Debates of Feb. 23rd, 1994

The Budget

[Some hon. members]

Hear, hear.

[Ray Speaker, Reform, Lethbridge]

Madam Speaker, thank you very much for the opportunity of addressing this assembly. I would first of all congratulate the minister for presenting us with his first budget. I encourage him today to do better. That will be my objective.

In summary, what I would like to say to the assembly are basically three things: First, look at some of the positive aspects of this budget; second, examine taxation, the deficit budget proposal; and, third, make some proposals on behalf of the Reform Party to this assembly and as well to the Liberal government in terms of the priorities and some of the things it can do to bring the spending of this country in line and deal in a more responsible way with our fiscal budget.

As well at this moment I would like to offer my appreciation to the hon. member for Saint-Hyacinthe-Bagot. The hon. member has been very eloquent today and has laid out a number of proposals. I do not agree with a number of the specifics that were presented to us here today, but I hope when I am able to speak en français that I am as fluent and as facile as the hon. member was here this afternoon.

This budget gives us as Canadians, and certainly members of this House, the first opportunity to judge the government on its promises. Canadians over the last few years have faced a number of difficult things: inflation, large tax increases, GST, and certainly recession.

Canadians are now asking the government a most important question. Will this new budget offer them hope, tax relief, and an end to the chronic deficits that this country has had in the last 10 years, deficits that have smothered us and created difficulties for employment opportunity, business growth and economic growth? They are asking that question and this government must answer it.

To be fair, and this is the Reform way, I want to talk about some of the positive aspects of this budget. First, I want to acknowledge what the government has done in terms of social programs, that it has started to target them toward those most in need. In these sad economic times we as Reformers believe that is a basic principle to be adhered to. In light of that principle, we

recognize the changes to the UIC and the elimination of the age credit as well for wealthy seniors.

Second, I recognize that this budget does bring about restraint, not excessive restraint or the type of restraint we would like to see, but modest restraint. If that is a slight flavour of what we are going to see in the future, then it is a good beginning. If it is not, then it is a very unacceptable start.

What we do not see along with that restraint is a real spending plan and that concerns us. We see this restraint in the military reductions. I know the hon. minister will address this today and will go into detail on some of those reductions which we hope will have fairness across Canada.

Our first review and examination of the reductions taking place regionally seem to be fair and spread across Canada as such. We appreciate the way that was handled. We were concerned prior to the budget that the cuts might be all in one province or in one region which certainly would have been very unfair.

The other area of modest restraint we see is in terms of decreases to business and regional subsidies. The red book had indicated $225 million to $250 million. They are around $150 million less but there is restraint.

The third item is the modest reduction in some of the government operations. We certainly salute that and encourage the government to pursue that direction.

When I examined the budget, and listened in the lock-up and listened to the speech by the hon. Minister of Finance, my attention was drawn to some of the comments on pages 1, 3 and 15 of the budget speech. I would like to read those comments into the record to set the tone for what I have to say later.

This is what the Minister of Finance said they want as a government:

A Canada where our public finances are in order, not ruin.

The days of government simply nibbling at the edges are over.

We need a new architecture, for government and for the economy.

On page 3 we can read this quote:

The era of tax and spend government is gone.

People told us we should freeze spending. We agree.

On page 15 is the support for what I have already quoted: "One of the reasons for the growth of the underground economy is that Canadians believe that taxes are too high. We agree". He said that; I say that. He went on to say:

We want Canadians to rejoin the legitimate economy, not leave it. Our objective is to get growth up and get the deficit down so that in the years ahead, taxes can be reduced. Ultimately, the pay-off for getting the deficit down will be lower taxes.

Those are excellent statements. When I heard them I felt as if I were flying like an eagle over the prairies of Alberta. I felt dominion over all. But all of a sudden, as I read other parts of the budget I felt as if I had crashed like a duck on the ice of Lost Lake in southern Alberta. What a change and what a let down.

When we examined the budget speech we came to the conclusion that the government was not coming to grips with some of the problems. We have renamed it the child of the red book and the budget speech is the red ink book. I am going to talk about that for a few moments today.

First, let us look at why the red ink. Canadians told all members of this House of Commons that they were overtaxed. However, if we look at the red ink book-

[The Acting Speaker (Mrs. Maheu)]

I am sorry. Perhaps the hon. member is not aware that it is not permitted to raise the red ink book in the House of Commons.

[Ray Speaker, Reform, Lethbridge]

Madam Speaker, certainly I will try to-

[The Acting Speaker (Mrs. Maheu)]

I am sorry. I requested that the hon. member not raise the red book from his place in the House of Commons.

[Ray Speaker, Reform, Lethbridge]

Thank you very much, Madam Speaker. I will adhere to that directive from the Chair.

The red ink budget presented to us told Canadians that there was going to be an increase in taxation levels and that the government would be relying on increased revenues for a large portion of its deficit reduction program. That was unacceptable.

Canadians have said in the last few months that we must stop overspending and get rid of the deficit now. What did that red ink book say to Canadians? What did the government say yesterday and today?

The budget will contain a $40 billion deficit and there will be minor expenditure reductions to reduce the deficit, a little today but mostly later. Mostly later, not today. If we examine the budget further we find that most of those reductions were taken by other expenditures, new expenditures of government, so we did not get ahead. We are $40 billion in debt.

Canadians wanted a long term plan, a plan for at least the 35th Parliament. Did we get it out of the red book? We got a two phase plan but it did not meet the request of Canadians. It is totally silent on a formal plan to deal with Canada's economy.

Another thing Canadians wanted was jobs, jobs and jobs and this was on the marquee of the Liberal Party during the election. When we read through all of these documents presented to us, the budget speech, the budget plan, the supporting documents, and the hearings we attended, there was no mention of numbers in the goals for jobs, either through job creation or job opportunities created by small and medium sized businesses across

Canada. The numbers there are minor to the real need of Canadians. There is nothing comprehensive in a plan that speaks to Canadians as to what this government intends to accomplish.

To sum up why I call it the red ink book plan it is because this government has not heard what Canadians have said on taxes, on the deficit, on the plan. Most important the government has not dealt with the question of jobs.

The minister claims he is going to do that. He presented the budget in a pair of what I call farm work boots. I want to say this very clearly. If someone came to my farm one morning, I hope ready to work, and at noon those boots were still clean and nothing really had been done, I would not keep that person around very long.

It is time for the Minister of Finance to get to work and get those boots dirty. It is time that the minister, the Prime Minister and other ministers of this government take on the tough job they face in terms of the economy. They have to show the will to deal with the difficult circumstances, the overexpenditure, the high taxation which is suppressing businesses across Canada, the high taxation which is creating doubt and a lack of confidence for investment that would create job opportunities for all Canadians.

I want to make some remarks about taxes and the attitude of the Liberal government on taxes which is highlighted in the budget. The minister was so proud when he presented it. He said: "For every $5 of cuts we only are raising taxes $1 over the next three years on a three year average".

Looking at some of the projections on the cuts, they are questionable in terms of whether the government will achieve them with the present policies which are in place. That is number one. However the other indicator that may be more realistic is the 1994-95 budget. The cuts for 1994 according to the budget speech are going to be $2.1 billion. The new program funding that will be introduced will be $1.7 billion. The net cuts that are realistic are $.6 billion.

Looking at that picture in terms of taxes versus cuts, for every $1.25 of tax increase there is $1 in cuts. This is the opposite of what the government is claiming in terms of a $5 cut for $1 increase in taxes.

The second thing that concerns me with regard to taxes is that this budget depends on revenue growth; that is, more tax revenue to deal with its responsibility. The expenditure levels are somewhat consistent at $122 billion. However to deal with the deficit and bring it down the government is placing all of its hope on revenue growth. That is all right on one hand but on the other we have to look at the expenditure side.

Looking back in history to the 10 years of government under the Tories and what they did in their plan, they never came to grips with expenditures. They never dealt with priorities and kept on spending. One of the major criticisms that can be made of the present budget is it seems that the tax and spend days of the Tories are not too far away from us. That is unfortunate because we expected this government to do better.

Why should we have some concerns about high taxes and increased taxes? First of all, as was said by the finance critic of the Bloc Quebecois, internationally Canada has the highest tax burden of the G-7 nations, except Germany. When we look at that we wonder about our underground economy. We need to lower the taxes.

The second thing I would like to bring to the attention of government is the provinces. They are concerned about this continuous increase in taxes.

Not too long ago Quebec Premier Johnson said in an article that we have to do everything possible to avoid higher taxes. In that same article his finance minister made some similar comments that we have to work on the expenditure side, cut on the expenditure side, not increase tax revenues. They called on Ottawa to keep the tax levels down.

In Alberta a very comprehensive program of deficit reduction is going on. The premier intends to balance the budget within at least three or four years and get rid of the deficit. That is a very noble plan.

However if Ottawa continues to increase taxes and impose costs on the provinces it makes their job very difficult. We have to deal responsibly with this budget at the federal level.

Another item which concerns me is noted in a document dated February 1994 from the Dominion Bond Rating Service. It comments on the weaknesses of the Canadian government sector. In trying to rate the credit for the federal government, two things are said: "Revenue, the new problem: (a) The economy has a lower tax generation capacity than in the past; (b) Tax rates are high relative to the U.S. in almost every category". I do not think that speaks well for the Canadian scene. We should recognize that and deal with the problem before us.

I would like to comment on the deficit reduction plan of the government. As I said earlier the proposed cuts are offset by spending in 18 new program areas. In this budget there are 15 program reviews. My experience has been that every time a committee or group is put together to conduct a review most of the recommendations are expensive and call for increased expenditures. I certainly hope that does not happen here. However, that is usually the pattern.

The third point I would like to make is that total budgetary spending is to increase over the next two years. It is not going to decrease. There is a slight increase built into it. Under the current conditions that is a rather scandalous circumstance.

One item I raised in the House today was with regard to the Spending Control Act. I feel that is an act that had at least the possibility to set some benchmarks so that when people wanted to examine whether the government is in a positive trend or in a progressive way dealing with the deficit, reducing expenditures, through that act, there would be a benchmark. The government has felt that it can do it on its own. It takes the ceiling off and is going to be responsible. It has not proved that yet and the question is still out. Why not leave it there? Is the government afraid of targets?

Another point I would like to make is that this two-stage budget is not meeting the needs. Stage one is doing almost nothing. Stage two is measures after lengthy and costly studies. That is not good enough. Where and when can we meet these lofty goals?

The 3 per cent plan of the government to deal with the deficit and to reach $25 billion in the year 1995-96 is not good enough either. Canadians need something more concrete. There are a number of reasons why that 3 per cent target is not adequate. The Maastricht treaty that was set up required that as an entrance requirement. Any country that was involved in that economic union was asked to deal with its deficit and balance its budget. That was part of it.

The priorities of the Reform Party are to reduce and eliminate debt. During the period we are here we want to be the conscience of this Parliament and call for very responsible spending.

I would like to move an amendment very quickly:

That the amendment be amended by removing all the words after "government" and by adding thereafter the following words:

and regret that the necessary measures were not taken to balance the budget by the end of the 35th Parliament.

[The Acting Speaker (Mrs. Maheu)]

The Chair will examine the proposed subamendment and will advise the member shortly.

[David Collenette, Liberal, Minister of National Defence and Minister of Veterans Affairs]

Madam Speaker, I ask the indulgence of the House.

I would like to ask the hon. member for Lethbridge a question. I can appreciate some of his comments. He has been pretty fair in his analysis. However, in the context of the subamendment that he has just laid down, the Reform Party obviously wants drastic cuts to our budget.

I would like to ask him how those cuts, if implemented, would play out in the defence budget. Is he advocating in the House today the closure of further defence facilities, more than were done yesterday, such as CFB Winnipeg, CFB Moose Jaw, CFB Edmonton, CFB Calgary, the training facilities at Wainwright and Suffield, CFB Cold Lake? Could the member answer that question?

[Ray Speaker, Reform, Lethbridge]

Madam Speaker, I appreciate the question from the minister of defence. The Reform Party did call for reductions in the area of defence spending based on budget figures of some eight to twelve months ago. Things have changed somewhat in the interim. However, our figure at that time was in the area I believe of 25 per cent, around $2 billion dollars.

In terms of where we are at the present time, we support the reductions that have been made. We are concerned, however, that we sort of put the cart before the horse.

Like other members, and I am sure the minister would like to have done this, we would like to have been able to examine Canada's defence position in total. Then, once we have agreed as to what our objectives are, we could work back and have the budget facility there to support those objectives.

I am sure the minister would like to have done that and we would as well. Under the circumstances, we cannot always have the conditions that are most favourable.

Concerning the reductions that have been made, we support those. I think now we should get on quickly and do the review so that we can then look at whether further reductions can be made.

In terms of specifics, as a caucus or a group we have not done an analysis of each one of the bases. I cannot answer the hon. minister's question regarding that. If I had the information, I would lay it on the table. Our caucus has not taken a step-by-step procedure through which we have made a judgment on each one of those bases.

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Madam Speaker, I have a short question for the hon. member. I listened carefully to his comments and I find them rather philosophical, dealing in generalities. However, now that we know exactly what is in the budget, we know that the government is attacking two things, to name only these: unemployment insurance and seniors. We know that the tax credit for people 65 or older will decrease progressively for net incomes over $25,921 and will disappear for incomes over $49,100. We also know that the government will cut transfers for unemployment insurance, education and welfare by some $466 million and by $1.5 billion 1996. I would like the hon. member to tell the House whether the Reform Party agrees with this kind of measure. Can seniors and people receiving UI benefits count on the Reform Party, which is

an opposition party, to raise its voice loud and clear against this injustice? Can these people count on the Reform Party for support?

[Ray Speaker, Reform, Lethbridge]

Madam Speaker, in terms of unemployment insurance, the Reform Party believes that we should build that program into an insurance program so that it pays its way. Those who pay in get the benefits thereof. That is number one.

Second, in terms of some of the changes that have been made to deal with the $6.6 billion deficit that is currently in the unemployment insurance program, those changes would be supported. We think those who are most in need will still be able to receive benefits.

With regard to transfers to provinces in the area of education and health care, that was one of the areas I was to cover in my remarks here today, but I was not able to set out that list of priorities.

The Reform Party has said very clearly that the transfers given to the provinces for health care and education in the budget of 1992-93 would be maintained and that we would not reduce the transfers any lower than that fiscal year. If the current proposal of the government indicates that the transfer payments would be reduced below that, we would have cause for concern.

[The Acting Speaker (Mrs. Maheu)]

The Chair has looked at the subamendment. We have examined it and we find it to be receivable. I will read the English translation. It is moved by Mr. Speaker:

That the amendment be amended by removing all the words after "budget" and by adding thereafter the following words:

and regret that the necessary measures were not taken to balance the budget by the end of the 35th Parliament.

[David Collenette, Liberal, Minister of National Defence and Minister of Veterans Affairs]

Madam Speaker, I am very pleased to have an opportunity to address the House in this first day of the debate on the impact of budget 1994, especially as it concerns the Department of National Defence.

In the past few weeks it seems that every time we turn around there are defence issues facing us. We have had a debate on our peacekeeping mission in the former Yugoslavia. We have had a debate on the cruise missile test. We had a debate last week on the establishment of the special joint committee on defence review and there have been many questions in the House relating to some of those issues.

It is quite obvious that there is a great interest in defence policy in the country.

Why such great interest? Because the government intends to keep its election promises to Canadians, particularly the promise to review defence policy and to substantially reduce the national defence budget.

The time has come to fulfil our promises and that is what we are doing. That is why we have taken important steps to implement the economic program outlined in the red book. If I may, I would like to start with our economic program.

The government's number-one priority is to put the Canadian economy back on track. The government has expressed its intention to tackle the enormous federal deficit. At the same time, we must stimulate employment and economic growth. Our policy, based on these two requirements, translates into a program in two parts: one, job creation and economic recovery and two, decisive action to bring the debt and deficit under control.

In fiscal policy, our goals are quite ambitious but realistic. This distinguishes ourselves from the members of the Reform Party. As we have just heard from the member for Lethbridge, his party would like to put in place a deficit reduction regime that in our view would bring on an absolute economic depression in the country if the measures were put in place to reduce the deficit during the life of this Parliament as he and his colleagues are advocating.

Instead, our government intends to get the federal deficit down to something more realistic, 3 per cent of GDP during our first mandate. This will require very strict discipline in government spending in all departments. To stimulate growth in employment, which is the other side of this debate, and it seems the Reform Party forgets, we will be moving on several fronts.

For example, together with the provinces we have launched the public works program to renew elements of our national infrastructure. In the last election campaign the Liberal Party promised to cut defence spending by $1.6 billion over four years beginning April 1 of this year. Much of the money that we cut yesterday in the budget will have gone to the national infrastructure program.

While on the one hand we have been taking it from the defence end of expenditures, we have been recycling it and reinvesting it, if you will, in the public works infrastructure program which is now taking effect and which will have an impact on all parts of the country.

The hon. member for Lethbridge raises a very interesting point. I dealt with it last week, but I want to reiterate it. Why did we make the cuts that we made yesterday in the budget without first waiting for the results of the defence review? It is a genuine question and I will repeat the answer I gave last week.

In a perfect world we analyse our priorities, our policies and then we look at the money we have to implement those policies and put them into effect. We do not live in a perfect world. The fact is, and the hon. member for Lethbridge will agree, the debt situation is becoming quite alarming. The deficit has gone up astronomically. It is much larger than we believed when we first entered office. The Minister of Finance has made that point. As a result we had to act very quickly.

We acknowledged this before the last election campaign. I will not raise the red book. I do not have to raise it. It has become a benchmark for political discourse in the country and will go down as one of the great political documents of all time.

In the red book we outlined a regime to reduce defence spending, as I mentioned, $1.6 billion beginning April 1. We could not wait for a defence review. The mere setting up of the committee has taken time. Parliament only returned in January. We had to debate the motion. We were surprised that there was a recorded division forced by members of the Official Opposition on the motion. We voted on it this afternoon. They objected to the participation of the Senate although, to give them their due, they are willing to participate after they express their views against the Senate.

We are just getting the committee under way. The Minister of Finance had to act. He had to demonstrate to Canadians and to the financial markets that we knew where we were going in terms of the financial regime of the country. As a result these cuts had to go into effect now.

To preserve the integrity of the process upon which we voted this afternoon, I say to the hon. member for Lethbridge, we have cut the defence budget in such a way as not to impair what is known as the sharp end of defence. In other words we have taken the tough decisions. Members will see in the days ahead when the full impact of the budget becomes known that we have taken tough decisions in base closures and other installations. There are 21 closures and reductions altogether that other governments had failed to make.

For 10 years the Conservatives sat here in the biggest post-war economic boom and did not deal with the tough questions of surplus military infrastructures. They just sat on them and saddled Parliament with the consequences of their action, which is a deficit last year of $45 billion. They should be ashamed of themselves.

They paid the price in the last election. That is why there are only two of them sitting in the House. I am not so sure about the member for Saint John. She voted with us more than with the Conservative Party. Maybe she knows something the rest of the Canadian public figured out in the last election. The Conservative Party has been penalized, perhaps irrevocably, for what it has done to the country. The Conservatives should have taken these tough decisions and not left them to us.

It has been heart-wrenching and gut-wrenching for us on this side because most of the closures are in ridings represented by Liberal members of Parliament. It is pretty tough for them to go back home to Cornwallis, to Shelburne, to Gander or to Chatham. Even the Minister of Industry in Ottawa and those of us from Toronto find it tough. I see some colleagues here from Don Valley North, High Park and Rosedale; they are all here. We have to go back and say why 1,000 jobs are being left in Toronto. We are not dumping this on the opposition. We are taking the responsibilities the Tories should have taken in the last 10 years.

If we had not done that we would have had to have taken it out of the sharp end. We would have had planes that would not fly. We would have had lovely new frigates admired by many nations in the world, certainly by our American friends, that would not sail. They would not get off the Grand Banks because we would not be able to afford to operate them. We would have peacekeeping troops in Bosnia; luckily they do not have to shoot much, but we might very well have had to send them over there without bullets. I am being somewhat facetious, but we could not have continued our international commitments if we had taken out of the sharp end of the military budget at this time. We dealt with the tough questions.

When the review is complete we will have a military of which we can be proud. Even with these reductions the number of combat personnel in the army is going to go up about 2,500. We are reducing the number of uniformed personnel from the current 76,000 to 66,700 people. Yet we are adding, because of the economies we are making, 2,500 combat troops for future engagement. That is good management and I think Canadians will appreciate it.

Some people could ask: "Why are you cutting bases and throwing people out of work? Why don't you just cut capital expenditures?" I hate to say it but the former government of which I was a part in the early 1970s took that approach. We kept the capital expenditures low and the results were not very well appreciated by our NATO allies or certainly by our military. It is like anything else. If we let our cars run down and do not get them fixed, if we do not have our houses painted, at some point our past catches up and we have to repaint, buy new cars or spend a lot of money as I did this week on my car to get it running after this tough winter.

We did not cut the capital projects. Would hon. members want us to cut the armed personnel carriers now being constructed in London, Ontario, by General Motors? Our order has given the critical mass to produce and sell 800 armoured personnel cars to the U.S. marines and bring needed foreign exchange and jobs not only to southwestern Ontario but to other parts of the

country that contribute components. Do they want us to cancel that? I think not.

I said to some colleagues on the east coast: "Did you want us to cancel the coastal patrol vessel with nearly a billion dollar contract that will keep the Halifax shipyards working for the next few years?" This is work that can be built upon by other contractors and value added for the future. No.

I ask members of the Bloc Quebecois, the Official Opposition: Do they want that contract for the construction of a new supply depot in Montreal to be carried out?

We are going to build a state of the art supply centre in Montreal, in consitutencies represented by the Bloc Quebecois. We are not playing politics. We are thinking about the best interest of people in Quebec in this case.

Are they saying they want the 25 per cent reductions they bandied about to be taken out in this way, by cancelling a $270 million computer contract, much of which will be spent in the province of Quebec? Did they not want us to consolidate the supply mechanism in Edmonton and in Montreal? I would like answers to those questions.

While I am on the subject of the Official Opposition, I read a quote from question period that I liked so much I will read it again. Before doing so I will read a quote from yesterday's debate.

I quote the hon. member for Saint-Hyacinthe-Bagot, who just ended his speech and who said this in his reply to the budget speech yesterday in the House: "I have the feeling that this government is living on another planet, that it is not aware of Canada's excessive debt, which puts it in first place about everywhere in terms of poor performance".

They say we are living on another planet and ask whether we know about the debt. Then they sit here this afternoon and criticize us for the cuts that were made to the province of Quebec.

My friend over there, the critic, is a nice guy but this is what he said in the House of Commons on February 17.

I quote the hon. member for Charlesbourg: "In spite of it all, the defence infrastructure remains far too big for the size of the forces. With a strength of merely 78,000 members, the Canadian Armed Forces are maintaining from coast to coast facilities that could accommodate 140,000. Obviously, more cuts are needed, especially since several of our bases"-several of our bases, Madam Speaker-"are obsolete and increasingly expensive to maintain".

But not in Quebec. Oh no! Not in Quebec! Make cuts, but not in Quebec! That is what the Bloc Quebecois member is saying.

I continue to quote, Madam Speaker: "Also, their strategic value is not the same as it was at the time they were built. So, for all these reasons, the government will have to make a choice and impose a new round of closures". I just quoted the Official Opposition critic for National Defence and Foreign Affairs.

I will now quote the hon. member for Verchères, who said this during the same debate, on February 17: "During the last election, and many times since October 25, the Bloc Quebecois has reaffirmed its support for cuts in the budget of the Department of National Defence. Despite the international context I have just described, we believe that we could cut that budget by some 25 per cent without dramatically impairing the operations of that important department". That is what he said in the House, Madam Speaker.

If we cut the defence budget, as we did yesterday, there will be a decrease in the number of soldiers and officers in the army and other Canadian forces. That is why we do not need three military colleges. I want the hon. members over there to be honest and to acknowledge that we are not closing only the Collège militaire de Saint-Jean, in Quebec, but also the Royal Roads, in British Columbia. We are trying to be fair to the people in Quebec and to all Canadians.

[An hon. member]

How sad!

[David Collenette, Liberal, Don Valley East, ON]

We made cuts, yes, and it is sad. Ten years ago, when I was a member of this House, I went to the Collège militaire de Saint-Jean to study French, and I am sad at the idea of closing this college. As I said during Question Period, there will be a military college in Kingston, a national military college for all Canadians, where everything will be done in both official languages. I see the hon. member does not believe me.

These people over there say one thing every night on the news in Quebec; I watch the news from Quebec. They say one thing there and another thing here. They do not believe in the same concept of Canada we believe in.

The hon. member for Charlesbourg stood in the House and said, as have some of his colleagues, that there cannot be a bilingual college because it is not in Quebec. What about the million francophones who live outside Quebec? What about them? I do not get upset very often, but I get upset when I hear that kind of rhetoric. That kind of rhetoric tries to tear the country apart and we are not going to have any part of it.

Before I lose my composure let me say I am really concerned about some of the two-faced comments I have heard on the closing of the military college in Quebec.

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

Madam Speaker, on a question of privilege.

[The Acting Speaker (Mrs. Maheu)]

The hon. member for Kamouraska-Rivière-du-Loup on a question of privilege.

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

Madam Speaker, the Minister of National Defence is putting words in our mouths that we never said. He is misinterpreting our statements. I am not talking about speeches which were read, but about speeches where he accuses us of being windbags. We are in a situation-

[The Acting Speaker (Mrs. Maheu)]

I am sorry, but this is not a question of privilege. The hon. minister.

[David Collenette, Liberal, Don Valley East, ON]

Madam Speaker, there are worse things in life than being accused of speaking in rhetorical tones.

I want to be serious for a moment. What we did yesterday is, as I have said, gut-wrenching. There will be 16,500 people in the armed forces phased out over the next four years. It is going to be tragic for many lives. In a sense we have walked through the lives of many Canadians. We have to show our understanding as members of the sacrifice these people will be making.

We are putting in place a very generous regime to deal with both our uniform personnel and our civilians. In terms of uniformed personnel there are measures such as pensions, annuities and training. For the civilians there will be in a sense a buyout package, training moneys over and above what would normally be coming to them through the workforce adjustment act. We have been discussing these matters with our unions and we hope to have their co-operation. I know it is a bitter pill to swallow.

When hon. members examine the true picture of how we are trying to deal with the people who are losing their jobs, they will see we have been as fair as possible, given the financial situation of the government.

With respect to the communities affected we have a real problem in some areas. I mentioned some of my colleagues from South West Nova, Miramichi, South Shore and Gander. These are poor areas. There is very little industry there. Afacilities were surplus. They were facilities that we could not justify keeping open. We will work with those members. We will work with the provincial premiers, especially the three Atlantic premiers concerned, Premier Wells, Premier Savage and Premier McKenna, to try to find uses for those facilities.

As I said last week, there is no magic solution. We just do not have a pot of money to throw at the situation as the previous government did with Summerside. We are going to have a very lean, effective military when this is all done. It will be one of which all Canadians will be proud. In the meantime we have to try to soften the blow as a result of some of these base closures.

I think when all is said and done, after the next few months when the defence review works itself out, Canadians will appreciate the role of defence spending. They will appreciate what good measure for money we get with those taxpayers' dollars, both in our international presence and domestic presence. I hope there will be a well thought out, well crafted policy, one that we can afford.

Again, by doing what we have done in the last few days we have preserved the ability of the sharp end, the ability of the forces to have a very professional, lean, efficient presence, well equipped to be able to go overseas and march with the best because we will have a proud group of people worthy of our Canadian military tradition.

In closing, I would only repeat the words of the Chief of Defence Staff yesterday who appreciated very much the efforts that have been made, especially by those who will be losing their jobs, and the understanding of the forces across the country.

The forces use both official languages.

Those forces, which are part of the fabric of Canada and help to unify Canada, will get through this difficult time and move on to better things in the future.

[Ian McClelland, Reform, Edmonton Southwest, AB]

Madam Speaker, I would like to say first of all that before I am a member of the Reform Party, I am a Canadian and a very proud Canadian. I hope that the budget brought down by the Minister of Finance works. This is our country and we need to work together. All of us here are Canadians and all want to be Canadians at the end of the day.

In this budget debate the Minister of National Defence has been explaining the difficult time he has had with the cuts that he has had to be responsible for. I think on balance they have been very fair. The minister is absolutely correct that these are decisions that should have been made 10 years ago. Had they been made 10 years ago, it would not have been nearly as rough today. I personally commend the minister for the good job that I think he has done in that regard.

I do have a question and it has to do with the budget forecast. The budget is relying almost exclusively on an increase in revenues. It is relying on an increase in revenues of about 15 per

cent over two years after coming from a year, last year, with a decrease of 5.6 per cent.

In my experience every time I have had trouble in my business, and most bankers would say most businesses have a problem, it is with forecasting revenues too high and expenditures too low. The expenditures are forecasted to rise just .3 per cent over this same period.

My question for the minister is this. In a period of deflation, which we are in right now-at least in my opinion we are in a time of deflation-do we have any backups to prevent a further erosion of our fiscal position if the revenues that are projected and we hope arrive do not arrive?

[David Collenette, Liberal, Don Valley East, ON]

Madam Speaker, I am not sure I am qualified to answer this question. I have been somewhat preoccupied with a department that is looking at a dearth of revenues. The Minister of Finance should really deal with it.

He is pretty confident that the projections he has given will be realistic and will be met and that the doomsday scenario that is implied in the question of my hon. friend will not materialize.

I would also like to say that his comments were most appreciated and in the best tradition of parliamentary debate in understanding the difficulties that we have had with the defence cuts.

[Claude Bachand, Bloc, Saint-Jean, QC]

Madam Speaker, I listened very carefully to the minister's comments, and it seems to me there are some figures or details he either failed to mention or mentioned so quickly that I did not hear what he said.

Before putting my question, I just wish he would agree that as far as bases, colleges and infrastructures are concerned, Quebec has always been short-changed. There is no comparison between what happens in Quebec and what happens in the rest of Canada.

For many years, the policy at National Defence was to compensate for this imbalance with substantial military contracts that made up for the lack of military infrastructure in Quebec.

The international situation has changed, however. So much so that the Bloc Quebecois does not protest when a contract is cancelled, as in the case of the helicopters, because although this contract would have gone mostly to Montreal, we preferred to see the money invested elsewhere. We never objected to the cancellation as such.

There is also the new procedure for distributing these contracts across Canada. In any case, will the minister confirm today that Quebec has only 13.8 per cent of all the infrastructures? That Quebec has only 15.8 per cent of defence spending in Canada although it has 25 per cent of the population?

I did not hear him mention those figures. But when he closes bases or colleges in Quebec or cuts as little as 5 cents or a dollar, he adds to the imbalance in this respect.

The figures I mentioned, 13.8 per cent of military infrastructures and 15.8 per cent of defence spending, while we have 25 per cent of the population, if the minister can confirm those figures, would he agree that he is adding to the imbalance by making budget cuts that affect Quebec?

[David Collenette, Liberal, Don Valley East, ON]

Madam Speaker, I am not sure whether I have enough time to give the hon. member a detailed reply, but he is right that the percentage of the defence budget spent in the province of Quebec is lower, simply because there was a lot of construction in the maritime provinces during World War II.

I must point out, however, that as a result of major cuts in the rest of the country, after this budget the percentage of military spending in Quebec will have increased. It was 19 per cent yesterday, and today it is 22 per cent, even after closing the Collège militaire royal and part of the base in Saint-Jean.

I appreciate his reasoning that Quebec is not getting its fair share, but that is a result of its geographic location in this country. If we had cut 25 per cent we would have had close the Valcartier base in Quebec City or perhaps Bagotville. If we had followed the recommendations of the Bloc Quebecois with budget cuts of 25 per cent, there would have been more drastic cuts.

This is not a good time for Quebec, but it is not a good time either for other provinces, especially in the Atlantic region. I think Quebecers will appreciate they have done their share to fight the deficit by taking these cuts in the defence budget.

[Jay Hill, Reform, Prince George—Peace River, BC]

Madam Speaker, I thank the minister for his comments. I enjoyed listening to his statement.

I noticed he used terms like maintaining the sharp end of defence and that our military in the future would be a lean, effective military. I notice when I review the red ink book that there seems to be no mention, although they took the hard decision following the election to eliminate the contract for the EH-101 helicopters, of the cancellation costs for those contracts. There seems to be no mention in the red ink book about replacement costs. It is obvious if we are going to have a lean but effective military that those helicopters will have to be replaced. Yet there seems to be no costs for those things built into this budget statement.

I would ask the hon. minister where those cost estimates are and why they are not part of the projected costs for the government.