Debates of Feb. 23rd, 1994

The Budget

[Some hon. members]

Hear, hear.

[Lucien Bouchard, Bloc, Leader of the Opposition]

Mr. Speaker, let me say how surprised I am at the vehemence with which the minister attacks the Conservatives, since his budget is identical to the one they presented. It is a budget which no Conservative still in that party-and there are fewer and fewer of them-would renounce today.

I must say that I find something profoundly indecent in this budget, since the Minister of Finance is an accomplice of fiscal unfairness. On the one hand, he takes more than $5 billion over three years from the poorest people, and on the other, he lets the wealthiest people in this country put billions into family trusts and earn income from them without paying tax.

I ask the minister, who voted with us in the Bloc Quebecois last year against the extension of this undue privilege, to tell us how he can preach fiscal fairness today when he supports such a double standard policy.

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, at least we are entitled to some consistency. His finance critic suggested referring the question of family trusts to the Auditor General. Since we believe that members of this House should assume their responsibilities, we referred it to the finance committee for study. We will look into it. We took his advice. So instead of asking me this question, he sould ask his friend.

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

Mr. Speaker, in the budget which he brought down yesterday-if we can still call what is left of it a budget-the Minister of Finance projected a record deficit of nearly $40 billion. Considering how accurate Finance Department forecasts are, it is possible that the deficit could be much higher than $40 billion. In fact, in the 1992 budget, revenues were overestimated by $11 billion, and in the 1993 budget, by $10 billion. A slight discrepancy, would you not agree. In point of fact, for the past two years at least, government revenues have been declining, while the underground economy has been thriving. Consequently, tax revenue forecasts have been completely thrown off.

How can we take the Minister of Finance seriously? How are we supposed to take a stand-up comic seriously when he announces an already record deficit of nearly $40 billion, given that he arrived at this figure by overestimating revenues, like his predecessors, when in fact he knows full well that for several years now, tax revenues have not been growing at the same rate as the economy.

[The Speaker]

I hope that the answers will be as brief as the questions.

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, I know that the critic for the Bloc Quebecois did not have a chance to read the document because he was in too much of a hurry to ask his questions. However, if he were to look on page 53, he would find a very clear explanation of some of the special factors which combined to dampen budgetary revenues this year. When we exclude these factors from our calculation, it becomes very clear that we can forecast a real increase of 3 per. cent or a nominal increase of 4

per cent. This is in line with the forecasts of the vast majority of the country's economists.

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

Mr. Speaker, does the minister not agree that a record deficit of more than $40 billion would undermine the confidence of investors and taxpayers and jeopardize a lasting recovery on the economic and employment fronts?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, we are fully cognizant of the problems associated with the deficits we inherited. That is why our targets are very clear: $39.7 billion, $32.7 billion and $25 billion. And we will reach these targets, Mr. Speaker.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, my question is also for the Minister of Finance.

The budget presented by the minister yesterday will add $100 billion to the federal debt over the next three years. Many members on this side of the House are deeply concerned that the budget simply does not address the deficit and debt problem.

If this House, through its committees or the consideration of estimates, were to put forward further proposals for further reducing the deficit in 1994-95, would the minister be open to adopting such proposals?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, at a recent meeting of the finance committee in response to an invitation from the member's seatmate, I said very clearly that we would be delighted to sit down with them and look at whatever constructive suggestions members opposite have.

I also said they should be based on current financial numbers. They should not be based on the financial numbers presently used by members of the party opposite which through no fault of their own are some six months out of date. They should also be based on responsible economic forecasts, not inflated forecasts such as was the case with the economic platform of the party opposite in the election campaign.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I thank the minister for part of his answer. My supplementary question is for the same minister.

The minister's budget bears some resemblance to the first Clinton budget in the United States which also included a new spending package combined with a cost-cutting package. When the Clinton budget got to Congress it scrapped the new spending proposals and applied the savings to the deficit to the benefit of the American economy.

Would the minister be willing to scrap or at least defer for a year or two his new spending proposals of $1.7 billion so as to get greater cost and deficit reduction in 1994-95?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, first of all a substantial portion of that spending is the infrastructure program which has been signed by all of the provinces. That program has been tremendously welcomed by all of the provinces and the municipalities. Along with our other measures it is going to lead to a substantial amount of job creation.

I am sure the member opposite understands the absolute importance of job creation at this stage of the fragile nature of our economy. That is what we are committed to do. That is what our budget is going to deliver. That is why those spending proposals, which are all a bit modest, are going to lead to substantial job creation.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I have a further supplementary question for the Minister of Finance.

The budget is completely silent on strengthening the ability of Parliament to control government overspending. Can the minister tell the House whether he favours strengthening Parliament's ability to control overspending through the passage of sunset clauses, spending limits, freer votes on estimates and other measures of that kind?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, if the member looks at the deficit projections we have made he will see they are substantially below the limits that would have been established by the current spending control limits. In fact we have gone far beyond them. It really demonstrates a government that has political will and conviction can do a great deal more than some kind of an artificial standard which in fact the previous government sought to get around.

In terms of the role of Parliament the member had an opportunity to read what I said yesterday in the budget speech. We are opening up the process completely. The finance committee of the House is to play a very important role.

We said that we were going to lay before the finance committee our projections for the next budget, the proposals that we would consider within the next budget, our spending plans, and that they would be subject to more detailed investigation by a committee of the House than has ever been done in the history of the Parliament of Canada.

We were prepared in the House to have a unique debate on the budget before we brought it down and sought from the members of the House their comments. In terms of estimates, the controlling of spending and the examination of the budget, we are not only prepared to co-operate with members of the House but we are most desirous of doing so.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, my question is directed to the Minister of Finance. Instead of dealing with the real problem, the high level of government spending, and eliminating costly duplication, the government says it intends to cut $7.5 million from social programs, mainly by reducing unemployment insurance. Like its predecessor, this government is trying to get the deficit down at the expense of the unemployed and senior citizens.

Why is the minister putting the bite on the unemployed, although he criticized the previous government every time it reduced benefits under the unemployment insurance program? What has become of those high-sounding principles, Mr. Speaker?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, if we look at what we did about unemployment insurance, first, we raised the level for the neediest in our society from 57 per cent to 60 per cent, which applies, for instance, to mothers who are heads of single parent families and families who have their elderly parents living with them. I think it is clear that this measure is targeted to those who need it most. We are freeing up money for training because we really want people to be able to work and not go on unemployment insurance. Furthermore, because of these measures, we were able to reduce unemployment insurance premiums from $3.07 to $3.00, which will create a lot of employment in this country.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, I have a supplementary. Oddly enough, the minister is reversing measures that they themselves introduced. Since the minister is so proud of getting at the wealthy in his budget, would he say that a senior citizen with an annual income of $26,000 is wealthy, to justify a clawback of $200 million from 800,000 senior citizens?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, when we looked at the problem we had with the deficit and we conducted much needed consultations across this country, senior citizens we met told us that everyone should share the burden. So if we look at what we did in this case, seniors must have an income of $49,000 or $50,000 to lose the age credit. This age measure affects a mere 5 per cent of senior Canadians. It does not affect 75 per cent of them, and the remaining 20 per cent are hardly affected at all. Only 5 per cent will be affected.

[Stephen Harper, Reform, Calgary West, AB]

Mr. Speaker, my question is also for the Minister of Finance.

In the pre-budget discussions the minister promised the House that he would provide complete and realistic financial information in the budget papers.

The notable absence in the budget papers is full financial data for the third fiscal year 1996-97 where he was to attain his 3 per cent GDP target. We do not have economic projections from the department. We do not have a summary statement of transactions and many tables were incomplete. Will he provide the information from the Department of Finance and table it in the House immediately?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, we made it very clear that this was a two-stage budget and that we were providing financial projections for each of those two years.

On the other hand we did provide full financial information for the third year, tracing the effect of the expenditure cuts that were taken in this year. That tracing demonstrates that we will arrive at the $25 billion figure or the 3 per cent of GDP.

All the information the member requires is in there. The only thing that is not in there is the projection of economic growth. The reason we did not do that is that we did not want to fall into the same mistake the previous government did, that is projecting so far out and making promises on the basis of illusory growth that we are not able to keep.

The fact is that we provided full information in terms of tracing the cuts we have made in this budget, cuts which are to bring the deficit down to 3 per cent of GDP in three years.

[Stephen Harper, Reform, Calgary West, AB]

I have a supplementary question, Mr. Speaker. That is an interesting answer. I agree there are tracings of the third year in the budget, but there are no economic projections or detailed third year data for any of the tables.

Will the minister admit-and I know he will want to consider carefully this answer-that if he provides realistic economic projections, combined with the data in the budget, it will show that from this budget the deficit will in fact not go below $30 billion in the third year and will remain close to 4 per cent of GDP?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Mr. Speaker, if the member opposite would take a look at the document underneath the charts, he would see there is a very clear statement after tracing the decisions taken in this particular budget through to the third year that a level of growth

in the third year similar to that which is occurring in the second year will give us the 3 per cent of GDP.

The answer to his question is quite the opposite. Absolutely, with that level of growth we will attain the 3 per cent of GDP.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, my question is for the Minister of Finance.

Wealthy families can use family trusts to avoid paying tax on billions of dollars. It was a Liberal government, in 1972, that created this unacceptable system. Just last year, the Liberals voted against the continuation of these trusts proposed by the Conservative government. But, as we discovered yesterday, the wealthy family lobby has won.

How can the minister justify digging even deeper into the pockets of the unemployed and the poorest of the poor when he will not even touch the privileges granted to the wealthiest? Will the minister admit that he caved in to the pressures of wealthy families and party friends?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development -Quebec]

Not at all, Mr. Speaker. All we did was do what his party's finance critic had suggested when he said that, given the complexity of the issue, it should be referred to the finance committee. That is on the record, by the way, Mr. Speaker.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, either the minister misheard our suggestion or he does not want to admit to having heard it. His logic is somewhat twisted. He tells us that, when it comes to taxing the rich, we have to look into the matter for one year. On the other hand, taxing the poor can be done immediately. That he can do.

Mr. Speaker, I would like to remind the minister that, in 1987, when the economy was flourishing, over 90,000 Canadian businesses which had made in excess of $27 billion in profits did not pay a cent in taxes, and the Liberals denounced that fact.

Why does the minister refuse to accept the principle of minimum corporate income tax that the Liberals talked about when they were in opposition?