Debates of Feb. 21st, 1995

Supply

[The Deputy Speaker]

The hon. member was not in the Chamber earlier when I asked members to please put their remarks to the Chair. Anytime the word "you" is to be used it is to refer to the Chair.

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

Mr. Speaker, I am sorry. I will make sure that I do that for the remainder of my 10 minutes.

I read most of this document today. My initial reaction was the following. I thought that the Reform Party had a lot of courage to put forward such a comprehensive document just before the budget. It is a great debating tool. The Reform Party will no doubt, as it will discover, face a lot of criticism for the flaws which are in it.

However, the essence of this Chamber is to exchange and to debate ideas. We come here with different backgrounds and ideologies. Obviously there are a lot of things in this document that I would not support. However it will be useful for me when constituents come with your proposal. I may be able to point out some of the good things, while showing some of your flaws.

[The Deputy Speaker]

The member who said he would not use the word you has used it twice.

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

Three times and you are out. I am too close to the Reform Party, Mr. Speaker.

One of the reasons I was profoundly disappointed in this document was that members of the Reform Party campaigned on comprehensive tax reform during the last election. They campaigned on restructuring the tax acts. It is no secret to members that I was delighted when there were 40-odd members returned to the House who shared-at least I thought they shared-my view, as do many other members on this side of the House that it is time to overhaul the entire personal and corporate income tax structure.

Canadians should know that in this document the only reference to proposals for a taxpayer protection act are one page, on pages 53 and 54. Canadians believed the Reform Party was truly committed to tax reform. In a document of 55 pages, to only have one page devoted to tax reform is not a serious effort.

It is a serious flaw in the document because I happen to believe, and I know a lot of Reform members believe, that Canadians are frustrated with the current tax acts. The complex tax system we have is one of the reasons why people are putting money offshore. It is one of the reasons we have such a large underground economy. It is one of the reasons we have a lot of entrepreneurs who are not investing in creating jobs. On that issue I say that the paper prepared today, the taxpayers' budget, is misleading and it falls short.

There is another thing that concerns me about this debate in total today. It is this total preoccupation with the federal deficit. I believe, as all members believe, that the deficit must be dealt with. I cannot imagine a member standing up anywhere saying that the deficit is not important.

We have had enough debates on the federal deficit and the fiscal discipline side of this equation. We are not talking about the growth side. How are we going to put 2.2 million Canadians back to work? I wish we would spend more time speaking back and forth and I think Canadians would like to see more debate in the House back and forth on how we can put people back to work.

I want to be very specific about what I mean. My colleague from Waterloo handed me a document he received today, a debating document called "The Working Nation". This is a policy paper on policies and programs from the Australian government.

The Australians have an idea that I would like to share with members and all Canadians today. It is called the job compact. This is an idea they are debating in their House right now. The job compact will apply to all those who have been in receipt of a job search or a new start allowance for 18 months or more. A job compact will include more intensive case management, training and support to ensure the unemployed person is job-ready, a job for six to twelve months primarily in the private sector, a training wage which combines employment with training, leading to recognized and transferable skills. New work opportunities will encourage local proposals for employment generation, especially in regions where other employment opportunities are limited. Intensive job search assistance and referral to suitable vacancies at the end of the job compact maximizes employment outcomes for those assisted. There will be stronger penalties for job seekers who do not meet their obligations under the job compact. The paper goes on to describe how jobs will be

obtained and how employers will be further encouraged to consider the abilities of long term unemployed, et cetera.

That is a specific idea the government is currently putting forward to give every unemployed Australian a chance to get back to work. That is the kind of thing I personally wish we could debate in the House. We have talked enough about the deficit and the debt.

When all is said and done and the budget comes out next week, I am sure all the things in the red book will be there. However we still have to face the challenge right away of getting those people back to work. That is what I think is missing in the debate.

The whole notion of human deficit is very important. As our human deficit grows eventually it will hit us like a ton of bricks. There are 700,000 university trained and educated young people who cannot find work. That is crazy. That is what I believe our focus should be on.

I want to expand my point about human deficit. It is the reason we have a fiscal framework right now that is not very healthy. Not only are there unemployment costs and health care costs but there are all kinds of potential loss.

My appeal to the opposition parties is that they have now made their point about the federal deficit and the debt. I believe all members of the House understand it well. I am confident, as I said earlier, the Minister of Finance will bring testimony to that realization next week.

I would like to suggest to members of the House that our preoccupation in the next 60 or 90 days should be on identifying the priorities and government instruments we can use to stimulate entrepreneurship and to market the country to get the human deficit under control. Let us change our language from federal deficit to human deficit and let us attack it next.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, I appreciated the parliamentary secretary's speech. He certainly gives a good perspective.

We are concerned about the people of Canada. The real response to his intervention is not whether we want to look after the people but rather how to do it. The question arises: Is it good for jobs in the country to have the government spend 50 per cent of our money?

To me the answer is obviously no. It would be much better for the government to spend less of our money and to allow individuals to promote and improve themselves in job situations because the private enterprise system is working much better. That is one of our main points of debate.

I want to ask the parliamentary secretary a very difficult question. He may choose to talk around it instead of answering it, in which case I will assume that either he does not want to answer it because it is embarrassing to him to be on that side of the House and to answer it, or he may be equivocating and does not know. I do not know what he will say. However if he chooses to answer I would be very pleased.

The item of debate today is whether the 3 per cent of GDP is an adequate target. I am really quite convinced that it would be best if we eliminated deficit spending and stopped putting the government and the people more and more into debt.

Is 3 per cent an adequate target? Yes or no.

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

Mr. Speaker, I do not think that is such a complicated question. The absolute hope and desire of every member of the House would be to go beyond the 3 per cent and eventually eliminate the deficit. If the member gave us some magical way in which we could eliminate the deficit instantly, Mr. Speaker, do you think we would not want to do it?

I want to make another point. We are debating priorities in the House right now. I would like to focus on one that I believe in passionately. Right now the Government of Canada invests $50 million in tourism marketing for all of Canada; we spend $50 million to promote Canada all over the world. Nike shoes spends $200 million in the United States of America.

As a government priority I believe it would be good not just to spend $50 million of Canadian taxpayers' money promoting Canada and filling our hotel rooms, our theatres and our restaurants. I believe it would be a worthwhile tax expenditure to spend five times that amount because it would be money we would get back in 90 or 120 days. The job creation that could result would be incalculable in the short term.

There is an ideological difference between us and the Reform Party. I do not believe the private sector alone can do all these things well. There are times when government has to intervene.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, I thank the parliamentary secretary for his speech today. We are down to discussing differences of opinion rather than getting involved with who loves their mother more. That is very helpful.

I also agree with him that we need some major tax revision. We were looking at the process and have come forward with a substantial difference between the way the Liberals think about government and the way we believe Canadians want to think about government. We had to do a complete shift before we could come up with these numbers.

I would like to run these assumptions on jobs by the parliamentary secretary. The Liberal flawed assumption on jobs is that governments can solve the unemployment problem through public spending. The consequences are that government spend-

ing is now at an all time high. Yet over a million people are still unemployed or underemployed.

By comparison, the Reform Party believes that the private sector and not the government is the engine of job creation in Canada. The government's role is to create a healthy economic climate by eliminating the deficit, stabilizing and reducing taxes, and reducing bureaucratic regulation and trade barriers. The result is that we would have significant increases in private job sector creation. Does the member agree?

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

Mr. Speaker, government does not create jobs. Government creates an environment that accelerates job creation potential.

The point I want to make is that we agree with everything the member said. No one has accelerated privatization and offloaded government instruments after using up public policy usefulness faster than the Minister of Transport.

We are not trying to build empires. We are working rigorously and quickly in many respects to try to do some of the things the member cited.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Mr. Speaker, I rise to debate the subject of whether the 3 per cent of GDP is acceptable as a target in reducing the deficit. My answer to the question is no, it is not acceptable. It is unacceptable for a number of reasons, but before getting into my more formal remarks I wish to compliment the Parliamentary Secretary to the Minister of Industry. Once again he has demonstrated that there is at least one member on the other side of the House who actually reads some of the material we present.

You are the parliamentary secretary of industry and not of transport. I am so happy the minister-

[The Deputy Speaker]

The hon. member is a highly experienced member like his predecessor. I ask him to watch his use of the word "you".

[Werner Schmidt, Reform, Okanagan Centre, BC]

I apologize, Mr. Speaker. I wanted to make it absolutely clear that I was speaking to the Parliamentary Secretary to the Minister of Industry and not transport. I am very honoured the Minister of Transport is in his place this afternoon.

There are a couple of reasons I believe the 3 per cent of the GDP as a deficit is unacceptable. First, I was absolutely amazed to think of where that 3 per cent of the GDP came from. The following question was asked in the House: "Why is 3 per cent such a reasonable goal?" The Prime Minister answered at that point, I believe it was April 11, 1994, by saying: "We have a goal that is achievable to reduce the deficit in relation to GDP to 3 per cent per year. This goal is very reasonable because 3 per cent of the GDP is the requirement for any country to qualify in Europe to use the new currency called the ECU. If it is good enough for all countries in Europe to have that goal it should be good enough for Canada".

Why is that a problem? Is is because Europe has a totally different geography. The economies of the countries making up the European community are very different. The total debt structure is very different. The demographic distribution of population is very different. Their natural resource base is very different. Why is it that should apply it to our country?

If it is good enough for them it ought to be good enough for us only if everything else is equal. Is it really relevant in that situation? I could not help but think of an analogy in our armed services. I thought about the uniforms some of our generals wear. It seemed to me it was something like going to the tailor and saying: "If you want to make a good suit for the Prime Minister, go measure him really well. If the Prime Minister fits the suit it will automatically fit the Minister of Finance". Nothing could be more ridiculous than accepting for Canada a similar goal that is set somewhere else and saying that it should be ours as well unless everything else is the same.

Why do we not have a goal made in Canada for Canadians by Canada's government? That has not happened.

Second, this goal is not acceptable because it is financially inadequate. There is a principle that all governments should observe: governments should not be allowed to spend what taxpayers are not prepared to pay for. The violation of that principle has put us into the mess we are in today. For the last 30 years Canada's expenditures have exceeded revenues. Canada's debt has risen exponentially in the last few years.

Third, foreign investors who hold about 40 per cent of Canada's debt are becoming concerned that Canada will not be able to service its debt. It is not that they are so worried about paying the principal of the debt but they are concerned about being able to service it, that is paying the interest on it.

I am sure it comes as no surprise to anyone in the House that the deficit on an annual basis is made up of the interest payments on the principal of our debt.

There may be those in this House who suggest that the debt problem is really that of more than one level of government. It certainly is.

I go back to the ECU. That 3 per cent GDP figure includes all debt of a country, not just the federal debt. In Canada we are looking at 3 per cent of the federal debt and that is not sufficient.

The suggestion is also made that somehow there is support in the economic community or in the business community for that level. I want to refer to October 18, 1994 when the Prime Minister said: "We have faced up to our responsibilities. We

were the only political party that put in writing in our red book exactly how we would achieve our objective. The financial community thinks that it is realistic and it is a realistic objective. A deficit of 3 per cent of the gross national product is the level required in Europe for all countries in the European community to qualify for the new European currency".

The justification is that our business community supports that. I simply refer to the suggestion that our credit rating will be dropped down. We have had since then a devaluation of the Canadian dollar. We have had an increase in our interest rates. Also I draw members' attention to the situation in November 1994 when foreigners took a net $2.2 billion out of our country. Foreign investors reduced their holdings of Canadian bonds by $4.9 billion, a record for a single month.

Some other points to observe are that by September 1994 Nomura Securities Canada Inc. said that eight of the largest Japanese life insurance companies had cut their Canadian dollar exposure by 60 per cent from the previous year's level, reflecting mainly concerns over currency losses. The Canadian dollar decreased in value while the yen increased in value.

The London based Warburg Asset Management director Tom Berger says that Canadian bonds because of the debtload no longer make up core holding in his portfolio but may be used opportunistically on a short term basis.

Further evidence comes from Michel Doucet, economist for the National Bank, who observed that foreigners sold $3.4 billion of Canadian bonds in the secondary market in November 1994 alone reflects a loss of confidence in Canadian bonds.

One of the reasons investors are worried is that the debt is rising faster than the economy. Particularly they are worried that the government will relax its hold on inflation targets and that the currency will devalue as a result.

There are serious implications of the Moody's situation. I think it was two days ago that the president of Sun Life indicated that there is enough discomfort by that sort of thing happening that we rebegin to question whether the superintendent of financial institutions through the office of the superintendent of financial institutions is inadequate to control and monitor meaningfully the financial institutions of Canada.

All we need to do here is milk the special white paper that was introduced last week by the secretary of state for finance. It is worthy to note as well that nothing has been said about the implications of the goal for our chartered banks and other deposit taking institutions of those kinds of downgradings.

Let us not forget the billions of dollars that are found in RRSPs, GICs and other debt instruments. With one stroke of the pen to decrease the value of the Canadian dollar, a lot of damage can be done to the savings of Canadians.

There is a third reason this is an inadequate target. It guarantees further indebtedness. At the rate of $25 billion per year, that means that there will be a $100 billion addition to our debt every four years.

It is already growing faster than the rate of the GDP. That means it is as if the value of one's house were going down while the cost of one's mortgage was going up, a formula for disaster.

Let us review some of the recent experiences with reducing the deficit as a proportion of GDP. In 1991 the deficit was 6.6 per cent of the GDP. In 1992 it was 9.1 per cent. In 1993 it was 7.1 per cent and in 1994 it was 6.5 per cent.

From that vantage point alone it seems a bit far fetched that all of a sudden we are going to get to 3 per cent. Canada's economy has been strong because the U.S. economy has been strong.

There are now some pretty clear indications that the prospect of the U.S. economy continuing to roll along is not going to happen but that it is slowing down. It is likely that we are nearing the end of the current North American business cycle. That will make it increasingly difficult for the Minister of Finance to reach the goals he has set.

Three years have been wasted. It should be no surprise whatsoever that business leaders and credit rating agencies have difficulty believing that the minister is serious about dealing with the deficit.

The other part of the problem is the composition of the contemporary welfare state. Our welfare state works at the present time so that deficits rise when recessions hit and fall when the economy grows. Let us look at this in more detail.

Canada's deficit soared nearly 7 per cent of GDP after the 1981-82 recession but was under 3 per cent of GDP in 1988-89 after several years of solid growth.

This time in this increase the economy has been growing since 1992 but because of Ottawa's position of inaction we have seen no improvement in the deficit and that is where the problem is. It affects the levels of all governments to borrow for their needs for capital expenditures such as roads, schools and things of that sort. There will always be a need to borrow money. If our credit rating drops down it will impact our ability to do so.

If we use our credit to finance current expenditures for education, health and welfare we will be unable to finance those projects that are in themselves revenue generating. That situation compounds a difficult situation into an escalating and worse position.

I think this particular goal is deceptive. It sounds so good to be able to say 3 per cent of GDP. It is confidence generating-they have a number, they have to be right. The result is that the number, as we have indicated previously, cannot improve the long term health of our financial position because it will increase the debt of our country.

It is illusionary. The deficit will never be eliminated by a goal where the deficit is a proportion of the GDP. It means a perpetual deficit and the accumulation of more debt.

It transfers more of our responsibility not to ourselves but to future generations, in particular our children and our grandchildren. Instead of providing them with a more promising future we are saying they are going to pay more and more for the lifestyle that we ourselves were not prepared to pay for.

It reduces the attractiveness of Canada as a place in which to invest money. Another reason why I believe this particular goal is inadequate is that it is manipulative. It creates the illusion as if something is being done when very little is being done that would instil confidence in investors and credit rating agencies.

While Canadians on the one hand are urged to plan for their retirement, their children's education and so on, it is clearly known by the Minister of Finance that in pursuing this particular course the government's inaction will erode the future purchasing power of those savings through inflation and increased taxes.

Thus what appeared to be a very well planned RRSP turns out to be a mere existence under the new economic conditions. Canada pension plan contributions were said to be deposits for the future of the depositor so they could retire in comfort, but the legislative provisions for the investment of those funds mitigated against them. Many of the returns on those invested dollars were uncompetitive.

For these reasons I believe that this particular goal is inadequate. It is inadequate because the target was chosen not for Canada but for another series of countries. The fact that it is a rolling goal over two years and so on is not acceptable, as we heard so aptly this afternoon. It is based on the goal that we are supposed to be able to continue to grow and develop when there is nothing in the history of Canada so far to indicate that will take place. It is inadequate because it is not an honest position of giving hope to future generations. It saddles them with the responsibility of paying for a lifestyle which they did not enjoy but which we did.

That is a moral question as well. I believe that I should be held accountable and responsible for the things that I enjoy and the things that I want to do. I should not go to my children and say I want to drive a new car, I want to be able to do all of these things and they are going to pay for them.

This goal is a disincentive not only for us if our taxes are going to increase, which I understand from the minister, not directly but indirectly that they will, but it is also a disincentive in the sense that it provides little or no hope for our young people who will look forward to an increasing burden of debt. Is that the legacy we want to leave them? No, that is not what we want to leave them.

Much has been said this afternoon about compassion. The greatest compassion we can have is give to our young people the hope of living a better life than the one which we have enjoyed, to give them a tax burden which is less than ours, not greater than ours, one in which they will be able to initiate their own ingenuity, their own entrepreneurship, their own aggressiveness to be able to build a life which is self-satisfying and fulfilling, better than the one we have been able to give them.

We have not been giving them the example of managing money successfully and effectively. We have given them the impression that government can answer all questions, government can do all things and government can give them jobs. The answer is that government can do none of those things. As the parliamentary secretary said so clearly, it creates the environment in which these things can happen. This goal destroys that environment. We must change that. We must stop that and bring about a deficit which will reach zero in three years. That is what our plan is. That is what our party stands for. That is true compassion.

[The Deputy Speaker]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Burnaby-Kingsway-China; the hon. member for Frontenac-agricultural subsidies.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I would like to refer to a specific section with regard to retirement in the documents presented today by the Reform Party. It says that many seniors express frustration at mandatory retirement. Despite the fact that seniors are healthier and living longer than ever before, many of them are legally obliged to stop functioning as productive members of the economy once they turn 65. To complicate matters further, federally run pension programs start paying benefits at age 65.

Specifically, I would like to ask the hon. member if this means they are proposing to raise the age at which seniors are eligible to receive Canada pension plan and whether that is something which they propose to do instantaneously or phase in over a number of years.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Mr. Speaker, there are two parts to the answer to that question. The difficulty lies not so much in seniors wanting to retire at age 65, but that it is mandatory that they do so.

The important issue here is that there be flexibility and that no person would be required by law to retire at age 65. If they are healthy and willing to work beyond 65, they should have the opportunity to do so. They should also have the privilege to retire at age 65 if they choose to do that.

The second part of the answer with respect to increasing the mandatory retirement age or the age at which benefits would cut in, that it seems to me came from a meeting at which a Liberal person made a statement somewhere in Ontario. There is nothing in this document that says that we will increase the age requirement of the mandatory retirement age.

[Nick Discepola, Liberal, Vaudreuil, QC]

Mr. Speaker, the hon. member for Okanagan Centre opened up his debate by questioning our 3 per cent GDP target and spent almost 70 per cent of his time wondering whether we would achieve that 3 per cent GDP target.

In his preamble the hon. member stated that the 3 per cent GDP target was arrived at by looking at an area on the map of the world because of geography, demographics and natural resources. It seems to me those same criteria apply even more so to Canada.

In 1993 in terms of objectives, there was a party that had zero in five, another party that had zero in three, and another party that had three in three. Canadians spoke and said that a target of 3 per cent of GDP was acceptable to them.

I question the whole approach of the Reform Party today. Whenever we talk about the deficit, with each dollar we look at there is always one aspect we must remember as parliamentarians: there is a person, a human being behind that dollar. We are going to touch every single human being with the decisions we make.

Yes, a 3 per cent GDP target may not be ambitious for financial institutions and others, but it is an interim target. It is something Canadians can hold on to dearly. Even if we achieve that target the Minister of Finance in his address to the finance committee admitted publicly that we must strive for the day when we will have a balanced budget.

I ask the hon. member where in his party's platform do they see that compassion, that understanding for the human face that is behind every dollar? Their proposals go after the weakest provinces, after those on welfare, after the unemployed and after seniors. We must show compassion, as the hon. member said.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Mr. Speaker, I am very pleased to be able to address the question of compassion. The greatest compassion we can give is that of hope for a better future. There will be no better demonstration of that than to give to the Canadian people a balanced budget with the hope of reduced taxes in the future. That is true compassion.

The other part of compassion is to give to those who cannot look after themselves the wherewithal to look after themselves. If we analyse the alternative budget presented this morning, we will see very clearly as one of the major principles in the social programs that those who cannot look after themselves will be the very first to receive the social program benefits. Those who must be looked after will be looked after. That is true compassion.

It is when we kick people who are down that we have no compassion. For people who can help themselves, we let them develop the strength and empower them so they can look after themselves. That is also compassion, to let them realize what they are capable of becoming. Then we look after those who cannot do that for themselves. That is true compassion and that is the human being behind the dollar.

[Clifford Lincoln, Liberal, Parliamentary Secretary to Deputy Prime Minister and Minister of the Environment]

Mr. Speaker, in our electoral red book, which became the action plan of the Liberal Party during the 1993 election, we proposed a holistic way to look at government.

We proposed to the Canadian people that the basis of funding services and programs has to be money, and budgetary considerations have to be paramount. At the same time, we proposed and suggested that there are social responsibilities a government cannot avoid.

We admit that previous government administrations, including Liberal governments, have built a huge debt for which we are now responsible. We have to attack that debt, reduce it, and reduce our huge deficit. At the same time, we suggested we cannot do so at the expense of the government's responsibility to look after social programs and all the various services only a government can give.

What we proposed is the formula adopted by the European community of 3 per cent of GNP after three years, the reduction of our deficit to $25 billion. As we have said, naturally this is the first phase. We will have to go farther than this. We are all conscious of that. At the same time however, we are convinced that we cannot do so at the expense of our basic fundamental responsibilities as a government.

My colleague from Vaudreuil put it very well. In all the equations, in all the formulas about deficit and debt reduction, people have to come first. People have to be the priority.

The basic argument we have with the Reform Party is not that we should attack the deficit and the debt, but how we should do it and the timeframe in which we should do it. Reform's formula is an instant formula: make the deficit disappear to zero within three years. Ours is gradual. Ours says we will reach an important target. It will take tremendous sacrifices on the part of Canadians as the budget will show next week. At the same time, we feel it is the only way to avoid the pitfall of sacrificing the services and social safety net that Canadians depend on.

I was struck by the budget presented by the Reform Party. There are all kinds of footnotes and references to economists, chambers of commerce, and institutes of actuaries in Canada. All the references, perhaps bar one, are of an economic nature. I have not seen any references to books, to social activists, to social reformists, or to community groups that might present ideas. I have not seen any references to an environmental network that might also have a say in how the affairs of a country are run. It is purely a budget relating to dollars and cents, added up and subtracted as if people do not count, as if people do not exist.

For example, there is a reference in the Reform Party's budget to the U.S. economy which has produced consistently less unemployment than Canada since the 1970s. One thing that is not pointed out which is pretty obvious to me is that the U.S. market contains a population of 260 million. It is a huge internal market whereas ours has barely 30 million people. The U.S. market and the U.S. economy are huge compared to ours, 10 times the size of ours.

At the same time the point the famous Reform budget does not make is that if the U.S. has a lower rate of unemployment, maybe it could also say that the U.S. has a lower rate of interest. What is not said is that every year, 30 million U.S. citizens go without proper health care because there is no universal health care in the United States.

We can compare countries, but if we are to make a fair comparison, we have to do it on a holistic and comprehensive basis. We do not select only the bits that are suited for our own arguments.

The Reform budget talks about Ireland and Denmark, but I noticed that it does not mention New Zealand, the latest experiment in fast track deficit and debt reduction. The New Zealanders decided that overnight Minister Douglas was going to wipe out the deficit, so they deregulated the financial markets. They cut the taxes for corporate and upper income earners by half.

New Zealanders drastically cut public services. In one day alone they closed 75 post offices because they cost too much. They significantly reduced any infrastructure dollars given to towns and municipalities for sewers, road works and other different infrastructure projects.

The result was that unemployment went from 4 per cent to 16 per cent. They went from being a very peaceful and safe society to one which is now experiencing a lot of violent crime. Poverty rates went up 40 per cent. New Zealanders now have to pay huge user fees to use medical services. They have no universal health care any more.

The amazing part is that this huge deficit reduction curve did not help. In fact it made life even more difficult and more painful.

We are saying that yes, let us reduce the deficit and the debt but let us do so progressively, responsibly and intelligently.

It strikes me that with this simplistic approach we can have a magic kingdom with this magic formula in three years according to the Reform Party. However, this magic kingdom I read about in its report is full of little conditions. I will just quote a few of them.

In social programs, the details of such longer run reforms of the social programs still have to be worked out. Yes, Reformers still have to work out the programs.

With regard to seniors and the famous tax back in old age security, the details of such a program requires further discussion with Canadians and seniors specifically. I would hope that if they have a tax back on seniors, they will discuss the details with Canadians and seniors specifically. Obviously they have not or otherwise they would not write it as such.

In regard to seniors, the Reform Party says: "We should abolish retirement at age 65". I was part of a commission when I was in the Government of Quebec. One minister at the time when I was in opposition decided overnight to lift the retirement age at age 65. I remember questioning him as to whether he had actuarial figures to show what the impact of this was going to be. I asked him if he had any studies to show what the impact was going to be on young people who would not get a chance to be employed if there was no retirement of seniors.

However, in the magic kingdom we just do this and retirement no longer happens at 65, regardless of the consequences to younger people who want to find a slot. I have a young daughter who is a teacher. In the first few years of her teaching life she cannot find a job because people do not retire at the top. However, Reform will do this and suddenly the magic has happened. Before proposing anything we have to know all our facts and figures.

On page 46 of the Reform Party's plan it says it would also investigate the possibility of equalizing UI premiums for employees and employers rather than making employers bear a

heavier payroll burden. Reformers say they will investigate and then they tell us that their figures are watertight.

Over the long term the Reform Party is investigating a number of options for the renewal of Canada's UI system. Reformers are still investigating a number of options for renewal of Canada's UI system yet they tell us with so much cockiness and assurance: "Oh yes, we are going to wipe that deficit to zero by a great magic. You can't but we can".

Reformers talk about the principles of social reform. The principles of social reform are to have families look after themselves. They want to put the accent on families. I am for that 100 per cent because I am a family man. Let us empower people in communities and I am with that too.

In the simplistic way of looking at things, once Reformers have looked after families, once they have looked after empowerment, once they decide to only take care of the needy-they do not explain who the needy are, the needy according to the Reformers, I wonder who the real needy are according to them-then everything else will take care of itself.

I will give my own personal experience. I have a retarded son. For 20 years or so, I have worked in community groups relating to the intellectually handicapped. We built schools, we built pre-schools. We started with volunteer groups trying to get out of the glue, trying to raise funds by selling bricks for schools, holding lotteries and fund raising events. Eventually it was only through government programs that we were able to set up a proper network which gave the services that eventually enabled the intellectually handicapped to find a place in the sun, to integrate into society.

Perhaps what the Reform Party does not want to accept is that we are an evolving society. Twenty or 30 years ago my son would have been kept hidden behind the bushes somewhere, but today people evolve. We have autistic children, we have severely handicapped children that go to schools because we have given them the means through expert help of finding a way to better themselves, to enhance their own personalities, their own beings.

Members of the Reform Party ignore the evolution of society. They think it is a static society. They talk about seniors as if we have a static group of seniors, whereas aging in Canada is happening at a rate which is exponential: to date something like 12 per cent of the population in some areas, and tomorrow it is going to be 18 to 20 per cent. They do not provide for that. All the figures are static. We are going to make seniors carry on, working beyond 65. We will have a tax back on old age security and somehow we are going to retrieve all this money and the $17 billion that is left we are going to distribute very evenly among all those that need it without saying how this criteria is going to be built.

They do not talk about what is happening in a society that is fast evolving with problems that are immense. We never knew Alzheimer's 20 years ago. We never knew the tremendous rate of cancer in society, of AIDS. We have all sorts of fantastic problems to face today. They are so complex and require so much money, require expert services, that private institutions cannot give them. Only government can give them because only government has that responsibility to the people who need it most. Whether we like it or not, the private world is geared to profit motives mostly.

What they do not say in their document which we say in our red book is that to all the problems of society, whether they be financial, whether they be educational, whether they be illiteracy, whether they be a social dysfunction in families, have root causes. We have to address the root causes of them.

I do not see anything in their budget that addresses the root causes. It is strictly an economic document that talks about dollars and cents, that balances columns, that adds up and subtracts and arrives at $25 billion; $15 billion that they will take out of security and social systems and $10 billion in government operations and that will cure the world.

If they say it is only the Liberals that are crazy, that do not see their great magic, I will read to them that some critics from outside feel differently. "With this $25 billion in cuts to annual federal spending the deficit indeed will soon stand at nothing. So too might the country. It is here that Reform's proposals fall short. It is one thing to present some specific solutions, which the party has done, but it is another to set out the consequences, which the party has not done". That was written by the Edmonton Journal from the province from which many of them come.

It says in the Ottawa Citizen on November 29, 1994: ``The Reform Party does not know what impact the deep spending cuts that it is proposing will have on the economy or on individuals, party finance critic Ray Speaker conceded on Monday''.

In another editorial it states: "If you picture government spending as a runaway bicycle the Reform would jam a stick in the front spokes. It gets the job done but odds are that you will not recognize the face of the nation afterwards, nor would you want to look". That is the Ottawa Citizen .

"Reform Party's Preston Manning's shrill call for absolutely no tax increase sounds simplistic and irresponsible. The Liberals seem ready to chart a realistic course of how to get out of debt city and on to recovery road. It certainly beats the Reform

Party's slash and burn shortcuts which would take Canada nowhere fast". That is from the Montreal Gazette .

Then the Calgary Herald : ``Reform, for its part, would rapidly slash federal government spending so as to create a fiscal balance while creating a huge social deficit in the form of greater unemployment and social polarization''.

I challenge Reformers to show us how they really arrive at zero deficit in three years without raising taxes. Remember, if they do not raise taxes and suddenly cut everything in sight, they arrive at zero deficit. Then in their magic kingdom, empowerment, family life, giving the community the responsibility to administer all this, suddenly everything will come right.

The amazing part is that this does not take care of fishermen out of work in Newfoundland. I see that typically all the Reform members come from western Canada. I do not know if many of them travel to Newfoundland, to Prince Edward Island or Nova Scotia or New Brunswick or Quebec, or the Gaspé coast where thousands of people are out of work, where unemployment insurance is not something that people want to have because they feel good about it, but because it is needed for them to sustain a dignified living, to try to look for some other way to recycle themselves while they have no work.

Fortunately, sadly, these responsibilities cannot be passed on to somebody else. They have to be the responsibility of governments. Governments have to continue to be involved, to be responsible.

I believe that our budget approach of reducing the budget gradually to the point of 3 per cent of GNP by the next fiscal budget is a responsible approach. Then we go on to reducing it further.

In the meanwhile, the pain, the hurdles will be formidable enough as they are. Canadians are being asked to make tremendous sacrifices already. I believe their sacrifices will be worth it but certainly we should not ask them for more and the magic kingdom of the Reform is for naught.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, I sincerely respected the speech we just heard, particularly at the personal level.

Again I would like to state what we are really talking about here, to put it on a proper level of debate, is a different philosophy in arriving at the same goal. The Reform Party is not out to destroy social programs. What the Reform Party sees is the Liberal government, with its present course of action, in the process of destroying the ability to fund social programs.

I hope that the member and I could come to an agreement that we are both out for the same objective but we are attempting to arrive at the solution from different perspectives. I am sure the member is not suggesting that we do not desire to see the social programs not only continue but to be available for people.

With that in mind, I would draw this to his attention. We receive in the House a publication called "Quorum". On page 17 of "Quorum" he was quoting from the Edmonton Journal .

This quote is from the Edmonton Journal of February 18 where the energy minister, who is a member from Alberta, called the Moody's downgrade ``irresponsible''.

"It angers me when we are working very hard to get our fiscal house in order". She said Moody's should have waited until the budget is tabled, "and then if they do not think we have done enough; fine. Then they can let us have it."

"The truly important factor in all of this is that until we deal with our fiscal situation we are going to be held hostage by the Moody's and the others of this world. What they are doing is slowly undermining our sovereignty."

To me, that is a reflection of where Liberal members are coming from. They do not realize that when they look in the mirror and see broccoli on their teeth they should not smash the mirror, there is broccoli on their teeth. The problem in this case is that the Liberal government has been going out of its way to say Moody's is wrong. Moody's happens to be advising all of the people. The Wall Street Journal is wrong. All of these people are wrong and the Liberals are right.

I wonder if the parliamentary secretary would not agree that the remarks we are hearing from Dominion Bond Rating Service, from Moody's, and from all of these other publications are trying to tell us something, that in fact the 3 per cent level that the government has chosen will have the effect of destroying Canada's ability to be able to fund the programs that he and I want to maintain.

[Clifford Lincoln, Liberal, Lachine—Lac-Saint-Louis, QC]

Mr. Speaker, I have listened to the Minister of Finance several times. He has met us in various meetings. I have listened to him here in the House.

We have gone to the people of Canada during an election where we put forward our electoral platform very clearly. We set in it exactly what we were going to do. We were going to reduce the deficit to 3 per cent of GDP within three years. We are on target to do this.

We set out the various programs that we wanted to keep, the programs we wanted to maintain as a social safety net, the programs we wanted to enhance, and we have set it out in very clear language with figures backing it up.

All the various financial houses were aware of what we were trying to do. The budget is going to come down within a week. We should all wait to see what it says, what it does, what thrust and direction it takes, whether it follows in the same path as the first budget, which it will do, and whether we are on the right target.

I am convinced that once the budget is down, once the facts are known, that all the various naysayers will agree that Canada is going in the right direction and following the right path, and that certainly we are keeping to our commitments in a very credible way.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I will make a couple of comments and then ask a couple of quick questions of the Parliamentary Secretary to the Deputy Prime Minister.

First of all, I want to touch on his reference to New Zealand. The parliamentary secretary in referring to New Zealand said this was an example of what tough deficit reduction can do and has done. The Parliamentary Secretary to the Deputy Prime Minister should know that in fact New Zealand chose not to take tough deficit reduction action, and as a result its economy collapsed. Exactly the same thing happened there as Canada is facing right now.

One day there was no one willing to buy the bonds that New Zealand floated, and Canada is very close to that. That is what Moody's and the others are warning about. The parliamentary secretary had better do a little bit of reading on what happened in New Zealand so he can speak factually about what did happen. I thought I would correct him on that.

I would like to also talk about the target of 3 per cent of GDP in three years that he refers to as the target set in the Maastricht treaty. It was a deficit target but it was based on all government debt, not just federal government debt, whereas this Liberal target is on federal government debt only. The target the Liberals have set is nothing like the target set under the Maastricht treaty.

[The Deputy Speaker]

There did not appear to be a question in that. We are at 5.30 p.m. Perhaps the parliamentary secretary does not need to respond.

It being 5.30 p.m., it is my duty to inform the House that pursuant to Standing Order 81(19), the proceedings on the motion have expired.

The House resumed from Friday, February 17, consideration of the motion that Bill C-59, an act to amend the Income Tax Act and the Income Tax Application Rules, be read the third time and passed.

Income Tax Act

[The Deputy Speaker]

Pursuant to the order made Friday, February 17, 1995, the House will now proceed to the taking of the deferred division on the motion at the third reading stage of Bill C-59.

Call in the members.

(The House divided on the motion, which was agreed to on the following division.)

[The Speaker]

I declare the motion carried.

(Bill read the third time and passed.)

[The Speaker]

It being 6 p.m. the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.