Debates of March 23rd, 1994

Borrowing Authority Act, 1994-95

[The Deputy Speaker]

Again, the hon. member for Portneuf, this time on debate.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, there are subjects we discuss with enthusiasm. There are bills that elicit much positive feeling and that are really worthwhile.

Unfortunately, I am somewhat less than enthusiastic about speaking to the matter before the House today. This afternoon, the debate is on the motion of the Minister of Finance for third reading and passage of Bill C-14. And what is Bill C-14 about? Is it something we can applaud? Is this a bill that will give us reason to rejoice and look forward to a happy and prosperous future for all Canadians and Quebecers?

This bill is an act to provide borrowing authority for the fiscal year beginning on April 1, 1994. The operative word is borrowing, and borrowing means deficit and deficit means debt. We are

now talking about getting into debt. The subject is the debts of this country and its citizens. Are these small debts? Are these debts we can pay back quickly? Were these debts incurred for capital spending on infrastructures and services that will be useful to this generation and future generations as well? Not exactly.

What we are talking about is the cost of financing a deficit of $40 billion. That is a lot of money, and not many people can appreciate what this amount represents. Put in simple terms, let us say this boils down to $100 million per day. If we consider the bridge for Prince Edward Island, which raised quite a few questions because people felt that $900 million was too much, this bridge would be paid for in nine days, which means that we could afford forty of these bridges, and I mean forty per year.

I suppose that could be called "looking on the bright side", but seriously, we should try and understand why we have to finance a debt of this magnitude. As the previous speaker pointed out, we are not paying the interest on our debt. We borrowed this money more than a decade ago. We borrowed, and since then, we have not paid back the capital and we have not paid back the interest incurred. We have not paid the cost of servicing the debt. Consequently, day after day, month after month, and year after year, the interest we have not paid off is being added to the debt. In fact, and most people who know something about compound interest will realize this immediately, we have a debt that is growing as a result of compound interest.

Are we unable to pay because we do not pay enough taxes or because we spend too much? I suggest we look at the figures and try to draw certain conclusions later on.

To begin with, the citizens of Quebec and Canada pay out roughly $120 billion each year in various kinds of taxes. This is a substantial amount of money and all of us can understand what it represents, since it either comes out of our wages or we pay it in the form of a goods and services tax.

What does the government do with these $120 billion? Well, it spends it on various programs which result in services to the public or in more or less durable goods. All of which means that we spend what we pay out.

The $40 billion deficit did not come about because we purchased services or goods without being able to pay for them. Basically, the $40 billion represents the interest on the debt which we are unable to pay.

And the debt is getting bigger and bigger. It now stands at $500 billion! It may even be higher than that since, as the member before me mentioned, it is growing at the rate of $85,000 per minute. In the few minutes that I have been speaking, the debt has increased by an amount which would allow several people to live quite comfortably for some time.

Imagine, $500 billion! Few people can appreciate what this amount represents. As you know, I am a teacher by profession and a good instructor tries to find ways to illustrate the subject matter he is teaching. Therefore, I have tried to come up with an example which would give Quebecers and Canadians an idea of what $500 billion represents.

So, here goes. The TransCanada Highway is a ribbon of asphalt about 7,000 kilometres long stretching from the Atlantic to the Pacific. Let us assume that the TransCanada Highway has four lanes: two heading from east to west, and two heading from west to East. This is a great deal of pavement, four lanes in all. Now, let me see if I have a coin in my pocket. It is unlikely though because it must have been eaten up by taxes. What if we were to pave this highway with one dollar coins, pave it from shoulder to shoulder, all four lanes, with loonies. Would we be able to get from Nova Scotia to New Brunswick or maybe even Quebec? How about Ontario, Saskatchewan or Manitoba? What about Alberta? Would we make it through the Rockies? Would we get to British Columbia? We are talking about 7,000 kilometres of four-lane highway, and loonies are, after all, a relatively small coin and we only have 500 billion of them.

I will give the House a few moments to think about this and then I will give you the answer. Not only would we be able to pave the highway from the Atlantic to the Pacific, we could go all the way back to the Atlantic and travel an additional 700 kilometres in the opposite direction. That is what $500 billion represents. Where are we going to get the money to reimburse a debt of this magnitude?

That is obviously a major problem. I have heard on the radio, seen on television, read in papers-claims to that effect were even made in this House-that Quebec's sovereignty poses a serious threat to Canada. I will say this. The real threat to Canada, let us not forget it, is this absolutely enormous debt, this crushing debt, which is going to ruin us all if we do not make the right moves.

Quebec's accession to sovereignty, I might add, would probably be a good time to change the current rules of the game and provide a golden opportunity to all parties to review these rules and finally deal with the public finance problem. Our public finances have obviously not been managed properly for decades and, as a result, an extremely heavy burden will be passed on to future generations.

They will have a heavy burden to bear. We already do. What is the per capita share of this burden? How much does each and every one of us owe on the public debt? Some say $16,000,

others $16,500. It all depends of course on the time of day, seeing that the debt grows by the minute.

For the sake of argument, let us say for the time being that each and every one of us, all 30 million of us in Quebec and across Canada, owes $16,384.22, but this figure grows as we speak.

We also know that, given the current interest rates, the debt doubles every six or seven years. So, unless we act now, unless we start paying off the interest on the debt if not the capital, six or seven years from now, the public debt will have doubled and each of us will owe anywhere from $32,000 to $33,000 on it.

If an individual goes to his or her bank or credit union and says to the manager: "Look, I have debts, about $16,000 worth of debts, and I would like to consolidate all that", the bank manager will frown, of course, but he or she will more than likely answer: "Let us sit down together and see what we could do about your lifestyle. Let us try and work something out".

But six or seven years from now, if you go to your bank manager with a debt of approximately $32,000, I have a feeling that his or her immediate reaction will be: "File for bankruptcy". Sometimes I wonder if we should not file for bankruptcy and just start over under a new name. I can see certain members have understood what I am getting at.

During the holiday season I volunteered to work with the Red Nose organization in my riding. English-Canadian communities probably have similar organizations where, during the holiday season, volunteers offer rides to people who have had a little too much to drink. These people make it home safely without having to drive their cars. It has become an institution in Quebec and in many other countries. The Red Nose organization allows people aware of the dangers associated with drinking and driving to act responsibly.

That being said, I offered to drive people asking for a ride home, and one of my constituents said during the ride, "Why not simply raise taxes to pay off the deficit so that we can get rid of it quickly?" I asked her by how much she thought her taxes would go up and she said, "By a small amount of money". When she understood that we were talking of $16,000 for the interest alone, she realized we had a real problem on our hands.

We are indeed in a dilemma. You see, if we increase income or consumption taxes, everyone will have less available income and, as a result, less money to spend on goods and services.

Mr. Speaker, you are indicating to me that I have only three minutes left so I will be quick. If we raise taxes, consumers will have less money in their pockets to buy things with; if they consume less, businesses will eventually sell less; if businesses sell less, they will lay off workers. And we will just have increased the deficit. However, if we cut spending, again people will be laid off. These people will stop contributing to tax revenues, and again we are in trouble.

We must redirect federal expenditures wisely, cut where it will hurt the least, and ensure that displaced workers can find new jobs. We have our work cut out for us; it will not happen as if by magic.

In conclusion, I must quote the Minister of Finance not because I like his comments, but because they scare me. The Minister of Finance said, "We clearly showed, in the first phase of our budget, that we would bring the deficit down to 3 per cent of GDP within three years. It will be the first time-he used the future-in 15 or 20 years that this goal has been achieved". I hope so, but he should have said-it would have been more accurate in my opinion-"it would be the first time". He could also have stated that it was not, unfortunately, the first time such promises were made to Canadian and Quebec voters. Although I sincerely hope that this budget will fulfil the promises made to us, I am afraid that it is just another illusion.

[Chuck Strahl, Reform, Fraser Valley East, BC]

Mr. Speaker, I would like to thank the hon. member for Portneuf for his speech.

That is as much as I can get out at this time, but it is going to come.

I would like to thank the member for his remarks. I am glad to see that he is concerned as many of us are with the size of not only the deficit but the size of the debt. The debt we all realize is driving this deficit problem that many of us at least on this side of the House seem to be quite concerned about.

I am also very pleased that he used the example of a national highway from sea to sea as an example of the size of the national debt. It is perhaps a symbolic gesture on his part of that continuity from ocean to ocean. I am glad he was willing to use that.

I know the previous speaker gave some detailed examples of what he thought should happen in order to address the size of the debt and the deficit, specifically the year to year deficit. Other than some duplication of services which I know can be streamlined, with the size of the debt surely the hon. member has some specific ideas for saving significant amounts of dollars in order to bring this deficit more in line.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, during the election campaign, the Bloc Quebecois proposed a specific plan for reducing government spending and attacking the deficit.

One of these measures was an infrastructure program, something much bigger that what the Liberal Party offered us. Let me point out here, and perhaps other members will want to react to this, that the federal government is advancing $2 billion for the infrastructure program, but the federal government is now spending $20 billion on unemployment insurance.

Look at the dichotomy. On the one hand, we have $2 billion to put people to work and, on the other, we have $20 billion for them not to work. I would have expected a much more solid proposal from the Liberal government for redirecting unemployment insurance funds to more productive things that are more promising for the future of all these unemployed people.

At the present time, unfortunately, unemployment insurance is a way to help people survive until welfare becomes their only option. Unfortunately, there is no work once these weeks of unemployment insurance inexorably run out.

The Bloc Quebecois's program also sought to redirect a greater share of federal spending to Quebec. You should realize that Quebec pays a total of $28 billion, more or less, in tax every year and receives the same amount of $28 billion from the federal government. The problem is that a large part of this $28 billion is unemployment insurance and what is called welfare. If this money were spent on job creation, and what I am saying applies not only to Quebec but to all of Canada, people who work would pay taxes.

An interesting statistic to which few people refer is the $120 billion paid by people who work and consume. In Canada, about one in four employable persons does not work, which means that if they could work, they would pay $40 billion more in taxes and that is exactly what we need to wipe out the deficit.

Mr. Speaker, what are we waiting for to act?

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, I listened with great interest to the words of the hon. member of Her Majesty's Loyal Opposition. He quite rightly points out the very difficult financial situation which exists in Canada.

We have all been through the stages leading up to where we are today. A brief history is that it started many years ago when Keynesian economics were applied to the economic situation of the day creating a national debt. The subsequent government that took over, if it was going to apply that same philosophy, during the years of increased economic activity in this country, should have been taking that money back and paying off the national debt. But it did not. Therefore what was a debt of $160 billion 10 years ago escalated another $340 billion over the two terms of office of the previous government.

The challenge has been how to turn the ship around without capsizing it in the process and put us on a new tack. Our Minister of Finance did an admirable job in focusing on the vision in the red book, which we all used during the last election campaign, and in applying it in the first phase of a double budget. My friends in the Reform Party have insisted we have to make more cuts. The government has introduced a multitude of measures.

I fail to understand how the hon. member believes that separation, or as he words it, the sovereignty of Quebec, would help with this financial problem.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I noticed that the hon. member seemed to want to go on for a while, and I thought I would have a little time to respond. I appreciate how he put his question.

I understand the sovereignty of Quebec is very important for everyone from coast to coast and believe me, more so for Quebecers.

Something must be said in this House. The Quebec government over the years and for well over a decade has managed its public finances a lot better than what has been done in Ottawa.

Furthermore I am a taxpayer and have been a taxpayer for a long, long time. I have paid my share I am sure, as all the other people in this country are doing.

We send money to Ottawa on the assumption that it will be used to pay the interest on the debt and to reduce the deficit. I was told that. Everyone has been told that year after year after year for well over a decade by all the governments that have preceded this one. We are told that right now by this government.

I send my money to Ottawa on the assumption that it will be used well. When I see it is not, I wonder why I should not give my money directly to the government that has proven in the past to be more able to take care of my finances. By that I mean Quebec. That is why I think Quebec would better administer the servicing of our debt than Ottawa has proven able to do in the past.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, today we are asked to give extensive borrowing authority to a government that has already shown in its first budget that it is not only fiscally incompetent but also fiscally incontinent.

On February 22, while the Minister of Finance was singing into our ears, I could not help but see the ghosts of Michael Wilson and Don Mazankowski coming back to haunt us. We heard all the old platitudes. For example-

-restoring fiscal responsibility, a responsible social security system and a framework for economic renewal. There was even a mandatory pledge to get a handle on things next year and really take action the year after that.

The minister bravely proclaimed it is time for the government to get its fiscal House in order while confessing that the government plans net spending increases of $3 billion in the next fiscal year.

After nine years of Tory smoke and mirrors, inflated revenue estimates and broken promises, Canadians were entitled to expect something new, something better. All they got was the same old hokum that hardly anyone takes seriously any more.

This government which plans to persist with the Tory practice of killing the economy with high taxes is nevertheless predicting that the economy is going to miraculously rebound, thus inflating its projected revenue.

Personal income tax which unexpectedly fell by $6 billion this year is supposed to rebound by $7 billion next year. The anticipated increase of $1 billion from higher UIC premiums will probably come true. Why should GST revenues increase by $1 billion when anyone who has a few dollars is scared to death to spend them on consumer goods?

Rather than face reality and cut spending now, the government wants to party on. It wants to borrow another $34 billion to pay the tab. It has already been quite a party, twenty years of glorious excess.

Now our children and our grandchildren are going to be stuck with both the bill and the hangover. The $500 billion that this government already owes is going to be around for generations. Because of it those future generations are going to have a lower standard of living than we have had. There is no way out.

In the name of decency and common sense, how can we justify borrowing another $34 billion to make their burden heavier? More to the point, how can we talk about adding another $100 billion to this load on their backs for the next three years?

Remember that $100 billion is based on the rosy estimates of this government. If events of the last 20 years are any indication, it will probably be closer to $150 billion if the foreign money lenders do not come and take our credit card away before that happens.

Thanks to the magic of compound interest the debt we have already accumulated is eating us alive. Debt service costs this fiscal year will equal the cost of old age pensions and UIC combined. Every second the federal government pays more than $1,200 in interest. A typical Canadian family of four pays $460 in taxes every month just to cover the interest on the federal debt, a third of which is foreign debt.

For 20 years the Grits and the Tories have told us soothingly that mounting government debts are not really a problem because they are internal, that we owe it to ourselves and since the interest payments remain within the domestic economy they constitute only a recirculation of funds, an economic perpetual motion machine.

Even if one accepts this Disneyland approach to economics, the basic premise is no longer true. We are paying so much interest to foreigners that even though we have had a trade surplus every year for decades, our current account balance has been negative since 1985. This year our current account shortfall will be $25 billion and our foreign exchange reserves are shrinking.

If provincial foreign debts are added to those accumulated in this place, and that is reasonable since most countries do not have states or provinces borrowing money on world markets, Canadian public foreign debt is greater than that of Mexico and on a per capita basis it is greater than that of Brazil.

The government can wail "But there is nothing we can do. If we cut spending it is going to hurt". Sure it will but the pain can only be delayed, it cannot be avoided. Every time a year goes by and another $40 billion is added to the burden, the intensity of the potential pain becomes greater.

What is more desirable, to cut voluntarily while we still can or wait for the inevitable fiscal meltdown to burn us up like New Zealand and Sweden? How long does the government think that our economy can survive if the foreign bankers cut us off? How long before we would have to go hat in hand to the IMF like a third world country?

The government says it cannot cut spending because of its great compassion for the poor and the disadvantaged. I submit that the trick is to target social spending to those who need it. We can no longer afford to subsidize high income individuals and we can no longer afford to subsidize corporate Canada. If the government does not start to practise a little basic economic management, that compound interest machine is going to continue to accelerate.

One-third of every tax dollar collected by the government is already being used to service existing debt. What happens in the not too distant future when that becomes 40 cents out of the dollar, 45 cents or even 50 cents? Where will the money come from to pay for social programs or even to provide basic government services?

If the whole rotten structure comes tumbling down there will be no medicare, no pensions, no UIC, no welfare, nothing. Those who will suffer the most will be the weakest members of society: the sick, the old and the very young. That will be the govern-

ment's legacy to the people of Canada if it does not begin to take the problem seriously.

The government has proven through its non-budget that it cannot be trusted with a credit card. That card should be locked away in a safe place before the foreign bankers come and take it away from us.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, true, I talk a lot about the deficit but, you see, a few years ago I thought it was my money at stake, but I realized some time ago that it is my children's and perhaps even my grandchildren's money.

The hon. member mentioned many things, one of which I want to correct, if he would kindly allow me to do so. He said that one-third of the tax collected by the government is used to service the debt. Unfortunately, it is a lot worse than that. Zero per cent is used to service the debt. One hundred per cent is used for programs. We do not pay the debt and the interest just adds on. How unfortunate.

However, I have a question for the hon. member if he does not mind. I will read something that was printed in La Presse in Montreal. I will read it in French. I am sure he will be able to follow it through the translation.

"The changes to the unemployment insurance program announced in the last federal budget make unemployed Canadians bear the brunt of over half of all new Liberal cuts", as if cuts could be liberal, "and will cost the provinces $1 billion, including $280 million in Quebec alone".

This is the question I would like the hon. member to address. It seems that the federal government has succeeded in keeping the deficit just below the $40 billion mark by shovelling part of the problem into the backyard of every one of the provinces. How does the member react to that?

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, I will address the first comment of the hon. member for Portneuf.

Where does the money come from to pay the interest on the debt? I guess this is an exercise in semantics. You can take it out of their right pocket or you can take it out of their left pocket. The fact remains it collects $120 billion in taxes and $40 billion goes to pay interest on the debt.

Yes, I agree with the hon. member. We are borrowing money to pay interest on the debt because we are not quite breaking even. We are borrowing more than the interest cost. Where this will end, the hon. member knows well.

I want to compliment the hon. member for Portneuf on his original speech. I did not get a chance to stand up because everyone wanted to ask him questions. I applauded him. I thought he had perhaps become a Reformer when I listened to his economic analysis.

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

Le Bloc réformiste.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Yes, le Bloc réformiste, bien sûr.

The only part of his address that bothered me and sort of spoiled the effect was when he persisted from time to time in referring to two different countries, Quebec and Canada. If he would accept the premise that we are all one country, I would really like to see him move many seats this way and display his considerable talents on behalf of the nation because he really knows his economics.

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, as the House may or may not be aware, the hon. member for Swift Current is involved in the agricultural community.

I wonder if the member could enlighten me and other members of the House of the effect on the agriculture industry of this chronic overspending and our inability to live within our means. Is it making our agricultural products less competitive in the world market?

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, the answer is yes, it is having a very marked bad effect on our competitiveness in the agricultural markets.

One of the main reasons that farm input costs are so high is the tax component they contain. It does not matter whether one is buying a tractor or a litre of diesel fuel or repairs for something on one's farm, the tax component if one tracks it backwards through every stage of production in many cases, I would suspect in most cases, amounts to some 50 per cent of the cost when the farmer goes to buy it from his agent.

If we were not being taxed to death in order to maintain this excessive debt load, then the prices of farm inputs would automatically go down and we would be more competitive on the world stage.

[Chuck Strahl, Reform, Fraser Valley East, BC]

Mr. Speaker, I would like to congratulate the member from Swift Current again for his presentation on the borrowing authority bill and to get away a little bit from the side issues. I guess they are all important, but to me it is a side issue, whether it affects agriculture per se or affects one region of the country more than another.

I would like to focus on the borrowing aspect of this bill, the authority that it is giving the Government of Canada to borrow

tens of billions of dollars at unknown interest rates, apparently ever on the increase, and the effect that is going to have on the government's budgetary predictions.

I wonder if the member from Swift Current would comment on yesterday's announcement of the three-quarter per cent jump in the Canadian prime and the effect he feels this will have on the government's budgetary predictions.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, we asked the Minister of Finance this morning to address that very question. We did not get an answer. My own interpretation is that it will probably cost about an extra $1.5 billion a year if this current increase continues.

What I am more afraid of is that this is the shape of things to come and that we are going to have another spurt of interest rate increases. As our bond ratings are downgraded and as foreign investors begin to look more and more unkindly on us, we could very easily see 8 per cent interest rates by the end of this year. Then watch the deficit roll.

[Chuck Strahl, Reform, Fraser Valley East, BC]

Mr. Speaker, it is a pleasure to speak again on this bill. I spoke at second reading. I raised some concerns at that time, concerns that have been expressed to me not only in post budget days but during the lead-up and the entire campaign period last fall, even during the time I was nominated before I entered into the campaign mode.

This whole issue of deficit financing, the national debt, having to borrow and the fact that we are placing not only this nation and ourselves into a tremendous debt hole but are asking our children to try to dig us back out is an issue for which many of us in the Reform Party have become standard bearers.

One of the major concerns that brought the Reform Party into being was the fact that the fiscal mismanagement of successive federal governments has placed us in an untenable position for which we will be paying for generations.

When I first sought the nomination for Fraser Valley East the size of the deficit was forecast as perhaps going as high as $30 billion. This was a couple of years ago. At the time I have to admit it was the last straw that catapulted me into the federal election arena. Just the thought that I was going to saddle the nation with a deficit of $30 billion was more than I could stand. I am not sure whether there was a national uproar, but in my area it was such a concern that many of us joined the Reform Party and said that we would try to do something to turn the tide so that our children would not be adversely affected.

Thirty billion dollars is looking better every day. We are approaching a $45 billion deficit. By the government's own admission the best that it can hope for this year is in excess of $40 billion. Every day that the interest rate fluctuates or the dollar drops or the Minister of Finance has some musings, it changes the rates and the figures once again.

It was a real concern at $30 billion. Now that it is $40 billion or $45 billion, depending on who one wants to believe, it is even more of a concern. I would suggest it has gone from a concern to a pending and possibly imminent disaster.

Since it is bad and is getting worse we should describe, as the member did previously I think a little bit, the size of the debt and what it will mean to Canadians in the years to come. The debt is in excess of $500 billion, depending on the figures that were bandied about here a little bit earlier. Whether it is $16,000 per person or whatever, that only shows part of the picture. The other half of the picture, of course, is the added debt from the provinces, because there is only one taxpayer. Canadians are going to have to finance somehow by increased taxes, increased deficit, and more and more of these types of bills, borrowing authority acts, in all legislatures and Parliaments and that will continue to add to this burden for successive generations.

The deficit, which is a year to year accumulation of the shortfall in the revenues from expenditures, is going to be at least $40 billion this year. That alone is going to add increased burdens on all the people who can least afford it. I seldom see people worth $10 million or $20 million running for cover when these figures are bandied about. What bothers me and concerns me the most is that the people who are least able to shoulder this type of load, those on fixed incomes, the people who are relying on a government pension that they have faithfully paid into and expect to reap some benefit from, the people who are needing some temporary help from a temporary loss of employment through a UI program, no matter how it is revised, will have to pay the price and pay increased taxes and will in the long run experience decreased services.

I have a lot of concerns about that. These concerns have not gone away since I have come to Parliament. Over the last couple of months the concerns I think have been exacerbated by the signals being sent from the government side of the House.

It seems there is no concept of fiscal restraint. The budget papers states: "We will no longer nibble around the edges and just fuss with the minor details of the budget. This budget contains real cutbacks". That is what the government would have us believe. When I turn the page I see that the total expenditures of the federal government have increased from $160 billion to $163 billion.

How is that a cutback? It is not a cutback. It is increased spending. Our borrowing has increased, our taxes inevitably will go up, and our service inevitably will go down. That is a

problem. It is a concern to all of us. It certainly should be even more of a concern to the government side.

If that is the problem, and I believe the problem is what I have described, we are going to pass this problem on to successive generations. What can we possibly do to control the deficit? What can we do to bring under control the year to year deficit so that this borrowing authority that we are debating today will no longer be necessary?

We are not without examples of what can be done even within the Canadian jurisdiction, leaving New Zealand out of it for a moment. I know that is often bandied about. Within the Canadian jurisdiction there have been some examples of what can be done to control excessive spending by governments.

We have an example from Alberta in which the provincial government has grabbed the bull by the horns, if I may use a western expression, and has said that enough is enough, we can no longer afford to continue to spend and tax and spend, and expect to maintain services and a business environment that will assure prosperity in the future.

The premier of Alberta did the unthinkable in Canadian politics. He decided to get tough with some spending, and indeed he did get tough. Some people have done analyses on this and have suggested that if the federal government were to exercise as many spending cuts as the Alberta government proportionately, then it would have to slice $19 billion from its spending just to match the precedent set by Premier Klein in his budget. I am not saying Premier Klein's budget is perfect, but I use that as an example to show that it is possible to realize the severity of the problem. It is possible to reduce one's spending in real terms. It is possible to offer a light at the end of the tunnel for those Canadians concerned about the size of deficits, debts and the borrowing that is associated with it.

Of all things, and I never thought I would say this, there is even an example in my own province of British Columbia. I hate to think that the federal government cannot match an NDP budget, but the B.C. budget brought down yesterday announces tax cuts of $112 million. It will reduce its deficit this year to $189 million which is a tremendous step in the right direction for a government not known for its fiscal responsibility. It is offering certain tangible benefits to businesses and some of that famous light at the end of that famous tunnel.

For example, the Vancouver international airport, which is competing as all of B.C. must for Pacific rim business, is a big winner. The jet fuel taxes are being rolled back one cent to four cents a litre. Air cargo gets another boost. Last year's budget removed fuel taxes from cargo carriers altogether. There are ways to help businesses, consumers and people who are concerned about taxes, deficits and everything that just seems to snowball together. We can specifically reduce spending and by reducing that spending we can offer tax breaks to businesses, consumers and people on fixed incomes.

For instance, in the B.C. budget there were the mining tax breaks estimated to be worth $18 million. This is unprecedented in B.C. recent budgetary history. The people are concerned about increased taxes, increased borrowing and the never ending spiral of hopelessness that involves. Now that the government has seen the light, if I can use that expression again, it has actually reduced taxes in specific areas to help businesses help themselves. These businesses are not going to receive a grant, a handout, regional development aid or anything else. These businesses are going to receive tax breaks which is all that businesses require.

How many times have we heard small and medium sized businesses say that all they ask of government is to get out of their way and get off their backs so they can get on doing the job that they do best which is create jobs for Canadians?

As I said, I did not know that I would ever compliment the B.C. government on its ability to bring in a budget, but I am not going to be totally complimentary to it either. The B.C. budget also brought in some total budgetary spending increases of 3.5 per cent.

What would have happened in B.C. if instead of bringing in increased budgetary spending it had brought in a zero increase in budgetary spending? All of the similar cuts that I talked about earlier could have gone on. The cuts in overall taxation levels could have gone on. The reduction in the taxation for jet fuel and so on and so forth could have gone on. What if, instead of increasing the spending in other areas by 3.5 per cent, the B.C. government had brought in a zero increase budget? Instead of predicting a balanced budget by 1997 it could have brought in a balanced budget within its term, within the next year or two. That would have been a tremendous feather in its cap and may have turned the tide in the popularity contest which it seems to be losing at the current time.

Those are precedents that are within the Canadian round. If the federal government had brought in a zero increase budget and had just held flat at $160 billion, which is incredible as it is, but even if it had brought in that much without an extra $3 billion or $4 billion in spending, then this government I think would have been perceived by the Canadian people as being serious about addressing what may be a crisis problem of deficits, debt and borrowing.

My riding extends from Boston Bar, which is pre-riding boundary adjustment time, in the north which is basically a one industry town, a lumber town that derives almost its entire economic activity from the forestry industry. It extends down through Hope which starts to diversify a little. There is some mining and basically a lot more forestry activity and a lot of tourism. It extends down through the Chilliwack area where I live and where we diversify into agriculture and again lumbering and forestry continue to be important. There is a Canadian

forces base there. My riding extends right into the Abbotsford area which has almost another flavour unto itself. It has a lot of urban commuters who drive in to Vancouver and work in the big city and it has a lot of retirement people as well.

It does not matter where I go in my riding, whether I am talking to a lumberjack or a logger up in Boston Bar with his red strap suspenders and the whole ball of wax, if I talk to him about the size of the deficit and having to live within your means, that logger knows exactly what I am talking about. He will poke his finger into my chest and tell me to tell this government to quit spending money it does not have just like he has to manage things in his own household.

If I extend down into Hope and into Chilliwack where I live and talk to a dairy farmer there who is worried about GATT and NAFTA and all sorts of things, he will tell me again as he sticks his finger into my chest: "You tell that government to quit spending money it does not have. Quit borrowing money to spend on things we do not even need. Quit obligating my children to pay your debts. Tell that government to quit spending money".

If I go into Abbotsford where people live on a fixed income they will come up to me at a public meeting and tell me the same story. It does not matter what you do or where you live, the people know you have to live within your means.

As soon as you get an allowance of two bucks a week when you are 10 years old, you know you have to live within your means. This government has not learned this lesson yet. This is why this government's borrowing authority act is asking for an unprecedented amount of money to keep government going. It has not learned the lessons it should have learned by watching, if I may be so bold, the PC government of the last eight, nine or ten years.

If the government continues to spend this sort of money in the dollar amounts it is proposing, the electorate will turf it out at the next election with such a vengeance that we may again find a party decimated to the ranks with one or two people left. It has to listen to the Canadian people. The Canadian people want restraint. They want budgetary sanity brought back into government and they expect this government to do its part by restricting spending, bringing in a budget that does not include increased spending measures. Do it now. Do it not only for the people sitting here today but, more important, do it for the people of Canada who are demanding it.

I ask the government to reconsider this bill. Do not pass it. Do not ask for this amount of money. Bring in a budget that we can support, something with a cap on spending, and do it now.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I have a comment and a question for the hon. member, who raised points which I wondered about several months ago already, and for which I found an answer. I am going to suggest that answer to the hon. member and, in the process, get his point of view.

The hon. member says that the government must live according to its means. He adds that, for years now, in fact two decades, we progressively got more and more into debt.

I noticed that too, and I wondered not only about the facts but also their cause. It is not enough to say that we notice something. We have to ask ourselves: How did we end up in this situation and why do we still find ourselves in it?

So, I asked myself this very simple question: Why is it that Mr. Trudeau-I think I can name him without violating the rules-started getting us into debt? Is it because he did not realize that it was not a very smart idea to incur debts? Or is it because he was incompetent or acted in bad faith? Certainly not! I am convinced that, at the time, Mr. Trudeau acted in good faith and followed what he believed to be excellent advice encouraging him to do what he did.

Several years later, Mr. Mulroney promised to correct the situation and he failed. Did Mr. Mulroney act in bad faith? I do not think so. I believe that Mr. Mulroney really wanted to reduce the national debt.

Did he receive bad advice? I think that, here in Ottawa, we have extremely competent civil servants who work very hard to make things happen. So, my question is: What happened?

[Chuck Strahl, Reform, Fraser Valley East, BC]

Mr. Speaker, I thank the hon. member for Portneuf for his question. He raised a couple of interesting points. I am not exactly sure what Mr. Trudeau was thinking when he started us down this path. Perhaps it is just a Liberal frame of mind. I am not sure but time will tell.

I realize I am stretching it, but Mr. Trudeau and Mr. Mulroney have a similar problem or similar disease that afflicts new governments. It is called missed opportunities. When a new government takes the reins in Parliament it has a window of opportunity, which lasts a few months while the honeymoon period is on and while government members are glowing from ear to ear and from coast to coast, to make significant changes in the way that Parliament and Canada are run.

Both Mr. Trudeau and Mr. Mulroney had a similar disease in that they missed opportunities. I am not sure exactly what the perception of Mr. Mulroney was in Quebec where he won a huge number of seats, but we voted for him in the west in 1984 because we thought we were electing a fiscally responsible voice that would ensure our concerns were upheld in Parliament.

During his first budget Mr. Mulroney missed a tremendous opportunity. People wanted a fiscally responsible budget brought down, but because of some vocal people who were naysayers he folded the tents and went scurrying with his tail between his legs.

If I could come now to the 35th Parliament, I fear from looking at the budget that we have a similar phenomenon. We have a populace leader of the government who seems to be very much in tune with people. He seems on the outside to be one of the little guys from Shawinigan, just a regular guy, but he missed an opportunity in the budget to change the course of the 35th Parliament. It will not get easier. If the hon. Minister of Finance thinks it will get easier as we get near the next election, he is totally wrong.

As the hon. member said, whether they received bad advice or did not catch the full vision of what people were sending them to Ottawa to do, I am not sure. Regardless of what it was, if an opportunity is missed at the start of a parliament to set the tone for what the government is trying to accomplish the opportunity will never come back.

Perhaps the government wonders why we make such a fuss about the borrowing authority, the budget and so on. It tells us to wait until next year, but we have heard this wait until next year stuff for at least 10 years and it never comes because it never gets easier.

Any time we shrug something off and think that a problem will go away on its own it is just wishful thinking and there is a famous road paved with wishful thinking.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I am pleased to address for the first time Bill C-14, an act to provide borrowing authority for the fiscal year beginning April 1, 1994. I speak against the bill because it is time we stopped living on borrowed money. The government has to start living within its means and resist the temptation to continue the mistakes of the past 25 years.

In 1968 the Liberal government under Pierre Elliot Trudeau came into power. It generated the first deficit. Since 1968 and including that year every government has continued to spend more money each and every year than it generated in tax dollars. If we check the records, after the Liberal government was kicked out by the Conservative government it left a debt for the Conservatives of $175 billion in 1984.

The Conservatives continued the same spending habits the Liberals had taught them while they were in government. Each and every year while the Conservatives were in power they continued to add to the debt to the point at which the people finally had enough. Under that government the debt grew to $460 billion. When the Conservatives were in power they kept blaming the Liberal government for the debt that grew every year because they had to pay interest out of the revenues to service the debt brought in by the Liberal government under Mr. Trudeau.

Now the Liberals are back in power and they are blaming the Conservatives for the $460 billion debt. They say it is their fault and that the $40 billion interest payment is a result of their lack of fiscal responsibility. The Liberals are now expecting the Canadian public to buy the same argument again.

Enough is enough. The finance minister's budget ignored the real problem. The finance minister presented a budget that accomplished nothing. The results would have been the same after 12 months if he had done nothing. It is a shame for him as a person with such good business background and business acumen not to heed the advice of his own experience.

The real problem is the debt and the interest we must pay every year to service the debt which is in the $40 billion range. There is the deficit, the debt and the interest payment on the debt. The finance minister brought in a budget that increased overall spending by $3 billion. Yet his rhetoric sounds as if he read the Reform Party blue book and the zero in three plan.

He talks tough. He talks about where we must take tough measures and make tough decisions. We must work toward a balanced budget. We must do this. We must do that. However, what does he do? He makes one sector of the economy, the military, suffer the most. It is suffering pain for no net gain because he increased spending by $3 billion overall.

This is why we are concerned as members of the Reform Party. The finance minister says he understands the problem but he fails to address it in the budget. As a businessman I am doubly infuriated because every time the government interferes in the private sector through grants, subsidies and regional development funds it proves in the long run not to work. When the money runs out so do the businesses. It is unfair. It distorts the marketplace and it creates confusion.

For instance, under the infrastructure program the federal government will contribute $2 billion if a province contributes $2 billion and the municipalities collectively contribute $2 billion. Then we will have a $6 billion job creation program. It is creating confusion. In the heart of downtown Calgary in my riding is a building that contributes to infrastructure that already draws businesses and people. It is a round-up centre, a building called the Saddle Dome which houses the Calgary Flames, a professional hockey team. The municipal council has now found a way to make application to the provincial government and through it to the federal government. The President of the Treasury Board will have to make a decision. I advise him to

decide against it because it is not a true use of infrastructure moneys. He will be asked to make a decision on whether it falls under the criterion and the definition. There is confusion.

Therefore the federal government should make it a point that if it has an infrastructure program it should go toward infrastructure. Two other levels of government have decided that spending money on a facility that is already in place is infrastructure. Since the private sector is involved with the Calgary Flames and since it is the major tenant, I recommend the President of the Treasury Board take a good hard look at the application.

My original point was that the infrastructure program was causing confusion. It is an intrusion into the marketplace. Another intrusion involves the province of Quebec and the manufacturer of the Hyundai car. Hyundai was originally subsidized, attracted to come to the province. It was to create 1,000 jobs. We were to lend it $100 million and to sell 100,000 cars at the end of this wonderful deal.

Hyundai closed its doors when the money ran out. Some 856 jobs were created, not 1,000. There were only 26,000 cars produced, not 100,000. However the Minister of Finance is considering lending more money for it to reopen the doors and gainfully employ another 800 people, the same 800 people.

Has the government or the finance minister not even asked why it shut its doors. Is it because Hyundai is not competitive enough? Is it because it cannot sell cars?

This is the private sector in which the federal government continues to intrude and continues to distort. The private sector wants the government off its back and out of its pockets. It wants to be left alone; it can create the infrastructure. It wants the government to do only what governments can do, and that is peace, order and good government, not investing in the private sector. I do not know how much more emphatically Reformers can say that and repeat that until it finally gets the message across.

The government wants to pass Bill C-14 so that it can borrow money to meet its commitments in the red ink book. It wants to borrow money so that it can create jobs to fund our already too generous social programs rather than review them for ways and means in which it can create a social safety net that protects the truly needy, not those it protects now who do not really need the money.

We have limited dollars. We are living on borrowed money. Why do we not stop wasting borrowed money and reduce the debt and thus reduce the amount we have to borrow? The proper signal should be sent to investors, lenders and consumers that the government will change the mistakes of the past 23 governments and finally make a commitment to the proper principles of economic growth. Lord knows, with all the advice we have available through bureaucracy we could do it.

As a member of the Standing Committee on Finance I have heard some interesting presentations on a replacement tax for the GST. I have also had the very good privilege of questioning the deputy minister of finance, Mr. Dodge. It is worthwhile for the entire Liberal cabinet to listen to him, especially the finance minister to whom this man has to answer. Let me read a comment that he made to the committee referring to our huge debt. He said that the problem was not only a federal one but also a provincial and local one.

In 1992-93 our deficit stood at approximately $40 billion federally and approximately $25 million provincially. The debt at the federal level is getting very close to three-quarters of the GNP. We are paying interest rates that are about 2 per cent above the rate of growth of the economy. That means we have to divert increasing amounts of taxpayers revenues just to service the past debt.

Canada's total budget deficit was the second highest among G-7 countries in 1992. We are just about leading the G-7 with respect to all levels of spending which is approximately 50 per cent of our GNP. The proportion of our debt that is internationally held has increased a great deal over the past 10 years. It is to the point now where the combined federal provincial total is about $750 billion and $300 billion plus is foreign held.

We must pay foreigners more and more to service Canada's foreign debt, approximately $1 of every $20 produced. All we can say is there may come a time when financial markets will feel they can no longer trust Canada to handle its problems. People will want to sell their Canadian bonds and we will no longer be able to borrow. We will face serious problems like New Zealand, Sweden, et cetera.

The important part is that the moment of truth can arrive just like that. That means when the Liberal government's program and budget after this year and next year do not work, its final recourse may be the International Monetary Fund. The government may have to invite them here and I do not think we need that. Do we want to invite the International Monetary Fund to solve our problems? I do not think so.

Is the finance minister listening to his own deputy Minister of Finance? Is the Liberal cabinet discussing the seriousness of the debt and the deficit and the interest costs on servicing that debt? What is going to happen if interest rates continue to rise? I will leave that for another speaker to possibly address.

I recommend we handle our own problems before resorting to groups like the International Monetary Fund. I recommend a complete overhaul and entire review of the taxation system. Never mind just a GST study, make a commitment to an entire

tax review. Get rid of the income tax in its present form. Get rid of the 14,000 books of rules and regulations.

Why does this government not take some advice from one of its own members who worked hard and true on this in opposition, the hon. member for Broadview-Greenwood? I know what his name is but I am not allowed to mention it. He wrote the book The Single Tax .

That has a lot of merit. A flat tax for Canada would help spread the tax load. It would allow us to introduce a lower tax rate. It would help solve the problems with the social safety net with an exemption level for each person that generates money. That would solve the problem. They would not have to pay tax on the first $15,000 for instance. They could then look after themselves without government subsidies and aid. Then the money we did generate as a government could go to the truly needy, the people who really need welfare and those seniors who really need help under the guaranteed income supplement.

Why will the Liberal government not focus on issues like this? There is a member within that party and he is not even in cabinet. He has been shunted right out and I do not understand why.

A flat tax has some other advantages. A flat tax would allow all Canadians on a proportional basis, depending upon the size of their family and the size of their income, to pay the same rate of tax. That would be equal. It would be more equitable and it would be fair. The finance minister always likes to use the word "fair". He has said in his budget speech that his intent and one of the objectives of the federal budget is to restore and sustain fiscal responsibility but I beg to differ.

The other advantages of a flat tax, if the Liberal government were so inclined to review it, would be that being simple it eliminates the need and the work with all these exemptions and loopholes that the finance minister talks about in his budget.

Today when we want to develop a certain sector of our natural resources, we create an incentive for people to invest and we give them a tax deduction. That starts to work or does not work and then later on we take the exemption away. We call it a loophole and we eliminate it. We give and take and give and take.

If we had a flat tax we would not have to worry about incentives, loopholes and deductions. We would only have to figure out mechanisms over and above the personal exemption in terms of charitable donations, perhaps 1 per cent, and in terms of the child credit and child care costs. Those could be incorporated.

After that we could draw a line. We would state what was made, make the deductions, multiply by 15 per cent and send that amount to the federal government. This system would be less complicated and understandable by everybody. It could be put on one sheet. Everybody would be doing it the same way. It is a proportional tax.

I would love to have a debate on this. Perhaps I could convince my own caucus to make a motion at some future point to discuss this flat tax and have a situation in which we solve our own problems. I believe a major overhaul of the entire taxation system would entice more investment in Canada.

We need capital. We need equity capital. Right now the government mentality, especially at the federal level is to continue to live on borrowed money which I call debt capital. There is a big difference. Money that is at risk motivates. Government money, especially borrowed money, is a waste.

I wish at some point in time we could address our entire economic and social problems in a comprehensive and analytical manner. As some Bloc Quebecois members like to say in the finance committee, there should be a complete review of our taxation system category by category, allocation by allocation.

We could then decide what programs we should be funding, what programs should remain in the public sector and what programs should be shunted off to the private sector. Yes, I am talking about privatization. There are a lot of Crown corporations that could be sold off if they are still necessary. If nobody in the private sector wishes to buy them, that is only proof nobody wants the service or needs it anyway.

We could really clean house in this 35th Parliament if we made a commitment. I understand the Bloc Quebecois claims to be fiscally responsible. So does the Reform Party. Why do the cabinet ministers not swallow their pride and listen to some of the comments we make? They could take credit for being the greatest government that ever lived because it finally listened to the people on matters that really counted, money. We pay far too much in taxes and they need to be reduced.

I speak against Bill C-14. I know the government ultimately can put this bill through, but I caution it to at least listen to some of the comments made in this House. Do more than give token interest to what we say. We are here to serve for another four and a half years. We want to be solving the problems for this country, not for some international association.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I will be brief because I really want to hear the Reform Party's answer to this question.

Some time ago, because of a similar perception of the debt problem, I was invited to join the ranks of the Reform Party.

However, even though we may perceive the problem in a similar way, it does not necessarily mean that we share the solution. Indeed, our respective solutions may differ.

In this context, I said earlier that in the last decade or two no government was able to control the debt and the deficit.

I submit that the reason for this failure rests with the system itself and that the system has to be changed. I would like to read the hon. member, if I may, Mr. Speaker, the end of the letter dated March 1st which the president and chief executive officer of the Quebec manufacturers' association, Richard Le Hir, wrote about the budget. It is only one paragraph long.

Faced with this situation, the federal government's only strategy is the relentless pursuit of the same policy in spite of all the evidence. Nothing else can explain Mr. Martin's reserve in his recent budget. He and his Liberal colleagues are hoping that, contrary to all expectations, a miraculous upturn in the economy will save Canada from the disaster it is headed for. They are making the same mistake the Conservatives made before them. They refuse to admit there is a structural aspect to the Canadian public finances problem. And for a very good reason! If they did, it would call into doubt the very structure of the system: the sacrosanct Constitution. That would be tantamount to opening Pandora's box. That is why, as we now say in Montreal, `les jeux sont faits, rien ne va plus'!

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I enjoyed the commentary of the hon. member. That quote has a lot of merit. I would not dispute that.

I would like to raise one thing that perhaps Bloc Quebecois members have not considered. I know the agenda they ran in the province of Quebec. They feel that separation is the best thing for Quebec. I respect their views on that. I respect why they feel that way. Perhaps members could give them other thoughts to consider.

Why not stay in Canada? Why not work together for one Canada, a new federalism? The Bloc Quebecois would work within this confederation to gain the best possible for the province of Quebec in partnership with nine other equal provinces. As one country we would grow together and ultimately achieve our highest potential. Why does the hon. member not talk to his caucus about the economic advantages for the province of Quebec of staying in Canada? The signal that would send to the global community and the global market would have resounding positive financial rewards for the province of Quebec.

As Reformers we would be happy to point out to the Bloc Quebecois what some of the advantages are to staying in confederation. This separatist point of view is divisive and confusing. There are the arguments and debates over immigration, over the debt and what Quebec's share would be, how we do this, how we do that. Why not work together? Financially it is advantageous for everyone concerned.

[The Deputy Speaker]

The Chair has received written notice from the hon. member for Davenport that he is unable to move his motion during private members' hour on Thursday, March 24.

It has not been possible to arrange an exchange of positions in the order of precedence according to Standing Order 94(2)(a). Accordingly it is necessary that the Chair ask the table officers to drop the item of business to the bottom of the order of precedence.

Pursuant to Standing Order 94(2)( b ), Private Members' Hour will be suspended for the day and the House will continue with the business before it at the time.

It now being 5.30 p.m., pursuant to the order made on Tuesday, March 22, 1994, it is my duty to interrupt the proceedings and to put forthwith every question necessary to dispose of the third reading stage of the bill now before the House.

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.