly reduce the deficit or encourage a economic recovery. Make work programs do not create long term jobs. They are simply another way to spend taxpayers' money.
When the money runs out for the contractors and construction workers under the Liberal plan, the jobs will stop. Taxpayers will then be left with an even bigger debt to be serviced through increased taxation. What if the interest rate goes up? How will we service that debt? Where will the money come from? Canadians are still paying for programs created by previous governments during the seventies and eighties. The federal government's responsibility is to create a healthy economic environment that favours investment, encourages initiative and risk taking, and protects the environment.
It is widely known that outside investors prefer to do business where governments are fiscally responsible. This is why the government must get a firmer handle on expenditures, not just raise taxes.
Alberta Treasurer Jim Dinning said recently: "If you put more money into government hands they don't save it; they spend it". If the purposes of taxes is to provide peace, good order and good government in Canada then let us do it and let us not just talk about doing it.
In conclusion I hope the Liberal definition of fairness in the taxation system does not mean let them overtax everybody.
Ronald J. Duhamel LiberalParliamentary Secretary to Minister of Public Works and Government Services
Mr. Speaker, I want to ask but one question and I will do it briefly because I see other colleagues want to raise some as well.
The hon. member who has just spoken will realize that the Liberal Party formed the government because it had the largest vote of any other party in the last federal election. During that election the Liberals stated that we wanted as a first priority to create jobs. We put forward a job creation plan in the short term to boost the economy immediately, the infrastructure program. We laid out our long term program: the youth corps and more apprenticeships, ensuring that small and medium sized businesses have the climate to permit them to create jobs as they have during the last decade. They create over 85 per cent of new jobs.
I have a specific question. Is the hon. member now questioning, subsequent to the election, the wisdom of Canadian people in having elected the Liberals as a majority government? We said that jobs were our first priority. Is he suggesting, now that we have been elected, that we should now change that? He did say, if I recall correctly, that we should not be spending on the infrastructure program because it would simply increase the debt and it would not really make any significant difference. His leader made similar comments. Whose side is he on? Is it the people's side or his party's side?
Jim Silye Reform Calgary Centre, AB
Mr. Speaker, in response to the hon. member, I would like to clarify a couple of points the member asked about.
I did not say that we did not support or justify spending on infrastructure. The government has $126 billion. It should priorize spending. If it means including infrastructure, by all means it is the government's responsibility now to decide how that money is spent efficiently and effectively.
What we are talking about and are concerned about is increasing the revenue take through increased taxes. If the government wants to balance the budget by increasing the revenue just through that infrastructure program, it is not enough to generate new tax dollars to cover increased costs.
With respect to another point, we also want to create jobs as does the Liberal Party, but our philosophy or suggestion is that jobs are created by the private sector which does a much better job. We should redistribute the wealth and put it back in private sector hands, not keep the money in government hands which has proven over and over again for the last 26 years that it does not know how to create long term meaningful jobs. All it knows how to do is take in money and mess it up. We would like to put that money back where it should be.
The hon. member asked a tricky type of question regarding whether I supported the will of the majority of the Canadian public. We all know how the electoral system works. We all know how they got their majority. We all know where they got their majority.
Many people in the country also support our point of view. It is not just that the Liberals have carte blanche. It is also their responsibility as government to listen to some constructive alternatives and to listen to some constructive suggestions. Members of the opposition are here to help them improve their programs. If they do not do that and if they just dictate to us, they will breach their commitment and responsibility just as the previous government did and will end up with the same fate.
Paul Crête Bloc Kamouraska—Rivière-Du-Loup, QC
Mr. Speaker, let me start by saying that I agree with the hon. member who just spoke about the urgent need to act. He made a number of suggestions and while I do not necessarily agree with them, I do nonetheless find many of them to be interesting.
Perhaps I could add to this by saying that what really matters is not necessarily reviewing all social programs or adding to the tax burden, but rather taking advantage of this pre-budget period to review expenses carefully. On this point, I would like to draw the attention of the House to three areas in which, in my opinion, significant waste occurs.
With respect to manpower, among other things, government duplication costs Quebec $250 million annually. The same holds true for regional development where fixed costs are estimated at $26 million.
Lastly, there is much duplication as far as officials are concerned in the fields of education and social affairs. I believe it is important for the federal government to seriously consider withdrawing from these areas. Tangible savings would be achieved and the goal of increased efficiency would be achieved.
Jim Silye Reform Calgary Centre, AB
Mr. Speaker, I feel that was a supportive comment by the hon. member and therefore I do not feel I have any need to add to his comments.
Elwin Hermanson Reform Kindersley—Lloydminster, SK
Mr. Speaker, before I begin my remarks I would like to thank the government for this apparently unprecedented pre-budget debate. May I commend the government for holding this discussion. It is an example of a more open consultative process which I hope will lead to a better budget than Canadians have recently been accustomed to.
The finance minister will hear advice from all corners of this place during the debate. This advice will include the thoughts of 2.5 million Canadians who voted for Reformers sitting on this side of the House. We will be expressing the concerns of all Canadians who believe that their tax money is not being spent as wisely as it could be. I ask the minister to act on these concerns when preparing the budget document.
The introduction of a budget is one of the most important functions a government performs. The budget is an outline of the government's fiscal plan for the country in the coming year. It directly affects every other government program, service and initiative by the way it distributes tax dollars. For this reason the consultative process must balance the needs and wants of Canadians with their ability to pay for those needs and wants.
When preparing a budget a government must do two things. First the government's primary task is to lay out a plan which allocates the hard earned money Canadian taxpayers have entrusted to them. This must be done in a way to deliver federal services and programs in as fair and economical a manner as possible.
The second consideration is one that often gets forgotten. The government must also treat future generations of Canadians fairly. It must ensure that their opportunities and quality of life are not hindered by the millstone of massive debt. It is unfair and immoral for us to spend money on ourselves today and leave the bills for our children and grandchildren to pay tomorrow.
All Reformers have a mandate from Canadians to reduce the tax burden through controlling government expenditures. I have chosen today to comment about federal agriculture expenditures because agriculture is the primary industry in Kindersley-Lloydminster and, indeed in much of Canada, because the production of food stuffs is vital to adequately sustain over five billion human beings, many of whom depend on food produced by Canadian farmers.
The purpose of funds earmarked for agricultural support should be primarily to assist agricultural producers who through no fault of their own find themselves financially disadvantaged. There are at present almost 50 different agriculture support programs and initiatives. They are far ranging and include loan guarantees for farm improvements and marketing co-operatives, a special Atlantic livestock initiative, a national farm business management program, a provincial potato diversion program, the southwestern Ontario soil and water quality enhancement program as well as the national soil conservation program, the Canadian agri-food development initiative and economic regional development initiatives.
There are even some in my province of Saskatchewan; a Canada-Saskatchewan partnership agreement on rural development, a Canada-Saskatchewan partnership agreement on irrigation based economic development.
We have not even heard of most of these programs. They are not very well known and we are not sure of their actual value. The administrative costs of running so many different and sometimes overlapping or outdated programs is staggering. Over $3 billion per year is spent by the Ministry of Agriculture of which almost $900 million is spent on operating and capital costs alone. These figures do not include the additional $728 million spent under the Western Grain Transportation Act.
This appallingly high level of overhead signals waste and mismanagement. By consolidating those 50 programs and initiatives into just a few, the government could probably save over $400 million and provide better support to the industry as a result.
We must expose the myth that more money spent always results in more effective programs. In the case of agriculture it is not only possible to provide better support with fewer dollars but it is essential to the long-term sustainability of the industry, given the financial shape of the government. We must be continually vigilant to ensure that whatever programs we establish today will be economically viable tomorrow.
Reform of agricultural programs is essential because we must be able to defend the cost of agricultural support to taxpayers, consumers, and future generations. Support programs that protect farmers and producers from situations beyond their control are defensible and desirable for the maintenance of our agricultural industry.
Defensible support programs include, first, an actuarially sound federal-provincial-producer funded crop insurance program to protect the farmer from natural disasters such as floods, frosts or droughts. I urge the Minister of Agriculture to review the program at least in my province of Saskatchewan where increased premiums, lower coverage and truckloads of bureaucratic red tape are ruining the program. For the record I also want this government and all Canadians to know that Reformers supported the crop insurance program in the last election and campaigned to strengthen it.
Second, we need an income stabilization program to help protect farmers from market cycles inherent in an open market environment. This shared federal government-producer program should have universal application and be based on the whole farm level rather than being commodity specific. Producers in the supply managed sectors should have access to this program as tariffication has been introduced. This program has the additional benefit of helping farmers make the transition into retirement, as remaining funds could be transferable to an RRSP account if the government does not dismantle the RRSP program.
A third program promoted by Reform is a trade distortion adjustment program designed to compensate exporting producers as a direct countermeasure to foreign subsidies. The program should include an automatic triggering mechanism and be based on the historic volume of exported products. Such a program would not require producer premiums and should ensure timely payouts within the same market period. We suggested taking funds from the ill-designed GRIP program and the slowly eroding Western Grain Transportation Act and thereby provide a
tool to beleaguered producers that is superior to anything available today at no more cost to taxpayers.
Reformers believe that if these improved programs are targeted to those producers most in need there will be many benefits. First, support dollars that are strategically targeted increase their effectiveness manyfold. Second, by delivering support more directly to the farmer rather than through a large bureaucracy the money gets where it is needed faster. Third, reduced overhead costs frees up more money for those in need.
This is but one example of how the government can increase the effectiveness of a program for those who need it and at the same time reduce the burden on the taxpayers.
If we can save dollars in something so basic and important as the Department of Agriculture surely there are many other government departments where substantial savings could be made. The department of aboriginal affairs for instance could be similarly realigned. Fewer dollars appearing in the budget could still mean more money in the hands of our aboriginal people. Another example is the Department of Multiculturalism and Citizenship. Justifiable functions of that department such as citizenship registration and human rights protection could be transferred to more appropriate departments such as employment and immigration and justice respectively. In this way almost the entire cost of a government department can be saved at the same time as continuing to deliver defensible services.
In conclusion, I would repeat that if within the Ministry of Agriculture we can increase program effectiveness and save $400 million by reorganizing the programs, surely there are economies to be made in all other departments as well.
Once again I want to congratulate the government for holding this debate. I urge the Minister of Finance as well as the Minister of Agriculture to consider these suggestions carefully. I have not made these suggestions for partisan reasons or for party bragging rights when progress is made. I have made these suggestions for the good of Canada not only today but for future generations as well.
Don Boudria Liberal Glengarry—Prescott—Russell, ON
Mr. Speaker, I listened to the comments of our colleague. He referred particularly at the beginning of his remarks to cutting and eliminating some loopholes in the tax system. He gave a few examples.
I seem to remember only a few days ago the leader of his party talked about getting assurances from the government that a measure that existed for utility companies in his province whereby they did not have to pay taxes would be retained. I find the discourse rather interesting in that regard.
I want to ask him about another so-called loophole, at least in the eyes of some, not me. I consider the lifetime capital gains exemption of $500,000 on the disposition of farmland to be a very valuable instrument. It is a form of pension for farmers as they accumulate wealth gradually. When they dispose of their assets they are able to keep those funds without taxes. This is much the same way that people accumulate by making tax deductible contributions toward their pension fund if they are teachers, factory workers or what have you.
Does this capital gains exemption fit into one of the loopholes to be abolished? Does my colleague agree with me and hopefully with all the officials of the finance department who may be listening to us making these remarks now that it should be retained for the benefit of farmers so they can have what is the equivalent of a pension plan for the agricultural community?
Elwin Hermanson Reform Kindersley—Lloydminster, SK
Mr. Speaker, I welcome the hon. member's comments.
He may have a couple of speeches confused. In my address I did not address the tax loophole issue although that certainly is a concern that I, many other members and also Canadians have.
With regard to his comments regarding the $100,000 or $500,000 capital gains exemption, our party has looked at those programs as well as the RRSP program as being an effective tool to help Canadians to plan security for later years in life so as not to be a burden on Canadians through needing assistance in other areas.
I feel quite comfortable in saying that our party would be fairly supportive of maintaining the $100,000 tax exemption for persons and also the $500,000 tax exemption for farmers which as the hon. member points out has been an effective tool to provide for their security in later years, once they are not actively in business and have sold or transferred their operations to family.
Simon de Jong NDP Regina—Qu'Appelle, SK
Mr. Speaker, first I wish to congratulate the member for Kindersley-Lloydminster especially on the fact that he brought forward the position of the Reform Party on agriculture.
I also come from Saskatchewan where agriculture still remains our most important industry. There is a lot of coffee shop talk about what the Reform platform on agriculture really means. Today I heard more detail about the program of the Reform Party concerning agriculture.
I entirely agree with the hon. member that much of the existing systems should really be wiped out. They are a bureaucratic mess. They create more uncertainty for many of our producers in trying to figure out whether they should apply or whether they qualify. Quite often they do not know until the next crop year. It just creates a whole bunch of uncertainty.
Part of the problem with the existing system is that it really rewards the bigger producers. Approximately 75 per cent of the tax dollar that goes into agriculture goes to around 25 per cent of the producers. When the payments are based on seeded acres or on so many bushels then the bigger the one is, the more subsidy and support one receives.
We feel that to maintain a viable rural community one has to maintain the medium sized family farms. That is why our election proposals had a basic cost of production for a certain number of bushels. If one was bigger the rest was done at his or her own risk.
Does the Reform Party also encompass the notion of a cap to ensure that the tax dollar that goes to agriculture gets more evenly distributed among all of the producers?
Elwin Hermanson Reform Kindersley—Lloydminster, SK
Mr. Speaker, I thank the hon. member for Regina-Qu'Appelle for his comments and also his question. If he had followed our election campaign positions on agriculture and other issues he would be aware that Reformers promoted the targeting of funds in a way most beneficial to producers. We expanded that in a larger way. We even suggested that by targeting funds for social programs we might be able to salvage them rather than see them eroded by the government's inability to sustain them because of lack of funds with a growing debt.
I concur with the member's suggestion that some of our programs right now are badly managed and very little thought has been given to how effective they could be. For instance, some of our agriculture programs are not good for the environment. One instance is the Western Grain Transportation Act which has no cap on it. Someone produces canola at $12 a bushel and receives the same benefit from that program as someone who is growing wheat and struggling at $2 a bushel.
What we are suggesting is a trade distortion adjustment program that would target those funds to producers who are hurt by the trade war and thereby sustain their economic viability.
Francis Leblanc Liberal Cape Breton Highlands—Canso, NS
Mr. Speaker, since this is my first real address since the opening of the new Parliament, I would like to begin by congratulating you and your colleagues on your election and appointments to the speakership. I pledge my entire co-operation with you in the sometimes difficult job that you have in maintaining the order and decorum which is so necessary for parliamentary debate.
I would also like to express my thanks to my constituents in Cape Breton Highlands-Canso for renewing their confidence in me on October 25. Whether or not they supported me, I would like to pledge to my constituents that I will work as hard as I can on their behalf in this House of Commons and also within the party of government over the next four years.
I am always moved and deeply touched by the support, comments and requests for assistance which I receive from my constituents. It has been a source of learning and inspiration for me over the last four years to have been able to be their member in Cape Breton Highlands-Canso. I really want to express that once again.
I want to comment on the new mood of co-operation and constructive debate which has characterized this House. It has been a very pleasant change from the previous Parliament to see from all sides of the House such an expression of earnest willingness to participate in sincere debate. We can give a lot of credit to our friends on the opposite side of the House, particularly the new members who have shown in a very impressive way their determination to address the problems we faced in the past in the House of Commons of not showing the voters that we were serious about the business for which we were elected.
I welcome the motion of the Minister of Finance and his decision to open the budget process to a broad range of consultation across Canada and also to have the process in this House. It is a new endeavour for this government. It also reflects the new mood of consultation and willingness to work with members of Parliament and Canadians which has characterized this administration from the beginning.
I believe it is already bearing fruit in terms of the mood of Canadians and the fact that Canadians can see that the difficult years are behind them. That mood of confidence is starting to reflect itself in the economic indicators and in the spirit of confidence which is occurring throughout the economy. I hope that will make the tough decisions which the Minister of Finance has to make over the next few weeks a little easier.
Obviously the most serious and difficult problem presently facing the Minister of Finance and the Canadian economy is the high deficit of the federal government, as well as the deficits faced by Canada's provinces. It has been a serious handicap for the Canadian economy. Reducing that deficit has to be a priority of the Government of Canada and of the Minister of Finance and it is.
As the minister mentioned earlier today this problem cannot be addressed in isolation. The budget cannot deal with the question of raising taxes or drastically cutting expenditures without regard for the need to produce growth and jobs in the Canadian economy. Nor can the Minister of Finance address the deficit on the backs of the most disadvantaged Canadians. It has to be addressed over the longer term.
We have to begin with this budget. We have to produce measures which will increase growth and increase the revenue generating capacity of Canadians so that the deficit can be brought down as part of the growing Canadian economy. That is the underlying message which should be conveyed to the Minister of Finance as part of his budget preparation process.
With respect to the basic decisions of tax policy which inevitably will form part of the budget, I want to associate myself with those who would stress the need to simplify the tax system and eliminate the many loopholes and overlaps which exist in the federal tax system and to work toward a more simple tax system.
I am very sympathetic to the work which has been done by my colleague, the member for Broadview-Greenwood, in moving toward the single tax. The extra revenue derived from a very steep regressive tax system, one that is so full of loopholes that it pays people with higher incomes to avoid the tax, is not serving Canadians well. Without mentioning any specific areas I urge the Minister of Finance to consider tax simplification as an objective of his tax policy measures.
Important as they may be, there will be more in the budget than simply tax and expenditure measures.
This budget as the first budget for the next term of this government has to lay the foundation for growth in Canada. As part of the way of doing that it will have to deal with the many areas of government policy that have in one way or another restrained growth for example through excessive taxes on small businesses or through the many complicating features of such programs as unemployment insurance.
I understand and am very pleased to be part of the committee that will examine the whole range of social security reform in Canada including the unemployment insurance system. I believe there is work to be done in that area to make those programs more streamlined, more simplified and less inhibiting on growth and job creation.
Young people in many parts of Canada are finding themselves lured into traps through regulations in the Unemployment Insurance Act that encourage and lead them away from seeking higher education and into positions or jobs which are dead end. It even encourages businesses to provide those kinds of jobs because it is advantageous. We have to work toward eliminating these disincentives in that program and in other similar programs in order to encourage the kind of creation of employment and the kinds of jobs Canadians will need in the future.
However that is only part of the equation. Another part of the equation has to be to work toward fostering the industries of the future. The government has a very active role to play in this. In creating those industries of the future the government has to make sure that all parts of Canada are included.
Because central Canada has been the focus of the manufacturing industries in Canada it is very easy to forget the east and the west. I come from the east where the economy has depended on resource industries which everyone knows have been devastated.
The fishery is a primary employer in my own constituency. Over the last four years it has been devastated. Forestry is a resource industry in Canada which has been undergoing very difficult times in my constituency.
The government has to promote measures that will help Atlantic Canada be part of that economy of the future so that it will not always consider itself a have-not region of Canada. On that point there are measures that this budget can do to begin that process.
Monte Solberg Reform Medicine Hat, AB
Mr. Speaker, I commend the hon. member for his speech. I certainly agree with him that we need to take a close look at reforming the taxation system. I also commend the member for Broadview-Greenwood for his work on the single tax. I think it is a great way to go.
I also agree that we have to take a look at reforming unemployment insurance. There are many disincentives to work in the program as it is presently constituted.
My question for the hon. member has to do with infrastructure. He mentioned that he was supportive of the government's infrastructure program. Does he think that the $6 billion that will come from taxpayers for the infrastructure program is going to be more wisely spent by the government than it would be by taxpayers, investors and small businessmen?
Francis Leblanc Liberal Cape Breton Highlands—Canso, NS
Mr. Speaker, the infrastructure program that this government has put into place is exactly the right stimulus to the economy at the present time. It will create jobs now and increase confidence precisely in those communities where that confidence is most needed.
It will have a spin-off effect. The income from the jobs in those communities which will be created in building infrastructure will end up in the pockets of taxpayers. It will be recycled in those communities, not by themselves but they will begin a process of building those communities, so that they are more competitive in the future.
That is the point of that program. By itself, it will not get us out of the recession but it is an important initiative and an important immediate term measure as part of the government's recovery plan.
Ron MacDonald Liberal Dartmouth, NS
Mr. Speaker, I listened with a great deal of interest to my colleague from Cape Breton Highlands-Canso.
In the last number of years he contributed a great deal on our side when we were in opposition. He ensured that there was a sense of realism in the debate we were having on economic matters specifically dealing with taxation reform, fundamental restructuring of the economy and things like unemployment insurance changes. He also ensured that when we led off that it was not just a lot of bravado coming from the opposition.
I am very pleased to see that he will be making a major contribution as we set out to restructure social benefit programs as outlined by the minister.
I want to pick him up on a point. It is very clear that there are two problems that face the government today. One of the problems is in expenditure. If one looks at the graphs over the past 20 years, one will see that the percentage of dollars spent overall by the government on programs is actually decreasing.
Contrary to what members of the Reform Party and others may think, government spending is not out of control. Government spending seems to be well in control. The problem appears to be the second problem, that is revenue generation.
Over the last number of years we watched as successive governments, even Liberal governments a few years ago, tinkered with the tax system. It seems that every single time that we try to make some modest changes to the tax system we end up by downloading on to the middle classes.
Many would believe that the recession is stubborn and that we are not coming out of it very quickly because the tax burden has been shifted too heavily on to the consuming classes. I would like to support what he said about the efforts of the member for Broadview-Greenwood to put forward at least a proposal that seems to go in the right direction with the single tax.
I would like to ask my colleague if he believes that type of program without any tax increases would lead to the federal government taking in the amount of taxes that it currently does with the economic activity that is going on. Does he believe the single tax system would lead to less tax evasion which we have now seen by witness with growth of the underground economy?