Mr. Speaker, this afternoon, I am happy to speak to the motion presented by the Reform Party which is supposed to be trying to provide the finance minister with some solutions, answers, and ideas on how to cut government spending and shift the fiscal burden.
Of course, I suppose that, by the very nature of its name, the Reform Party has set out to reform Canadian institutions. This is the reason why it is called the Reform Party. Before finding solutions to all of Canada's financial ills, one should find their causes.
I am going to give a brief background, starting in 1970, when Mr. Trudeau's Liberals were in office. I remember well that in early 1970, I believe it was in 1969, the federal government had a budget surplus. One must assume that the Liberal Party was not happy with the situation and that, with characteristic generosity, it found that Canada was not progressing fast enough on the economic and job creation front. In 1972, the deficit really started building up with Mr. Turner and under Mr. Trudeau.
The then Liberal government decided that the only way to create jobs and to have a decent standard of living was for the federal government to interfere in just about every area. So it started borrowing money and the deficit started growing. In 1972, 1973 and 1974, the deficit was respectively $5 billion, $10 billion, $15 billion and then $20 billion. It kept on growing well into the 1980s. In 1972, 1980, and especially 1984, we had huge deficits.
From 1972 to 1980, the government used borrowed money to create an artificial economy. It borrowed in order to pour large amounts of money into our society, which resulted in the economy becoming completely artificial. It was not a normal, natural economy. It was borrowed money that was injected into our society so that people could spend, which in turn led to job creation, but all that job creation was artificial.
Spending borrowed money created an artificial economy. This overheating of the economy generated inflation, which lasted several years. Members will recall that in the years 1975-1976, the annual inflation rate varied between 6, 7, 8, 10 and 11 per cent. Such high inflation was not normal. But instead of cutting expenditures at that time, the government kept borrowing, which continued to create this overheating of the economy.
What solution was available to the governor of the Bank of Canada? He had only one solution, as he said himself, and that was to raise interest rates. And the government, as ignorant then as it is today, continued to borrow money, thereby creating inflation.
So, in 1980, interest rates went up as high as 20 per cent. It ruined a large percentage of small and medium size businesses in Quebec. It created hardship and unemployment. It created impossible situations. People were discouraged. People lost hope, particularly in Quebec where there are a lot of small and medium size businesses.
The result, in 1980, was a horrible economic disaster. The government, which had not found a solution, tried to correct its mistakes by borrowing even more, putting in place programs to save the economy. It kept injecting money into our society to try and protect the poor, and it was right. Having created an economic disaster, it had to do whatever it could, so it then injected, between 1980 and 1984, some $100 billion in borrowed funds to try to save the economy and avoid a crisis like the one of the 1930s. So more money was injected to help people who the government had just put out of work by its sky high interest rates. So much for the federal government.
In 1984, when I was with the Conservative party which was elected, the federal government had tallied up an accumulated debt of $175 billion. It had completely lost control over its spending. Revenues were of about $70 billion and expenditures of about $110 billion, and at the time Mr. Lalonde had predicted a deficit of some $39 billion for 1983-84; the largest deficit in Canada's history. People were saying, "We are bankrupt. It makes no sense. We have lost control over spending in Canada".
When I hear members of the Reform Party refer to this today, they might do well to remember that this is nothing new; this federal system does not work, it no longer works, it is a big mess.
Returning to 1984, the deficit was $38 or $39 billion. We had completely lost control over spending. On 4 September 1984, the Conservative government took office declaring, "We have to get out our axe. We have to make cuts".
At that time, the Conservative Party was similar to the Reform Party in terms of its culture and habits. It had more or less the same policies. It was a party pretty much of the right. People said that it would clean things up, that it was made up of people with a sense of responsibility. They said the Liberals had made a mess in the previous 20 years and that the Conservatives would put a stop to things and fix Canada up.
Well, it was very difficult for the Conservatives, because the debt was extremely high. The Liberals had made a lot of long term commitments. It was therefore very difficult for the Conservatives to cut.
Nevertheless, the economy grew between 3 and 5 per cent from 1984 to 1988. It would have been very easy to cut expenditures by $5, $10 or $15 billion a year, and we would have had economic growth at the rate of 2 per cent, probably, instead of 4 to 5 per cent. This would have been a normal rate of growth. The economy would have been sound and natural, not artificial. Public finances would have been put in order.
However, the federal system does not work this way. The federal system is governments in power, which want to show their electors-and I have seen it, I have been there-that expenditures cannot be cut, because people had to be shown that the federal government was useful and necessary. Money just had to be spent to prove that the government was indispensable, that federalism was alive, and that, without federalism, we could not function and exist as a country, without federal spending. A government always has to justify itself to the people and it generally does so by its spending.
If the people do not get anything, they believe the government is useless. So, what is needed is a government sufficiently strong to say what its role is and what the role of the provinces in various sectors is.
But no! Because the federal government had the power to spend, it continued to borrow, continued to spend in order to prove to Canadians that federalism was the solution, and that was the only way to justify federalism's existence.
Therefore, by 1990, we were faced with the same problem. We had to raise interest rates because the Conservatives did not cut spending enough and set off inflation themselves and we were back at square one. In 1990, interest rates were increased to cause a recession. Intelligent, is it not? What a smart government. We created the problem ourselves and we aggravate the situation by saying: "We created inflation ourselves so, now, we will increase interest rates to slow the economy and create a recession".
But this time, people were not deceived. A short time before, they had just lived through a terrible recession. And people stopped trusting the federal government. They still mistrust the federal government. The recession has lingered since 1990. It is now 1995. People have lost faith in the federal government, have lost faith in the future and have lost all hope. There are more and more family problems, young people are becoming more and more desperate, they have no hope for the future because over the past 25 years the federal government has not learned how to assume its responsibilities in order to prove that it is indispensable.
And it was Trudeau's policy, that of the strong central governments of the Liberals of today and of the past, which has led Canada to bankruptcy. Canada is bankrupt, pure and simple. Thus, now that we know what we did wrong in the past, other problems have emerged, of course.
I was forgetting another problem: that, in this Canadian system, we have a structure designed to administer perhaps some 300 to 400 million people and there are now 28 or 29 million people in Canada. We have 11 political powers, 11 governments. There is a socialist government, an NDP government, in Ontario; there used to be a Liberal government in Quebec; there was a Conservative, then a Liberal government in Ottawa, with contradictory policies in most cases, so that the system cannot work.
At any one time, there is a government getting ready for an election. Since there are also Liberals in Ontario, the Liberal government in Ottawa tries not to hurt its Liberal colleagues in Ontario and vice versa. This means that the federal government never takes action, never does the right thing, never acts rationally, so that the country cannot function.
Let us stop putting our heads in the sand and believing that Canada is the country with the highest standard of living in the world. Such a claim is ridiculous and deceives people. Canada is now considered to be a third-world country in terms of its debt.
We are now considered to be at the same level as the third world, but we still call Canada a rich country. I thought that the way to evaluate a business is to look at its assets and liabilities. Canada is now considered a third-world country in terms of its debt. Let us stop putting our heads in the sand and look reality in the face.
That is why we in Quebec think that extensive decentralization is the key to saving Quebec and even Canada. Canada stands at the edge of the abyss but can be saved through extensive decentralization. We started to talk about it with the Meech Lake Accord, we said that we had to decentralize, we said the same thing in Charlottetown, and Canadians said no. Canada's future lies in small sovereign countries.
We in Quebec want to achieve sovereignty because we believe that with a single government and a smaller country, we will be better able to succeed. It is easy to understand. We are saying that in a small country with only one level of government, that government, the universities, as well as business and union people can arrive at solutions together. We will be able to set a joint economic and social policy for the mid and the long term.
There will only be one government, instead of 11 different ones constantly fighting and implementing conflicting policies. We will work in harmony. We feel it is the only way to get out of this mess. As Quebecers, we do not want to sink with the rest of a
country, which has been mismanaged for a quarter of a century and is now bankrupt. I am not exaggerating when I say that we are bankrupt; I am merely telling the truth.
The Reform member who spoke earlier was quite right when he said that, in Canada, the accumulated debt stands at $1.2 billion. That figure includes the debts incurred by the federal, provincial and municipal levels of government, as well as by private companies. We are currently paying $100 million per day in interest to foreign creditors.
Surely we must have borrowed enough money if, every day, $100 million leave the country to pay the interest on foreign loans. We could do a lot with that money. Why is that? It is because the federalist structure did not allow us to manage the country in a way that would have been beneficial to everyone.
Consequently, we are struggling with this serious problem. As Quebecers, as members of a nation speaking the same language, sovereignty is the only option. Our culture is different from that of the rest of the country, whether we are talking about financial institutions, artists or creators. We are simply different. As a small country, if we work together, we will be able to have our own legislation, collect our own taxes, spend according to our priorities, and we will undoubtedly be better off. It is with that in mind that we embark upon our plan for a sovereign Quebec. We do not have anything against anglophones, Ukrainians, Italians or Jews. We do not have a grudge against anybody. All we want is to survive. We just want to keep at least a decent standard of living, which we will lose if we stay within the Canadian Confederation. It is with that in mind that we intend to embark upon our plan for a sovereign Quebec.
The future belongs to small countries. We will negotiate and we will succeed. I can guarantee Quebecers that even the hon. member from Quebec, on the other side, knows I am right and agrees with what I have just said. But, unfortunately, he will not accept this daily reality.
What I say today does not all come from me. In the study which was carried out by the Bélanger-Campeau Commission, in 1992, experts clearly said that there was only one solution, that is, that Quebec must recover the great majority of its powers. If not, it will have to become sovereign or risk losing its standard of living and becoming poorer and poorer. Since the rest of Canada said no, this leaves us with only one alternative.
In matters of public finance, changes of all sorts are no use. There is only one alternative for Quebec, and for the rest of Canada, that is, to have a sovereign Quebec, an economic association open to the world. This is the only way we will save Canada and Quebec.
Thank you, Mr. Speaker, for this opportunity to speak this afternoon. I am convinced that some federalists from Quebec, on the other side, have understood some of the matters I have discussed this afternoon.
