Debates of March 18th, 1994

Questions On The Order Paper

[Wayne Easter, Liberal, Malpeque, PE]

Who were the members of the Canadian government's GATT negotiating team from June 1992 through to January 1994, what are their backgrounds and the positions they held prior to becoming members of the team and the dates of their appointments?

[Roy MacLaren, Liberal, Minister for International Trade]

The negotiating agenda of the Uruguay round of the GATT encompassed a wide range of issues. Accordingly, government officials from the Department of Foreign Affairs and International Trade, Department of Finance, Agriculture Canada, Industry Canada (incorporating the former department of consumer and corporate affairs and Investment Canada), as well as Department of Canadian Heritage, Ministry of Transport, Government Services and Justice, took part in the negotiations.

Given the number of officials involved over the two year period covered in the request, it is impractical to track down and list each individual. As such, listed below are the names of our chief negotiator and ambassador to the GATT and the assistant deputy minister, multilateral trade negotiations, Department of Foreign Affairs and International Trade.

Ministers of the crown assume full responsibility for all policy decisions taken by the government during the GATT negotiations.

Ambassador G.E. Shannon, Canadian ambassador to the GATT and chief negotiator, Department of Foreign Affairs and International Trade; appointed 1990

Mr. Germain A. Denis, assistant deputy minister, multilateral trade negotiations, Department of Foreign Affairs and International Trade; appointed 1988

[The Acting Speaker (Mr. Kilger)]

The question mentioned by the parliamentary secretary has been answered.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

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

[The Acting Speaker (Mr. Kilger)]

Shall the remaining questions be allowed to stand?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. Kilger)]

I wish to inform the House that pursuant to Standing Order 33(2)(b) because of the ministerial statement, Government Orders will be extended by 25 minutes.

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

Borrowing Authority Act, 1994-95

[Stephen Harper, Reform, Calgary West, AB]

Mr. Speaker, I am rising to speak on third reading of Bill C-14, the borrowing bill. I will not waste the time of the House in saying that we are opposed to this bill and opposed to the general budgetary and borrowing policies of the government.

Bill C-14, an Act to provide borrowing authority for the fiscal year beginning on April 1, 1994, will make the national debt increase again in the coming year, with the deficit reaching $40 billion and the borrowing authority $34.3 billion. This means that the national debt will grow by nearly $100 billion over the next three years. That is why we from the Reform Party continue to oppose this bill.

The parliamentary secretary for finance said in his statement earlier today that generally speaking, and I quote: "this borrowing is a normal part of government operations". That is correct. It certainly has become normal for the Government of Canada to borrow sums of this kind. It is not just a normal part of the Government of Canada, but it has become a normal part of the operations of crown corporations. It has become a normal part of the operations of provincial governments, a normal part of the operations of municipal governments to borrow millions and even billions of dollars.

What is the consequence of this? The consequence is that at the federal level we owe half a trillion dollars of debt that will increase under the current budgetary policies by another $100 billion over the next three years. As a nation we owe publicly, all levels of government, approximately the value of our entire economic output in a single year. That is the consequence of the normal activity of borrowing.

The Prime Minister said earlier this week we borrow from the left, we borrow from the right. We borrow from Canadians. We borrow from foreigners. We borrow for today. We borrow for tomorrow. We borrow to pay interest on what we borrowed yesterday. We certainly do borrow. That is the one thing that governments do. That is the one thing the government does, and

that Conservative governments have done. They borrow, borrow, borrow.

Having said that, let us look at the amount of money involved in this particular act of borrowing. The bill requests authority for fiscal year 1994-1995 for $34.3 billion borrowing representing a deficit estimated to be at this point, $39.7 billion.

The parliamentary secretary in his statement in question period suggested that the hon. member for Elk Island was incorrect in his analysis of this, that we are not borrowing any more than $34.3 billion. That is not correct. We are asking for borrowing authority to go into the marketplace to borrow $34.3 billion but as I will discuss later in my speech we are borrowing on top of that. We are borrowing from a number of non-budgetary accounts, particularly government superannuation accounts, which themselves represent liabilities of the government.

The member for Elk Island was entirely correct in his analysis although the technical borrowing requirement in this bill is somewhat lower than the borrowing stated in the deficit. I will discuss that at some length.

As I said in my speech at second reading it is hard for ordinary people to get a handle on exactly what these kinds of numbers mean, but let me try to do that. I did that before but let me try to do it again and be a little clearer.

When we talk about borrowing or a deficit of $40 billion we are talking about the equivalent of enough money to eliminate the goods and services tax entirely and pay it back twice. We are talking about enough money to not only pay our current old age security system but to pay it two more times to every single recipient. Another way of putting it, with money like this we could talk about increasing the budget of every single federal program by over 30 per cent.

That is the consequence of the kind of borrowing and borrowing policies that governments of all stripes and governments at all levels have been pursuing for the past generation.

What are we doing with the money? What is the alternative? One of the reasons we are borrowing as much this year is we have the famed infrastructure program that now is turning into a program for just about anything any municipality wants to do. The federal government is encouraging other levels of government also to borrow additional money to fund new infrastructure projects.

What does infrastructure include? There are traditional and clear economic definitions of what an infrastucture program is. Infrastructure is not simply investment or capital. Infrastructure is those kinds of capital investments that have a use for a wide range of future economic activities.

We began to see the broadening of this definition when we saw convention centres funded under this program. In the city of Calgary the current controversy is the possible funding of the expansion of operations and seats within the Saddledome in order to persuade people to keep the National Hockey League franchise in Calgary. It is part of the bargaining between the Saddledome Corporation, the Calgary Flames and others.

Many Canadians are hockey fans, including myself. Many of the people calling my office to protest this are also hockey fans. But is this really an infrastructure program? Is this the kind of project we want our money to be spent on?

I know it annoys other members who have served more than six years but our party puts a lot of emphasis on the need to reduce spending on things like MPs pensions and some of the other perks and even some of the salaries. In particular, we talk about the tax free expense allowances that are extremely generous, non-receiptable, that are included in the pay of every member of Parliament. Why do we talk about them? Not because we believe the deficit could be eliminated by cutting them but because of something I read on an airplane recently.

I cannot remember who said it, but it was an interesting phrase. He said that what concerned him about fiscal policy is that he wished fiscal policy was framed by people who had a stake in its outcome. That is the whole point with the pensions of members of Parliament and why it is a concern when we talk about how we are using the money we are borrowing.

Very shortly, and we will have a debate on this, and it will not be long before the value of the pensions of former members of Parliament will exceed the total amount of money that Canadian taxpayers are spending on current members of Parliament. These are the people who made the decisions that put us where we are today financially. They have made themselves permanent wards of the state so that we borrow, borrow, borrow to support this extravagant scam endlessly. That is why Canadians are concerned about these kinds of expenditures and this level of borrowing.

Let me turn to the red book. The government always insists that we read the red book. Of course we always take those suggestions to heart. Let me spend a little bit of time to talk about what the red book said about borrowing.

I quote from pages 19 and 20 where the government talked about balanced policies for jobs and growth. One quotation is from track two of its economic strategy.

A Liberal government will reduce the deficit.

Under this budgetary policy and the borrowing bill the deficit will be higher than was planned last year. It is supposed to come down after we make accounting changes. It is supposed to come

down but it is higher than it was projected to be during the time we were debating the red book in the election. In fact it is $10 billion higher. We have not reduced the deficit.

It says:

We will implement new programs only if they can be funded within existing expenditures.

I admit there has been some cutting and reallocation but expenditures are increasing. In fact program expenditures are increasing so not all new initiatives are being funded within existing expenditures.

The red book said:

Nine years of Conservative government have seen Canada's debt almost triple, from $168 billion in 1983-84 to $458 billion today. Despite repeated promises to reduce the deficit, the government has turned in deficits in the $30 billion range every year: the latest was $35.5 billion.

Of course that was all accurate. That was the best information at the time the red book was written. But what is the policy today? The policy today is to increase the deficit another $150 billion in the life of this Parliament. We are going in the same direction the Conservatives had been going in the last 10 years.

Does the budget project a deficit below $30 billion? Not quite. It says that in the third year we will finally go below $30 billion but we do not publish the data for the third year or show the columns where we can see the deficit going to $30 billion. We are merely told to accept that as an act of faith and as an extension of the boom times which we assume are coming.

On page 20 of the red book-the red ink book. I like the red ink book expression.

After nine years of Conservative budgets, the federal government's deficit is 5.2 per cent of gross domestic product. This is too high.

What is the projection in the budget for this year? It is a deficit GDP ratio higher than 5.2 per cent. Off hand I cannot remember but I believe it is close to 6 per cent.

The next statement concerns the 3 per cent target and as advocated by the member states of the European Community and the Maastricht treaty, that of course is not entirely accurate. I discussed that in previous debates and I will discuss it today if I have some time.

In any case this budget and these borrowing proposals are very different than the promises outlined in the red book. I would also note, as I have noted before, this is the highest planned deficit and the highest planned borrowing in our history. We have had higher deficits and we may in fact have a higher one after the accounting changes. Last year's deficit may still prove to be higher than this year's. This is the first time we have ever started with a deficit and with borrowing requirements this high.

The tendency has been in the past years for us to be underestimating our requirements and to be exceeding those requirements in the course of the year. Last year's borrowing authority for fiscal 1993-94, Bill C-117, that was given royal assent on May 6, 1993 had requested at the time borrowing authority of $31.5 billion based on a $26.5 billion estimated financial requirement. That was for last year. We see in fact that under this bill the borrowing requirement has increased.

The government justifies these policies, this particular level of borrowing, by saying that it really can justify it through two objectives or two goals. One is that it will help us achieve a lower deficit later and that it will help lead the government in its plans toward economic growth and job creation. Let me just express the scepticism as both a taxpayer and an economist that I have about deficits today achieving lower deficits tomorrow and in particular an interim target of 3 per cent of GDP.

I was a supporter at one time of the previous government when it first came to office which used much the same kind of rationale for not dealing with the problem quickly. What did we see in the eighties and early nineties? We saw that as governments refused to deal quickly with their debt and deficit problems they accumulated deficit on top of deficit, debt on top of debt and we have the situation today in which the biggest factor behind the long term deficit and the growth of debt in Canada is not in fact the recession. It is the accumulated debt and the interest payments on that debt.

When we have that kind of a dynamic it makes it very difficult for deficits today, which will add to debt and add to debt charge burden, to lead to lower deficits in the future.

Some members of Parliament of the governing party are apt to refer to the great early 20th century economist, Lord John Maynard Keynes, in justifying this kind of economics. I wonder how many of them have in fact read what Mr. Keynes wrote on this subject and what kind of analysis he used and what kind of circumstances under which he justified these kinds of budgetary policies.

I know the hon. member for Capilano-Howe Sound has, as I have in the past, read these things. We can certainly say that these were not the policies advocated by a learned man such as that. I do not agree with everything he wrote but he never advocated permanent, ongoing structural deficits, not at all.

It is also important to say that he wrote at a time when governments had very little permanent financial obligations of their own. Governments were in fact a source of funds rather than a drain of funds. It was a very different situation and one that cannot be justified at this point.

The second point the government has made is that these borrowing policies will lead to economic growth.

Just as an alternative opinion-our party has a very different economic philosophy-let me read what the job creators of this country said about economic growth and job creation. We know that with governments being as insolvent or increasingly insolvent as they are jobs will come in the future from the private sector. I think the Liberal Party generally acknowledges that fact.

The Canadian Chamber of Commerce in a news released dated February 14 said a million jobs can be created according to preliminary results from entrepreneurs in a study the chamber had conducted. It had 658 responses so far from employers representing a range of sizes of firms, all the way from very small firms to some of the very large firms. It indicated that with the right kinds of economic policies there were capacities within these firms for a total increase of employment of one million Canadians.

The kinds of economic policies it said were necessary, if the debt and deficit were reduced, if payroll taxes and corporate tax rates were lowered, if the government regulatory burden were eased and training and education of the labour force improved, could create an average of 14 jobs per firm in the next three years.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Ask it to give back the grant it got to do that study.

[Stephen Harper, Reform, Calgary West, AB]

The member says ask it to give back the grant that it received to do that study. I think it would probably be willing to do that. In fact, our party has advocated, with the support of the business organizations of this country, an elimination of most, not all, the major business and industrial subsidies. I know individual firms will fight that but we found no resistance to that policy from business organizations. In fact, it is one of the reasons why many of them have been supporting the Reform Party and, I would add, in increasing numbers since the budget came out.

Those were the policies. What I did not see in that list of policies that the business community said were needed to increase jobs was any mention of an infrastructure program. I did not see any mention of increased spending. It was precisely the opposite. It did not say it needed an extra $40 billion in borrowing this year and $100 billion over the next three years. There are a few things in here that are the same as the track the government is on, but the things here are a very different policy than what the job creators say need to be done to create the jobs in this country.

Let us go back for a second to the budget which underlies this particular borrowing bill because it is important to review that and I know I have done this before. The budget is based on a series of economic assumptions. In particular are the following first year assumptions of growth at an annual rate of 3.0 per cent; that interest rates will range in the neighbourhood of 4.5 per cent for the short term benchmark to 6.4 per cent long term; that inflation will remain low in the 1 per cent to 2 per cent range; and that the ability of the tax system to generate income for the government will recover as the economy recovers. It fell last year from about 17.7 per cent down to 16.1 per cent.

These are all important assumptions and most of them are defensible. However, what happens in the subsequent year assumptions to justify these kinds of targets? Growth is projected to increase permanently to about 3.8 per cent. Inflation will continue to stay at record lows. The revenue GDP ratio that the tax system establishes will rise. Unemployment and job creation will increase. Interest rates will not only fall but stay at record lows.

I would point out, as I did in my earlier comments, that these assumptions are somewhat better than the Progressive Conservative assumptions but very much reflective of the same kind of thinking. After a very short time period we are reasonably pessimistic in the first year but after that we can be more optimistic. What we have is a pattern of record low interest rates, record low inflation, a return to growth, not as high as the Conservatives project, and job creation.

What is interesting and I emphasize it again is that overall the government's estimates are more honest than the Conservatives, although still along the same pattern. What is very interesting is the job creation estimate. It is the most realistic estimate in the budget, given the policies of this government.

It is estimated that the unemployment rate will fall from about an 11.2 annual average to 11.1 per cent this year and to 10.8 per cent next year; in other words, an extremely modest, almost no change policy on the total state of the labour force in the country. I say that is a very interesting projection for a government that claims that job creation is its primary purpose.

What this government has done and I commend it for that, although I wish it would be more frank in it, is admit that there is a link between ongoing high deficits and high spending and high levels of unemployment. It has admitted the link for the first time.

Previous governments said that they could keep these high deficits and could engage in gradual reduction strategies, keep deficits very high but the unemployment rate would fall. This government has admitted that as long as it keeps the deficit high, the unemployment rate is going to stay high.

The reason for that is the simple economic fact that the funds needed for job creation are created through private sector investment. Those are the same kinds of funds that governments hit when they go into the marketplace to borrow sums of money in the range of $40 billion a year.

One problem in the government's projections not just for future years but even for this year-it has come up in the House and I want to raise it again-is the projection on interest rates. In my initial speech on Bill C-14 I had indicated to the House that

interest rate projections were already about half a point above, on the long term, what they had been projected to be in the budget.

I said that they were between 6.8 and 6.9 per cent. I apologize to the House if I mislead the House on that. I had written that speech a few days before and by the time I had written it, interest rates were then over 7 per cent on 10 year government bonds.

It is interesting in that context to look at the pattern. There is a very definite pattern that has occurred in the financial markets since the budget was tabled and since we had our prebudget debates when the government gave an indication of its direction.

On February 1 and 2 we hit basically a trough not seen in a long time in interest rates in this country. Let me quote interest rates on government securities. We had a bank rate of 3.87 per cent. We had a rate on six month treasury bills of 3.76 per cent and we had a rate on 10 year government long term bonds of 6.4 per cent.

The government projected in its budget that for this year, 1994, the long term rate, the rate on 10 year bonds, would fall to 6.4 per cent which is actually what it was at on February 2 and that it would fall further in subsequent years to around 6.1 per cent.

It projected that the short term rate, and it used as its benchmark the rate on 90 day commercial paper, would actually rise slightly this year to 5 per cent, which is indicated by the term structure, and would stay there for the next several years. Those numbers are actually identical to the projections that the former government used in framing its last budgetary policies.

The rate on commercial paper continues to be below the rate of the government's projection, that is true, but that rate has been continually rising. It has not been rising as fast as the rate on key government securities.

According to today's Globe and Mail from the period from February 2 until today the bank rate has gone up from 3.87 per cent to 4.22 per cent. That is an increase of 35 basis points. The rate on six month treasury bills has increased from 3.76 per cent to 4.58 per cent. That is a three-quarter of a full percentage point increase in the time period every single week, most of it is since the budget was tabled. On 10 year bonds there has been an increase from 6.4 per cent to 7.38 per cent. It has been hovering around 7.4 per cent for the last several days, or a full percentage point above what the government had projected.

The government has not published all of its interest rate projections for this year, only two. The government continues to insist it can live with numbers like this and come in at the same target that was projected in the budget. I really question that.

What the government certainly cannot have is a continued increase in the rates over the next several weeks. Even since the bank rate was set last week we have had another quarter cent drop in the value of the Canadian dollar.

That is occurring. We know it and we know why. We know it as individual Canadians when talking to our friends and neighbours. We know it as public policy analysts looking at some of the financial newsletters in this country. People are taking their capital out of this country. They are taking their capital out of Canadian government bonds because they are denominated in Canadian dollars. They are putting it elsewhere because there is an increasing insecurity about the financial state of this particular institution, the Government of Canada.

This lack of caution on interest rate projections is the most serious error by this government in its financial planning. We have a debt structure where a huge percentage of our debt is loaded at the front end. The average term of government debt in Canada is two and a half years. The average term excluding treasury bills is four and a half years. These are very short timeframes and very sensitive to unforeseen increases in interest rates.

The government also provides information in the budget which underestimates the sensitivity of its borrowing to changes in interest rates. It is important to note the sensitivity analysis.

People ask me why if all interest rates went up 1 per cent the government says its debt charge would only go up $1.7 billion. Why not $5 billion? Why not 1 per cent of the debt load?

The reason of course is that the debt rolls over. It does not roll over 100 per cent in a single year, but over a very short period of two, three or four years most of it will roll over. The real underestimation in that kind of sensitivity analysis is it does not take into account the fact that the debt itself compounds, not just the interest payments. The debt itself compounds when the level of interest payments and the level of the deficit are underestimated. That is a very serious issue. It is one of the reasons we got ourselves into these kinds of problems.

I remind the government of the importance of real deficit targets. An article in yesterday's Financial Post said that the government does in fact have figures for the third and subsequent years of its financial planning period and it is prepared to table those in August. Why in August? Why do we not see them now? I suspect we will get the same story in August as we got in the budget: The situation is much more serious than government thought and it needs to re-evaluate it. We have heard that story before.

Not only do we have to have a deficit target. Any country in financial problems has to have a debt target. I go back to the fact that the Maastricht treaty does not speak simply of a 3 per cent deficit-GDP target. It speaks of a 60 per cent debt to GDP target. If it is over 60 per cent debt to GDP the only way to achieve that target would be to run zero deficits or even surpluses.

Canada's debt to GDP ratio under this budget even under the government's own assumptions is estimated to rise to a level of 75 per cent of GDP by the end of the planning period. Once again that is only for the federal government and is on a net basis, not on a gross basis which the Maastricht treaty talks about. It talks about gross basis and about all levels of government in the country. These are unsustainable levels.

With respect to the committee and report stages, we agreed to bypass report stage because we are anxious to have meaningful debate and we did not have amendments from committee. Nevertheless I want to mention some things that could have been mentioned in a report stage debate. I did not want to hold the bill up for that, but it is important that we mention it.

Once again there are problems in the process and in some technical aspects. We agreed not to have a report stage debate. However we thought that before we had the third reading debate we would at least have the published minutes of the committee hearings. This is another problem. I point out once again how much the government views this entirely as a rubber stamp process.

I do not have those in my hands and I doubt I will today. Just before I spoke I received a transcript of our hearings on this bill. However the public and we do not have published minutes of the committee hearings and debate on the technical aspects of this bill although we went through report stage and are now on third reading.

That is inexcusable. We are not in so much of a rush here that there is not the right of Parliament and the public to have final published minutes and proceedings of the committee that are relevant to the debate we are now having in the Chamber.

Because of that I am going to take a few minutes to outline some of the technical aspects of the bill. I will indicate quickly some of the discussion in committee and how it might be helpful to the government in the future.

The budgetary deficit is projected to be $39.7 billion. Against that the government is borrowing through internal accounts a sum in the neighbourhood of $9.5 billion. That is the temporary surplus we have on non-budgetary accounts, mainly superannuation accounts.

The government must cover exchange fund earnings of $1.1 billion which are included in budgetary revenue but in fact are not available for normal budgetary purposes and a reserve of contingencies for $3 billion. This is one of the ways the government gives itself some leeway. Although it commits to keep the deficit within bounds it allows for considerable reserve so that it can have access to more borrowing without going directly to Parliament in this fiscal year. That is how we reached the total borrowing authority of $34.3 billion, which the public will note is different from the budgetary deficit.

This is not the greatest control system. The budgetary deficit itself includes $2.4 billion reserves for as yet unplanned expenditures. It is true that Parliament would have to authorize additional expenditures if they were of a non-statutory nature. However these various contingencies of $2.4 billion within the budgetary deficit and $3 billion within the borrowing authority itself provide the government with considerable flexibility to err not only in its interest rate projections but also in various other aspects of its financial planning.

There is nothing wrong with a little bit of leeway. However I would think if we got into errors of that magnitude it would be appropriate for the government to have a system whereby it came back to Parliament. It would explain those errors and ask Parliament for the appropriate authority and discuss why it had erred.

One of the problems with the present reserve and contingency requirements is that they are actually open to multiple justification for their usage. We do not have simply a margin of error on an interest rate or a margin of error on statutory spending. Most of these things can be used in one way or another. That is a serious deficiency of this particular process.

There is another important issue raised in committee which the government should examine. That is the nature of its debt management.

There were some technical questions concerning not only the term structure of the debt but also the tendency of the government to borrow almost exclusively in Canadian dollars. It does so at a time when the value of the Canadian dollar is increasingly unstable and there are risk premiums involved. This will increase the cost of this borrowing to the public, to the government and to the taxpayer.

It also encourages the government in a somewhat less than responsible attitude toward borrowing. By borrowing in Canadian dollars there is a sense of greater flexibility should there be a financial crisis. With the lower yields offered on other currencies it should consider diversifying and of course reducing that borrowing.

I will end very quickly by reminding everyone of the budgetary situation. The government faces a $40 billion deficit. It was higher than we had believed even during the election campaign. The government's response has been the smallest of expenditure cuts, even smaller tax measures and the adoption of various programs that are something probably less than effective in

getting economic recovery. As well it will only add needlessly to our burden.

I oppose the bill. I urge the government once again to reconsider this borrowing and some of the expenditure plans which underlie the borrowing. I promise we will continue to fight this bill and these kinds of policies.

I urge the government to look at its counterpart, the Democratic Party in the United States, which reconsidered in particular the strategy of adding additional spending programs on top of a deficit management situation.

[The Acting Speaker (Mr. Kilger)]

The first three speakers at third reading of Bill C-14 had 40 minutes without questions and comments. We will now go to the next stage of debate which is 20 minutes and 10 minutes of questions and comments.

In recognizing the Parliamentary Secretary to the Minister of Industry would he indicate to the Chair at the beginning of his remarks whether he will be taking the full complement of 20 minutes or sharing his time.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I am splitting my time equally with another member. I understand I cannot question the previous speaker, but I will begin my remarks by making a comment.

I listened to the hon. member talk about all of the budget cuts the Reform Party would wish for and the cuts in terms of grants to business.

The hon. member even went so far as to suggest that the Chamber of Commerce might be willing to return to the treasury the $400,000 it received for doing its study on what business recommends in terms of fiscal reform. First I want to say that I in no way, shape or form have anything other than respect for the work the chamber does, but I am not sure that it would return the $400,000.

I wonder sometimes if the Reform Party realizes that the real challenge for fiscal reform is in the tax act. When the time comes to tackle that problem I wonder whether the Reform Party will remain steadfast to its principle of a single tax system.

With the $40 billion or $50 billion worth of tax grants to business, mostly foreign and multinationals, a lot of them in the energy sector, I am wondering whether the Reform Party will remain as committed to the cuts. When I asked this question of the leader of the Reform Party he began to shy off on cutting those tax expenditures. In due course we will really test the Reform Party's commitment to comprehensive tax reform.

I listened to members opposite today talk one after the other about gloom and doom and how there was not anything in the budget that would inspire some hope for Canadians. I could not help but think that a lot of the members had deserted their earlier commitment to try to be constructive in this House. We have only been here a couple of months and it amazes me that members opposite could not acknowledge anything positive in the budget.

I would like to raise something I believe is most meaningful to the small business sector. We heard from members opposite today that we must support small and medium sized businesses. We heard members opposite agree that our greatest hope for putting people back to work rests with the small business community. We all know, because we have all knocked on the same doors and we have all heard from many small business people across the country, that the greatest problem they face today is access to capital.

On pages 4 and 5 of the budget the Minister of Finance announced that for the first time ever we would have a committee of Parliament take on a study of access to capital by small business. This is not a study that includes only government members. This is a study that includes members of the Bloc Quebecois and members of the Reform Party.

Members opposite should have told Canadian people that the government should be applauded for the way in which it has acted so speedily in setting up this study in the industry committee. We have been studying the matter for four weeks. We have heard over a dozen intelligent business people from many regions of the country confirm what all of us have heard about the difficulties of small business. We are already beginning to see signs that the bankers are responding to this very difficult problem that exists in our country today.

It is important that we as members of Parliament not criticize just for the sake of criticizing. By the way I accept constructive criticism. There are some areas in the budget that are tough for all of us. We have never had a perfect budget. It is tough. We have a tough fiscal situation. At the same time we have to acknowledge the fact that we are starting to see some movement in access to capital for small business. All members of Parliament should be delivering that message of hope to their constituents.

We can be tough on the banks in the House of Commons, but at the same time we should acknowledge when banks and bank managers begin to respond. I am not saying the process is complete. Last week the Canadian Imperial Bank of Commerce announced the appointment of an ombudsman for its bank. Small and medium sized business people who are having difficulty at the branch level could go to the ombudsman to seek fairer treatment. Today the Toronto-Dominion Bank set up a three-person ombudsman system. It is almost like a court of appeal for people who are having difficulty.

These are only beginnings but I believe they are important beginnings. As members opposite have said repeatedly, small business represents our greatest hope. We must support small business. The biggest thing it has asked for is help in changing the attitude of banks and financial institutions and help in finding new sources of capital so entrepreneurial spirit can flow again. We have begun the process.

I must also say that the members of the Bloc and the Reform parties on the committee are working hard and are working co-operatively. By the end of June we will be able to bring solid, constructive recommendations to Parliament and to the Minister of Finance, recommendations for amendment in terms of regulation and recommendations for banks to change their process and attitude. I believe we will be able to bring in new sources of capital through mutual funds, pension funds.

Even though the process is not complete today, I believe it is incumbent upon all of us as members of Parliament to tell our constituents that it is under way, that we have only been at it for a month but in another two months they should see even more dramatic results.

I do not believe that when we go back to our ridings we should only bring bad news. I listened to a Bloc member this morning refer to our party as a party of darkness, as if members of the Bloc were the only ones who feel the pain of students, fathers or mothers who do not have work. We feel that same pain. We are trying just as hard and are just as concerned as members opposite to get the country back to work.

When something in the budget is constructive and hopeful-and I believe changing the attitudes of banks is a very meaningful exercise for all of us in the Chamber-we should not be shy in acknowledging it or in saying that in that particular area the government is moving forward and the government is on the right path.

It is not that we are looking for an accolade. That is not the point. The point is that we have a responsibility in the House to inspire and show some hope for the 1.3 million small business men and women out there who are having a very difficult time right now.

Other projects were announced in the budget on behalf of small business. The officials in all departments are interacting with small business in terms of the paper burden. They are all but locked up in a room right now trying to simplify the forms and consolidate the paper small business has to deal with when it comes to interacting with government: all the various forms in Revenue Canada and in Consumer and Corporate Affairs. There is an intense effort by officials and people from business. They are working together to try to reduce the paper burden. It is important for our constituents to know we are working vigorously on that. That is another result of the budget.

I also mention the fact that the finance committee working on comprehensive tax reform is another hopeful signal or hopeful sign for small business. It is very important to challenge the path we are taking the country down at this moment. We accept their challenge on any issue.

It is Friday afternoon. Hon. members will be going back to their ridings. I tell them not to be shy in telling their constituents about some of the good things the government is doing.

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

Mr. Speaker, it is always a pleasure to exchange comments with the parliamentary secretary, but I think I ought to tell him, with respect, that his speech contained two contradictions. I want to point out that his impassioned defence of small business has always been well received by my party. I know that some of my colleagues here today are working very hard with him in committee.

He is probably aware that Montreal is the poorest city in Canada; the Montreal area has the largest number of poor families and poor people in this country. In East Montreal, we had a program called the PRIEM program, which was set up five years ago. All parties involved in this program asked the government to extend it. The program gave small businesses access to capital to update their facilities, and it created about 30 per cent of the new jobs in East Montreal.

If the minister and his government had been serious about using small business as part of their economic recovery strategy, it seems to me Montreal would have received a favourable answer to its request for an extension to this program. It did not, however. We and other members had a meeting with the Minister of Finance. We made certain representations, as did the community of Montreal, but unfortunately, the program will not be extended. That was the first contradiction I wanted to point out, and I would appreciate it if the minister would comment.

I would also like to hear his comments on a second issue, the technology question. On several occasions the minister has said in the House, with considerable eloquence, that his party was prepared to go all the way with technology and that this was a major priority. Unfortunately this was not reflected in the budget, and the scientific community got even less than it expected. There is not much in the budget that would point to a genuine national strategy on technology.

I wish he would offer some thoughts on the information highway. All parties concerned agree that if we are to have a national information highway some day, government funding will be needed. It is not true that only private capital is needed.

However, we can find no indication in this budget that the government will help implement this information highway.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, I say to the member that I welcome his spirit in debate. I always have.

First, I cannot speak to the specific example the member has given. I am not aware of it. The member can send me the details on it and we can study it.

Second, I cannot make a commitment, which sounds strange because of our commitment and our special sensitivity to the city of Montreal.

The third point concerns the information highway. Two days ago the Minister of Industry announced the new chairman of the national advisory committee on the information highway would be the former vice-chancellor of McGill in Montreal. The member should know the whole process of studying the information highway will be contrary to what we read in the newspaper. It is going to be one that is very open. We will be listening to experts from every region of the country. These meetings will be in public. Naturally when we have committees some of them have to be private but there will be an extensive consultation process and this government and our Minister of Industry have made the information highway a priority.

As the Prime Minister said earlier this week in the House, our commitment to this sector of the economy is most important in terms of job creation and I think the member will see in time that in no way, shape or form will we feel shy or cut short our participation in that very important sector of the economy.

[The Acting Speaker (Mr. Kilger)]

The parliamentary secretary had given an indication to the Chair that he was sharing his time.

If not I would be in the hands of the House as to whether there would be unanimous consent to allow an additional five minutes for questions and comments to the parliamentary secretary. I know a good number of members have been seeking the floor. Or we could simply resume debate.

If there is no one from the government side who is going to be sharing the time and if the House wants to consider unanimous consent, is there consent to an additional five minutes of questions and comments for the parliamentary secretary?

[Some hon. members]

No.

[Gaston Péloquin, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, every year after the happy holiday season the people of Canada and Quebec enter a period of fear. In fact, at this time of year, people fear two kinds of disasters: snow storms and the federal budget.

In both instances, they are unable to forecast the extent of the impending disaster and they feel they have no control over what is going to happen. The only thing they know for certain is that the two events, whether of natural or ministerial origin, can be costly and have an impact on their quality of life.

To a certain extent, we can protect ourselves against the meteorological vagaries of winter, and we can be philosophical about them, knowing that everything will melt away in the Spring anyhow. The storm raised by the federal budget is another story. The fiscal and budgetary whims of Canadian Finance Ministers are getting less and less predictable and more and more painful.

This year, people were expecting a very severe winter and a very hard budget. In both instances it is as if the sky had fallen. We can get used to the snow and the cold, as we known it is going to end eventually, but the budget has inflicted severe injuries to the country's economy and the scars could be permanent.

The Minister of Finance and the government he represents have demonstrated a total lack of imagination and creativity. Once more the axe fell on the unemployed and the aged who are submitted to dreadful cutbacks by this budget. The reason of this is that the Minister of Finance did not want to tackle the real economic problems of the country and cut into useless spending by the government.

Yet, the Minister of Finance had only two responsible things to do before preparing his budget. First, he should have used the long cold evenings of January to read the report of the Auditor General, and I doubt he did.

Second, he only had to listen carefully to the concrete and progressive proposals brought forward by the Official Opposition. This would have prevented him from racking his brain in search of a scheme that would allow him to attack once again the poorest people in our society.

The Auditor General tabled his report to the House of Commons for the fiscal year ending March 31, 1993. All 800 pages of it! Eight hundred pages of horrible findings on the appalling management of public funds in Canada. Eight hundred pages of concrete recommendations on ways to better manage the Canadian government machinery. I will say it again, I doubt that the Minister of Finance took the trouble to go through such a valuable document as the report of the Auditor General, because the provisions contained in the budget do not reflect in any way the expectations expressed in the Auditor General's annual report for 1993.

The auditor managed to summarize in one sentence the expectations and aspirations of the Canadian people, and I think it is important to quote it in this House so that the government cannot plead ignorance when the time comes for it to find out the

effects of such a pitiful budget on the economy. Here then is the Canadian taxpayers' message that the Auditor General wanted to convey to the government, and I quote: "Today it is clearer than ever, to both public servants and parliamentarians, that Canadians expect them to demonstrate sound and prudent management rather than finding new ways to spend borrowed money".

I must admit the Report of the Auditor General of Canada is not an appealing document. I can see why the Minister of Finance would try to keep away from it as much as he can since the truths we find in there do not always make for pleasant reading. Journalists call them the Auditor General's horror stories and rightly so. Indeed, his report is full of pathetic examples of mismanagement and particularly unwarranted government expenditures which are all equally reprehensible. I will mention only two such stories, two unfortunate situations which show how careless the government can get when it comes to spending public funds.

One of the great government extravagances noted by the Auditor General concerns the use of Challenger planes by ministers or other parties close to government. Flying these airplanes costs almost $20,000 an hour. In 1993 alone, the total bill for these travels came up to $54 million and the example given by the Minister of Intergovernmental Affairs in that respect is certainly not comforting. Just imagine. For one day in the United States, not six months in Japan, but one single day, the travelling expenses of the Minister for Intergovernmental Affairs were in excess of $170,000. Our ministers are travelling in flying palaces while the government takes away a wheel from the inexpensive scooters of the unemployed. Such a situation is totally absurd!

Speaking of absurdities, how can they explain that the new President of Investment Canada has refurbished her office for a total of $132,000? That is the outrageous cost of the new bathroom and new kitchen in the office of Madam President of Investment Canada.

Was there no one in the government who could have put a stop to this foolish waste of money? While the government is busy installing deluxe toilets in the offices of senior officials, it is also literally taking the toilet paper away from senior citizens. Do these two groups not have the same needs, Mr. Speaker?

In all, the Auditor General identified in excess of $5 billion annually in overspending and shameful waste. It was really not necessary for the Minister of Finance to raid the pockets of ordinary taxpayers in order to recoup these billions of dollars. But, that is what he did and the people feel betrayed by this Liberal government which had nevertheless stated in its red book, and I quote: "We want a country whose governments are efficient and innovative".

When we see the results, it is not surprising that this government has already lost all credibility in the eyes of the public. In a mere six months' time, the Liberals have managed to alienate Canadian and Quebec taxpayers, a feat which the Conservative needed many years to accomplish. That is saying something! Were the Liberals really expecting to maintain their popularity rating by leaving family trusts alone, while at the same time targeting the unemployed and seniors and doing nothing to eliminate instances of administrative overlap?

I find it rather alarming that expressions such as "overlapping jurisdictions", "federal interference" and "administrative duplication" have become commonplace, even the norm in Canadian political jargon. We have come to trivialize these expressions because the federal government has, over the years, used its famous discretionary powers to excess to interference in areas of provincial jurisdiction. This has been going on since Confederation and has slowly become the traditional way of conducting federal-provincial relations.

This year's budget carries on this nice Canadian tradition. The Minister of Finance strove to perpetuate the federal government's great centralizing tendency, whereby this government has the power and the duty to interfere more and more in provincial jurisdiction or at any rate never to withdraw from provincial jurisdiction, all in the name of maintaining Canadian unity, of course.

This façade of national unity is starting to cost us dearly. A study by Treasury Board in 1991 showed that 67 per cent of all federal programs overlap provincial programs to some extent. Besides the tens of billions of dollars spent unnecessarily every year, we have a huge bureaucratic and administrative machine that is so complex that these federal and provincial programs become redundant and inefficient when they are not simply incompatible.

The Canadian bureaucracy is like a big beached whale and the federal government is doing nothing to save it. The most striking proof of this lack of federal will is still the issue of manpower training in Quebec. While the Conservatives at the end of their term recognized the need to return all powers for manpower training to Quebec, the Liberals have stopped the process under way. For the Liberals, it is unthinkable to take any action which would reduce the federal government's prestige, even if it meant saving $250 million a year. I think that the federal government's ego is as big and immovable as the beached whale mentioned earlier. We well know that even a dying whale is not easy to deflate.

Yet, the Bloc Quebecois had asked the government to cut the fat. Unfortunately, the government has once again opted for a miracle diet which promises results without pain. Putting our

financial house in order will require real austerity measures, accompanied by painful cuts that are inevitable if we are to achieve our economic aims.

The federal government continues to get into debt, and gets away with it. One fourth of this debt is incurred in Quebec's name. But beware, Quebec will not wait for liposuction to become necessary before doing what it must to ensure its future economic development. The only way for Quebecers to get rid of all these horror stories is still sovereignty for Quebec.

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

Mr. Speaker, I congratulate the hon. member of the Bloc Quebecois on his reading the report of the Auditor General, particularly as regards the ministers' expenses. I sat for five years on the Committee of Public Accounts, and I know what he is talking about. But I am not sure he does. I think he forgot to mention that the Prime Minister and the Auditor General have undertaken a study on travel by ministers.

The Bloc Quebecois member referred in jest to the Challenger. Does the hon. member know where the Challengers are made? Should we stop manufacturing Challengers? What other means of transportation should the ministers use?

In conclusion, Mr. Speaker, the hon. member quoted something to this effect: "Some people-I do not know exactly to whom he was referring-said that the Liberal government betrayed them". I found such a comment rather strange, coming from the Bloc Quebecois, which, as a separatist party, is a traitor to this country, in my opinion.

[Louis Plamondon, Bloc, Richelieu, QC]

I rise on a point of order, Mr. Speaker.

[The Acting Speaker (Mr. Kilger)]

If I heard correctly, the hon. member for Carleton-Gloucester did refer specifically to treason, and I believe that is unparliamentary. I would ask him to please acknowledge the fact that the Chair has to see that our debates are conducted in accordance with our Standing Orders and that we respect the spirit not only of the Standing Orders, but also of the House of Commons. I would ask him to withdraw the expression he used. The hon. member for Carleton-Gloucester.

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

Mr. Speaker, are you suggesting that the member of the Bloc Quebecois has the right to say that the members of the Liberal Party have betrayed Canadian society, but that I, on the other hand, do not have the right to conclude, Mr. Speaker, by saying that anyone who spies, for example-

[The Acting Speaker (Mr. Kilger)]

Order. To my knowledge the last member who spoke, the hon. member for the Bloc quebecois, did not make the remark to which the hon. member from Carleton-Gloucester referred. I believe the hon. member for Carleton-Gloucester was referring to a comment made earlier in this House by another member.

Of course, I do not have before me the blues of all debates that took place today in the House. I would therefore ask hon. members to show some understanding for the problems facing the Chair, under the circumstances. Of course, the Chair cannot let members on either side call someone a traitor.

[Some hon. members]

Hear, hear.

[The Acting Speaker (Mr. Kilger)]

Finally, I will take time to review the blues and, if necessary, I will get back to the House as soon as possible.