Debates of Feb. 24th, 1994

The Budget

[The Deputy Speaker]

Order. The hon. member's question is clear enough.

[Lloyd Axworthy, Liberal, Winnipeg South Centre, MB]

I am astounded equally by how members of the Reform Party do not have the economic sense to understand that when we put capital investment in new transportation, in new infrastructure, in improving productivity, we create new wealth for the country.

Do they have no understanding of how important it is to improve the productivity of the country and to help people get back to work?

[Some hon. members]

Oh, oh.

[Randy White, Reform, Fraser Valley West, BC]

You don't know what economic sense is.

[The Deputy Speaker]

Order. Time has thankfully expired on the questions and answers.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I rise to address the budgetary policy of the government as presented by the Minister of Finance.

As a new member of Parliament and a member of the Standing Committee on Finance I listened intently to the minister's speech in the hope that this budget was going to be different. After cutting through the finance minister's wonderful rhetoric, the budget is nothing more than a continuation of the Trudeau philosophy that we can grow out of our economic problems.

That concept was the solution for a different problem at a different time. In fact, the only things that grow out of this budget are overall spending, up by $3.3 billion, and the number of task forces, committees and hearings to determine and sell next year's budget. These new studies are up to about 15 new committees with three or four task forces.

I have said this before in the House and I will say it again. Total government revenues are projected at $123.9 billion. Total expenditures are slightly less than this. It is the interest on the debt that creates the deficit of $41 billion. Interest expenses on the federal debt now total 33 cents of every tax dollar. I submit that it is the debt and the interest expense to service the debt that puts in jeopardy the viability and flexibility of our existing programs.

The Minister of Finance has taken great pride in the unprecedented degree of consultation that his party sought in the preparation of the budget. What good is consultation when a government will not implement policies that people want and are demanding?

I fail to see the finance minister's so-called game plan that he claims to have presented in a budget that is full of wait-until-next-year promises. Spending increases are this year and all the big spending cuts are left for future years.

As a former professional football player I know the value and the purpose of a game plan. A game plan is about attacking a known obstacle or problem which in this case is the rising costs associated with servicing the debt.

Based on the government's game plan I can tell members that they are attacking the wrong problem because they have ignored the debt. It will not work in the field of economics. However through his great political skills and wondrous humour skills, the Minister of Finance will certainly know how to talk to the reporters after the game. Will he blame the players, the game plan or himself when this plan fails?

The finance minister has promised to "put an end to real drift" by guaranteeing meaningful jobs, training and retraining. How does he plan to do this when he tells the people who pay our salaries to wait another year for government to fulfil its policies? It appears that he has learned nothing while he was eight years in opposition and has applied, I am sad to say, very little of his own business acumen.

I hope that the finance minister and the Prime Minister truly enjoy themselves as they travel across the country selling another year's worth of hope and weak promises on the rock solid financial foundation of living on borrowed money and over spending while those to whom they speak must live within their means.

I submit that the budget, like those before it, has missed the mark. The Minister of Finance has truly wasted some golden opportunities to reduce spending and here are a few of them.

The budget could have included the elimination of business subsidies and regional development programs; savings to the government, $3 billion to $4 billion. The budget could have outlined at the minimum a 25 per cent reduction of subsidies to crown corporations; savings to the government, $1.25 billion. In this area our party would have gone further and outlined the value of some privatization, with the application of the proceeds from the sale to the national debt, another savings to government of $3 billion to $4 billion.

This budget could also have addressed old age security payments going to seniors whose household income is in excess of the national average of $54,000 per year. That is $54,000 and not $35,000 as the finance minister seems to say on television. They are not truly needy. Savings to the government, $2 billion to $3 billion.

If the government or the finance minister had done nothing, in other words no new budget, with his own figures and estimates it shows us that the federal deficit would have gone down, dropped to $41.2 billion from this artificially inflated $45 billion, in the coming fiscal year, and unemployment would have remained at around 11 per cent. By doing nothing that is what we would achieve. What the finance minister did was shuffle the financial deck of cards and confuse everyone with a new hand to evaluate.

The finance minister has deferred the tough decisions and at the end of the day has ended up with virtually the same results. Why did he bother? He has created a whole lot of pain with no net gain for those who have been asked to sacrifice. At the end of the day, in my opinion, if you are asked to contribute and sacrifice, there should be a reward, and there is none in the budget for those people.

In my estimation, Canadians have been dealt a rotten hand while the finance minister on the other side of the table has finessed four aces in the financial deck of cards. When will he play the ace of toughness and cut overall spending by the government? When will he play the ace of reality and stop hiding behind taxpayer funded task forces and committees to debate the obvious? When will he make the real choice; do what has to be done, reduce overall spending.

When will he play the ace of change and show something for his party's eight years of opposition, spent criticizing Tory budgets, and work toward helping Canadians see the benefit in attacking the debt instead of adding to it, more so than the previous Tory government did in their last year?

Finally, when will the Minister of Finance play the ace of all aces, the ace of tax reform, and eliminate the incredibly high, complicated and bureaucratic taxation system that all Canadians want simplified and lowered? Canada needs a simple, visible or flat tax that is the same rate for individuals and businesses alike; a tax with no exemptions or loopholes in the range of 15 to 20 per cent, which addresses the problem of equality, equity, neutrality and efficiency; a tax that increases disposable income for all Canadians and businesses and reduces the current bureaucratic, suffocating nightmare.

These are the key factors for an effective system of taxation. The Liberal budget addresses none of them. When the finance minister has the courage to play this card, the ace of tax reform, his government will have begun to address the real problems in the country.

This budget is not about change, but rather a nibbling at the edges leaving only high debt, high taxes and high unemployment, the exact opposite of what is intended.

The Liberal Party always challenges us for alternatives. Here in my speech I have provided over $9 billion in cuts this year for the Minister of Finance to use which are not in his budget. I challenge him to take the initiative, take the credit, start reducing the debt and do what is best for the country.

I say to the Minister of Finance: Stop talking a good game. Make some real decisions. Get into the game. Get your uniform dirty and complete the grand slam to lower debts.

[Karen Kraft Sloan, Liberal, York—Simcoe, ON]

Mr. Speaker, I would suggest that the Minister of Finance is not some kind of card shark who is gambling with the lives of Canadians. The Minister of Finance is someone who cares about the lives of

Canadians, is concerned about job creation and has taken a balanced view.

When we have one million Canadians unemployed it costs the economy $25 billion, and I would suggest to the hon. member on the other side that perhaps the deficit is only the symptom not the root of the problem.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I have long abandoned the deficit because when you say deficit the opposition tackles that. So let us present the real problem: the debt; the fact that the government is now adding another $41 billion to the debt. It is going to be $550 billion at the end of this coming fiscal year. It is the debt that is causing the problem and the interest on it. They make an emotional plea about jobs. Currently the unemployment rate is at 11.2 per cent. At the end of this year, with the finance minister's projections and the Minister of Human Resources Development with these 168,000 jobs offered, at the end of all this the unemployment rate goes from 11.2 per cent to 11.1 per cent. This is one-tenth of 1 per cent. Is that what this government calls giving jobs to Canadians?

All you do is talk and promise, promise, promise but you do not deliver the goods. Here was your opportunity to lower the deficit to a point at which you could leave money in the hands of private enterprise so it could create long-term, meaningful jobs and it is equity capital.

In the previous speech I heard the Minister of Human Resources Development say that capital creates jobs. There is no question that capital creates jobs but not borrowed money and not governments-equity capital not debt capital, private enterprise not public enterprise.

[The Deputy Speaker]

I would invite the hon. member for Calgary Centre to put his remarks through the Chair. The reason is quite simple. It is designed to promote harmony between the members by doing it that way. That is the theory.

[Andrew Telegdi, Liberal, Waterloo, ON]

Mr. Speaker, let me express my harmony through you to the member for Calgary Centre.

Actually I have found the member for Calgary Centre to be rather reasonable on some issues. What I am concerned about is the amount of response we have coming back and forth between the government and the Reform Party. It is the same kind of debate that took place during the election campaign when we all were on the hustings. We were all debating the issue.

There is a fundamental question. We laid out a plan and our plan is the red book. The Reform Party laid out a plan which was the slash and burn book. My question to the member for Calgary Centre is will he not concede that we stayed true to what we said we were going to do in the red book?

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, in response to the hon. member and with respect, I just cite the figures of the finance minister which show that the Liberals were elected on a promise to create jobs. The number of jobs they are going to create after 12 months is one-tenth of 1 per cent. If the member figures it out himself he will see that is not very much of a growth.

If they keep that up in year two, year three and year four, pretty soon the rest of the member's mates will be back over on this side of the House and we will be all over there full. Once eastern Canada gets to see what we are talking about, the advantages of living within our means, it will understand that we have the right medicine and we have identified the right problem and not the pie in the sky that the Liberals keep talking about.

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, the Prime Minister bought the Minister of Finance a new pair of work boots for the budget the other day and it is a good thing because he has certainly got his work cut out for him.

Like all new work boots, or at least like any that I have had, it will only be a matter of time now before he gets a certain amount of organic material on them.

This was the minister's first budget and we can only hope that within the next three budgets he will get better at reducing the deficit. This budget will put Canadians another $39.7 billion in debt, bringing the total debt in two years to $550 billion. If we add the projected deficit of $39.7 billion to this and the $32.7 billion for the forecast for next year, one will find that we are adding another $72.4 billion to our already burgeoning debt.

Since we are living on borrowed money, as has already been pointed out by my hon. colleague from Calgary, and borrowed money is subject to interest of at least 7 per cent, if we are lucky, we are adding another $5 billion in interest to that debt.

To switch off of the negative for second, I do wish to commend the minister for showing at least some restraint and changing some government operations which will produce some savings.

Unfortunately, it seems to me that all of this will be negated by the cost of the 18 new programs and 15 new studies announced in this budget.

When will this government admit that we have a spending problem? Spending is the key, not revenue. The government revenues for 1993-94 totalled $127 billion. The Prime Minister said in this House not too long ago we cannot run government as if it were a business.

Even if we grant him that supposition, perhaps the government could be run like a household. Certainly, when we can no longer pay our bills in our household we have to take drastic measures; namely, do without some of the things that we can do

without in order to reduce our expenditures to fit our income. That certainly seems to make sense to me.

The whole issue of spending $70 billion a year on a social safety net and a further $40 billion on interest to service our debt simply has to stop. Past governments have certainly made the military their whipping boy at budget time. What do you know, this government seems to have taken right up where the other bunch left off.

We on this side of the House were quite pleased. We applauded and supported the government in its promise to undertake a military defence review. Instead it accelerated the process and we as members of Parliament did not have any opportunity for input. It completely prejudiced the outcome of the study by going ahead and closing bases and reducing others.

Perhaps if we had had a better equipped military we could have exercised sovereignty over the Atlantic fishery and we would not have to pay support to the whole east coast fishing industry. The cod stocks maybe would not be quite as low as they are now, and certainly they are depleted. Members opposite refer to our cod stocks as extinct. Now we have added all these otherwise self-sufficient business people to the ranks of the full time unemployed.

The January unemployment rate was 11.4 per cent in Canada. Stats Canada reports that there were 1,592,000 unemployed people in Canada last month and that does not take into account all those people who have dropped out of the system.

This budget simply nibbled at the edges in my opinion. The unemployment insurance program is a good example of that.

Reducing the generosity of the program is, however, a step in the right direction. After all, we are all aware that generous UI programs do have the effect of increasing the number of people drawing unemployment insurance.

The cumulative deficit of the unemployment insurance account amounts to $6 billion. It is a fallacy to believe that this is solely a worker-employer funded program. It is the government, the taxpayer of Canada, paying for the shortfall.

The unemployment insurance program changes announced in the budget begin to target social benefits to lower income Canadians, as the minister has said, to target those most in need. This as well is a positive step.

The Canadian unemployment insurance plan has become an inefficient income supplement plan rather than social insurance. We need to the "un" out of unemployment insurance. It should be employment insurance with extra emphasis on insurance. We buy life insurance, not death insurance.

The Reform Party policy is to make employment insurance a sensible, sustainable program of social insurance which provides compensation for temporary loss of employment. We believe the program should be funded by employers and employees who determine the level of premiums and benefits. This, I am sure, would go a long way in reducing the underground economy and ultimately relieving the tax burden.

To quote the hon. Minister of Finance, the underground economy is not simply about smuggling, it is about hundreds of thousands of otherwise honest people who have withdrawn their consent to be governed.

It appears that they are withdrawing their consent to be overtaxed as well.

[An hon. member]

Good point.

[Dale Johnston, Reform, Wetaskiwin, AB]

The underground economy's strength is directly proportionate to the high levels of taxation. Taxpayers need a break. The beleaguered Canadian taxpayer deserves a break.

Canadians do not want to cheat. They are prepared to pay their fair share of taxes. Does this budget provide a fair level of taxation?

Over the last 10 years successive governments have increased the tax burden of the average middle class Canadian. The Fraser Institute reports that even though before tax earnings have increased for the average family, the percentage of after tax income has decreased. It has to be an increase in the taxation.

At the same time the same governments allowed this debt to escalate to $500 billion, half a trillion dollars. Is it any wonder that the underground economy is flourishing? Does this budget give the taxpayer a break? I do not think so.

We in the Reform Party will do everything we can to ensure that the minister gets an opportunity to wear out his new work boots. We will continue to work in this House and in committees to convince the minister and his government colleagues that they must reform their red ink book philosophy before the minister brings in another budget.

[John Harvard, Liberal, Winnipeg—St. James, MB]

Mr. Speaker, I have one question to put to my hon. friend, the hon. member for Wetaskiwin.

The hon. member went on a bit about the UI program. As opposition members are wont to do, the member focused on what he thinks are some of the more negative aspects of what we have done or not done with UI.

One thing that he did not point out is the reduction in premium rates that will come about from $3.07 to $3.00. According to the government, and I have no reason to disbelieve the calculation put forward by the hon. Minister of Human Resources Development, that premium reduction alone could translate into as many as 40,000 jobs. That reduction does put an additional $300

million into the hands of business. Most of that is small and medium size business.

I would like to know from the hon. member for Wetaskiwin how he feels about that particular reduction and whether he would support putting that kind of money into the hands of business which might use it to increase jobs.

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, the member raises an excellent question, one that I am sure we could debate on all day.

The first thing that springs to my mind is that whenever government gives something, it first had to take something away.

I am going to try to answer this question to the very best of my ability. I am not going to dance around it. If government had not been involved in unemployment insurance in the first place, if it was an agreement between the employer and the employee, probably the rate would have been down around $1.50. There would never have been a need for it to be raised in the first place so that it can be lowered at budget time.

I think that should probably suffice the hon. member.

[Jerry Pickard, Liberal, Essex—Kent, ON]

Mr. Speaker, I would also like to ask a question of the member and congratulate him on his presentation.

I have a bit of a problem with the position he took with regard to the military. I think it is very clear that as the budget came down, the finance minister and the minister of defence had a mandate to reduce expenditures and costs. Certainly there is a review of the military and that is extremely important as well.

However, if they were not to take steps and measures within this budget of a $1.9 billion reduction we would have a deficit, in addition to what there is at present, of $1.9 billion more.

Is the hon. member suggesting that those cuts not be taken and the deficit be increased?

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, I am suggesting that there is a need for military in Canada today. Let us define what it is. We need a certain amount of military to exercise our sovereignty over Canada. We also need a certain amount of military to exercise our sovereignty over our 200-mile offshore limit. We also need a certain amount of military for search and rescue operations.

Let us define what it is before-and I use some terms I have heard from the other side of the House-we hack, slash and burn our military.

[John Bryden, Liberal, Hamilton—Wentworth, ON]

Mr. Speaker, I have a very quick question for my hon. colleague.

He mentioned in passing in his speech that he found the $70 billion figure for the social safety net unacceptable. Could I ask him what he thinks is an acceptable figure? In other words by how much would he cut the $70 billion and what programs would he cut thereby?

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, I do not know that it is so much a matter of cutting out certain programs. It is safe to say that we could find a level somewhat less than $70 billion.

If we were able to lower our debt we would lower our interest payments and there would be at least a portion of the $40 billion that could be used to put into social programs. That would be my recommendation.

[Tony Ianno, Liberal, Trinity—Spadina, ON]

Mr. Speaker, I rise today to present my maiden speech to Parliament with honour, pride and a great sense of responsibility. I would first like to congratulate you on your election as Speaker. I believe your sense of fairness and calmness will help us in these uncertain times as we face the unique challenges of the nation.

I am honoured and humbled by the confidence placed in me by the people of Trinity-Spadina who have given me the opportunity to serve them in the House. In this capacity I hope to echo both their deepest concerns and their greatest hopes.

Trinity-Spadina is located in the heart of downtown Toronto by Lake Ontario. It is one of the most economically and culturally diverse ridings in Canada. It is an exciting place to live and a great place to raise a family. It is home to the University of Toronto and the world champion Toronto Blue Jays. Great theatres and some of the best restaurants in Canada are located in places like Portugal Village, Little Italy, Chinatown, the Annex on Queen Street and the waterfront.

I had the good fortune to be raised in Trinity-Spadina and have experienced many of its great attributes. My parents like many Canadians immigrated to this country because of the opportunities it provided. They instilled in me the belief that with hard work any dream can be achieved. They also instilled in me that sharing with and compassion for others must be integral parts of that dream.

I believe the government was elected to give Canadians their pride, dignity and hope. The way to achieve this is by charting a new economic course. As an entrepreneur this experience allows me to speak with some insight on the issues facing our economy. Too often in Trinity-Spadina I see small business people striving to keep their enterprises alive. I see single mothers struggling to raise their children. I see university graduates trying to find jobs that do not exist and working people who cannot make ends meet. I see a staggering number of people who

depend on the Daily Bread Food Bank, an appalling number of whom are children.

For us to move ahead as a nation we must ensure those without a voice, those who have fallen through the cracks, are not left behind. We must give Canadians the tools to realize their potential and their dreams and thereby fulfil Canada's. That is this government's goal.

The budget is the first step in achieving that goal by laying the basis for tomorrow's prosperity. In order to achieve this we must harness the initiative and creative talents of all Canadians.

The key to the success of Canada's economy is our small and medium sized businesses. There are over 900,000 of them across the country. If we as a government as we have started to do in the budget establish the proper framework for our small and medium sized businesses so that each of these businesses can hire just one person, many of our economic problems would be solved and the government would have a net gain of $18 billion from direct employment alone.

What small businesses need to achieve this is access to capital. The banks' rigid lending formulas and the arbitrary cancelling of lines of credit are cracking the backbone of our economy. Every time we allow a small business to close we not only lose jobs; we kill a dream. It is time Canadian banks recognize their responsibilities as partners in the development and growth of Canada's economy. Canadians through the Bank Act have given the banks special privileges. Canadians expect them to do more. We will work to achieve it.

The first step, as mentioned in the budget, was to establish a task force that would develop a code of conduct for small business lending. Small businesses also need access to the emerging new global economy to survive and grow. The opening of foreign markets to Canadian business will provide unprecedented opportunities for growth. Canada's cultural diversity, coupled with its entrepreneurial spirit, gives our country a unique advantage in this highly competitive world.

This government is going to play its role. Our international network of embassies and trade officers will provide a pro-active, ongoing link to these exciting new export markets. The economic engines of the future are the emerging technologies of today. We must participate fully in the technological revolution and be at its leading edge.

Through increased funding for the National Research Council and the technology partnership program, government will bring together our research institutions and the private sector to capitalize on the innovations of Canadians in such fields as environment, health care, biotechnology and telecommunications. In some of these fields we are already world leaders.

By the year 2000 environmental technology sales alone will be worth approximately $580 billion a year. We have great opportunities. The government's task is to ensure that Canadians have the capacity to meet these new challenges.

Let me give an example from my own riding. At Central Technical High School a partnership has already been forged between the school and the Canadian Tire Corporation. In the past Canadian Tire could not find graduates trained in computer based auto repair. To help remedy this situation they provided the school with $200,000 of equipment to modernize the auto mechanics teaching facility. Because of this, graduating students will now enter the workforce with the most up to date skills and Canadian Tire will not have to look abroad to fill the jobs.

We must keep up with technological change, not only in our educational facilities but also in the workforce and the workplace. We must use new technologies to reinvigorate our existing industries. As an example, Spadina Avenue has historically been synonymous with the fashion industry in Canada. Today, to remain competitive, this industry must embrace new approaches to design and manufacturing. By drawing on the creative talents of designers and by utilizing the most modern computer assisted systems we can put Toronto once again back on the leading edge of the global fashion industry.

It is only through this kind of creative leadership that we can accomplish these changes. The budget will help in the required transformation.

However economic growth is not just a matter of exporting abroad. It is drawing on the strengths we already have. In Trinity-Spadina we know first hand the benefits that can come from expanding tourism. Trinity-Spadina is home to many of Canada's most unique tourist attractions. From the art galleries and the museums to the theatres and the bistros, from the SkyDome to Ontario Place, from the CN Tower to Harbourfront Centre, millions of visitors come to my riding to enjoy music, art, theatre, history and sport. We must take advantage of this resource. Governments and business must work together to expand this industry by letting the world know of our treasures. These resources must be aggressively marketed. Tourism is a form of export. The difference is that foreign customers come here and leave their money behind.

I draw the attention of members to a potential infrastructure project in my constituency which will provide much needed construction jobs and will advance the long-term goals I have described. I am referring to the establishment of the World Trade Centre at Exhibition Place or the expansion of the Toronto Convention Centre. Either of these facilities would provide Canada with a venue that would allow us to compete with convention centres around the world. By drawing these shows to Canada we could help small and medium sized businesses bring

their Canadian products and technologies to the world marketplace.

Along with bolstering our export market such a facility would draw hundreds of thousands of visitors who would leave millions of dollars behind. The people of Trinity-Spadina want to be a part of a proud Canadian team competing in this international market. Canada has the tools and an intelligent educated workforce that can adapt to these new industries and technologies. We have the strength in our diversity and we have the desire and ability to succeed. We are not afraid of competition.

The budget set the foundation on which the future economic growth of Canada will be built. This government will be the catalyst to bring Canada's people, businesses and institutions together to harness our strengths and to achieve our common goals.

All Canadians must share in our growth. Everyone's dream is important. No one will be left behind.

[René Canuel, Bloc, Matapédia—Matane, QC]

Mr. Speaker, I listened attentively to the hon. member opposite. In addition to our ideological differences, I noticed something else. I noticed that there are huge differences between urban and rural constituencies. Where I live, there is no CN Tower. I live in a rural riding whose population depends on farming and forestry and where many are unemployed.

Is the hon. member not a little surprised that the budget cuts funds for forestry and maintains the status quo for agriculture? Are you not a little surprised by that?

[Tony Ianno, Liberal, Trinity—Spadina, ON]

Mr. Speaker, I thank the member for the question. I am not surprised. What we are doing in the budget is setting the framework so that we can invest in agriculture and forestry, but maybe not in the same ways that have been used in the past.

We have to get creative. There is a lot available for us with new forestry technology and agricultural technology. Not only will we serve our own purposes here as my father-in-law on his own farm and my relatives deal with. There will be a future. Their children will have a chance to participate in innovative ways. Not only will we be able to use the technology in Canada but abroad to the benefit of export markets for cattle and everything else our farmers utilize, and in our forest industries when we take into account depletion around the world and our concern for the environment.

I am not surprised by the member's question, but I hope in the next four years when the economy comes along with us we will be at the leading edge of a lot of these new industries that our communities will be able to participate in fully and vibrantly, especially the young.

[The Speaker]

I know the hon. member was referring to me when he said you.

[Jack Ramsay, Reform, Crowfoot, AB]

Mr. Speaker, I want to thank the hon. member for not only his speech but the demure way in which he gave it. I appreciated that very much. His presence would be welcome in my office or in my presence at any time as a result of that.

I would like to ask the member a question having to do with the debt. We have been told by economists that we may be beyond the line of any return on the debt. What impact does the member feel the addition of $100 billion to the federal debt over the next three years will have upon job creation and employment in Canada?