Debates of Feb. 21st, 1995

Interest Rates

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, with Moody's now monitoring the credit rating of the Canadian government, interest rates have moved upwards. Today, the Bank of Canada has just increased the bank rate from 8.07 per cent to 8.38 per cent.

Does the Minister of Finance acknowledge that this pressure from the financial community, which caused interest rates to rise last week, is growing and, with the approach of his upcoming budget, is he prepared to cut the operating costs of the federal system, including in the area of overlap and duplication, before interest rates rise significantly?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Yes, Mr. Speaker.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, will the Minister of Finance acknowledge that the pressure from the financial community is a signal that he should tackle the deficit problem by making massive cuts in government spending, which has to be the preferred approach, rather than raise the taxes of the middle class, as he himself proposed, which would considerably delay an economic upturn?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Yes, Mr. Speaker.

[An hon. member]

He is going to vote yes.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, I note that the Minister of Finance favours a yes.

[Some hon. members]

Hear, hear.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, I hope I can get a "yes" to my third question.

While tackling the deficit by significantly reducing expenditures, does the Minister of Finance intend proposing to the Bank of Canada that it adopt a monetary policy that is less restrictive, less focused on the fight against inflation and more concerned with economic development and job creation?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Mr. Speaker, as the hon. member knows very well, we have established objectives with the Bank of Canada concerning inflation. This agreement has served Canada very well, and we intend to go on with this policy.

Having said this, I would like to congratulate the hon. member on his very clear questions.

Tax Loopholes

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

Mr. Speaker, the finance minister himself stated yesterday on the CBC that he is well aware of the tax loopholes which he must close to ensure that the wealthiest Canadians do their fair share to correct the fiscal situation. Unfortunately, the minister once again targeted social programs in his strategy to combat the deficit.

Can the finance minister tell us when he will bring down the upcoming budget, and can he tell us whether he will have the courage this time to tackle the real tax loopholes of wealthy Canadians which he claims he knows so well, while leaving unscathed the unemployed, persons receiving social assistance and senior citizens?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Mr. Speaker, we addressed tax loopholes in the last budget. In regard to the upcoming budget, I have indicated that this will be an important avenue to pursue.

Having said this, I shall answer the hon. member's second question. As you know, an old tradition in the House has it that the finance critic for the opposition asks the finance minister the date of the budget. Unfortunately, this tradition was put aside under the previous government and we are pleased to revive it.

I would like to answer the hon. member by saying that the budget will be brought down on Monday, February 27, at 4.30 p.m.

Once more bringing to life a tradition that existed in the House for a long time which the previous government had set aside, it is my pleasure to announce that the budget will be presented Monday, February 27, at 4.30 in the afternoon.

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

Mr. Speaker, I would like to thank the Minister of Finance for his only truthful answer in some time, I thank him for stating the date of the budget.

I would like to ask him whether, when his upcoming budget is brought down on February 27 at 4.30 p.m., he will tackle the real tax loopholes benefiting wealthy Canadians, including tax treaties signed with countries which provide endless loopholes and are regarded as veritable tax havens?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Mr. Speaker, we have many agreements with many countries. Moreover, such agreements are part of international trade, but I can re-assure the hon. member on his specific question about tax havens. We tackled them in the last budget and we intend to continue doing so.

The Budget

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, today the Reform Party outlined a taxpayers' budget that would eliminate the deficit in three years through spending cuts alone.

We did so because many Canadians believe, and the international money markets agree, that the Liberal government's deficit reduction target is too weak and that the government is squandering its one opportunity to get federal spending under control.

Will the Minister of Finance, even at this late date, even if it means putting an addendum into his budget, revise the upcoming federal budget to set a firm target date for the elimination of the deficit rather than just its reduction?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development--Quebec]

Mr. Speaker, one of the things that we wanted to do when we set up the consultation process was to encourage as many Canadians as possible to participate in the formulation of the budget and to make their comments on the budget.

I would like to take this opportunity, now that we are getting very close to the ultimate thing, to thank all of those who participated, certainly members of my own caucus.

There were some very live debates within our caucus. All points of views were expressed. I would like to thank those on the outside, whether it be the senator for policy alternatives, whether it be a number of major organizations.

I would like to thank the Reform Party for its effort this morning. I think that it has tried to elevate the debate. I look forward to the opportunity of debating the details of the Reform proposition as soon as I am able to discover it.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I appreciate the reply but we were asking about revising the government's deficit reduction target. The minister has repeatedly mentioned rolling two year targets for the deficit. We ask, is the minister listening to the money markets?

I quote Avery Shenfeld, senior economist at Wood Gundy, that a two-year target at the top of the business cycle is not going to satisfy creditors. The Bank of Nova Scotia vice-president stated that making non-ambitious two-year targets is really not what is needed. Moving toward a balanced budget is what investors want to see.

Given the fact that our creditors, the people that are putting up $40 billion to cover the overdrafts, have no faith in the government's fiscal plan, will the minister abandon the idea of rolling two-year deficit targets and set a firm date for deficit elimination?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Mr. Speaker, I made the same comment on Friday. The problem with members of the Reform Party is that they are so desirous of rehearsing their spontaneous lines for after the budget, they cannot wait until it is presented.

Let me assure the House that when the budget is brought down, the desires of those who want to see us clean up the nation's finances in a humane way that will allow Canadians to get back to work while still respecting the values of the country, one of which is that governments should live within their means, will be very satisfied with the budget.

[Preston Manning, Reform, Calgary Southwest, AB]

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

Since the government's last budget, the Canadian bank rate has gone up by 4 per cent. It went up again today. The Canadian dollar has fallen by three cents. Canada is in danger of losing its AAA credit rating and its social services network is unravelling. These are just four of the consequences of the government's fiscal policy.

Does the Prime Minister accept any personal responsibility for these consequences? Does he want to go down as the Prime Minister that drove the debt through he ceiling and the dollar through the floor or will he order a mid-course correction in the government's fiscal policy?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I would like to be remembered as running a very good government with a very good Minister of Finance, a government that has performed with 4.3 per cent growth rather than 3 per cent, with virtually zero inflation, with 450,000 new jobs created in a year.

This is the first government since 1990 that has managed to have an operating surplus and that predicted a deficit of $39.7 billion. The actual deficit will be lower than that.

I would like to be remembered for all of that.

Dairy Farmers

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

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

Canadian dairy farmers are urging the Canadian government not to give in to Washington, which is trying to pressure the government into going back to the negotiating table for tariffs on dairy products, following the implementation of the new GATT agreements.

Does the Prime Minister plan to tell President Clinton that Canada intends to unequivocally defend farmers and to tell him in no uncertain terms that Canada has no intention of negotiating any reduction in the tariff rates approved in the GATT?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I met with farmers from my riding last Friday, and I had the pleasure yesterday of meeting with the president of UPA and other leaders of Canadian farm organizations. I assured them that Canada's position is quite clear: the GATT agreement reached last December gives us the right to maintain tariffs at their current levels and Canada's position is absolutely logical and defendable. We intend to say this clearly to the American president when he comes to this House.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Mr. Speaker, given the Prime Minister's reply, will he assure us that Canada will not hesitate to bring this issue before a WTO panel, if the Americans push the issue?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, from one "Chrétien" to another, yes.

Social Services

[Diane Ablonczy, Reform, Calgary North, AB]

Mr. Speaker, this year the Canadian government paid out about $43 billion in interest. Next year we will have to pay about $47 billion in interest. That means we will have $4 billion less to spend on social security next year than we had this year.

What does the finance minister intend to cut from spending so he can pay this extra interest on the debt he is building up?

[Paul Martin, Liberal, Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

Mr. Speaker, I will be bringing down the budget on Monday. At that point the member for Calgary North will have the answer to her question.

The member for Calgary North has just made an interest rate estimate. The interest rate estimate of this afternoon is not the same interest rate estimate that was made in the presentation this morning. I would like to know what happened in the last couple of hours.