Mr. Speaker, I am happy to have this opportunity to speak to Bill C-9.
As our colleague just mentioned, Bill C-9 gives concrete expression to measures announced by the previous government in the Economic and Fiscal Statement of December 1992 as well as in the last budget it tabled before being litterally swept out of office in the last federal election.
This bill will be considered in the Standing Committee on Finance, at which time the Bloc Quebecois plans to examine each provision, even though the government considers certain provisions as mere formalities. With regard to those measures that we see as very positive, such as the extension of the plan allowing individuals to withdraw funds from their RRSPs to buy a first home and those relating to labour sponsored venture capital corporations, an item by item examination of Bill C-9 will give us an opportunity to make recommendations to the government, if applicable, to extend further this kind of programs. I think that this is one of the functions of the Standing Committee on Finance.
Having said that, no great revelation emerged from my review of this bill because I was familiar with the actions of the previous government. Like my hon. colleague though, I have realized that the last budget tabled by the Conservative government was full of short-term measures, measures to mitigate a catastrophic economic situation they were largely responsible for. Think for instance of the recession which took unprecedented proportions after the first quarter of 1990, making the rate of unemployment in Canada climb from a little over 9 per cent to 12 per cent. Think of youth unemployment also. Released just recently, the latest statistics on the last quarter of 1993 indicate that unemployment is affecting 17.5 per cent of young Canadians under the age of 25.
Take the inactivity rate in Quebec, for example, because we know that situation better. This is the unemployment rate plus the people who are no longer looking for work because they are so discouraged by the economic measures of the previous government that they have given up. In five years the inactivity rate has gone from about 19 per cent to nearly 25 per cent in Quebec.
These are the devastating effects of Conservative policy. In Bill C-9, in the last budget, we find some piecemeal, partial, weak measures to lessen the blow and bandage the wound which they themselves created.
That said, I would like to give an overview in the next few minutes-I will not take too much of your time-but in the next few minutes, I would like to give the reasons for this mess, the causes of the catastrophic state the economy is in, so that the present government will not repeat the same mistakes.
The economic situation which we have been in since the first quarter of 1990 is the combined result of three main factors. The first of these is very bad management of the government's finances. The second is the Conservatives' monetary policy and the third, the international economic climate which has worsened the disastrous economic situation and the sorry state of Canada's finances due to the Conservative government.
I do not think that we have to review the first of these factors, the government's finances. Canada's public finances have become a cause for great concern since about 1986, even extreme concern.
I would remind the government that it was when the Liberals were in power before that we started to have problems with the government's financial management. I will just give you a few figures in the hope that the new Liberal government will not repeat the same mistakes that it made when it was in power from 1970 to 1984. I would remind you that the present Prime Minister of Canada was Minister of Finance during that time. I would remind you that from 1970 to 1984, the annual federal deficit as a percentage of gross domestic product rose from 0.3 per cent to 8.7 per cent, a record since unmatched. The Liberals set the record when they were in office before.
We are hoping and taking the opportunity of this debate on Bill C-9 to warn you against reverting to this mismanagement of public funds.
The second cause of our disastrous economic situation, the second legacy left us by the Conservatives, is the anti-inflation policy.
When you say that in less than a year and a half the gap between Canadian and American short-term interest rates went from about 1.5 to over five points at times, it is obvious that, sooner or later, it would impact on investments and, in turn, on economic growth and job creation.
The dogmatic anti-inflation policy followed by the former Governor of the Bank of Canada was a major factor in the ailing economy that led, in Bill C-9, to a few fragmented stopgap measures.
We therefore warn this government against making the same mistake by adopting a dogmatic anti-inflation policy that goes too far to bring inflation under control without trying to maintain a balance between long-term price control and short-term job creation.
We also hope, after thoroughly reviewing Bill C-9 to learn from it as you can see, that this government will subject all programs, expenditures and tax measures such as those in Bill C-9 to extensive scrutiny. Because, after studying this bill and consulting senior officials from the finance department, we found out, that no cost-benefit analysis has been done, that no serious, objective review is done every time new tax measures are planned like those the Conservatives left us in June 1993.
The Auditor General is very clear on that. He said that out of 16 federal programs accounting for $124.5 billion, only two have been seriously evaluated. Therefore, I urge the government not to make the same mistake in the next budget. It is important that every measure proposed in a budget be fully analyzed, that they be subjected to a thorough cost-benefit analysis.
Fourth, I hope the government will propose something other than palliative measures-similar to those inherited from the previous government-like the ones in Bill C-9. I am hoping for real programs of job creation, not Mickey Mouse programs. I would like to see real measures to create long-term jobs, measures which would raise the quality of manpower and improve its capacity to face the globalization challenges. I hope the government will fulfil the expectations concerning training, the expectations of the Quebec Government, and that it will put an end to overlappings and inefficiencies in this area.
This is another piece of friendly advice to the government from the Bloc Quebecois. I hope the government will not repeat the mistake of the Conservatives and try to attack social programs. That too seemed clear in the red book that is being waved at us virtually every day on the other side of the House. By the way, I believe it is improper to produce exhibits in the House. I would have to check, but I think I read that somewhere.
It was clear in that red book-I remind you that Mao also had one -that social programs would be protected and that future budgets would also allow for the creation of social housing. It seems that the Minister of Finance has forgotten those commitments.
Let us hope that the government will not repeat the mistakes of the Conservatives who tried several times-and they were taught a costly lesson-to reduce social programs, to reduce senior citizens' pensions, and to practically eliminate-as they did in their second last budget-social housing.
It is hoped-and that was shown to me by Bill C-9-that the government, when tabling its next budget, will try to really reduce its extravagant spending. There are also real measures that can be taken to fill the taxation gaps, and I will give you some, because I have the feeling that people here tend to forget these things, even from one day to the next.
There are major gaps in the Canadian tax system. It has been said repeatedly since the morning of October 26 and even before, during the election campaign. I will give you two or three more examples in order to refresh your memory and that of the minister of Finance, who is preparing his next budget which, according to rumour, is to be tabled on February 22.
Here are some examples of these scandalous situations. Taxpayers in Canada who get their income mainly from capital-so, they are not workers, but people who are able to invest in stocks, bonds and elsewhere-are taxed at an average rate of 9.9 per cent. The basic rate for workers, for those who toil to earn a living and who cannot afford to speculate, is at 29 per cent. Why are there such inequities?
Here is a second example. In 1987-because since then the Department of Finance has stopped conducting these analyses and, all above, publishing them; people in the federal system are hiding them because they are ashamed-in the middle of an economic growth, there were 90,000 Canadian companies that made $27 billion worth of profits without paying any income tax.
The Bloc Quebecois has often mentionned the scandal of family trusts during question period. The Minister of Finance, as the Prime Minister and all the members of the Liberal Party, decided to laugh at the whole issue of these tax loopholes and to discard, with language well known to this House, the family
trust problem even though it costs the federal government between $350 million and one billion dollars a year in tax revenues.
Last weekend, I read an article by Yves Séguin, who is certainly not uninformed about taxation whether in Quebec or in Canada, and he estimated that in Canada, tax loopholes alone-I am talking here about grand-scale tax evasion by Canadian corporations-represent a loss of revenue of approximately 2.5 billion dollars.
When the government presents its budget, when it evaluates all tax measures and when it modifies or reviews the whole Canadian taxation system, we hope that the Minister of Finance will keep in mind that there are blatant tax inequities in our system and, most of all, that he will not touch middle-class income, social programs or those people who have been carrying an ever-increasing tax burden since 1984, that he will not copy the previous government which, need I remind you, was erased from the federal map.
Contrary to what the Tory government did in its last budget, I hope this government will present true tax incentives in order to promote economic recovery in Quebec and in Canada and to reinforce corporate and individual competitiveness because globalization is something everyone speaks about in this House, something everyone has been talking about since 1984 under Tory management, but it is more than a mere concept.
Globalization means we have to face the best in the world, the best industries, the best workers, in a world that is getting smaller by the minute. My former boss at the Union des producteurs agricoles used to say that globalization would transform our planet into a global village. Therefore, the United States are not our competitors any longer; our competitors are now the most efficient workers in the world. They are the Pacific Rim countries and the developing countries because in the area of mass production, their competitive effectiveness is superior to ours.
So we hope this government will not repeat the errors by applying stop-gap measures instead of real ones which would reinforce corporate competitiveness and worker productivity in Canada.
We hope that this government will change its mind and restore the full meaning of the Canadian equalization program, which we had the opportunity to debate yesterday and today, with respect to Bill C-3, by eliminating the ceiling it imposed on payments to the provinces. My message is the same one we delivered yesterday and are still sending today: this ceiling completely changes the nature of the equalization objectives.
For the benefit of my friends in the Reform Party, I will digress for a moment. I have the feeling that they cannot read, although I hope they can write; but I do know for a fact that they cannot read; how else could they refuse to understand the basic principles of equalization? Since yesterday, they have been saying things about Quebec and the Canadian equalization system that are totally biased, harmful, and even vicious.
May I just remind all the members, before I make my point, that this system is here for a good reason and that it originates in the Rowell-Sirois report, which I urge all the members of the Reform Party to read and study; there are close to two dozen copies of the report in the Library of Parliament. It provided the basis for the Canadian equalization system, together with a nice Canadian dream neither my colleagues nor I believe in any longer. It said that the redistribution of wealth among all Canadian provinces was the cornerstone of federalism.
The aim of equalization is to make sure that even the poorest provinces, the have-not provinces-these are the principles of fiscal federalism, I did not invent them, they stem from the Rowell-Sirois report and subsequent ones-are in a position to have sufficient revenues, including equalization payments from the federal government, to deliver approximately the same level of quality public services as the other provinces.
Equalization payments are calculated according to two factors. The first one is the ability of provinces to raise tax revenues on the municipal and provincial levels. This taxation capacity is then compared to a national average calculated using five Canadian provinces. If the taxation capacity of a province is inferior to $4,800 per person, if I remember the latest calculations, equalization will provide the rest.
Since the total amount of equalization payments is calculated on a per capita basis, it is obvious that Quebec, with seven million people, receives more. Quebec is a have-not province with regard to its capacity to raise tax revenues. When you multiply the per capita rate by the population of the province, it is obvious that Quebec receives more money than Manitoba, Saskatchewan and most of the provinces which "benefit" from equalization. This is not a hand-out. This is the principle of federalism in action. And if the members of the Reform Party are federalists-unless they have had a change of heart and have become sovereigntists in their respective provinces, but I will assume they are federalists until further notice-then they are out of line when they point a finger at Quebec for receiving more than its fair, equitable share, or so they say, a share based on the federal system.
A second point before getting back to the main subject. I would suggest that my colleagues from the Reform Party as well as some of my Liberal colleagues ask the Library of Parliament-they have economists, tax experts and other specialists working there; I can even send a memo on their behalf if they do not know how to go about making such a request-to dig out for them all the expenditures and types of expenditures the federal government has made in each province as well as the per capita share. They will realize one thing: Quebec may, on the one
hand, be receiving 3.6 or 3.7 billion in equalization payments but, on the other hand, it has been losing support for the past ten years in areas such as research and development, transportation, agriculture, federal department investments in Quebec- I would appreciate that they wipe that smile off their faces and just check the figures. At any rate, we will keep bringing them up in this House throughout our mandate, over the course of the four years we will be spending here together.
A third point on equalization. My colleagues from the Reform Party come mainly from the Prairies, from Western Canada. Let me remind them -and I know this for a fact-that each and every year since 1984-85, the three Prairie Provinces have been receiving between $2.5 and $5 billion from the federal government mainly in support of the grain sector.
Back in the days when I sat on foreign trade and stabilization committees of the Canadian Federation of Agriculture as a representative of the Union des producteurs agricoles, the UPA was saying that Prairie grain growers were hard hit by the global economic situation. They have also been hit by several droughts since 1984. We understood their situation and never criticized the federal government for making ad hoc payments to help them out.
We have never blamed them for the fiscal federalism that Quebec is being blamed for through equalization. So I would ask them to show a little more respect for Quebec when we are talking about it and not to make harmful analyses on equalization and what Quebec gets from it. This is all I wanted to say on equalization.
To go back to my advice to the government, I would suggest to the Liberal government, in the light of the disastrous economic situation the Conservatives have imposed on us since 1990, not to revert to the dogmatic anti-inflation fight advocated by the previous government, as it seems determined to do.
I was very surprised and shocked to hear, before the holidays, that the finance minister was holding a press conference with Mr. Thiessen, John Crow's right-hand man and principal advisor at the Bank of Canada. I was very disappointed because it indicated to me, barring evidence to the contrary, that the current finance minister and even the current Prime Minister of Canada have long advocated a monetary, inflation-fighting policy maintaining a better balance between long-term price stability needs and short-term consistent job creation needs. I believed in them at one time.
I was very disappointed to see that the finance minister, in a pre-holiday press conference with the new Governor of the Bank of Canada, announced that, like his predecessor, he would wage a relentless fight against inflation. We do not have anything against fighting inflation per se but we are totally opposed to a relentless fight because, since 1990, we have lived through the outcome of such a relentless, dogmatic fight against inflation.
If the Liberal government is telling the truth about long-term job creation and economic recovery, and if the Liberals were telling the truth when they were in opposition and challenging John Crow's policy, this government should not renew this obsessive anti-inflation policy. Things are going rather well at the moment, in the sense that there has not been a surge in interest rates such as that caused by the Conservatives' anti-inflation policy in the early 1990s. But-this piece of advice is also directed at the hon. members opposite-as soon as the economy picks up, and I hope there will be strong economic growth in the next few months, there will certainly be upward pressure on prices. There is no doubt that if the Bank of Canada pursues its policy of controlling inflation at all costs and tries to keep it at two per cent, the chances of having a truly sustained recovery are reduced.
A mere review of Bill C-9 showed Bloc Quebecois members the carelessness and the incompetence displayed by the previous government. We do hope that you will not make the same mistakes. We also hope that this review of Bill C-9 will help you find a better solution.
Madam Speaker, we would like to see the Finance Committee do a clause-by-clause review of Bill C-9. As I said earlier, we would like to do an in-depth analysis, as the government did according to the hon. member, but in this case it would be a non-partisan exercise done by the Finance Committee. If we have the opportunity to do so, there are already two measures contained in Bill C-9 which we would like to see in the budget to be tabled soon. First, the clause on venture capital corporations for workers. Second, the extension of the Home Buyers' Plan, which enables taxpayers to use their RRSPs to buy a property for the first time.
Madam Speaker, this concludes my comments. I thank you for your kind attention.