Debates of April 11th, 1994

The Budget

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I disagree with the hon. member's hypothesis. The budget we brought down in this House in February was well received. I agree there was some movement in the markets last week, but everyone agrees these fluctuations were caused by a very volatile situation on the international scene, and everything seems to be back to normal.

The Minister of Finance and I have made it clear that the government's plan is straightforward: we want to meet our objective to reduce the deficit to 3 per cent of GDP by the end of our third year, and we are convinced that we will meet our objectives.

[Lucien Bouchard, Bloc, Leader of the Opposition]

Mr. Speaker, the Prime Minister forgot to mention that most economists and financial analysts who examined what caused the financial instability of the past few weeks referred to the Budget and the concern shown by financial markets about the govern-

ment's failure to cut where it should cut, in other words, public spending.

Does the Prime Minister agree that the negative assessment of the financial community will add another $3 billion to his deficit and that rising interest rates will compromise economic recovery and job creation as a result of a lack of confidence among consumers and investors?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, we are certainly not satisfied with the situation, but I think everyone will agree that we have made considerable progress on the employment side, because 114,000 new jobs were created in February and March of this year alone and the unemployment rate went down from 11.6 per cent to 10.6 per cent, between the time this government was formed and the end of last month.

We are on the right track. We must keep calm and keep going. When you know you have a good plan, you have to stick to it. I agree there is some instability, but part of that instability is caused by the political option of the Leader of the Opposition.

[Lucien Bouchard, Bloc, Leader of the Opposition]

Mr. Speaker, it is unfortunate to see a government so irresponsible in the way it interprets the negative movements of financial markets.

For instance, Mr. Speaker, the Prime Minister sees an improvement where there has been deterioration. Fewer people are unemployed because more people are on welfare. When people go on welfare, they are no longer included in the unemployment statistics, and so the government is satisfied. This does not make sense. And the few jobs that were created are not durable jobs.

I want to ask the Prime Minister whether he will let his government review its deficit reduction strategy to restore its credibility with the financial markets. Is he prepared to immediately implement measures to cut government spending?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, what the financial markets need is a government with a plan, a government that intends to stick to its plan, a government that does not lose its cool, a competent government that is consistent in its policies. It would be a disaster to have as the leader of this government a political leader who has changed parties five times.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, in his budget, instead of proposing a real plan to cut spending, the Minister of Finance attacked the most disadvantaged people by making substantial cuts to unemployment insurance benefits in particular. With the recent instability in the markets, which seems likely to continue, given what the Canadian dollar did this morning, the federal government's interest charges have already increased by $3 billion.

How will the Prime Minister explain to the unemployed and to seniors that the sacrifices imposed on them will be pointless and that the loss of his budget's credibility in the financial markets will by itself wipe out the billions of dollars that his government wrung from the disadvantaged to reduce its deficit?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, the fact that the economy has produced 114,000 new jobs in the last two months is a sign that we are on the right track.

We are not satisfied with that. We know that when we started unemployment was 11.6 per cent. We want to reduce it. We want to create jobs. This is the program of this government. This is the goal of this government.

The infrastructure programs will start to produce jobs in the coming weeks because the agreement has been signed with everybody. We are very hopeful that it will continue creating more jobs, that there will be more jobs in the ridings of every member of Parliament because of the program.

Of course the rest of the economy will produce other private sector jobs. We are on the right track. We should not lose our cool because there are some fluctuations in the market. I have been Minister of Finance before and I have learned that it is serving-

[Some hon. members]

Oh, oh.

[Jean Chrétien, Liberal, Saint-Maurice, QC]

Yes, and I managed to reduce the deficit while I was there.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, their irresponsibility is endangering the employment recovery.

Does the Prime Minister not agree that he must in the short term review his deficit-fighting strategy and undertake a review of all budget and fiscal expenditures by setting up the parliamentary committee to review public spending that the Official Opposition has been demanding from the beginning and that the financial community now supports, Mr. Speaker?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, the opposition members will have to make up their minds one day. We presented a budget and made cuts. They criticized us for the cuts we made. They should start by accepting these cuts and then we will accept their suggestions.

Every time we do something, they just criticize and of course that is why they will never form the Government of Canada.

The Economy

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, my question is for the Prime Minister.

While the House was recessed Statistics Canada announced the combined federal and provincial debt to be $660 billion. That is 93 per cent of GDP or $23,000 worth of debt for every man, woman and child in the country.

Will the Prime Minister today acknowledge-

[Some hon. members]

Oh, oh.

[The Speaker]

I know we have all missed the House and we are anxious to be back. I also know all hon. members would want to listen to the question by the hon. member for Calgary Southwest.

[Preston Manning, Reform, Calgary Southwest, AB]

I make reference to the record level of debt. Will the Prime Minister today acknowledge that this debt level is unacceptable to the government and that extraordinary measures beyond those contained in the budget must now be considered to combat it?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I would agree with the hon. member that we are not happy at all and we do not find having this big debt very easy.

We only formed the government six months ago, but when we have a problem like this one we have to be rational and make sure we are managing it in a way that would not cause a recession. That would compound the problem.

That is why we have a very balanced approach. Sometimes the opposition parties criticized us for some cuts and some would like to have more. However we know that if we go too deeply into debt we will compound the problem by having more unemployed people. When people are unemployed in Canada, being a civilized society we do not let them starve. We help them through these difficult periods.

This is why we think that our balanced approach is the best one. We made some very difficult cuts but at the same time we have kept our priority to ensure that new jobs are created in Canada. I hope the hon. member will recognize that in the last two months the economy created 114,000 new jobs. That is not too bad.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I find the Prime Minister's answer incredible. All members of the House had better recognize that the government is spending $110 million more per day than it takes in. We are sleepwalking toward a fiscal crisis.

I have a question for the Prime Minister. Will the Prime Minister today acknowledge that this spending rate simply cannot continue and that the government will have to consider extraordinary measures not contained in the red book, the throne speech or the budget to bring this spending rate under control?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, we have cut quite substantially in the last budget. It was not easy to do. We have some problems to cope with and we think we have managed the situation quite reasonably.

We have a goal that is achievable: to reduce the deficit in relation to GDP to 3 per cent per year. This goal is very reasonable because 3 per cent of the GDP is the requirement for any country to qualify in Europe to use the new currency called the ECU. If it is good enough for all countries of Europe to have that goal, it should be good enough for Canada. I am saying that is a commitment in the red book and we will achieve that goal.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, the countries that are part of the European Community are running debt to GDP ratios of about 60 per cent. This government is running a debt to GDP ratio of 93 per cent. We could not even get into that community.

I have a supplementary question. If the Prime Minister is not prepared to give convincing answers to this side of the House, surely he recognizes that he has to be convincing to investors and lenders of private sector job creation.

Will the Prime Minister today acknowledge that Canadians want a clear signal, not from the Minister of Finance and not from the Minister of Human Resources Development, but from the Prime Minister that he is personally prepared to consider extraordinary measures to control the overspending of his government?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I have given my commitment to controlling spending. This is why we have had so many cuts for which we have been blamed by the opposition.

We have a program that we want to keep. We are not about to change suits every day. We will stick to the plans we have made. The markets know we have a very good Minister of Finance. He has my full support and full confidence. The Minister of Human Resources Development is a man of experience and quality. He is an excellent minister.

We have a good team and the markets should have confidence in this team.

Unemployment

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, while the government is trying to take credit for a drop in the unemployment rate, more than 20,000 young people are said to not even bother stating that they are looking for work. They are disillusioned with the job market and the government's apathy.

Will the Prime Minister face reality and recognize that, at a time when some 200,000 jobs are needed in Quebec to return to pre-recession levels, the drop in the unemployment rate is largely due to the fact that young people are disillusioned and have given up looking for work?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I believe that the employment situation has improved but we are extremely concerned with the unemployment rate among young people. This is why the Minister of Human Resources Development is working with the Secretary of State for Youth to set up a special program to create jobs for young people. I hope that we will be in a position to make an announcement on this program in the next few weeks.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, how can the Prime Minister keep defending his job-creation strategy when the bad reaction to his budget in the financial community, as well as the loss of credibility of both his finance minister and his government, are the main causes and obstacles to job creation in Canada?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, we have a program to stimulate employment. This program was the main element of our election platform in 1993. We clearly stated what we intended to do. We are following our agenda. We are on the right track. So far, results are rather positive, but it will take time. We started off with an unemployment rate of 11.6 per cent. We do not think we can turn the situation around in just a few weeks or even a few months. We must continue to work; we have a well-thought-out plan which Canadians have accepted, and we need everyone's support if we are to succeed. The hon. member could also help. Indeed, if he talked about employment instead of always discussing separation, our country would be better off.

Unemployment Insurance

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, my question is for the Minister of Human Resources Development.

During last fall's election campaign any suggestion that a reformed UI program should be jointly funded by employers and employees and should be run like a genuine insurance program was greeted with ridicule by Liberals.

Will the minister tell this House, as has been suggested in the media, if he is now considering funding the UI program solely on the backs of workers?