Debates of Feb. 25th, 1994

Petitions

[The Acting Speaker (Mr. Kilger)]

Order! Order.

[Louis Plamondon, Bloc, Richelieu, QC]

I have had enough of this.

[The Acting Speaker (Mr. Kilger)]

Order, please.

Having clearly heard what a member told another, and recognizing the Chair's responsibility to maintain mutual respect among members, I would invite the member for Richelieu to withdraw the word "hypocrite" he used against one of his colleagues.

The member for Richelieu.

[Louis Plamondon, Bloc, Richelieu, QC]

Mr. Speaker, I agree with you, the word "hypocrite" should be banned from this House. But while I am willing to withdraw it, I would like to remind-

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

No way. Without any conditions.

[Louis Plamondon, Bloc, Richelieu, QC]

There are no conditions, Sir, I withdraw it entirely. But I would like to remind the members that the Prime Minister, not the present one, but Mr. Mulroney, used that word, you can check the Chair's records, against the member for Shefford, Mr. Lapierre, who was then the Bloc Quebecois House leader. At that time, the Chair judged it to be acceptable. The Prime Minister had called Jean Lapierre "hypocrite" and "insignifiant". It appears that these words were found acceptable in the context they were used.

Personally, I find it unacceptable and I want to retract and apologize to the member for using it. But I want him to understand that what prompted me to do so, is that we do not accept that petitions dealing with official languages be tabled while saying: "I am tabling them but I do not support them". He should either agree or disagree. I like people who tell the truth.

[The Acting Speaker (Mr. Kilger)]

I appreciate that and we respectfully accept the fact that the member for Richelieu has withdrawn the comment he made regarding the member for Parry Sound-Muskoka. I do not care to hold a debate on this issue.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

On a point of order, Mr. Speaker.

I do not think it is totally fair that the member, although I do appreciate the fact that he withdrew his inappropriate statement, in his additional comments is still leaving an impression in the House that is not accurate for a number of reasons. I want to make this-

[The Acting Speaker (Mr. Kilger)]

Order. As I stated previously, I will not allow the House to engage in debate on this matter. The Chair asked the member for Richelieu to withdraw his comment. He has. It has been accepted. We will now move on. Were there any other petitions?

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Point of privilege. The hon. member who made some comments and withdrew certain of them made reference to the contents of a petition and a comment that I made. In neither case was he aware of its contents nor were they accurate. His statements about something that he had not read, nor did he repeat it accurately-

[The Acting Speaker (Mr. Kilger)]

Order. That is a matter of debate.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, this may not be the best time to ask for the unanimous consent of the House, but since I was not here earlier to present the report of the Committee of Finance, I would like to ask for the unanimous consent of the House to present the Committee's third report.

[The Acting Speaker (Mr. Kilger)]

Members have heard the hon. member for Willowdale. Is there unanimous consent?

[Some hon. members]

Agreed.

Committees Of The House

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I have the honour to present the third report of the Standing Committee on Finance. In accordance with the order of reference of Monday, February 14, 1994, your committee has considered Bill C-9, an act to amend the Income Tax Act, and has agreed to report it without amendments.

May I say, as the chair of this committee, that I am very grateful to all members, including the opposition members, for the hard work and the co-operative spirit they have brought to these very difficult chores.

Questions On The Order Paper

[Fernand Robichaud, Liberal, Secretary of State (Parliamentary Affairs)]

Mr. Speaker, I would ask that all questions be allowed to stand.

[The Acting Speaker (Mr. Kilger)]

Shall all the questions be allowed to stand?

[Some hon. members]

Agreed.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, we are seeking unanimous consent today and it is going very well. When I sought unanimous consent I know the Bloc gave unanimous consent, as did the Reform Party and the representatives of the Conservative Party, but my friend, the secretary of state, indicated that consultations were ongoing.

Could he explain what he meant by that as to whether or not those consultations will take forever, a few weeks or a few hours?

[The Acting Speaker (Mr. Kilger)]

I do not think that is a point of order. The secretary of state has already addressed that question. If people want to continue that debate behind the curtains or elsewhere in those negotiations I would encourage that. At this time we will proceed to orders of the day.

The House resumed consideration of the motion that Bill C-14, an act to provide borrowing authority for the fiscal year beginning April 1, 1994, be read the second time and referred to a committee.

Borrowing Authority Act, 1994-95

[Stephen Harper, Reform, Calgary West, AB]

Mr. Speaker, I am rising today to address Bill C-14, an act to extend to the government borrowing authority for the next fiscal year, borrowing authority in the order of $34.3 billion with a contingency for an additional $3 billion.

For those who have trouble grasping some of these numbers, and I think that is probably most Canadians, I will just spell it out. We are talking here initially, to put it in number terms, 34,300,000,000.00 dollars and cents. That kind of money, to give it some practical significance, would be enough to eliminate the GST and then pay it back twice to all Canadians. It would be enough to halve the income tax. It would be enough to pay old age security for an entire year without any additional revenue sources.

This is the highest planned borrowing. As far as I know, it is certainly the highest planned deficit on which this is borrowing based in Canadian history. We have had higher deficits in the end, but this is the highest we have ever had to begin with.

I will not waste a lot of time in telling the Chair that I will be opposing this bill on that ground. It is safe to say that every member of the Reform caucus and I will be opposing it for like reasons.

In my speech and in the speeches of other members of my party who will follow today and subsequently, we will not restrict our comments merely to the borrowing aspect, but we will comment on and evaluate the general budgetary policies of the government from which are flowing these tremendous borrowing requirements.

This of course all comes from the red book which I think is widely becoming known now, upon presentation of the budget, as the red ink book.

The Liberal Party talked about its red book throughout the election campaign. But now we see what a red ink book is all about. With this bill, we will be increasing the national debt of our country by more than $34 billion. Over the next three years, we are talking about an increase of at least $100 billion.

That is a lot of money.

I want to make my remarks on four particular categories. I will start by evaluating the stated targets in the budget and give an evaluation of those. Second, I want to look very carefully at the economic assumptions and the projections behind the targets. Third, I want to look at where we are headed financially and economically, particularly on the issue of this bill, the borrowing authority, the debt. Finally, I would like to summarize in some detail by looking at what the market is saying and where the government may be going.

In his budget speech the minister spoke about achieving targets rather than having illusions and falling short. I want to evaluate some of those targets and the data used to obtain them. Let me make a general comment. The government, unlike the previous government, has provided some measurable targets. It has also provided in the short term more realistic data than were provided by the previous government. It is better data that are much easier to evaluate.

However, to summarize, the targets are very soft; the action is somewhat overstated; the achievement is not at all clear. The minister has spoken of a two-part budget and of course we have no long term or even medium term financial projections in this budget. We have only an empty third year column in which we are told we will reach the target. That is a general comment.

Let me go back to previous experience on this matter. In April 1993 the former Progressive Conservative Party and government brought down its final budget. In that budget it promised to balance the books in six years. This would mainly be achieved through spectacular economic growth.

The House will recall that at the time the budget only laid out projections for five years. It showed that by fiscal year 1997-98

we would have a deficit of about $8 billion and extrapolating the economic projections we reached a budget balance in fiscal year 1998-99.

In the specific projections that were made we had this tremendous prediction of an average rate of growth of almost 4.5 per cent per year until the end of the century. We had rapidly declining unemployment rates which would fall to about 7.5 per cent by the end of the century. We had spectacular falls in interest rates, both nominal and real, and of course we had an income tax system that would generate all the spectacular revenue increases that these assumptions implied.

The former Conservative budget of 1993 called for a deficit in fiscal year 1994-95 of $29 billion. In the election campaign our party said, and I want to give a realistic evaluation of this situation, that the Conservatives were grossly underestimating the seriousness of the problem. We said that the Tory plan would not reduce the deficit. In fact we said that the Tory and the Liberal plans were pretty much identical in macroeconomic terms.

This is not the first time when one political party, the Conservative Party, talked like born again right wingers about the seriousness of the deficit and how this had to be stomped out at all costs and the Liberal Party talked about jobs and social democratic priorities.

Of course in reality the numbers that they were proposing were very close. When one extracted out of the Conservative projections the unrealistic assumptions, one found that one reached a target of about 3 per cent of GDP by the end of the century. That was the real Conservative target in that budget although they did not say that. The Liberals said this was excessively harsh and that they would do things differently. We Reformers said this was not good enough, the deficit was more serious than either of these parties was saying.

Interestingly, if I look back at some of our own studies, and I can take some credit and blame for this, I see that the trend we had established in our evaluation of the likely deficit for fiscal year 1994-95 was $31.2 billion. We were told that we were excessively pessimistic, that we had grossly overstated the problem.

Now we have the revelations of the past few months about the doctoring of the books that occurred in the later days of the last Parliament. We are now admitting, and the government is admitting, that we are looking at a trend deficit figure, with no policy adjustments, of $41.2 billion or exactly $10 billion above the Reform Party's estimate of how serious this problem was only a year ago; $10 billion above what we thought one year ago, we who were most concerned about this and were labelled hysterical about our evaluation of the situation.

This is one of many signs of the very serious and rapid deterioration we are now about to enter upon if we do not get a handle on this problem.

Just as an aside, why did the Reform Party so underestimate the deficit for 1994-95? I would like to comment on that as the finance minister has made some reference to it in the House. He has said that we had unrealistic growth assumptions. In fact we did not have unrealistic growth assumptions. Our growth assumptions for last year were modestly above what transpired. Our growth assumptions in the longer run were not over estimates. In fact they are lower than the growth assumptions that the government is presenting today.

What happened was that we had overestimated the ability of the tax system in general to extract revenues from economic growth. Last year we had a dramatic collapse in the revenue GDP ratio which indicates a significantly lower revenue potential that is now recognized. We had a collapse of over 1.5 per cent of the ability of the tax system to extract revenue from growth in the gross domestic product.

That is something I will be talking about more. It is now a recognized problem. It was not at the time. It is indicative once again of the underground economy, smuggling, tax avoidance and the impact of sustained recession are problems we are beginning to understand better.

Let me move on to the second issue I wanted to address. We talked about the targets the government set. Let us now talk about the specific economic assumptions and projections that the government has made in saying it will reach these targets by the end of the third year.

This government, and I want to be fair here, unlike the previous government has not spectacularly exaggerated its estimates. Its record is mixed. It is better than the previous government but there is still a lot to be desired.

I am going to talk about some subjects: economic growth projections, unemployment projections, interest rate projections, revenue projections and the efficiency of the tax system. I wrote most of what I have to say today prior to reading the Globe and Mail article this morning.

Economists all over the country are in the process of studying the budget, of examining these tables and estimates very carefully. I should say that in the last two or three days it is increasingly obvious that some of the deficiencies in the assumptions of this budget are being exposed.

Let me mention a few, not all, because there is going to be more debate about this in the upcoming days. First, the government's most positive feature in its planning, job creation, is definitely not exaggerated in the budget. Unemployment is projected to fall to only 10.8 per cent in 1995, with modest job recovery thereafter.

I think it is probably accurate. It is a very interesting projection coming from a government that says that creating jobs is the major priority of the budget, and continues to insist there is

somehow a link between jobs and debt. That somehow, if the government spends money, if we continue to run these deficits, we will create jobs. The budget indicates what we in the Reform Party are saying is correct. The longer these deficits stay high the longer job creation will stay low.

I can be a little more critical when it comes to its projections for economic growth. The government has forecast 3.0 per cent economic growth for 1994 and 3.8 per cent economic growth for 1995. It has avoided making explicit projections for the period after that but its documents as well as the minister's responses earlier this week would indicate that it expects growth in the order of 3.8 per cent to continue in years 1996 and after.

The basis of these growth projections is said to be in median or even below median assessment of the forecasts of private sector economists and forecasters. This is said to be a brand new approach to budget planning. This is not the case. This is not a brand new approach. The previous government also cited private sector forecasters in making its own more exaggerated and unrealistic growth projections.

What is similar here and what needs to be pointed out, if we are going to rely on the projections of private sector forecasters is that it would be useful to have some additional information, such as who are the private sector forecasters that are being sampled in these kinds of growth projections, precisely what kind of adjustments have they made to their own economic models in light of recent evidence, and most important, if that is your only basis of forecasting, what is in fact the record of some of these private sector forecasters in terms of their own evaluation of economic growth and other economic variables.

I would like to mention that in a recent article in the Financial Post entitled ``Deficit and Jobs Cloud Optimism'' private sector forecasters were quoted as saying that their projections for the next fiscal year were the following: for 1994 the median projection was 3.5 per cent, but for the years thereafter the average median forecast was 3.2 per cent which is considerably below the government's forecast.

Our position has been that budgetary planning should be based on very firm conservative budgeting principles. Those principles are the following: That we should select the lesser of two different pieces of information, the lesser of the forecasts that are out there among evaluators and recent economic history and experience. It would ensure a very conservative planning path over an entire economic cycle and is the approach we have used to estimate growth paths and recessionary deficits.

Using this, let me convey to the House the planning forecast that we have been using. As I say the Minister of Finance has inadvertently misrepresented this.

The planning forecast we have been using for the past several months, since the minister's statement in November, has been a forecast of 3.0 per cent for 1994. That is in agreement with the government. However, we suggest that the second and subsequent year forecasts are optimistic rather than conservative. We have projected those growths to range in the area of about 3.2 per cent on average as predicted by private sector forecasters.

The third issue I want to look at is the interest rate issue where the statistical games being played are much more serious. They certainly involve more distortion and potentially much more danger for the government. That is the assumption on interest rates.

Using the rate on 90-day commercial paper as its benchmark, the government is saying that short-term rates will be about 4.5 per cent in 1994, rising modestly to 5.0 per cent in 1995. Longer term interest rates, with the 10-year rate on government bonds as the benchmark, will fall from 1993-94 to 6.4 per cent and will continue to fall in 1995 to 6.1 per cent and staying thereabout thereafter.

In our view once again we should be using a conservative approach that would look at some of the forecasts out there-I suggest that these are exaggerations of the forecasts-as well as the clear market data which exist on interest rate expectations. There is in the marketplace an elaborate term structure for interest rates and an elaborate set of variables on which the market forecasts present and future interest rates.

Looking at that data we can see they reflect the government's short term forecasts. We see that interest rates are expected to rise gradually in the short end over the next few years. The reason for that is quite straightforward.

There is general concern about inflation, particularly if we are going to have recovery. That is reflected in interest rate projections. More significantly, there is no clear sign in the marketplace that long term interest rates are going to fall dramatically. Long term interest rates have had a pattern of falling and rising in recent years with the inflation pattern we have had.

At present the 10-year rate on government bonds has been ranging between 6.8 and 6.9 per cent. There is no sign of a decline in real medium term and long term interest rates. Maybe there will be but certainly for an organization that is experiencing the kind of debt levels we have here, we would not want to underestimate the possible debt charges as a way of balancing the budget.

This is the most serious deficiency. Other speakers particularly from the Bloc Quebecois have commented on the overestimation of the revenue forecasts. That is something serious. For a government that finds itself with a half a trillion dollar debt which will rise rapidly even under its own projections, to underestimate the potential debt charge on that is a very serious

and imprudent planning assumption, particularly when that deficit on average has a term of about two and a half years. It is now a very short term debt.

To concentrate that debt on the front end, while we face referendums and other economic and political uncertainties in this country, makes us vulnerable to rises in interest burdens. In our own case, as I have said, in our forecast of interest rates we have suggested we should look at the term structure.

We can take factors such as the overestimation of growth rates into the second and third year and the underestimation of interest rates at the long end into account. These factors alone would have an effect of adding half a billion dollars to the planning assumption for 1994-95 and at least $1.5 billion to the planning assumption for 1995-96. Because these imprudent assumptions are concentrated in the area of interest and debt charge, we can assume that any such understatement will compound rapidly into the future.

While these assumptions are somewhat of an improvement over the previous government, once we get into the second year in particular-and the government says those can be extended indefinitely into the third year-the overall pattern is not that different.

We have growth forecasts below those of the Conservatives but well above market forecasts and well above recent historical experience. We have interest rate forecasts that are identical to what the Conservatives proposed. And we have the most dubious of all assumptions which is the tremendous revenue generating capacity of the tax system, even though we continue to have one of the highest tax burdens in the industrialized world.

Where are we headed if we take all of these things into account? Our assessment is that we are probably headed for a very modest deficit reduction this year. It will be lucky to come under $40 billion. Our assessment is we will certainly not be achieving a 3 per cent debt to GDP ratio in 1996-97.

Based on this budget we will not achieve all the things the government wants: rapidly falling deficits, modest to high economic growth, extraordinarily low inflation, nominal and lower interest rates, et cetera. It is a very optimistic pattern by the time we get to the second and third year and there is very little to suggest it will be achieved.

In all honesty I would suggest to government members that if the government felt this were achievable, it would have published the figures. The fact it has decided to leave the third year column out of most of the tables is no accident.

The minister says he does not want to be hoisted with his own petard. Those were not his exact words but in other words, he does not want to repeat the mistakes of the Conservatives. He does not want to repeat the mistakes of making these forecasts, putting them on paper and then having them not come true. Therefore, rather than provide us with conservative or prudent forecasts he provides us with no forecast whatsoever and says that way he will not be held up on this.

On top of this another good question which should come out of all this is why is there a second stage to this budget if it will already achieve its objectives?

That is another reason I asked the minister to admit that the projections show the deficit will not fall below $30 billion. If he could achieve this objective and if it was based on realistic assumptions, there would obviously be no need to hide them. Furthermore, there would be no need to announce a second stage in the 1995 budget. Clearly, some of these excuses are wearing thin.

My personal view is that the government would be advised to provide the House with realistic information and to suggest that perhaps these targets are not going to be achieved. That is a far better way to do it than to play a shell game with the numbers.

I will comment a little more particularly on some of the critical ratios that are going to be affected by this borrowing bill. I recommend to the House once again chapter 5 of the 1993 Auditor General's report. It identifies five critical ratios in terms of evaluating federal fiscal policy. These are a set of operating ratios: Overall spending to revenue; program spending to revenue; deficit financing to revenue; as well as some more macro-ratios: the deficit to GDP target; and the debt to GDP target.

Commenting briefly on the operating revenues the former government was so fond of using, under this budget the operating ratios are forecast by the government to improve very modestly on the way they have been trending. With adjusted projections based on more realistic assumptions those ratios will be flat at best and they are at very high levels.

In terms of the deficit-GDP ratio, in spite of what the government says, with the actions strictly contained in this budget that ratio will be around 4 per cent of GDP by the time we hit 1996-97.

The debt-GDP ratio is a very critical one. It is the level of our debt relative to our ability to pay. The debt-GDP ratio is forecast at about 75 per cent for 1995-96 and flattening. Our calculations suggest this debt-GDP ratio will be closer to 76 per cent in the subsequent fiscal year and will be rising. This is the most critical ratio of all because ultimately this is the ratio on which the long run ability of the federal government to sustain its spending and financial policies is based.

Let me repeat for the benefit of all members the criteria on some of these variables contained in the Maastricht treaty in the negotiations for the European Community. The government is fond of quoting 3 per cent. Where did this 3 per cent concept come from? We are told that 3 per cent of GDP is a reasonable interim target. Why? We are told it is because that was the target used by the European Community in the Maastricht treaty. By the way, the European Community targets were not achieved but those targets were a 3 per cent deficit to GDP ratio and a 60 per cent debt to GDP ratio, 60 per cent of all national debt to gross domestic product. It was gross, 60 per cent gross.

Excluding the provinces and the municipalities, under this budget the federal government alone will have a public debt ratio of 75 per cent. It will be a net ratio, not a gross ratio. The government is well short. If it were to meet the Maastricht targets it would be expected to run a significant surplus in the upcoming financial years, not move toward a mere 3 per cent target.

Let me also talk about the size of the borrowing because it is important as well. The deficit is projected by the government to be in the order of $39.7 billion. Government members and others fondly point out that this borrowing bill is only asking for $34.3 billion more or less. They say our borrowing requirement is less than the actual deficit and therefore is not as serious and we should not worry about it. We have these non-budgetary transactions that are generating surpluses and if we take those into account we are in much better shape.

I caution government members very carefully against using that logic. I would call it Kim Campbell logic. Kim Campbell made some reference to this in her leadership campaign.

The surpluses on the non-budgetary transactions mainly concern pension and superannuation accounts. In spite of their cash surpluses in recent years these accounts have had very serious actuarial liabilities. Far from there being a solution in these non-budgetary accounts, they are a completely separate problem in addition to the deficit and debt problems we face and will have to be addressed in the future.

There are significant actuarial liability problems. To suggest for a minute we can borrow from the non-budgetary accounts in order to finance or reduce our deficit and thereby solve the problem is completely false. It is an extremely dangerous suggestion for anyone to send out to financial markets.

I want to give a blunt summary of my reading of this budget, not just an economic one but a political one. The government has provided small cuts in this budget. It has provided smaller taxation measures. It has provided a very, very modest fiscal stimulus program. Most important, it has deferred major decisions about the budget and fiscal policy to subsequent years. Let me comment generally on some of those points.

The government talks about having reduced expenditures much more than it has increased taxes. There are $5 of spending cuts for every $1 of revenue increase. There are five cents of spending cuts for every one cent of revenue increase. The budget has effected very small magnitudes. They are measured against planned expenditure levels. We all know that can be a highly distorted pattern because we then say we are not going to spend something we never really spent.

On top of that, if we actually look at the figures, at the end product and not these ridiculous cumulative measures, and take into account that a large portion of these measures was actually Conservative policy, the government will have reduced its planned spending by less than $6.5 billion by the end of the third year. The actual discretionary increases of revenue are less than $1 billion. These are very small magnitudes. We can compare that with an expected $25 billion gain in revenue from economic turnaround. The measures in the budget are absolutely dwarfed by what is expected to occur in the economy.

Then there is the fiscal stimulus program. I do not know how the government categorizes these, but there are 15 or so new spending initiatives in the budget, the major one of which is the infrastructure program. It is also a small package by any standards. I do not have to comment at length on the deferring of major decisions to subsequent years. We have had 18 studies.

I am sometimes amused by the rhetoric used by politicians. The minister said that we were taking action directly, that we were constituting a study or a committee or a commission. This is a very interesting concept of immediate action. The bottom line is that the deferral of decisions will cost $100 billion in new debt and associated service charges over the planning period.

In doing these things, particularly the small cuts, the smaller taxation measures and the fiscal stimulus, the budget is actually very close to the concept President Clinton had in mind though his magnitudes were much bolder. There is not an identical problem in the United States but a similar and serious problem.

The congressional process in that country caused a much more sensible budget package to emerge. It included some of the expenditure reduction measures and, in the case of the United States in which there is more tax room, some tax increases. The congressional process eliminated the stimulus program which was, as it will be here, an absolutely ineffective use of additional money to convince people the government is doing something.

What has happened in the United States has been a relatively high success. Growth in the United States is beginning and has been in the past several quarters to significantly outflank Canada's growth. On top of that its job rate is improving. Its unemployment rate is falling. Its budgetary deficits although still serious are dropping very dramatically. I point to the

congressional process which listened to opposition parties, the Republicans, and which produced a much better policy.

On that last point let me just make another summary of the budget, a political summary. As deficient as the budget is there are some improvements. The improvements are not in the dollars. They are the improvements in the philosophy embedded in the budget.

The finance minister may have spoken like a New Democrat, but many of the measures are in the direction of Reform Party policy. I look at what the government has done to old age programs, the direction in which it is moving. I look at the direction on unemployment insurance which I think is very sound. I look at the direction on industrial subsidies, the direction on social programs and transfers to the provinces. The fact of the matter is that these are just directions and with one or two exceptions the dollars involved are not significant.

The government is laying the groundwork in the budget-and that is what the market expects-to shedding its election campaign pledge and moving toward adopting real budgetary measures in the subsequent year. That is what the market hopes. The market hopes that these UI cuts are a sign from the government of a much more serious attitude toward the big spending programs. The government is hoping that it will get some breathing room.

I would suggest that buying time is a very dangerous way to proceed. We know what buying time has done to us in the past. I was with the Conservative Party in the mid-eighties when its members decided to buy time. We know what happened both to the their budget as well as to their party.

In summary, the budget has weak goals. The goals are not clearly attainable. There is some exaggeration in the expectations. It is somewhat better than before but still exaggeration. More than anything the government is taking a big gamble with everybody's future by putting off these decisions.

I would suggest that politically this gamble is not likely to work. It will probably benefit the opposition in political terms. Let me also point out that if it does not work out it is going to benefit members of the Official Opposition more than anybody. It is going to benefit their ultimate goals which will be hinged on the economic performance of the country much more than they will be hinged on the religion of official bilingualism.

I hope the government remembers that. I hope it takes very seriously the concerns expressed in this debate and in the debates in the months to follow, not only as we complete this budgetary process but as we begin the next one.

[The Acting Speaker (Mr. Kilger)]

Could the hon. member for London West indicate to the Chair whether she will be sharing her time or in fact using the full 20 minutes?

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I will be sharing my time. I consider myself privileged. I am deeply grateful to those in the urban riding of London West who put their trust in me. I pledge to do my utmost to justify this trust.

I wish to acknowledge and thank warmly my family and all those colleagues and friends who support me in these exciting days. As the mother of three young children it would be impossible to carry out my responsibilities without their encouragement and assistance.

In this Chamber I feel the privilege of serving Canada and my constituents, and to serve truly I pray for humility and decry arrogance, for humility leads to wisdom, the wisdom to listen and appreciate, to try and understand as well as to be understood.

This is the start of my journey, a journey that may not be easy. It will certainly be bewildering and sometimes treacherous. I will strive for the courage, faith and courtesy to face squarely these unusual times of changing conditions and share a vision of a strong Canada with Canadians across our country.

Let there be no doubt that together with all members of the House I will not shrink from responsibility so that one day I can look back and take pride in my modest contribution to this chosen homeland of mine.

I came to this country at the age of 5, having been born on the beautiful Mediterranean island of Malta. I am the first Maltese born Canadian to sit as a member in the House. I am very proud and thankful to be a Canadian.

At the commencement of the 35th Parliament each of us brings along an agenda that embodies a vision of Canada. Mine is a vision of freedom and opportunity based on tolerance and equality, a vision that rejects discrimination and extremism and every shade of injustice, a vision that gives us the assurance of a glorious Canada with all its democratic institutions at our disposal. We are fortunate in this land to have progressed well in many of these goals but our work is yet unfinished.

The primary concern of my constituents is the rebuilding of our Canadian economy and jobs for the present and jobs for the future. I am heartened that the government, true to its commitments, has already taken the initiative to translate our promises into action and charted its direction for choices in co-operation with the provincial governments. I hope the entire range of economic institutions and groups will co-operate in this great venture for the realization of our pressing objectives of deficit reduction and growth.

What we need for our deficit reduction and for facing the economic challenges of the nineties is a simultaneous commitment to increase economic growth and to regain control of our finances. Our budget addresses squarely these requirements.

In tackling the issue of growth one of our main thrusts will be where the backbone of job creation is: the area of small business. Small and medium sized businesses have accounted for 85 per cent of all new jobs created in Canada since 1979. In my riding of London West there are over 1,000 small businesses and many are struggling.

The government through the Minister of Finance introduced a plan for growing small businesses. It is evident the government will take the necessary measures to address the basic problems facing the small business industry.

The Minister of Finance has announced the establishment of a Canada investment fund to provide venture capital for innovative companies. There will be a Canadian technology network to help small businesses gain access to new technologies. A task force will be established to work with banks to develop a code of conduct for small business lending.

Another booster for small business will be the replacement of the GST, a program that in addition to dampening growth by fuelling the underground economy has been an expensive administrative nightmare. I also believe it is time to harmonize our provincial and federal taxation.

The industrial competitiveness of the nation today more than ever before is influenced by its capabilities in science and technology and by its research and development efforts.

OECD comparisons of science and technology expenditures as a percentage of GDP find that countries with a positive balance of trade in high growth industries are those that make substantial investments in research and development.

The budget has now strengthened R and D in Canada. We must encourage technology partnerships among Canadian universities, research institutions and the private sector which emphasize the commercial application of research and development.

The Drake-Siebens Research Institute, the John P. Robarts Research Institute, the University of Western Ontario, University Hospital and an industrial research park in my riding all are eager to share in the value added jobs that can result from these linkages.

It is especially important to tap the talent and energy of the young minds of a generation that is now facing over 17 per cent unemployment. We must ensure that there is a relevant transition of these young minds from their schooling to their workplace. New youth internship and apprenticeship programs are being launched under the budget.

Our world has undergone tremendous changes and the time has now come for a re-examination of a whole basis of social and economic policy. The world has become highly unpredictable both politically and economically. Nevertheless there is one common feature, a growing interdependence between countries, an interdependence that is unavoidable and is strengthened by a process of world economic globalization.

The conclusion of the Uruguay round of the GATT further reduced tariff barriers. The political obstacles formerly imposed by the cold war are no more. Market based economies unconstrained by ideological divisions between east and west are gaining wide acceptance, all of which reinforce the globalization process and present us with a tremendous potential for new markets and ventures with east European countries, the new republics of the former Soviet Union, China and the Pacific Rim.

Our jobs and future prosperity will depend upon our ability to get access to these new markets and to sell our products and services abroad. Let us start establishing the links to the future. It is important to remember that one in five jobs comes from trade.

As a developed society we have to realize that in shaping our domestic economic policies we must consider the inevitable changing international economic order fuelled by the process of globalization. We must focus on the agents of this globalization process and deepen our understanding of the implications on domestic economic policies in general and trade policies in particular.

At the same time we must ensure that Canadians affected by these changes are supported by the government in coping with a different economic order. Let there be no doubt that for Canadians this will be a challenge but should not be seen as an obstacle to our economic evolution.

I would not be true to myself if I end my maiden speech without touching the subject which has been lingering in the minds and hearts of many Canadians. Much has been said and written about unity.

In 1867, the English and the French communities decided to join together to form a confederation whose existence is now firmly established and which must be perpetuated. The other communities also contributed in an essential way to the development of our country and allowed Canada to become what it is now: a country admired by the entire world. For the nations that it welcomes, cultural diversity is a source of wealth and renewal.

Canadian unity is an established fact and must not be questioned.

It is our strength, our pride and a guarantee of stability and better future for all Canadians.

Preserving that unity is absolutely crucial to all Canadians being able to meet together the challenges of the next century.

As the member from a progressive English speaking riding in the heart of southwest Ontario, I want to say that my Canada includes Quebec.

Quebec is a part of Canada.

I know in my heart that we are one. I know in my mind that we should stay one. Let there be no doubt that whatever tomorrow brings I will stand for a strong and united Canada.

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Mr. Speaker, I would like to make a brief comment because I liked the speech of the hon. member very much. First, she sounded very sincere, and second, she is the first member of Maltese descent. I congratulate her.

Despite the ring of truth and sincerity in her speech, as well as her enthusiasm-something all new parliamentarians have in common-she will certainly agree with me that Canada is a country in which Quebec will democratically choose to stay or will decide to leave. The guarantee we must have from that side of the House or the other side is that as democrats-and there can be only one type, no doubt-the result of the referendum and the choice of Quebec will be respected.

Personally, I can tell you that should Quebec decide to remain within the Canadian federation I would respect that decision, but I am committed to working democratically for the other choice.

I thank the hon. member for her speech, which was really from the heart.