Debates of Dec. 14th, 1995

Finance

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I rise on a point of order. A petition has just come into my hands and I would like to ask for unanimous consent to table it quickly.

[The Acting Speaker (Mr. Kilger)]

Is that agreed?

[Some hon. members]

Agreed.

Petitions

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I have a petition signed by many citizens of Ontario asking Canada to use its good influence to ask the Sri Lankan government to abandon the military option and instead go to political negotiating with the LTTE as equal partners and to intervene immediately to have Manickavasagam Suresh released from prison.

Thank you very much, hon. members.

The House resumed consideration of the motion.

Finance

[Gary Pillitteri, Liberal, Niagara Falls, ON]

Mr. Speaker, this is my first opportunity to address Canada's 35th Parliament. It is a special day for me and the constituency I represent. I would like to take a moment to thank the people of Niagara Falls who two years ago elected me as their federal representative.

It is with great pleasure and eagerness that I take part in today's debate, a debate which focuses on pre-budget consultations that the finance committee, of which I am a member, held across Canada.

The consultations began in Ottawa on September 19. Since that time the committee has listened to testimony from Canadians from

coast to coast. The committee chose to use round table discussions to allow as many groups and individuals as possible to participate.

On the agenda, among other specific subjects, were the charitable sector, agriculture, monetary policy, education, health, the hospitality industries and tax expenditures.

The committee heard from labour unions, business and health organizations, charitable and community groups and also from many individual Canadians.

This year I was part of the group which heard from people in eastern Canada. The people who appeared before the committee offered sincere, diverse and far-reaching advice. One thing struck me: the eastern Canadians who made presentations to the finance committee expressed the same concerns, aspirations and dreams as the people in my beautiful constituency of Niagara Falls-Niagara-on-the-Lake. Their hopes and dreams are for a better future; a future in which unemployment will decrease, the economy will turn around and their children, when they graduate from high school, college and university, will find gainful employment. There is widespread agreement among Canadians to work together to achieve a better tomorrow.

Spending has to be cut, but at what price? We do not want to hurt those who can least afford it, as we see happening in Ontario. Canadians are ready to make sacrifices in order to have a better future.

By the end of the third year of the Liberal government's mandate the Minister of Finance will have fulfilled the party's election pledge. The finance minister will have shaved $18 billion off the deficit we inherited in 1993-94. We will have been successful in cutting the deficit almost in half, from 5.9 per cent to 3 per cent of the GDP.

We know that mindless cuts without concern for the consequences or the need for adaptation may result in short term savings, but they can also result in long term costs.

The third party presented to Canadians a slash and burn approach in its shadow budget which considered the elimination of the deficit in one year. At what cost? Canadians know that the Liberal government is proposing a lean but not mean approach. The government is committed to ensuring that the most vulnerable in our society will be protected. The fundamental problem remains a debt that is growing faster than the economy. Reducing the deficit remains paramount for job creation and growth.

There can be no more effective job creation program than getting interest rates down. In turn, there is no more effective way to get interest rates down than to decrease the deficit. A stronger economy contributes to the reduction of the deficit and the debt burden. The benefit is mutual and it will continue to grow with time.

Our strategy has been to apply a steady, significant, but orderly reduction of our deficit. We have seen the results. Today we have learned that the inflation rate is steadily declining. That is good news for all Canadians. However, we must remember to be careful. We must remember that transfer payments to provinces and to seniors amount to approximately 20 per cent of program spending. The most important thing remains the changes we have put in place to reduce the deficit. Those changes have been structural and have resulted in a lasting improvement in the way government does business.

In the 1995 budget we made a commitment to reduce the size of the unemployment insurance program by 10 per cent. We have done that. Once the reform of the unemployment insurance program is fully implemented, the cost of benefits will be reduced by approximately $2 billion a year. More important, $800 million will be reinvested in employment benefits to help Canadians get back to work.

When the system is fully implemented the reform will create approximately 100,000 to 150,000 jobs per year. In high employment areas, such as the riding which I represent, the new system will be phased in to ensure that individuals and communities have the time to adjust. These reforms are about fairness. They are about helping people get back to work.

We recognize, with understandable satisfaction, that 500,000 full time jobs have been created since the election, but we know that much remains to be done. Government alone cannot create jobs. We can, however, generate and foster the right environment in which the private sector can grow and create desperately needed jobs.

In last year's budget we stated clearly that one of the main objectives was to ensure the affordability of a public pension system. We know that over the next 20 years Canada will undergo big demographic changes. If we want to maintain our pension system well into the next century we need to start planning now for future changes.

The government has started discussing with the provinces how best to secure the future of the Canada pension plan. We have to ensure this key part of our social fabric be sustained well into the future.

In the 1995 budget the government reduced subsidies to business by 60 per cent, or $2.3 billion. Most of the remaining assistance is in agriculture where it takes the form of contributions to insurance schemes.

The government will continue to examine spending on subsidies so as to ensure that it is limited and, most important, justified.

I would like to talk about a subject that is on the mind of every Canadian, our tax burden. We all agree taxes are too high. However, our present economic situation does not permit us to reduce taxes.

We must realize that difference in tax burdens with other G-7 countries reflect differences in the composition of tax revenues. Some countries rely more heavily on revenue such as payroll taxes than Canada does.

Higher taxes in Canada have always reflected a higher level of public services. We may say without hesitation we have the best social programs in the world. These programs have without doubt contributed greatly to the fairness and quality of life enjoyed by all Canadians.

For this reason we must ensure everyone is paying his or her fair share of taxes. Again, the Liberal government has taken steps to ensure this is the case, first by enhancing enforcement efforts in the underground economy through increased audits and reporting requirements; and by eliminating tax advantages that do not meet the standards of fairness expected by all Canadians.

As Canada moves forward we have the duty to help Canadians better understand the value they receive for their dollars and how that value contributes to defining Canada as one of the best countries in the world.

We have to prove to Canadians their government is becoming more efficient. Canadians will expect us to balance the budget as well as lay out our vision for addressing the national debt. They want us to be frugal. They want us to end costly duplications in our programs.

I believe, as does my government, that Canadians want us to act, to show leadership and courage, to do what is needed while still maintaining the Liberal philosophy.

We must be successful. We must meet the expectations of Canadians. Only in this way will we achieve the stability and confidence level that Canada must enjoy to sustain economic growth, to meet the challenges of the 21st century and create lasting jobs.

I believe this can be achieved and I will continue to work with the finance committee, the government and, most important, with the input and help of my constituents to reach these important objectives.

[Monique Guay, Bloc, Laurentides, QC]

Mr. Speaker, I welcome the opportunity to speak in this debate on the prebudget consultations.

These consultations, held annually by the Standing Committee on Finance, are an opportunity for Canadian taxpayers to comment on the budget being prepared by the Minister of Finance. Individuals, groups and associations come to testify before this committee which in turn reports on the hearings and submits a report to the Minister of Finance. The minister is to examine the report and take into account the concerns expressed by the witnesses.

That, in a nutshell, is the normal and transparent process that is supposed to give taxpayers a chance to have some input as the Minister of Finance prepares his budget. Unfortunately, that is not what really happens. Actually, neither the committee nor the minister seem to be really listening to what taxpayers have to say. The minister's budget plans are prepared behind closed doors, in the course of limited and private consultations. In other words, the game is fixed.

Every year in February, the minister pulls out his budget like a rabbit out of a hat. Every February, it becomes increasingly obvious that all these public hearings and consultations held across the country are a sham and just a way to make the federal government look open and transparent.

The committee seems to draw its inspiration from what is said by the minister during his annual visit. In fact, instead of reflecting the comments of a host of witnesses, the committee's reports, from which the Bloc Quebecois has always dissociated itself, more or less repeat what was said by the minister. In other words, the committee submits the minister's own recommendations to the minister. How is that for an open and transparent process?

Basically, the sole purpose of this exercise is to legitimize the actions and decisions of the minister. I remember the big show our millionaire minister put on when he was about to bring down his first budget in February 1994. On the news we saw the minister getting out of planes on to a windswept tarmac and telling taxpayers: "You see, I am consulting across the country, and it will all be reflected in my budget". Fat chance. The 1994 budget, the one in 1995 and the one next February are all concocted behind closed doors in those ivory towers, well away from those so-called public consultations.

Only a small group has a say in the process, and it includes the richest taxpayers in this country, who are of course friends of the minister and buddy-buddy with the big decision makers.

We have here a kind of mafia whose members all know each other and have certain mutual obligations. This inner circle controls, decides and leads the way while protecting the assets, money and profits of its members.

This regrettable tendency to give certain interests an edge is obvious from every decision made by the Liberal government and especially by the Minister of Finance. The minister shamelessly attacks the average taxpayer and lets the wealthy and large corporations get off scot free. And yet this government says it wants to act in a way that reflects the principles of justice and fairness. I am not so sure it is prepared to do so. It is clear that this

government favours the principle of letting the rich get richer and the poor get poorer.

I remember, for instance, the cuts the government made in social housing. As soon as we took our seats in this Parliament, we condemned the federal government's withdrawal from this sector and more specifically, its decision to withdraw from direct financing of the construction of new social housing.

When members opposite were the official opposition, they made a big fuss and condemned the inhumane and immoral policies of the Conservatives.

Despite the pleas of the ordinary folk needing public housing and the most disadvantaged, who, in most instances, are obliged to spend more than half their salary on housing, despite their pleas to the government, the knife continued to cut. The result is that the disadvantaged really need housing, and the provinces are left picking up the pieces left by the federal government's departure. This sort of behaviour is shameful.

The minister's guidelines remain unchanged. They are easily spotted. They are aimed directly at cutting the deficit on the back of the small and medium taxpayer, while the deficit is being dumped in the backyard of the provinces. You do not need to be a specialist to see what the government is up to. The deficit is the bugbear of the Minister of Finance, and he will stop at nothing to get rid of it. One of his preferred ways to reach this goal is to dip into the unemployment insurance fund, which both employees and employers contribute to.

The surplus in this account, called the Unemployment Insurance Account, will help reduce the deficit by $5 billion. These $5 billion have come out of the pockets of employees and employers and off the backs of the unemployed, and yet there has been no word about creating steady jobs.

This amount is planned for 1995-96 and for each of the coming years as well. It is a tax, a hidden tax. So now we can call unemployment insurance, deficit insurance. The aim of the plan has been totally changed, indeed twisted, by the Liberals.

In this regard, a task force on unemployment insurance set up by the Canadian Institute of Actuaries wrote in its report that since the UI program is financed entirely through employee and employer contributions, the current formula distorts the government's budget results.

In short, the CIA maintains that the UI account balance should not impact on the federal deficit, as is now the case. The surplus for the 1995-96 fiscal year is $5 billion. If we adjust the deficit to allow for this surplus, the budget deficit will be $37.7 billion instead of $32.7 billion.

The Liberals' decision to take money from this account is unacceptable. Discontent is simmering in several regions of the country. The workers feel that this money belongs to them.

The Minister of Finance himself admitted that the annual surplus was used to reduce his deficit, thus contradicting our dear Minister of Labour who, not so long ago, was denouncing the federal government, who recently told Le Point that the government was setting this surplus aside and that it would not be used to reduce the federal deficit. What awareness. What a great demonstration of ignorance by our favourite minister, the Minister of Labour no less.

Another issue that is very much in the news these days is the old age pension. To reach its so-called target of reducing the deficit to $17 billion by 1997-98, the federal government will have to cut spending by several billion dollars. After presenting his economic and fiscal update, the Minister of Finance clearly expressed his intention of cutting old age pensions as part of the review announced in his last budget. Again, it is the little guys that will pay the price. The Bloc Quebecois is vigorously opposed to these cuts that will affect our seniors' living conditions.

It is clear that workers, the unemployed, seniors and the poorly housed will not be part of this circle of friends I referred to earlier. It is also clear that the federal government is not listening to these people or addressing their concerns. Except, of course, before an election, and especially before a referendum in Quebec. The Minister of Finance deliberately delayed his appearance before the finance committee this year, precisely because he did not want to upset these people. Political courage is certainly not a trademark of this government. There is a lack of backbone on the other side of the House.

Another Liberal strategy to reduce the deficit is simply to dump it into the provinces' backyards. The federal government is reducing its deficit by forcing the provinces to increase theirs. Instead of tackling the total deficit supported by taxpayers, it decentralizes it. The federal government's annual cuts of $2.4 billion in unemployment insurance have led to an increase in provincial welfare spending. And next year will be worse, with Ottawa making further cuts to UI totalling $2 billion.

Furthermore, cuts to transfer payments announced in the last budget will translate into a $2.5 billion shortfall to the provinces in 1996-97 and a $4.5 billion shortfall in 1997-98. Federal policies are forcing the provinces to either increase their deficit or reduce services provided to the public because cuts to UI make the provinces' expenditures go up while cuts to transfers make their revenues go down.

Given how dramatically transfer payments will be reduced, shovelling is hardly the appropriate word to describe what the federal government is doing with its deficit; it is literally blowing it

in the provinces' backyards. The government is no longer using a shovel, it is dumping the deficit by the truckload onto the provinces. But this approach does not seem to bother them. Quite the contrary; that is just what they wanted.

On this subject, I should read you a few lines of what Jean-Robert Sansfaçon wrote in last Saturday's edition of Le Devoir . Under the headline How clever'', Mr. Sansfaçon says that Ottawa is giving up its role as far as redistributing wealth is concerned. On the issue of budget management, and thus the deficit issue, he writes:The provincial government's task is never easy. Unlike Ottawa, the provinces cannot just decide what amount they want to put on the UI and pension cheques they write out. The provinces are responsible for most first line services, the main ones being health and education. At this critical stage of the deficit reduction effort, the provinces now see themselves forced to review the very framework of these services, a task the difficulty of which escapes federal mandarins''.

And he goes on to say that Pauline Marois was right when she pointed out that the future state of the province's finances is closely linked with cuts to federal transfers. While these cash transfer cuts may not affect Quebec, they will not result in a drop but rather in a shortfall of $650 million for Quebec next year.

Listen closely to this: "Note the intense lobbying effort carried out by elected representatives from the have provinces, through the federal cabinet, to get Ottawa to abandon its plans to use transfer programs other than equalization for wealth redistribution purposes. If Ottawa should give in to this pressure, budgets earmarked for social assistance and post-secondary education would not only be in free fall, as expected, but they would be distributed on the sole basis of provincial population. The Quebec government and every member from Quebec must oppose this Machiavellian way of redistributing wealth, since the per capita income is generally 25 per cent higher in have provinces than in have not provinces".

According to Mr. Sansfaçon, the UI reform in itself is a breach of the redistribution principle. The have provinces are the ones that stand to benefit the most, at least from a macroeconomic point of view, from the rollback of premiums paid by higher wage earners, who are concentrated mainly in have provinces, the integration of part time workers and the tightening of qualifying conditions.

The editorial writer of Le Devoir continues by saying that it is easy to identify the reasons why the federal finance minister is so optimistic in terms of meeting his goal of a $32 billion deficit for this year. He writes: ``Revenues are increasing, the clean-up in the departments has just begun, and most of the cuts were passed on to the provinces and to the UI account. Later, of course, pensions will also be targeted. The UI surplus alone will allow Ottawa to reduce its annual spending by five or seven billion, between now and the next recession, with no equivalent reduction in the contributions made. This is like a jackpot. This is another way, although certainly not progressive or productive, of collecting taxes''.

He continues in the following manner: "The more time goes by, the more the Martin method becomes clear. Ottawa will reach its budget goal without too much difficulty. That goal seems rather modest, considering that the way to meet it consists in forcing the provinces to tighten the belt of their people, forcing the unemployed to work, and forcing small businesses to pay for a UI program whose surplus will primarily be used to reduce the deficit. It was simply a matter of thinking about it".

Do we need to add anything more to an article that so clearly tells us about the intentions and the ways of the finance minister? Social justice and tax fairness are not compatible with the Liberals. Not everyone, and I am referring to the rich and the companies that get away with not paying any taxes, is being asked to contribute to the deficit reduction effort. The deficit is being reduced at the expense of the masses, and that includes the poor, the have nots, as well as the low and middle income workers.

It is the provinces that have to do the dirty work, since they are stuck with the every day reality and must provide the essential services to the public. Yet, in spite of cutting in the transfers to the provinces, the central government continues to impose its guidelines and national standards to the provinces. This becomes unbearable and unacceptable.

To counter the federal way of doing things, Quebec's finance minister, Pauline Marois, suggested two days ago to her federal counterpart that his government withdraw from the social assistance, post-secondary education and health sectors. Under Quebec's proposal, the federal government would give the province tax points instead of an annual cheque, which gets smaller every year.

An interesting suggestion, one I might even call it an intelligent one. The Minister of Finance is always being asked for suggestions, and he got one, but unfortunately for Quebec he clammed up afterward. A great pity, for everyone could have learned more about what to expect in coming years in those areas of activity.

Let us keep in mind that this suggestion would have allowed the provinces to do away with much of the overlap and would have given Quebec more leverage for creating an integrated job creation policy. In Quebec alone, duplications account for $3 billion annually, a real waste of money, but a waste that the federal government seems to absolutely insist upon.

The federal government's rejection of Quebec's demands is deplorable, since its role in these matters does not make much sense. It collects taxes, then it gives them back to the provinces, but sets certain standards for them. Before the referendum, Quebecers were promised change. Great possibilities were dangled before our eyes. This suggestion by Quebec offers an opportunity to fulfil those promises. But, unfortunately, the promises dwindled into meaningless noise.

The Bloc Quebecois has nothing against reorganizing public finances, but we do disagree with the approaches the Liberals are taking to that reorganization.

We have always asked the government to review the entire taxation issue, among others, in order to reach some form of equity. Far from complying, the Liberals are instead heading off in the opposite direction, as I have already shown.

My colleague from Saint-Hyacinthe-Bagot has brought to my attention the fact that, 40 years ago, 50 per cent of the taxes collected by the federal government came from businesses, and 50 per cent from individual taxpayers. Today barely 8 per cent comes from the business sector and the rest, 92 per cent, comes from the pockets of individuals. This is a scandalous and unfair situation, and what is even more scandalous is the federal government's lack of action to correct this totally imbalanced situation.

On top of the imbalance that exists between the corporate and the individual taxpayers, there are great injustices and inequities within those groups. Where businesses are concerned, the last federal list of those companies who paid no tax came out in 1987. No wonder it was the last one, since it was becoming an embarrassment to the government. The list included the names of more than 90,000 businesses that did not pay a cent in taxes. Not one cent. In 1990, according to the federal Department of Finance, 77,000 businesses that made a profit managed to avoid federal taxes.

The Bloc Quebecois has constantly asked the federal government to introduce a real minimum tax on corporate profits. The minimum tax is not aimed at increasing the tax burden of businesses. It is only intended to deal with profitable businesses that manage to avoid paying taxes altogether. It's purpose is also to be fair to businesses that pay taxes and, as good corporate citizens, do not try to evade that responsibility.

We see the same problem with individual taxpayers. The wealthy can take advantage of every loophole in the tax system and legitimate provisions such as tax shelters as well, to evade the obligation to pay their share of the government's revenue requirements. Such opportunities are of course not available to the average wage earner and the middle class.

The Bloc is asking the government to proceed with a complete review of the tax system, the purpose being to simplify and restore equity to the tax system by eliminating tax provisions that give big corporations and high income taxpayers an unfair advantage. The whole issue of tax conventions with countries that are considered to be tax havens should be reviewed as soon as possible. According to the auditor general, hundreds of millions of dollars in tax revenue are lost to the government as a result of these tax treaties.

These are suggestions the finance minister should act on without further delay. The minister should get rid of all these tax loopholes pronto, but he does not seem to be very anxious to do so. The minister is like Santa Claus, sporting the Liberals' colours and exuding their generosity as he hands out presents in the form of family trusts, tax havens and tax shelters of all kinds.

We have to look at where he comes from. He is not from the North Pole, as people might think, but, rather, from the Power Corporation Pole. I think that has some effect on his intentions and decisions.

We have proposed other avenues to the federal government. We want it to cut the annual budget of the Department of National Defence by an additional $1.5 billion starting next year. The Bloc, because Quebec receives only 17.4 per cent of national defence expenditures, insists that cuts be made in such a way that Quebec will end up with 25 per cent of defence expenditures.

And what about the Hibernia project, with the government pouring hundreds of millions of dollars into it year after year? We call on the government to withdraw from this financial sinkhole.

Finally, it is vital the federal government and its Minister of Finance listen to the people. Come out of your shell and tune into reality. The provinces, Quebec among others, and the people of Canada are talking to you and making perfectly reasonable requests. Pay attention and get in gear. Stop pretending so stupidly in an effort to keep alive a federal system, which is off track and out of touch.

[Maurizio Bevilacqua, Liberal, Parliamentary Secretary to Minister of Human Resources Development]

Mr. Speaker, a budget captures society's priorities. That is why the prebudget consultation process is so important. It is an opportunity for Canadians to share their perspectives with us. From those views and from our principles as a government we can find the path that will work best.

This consultation process has proven to be much better than the old ways of doing business. The road to budget day was once a darkened one. It was full of secrecy. Canadians suspected some special interest groups had ways to get their opinions into the process but that for most of us it was a closed system. Canadians

had no way to contribute to this essential part of our democratic process. Gladly that has changed for the better.

The budget deserves to be the subject of debate well before the late winter afternoon when the Minister of Finance tables it here. And so it is. The government has used a comprehensive prebudget consultation process. It is open, inclusive and fully in keeping with our commitment to govern with honesty and integrity.

Everybody recognizes we face a fiscal crunch. I hosted several town hall meetings and consultation meetings in my riding on the nation's finances. Hundreds of people came together to talk about economic and fiscal issues facing the nation. Together we discussed the steps the government has taken thus far and made recommendations for future change.

We looked at where the government was going with its fiscal agenda. We considered questions of jobs and growth. We discussed government spending. For all the diversity in the detailed comments there was a surprising degree of consensus on the big picture. People were quite supportive of the steps the government has taken to get our fiscal house in order.

A message that came through loud and clear was that people support budget cutting but not mindless budget cutting. The people who took part in my consultation process felt we all benefit from government programs and services. We all benefit from an activist government, a government present in communities. That is true whether we are rich or poor, young or old.

The people of York North want what most Canadians want, fairness, balance and a government that responds to people, one that can support initiatives that spring from communities.

Let us be clear. We live in a time of immense change in society, in the economy. Canadians are trying hard to adapt to that change but they want to know that if needed, the support of government is there to make it happen. This view is echoed throughout society. I have heard it continuously since I have been a member of Parliament. When I co-chaired the joint House of Commons-Senate task force on youth I heard young people asking for vehicles of opportunity to help them make the transition from school to work. We followed through on the very firm commitment we made in the red book by establishing Youth Service Canada and youth internship programs. Today I am pleased to say over 30,000 young people are benefiting from these programs.

We also kept our word that we would enhance summer employment programs for young people. As a result of the government's policy, the youth employment development services budget has actually been increased to $236 million, an increase of $43 million. When we consider we are living in fiscally challenging times, this speaks volumes to the fact that the government does not simply say young people are our future but actually acts by giving young people sound financial support and programs that not only get them working but make our country work.

As a member of Parliament I have had the opportunity to be a member of the human resources development committee. I travelled throughout the country listening to what Canadians had to say about our social security system. In that role I found Canadians wanted to modernize and restructure our social security system, a system which needs a complete overhaul since we are living in a time quite different from the time when the system was created.

Our goal was to meet three objectives: to help Canadians get jobs and keep jobs; to help the most vulnerable in society; and to make the system sustainable. In large measure this has been achieved. I point to the announcement by the Minister of Human Resources Development a few weeks ago in which he outlined a program of employment insurance which focuses on getting people back to work. The net impact of this program is the creation of approximately 100,000 to 150,000 new jobs for Canadians.

More important, it is not the old income support measures program of the past; it is a program which embodies two very important elements. One is income support, which will give people the security they need in their everyday lives as they face the challenges of unemployment. There is also an active element which speaks to the re-employment measures, the five tools under the $800 million human resources investment fund. The five tools are the targeted earning supplement, the wage subsidy, skills and loan grants, self-employment assistance, and job partnerships, which will be done with local governments and organizations. It is a way to empower local communities and individuals to make the type of decisions which better reflect the local reality.

I will talk a bit about the self-employment assistance program initiated a few years ago. It has been extremely effective. Since we formed the government in October 1993, 34,000 people have participated in the program. These formerly unemployed Canadians have created jobs for themselves and have created jobs for an equal number of Canadians. That means 68,000 jobs have been created through this very active program which the Government of Canada instituted.

This is the type of positive change Canadians have been calling for, empowering individuals to make the right decisions which better reflect their reality, their needs and their aspirations as responsible Canadians.

This is where we are turning the corner as a government. We are returning a great deal of faith to the people. We are returning faith and hope to the communities. We are telling people we have faith

in them and know they understand what it takes to make things happen as individuals and as communities.

We have taken other measures. We have modernized the delivery of services. We have increased the points of service for Canadians. We have moved from approximately 400 to 700 human resources development centres so that the needs of people at the community level, rural and urban Canada will be better met.

Returning to young people, we have increased funding for the Canada student loans. As institutions increased their tuitions, it is extremely important for the federal government to help our young people attend universities and colleges, to make sure they have an opportunity to acquire the required skills to compete in a very competitive global market.

That was an increase of $2.5 billion over five years, an increase of approximately 57 per cent in funding. Those are positive measures that speak to the needs of Canadians as they try to adapt to the change I spoke about earlier.

One of the most interesting aspects of being a member of Parliament, whether we are talking about the red book or federal government policies, is to make those things living documents in our communities. I will share with the House some of the initiatives through the partnership of local stakeholders at the community level I have been able to adapt to my community.

My community has been blessed with affluence, good schools, a good educational system. We are also blessed with a vibrant community that understands the new economy really speaks to technology, making sure people have the skills to adapt to the technological change that has occurred.

Therefore we initiated in partnership with local stakeholders colleges, local schools boards and community organizations the York North technology strategy which has been extremely successful in making sure our local businesses are now on the global web to attract business from abroad, to generate jobs locally and engage in the production of high value added products. At the same time through the investments we have made in human resources investment funds we can provide people with world class skills so they can compete in the global environment.

The people of York North are certainly behind the government to continue on the course it has charted so far.

[Herb Dhaliwal, Liberal, Parliamentary Secretary to Minister of Fisheries and Oceans]

Mr. Speaker, it is a pleasure on behalf of my constituents to speak on the budget process.

Just after I was elected I went on a talk show in Vancouver. One of the first things the host asked me was whether I would deal with the budget deficit. He outlined how minister after minister had set targets to deal with the deficit and each time they had failed. I said we would deal with the deficit, that we are determined to deal with it, and that as time goes by we will meet the targets.

I congratulate the finance minister who has not only met the targets he set but has exceeded them. In the last fiscal year the target in terms of the deficit was $39.7 billion. The minister was $2.2 billion below the target he set.

The finance minister has done what many finance ministers in the past have failed to do. He has also done other things which the Liberal Party promised during the election.

For the first time in history a finance minister went to Canadians and consulted with them before introducing a budget to make sure Canadians had an input into the budgetary process to, ensure we were able to take the excellent ideas Canadians had, and the ideas economists had, to ensure their ideas also were reflected in the budget.

There is no doubt Canadians said they want us to deal with the deficit and the debt. During the election we said we would bring down the deficit to 3 per cent of GDP. So far we have that carried out. There is no doubt we will make sure we meet the targets set out in our election platform. We will be able to deliver on one of the fundamental promises of the Liberal Party, to bring the deficit down to 3 per cent of GDP.

We have a further vision which the Minister of Finance has articulated. We will bring the budget to a zero deficit. As we all know, in order to deal with the debt and the deficit problems we must deal with the deficit first. The way to deal with it is to bring it down to zero. That is our vision. Each two years the minister sets the targets to ensure we are working toward that goal.

One of the fundamental reasons it is so important is the targets we meet send a very loud and clear message to the international community. We will not set targets we cannot meet. We are realistic. There is a political will that once we set these targets down we will meet them.

In the international community that develops confidence in that what the government says, it is willing to do it. In creating confidence in the international community we will ensure the fundamentals which help us create jobs and growth will be there. Lower interest rates, which we have seen, and long term interest rates on mortgages have dropped because we have sent a very loud and clear message to the international community that we will work toward a zero deficit.

When the government set those targets it was very important to look at the principles on how we were to achieve our deficit targets. There is a whole variety of ways. Some of our colleagues on the

other side have given us their views. We have rejected their views when they said we should do it in three years and that we should bulldoze many government programs and that we destroy some of the infrastructure and some of our industries in the science and cultural areas.

We said no. We have to look at the core government, what we should be doing as a government, what we have to build on, what we have to expand. What provinces and the private sector can do we should let them do. They will be more efficient in providing the service. We have to look at what we as a government need to do. There is a role for government in many areas.

We had a comprehensive review from the bottom up. We looked at services government provides. We looked at what things we need for the future of the country and where we have to be strategic in strengthening our position as a government. Many things that may have been relevant in the past in today's economy, in this day and age, may not be relevant. We looked at boards. Many boards were eliminated. We realized we really did not need them.

This was a grassroots approach, from the bottom up, to evaluate all government services. We went to those people and asked where duplications were. Let us take the duplications out. Where can the municipalities provide the service better? In recreational harbours in the area of fisheries it does not make sense for us to manage those from Ottawa.

We are going to the local governments, to the provincial and the municipal governments. If they are not interested we will go to the private sector and say: "Do you want to manage these assets? You can do a much better job". It will create opportunities for small business people and opportunities to develop that asset more.

We have gone through a comprehensive review from the bottom up. At the same time we do not want to forget to restore the fundamentals and provide better core services to ensure that we improve on them.

We also want to look at the infrastructures that make us competitive. One of the reasons we are competitive is because we have strong infrastructures. We do not want to destroy those. We want to develop them. We want to make sure our telecommunication infrastructure is the best in the world. We cannot escape the global economy which is moving very quickly.

As a trading nation where one out of five jobs is created because of the trading, we have to be competitive to ensure that the total infrastructure, whether it is telecommunications, transportation or the information highway, is competitive and we are able to compete with the rest of the economy.

That is why we want to strengthen these areas. The Minister of Industry has done a tremendous amount of work in strengthening our position in the area of information technology. In the environmental industry, one of the great opportunities that exist around the world is in this industry. There is going to be a tremendous amount of opportunity there. Strategically as a country we must make sure we have the skills, the knowledge and the infrastructure to take advantage of the environmental industry.

The Prime Minister has taken a leadership role in the area of trade to ensure that Canadian businesses have the opportunity to take advantage of all the new opportunities that exist in the global economy by going to different countries. At the same time, we need to develop a trade infrastructure so that we develop an information system which tells our small and medium size businesses that there are certain opportunities that exist in all the different sectors we compete in.

In meeting with people from many other countries, they have told us that Canadian technology is some of the best in the world and that we can compete with anybody out there. However, we need to know the opportunities. We need to ensure that we build a system of information so that right at a computer they will be able to access all the tenders that are coming up and all the opportunities that exist in the rest of the world. That is the reason why we need to develop our trade infrastructure so that we will be giving opportunity to small and medium sized businesses.

What we have done in this government is fulfil the promises we made to Canadians by ensuring that we meet our deficit targets and that we have a vision for this country to bring the deficit to zero and to build a country where small and medium sized businesses will take the opportunities that exist in the global economy and that is the way we are going.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is a pleasure to address some of the recommendations that were made in the report from the finance committee as a result of the prebudget hearings.

I want to come at this from the point of view of regular, average, every day people who may not know a lot about economics but know a lot about what kind of country they want to live in.

It is my view that the real reason for governments, constitutions, laws and all the institutions is for the people. What that says to me is that these institutions and the economy and all of those types of things need to be in alignment with the values of the people. Therefore, when we go about designing these institutions, budgets or laws, we need to know what the values of the people are.

It is a failing of these committees when we travel around that we do not always get input from regular people who express where they are coming from on these things.

It is not just the finance committee but all committees. It is a peculiar problem governments have: the ability to really hear what people are saying. It is something we have to work harder on. Certainly my party will try to help in doing that.

All members go out once in a while to sit in the coffee shops and talk to people about what life is like in the real world. There are some fundamental values that people believe in. I know in my riding they believe in certain values. I would hazard to say that it is probably true for most MPs.

One of the values people really believe in is equal treatment. For instance they believe that under the taxation system people should be treated equally and people should be equal before the law. They oppose anything that seems to grant special privilege to anybody.

That certainly applies to politicians when it comes to their pensions. The hon. member who just spoke was one of the MPs who gave up his pension. I appreciate that. I think that MPs have to lead by example because people do not want to see MPs or people in government getting treatment that is not available to everybody. They believe in equal treatment and they want to see that as one of the principles that finds its way into all institutions.

People believe in the merit principle. They feel that if you work hard and produce more, then you should be rewarded. Value should be recognized in all the things we do. People feel very strongly about this. People are tired of getting beaten up for working harder and producing more.

When we have the heavy a tax load we have in this country, sometimes people feel that way. This is why people are escaping into the underground economy or leaving the country with their talents and going to other countries where the taxes they pay are not so high. In some cases companies go to tax havens around the world to avoid taxes. The merit principle is a value that needs to find its way into all the legislation that comes out of the finance department.

I also think people believe in prudence. People who are successful in their own lives have to be prudent. They have to spend less than they take in. That is something that the government should be working toward doing. I know the hon. member across the way has said that it is working toward doing that but I would argue it has to go much faster still.

People feel very exposed as a result of how slowly the government is going toward its zero deficit target. It has not even announced when it will get there. It will be sometime in the next millennium I guess. Of course between then and now there will be an election. There could be another referendum. There could be a peso crisis. There could be a recession. There could be kinds of things that affect those targets.

If the deficit is not dealt with right away people are left exposed. Canadians' values are opposed to that. They want to have a government that lives within its means, that is prudent and ensures that any decisions made are dealt with by the current generation, that a large debt is not passed on to the next generation. That is something the average person is very much opposed to.

There is probably a lot more to discuss on values. People in this country are compassionate and they are compassionate in a particular way. They really believe that people who cannot look after themselves need to be looked after. That does not mean that a social program for everybody. It means that a social program for those people who cannot look after themselves. That is a small minority, not everybody. We do not need to have universal social programs.

I do not think anybody today would deny that universal social programs have not only helped create some of the social problems in this country where through some of the programs people are actually paid to remain idle. I would also argue that they have really and truly added to the debt problem.

There was a time when people thought that money grew on trees. Programs were expanded-

[Jim Silye, Reform, Calgary Centre, AB]

Can I have one of those trees?

[Monte Solberg, Reform, Medicine Hat, AB]

The member for Calgary Centre wants one of those trees. We all do. Those days are long gone. We have found that we were not actually even paying for those programs at that point. We were only using borrowed money to pay for them. Now the chickens have come home to roost and the country has a massive debt.

I have talked about some of the values. People want equal treatment. They want the merit principle in all of their legislation and in all of their laws. They believe in prudence. They are compassionate and want those programs directed toward the people who need them the most.

I wish to talk about those values in the context of the current situation. The situation is certainly not ideal. It would be wonderful if we could go back and wipe the slate clean and build new institutions based on some of these principles we have talked about, but we cannot do that.

We are in a situation today where we are really in a huge hole. The debate is $570 billion. Something like 44 per cent of the total federal and provincial debt is foreign owned. In a very real way a great deal of our sovereignty as a nation has been lost as a result of that.

The deficit will be somewhere around $32 billion this year. In other words, we are going to go into the hole another $32 billion. By the end of its mandate the government will have gone into the hole by another $100 billion.

If interest rates are 6 per cent or 7 per cent, it means it is going to be $6 billion or $7 billion, but that is only at the end of it. Over that period interest has also been accumulating and it would probably be much higher than that, say $11 billion or $12 billion.

Because we have waited so long, it means we are going to have to cut a lot deeper into our social programs. It means we cannot hold out any hope for tax relief for Canadians for a long time. People are crying for some relief from taxes.

If I may touch on our current situation, by the end of the mandate Canadians will be paying $51 billion a year in interest on the debt, about 37 cents of every tax dollar. That is a tremendous amount of money to devote just to paying interest.

Furthermore, we are mired in an unemployment rut. Unemployment now is about 9.4 per cent. A lot of people would argue that the biggest single reason for that high unemployment rate is the tremendous drag on the economy because of that massive debt and deficit.

Hon. members across the way say we should have a job creation program. The auditor general has slagged the government for these job creation programs because they do not work. All they do is add to the debt and that makes the situation worse.

All of these problems have to be looked at. We have to figure out how we can address them, using some of the values I have talked about just a minute ago.

I wish to talk a little more about our current situation. The Canada pension plan is in serious trouble, about $500 billion in debt. Taxes are rocketing up. In fact, they have gone up more in this country than in any other G-7 nation over the last several years. The situation is very serious.

I will conclude by pointing out that as members go home for Christmas and sit down with their families, with their children and grandchildren, they should remember exactly why we are in this place. We are here not to serve only our generation, but also to right all the wrongs that we are loading on to the shoulders of the next generation.

May I suggest that down the road what people really want is not a budget. What they want is some confidence that they will be able to retire some day, that they will be able to find a job, that they will be able to have enough money in their pockets after taxes so that they can put their kids through university. It is those human things that ordinary people desire every day. When you talk to people around the country this is what they tell you they want. This is my recommendation to the finance minister.

As we close, may I wish all the members in this place a very merry Christmas and all the best in the new year.

[The Acting Speaker (Mr. Kilger)]

I thought for a moment the hon. member for Medicine Hat was going to begin borrowing on the time of the member for Calgary Centre. I am sure he wants to speak about the trees and the other matters that were raised earlier.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I have bad news. As of one o'clock yesterday the doomsday clock which registers the national debt was $570,947,551,591.35. The second bit of bad news is that we cannot continue to borrow indefinitely. The third bit of bad news is that the public has lost confidence in the government's ability to manage money and resources and to live within its means as taxpayers have to do.

The greatest single impediment to job creation today is the plethora of taxes Canadians face. Governments must reduce the tax burden of individual Canadians and businesses alike. The debt and the interest expense to service the debt are jeopardizing the viability and flexibility of existing programs. That is why we need a balanced budget.

Instead we have a finance minister who mocks the Reform Party for presenting a balanced budget over three years as if the value and the merits of a balanced budget are insignificant and irrelevant.

When the finance minister talks about rolling deficit targets as a percentage of GDP and meeting those soft targets, he brags about bringing in a deficit of $37.5 billion. I would really be proud of that. That is exactly what the Conservatives projected two years ago, which of course ended up being $42 billion or $43 billion.

As a businessman I am astonished to find that even when the country is facing a debt of close $600 billion reality has not set in with the government. Government overspending is the number one problem facing the country, and the finance minister will not act decisively. He had his opportunity two years ago. He had his opportunity last year. He would rather concentrate on deficit financing, continually spending more money than we bring in. People are tired of this.

In 1968 the great and wonderful Liberal leader by the name of Pierre Elliott Trudeau ran across the country and got everybody to vote for him. That is when the Liberals started to run deficits. He ran a deficit. He came in at $17 billion. When he left it was close to $200 billion. Then Mulroney came in and left the country with a debt of about $508 billion.

Now we have this Liberal government. After four or five years, when it leaves two years from now, its legacy to the people of Canada will be to leave a debt over $600 billion. I hope the government can be proud of that.

As the member for Medicine Hat said earlier, the debt and interest costs are hurting the country, the drag and the slag that will put us into receivership somewhere down the road. Our grandchildren will have to pay off this huge debt. We have a responsibility to do something about it.

Having been in the Standing Committee on Finance I heard a number of witnesses who appeared before it for the prebudget consultations, and that is really what we are debating today. Some interesting comments were made. I am looking forward to the budget to see if the minister listened to the submissions.

One day 10 leading economists appeared. I heard a number of them say-and it was consistent across the spectrum-that it was good a target had been set and achieved. That sends a good message to the financial community. There is nothing wrong with that. We needed some confidence. We needed to restore some credibility in the finances of the country. To that degree the finance minister has done that.

However the hole is dug and it is deep. Now he will continue to dig it deeper but just dig slower. To solve the problem he has to stop digging. That is what a balanced budget means. Somewhere we will stop digging in two years, three years or whatever.

This year a number of economists suggested a 3 per cent target next year in terms of the deficit as a percentage of GDP, 1.5 per cent the year after and zero in the third year. That is what they suggested.

Another economist suggested that we should get off of the treadmill of deficit as a percentage of GDP and talk about debt as a percentage of GDP. Overall as a nation it is over 100 per cent. As a federal government we are at a 73 per cent debt to GDP ratio. Even the Governor of the Bank of Canada at a public accounts meeting said it was too high, that we had to get it down.

For two years we have had economic growth. The wonderful targets the minister has been achieving have not been through spending cuts. Ninety per cent of them have been through growth. He is deceiving the Canadian public by taking all the credit for it. The businesses and the people of Canada should take credit for it.

The minister is playing games with the people. The projections by the economists were 2 per cent or maybe 2.5 per cent in the short term. That is not very much. If the inflation rate is close to or higher than the growth rate, the economists say that what is needed is a surplus budget. That is what the Governor of the Bank of Canada says, but the government will not do that.

I recommend a balanced budget. Yes, we will have a deficit. The finance minister should tell the Canadian public when he will have a balanced budget and when he will address the real problem in Canada, the high levels of taxation. Then he can start promising Canadians tax relief. Then he can start promising Canadians a break in their pocketbooks. Then we can start looking at ways to stimulate the economy which will lead to money in the hands of the people and will let them do it, rather than the government.

I recommend the three 1.5 to zero scenarios, versus the four, three and two which the finance minister is now proposing. When the finance minister introduces his budget he will use the same principle he used before: selective hearing.

The business community was also at the standing committee hearings and said the same thing. It said that government targets were too soft and that it was moving too slowly. The finance minister has a tough job. It is difficult to predict and I respect the job he had to do. However, the business community said that if the finance minister was to err, he should err on the fast side and not on the slow side. It is better to err by cutting quicker than by cutting slower.

He is cutting slower. He is trying to ensure that he keeps his support in Ontario. He is not telling the truth to Ontarians. We cannot afford to make the payments for the programs that we are delivering at their current levels. We have to reduce them. We have to help the needy, the truly needy. We have to start helping people to become more responsible for themselves. The way to do that is to be honest with them. The way to do that is to tell them that somewhere down the road, if we bite the bullet now and learn to live with less, we can lower spending and then we can begin to lower taxes. That is what we have to achieve.

The finance minister also promised in the election campaign that he would get rid of the GST. The Prime Minister said they would kill it and that they hated it. The Deputy Prime Minister said that she would quit if the Liberals did not get rid of the GST. That was addressed at the hearings as well. People were saying: "Let us do something about the GST". Two years ago the recommendation was to harmonize with the provinces: combine it, have it at one rate, hide it and the people would forget about it.

No. Any tax should be visible. As a matter of fact, not only should taxes be visible but our spending should be visible. We use income tax too much to deliver social and economic benefits when we should be taking those tax breaks out of income tax and putting them in a spending envelope under direct spending as they did in New Zealand.

Then we would have politicians and bureaucrats who could be held accountable. Then we would have a politician saying: "This is what we will spend on welfare. Here is my envelope. It is a $5 billion program". The deputy minister and the bureaucracy could help the politician do that. That would create an incentive for bureaucrats to succeed. They could actually receive a bonus if they helped the politician achieve the objective. The morale in the

public service is very low. I critique the departments of Revenue Canada and Customs and Excise and I could tell stories that would scare people.

In the next budget I would like to see a solution to the GST that is better and different from harmonization.

The finance minister is doing a disservice to the country if he will not accept complete responsibility, present a balanced budget and tell Canadians when they can expect tax relief. I hope in the next budget he will not be accused by opposition members of having selective hearing in committee.

He should have listened to that committee the way I listened to that committee. I know what he has to do. We know what he has to do. Let us hope he has the courage and the conviction to be honest with the Canadian people and deliver a budget that is tough but fair and that he cuts out this crap about draconian reform measures.

Compliments of the season to everyone in the House.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to President of the Treasury Board]

Mr. Speaker, first off, I wanted to wish you, Mr. Speaker, and my colleagues a merry Christmas and a happy New Year on behalf of my constituents.

The people from St. Boniface wish everyone a merry Christmas, a happy New Year and the best of the holiday season.

As the member for St. Boniface, I am pleased to speak on this prebudget consultation initiated by the Minister of Finance. This is something new, it has worked for quite a while now and it yields results.

I met business people in my riding to ask them questions and get their opinions and viewpoints. Groups of advisers, young people, women, adults also keep me informed on such matters. I will share a number of their observations with you and my colleagues this afternoon.

Before I begin, I would perhaps briefly describe the political context we find ourselves in at the moment. In one corner, we have the official opposition, the Bloc Quebecois, which is trying to separate Quebec from Canada. This is their grand mandate, their top priority. In the same corner, however, and this is part of the political context, we have the Reform Party, often described as Darth Vader's party.

It is described as the Darth Vader party, the slash and burn, the fear, the gloom and doom party. I would like to attend one of its Christmas lunches. I expect its members would be talking about what they do in New Zealand. They would be telling their grandchildren that they had better enjoy the turkey on the table as there may not be one later as a result of the debt. It must be quite a get-together.

This is the same party that is lusting for power. It wants power so badly that it is prepared to do virtually anything to get it. I would suggest it is losing. Why? It was in the same corner as the Bloc on the national unity question. It is the first time in the history of Canada that a supposed federalist party has not co-operated with the government. Why? It is quite simple.

Reformers thought that was it. They thought there was no other way to go in terms of their own personal objectives than to try to be seen as a viable party. Therefore they abandoned the people of Canada. That is really very unfortunate.

The finance minister has hit every target he has set and has gone beyond. Have they ever admitted it? No, of course not. Why not? It is because it is a desperate party. The most recent poll shows the Liberals have over 50 per cent popularity in the polls. The Progressive Conservatives are next at 15 per cent. Then the Reform and the Bloc are tied. The Bloc in Quebec has the same percentage of support from Canadians as does the Reform Party. That is why it is a desperate party.

We have talked about new politics. In one article the leader of the third party referred to the Prime Minister as having a screw loose. That is the new politics. Rather than talking about creating jobs, national unity or the deficit and debt, they asked several questions in the House of Commons about the coat of arms because we added a ribbon that enhanced it. Those are the kinds of priorities they have set.

This is the kind of political context within which we find ourselves as the Minister of Finance prepares to bring forth the budget. When the Minister of Human Resources Development brought forth a policy and a meaningful initiative in terms of child care, what did they do? About 10 days ago they thought it was a great idea. Today they tried to score political points and it was not a good idea.

I have a final example of this contexte politique of which I speak. Some 11 members of the Reform Party voted for a veto for British Columbia. The others did not want it for British Columbia. However they did not vote for the veto in the main amendment. That party is having some real difficulties getting its act together.

When I talked to the people in my constituency most of them talked about a lot of taxes. Many felt that they were overtaxed. There is not much surprise there. Virtually everyone believed that a wealthy person could avoid paying his or her fair share and wanted me to bring that to Parliament. Most felt that rich Canadians should not be allowed to pay little or no tax. That comment was made

frequently. Most felt that rich corporations should not be allowed to pay little or no tax. There were many comments about banks, from their perspective, not paying their fair share. If banks are paying their fair share, they had better get out there and do some work because very few people I met thought that was so.

There was little agreement with respect to what was meant by a rich person. I indicated that they felt that rich corporations and rich people should pay their fair share and they indicated perhaps those with an income in the neighbourhood of $55,000. They did not define that with respect to corporations but are in the process of doing so.

There was a unanimous feeling that people earning profits on their investments in Canada could avoid all or some Canadian taxes. They wanted that perception brought to the House of Commons.

Over 75 per cent of the people who responded to my question felt that those who had student loans and were now working but had not paid back the loans should be pursued by every single means available to the government. This was a point which really grated on them. They felt strongly that if someone owes the government money and is in a position to pay it back, then they should.

They were pleased with some of the actions the government has taken with respect to family trusts. They want to make sure that continues, that there is no way for those who have a lot to be shielded from fair taxation and that they contribute to the Canadian economy.

All participants believed that there is a significant black market economy in Canada that should be stamped out. Some people thought it was probably large enough that if those people started to pay taxes according to the rules then we would not need further tax increases and we might be able to have tax decreases and at the same time eliminate the deficit. That is how strongly they felt. I understand this is a contentious issue. I also accept and appreciate that it is poorly quantified and we are not sure of how large it is.

They were concerned as well that elected representatives receive a just remuneration, but that it be just and not overly generous. They feel it is time for everyone to tighten their belts.

Another interesting point is that they wondered whether or not inheritance taxes were something the government should take a look at. Again, I share what they said with the House.

The auditor general has a great deal of credibility. Therefore whenever the auditor general raises any issue with respect to wastage or other similar matters they believe that governments must follow that up very carefully.

I would now like to share with you another point they have often made, the whole issue of the GST.

During the election campaign, the government promised major changes. The people I spoke to clearly indicated that they wanted these changes to be made. Some of them agree with the chartered accountants, who favour a single national sales tax. According to them and to my constituents, there would still be significant advantages. They claim, for example, that Canadian businesses would save at least $400 million a year on regulatory compliance costs. They also maintain that provincial governments would save $100 million a year on administration costs. That is a lot of money.

They mention other benefits as well. They feel that the time has come to implement a national sales tax because, and I quote: "The federal government is committed to replacing the GST; several provincial governments have come out in favour of harmonizing the sales tax so that they can reduce their own costs-the business community, in particular small and medium size businesses, would benefit from a much simpler tax system; and the public wants governments to eliminate overlap and duplication".

This organization made these comments, which are supported, I must add, by my constituents.

I have some final remarks.

My advisers, the people with whom I talked, pointed out that large organizations no longer are involved in growth in terms of employment. They believe that small and medium size businesses create jobs and that therefore they have to be favoured.

They claim that "the system" is promoting job cuts because there is no incentive to keep those who are working. They think that exemptions and tax reductions are required perhaps mostly in the early days of a venture, when setting up a business. They think that incentives-not so much tax incentives as grants, because these are supposedly more practical and easier to manage-are needed.

They add that research and development ventures should be encouraged because they promote the development and production of unique products sold not only in Canada but also abroad. They argue that this activity should be facilitated through tax measures. They would want us to cut through government red tape-too much paperwork, too many forms to fill out. They want us to promote the idea that it is a good thing to create your own job.

They talked about grow bonds and asked: What about mentors for entrepreneurs? Do banks lend enough to small and medium size businesses? They pointed out that in service to entrepreneurs those kinds of programs that are available are not always the most relevant or the best. They asked whether or not cuts in training, if they were to occur, would hurt the Canadian economy. They made the same point with respect to research and development.

They want to make sure that we protect the current successful businesses. They want to make sure that they are able to transfer their businesses to their families without significant loss or difficulty. They point out that the U.S. and other countries are providing great tax breaks to Canadian companies that want to go there.

Finally, they want us to talk to influential people in the business sectors that are creating jobs, to see how they are doing it, so that we can do it.

I could speak about this for hours because my constituents gave me a lot of good advice but unfortunately, I have to share my time.

Mr. Speaker, I wish you the very best of the holiday season.

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

Mr. Speaker, it gives me great pleasure to speak on this prebudget debate and provide some input on what I believe we should see in the minister's budget come next February. May I start by indicating there are four principles that the government and the minister should follow in formulating this budget.

First, there is a recognition by most members of this House and by most Canadians that the deficit is too large, that it is not sustainable in the long run and it must be reduced and eventually eliminated as quickly as possible. That is the first principle.

Second, the fiscal actions undertaken by the government should concentrate on the expenditure side and should not entail general tax increases.

Third, in the formulation of the budget the government has to remember that it has a dual responsibility. Yes, it has a fiscal responsibility, but also it has a social responsibility to individual Canadians and to society at large.

The fourth principle that should be followed is that the actions undertaken in the budget, as are many of the actions taken by this government overall, must have as their primary focus economic growth and job creation.

Our government clearly recognizes the need to act on the deficit. Looking at the record, it is very clear. When we took over government the deficit was almost 6 per cent of our gross domestic product. The following year it went down to 5 per cent; the following year it is going down to 4.2 per cent; the year after that it is going to 3 per cent. As the minister announced in his testimony to the finance committee, he has set the target for 2 per cent in the fiscal year after that.

That is a 66 per cent reduction in the short period that we have had an opportunity to control this government. It is not the slash and burn the Reform Party would want to see us undertake. It is responsible economic management and the emphasis is on the word responsible.

An important point is the minister pointed out in his budget presentation that in fiscal year 1997-98 our borrowing needs as a government will have been reduced to $7 billion. That is the lowest borrowing needs of any government since 1969. We are going to be accomplishing something that has not been accomplished in almost 30 years.

As far as reducing the deficit, as I mentioned earlier, there are two tracks to take. There is the expenditure side and we want to reduce expenditures. But we also want to see increased revenue, not by increasing the tax rate, but by bringing growth to the economy so that no individual taxpayer is paying more but that there are more taxpayers. That is the key to eventually controlling our deficit, economic growth and ensuring that there are more Canadians working and more taxpayers.

Obviously our goal is to bring the deficit to zero. As I said earlier we are going to do it in a responsible way and not in a slash and burn scenario that members of the third party would like to see us undertake.

Our actions in the last two years have certainly indicated our commitment to this. The minister in his February budget last year announced a 19 per cent decrease in government operating expenditures. He announced a 14 per cent reduction in the civil service. These are real fiscal measures that are leading to a reduced deficit.

To arbitrarily slash and burn when we are dealing with our budget is not appropriate. There are things that we spend money on that are important, that are investments in the future and things that we have to continue. For instance, there is the expenditure on the research and development tax deduction. Sure, the government can save money by totally eliminating that but those savings are false savings. It might save us something for the first year or the second year. If we stop research and development it is going to have a very negative impact on our ability to compete and a negative impact on our ability to generate jobs and income in the future. We have to be careful that we do not simply slash and burn but that we remember there are important things that government undertakes that we need to continue to spend money on.

There is something this government will not do and something I know the minister will not do. That is to follow the advice of the Reform Party or to follow the advice or the actions of the Conservative government in Ontario to substantially reduce expen-

ditures on social programs, not so that the deficit can be controlled, but rather so that tax decreases can be passed on to the most wealthy in society. That is something we will not do as a government. That is not responsible control of our deficit. It is not responsible fiscal management.

As I said at the beginning of my speech, the government has a fiscal responsibility. We do have an obligation to bring the deficit under control. However, we have to remember that we also have a social responsibility to individual Canadians. It is important to remember that behind every line on the federal budget there are real Canadians, real people who are impacted by those changes.

To simply do as the third party has suggested, to slash and burn without any consideration for what the impact on those people is going to be is not acceptable. It is not responsible fiscal management. It is quite easy to go down the list of expenditures and look at an arbitrary number and simply strike it out. We cannot do that.

We spend money on medicare. We spend money on our old age security system. We spend money on an employment insurance system. We do it because it is right. We do it because it is important. The suggestion that we should just simply slash and burn is not acceptable.

Another principle is that we have to work toward job creation. As the minister has said on many occasions, it is not a contradictory concept. Bringing the deficit under control, bringing fiscal management to the country will help in job creation. A lower deficit will lead to lower interest rates. Lower interest rates will lead to more business investment. It will lead to more consumer confidence. It will lead to more consumer spending. It will lead to more jobs. It will create a climate in which small business men and women can create jobs. It is important for job creation that we control the deficit.

Our policies for job creation work. Since the government came into power it has created 450,000 new full time jobs. The unemployment rate has dropped by 1.7 per cent. We are making progress. There is much to be done, but it is important for Canadians to realize we are making progress.

If we compare that progress with the previous government, which said during the election campaign that there would be absolutely no opportunity to increase employment until some time in the next century, we realize how well this government is doing. However, as I said, we still have much to do.

I will repeat the four principles which I believe the minister must take into account when formulating the budget. First, the deficit must be reduced as quickly as possible. Second, the actions he undertakes should emphasize growth strategies, expense reductions, and he should stay away from across the board tax increases. Third, we must act in a manner which fulfils our fiscal responsibility but also fulfils our social responsibility. Fourth, our actions must encourage economic growth and job creation.

We have a long term vision of economic prosperity. We do not have a vision which simply slashes and burns without any kind of responsibility for expenditures. We will ensure the deficit is brought under control. We will also ensure we invest in Canada, in our children and in our children's children.

[The Acting Speaker (Mr. Kilger)]

Before leaving the Chair, I would like to take this opportunity to wish you all a merry Christmas and a happy New Year.

[Richard Bélisle, Bloc, La Prairie, QC]

Mr. Speaker, I am pleased to take part in this debate on prebudget consultations and to draw the attention of this House to certain statements made by the Minister of Finance in tabling his economic and financial update this past December 6.

In tabling the document, the minister said "Our fundamental problem is still a debt that is growing faster than our economy. Twenty years ago, the federal government's debt to GDP ratio was 19 per cent. Ten years ago it was 50 and today it is close to 75 per cent".

This spiralling rise in the debt began, as we all know, during the long Liberal reign between 1968 and 1984. In 1970, Liberal finance minister Edgar Benson reported an annual deficit of $800 million. In 1976 the figure was $6.3 billion, and at that time the Liberal finance minister was Donald Macdonald.

When the present Prime Minister took over the finance portfolio in 1978, the annual Canadian deficit reached $12.6 billion, or 5.2 per cent of that year's GDP.

But the record for catastrophic management, leading the country to the brink of bankruptcy, goes to the ineffable Marc Lalonde, who was then Prime Minister Trudeau's right hand man. When he was Minister of Finance in 1983, Mr. Lalonde chalked up a deficit of $32.4 billion, or 8 per cent of the GDP, while the next year he hit a record high of $38.3 billion, or 8.6 per cent of the GDP. That year the deficit exceeded 50 per cent of the government's fiscal receipts of $75 billion.

After that, the Conservatives tried to put the brakes on the relative size of the annual deficit, but were unable to reverse the trend toward indebtedness year after year that had been started by the Liberals.

The Minister of Finance has today given us a sermon on the virtues of thrift, telling us "Yes, we will reach a zero deficit".

How can the people of this country trust a Minister of Finance whose party made its name by starting Canada on this downward slide of successive annual deficits, this vicious circle of endless debt? It is a bit like putting a professional safecracker in charge of a vault, and giving him the keys to boot. How can one believe a minister whose party has led this country to the brink of social and politicalruin?

The minister promises us a deficit of 2 per cent of the GDP in 1997-98. The federal deficit has never been less than that since 1974, one might well point out. What is more, the Government of Quebec's deficit was already 2.4 per cent of the GDP in 1994, $4 billion-far too high.

Quebec's deficit was still under the 2 per cent level in 1988, 1989 and 1990, but even that resulted in far too great a debt. In other words, the federal government's efforts to get their deficit down below that 2 per cent of GDP figure will still leave it far too high, given the accumulated debt to date.

This promise to get the deficit down to $17 billion by 1997-98 comes from the mouth of a Liberal minister. When we look at his party's record on government administration for the past 25 years, we might as well kiss that promise goodbye.

Recent economic trends do not coincide with the picture painted by the Minister of Finance. After a strong increase in 1994, economic activity in Canada has been stagnating since early 1995. As Statistics Canada pointed out: "Except for increased exports, the economy remains weak. Domestic demand continues to languish for the third consecutive quarter".

The weaknesses in Canada's domestic economy are visible everywhere: business investment, housing starts and so forth. When the latest economic and financial update was presented, the finance minister also announced that he would meet his pseudo-target of a $32.7 billion budget deficit for 1995-96 and $24.3 billion for 1996-97. He even talks about bringing the federal deficit down to $17 billion in 1997-98, when the next federal election is due.

The Unemployment Insurance account will show an annual surplus of about $5 billion for 1995-96 and each subsequent year. As was pointed out by my Bloc Quebecois colleagues who spoke previously, by including this surplus in its consolidated revenue fund, the federal government is in fact using it to artificially reduce its annual deficit.

Without this surplus, the actual deficit for 1995-96 would be $37.7 billion instead of $32.7 billion, as forecast. With $37.7 billion, the federal deficit is not that far away from the historic highs of $40 billion and more we saw all too frequently in the past.

To defend the minister's decision to use the surplus in the unemployment insurance account to balance the budget, the Liberals claim that in 1986 the auditor general had already suggested including the unemployment insurance account in the federal government's revenues and expenditures.

What the Liberals failed to say is that since 1990, in other words, after the auditor general made his recommendation, the government has no longer contributed towards the financing of the unemployment insurance account which is now fully funded by employers and workers. And in that case, what justification is there for the federal government to grab a surplus that, in fact, belongs to the workers and their employers and should be used to alleviate the impact of unemployment? The government could reduce premiums and increase unemployment insurance benefits instead.

Not so. The government is using this surplus as a source of revenue to hide the true level of its deficit and its failure to govern responsibly. The unemployment insurance account's surplus belongs to the middle class, to the workers and employers who are the heart and soul of our economy. At a time when the government is cutting assistance to the unemployed, it turns around and attacks those who still have jobs by taking even more of their hard earned money in a desperate attempt to clean up the federal government's finances.

This cowardly trick masquerades as a new tax that the average taxpayer has trouble understanding or even calculating. This looks more like another of the government's clever accounting strategies. Meanwhile, the government talks about openness and balanced budgets while it is doing everything to keep the truth from the taxpayers.

To meet its pseudo-target of $17 billion in 1997-98, the government will make cuts totalling several billion dollars. The finance minister was not coy about his plans to cut old age security in a review already announced in the budget last February. With my party colleagues, I want to make it clear that we strenuously object to such cuts in old age security pensions. We favour other ways to fight the deficit, and I will elaborate later on.

After attacking the middle class which is already overtaxed, the Liberal government is going after those who have worked all their lives to enjoy a well earned rest in the twilight of their lives. Where is the compassion the Minister of Finance crows so much about?

The third part of this failed deficit struggle focuses on the provincial governments. The federal government is reducing its deficit at the cost of increasing provincial deficits. It is not really going at the total deficit, which continues to be borne by the same taxpayers, it is shifting it to each of the provinces.

It is the old policy of dumping on the neighbour, who in turn dumps on his neighbour, and so on. The latest budget cuts in transfers to the provinces will mean a shortfall for the provinces of $2.5 billion in 1996-97 and of $4.5 billion in 1997-98. The provinces will have to look for money elsewhere. Federal policies will force these same provinces to increase their deficit or to cut

services to the public, since the cuts to the transfer payments will reduce their revenues precipitously.

During the referendum campaign, the Liberal big guns tried to link a no victory to political uncertainty and its negative effect on financial markets. They were wrong, since, in his recent testimony before the Standing Committee on Finance, the Governor of the Bank of Canada confirmed there was uncertainty, expressed in the difference in the long term interest rates in the United States and Canada, and said it was related Canada's excessive debt.

Permit me to quote the Governor of the Bank of Canada, who said the following on October 12, 1994: "Had Canada not had a big debt, the uncertainty over Quebec would have caused concern socially, but not financially for investors. The political uncertainty adds a cause for concern only because of the size of the debt and the deficit. The political uncertainty is due much more to the Liberal government's inability to limit the country's debt than to Quebecers deciding on their political future.

Canada's Prime Minister should not forget that, following the unilateral patriation of the Constitution in 1982, and the scuttling of the Meech Lake accord, Canada's political uncertainty will not be resolved through the passing of a motion vaguely recognizing Quebec as a distinct society, a purely symbolic, even folkloric, recognition without either value or scope.

Everything with this Liberal government smells of improvisation, both the behaviour of the Prime Minister in the final hours of the Quebec referendum campaign and the tabling of the Minister of Finance's financial and economic update on December 6.

By way of conclusion, I would add that the official opposition absolutely does not share the opinion of the Liberal majority on the progress made in deficit reduction.

The official opposition dissociates itself completely from the approach of the Liberal government, which consists in cutting its aid on the backs of the unemployed and dumping its deficit into the backyard of the provinces.

We in the Bloc Quebecois believe that the fight against the deficit must be based the following conditions. The federal government must: cut the annual budget of the Department of National Defence by an additional $1.5 billion, starting this year; review all tax conventions signed with countries considered to be tax havens; completely review of the tax system and eliminate tax inequities favouring big business and high income taxpayers; establish a real minimum income tax on business, which is intended only for profitable businesses that avoid paying one cent of income tax and, finally, stop funding the Hibernia project and turn its share over to the private sector.

No real and serious attack on the deficit can start without this price being paid.

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

Madam Speaker, I take this opportunity to wish the people of Canada the best for the season from the constituents of Windsor-St. Clair. I congratulate my colleagues on the end of the term and thank them for their co-operation over the year. I wish them the very best and of course yourself as well.

Election day 1993 gave us a tremendous majority and with that came a mandate for change. Windsor and Essex County is one area in which there was a tremendous Liberal vote. The ridings of Essex-Windsor, Windsor West, Essex-Kent and my own riding of Windsor-St. Clair voted overwhelmingly Liberal and remain overwhelmingly supportive today of the Liberal government.

That is not to say there is not room here in a prebudget debate for us to set out a little shopping list of things we are concerned about, that there is not room to say the people of Windsor have their concerns and they want to communicate to the Minister of Finance and to the government those concerns.

Windsor is a special place. It is the centre of my universe. It is special because of the way its people relate to one another, try to take care of one another and relate to the rest of the nation. People who do not know the community tend to think of Windsor as a blue collar town, as perhaps a kind of rough, tough and ready border city. They are right, it is, but it is also a very sophisticated and very beautiful community.

[Mary Clancy, Liberal, Halifax, NS]

Sophisticated?

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

I hear noise from the member from Halifax-Holt Renfrew. I could put Windsor up against Halifax any time.

Windsor has a tremendous industrial base which has brought us out of the recession ahead of many other communities. The big three in the auto industry, Ford, General Motors and Chrysler, have provided us with a stable base of jobs over the last little while. The products we produce in Windsor, ancillary to and which feed the auto industry, have resulted in a tremendous tool and die industry and a tremendous mould industry which now exports a large percentage of its products.

In addition to the big three other industries thrive in Windsor. Our newest, the Northern Belle Riverboat Casino, which opened

yesterday morning as an extra venue, has been a tremendous boon to us and a real jump start for the diversification of our economy.

Windsor used to be a pass through on the way to the rest of Canada. It is the biggest border crossing in North America. People would nod at Windsor and keep going. Now Windsor is a destination. This means a lot of change in the way we do business, change in the other kinds of attractions that many creative entrepreneurs in Windsor are developing, and change in many aspects of the hospitality industry.

The casino is worth hundreds of millions of dollars a year to Ontario and millions to the federal government as well. To put it in perspective, the casino attracts a minimum of 17,000 people a day to our city. Of those 17,000, roughly 80 per cent to 85 per cent come from the United States. That is offshore money coming to Canada, being spent in Canada and employing thousands of well paid union workers, all of whom are paying income tax, property tax, provincial sales tax and GST to government coffers. Funds are being generated for all three levels of government in order to reduce deficits and in order to give all three levels of government another source of revenue.

In terms of the casino and its operation in Windsor I cannot urge strongly enough upon the Minister of Finance and the government to stay away from the impulse to tax the proceeds of casino gambling. This is foreign money coming into the country. Essentially we have discovered a way to tax Americans. We have to stick with it and keep this money here and keep those people coming to the biggest single tourist destination in North America.

Another industry in Windsor that needs looking at by our government is the distillery industry. Within the city of Windsor, in the township of Maidstone in the riding of Essex-Windsor, and in the town of Amherstburg, also in Essex-Windsor, we have two distilleries. Hiram Walker operates a plant in my riding of Windsor-St. Clair, which used to be called Windsor-Walkerville after Mr. Walker. It operates a storage area in Maidstone township where it is the biggest municipal taxpayer.

The Seagram company operates a distillery in Amherstburg. The beverage alcohol industry produces hundred and hundreds of jobs in our communities. Yet this is a commodity which is so heavily taxed by provincial government and to a certain extent by the federal government that it is not operating any more on a level playing field with other forms of beverage alcohol such as beer and wine.

In addition, because the taxation level is so high, the problem of smuggling has increased in terms of beverage alcohol, particularly in terms of distilled spirits. The federal government needs to take a hard look at this, as do all the provincial governments, in an effort to reduce crime, in an effort to increase revenues from excise tax by actually being able to collect it, and to equalizing the playing field among all forms of spirits so they can compete adequately.

Another major employer in the city of Windsor that could use a look at by our government is our university. The University of Windsor is a major employer in our community, again employing hundred and hundreds of people. It is a major contributor to the skills level in our community. Our community, fast becoming a place of high tech industry, requires high tech jobs.

The university has worked in partnership with the federal and provincial government and with private industry to produce research and development facilities and to produce good, well trained employees in order to benefit and promote the economy of not only our community but of the entire country.

Small business in Windsor has always been entrepreneurial. It has been exciting and forward looking. It employs thousands and thousands of people. I urge my colleagues in the government to take a hard look at what we can do for these types of industries, for these types of workplaces, for these creators of jobs.

The city of Windsor, the town of Tecumseh and the village of St. Clair Beach, all of which are in my riding, are successful right now. They are not selfish places. We are not a community that begrudges help to other communities. We are vitally interested in the unity of the country, vitally interested in the well-being of the entire country, every province, every region from sea to sea.

We are not perfect. We need help. We are concerned about social problems, as are other Canadians. I will outline a few of those.

Windsor, like every other community in Canada, needs help with child care. We all need to move forward in this area. Child care needs to be a part of the basic social fabric of the country. Single mothers are out of work. Child care would allow them the opportunity to get training and to get back to work while they know their children are in a safe and healthy environment.

It takes the activity of government to do that. Unfortunately in Ontario we do not have a provincial government which will do that now. However, we do have a forward thinking federal government which made some announcements yesterday that should help this situation. I hope the budget will also stress the need for child care.

Windsor has always had a tremendous record in terms of charity and in terms of charitable giving. Windsor likes to share its good fortune with others. However, Windsor lives in the shadow of the United States. Perhaps the most stunning landscape for visitors to Windsor is the city of Detroit which looms on our horizon.

It is important as we consider the broadcast industry over the next year in Canada to remember that communities like Windsor will suffer if we do not take good care of both private and public broadcasting.

These are a few things which concern my constituents. I am pleased to have had the opportunity to bring these concerns to the attention of the government.

[Marlene Catterall, Liberal, Ottawa West, ON]

Madam Speaker, I appreciate the opportunity which has been given to all members of the House to speak freely on their concerns about the upcoming budget and to provide advice to the Minister of Finance as he works toward bringing down a budget for 1996-97.

Clearly the concerns of my constituents, like those of people throughout Canada, are on the tremendous debt and deficit and the kind of future we are leaving to our children if we do not deal with the debt and deficit.

Having sat in Parliament since 1988, having listened to budget after budget in which targets were set for deficit reduction and for bringing the debt under control, and having never seen those targets met while the deficit and debt increased, I am pleased to note the success our government has had in meeting and exceeding its targets for deficit reduction.

Some argue we should be going faster and doing more. They advocate in the name of deficit reduction destroying many of the programs which reflect Canadian values, many of the programs we regard as defining ourselves as a nation; our commitment to look after those in need, our commitment to sharing as a society with our fellow citizens and among the different regions of the country.

Canada has never looked only to its own self-interests. We have recognized that a child in a small poor community in Newfoundland has as much right to be educated and fed as a child growing up in a well-off neighbourhood in downtown Toronto.

What we have tried to do and what my constituents continue to urge me to do is balance deficit reduction with societal values. We need to continue to develop a country which is concerned about its human resources as well as its fiscal resources. While we do not want to leave our children a debt that they cannot manage, neither do we want to leave them a meaner society that they will not want to live in. That is the difference between us and some of the measures advocated by others, notably by the Reform Party in this House.

I want to speak about a couple of other issues. The government has been committed to pension reform, to ensuring that in the future we will be able to meet the commitments to pensions for seniors, to pensions working Canadians have built up over their years of work so that they do not enter retirement in poverty. I want to urge the government to take into account, as it does that, the need for fairness and for equity among different groups in society, between men and women and to start correcting some of those economic inequities that have marked western society.

I want to mention the CBC which ties our nation together and gives us a sense of identity and a better understanding of ourselves. My constituents are concerned about the cuts which have been, in their view, diminishing the ability of the CBC to fulfil its mandate to the nation.

Above all I want to refer to the continuing importance my constituents put on the need for jobs, for the kind of economy that will allow young people to use their talents. I also want to refer to the importance of the announcement made in terms of keeping our commitment to child care so that women with children, families with children, are not prevented by the interests of their children, by the interests of providing good care for their children from participating in the economy.

[The Acting Speaker (Mrs. Maheu)]

Should I ask the member to continue once we have gone on with our other business.

[Marlene Catterall, Liberal, Ottawa West, ON]

Madam Speaker, I would be pleased to.

[The Acting Speaker (Mrs. Maheu)]

It being 5.30 p.m. the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.