Debates of Feb. 24th, 1994

The Budget

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Madam Speaker, the Government of Canada is like a person who has a weight problem. Overspending is like overeating. The deficit is like the fat that stores the excess calories consumed. The dangers for Canada are the same as for the overweight person.

Ultimately the fat will clog the arteries and some vital functions will fail.

Like those with weight problems our government always makes resolutions to do something about the problem: just enough calories today to sustain the fat and a more serious diet next week.

The excuses for procrastination are always the same. We need the calories to sustain the living tissue otherwise there will be pain: unemployment. Another excuse is that we are about to discover a method for losing weight without pain: an infrastructure spending program, some grand redesign of social programs, more efficient government operations or the closing of tax loopholes.

This budget has put the patient on a diet which slows the rate of growth of the debt. It does nothing to stop the debt from growing. Certainly there is no indication that we can ever expect a slimming of the debt. Promises for a more restrictive diet following the redesign of social programs are no longer believable. There are no painless ways of losing weight. No studies will uncover them.

More important, it makes no sense to keep on saying that all slimming procedures are health threatening. Canada had full employment and rapid economic growth when budgets were balanced. The restoration of balanced budgets really restore these favourable conditions, just like people feel healthier and more vigorous who have dieted successfully and have returned to their normal weight.

The cure for Canada's disease is known. It needs to be applied soon or the patient will be seriously ill. All it takes is to say no to additional helpings of food. We need to cut spending drastically. During the election campaign the bulk of people I had contact with were concerned about the size of the deficit and debt and wanted dramatic action to reduce it. They believed that the overweight person, the Government of Canada, must be made to slim down to where there is no more fat. They believed that a crash diet was worth the pain in the knowledge that health would be restored.

My constituents put one important condition on their willingness to make sacrifices for the sake of the country's fiscal health: the pain must be shared by all Canadians. Our basic system of public health care and pensions must be preserved. Social spending programs must be restructured to serve only those in need. The budget does not share the burden.

The people in the defence industries, civil servants, elderly taxpayers, business, entrepreneurs with capital gains and the recipients of UIC have been singled out. Worse, these Canadians are asked to make sacrifices while excess spending is maintained. There are 18 new spending programs which in the aggregate match the cuts. These new programs are motivated by the desire to pursue ideological goals stemming from the liberal world view about the ability of government to solve all problems of society.

There is the promise to increase the number of day care spaces once economic growth has reached 3 per cent. The forecast is for such a growth rate during the next two years. What will this promise cost? The budget is silent on this potentially very expensive program.

There is much known fat in current government spending programs. No studies are needed to identify it. It could have been cut to reduce the deficit significantly while resulting in much more equitable sharing of the burden.

First, there is the unemployment insurance system. The proposed changes in eligibility requirements are a step in the right direction but they are not enough. By most international and our own historic standards the benefit rate of 55 per cent for single persons is too high. Lowering it by two percentage points is symbolic rather than economically effective, especially when at the same time the benefits to others are raised to 60 per cent.

Second, old age security benefit payments are slated to rise 7.5 per cent from the current $20 billion in two years, primarily because there are more eligible Canadians and because of the indexing of the benefits. Yet, it is well known that a very substantial part of OAS payments are going to families with high incomes. It was never the intent of the program for families in the top decile and earning $100,000 to receive annually over $2.5 billion under this program while they are retired, without family obligations and fully insured against health care expenditures.

Third, the most rapidly growing expenditure category is grants to Indians and Inuit. It is slated to rise a full 17 per cent in two years. Many people who have been asked to make sacrifices are wondering why spending in this program is slated to increase $300 million every year for the next two years.

More generally this budget claims to make savings of $8 billion in two years. It should be noted that these savings are relative to spending levels slated to increase according to the budgets made a number of years ago. Half of them are due to what is called securing savings from previous budgets which requires no measure of political courage. In effect all the so-called savings amount to nothing more than the reduction of previously announced spending increases.

The bottom line for Canadians is that the level of program spending is slated to remain unchanged at $122 billion during the next two years. This is not the kind of diet the overweight patient needs.

There is legitimate reason to be sceptical about the realism of the projected size of the public debt charges. They are slated to rise only $3 billion over the next three years. The expected deficits of this period are about $100 billion. The interest on this additional debt alone is $6 billion. Therefore the government

must expect to enjoy large savings of $3 billion on debt service charges on the already existing debt of $504 billion.

This is a very risky forecast. Economic growth is predicted to be 3 per cent and 3.8 per cent in the next two years. This will create inflationary pressures which will be compounded by the delayed effects of the depreciation of the Canadian dollar during the last year.

The forecast of the inflation rate of 1.3 per cent for 1995 is very low and so is the related forecast for interest rates of only 6.1 per cent on long term bonds in 1995. Adding to my scepticism about interest rates is that the U.S. economy is booming and rates there have already begun to rise. Canada cannot afford to have a significant gap in favour of U.S. interest rates.

I also have my doubts about the forecast for economic growth in the next couple of years, doubts which are not shared by the majority of economists. I believe the main reason consumers are reluctant to spend and therefore are extending the recession is that they are worried about the country's deficits and debt. They worry whether they will experience the collapse of government services and entitlements suffered by the people of New Zealand.

Until they are sure that our government has taken courageous steps to reduce the deficit, they will continue to spend cautiously. As a result, economic growth may well remain more sluggish than has been forecast in the budget.

Let me close by noting that the international capital markets are giving the government breathing space for this budget, however disappointing are the figures on the level of spending cuts. Several people in close contact with the financial community have told me that we may expect serious capital flight and a financial crisis unless the announced redesign of the social programs this fall produce significant savings.

I therefore urge the government to make the redesign of the social services a serious effort. If there are no tough decisions made and credible savings generated, Canada may find itself in the same position as did the country's largest real estate empire.

Rumours and predictions about a financial crisis were denied and banks kept on extending credit until suddenly and upon one extra slight provocation the crisis started and the entire empire began to collapse. The diet was too late and too little.

Let us hope that Canada will not face the same problems. The decision is in the hands of the government.

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Madam Speaker, I am delighted at the opportunity to beat all of my colleagues to the floor. I was certain that the speech would provoke an immediate reaction. Certainly it reminds me why I am here.

I would suggest to the member for Capilano-Howe Sound that the objective of social programs is not to save money. The objective of social programs is to help people. To set out with an immediate objective that is based on the need to save money is incorrect in the spirit of those programs.

The 18 new programs that the budget is financing were presented to the population of this country last fall and accepted and supported in big numbers. I think to do anything but to support those programs is to ignore the democratic wishes of the people in this country.

The idea that the UI reductions did not go far enough I find mind boggling, that the way we would try to save money is to take it from the hands of people who are just getting by so that people who are getting by more comfortably will be more comfortable in their support for these programs.

Finally I would say, in keeping with the member's analogy in terms of diet, there is a big difference between dieting and starving people to death.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

I thank my hon. colleague for his comments. They are clearly partisan. This is what divides people. I look forward to seeing how many letters he will get from the people who have been singled out to make sacrifices so that other people can get benefits. I find that the kinds of programs initiated by his government are not popular with my constituents.

[Eugène Bellemare, Liberal, Carleton—Gloucester, ON]

I would like to comment on the remarks of the tough-talking, self-proclaimed crash diet expert from Capilano-Howe Sound. He says we are not going through enough pain in dieting and that we should be on some kind of crash diet. I am not too sure if he confuses the word diet with what my friend just mentioned to me, starvation.

The hon. member said that the Liberal Party is now going into excessive new spending. Then he attacked the system for day care we want to introduce. He talked about overweight Canadians. I react to that with a smile.

He says that the UI changes are not enough, that we should have been more courageous and we should have cut, cut, cut further. I wonder if the member for Capilano-Howe Sound would have further cut the UI.

He talks about letter writing from Canadian citizens. I wonder if he would care to write an open letter to the newspapers in the Atlantic provinces on the UI changes which he would propose. I am waiting with bated breath to hear what his proposals would be.

On old age security he says that we are giving out too much money. I wonder if he has read the budget and if he has had reactions from people who are now seniors and will be paying much more in taxes due to the thousand dollars they will be losing from now on.

He talked about the 17 per cent increase to natives, $300 million a year. I wonder if he could expand on his views regarding the treatment of natives.

I will stop at this point because I believe the member for Capilano-Howe Sound, the tough talking, self appointed crash diet person, probably has a lot on his plate right now.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Madam Speaker, I will be very brief in commenting on the wonderful reiteration of the ways in which this government is preserving this wonderful country which is going down the drain because we are facing a financial crisis. One hundred billion dollars more added to the debt in three years. It alone will add $6 billion to the current deficit. I do not understand how this can continue.

[Barry Campbell, Liberal, St. Paul's, ON]

In this, my first speech in the House of Commons, I would like to congratulate the Speaker on his election and you, Madam Speaker, on your appointment.

I would also like to express my sincere thanks to the people of St. Paul's riding in Toronto who have entrusted me with the honour of representing them in this Parliament. I accept this responsibility in all humility.

St. Paul's riding is in many ways a microcosm of Canada. It defies easy characterization. It is a place of contrast. It is a riding of tenants and home owners, business executives and building contractors, new Canadians and people who have been here for generations. Successive waves of immigrants have called the southwest part of my riding home and supplanted one another in this neighbourhood as each group has prospered and moved on, the Canadian way.

Among the residents of St. Paul's are many of our best known business, cultural, political, labour, educational and community leaders, and many thousands of hard-working people who through their efforts keep Toronto and Canada growing.

As I went door to door during the last election, I was continually moved by the diversity of Canada and how it is reflected in my riding. In representing St. Paul's, I have wonderful role models to look to: John Roberts, Mitchell Sharp and Walter Gordon who represented voters in this riding in the past. These people of great vision and deep commitment to Canada shared a fundamental belief in the virtue of public service.

In carrying out my responsibilities I shall very much have in mind their example, people who served, and in the case of Mitchell Sharp continues to serve, with integrity and devotion to their country.

I must pause to say thank you to my family, the unsung heroes in any politician's life. I am grateful to my wife Debra, who holds things together in Toronto while I am here, and to my two sons, Matthew and Jeremy.

My parents taught me that we each have a responsibility to give back to our community. Whatever our personal circumstances we have the same responsibility to roll up our sleeves, get involved and try to make a difference. I shall always be grateful for that lesson and their support.

Over the last year I have had the privilege of meeting thousands of people in my riding. They voiced concerns about jobs and the economy. Many are deeply troubled about the future and perplexed about the role of government in our time.

St. Paul's has not been spared the ravages of the recession. For many, optimism has given way to frustration and despair. Economic stagnation has taken its toll. However, our spirit is strong. The people in my riding are not apathetic. They have channelled their frustration and anger into action and involvement within their community, their city and their country.

Politics is serious business in my riding. St. Paul's is the site of Montgomery's Tavern where William Lyon Mackenzie planned his rebellion of 1837. One cannot help but notice parallels between those days and our own. The rebellion resulted from widespread public anger directed at a government which was disinterested, self-absorbed and out of touch. The bold actions of 1837 paved the way for responsible government.

One hundred and fifty-seven years later the Canadian people, angry with a disinterested and out of touch government, again rebelled the way we do in modern society: at the ballot box. The message they sent was loud and clear. Canadians want responsive and responsible government.

The people of my riding are unforgiving of politicians. They do not forget if we fail to keep our promises. That is why I am proud to be part of a government which is proceeding with this budget to do exactly what it said it would do. We are funding every major commitment in the red book. When we keep our promises we go a long way to restoring the confidence Canadians must have in their government.

Among the many noteworthy budget initiatives are the infrastructure program, the youth service corps, prenatal nutrition programs, the restoration of the court challenges program, the technology network and the residential rehabilitation assistance program.

There are two different visions for Canada. Some believe, and we have heard it today, in a Canada of winners and losers, of we and they, of us and them. They believe government is the problem, that government has no role to play except to stand

aside and let the chips fall. Their theory is that the economy will adjust, that we will all be better off in the long run if government simply gets out of the way.

In the meantime, and it is a mean time, slash and burn economic policies have a terrible impact on the social fabric of society.

I learned a few things when I was working for the monetary fund in Washington.

One of the things I learned is that slashing expenditures alone, what we call shock therapy, leads inevitably to serious costs to society and fails to restore fiscal health. We must control expenditures and foster growth. That is the course we have set. We should beware of those who would prescribe quack diets.

[Translation]

Our vision is different. We cannot define Canada in terms of winners and losers. What matters to us is improving the quality of life of all Canadians so that they can all be winners.

The government has a role to play in revitalizing the economy and in preserving the social fabric. Canada has always been a land of prosperity and Canadians have always prospered under a government which could play that role, even in times of fiscal restraint. As the budget indicates, our government must take an active part in the economic, social and cultural life of this country.

This budget demonstrates that this government understands its responsibilities to the people of Canada. For Canada and for Canadians to prosper, government must neither stand aside nor stand in the way. Government must stand alongside Canadians.

I know the government cannot do everything. There are worthy things we simply cannot afford to support. We have made tough choices in this budget but I believe we have made the right choices. We were listening to Canadians in the pre-budget consultations.

As a member of the Standing Committee on Finance, I look forward to listening to the views of Canadians on the thrust of the economic policy.

The government understands the reality we are faced with today and is prepared to do that which is necessary to be fiscally responsible. Controlling spending is a priority for this government. This budget begins the long and difficult task of reversing the debt and deficit spiral. The budget incorporates a more ambitious deficit reduction plan on the expenditure side than any budget in the last decade.

We will not blame the previous government for the sorry state of Canada's financial affairs. We are prepared to be judged by how we deal with the hand we have been dealt by the world we find. This budget is a first step in a longer process which began on October 25 to restore fiscal health and preserve the social justice which defines Canada.

The government will not solve Canada's problems by creating a permanent underclass in this country. Those who need help most will always have the assistance they require. I will work with the government to identify and support the role that government can and should be playing.

Government can and should bring people together, set goals, provide leadership, make sure the job gets done fairly and effectively. That is what this budget is all about. The government understands it has a role to play in helping people find decent work, in helping restore their confidence. Even in difficult economic times government must respond to the needs of Canadians and Canadians need jobs.

The budget accomplishes this in two ways. The infrastructure program is putting people to work now. In looking to tomorrow, to tomorrow's workers and the jobs they must have, the budget establishes a national literacy program, a youth service corps, internship and apprenticeship programs, and innovative programs for small business.

I am confident that together with the people of Canada we can solve the riddle of the 1990s. We will be able to have a caring society, a vital cultural life, and a viable economy. We are up to the challenge.

We, as members of Parliament, must do our job, but Canadians too must do their share and keep on believing in what we can accomplish together. All citizens of our great country must recognize and accept their responsibilities towards this society and do their share. We must regain confidence in our common future.

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

Madam Speaker, I was rather surprised by the speech of my colleague, because my vision of the budget is entirely different from his.

How can he say that we are going to improve the quality of life in Canada, when the qualifying period for unemployment insurance has been raised from 10 to 12 weeks at a time when people are experiencing a very difficult economic situation in the regions of Quebec and Canada? How can he say that reducing the number of weeks of insurable employment for an individual to be eligible to UI benefits will improve the quality of life of Canadians? I believe that Liberals will have to admit, at the very least, that their budget is a conservative one.

What should we think about this budget, when the government is reaching into the wallets of senior citizens. They have paid their share all their lives and now that they are retired, all they deserve is to see their income cut back. I think the media were very clear on this. I would be pleased to hear the hon. member explain to me how this is going to improve the quality of life of Canadians.

Also, how can he say the deficit is under control, when it is the highest that any government dared make public? I am willing to make a bet with the hon. member that, next year, when we get the figures for the fiscal year, the deficit will be $45 billion rather than $39 as forecast, because the Liberals were not willing to take their responsibilities and reduce the duplications.

[English]

[Barry Campbell, Liberal, St. Paul's, ON]

Madam Speaker, I want to thank the hon. member for his question.

The budget is very much about the quality of life. It contains numerous programs, many of which I have focused on, that are all about the quality of life: our youth, the jobs they must have, the retraining that must take place and the preservation of the social programs that he referred to in a sensible way which contributes to getting people back into the workforce.

[Art Hanger, Reform, Calgary Northeast, AB]

Madam Speaker, I appreciate some of the comments the member made in reference to the response of people to a government that does not listen. I keep wondering how things are changing right now when we are faced with that very situation. Government is not listening to the people.

Many have expressed concerns about the massive debt that keeps building up. The budget has just been released and it amounts to a situation now where in the next three years we will have an additional $100 billion in debt. That certainly does not reflect what the people are demanding. A threat hangs over the head of every taxpayer in the country. There is now going to be a service charge to be paid, again on the backs of the taxpayer.

What is going to happen? Are we going to have additional tax burdens again affecting the quality of life? How caring will the government be when forced by lenders to curtail its spending? If we do not get a handle on it now, what is going to happen in the next three years when the lenders say that enough is enough?

I would appreciate the member responding to how caring the government will be after failing to take immediate action. It will be a much greater crisis in the future.

[Barry Campbell, Liberal, St. Paul's, ON]

Madam Speaker, I want to thank the hon. member for his question.

There are no tax increases in the budget and I have every confidence, unlike the hon. member and some of his colleagues, that we are up to the challenge. I am not sitting on the edge of my seat waiting for the total collapse of this country. I am shouldering my burden along with my colleagues on this side of the House and the few who are over there in getting on and in getting the job done.

[Ben Serré, Liberal, Timiskaming—French-River, ON]

Madam Speaker, I want to thank you for giving me the opportunity to address the House this morning on this important matter of my government's first budget.

For the past few weeks, I have sat in the House, listening to the many statements, questions and speeches made by my colleagues on both sides of the House. I was struck by one fact. No matter how different our approaches and methods and no matter which region of Canada we originate from, we all share something in common: a strong sense of duty to our constituents.

For me my riding will always come first. I want to thank the people of Timiskaming-French River for putting their faith in me. I want to tell each and every one of them how proud and honoured I feel to be their voice here in Ottawa.

Many of my colleagues on both sides of the House have addressed specific issues in relation to the budget speech today. I would like to restrict my comments to two areas which I feel have more direct consequences to my riding: mining and agriculture.

My riding of Timiskaming-French River is largely a rural riding. It is vast in size and stretches from Matheson and Kirkland Lake in the north to the French River of Alban and Noelville in the south. It is a riding that has been developed by the forestry, mining and agricultural sectors. Although tourism offers great potential it remains relatively undeveloped.

Unfortunately as a result of the poor mining policy of the previous government and the cancellation of mining incentives by the Conservatives in 1987, for the first time in its history Cobalt has no operating mine. The Adams mine in Kirkland Lake and the Sherman mines in Temagami, two iron ore pellet producing mines, closed in 1990. Dofasco through very questionable circumstances now buys its iron ore pellets in the former Prime Minister's riding.

Permit me to state a few facts and statistics on the mining industry in Canada. The first big myth is that mining is only important to a few remote areas of the country. This could not be further from the truth. The mining industry is the cornerstone of our economy, accounting for approximately 16 per cent of total exports, 4.6 per cent of gross domestic product and 100,000 high paying, skilled jobs. More jobs are created in urban centres from services and supply to the mining industry than in the actual mining communities.

Mining is a mainstay of employment and industrial activity in more than 150 communities across the country with a total population of about one million people. Urban areas also benefit as they are home to international mining head offices, support industries including banks, stock markets, insurance companies, suppliers, legal services and consultants.

This is why I am so pleased with our initiative to establish a reclamation fund mechanism for the mining sector. I intend to continue my consultation with the Minister of Finance and cabinet to ensure that other initiatives, as set out in our mining policy, such as a single window environmental process and an incentive program for exploration, be implemented as soon as possible.

The second big myth is that mining is environmentally damaging and irresponsible. Well-intentioned environmentalists have virtually declared war on our resource based industries like mining, forestry and trapping. Yet the total mined acreage in the country is smaller than metropolitan Toronto.

Although I recognize that forestry and mining practices of the past cannot be repeated, we must guard against extremes which would result in the death of our resource based communities and thus do great harm to the Canadian economy as a whole. We must do more to educate the general public, especially from the urban areas, on the importance of mining in the Canadian economy.

In the last five or six years our ore bodies inventories in this country have been reduced to dangerously low levels. The lack of consistency and the duplication in environmental processes, the lack of incentives and a reclamation fund mechanism, land accessibility because of native land claims and parks are but a few of the problems facing the mining industry.

The Liberal Party in the last election was the only party which developed a comprehensive mining policy. These policies received tremendous support from the mayors and reeves of the mining communities across the country, most of which are single industry towns. These policies were also endorsed by all major mining associations in Canada. I praise the finance minister for acting expeditiously to implement some of those policies.

Agriculture remains an economic sector which is essential for the security, the prosperity and the sovereignty of our nation. On December 15, Canada signed the GATT Agreement in Geneva. I want to congratulate the Minister of Agriculture, the Minister for International Trade as well as the 60 members of the Liberal caucus who worked hard to defend the interests of the Canadian farmers in Geneva.

Together we have succeeded, under those very difficult circumstances and in spite of though time constraints, in maintaining our marketing system and an effective control over import quotas through an appropriate pricing method. Those measures will allow our family farms to survive in the short and the long run.

We still have a very thorny problem to settle with the Americans, the cream and yoghurt issue. I am confident that the Minister of Agriculture will be quite capable of negotiating with them a bilateral agreement which will satisfy our Canadian dairy producers.

However, we will have to be very careful not to give in to the constant pressures of the Americans who are asking us to lower those import tariffs. We will have to maintain the viability of our family farms at any rate.

A country that cannot feed its own people is not a sovereign nation. Therefore, I am very proud that the Minister of Finance maintained the major safety nets for farmers, including the Gross Revenue Insurance Plan and the Net Income Stabilization Account.

I would like to make a few comments to my colleagues from the Official Opposition, in particular to their leader. First, I wish to say a few words about my background. My ancestors arrived in the beautiful city of Quebec around 1658. I am very proud to be a descendant of one of the greatest Canadians, Sir Wilfrid Laurier. My family moved to Ontario around 1889 to work in the logging industry and clear rocky lands. I am extremely proud that we were able to preserve not only our language but also our French culture, despite all the challenges and fights we had to face in Ontario.

Last year, my family was designated the Francophone Family of the Year by the ACFO Nipissing.

My riding is made up of about 30 per cent of francophones, as well as Canadians of Ukrainian, Polish, Italian and other origins, and 45 per cent of anglophones who came to work on the land, sometimes a very difficult land to develop. I intend to defend the rights of all these minorities equally.

I am doubly proud to be the first francophone elected in the Timiskaming-French River riding, with the biggest majority ever seen there, since the riding includes six municipalities which declared themselves unilingual anglophone, even before Sault Ste. Marie went that way.

That is why I listened to the opposition leader's speech with great concern and apprehension. I had the impression that, during the election campaign, he promised Quebecers that he would concentrate first and foremost on job creation and economic renewal. I think it is the reason why many Quebecers voted for his party. However, nearly all his speeches have been very negative and mostly devoted to his separatist agenda. Quebec constituents are not any different from those in Timiskaming-French River. They want to be able to earn a decent living and put food on their table.

Consequently, I would like to warn the opposition members that if they do not set aside their separatist option and start working with this government to put Canada back to work, as a party, they will end up paying a huge political price.

Moreover, for the Leader of the Opposition to consistently refer to the rest of Canada as English Canada is an insult to the millions of francophones outside Quebec, as well as the millions of Canadians of other origins.

I had the opportunity and the pleasure to visit beautiful Quebec City and other areas in Quebec where I felt at home. They are as much part of my heritage as of any Quebecer's. Thus, I would like to invite my colleagues from the Bloc Quebecois, especially those who come from Northwest Quebec, to work with us to implement our mining, forest and farm policies, extend the Ottawa seaway, and jointly develop our tourist industry, so that we can stimulate the economy and create jobs.

Let us look for what unites us rather than what divides us and together, let us put our country back on its feet.

[Yvan Bernier, Bloc, Gaspé, QC]

Madam Speaker, I want to congratulate my hon. colleague from Timiskaming-French River. I must say, however, that I do not agree fully with his comments. He speaks of sovereigntists. Well, I am proud to be a sovereigntist, but I am even more proud of the fact that our leader addressed the sovereignty issue during the election campaign. Another distinguishing feature of Bloc Quebecois members is that they are realists.

The budget brought down this week is an assault on existing social benefits. We have proof of this. We have listened to our constituents and seen the impact of cuts, of lower unemployment insurance premiums, of the increase in the number of weeks of work for UI eligibility and of other reform measures which have either been announced or are being planned for them by the Minister of Human Resources Development. We are confused and worried. And we are rightly proud that we are sovereigntists and realists.

We are not trying to be divisive, to start any arguments or to score political points at the expense of Quebecers and Canadians. We have before us a budget about which my colleague spoke at greater length. I fail to see why one would seek out divisive issues. But, since we are talking about this, I would like to reiterate that the second distinguishing feature of sovereigntist Bloc members is their realistic approach in saying to Canadians: Be careful, you voted for the Liberals, the ones responsible for this budget. We have always maintained that there is very little difference between the Liberals and the Conservatives. During the election campaign, we used the expression "six of one, half a dozen of the other".

If we had to start another campaign tomorrow morning, in referring to the difference between the Conservatives and the Liberals, I would say that the Liberals are just Tories wearing red ear muffs. That is all I wanted to say.

[Ben Serré, Liberal, Timiskaming—French-River, ON]

Madam Speaker, on one side we have the Reform Party claiming that we did not cut deep enough, while on the other side, we have the Bloc Quebecois that says we were too ruthless. They want us to reduce the deficit, but they do not want us to make any cuts or increase taxes, as we did on corporations and wealthier Canadians.

A well-known Quebec comedian and philosopher by the name of Yvon Deschamps summed it up quite well when he said that what these people want is an independent Quebec within a united Canada.

I must say that one cannot have it both ways. One cannot have one's cake and eat it too.

[Lucien Bouchard, Bloc, Leader of the Opposition]

Madam Speaker, governments come and go, but nothing changes. At least, that is the distinct impression one gets from the February 22 budget, once the veil of pretence has been lifted and the many statistical pirouettes have been figured out.

Yet, the members opposite claimed they had understood a few things: first, the urgent necessity to drastically reduce the federal budget to reverse the debt spiral which is spinning out of control; second, the price to pay in terms of credibility for padding forecasts for future economic progress; and third, the need for openness and transparency to win people over, as they are the ones who pay and do not appreciate being mistaken for something they are not.

There was also a fourth thing, which the government seemed to distance itself from more and more as the fateful moment to table the budget drew near. The federal government is unquestionably responsible for creating the debt spiral, and therefore the budget crisis that Canada is currently facing. Logically, it should make some sacrifices and clean up its own act.

Given that the federal government had recognized in December, at the premiers conference, that overlapping jurisdictions and policies were a problem, some were nevertheless hopeful.

Alas, on all four fronts, the budget is a surprising disappointment, especially since the government has, at the very beginning of its mandate, a wide-open window of opportunity, both politically and economically. Any recovery, however slight,

still gives more leeway than a recession. This golden opportunity was missed.

Let us look at the substance. The billions in cuts announced left and right combined with the spectacular increase in federal revenues would have led any person unfamiliar with the vocabulary used by successive finance ministers to believe that the trend in the federal deficit would finally be reversed as early as next year. Nothing could be further from the truth.

We will go from a deliberately inflated $45.7 billion deficit in 1993-94 to an almost $40 billion deficit for the coming year. The government's budget plan tells us that the 1993-94 basic deficit, excluding non-recurring factors, will amount to $42.1 billion and that, without any political change, next year's deficit will go down to $41.2 billion.

Let us compare this $41.2 billion figure with the $39.7 billion deficit announced by the Minister of Finance. We must conclude that all this figure shuffling by the government results in a very modest deficit reduction of $1.5 billion. The Minister of Finance wants to convince us that he deserves a gold medal in deficit reduction. In fact, he deserves a paper medal.

Why paper? Because a paper medal has two sides, one for recording revenues and the other for recording expenditures. When we look at it more closely, we see that the finance minister's alleged achievement is entirely based on a revenue increase so large that we are taken aback, especially since his economic forecasts for 1994 are both realistic and modest. But it is pretty useless if we do not arrive at the right conclusions. Even if we exclude non-recurring factors, revenues only went up by 1.2 per cent between 1992-93 and 1993-94, while the GDP grew by 3.3 per cent in nominal terms.

With a wave of the finance minister's magic wand, revenues, excluding increases due to a broader tax base, will suddenly jump by 4.6 per cent with a GDP nominal growth of 3.9 per cent.

We must ask the question that the Minister of Finance has been avoiding: What would be the impact of a more realistic tax revenue increase of, say, 3 per cent? The deficit would amount not to $39.7 billion but to $42.9 billion. The basic deficit for 1994-95 would stay the same as that for the fiscal year ending in one month. At first sight, this outcome would seem the most likely.

The government backed down after the general outcry caused by the trial balloons on RRSPs and employer-financed health insurance plans. But it will still take $1 billion from the pockets of the middle class over the next three years, while some tax shelters reserved for the wealthiest stay in place. They told us about making taxes more equitable, but that will have to wait.

If the government wants its revenue forecasts to materialize, it must allocate additional resources to create jobs by making further cuts in less sensitive federal expenditures. There would then be a real deficit reduction with, as a bonus, a beneficial effect on long-term interest rates and, in turn, on consumption and investments.

The government is acting as though Canada was not facing a structural economic crisis. The year 1994 did not start well on the employment front as 38,000 jobs were lost last month so that, nearly two years after the recession ended, 47 per cent of the jobs lost during the recession in Canada have still not reappeared. The 143,000 jobs created in 1993 were not even enough to absorb new arrivals in the workforce. Quebec still has to recover 60 per cent of the lost jobs. The Canadian economy is still performing well below its potential. The Minister of Finance himself predicts that 173,000 jobs will be created in 1994, which is barely enough for the new arrivals and is not enough to continue making up lost ground.

One of the obstacles to a real recovery of the Canadian economy is the level of longer-term interest rates, which are still high, especially because of this huge debt hanging over Canadians like a sword of Damocles. Historically, long-term interest rates did not exceed 4 per cent in real terms. Today, they are still 6 per cent and, even worse, have started to rise again in the last few weeks under pressure from the U.S. economy.

The only way of bringing back the momentum of lower long-term interest rates is by substantially reducing the federal deficit. When we have a debt of $511 billion, a one point decline in rates represents more than $5 billion less in interest payments. Half the federal debt is of a short-term nature and half is of a longer term nature of is more than one year. This momentum can feed on itself but it has to be sustained and propelled by a government that knows where it wants to go. This does not seem to be the case.

As things stand now the prediction of the Minister of Finance on long-term interest rates seems too optimistic. In a few months the federal deficit will appear to be still out of control and significant economic growth will again be postponed. Job creation was supposed to be the rallying cry of the Liberals. The Minister of Finance predicts a real boost in job creation but unfortunately not this year. It will be next year only.

I am reminded of the metallic plaques in a few French cafés and brasseries bearing the inscription: "Tomorrow free beer". It is tomorrow only and we read it today.

In the meantime what are we supposed to make of a budget that acknowledges one of the first measures of the new government enacted last December was and is a job killer. It is written in black and white on page 2 of the backgrounder on the proposed changes to the unemployment insurance program.

Referring to the rollback in the premium rate from $3.07 to $3 next January it says:

-will provide significant financial relief to businesses. By the end of 1996 there will be 40,000 more jobs in the economy that could be expected if premiums were allowed to rise.

Certainly 40,000 jobs are not something to be looked down upon in these uncertain times. It represents maybe $1 billion in wages.

The government is going to roll back its own increase in the premium rate this year but only in 10 months. In the meantime this increase is killing thousands of jobs. It is strange indeed.

But how do you explain that the announced cuts of several billion dollars do not have any real impact on the deficit? This is because there are two kinds of cuts: real cuts and artificial cuts. For several years, finance ministers have become real specialists in making false cuts.

What is an artificial cut? It is an announced reduction of planned future spending. What was usually foreseen before, of course, was an increase. Reducing or eliminating this increase, in the jargon of technocrats at the Department of Finance, becomes a cut. An employee whose salary raise goes from 5 to 3 per cent has his pay cut 2 per cent, from this point of view, although in fact it is a 3 per cent increase, which will be accounted for as such in the budget of the company or the department.

Such an approach obviously has several advantages for the government. For one thing, it is a good show for the media, since the billions pile up fast in this game, especially since there is no time limit. They will talk about cuts spread over the next three or even five years. And since they are in the habit of adding the cuts over several years, even if it only makes the debate more confusing, they quickly come up with impressive amounts that they can boast about.

What this approach does, in reality, is keep the public guessing as to the government's determination to take the bull by the horns. These budget papers, like all those that came before, do not include the expenditure forecasts of the previous budget. This makes it easier for the government to pull the wool over people's eyes and to more or less distort the facts.

Before I give you a few examples of this sleight of hand, Madam Speaker, I want to say that not only are we not impressed with all of these special effects, we also deeply deplore the lack of transparency in the budget process. The nice words spoken by the Minister of Finance at the University of Montreal last November were quickly forgotten, along with all of the other good intentions. However, the government will not resolve the serious debt crisis by playing hide-and-seek with the opposition parties and with the taxpayers.

At this point, I would like to highlight a discrepancy which, considering the sums of money involved, is perhaps only a minor one, but one that is nonetheless symptomatic of a dangerous attitude. The government appears to be saying that since no one will bother to check the figures, it can take the liberty of concealing the truth. Here is one example of this type of attitude which we are not used to seeing, given the traditional accuracy of Finance Department budgets. On page 32 of the Budget Plan, we note the following: "International assistance funding is, therefore, being reduced by 2 per cent for 1994-95 from the 1993-94 level". However, on page 34, the figure quoted for 1994-95 is $91 million. This represents a reduction of 3.4 per cent compared to this year's international assistance budget, which was pegged at $2.7 billion. Therefore, this is not a 2 per cent reduction. Does this mean that we have to check every single percentage in the Budget Plan? Is there a catch here? Is the government trying to conceal something? We want an answer.

The budget announces new cuts in business subsidies. On page 33, the following is stated and I quote: "These reductions are over-and-above the reductions in grants and contributions announced in the April 1993 budget. By 1996-97, grants to business will be on the order of $3.1 billion, down by just under 10 per cent from $3.4 billion in 1993-94". While this last sentence is accurate, it completely contradicts the first one. Expenditures for this item already exceed the forecasts contained in the April 1993 budget. It was projected that expenditures would decrease from $3.3 billion in 1993-94 to $2.5 billion in 1997-98.

All of this is quite complicated and difficult for anyone to understand. However, this approach generally allows the Finance Department and the Minister of Finance to hide behind distorted facts that have been introduced into the debate. In this instance, the lack of transparency is accompanied by a lack of consistency.

This is doubly worrisome. Not only are facts being distorted, but the total accuracy of table 8 on page 34 can be viewed as questionable. This particular table is very important as it details reductions in expenditures associated with the restructuring of federal programs. Consequently, the formula used to calculate the deficit can also be viewed as questionable. In fact, in some cases the figures listed under such items as international assistance and defence relate to the April 1993 budget, while in other cases, they do not. They do not even represent new artificial reductions. The references are complex and confusing. We are dealing with apples and oranges and the average person has trouble sorting the whole mess out.

The situation with respect to business subsidies is also true of federal government operating expenses, at least for 1994-95. It should be noted-and this is far from reassuring-that the federal government is having a lot of trouble controlling its operating expenses. Over the last two fiscal years, these expenses have clearly exceeded budgetary projections. The Budget Plan announces that the new reductions for 1994-95 will be over-and-above those announced in the April 1993 budget. At the time, reductions of $468 million were projected for

1994-95. Yet, in Tuesday's budget, we see that the operating expenses for the new fiscal year are identical to the forecasts in the April 1993 budget. It is in the defence sector, Mr. Speaker-I just went from the feminine to the masculine and the people reading Hansard will realize that our female Speaker has just been replaced by a male Speaker-so it is in the defence sector that we hit the jackpot of false cuts. Seven billion over five years compared with the April 1993 budget. In this case, it seems to be somewhat consistent. But the real cut is much smaller, since the defence budget will decrease from $11.3 billion in 1993-94 to $10.5 billion in 1995-96.

As there will be no real reduction in federal operating expenditures and in business subsidies, and as the overlap problem will remain unresolved, the Minister of Finance had to do something to at least give an impression of movement. So what was left? Social spending. So they went full speed ahead.

Make no mistake. We would dearly like to see the unemployment insurance budget reduced to zero for lack of unemployed people, except for those in between jobs. But the minister is cutting the budget without reducing unemployment. He will eventually carry out a global reform combining, we are told, training and re-training programs. But, in the meantime, he is striking with full force. He himself estimates that 85 per cent of unemployed workers will receive reduced benefits while only 15 per cent will see an increase in theirs.

Disadvantaged regions will be hit the hardest. Let us not forget that the minister's own forecasts for 1994 are not the greatest. Social assistance, mainly funded by the provinces, will see an increase in the number of claims.

At the same time, the Minister of Finance is reducing his cash transfers to the provinces by $800 million. I am referring to Table 17 on page 56 of the Budget Plan, a $800 million reduction in cash transfers. The value of tax point transfers will increase by more than that, but cash transfers, the only transfers that the federal government can regulate, are the only ones that matter in terms of the federal government's policy in this regard. So the federal government's heavy responsibility in the budget crisis, the practice of shifting the deficit burden to the provinces remains popular. That is a heavy price to pay and we will come back to that later.

Again, an accurate assessment of the unemployment insurance shortfall will have to wait. The Minister of Finance talks about savings of $725 million in 1994-95, but compared to what? It is not clear. What is surprising is the total cost of unemployment insurance benefits, which stays at practically the same level between 1993-94 and 1994-95, despite the new rules and the stable unemployment figures. Given other estimates of budgetary expenditures, we are entitled to see the finance department's detailed simulation.

Is there, Mr. Speaker, more significant evidence of this government's lack of moral fibre than the avowed intention to achieve the most drastic cuts, $5.5 billion over three years in this particular sector? During the election campaign, the Liberals were rending their clothes over the protection of social programs. They are now trying to mend them but their stitchwork leaves much to be desired.

The copy tabled by the Minister of Finance deserves a single annotation: "This Budget is all smoke and mirrors". This is not what Canada and Quebec were hoping for.

[The Speaker]

As I am sure all hon. members understand, there will not be a question and comment period. The hon. Leader of the Opposition has unlimited time and it is only after 20-minute speeches that there are questions and comments.

[Stephen Harper, Reform, Calgary West, AB]

Mr. Speaker, I wonder if there would be unanimous consent to have a 10-minute question and answer period.

Daily we have the opportunity in the Chamber to question cabinet ministers and any other member who makes a speech, including the leader of the Reform Party. The government in particular is always saying that the Leader of the Opposition is somehow responsible for every policy that occurs around here.

Maybe there would be unanimous consent to allow a 10-minute question and answer period.

[The Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

[Some hon. members]

No.

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

Mr. Speaker, this process is a privilege of the Official Opposition and we do not want to call into question the role of the Official Opposition, as the Prime Minister did when he was leader of the opposition. So, we fully respect the normal operations of this House, while also following the example of the present Prime Minister when he was sitting on this side of the House.

[John Manley, Liberal, Minister of Industry]

Mr. Speaker, I would like to remind the Bloc that the current Prime Minister did accept questions in the question period after speeches when he was Leader of the Opposition, not necessarily on every occasion, but he certainly did it. Perhaps the current Leader of

the Opposition does not like to be reminded of his past as a member of the previous government.

I have participated in a lot of budget debates and a lot of borrowing authority debates over the last five years, always of course from the other side of the House. The task of criticizing the budget when I was in opposition was always made easier by the fact that the previous government always failed to meet the budget targets it set. Every year it gave us more and more rhetoric about the deficit. It proposed more cuts and tax increases every year. Yet it seemed to auger deeper into the ground, so much so that this year we face a deficit of $45 billion.

The fundamental problem which the previous government failed to address was the need to take seriously its responsibility for the transformation of the Canadian economy into one premised on the need for growth based on knowledge, skills, innovation and the use of technology.

We live in a new global market. Rapid structural changes are taking place in our traditional industries and these changes, combined with globalization, have generated confusion and uncertainty among Canadians.

We have reason to be hopeful. The new economy offers boundless opportunity for the innovative, the inventive and the courageous. This budget is about seizing the opportunities of the new economy. It is an agenda for economic growth. It is an agenda to put Canada back to work. It builds on our strengths, faces our weaknesses head on and points us to new horizons.

A basic vision for the Canadian economy was at the core of our red book in the election campaign and survives intact in the budget. The vision is one of a Canada successful in making adjustments to the new economy, a Canada in which our traditional sources of wealth creation are enhanced by the application of new technology and by adherence to the principles of sustainable development, a Canada in which small business is able to prosper in an environment in which governments believe that to succeed is good and to succeed requires the co-operation and support of public policy.

The fundamental problem that faces Canadians today is that we as a society cannot finance our consumption at current levels. Measures in the budget reduced the amount that the federal public sector is consuming by a significant degree. However, we still face the reality that the only way our standard of living can be maintained and our expectations of government services can be realized is if we move forward with a plan to revitalize the wealth creation capacity of our economy.

The notion that government does not have a role to play in enabling a nation's economy to succeed is a view that I believe was held by our predecessors, including the current Leader of the Official Opposition. This view has been widely discredited by the successful new economies that are emerging rapidly as our chief competitors in the international marketplace.

The world is moving from a commodity and assembly line economy to a knowledge based economy in which innovations in products and processes are the result of scientific research and development.

Knowledge and skills, rather than location and natural resources, are now the basis for the competitive edge in agriculture and mining, as well in electronic data processing.

Public policies can have a bearing on knowledge and skills. The government can promote the creation and improvement of those.

At the same time as barriers to trade are falling, new roles for government in determining a nation's economic success are being defined. Governments too have to be innovative and strategic in the use of their own limited resources and strategic as well in the direction sought for the economy of the nation.

Our strategy recognizes the rapid change occurring in the world today. Our strategy recognizes that for Canadian firms the key competitors are not across the street. They are on the other side of the world. Our strategy recognizes that our most important resource is people: their skills, their knowledge, their desire to succeed.

In this strategy individuals need to prepare themselves for a future that will likely include career changes and the acquisition of new skills and knowledge throughout their working lives. In this strategy companies must recognize the importance of continual upgrading of their products and the need to develop new markets in Canada and abroad. To do so they need to continually invest in their people and they must not delay in acquiring and using new technology, new processes, new ways of solving old problems. In this strategy governments must create the supportive environment that encourages individuals and companies to innovate, to upgrade, to expand and to create jobs.

What will this require of government? First, we have to get the economic framework right. The Minister of Finance has set out a tough but realistic plan for reducing the deficit to 3 per cent of GDP over three years.

We put in place a clear and stable monetary policy until the end of the decade. We signed two major trade agreements, NAFTA and GATT, which increase and ensure access to world markets for Canada. We are also negotiating a comprehensive agreement to eliminate internal obstacles to domestic trade in a key sector by June 30 of this year.

Second we have to get Canada's business framework right. By that I mean we need a regulatory and tax environment that enables Canadian firms to succeed rather than hindering their success. We need competition and consumer protection laws that enhance the proper functioning of the marketplace while enabling Canadian businesses to achieve the critical mass necessary to take on the world.

We must try to attain excellence in education and training, and also eliminate barriers and obstacles to personal initiative.

Third, we must change the culture and attitudes of employers and employees alike to the adoption of new technologies.

Advances in science and technology are driving productivity improvements everywhere in the world. In the 1990s no country can insulate itself from new developments. We must organize ourselves to keep up with cutting edge technology and where possible move ahead. This is the essence of creating well paying jobs and growth in this decade.

The opening of markets around the world creates new opportunities for Canadian business. In Latin America and southeast Asia national economies are growing at a double digit pace. Yet almost 80 per cent of the Canada's trade continues to be with one nation, the United States. Despite the abundant opportunities abroad, as recently as 1990 only 100 firms accounted for 60 per cent of our exports. Only 7.6 per cent of Canadian firms are engaged in export trade. This is simply not good enough for a country as dependent on trade as we are to sustain our standard of living.

In a knowledge based world economy, technology and people define the difference between a firm in Singapore and one in Montreal. Yet less than one-half of 1 per cent of Canadian companies do research and development on their own. Not enough of our R and D winds up in products and services to create jobs at home. Canadian companies, particularly small businesses, have not integrated leading technologies as rapidly as their competitors abroad.

The message is clear. The number of businesses doing research and development and investing in state of the art technologies must increase dramatically.

The questions we have to answer are these: How are we going to make more than one in ten Canadian companies into exporters? How are we going to dramatically improve the number of Canadian companies that perform research and development? How are we going to match our global competitors in the use of new manufacturing and processing technologies?

To succeed, we must have an economy based on innovation. We must rely on the strengths of small businesses which offer the best opportunities for growth and job creation. We must help small businesses where needed, that is with training, exports, high technology and financing.

As part of the budget the Minister of Finance and I have tabled an action agenda to help small businesses grow and to continue to generate jobs for Canadians. It is a small business agenda that is willing to help firms to take risks and to innovate. It is the small business that has the greatest potential for dynamic growth and job creation.

At the top of our growth agenda is the vital consultative process that has been launched with the small business discussion paper. This consultation demonstrates that we are ready to listen and ready to act. The need to review our approach to science and technology to better support a knowledge based economy is also at the top of our growth agenda.

As part of the budget, we announced a comprehensive re-evaluation of science and technology policy that will begin with the release of a discussion paper this spring. This process will build on budget initiatives to set a long-term course for science and technology policy focused on our greatest opportunity, the transfusion of R and D and technology into high value added products and services.

A key feature of the knowledge based economy is the speed with which information is transferred. Economic success comes from freer, easier flows and exchanges of information. In this rapidly changing environment, the prospect of linking Canadians to a high speed interactive multimedia network, a virtual information highway becomes critical to building our new economy.

Canada is a leader in telecommunications and we can rely on that strength. Investments, mostly from the private sector, are enormous. I will work in co-operation with industry and the

users of the information highway to ensure that governments play an active and creative role.

An economic growth strategy is not a one budget issue. It is at the heart of the government's mission. I have reviewed today how we will elaborate on our growth agenda in coming months, particularly in the areas of small business, science and technology and the information highway. However this debate is also about what the government is doing to fulfil the immediate promises of the red book.

The answer is simple. We mean what we said. Capital is the catalyst that turns ideas into new products and services. The Canada investment fund will help provide that patient capital. We will contribute $100 million to the fund over four years and we will seek additional funds in the private sector. The fund will be operating before the start of the next fiscal year.

We are working with the Canadian Bankers' Association on projects to improve financing for small business. These include the development of a banking code of conduct to clarify the relationship between borrower and lender and the search for new and better ways of providing regular and trade financing to knowledge based businesses.

We will work with the industrial sector to create networks that will help small businesses to form groups to do together what they cannot do alone.

Our competitors, particularly in Europe, recognize that networks are essential if small businesses are to compete internationally and gain competitive advantages of scale, scope and speed.

Networks are particularly effective in innovation. They help small businesses develop new products and services, to put new and emerging technologies to work for them and to focus on marketing and exporting.

We will improve the diffusion of innovation and the building of an innovation culture in business by committing $15 million this year for the creation of the Canadian technology network. The network will provide small businesses with the latest information on new technology, new management techniques and new market developments.

We want to set up an engineering and science program to help small businesses hire engineers, scientists, technicians or industrial designers. We will co-operate with the provinces and industry to develop this program and co-ordinate its implementation by 1995.

To help turn research excellence into new products, growing industries and jobs, we are committing to start-up funding this year of $10 million for a national technology partnerships program. This program will promote the growth of technology partnerships and help small businesses turn research into new products, new services and new jobs.

There is a great domestic and export growth potential for the environmental technology sector, particularly for small businesses. This sector is poised for growth and Canadians can benefit immeasurably from the jobs and exports created by environmental technologies.

The Minister of the Environment and I are reviewing Canada's approach to the environmental technology sectors. When that review is complete we will table detailed plans for this strategic sector.

The budget allocation of $800 million over 10 years for a new long-term space plan is proof of the government's commitment to Canada's continued role as a space-faring nation. The new space plan will be within our financial means and will build on our strengths in earth observation, remote sensing and satellite communications.

A stable base for our research infrastructure is a vital part of improving our innovation capability. The National Research Council of Canada plays a key role in giving effect to the federal government's science and technology policies. This year we will provide the National Research Council with new resources to carry out its mandate.

It is important that we be able to promote and preserve our skills in the university research sector. University research and development are high priorities. This is why we continue this year to ensure the financing of the various granting agencies. Starting in 1995-96, we will give them an annual increase of about 1.5 per cent.

A significant part of Canada's academic research capability is the networks of centres of excellence program.

We are making sure that there is enough funding to support the second phase of the program. In this second phase we will give greater weight to the economic and commercial potential of the networks to support our growth agenda based on innovation.

As Canadians we have been through a lot in this last decade. Many of our fellow citizens approach the future with more anxiety than hope. Our mission as a government is to offer hope. But if hope is to be meaningful, it must be realistic. So we have put forth in this budget a plan for the revitalization of the

Canadian economy, a plan which I believe addresses the challenges and recognizes the opportunities that await Canada.

This House was once told, and I quote: "The times in which we are living call for initiative and resourcefulness on the part of industry. We must be constantly alive to the changes taking place in the world today and quick to seize every opportunity that will build up our economy. It cannot be done overnight but I am confident that with the co-operation of industry and of government we can build toward a better Canada and a better world".

Canadians heeded my predecessor, C. D. Howe, when he spoke those words in this place in 1948. Canadians showed initiative and resourcefulness. They worked together, they seized opportunity, and they launched Canada into a period of unparalleled vigorous growth and helped build a better world.

We still have that initiative, that resourcefulness, that sense of shared opportunity. I am confident that we can harness it again to create a period of growth as we move into the next century that will match our great post-war expansion.

I look forward to the co-operation of all Canadians and all members of this House in working toward that goal.

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

First I have to say how much I enjoyed my colleague's speech about how enthusiastic he is about how bright the future of Canada perhaps will be. He talked about the electronic highway, and that of course is vitally important to the ability of this country to remain competitive in the years ahead.

He talked about putting new technology to work. He talked about a $50 million program to provide assistance in the new technology. He talked about a program to hire scientists and engineers to ensure that we can move forward and develop new products. He talked about a $10 million program for new product partnerships. I thought this was just great and wonderful.

If all these things are so important to Canada moving ahead and being competitive in the world, why are we spending $6 billion to fix the roads and sewers when these things that he has outlined are so vitally important for the country to move ahead from this point forward?

[John Manley, Liberal, Ottawa South, ON]

I thank the member for his question because I think it is important for us to understand how economic growth is generated in the country. I think what is fundamental in the favourable comments that he made on the subject of some of the investments that we want to make with respect to the electronic highway, with respect to diffusion of technology, technology partnerships which get new inventions out into the marketplace, and what is very important about spending in some of those areas is that it is seen as an investment in growth for the future.

An analysis came out a week or so ago, produced by Statistics Canada, analysing what has made for success, made for growing small and medium sized firms in Canada. One point is that they have been prepared to invest in research. They are also good at applying new technologies.

We have to understand when we spend whether we are consuming or whether we are investing.

With respect to the infrastructure program, there are really two things that I would like to say in response to the member's question. First of all it was made an important point of the design of criteria for the program that the definition be broad enough to include expenditures that related to, for example, electronic highways, to things that would improve innovation that would allow investment in technology.

I am absolutely delighted that the Regional Municipality of Ottawa-Carleton, part of which I represent, has chosen to use some of its funds under the national infrastructure program to expand the communications network by investing in electronic highway capability for this region. I think that is exceptionally far-sighted on the part of local government and I applaud them for it.

It must also be understood that the traditional infrastructure programs are also investments in economic growth in the future. True, they do provide short-term jobs, but just as at one time in our history it was the canals and at another time it was the railroads, currently in many areas it is the highways that are generating economic growth, highways, airports, means of transportation and communication. These are vital to economic growth in many parts of the country.

Every government at every level needs to look at, and these issues are difficult because of the financial limitations on government, its expenditures very carefully to ensure that its expenditures represent investments in productivity gains for the future, not simply spending for current consumption. The emphasis has to be on building for the future so that we can afford our current level of consumption.

[Gérard Asselin, Bloc, Charlevoix, QC]

Madam Speaker, in response to the minister's speech, where he talked about sending a clear message, I would like to tell him that since the tabling in the House of this budget, which will be in effect until March 31, 1995, Canadians and Quebecers do indeed find the message very clear.

It is clear because, regardless of whether Conservatives or Liberals are at the helm, people no longer have any confidence at all in the present federal system. Let me explain: Canada is operating increasingly in the red. Both the budget and the deficit reflect this fact. Liberals, for a second time, have set a record. The first one was when they created the deficit, under former Prime Minister Pierre Elliott Trudeau. This week, they set a second record, when they brought down a budget forecasting the

largest deficit ever, $39.7 billion; never before has a budget projected this large a deficit.

How does the minister intend to reduce the deficit when he has tabled a budget forecasting a $39.7 billion deficit? I await his answer.

[John Manley, Liberal, Ottawa South, ON]

Madam Speaker, in my speech, I tried to explain what is not so hard to understand. I think that the key to deficit reduction is economic growth. Throughout the years under the previous government, we have learned that the Conservatives always thought that, by cutting expenditures and increasing taxes they could lower the deficit. It did not work.

This year, we have a dreadful $40 billion deficit. If we want to tackle this problem, we will have to reduce government spending. That we have already acknowledged. But we must also limit tax increases. That is why the Minister of Finance stated that the deficit reduction measures announced in the budget will result in a cut of $5 in government expenditures for every one dollar raised in revenues. That is totally unlike the old tactics used by the Conservatives. We have also implemented an economic growth policy. We are prepared to invest in the new economy. We are prepared to help Canadian small businesses have access to international markets for their goods and services. That is the key to the problem.

I would just like to say a couple of words in English. If we are going to solve the problem of the deficit over the long term there is only one realistic solution and that is to achieve substantial, sustainable economic growth. That is the plan of this budget.

That is a diversion from the budgets of the previous government which relied entirely on a false hope that getting some of the macroeconomic fundamentals right was going to allow for economic growth as the grass grows in springtime. It simply did not work. We are going out into the fields, we are ploughing them, fertilizing them, we are trying to encourage economic growth. That is going to be the key to reducing the deficit in the future.