Debates of Feb. 21st, 1995

Supply

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I thank the second opposition party for tabling what can be called a shadow budget. It becomes part of a general dialectical process of discussion that the finance minister launched some months ago and which has been highlighted by discussions of citizens' groups, household groups, learned society groups, all people putting in ideas and suggestions to the government to help the finance minister in preparing for his budget that he will table in the next week.

Members will pardon me, though, if I say-it is not intended as a criticism-that one finds in the feedback from the various groups consulted, and we could say this is true of the shadow budget from the second opposition party, that it is formulated at a fairly high level of generality and abstraction, that it lacks the tethering detail of examining concrete cases against an empirical record which is the responsibility of a government.

One is reminded of General Secretary Khrushchev celebrated rebuke to the Albanians. I will not translate what he said in Russian exactly. He referred, I think we can say in English, to people jabbering. Basically it says: "Look, it is one thing to talk without having responsibility but when you have to make decisions you have to point out concretely what this means".

In other words, if we have suggestions to make and we do not want cutbacks in our own backyard, whom would we want to cut and why? What are the criteria?

It is very easy to say without responsibility for the government that one would eliminate $40 billion or $50 billion from federal spending in three years, but a government has to justify that in the concrete cases and examine what cuts in one sector of the budget would do to other sectors of the budget and, second, what impact it would all have on federal-provincial relations which without necessarily any action other than from historical forces is with us again as a key issue in the next few years, the Quebec issue to mention only one of these things.

We were warned during the last general election by financial analysts of some reputation and by the International Monetary Fund that reckless and radical financial restructuring without proper attention to empirical detail would have unforeseen effects on unemployment and on the economy.

This is why the government, as its first approach to the budget, recognizes the basic truth that any budget is a balancing act. It requires balancing competing interests, social and economic interests, choosing between them and offering justification for that.

As a government we are charged with keeping Canada together. We have to recognize the conflict in economic attitudes in many parts of the country. For the economically dynamic western provinces in which my own seat is located this means cutting the deficit as top priority. In Quebec and the Atlantic provinces we are getting the message that jobs may have a higher priority than that. We have to balance those interests.

Our predecessor government, the Mulroney government that has disappeared into history, had a fixation on cutting without serious consideration of the revenue side of the balance sheet. To take one example, some economists estimate that each public sector job results in seven spinoff jobs in the private sector. For many companies, for better or for worse, the public sector today is their largest customer. They have to be weaned off public spending. Public sector jobs have to be cut at a pace at which the private sector can absorb them.

Coming back to the budget and the balancing of interests, there is a little bit of voodoo economics from the second opposition party. President George Bush's-

[An hon. member]

A little bit?

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

We understate, as the parliamentary secretary who intervened knows very well. It is our tradition to understate.

There is a little bit of voodoo economics in some of the proposals put forward by the second opposition party. For example, cutting provincial transfer payments with a corresponding transfer of tax points does not result in lowering the overall public debt. It is simply to transfer federal problems to the provinces.

Alberta and Saskatchewan already have their own economic houses in order but other provinces have not. I do not think they are going to appreciate a federal government abdication of responsibility.

Let us take another example. Broad brush cuts look very simple. There is a proposal that has been floated to automate lighthouses on the west coast. It is a major issue for people on the west coast. Many sincere, decent people have discussed this subject with me. I have 25,000 names on a petition in my office opposing this one budgetary cut. I accept the sincerity of the proposals, the logic of the argument, but I also recognize that we have to make cuts.

I have to pose the question: "Whom would you cut and why? Is the deficit to be cut everywhere but in one's own backyard?" These are the hard problems that a finance minister must struggle with.

The Indian affairs department has been referred to. It is a favourite target for many people who do not bother examining

empirical data. It is in the process of devolution that is being spearheaded in Manitoba. The department has cut its workforce by 45 per cent in the last several years. Some bands are ready for self-government, although that is not totally defined, and some bands are more ready for self-government than others.

Consideration of further cuts in the Indian affairs department has to be related to the progress to self-government and to the concept of moving by steps which the government rightfully on all empirical political experience has accepted as the best road to self-government.

Transferring responsibility to what is called the family ignores current social structures that exist as the living reality today in Canada. I would suggest the second opposition party has a rather restricted particularistic definition of the family. One would raise the question and not simply rhetorically: "What about Canadians who do not have a well-to-do family to rely on? What about them?"

There are too many contradictions-antinomy is the technical term-in the shadow budget of the second opposition party that are simply not resolved. Empowerment of individuals is brought forward as a buzzword but is really a code word for abandoning those in need. Basically it calls for people to look after themselves whether or not they can.

This contradicts what in another part of the second opposition party's proposal, the shadow budget, is called equalization. Again one talks of national standards but this contradicts the principle of cutting transfer payments. If we want to impose national standards as a federal government in a domain where the federal constitutional power has to be stretched to the limit, how do we do it without using the tool of transfer payments? The contradiction is there in the shadow budget of the second opposition party. It simply has not bothered to try to resolve it or to suggest how to do it. That again stems from the fact of absence of responsibility in making the hard decisions that we must make as a government.

Again to take a further contradiction on a contradiction, the equalization principle contradicts the idea of cutting transfers to the provinces as such. I believe there is one basic truth here which all of us must recognize. The budget to be brought in by the finance minister within the next week will be the toughest budget Canadians have seen in 127 years. That is the reality. It is going to be a very tough budget. That is our responsibility.

Since I am not privy and constitutionally could not be to the finance minister's plans until he actually announces them in the House, I do not yet know what is in the budget; but I am on record, as are many of my colleagues in the government, as supporting drastic reform of the pensions of members of Parliament. I am on record, as are some of my colleagues, in advocating that Parliament bring MPs' pensions into line with those in the private sector.

There has been reference to foreign travel. I personally have not partaken of any foreign travel at taxpayers' expense since my election. Many government members are in the same position.

I support unemployment insurance reform. Indeed the most imaginative part of the green paper on social reform brought forward by the minister charged with social security concerns unemployment insurance reform. Many Canadians are paying $1,200 per annum in premiums even if they have never made a claim. The seasonally unemployed and the manufacturing industries which include unemployment insurance abuse in their business plans should be made to be more self-supporting through increased premiums, fewer weeks of benefits, more weeks to qualify and mandatory retraining.

These are the materials before the finance minister that have been given considerable consideration by committees, by task forces and by other groups. They are the sorts of decisions a government must make, big tough decisions, balancing the interests, choosing among the conflicting interests and resolving the antinomies.

I support, as do many government members, the commercialisation of as many crown corporations as possible and a rationalization of those remaining. The government accepts that responsibility. It will be reflected in the choices that it has to make in the budget.

We all support the elimination of overlapping government services. We support the transfer of powers to the provinces in such areas as natural resources, fishing and health administration, without sacrificing national health standards. These proposals have been part of our historical debate for the last 30 years since the quiet revolution.

We welcome the suggestions put forward by governments in Quebec, by the Bourassa government and by its present government, for study in this area but we recognize the impact upon the budget in adopting proposals of this sort.

I am really saying that the shadow budget of the second opposition party does not really tackle concretely the problems of making those hard choices. To the extent that it does, it seems to me that like the previous Mulroney government's approach to the economic situation there is a give it up philosophy there.

It is not enough to slash government expenditures. We need, and this was our proposal in the red book and in the general election, a dynamic policy of creating new jobs. We need new export industries. We need more foreign trade. We need to be competitive there.

The Prime Minister has made his trips to Asia accompanied by our leading business specialists and to South America. This is part of the new politics. We need to harness science and technology in aid of economic growth and that requires a strong federal presence. This is the key to the infrastructure program that the government has been carrying forward since its election. It is the key to areas such as western economic development, but it is a recognition. The slashing of expenditures, if that is all it is, is a descent into economic pessimism. It reminds one of the policies of the economists who failed in Germany at the end of the 1920s and who failed in the United States in the Hoover period.

The country is strong. To echo the remarks of the man who replaced President Hoover, we have nothing to fear but fear itself. What we need are new jobs, new markets and new tax revenues. This is a positive, dynamic way of controlling the deficit and reducing the external debt. Create the new jobs, build the new revenues from the new incomes. It is a new, dynamic and optimistic approach to the Canada of the next century. This will be the thrust in the budget to be presented I am sure in the next week.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I am shocked and appalled when I listen to a speech like this. I think a speech like this is a symbol of what is wrong with this government.

I listened to the hon. member ramble on giving excuses for his government's inaction. He continued to explain why it cannot do anything about this or that. I think the height of irresponsibility is to do nothing. It is analogous to criminal negligence.

Why do you not have a plan after almost 10 years in opposition and after a year in government, after fighting an election campaign that you knew was there and-

[The Acting Speaker (Mr. Kilger)]

Order. I want to once again remind the House that all of our interventions have to be made through the Chair, through the Speaker. It is not to engage one member with another but collectively for the House in making sure that our debate is done in a parliamentary fashion.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

I am sorry, Mr. Speaker. I am too emotional from his presentation. I feel so strongly that this issue is a key issue that we need to address.

I believe the country is tired of hearing excuses about how we have such an onerous task and it is so difficult. This is the government opposite. As a government it cannot keep criticizing Reformers for what they propose unless it can come up with a better proposition. That has to happen. When someone is drowning and is going down for the third time he or she would like to see a life preserver thrown to him or her, not another weight. Increased spending and increased debt and deficit is simply another weight. I think it is inexcusable that this kind of rhetoric continues to be spouted out by these people.

I would like to know what plan the government has? What does it propose in a positive manner that will give hope for Canadians that they will begin to see the light and not continue to be thrown more weights as this member suggests?

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I have waited patiently through a sea of clichés and tired metaphors for a general idea or a question. When finally the question emerged, the only response one can give is pay attention to empirical data. Read my speech when it comes out in Hansard and the responses are there. Please do not remain in the realm of cliches. Give us some empirical data. Do not be an Albanian in Mr. Khrushchev's terms.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, as a reflection of what my Reform colleague said, I must say that the Dr. Feelgood kind of thing this government seems to be into, trust it, everything is going to be fine, is very difficult to swallow when one realizes that this very day this government is going to the financial marketplaces all over the world, cap in hand to try and find $110 million.

I have the good fortune, if I can be permitted to be a little personal, that this week I am expecting to become a grandfather for the first time. As a consequence, it is a sincere and very personal concern for me that we have a government in power today that is prepared to encumber my grandchild to be with the spending of today.

The Reform Party came forward with its zero in three plan in 1992 and here we are just three years later. There is only so much that can be taken out of non-social spending. As a consequence for us to get to zero, which we must do in three years and what this motion is all about, we have now accelerated and gone from only taking $9 billion out of social spending to having to take a further $7 billion out of social spending. That has happened in two and a half years.

I ask the member in good conscience, and I am sure he will realize that I am being deeply sincere, whether it is really not immoral for this Parliament to go ahead and transfer the spending of today probably to my future grandchild's grandchildren. Is there not some kind of problem in the thinking of this member and perhaps in the thinking of the government that we should be doing that?

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I appreciate the thoughtful question from the hon. member opposite. We welcome his co-operation and his party's co-operation in finding concrete ways for cutting government waste and cutting expenditure. We accept the burden of reducing the national deficit, reducing the

external debt. We believe the positive way is by expanding the economy by creating more jobs. If more jobs are not created, we will never get rid of the deficit. That is why we say the two go together. There cannot be one without the other.

I welcome his co-operation and his party's co-operation in tackling the deficit.

[Ed Harper, Reform, Simcoe Centre, ON]

Mr. Speaker, it is a real pleasure for me to take part in this debate on the motion introduced by my Reform colleague for Kootenay East.

Today is really the tale of the threes. I added a third three after listening to the intervention by my colleague from Kootenay East. The first three I had down was 3 per cent of GDP which we are talking about today as being not sufficient to address our current problems. Another three is the zero in three plan we introduced while we were campaigning in 1993. The third three I added was my three-year old grandson Nicholas. In many ways that is what this whole debate is all about. It is about the future of our children and our grandchildren.

Let me deal with the last three first. We in this House have been part of the generation that has accumulated the tremendous debt that we are all burdened under. We are not going to be around to pay the bill. We have accumulated this debt and we are leaving it on the shoulders of future generations; taxation without representation.

I have been part of that overspending and I have not been very proud of that. I am pleased that I am here, elected to this place to do what I can to bring the government to realize that we have to start living within our means.

Let us go to 3 per cent of GDP as the target that the government has set. What does 3 per cent of GDP mean? It means after we achieve this target we will still be overspending on an annual basis by $25 billion. However, at that point we will be facing federally a $650 billion debt and the interest payments on that debt will have reached $50 billion. What is worse, there is no plan to eliminate the overspending. It is somewhere down the road but there is no definite plan in place to address it.

I would suggest that without a plan to attack it, it will not happen. The 3 per cent of GDP is too little, too late. We have already lost a year. A year ago we were looking at a $490 billion debt and as we stand here this afternoon we are in debt to $550 billion. Our situation has worsened by $60 billion.

Let us take a moment to look at our zero in three plan which we campaigned on last year. We were honest with the Canadian voter when we campaigned. We spelled out where we were going to make the cuts, the departments we were going to make the cuts in and how much those cuts would be.

I would remind members that we were the only party that did that. We actually put some numbers to paper and presented it to the Canadian voter. Two and a half million voters supported us knowing where we were coming from. The deficit at that point was $30 billion. As we stand here this afternoon we are looking at a potential $40 billion deficit.

The deficit can be eliminated within a specific timeframe and we say three years. In eliminating that deficit we will create employment. We will restore investor confidence in our economy and they will come in and they will create the jobs that our children and our grandchildren need, full time, meaningful employment.

By getting our spending under control we will start to offer for the first time tax relief. Canadian voters will be able to see down the road that there is some tax relief coming and that we will not continue to attempt to go deeper and deeper into their pockets.

We speak a lot about the safety nets. Getting our spending under control and eliminating the deficit is the answer to saving our social safety nets. We are not the ones out to destroy it. We are the ones facing reality and we are the ones who want to save those safety nets for those who are in need.

The budget that will be coming down next week to my mind is the most important in Canada's history. If we do not do what is right in this budget we will pay some very serious consequences. The Canadian taxpayer is concerned. The financial markets are concerned. The warning bells are going off, the red lights are flashing and yet they are being ignored. As a matter of fact, we are shooting the messenger. We are being warned that we cannot go any deeper in debt, that we have to make some spending cuts. We are being warned by the people who buy our bonds, the people who have allowed us to go deeper and deeper in debt.

We appreciate it when they buy our bonds, but we do not like the fact that they are warning us that we are getting ourselves into a position where we cannot sustain that debt and are in danger of hitting the wall.

As I said, thousands of concerned taxpayers have spoken out. The message has been unified: no more taxes, reduce government spending, they are taxed to the limit.

The Canadian Taxpayers Federation has gone across Canada holding tax alert rallies that have been attended by thousands of taxpayers.

Yesterday we presented petitions signed by 230,000 concerned taxpayers and as I said, the message is uniform: no more taxes. Government spending must be cut.

Small business gave us the same message. The Canadian Federation of Independent Business in its survey of small business states that 88 per cent of those that responded said the

best thing the government can do to help small business is to cut spending. Get off their backs and out of their pockets.

It is happening all across Canada. In our homes and in our businesses, we have cut back in these times of restraint. We have had to make the cuts in order to survive. Government must do no less than what Canadian taxpayers and Canadian businesses have been doing.

When I was a youngster, I was told that there are only two things that were certain in life, death and taxes. What we are now finding out is that one is causing the other. The Canadian taxpayer is being taxed to death. Canadian taxpayers are fair, compassionate and reasonable but they have reached the limits. The message is that we have no more to give. The government does have room to cut its spending.

Protests have been going on across the country. Radio shows have been encouraging their listeners to phone their member of Parliament. I am sure all members have received phone calls because of the tax alert rallies or tax alert programs.

I want to relate one of the many phone calls that I got in my riding. It was from a young mother. She said: "I am 24 years old. I have three young children. My husband has a good job. He makes a good wage but we are just getting by. Please do not raise taxes. Do what you can to make sure taxes are not raised. We just have no room to move".

I said to her: "I understand where you are coming from. I will do my best to see that your tax burden is not increased". Just before she hung up she said: "There is one other thing that really bothers me. I know the social programs are important but I have a neighbour who is on social programs and in many ways that family is living much better than we are".

The message was that there are people riding in the wagon that she and her husband are pulling who are enjoying more benefits than they are. That has to stop.

Raising taxes are counter productive. For 25 years now we have told the Canadian people that we have to raise taxes and we are going to address the deficit and the debt. In fact what has happened in those 25 years is the exact opposite. While we have raised taxes, the deficit has increased and as a result, the debt has increased.

There is absolutely no justification for any tax increases. They achieve the very opposite to what they are supposed to achieve. We already have a huge underground economy because the Canadian taxpayer has said: "I am giving you more tax dollars and I am getting less service. I am going to find a way to escape this tax burden".

That underground economy is very difficult to get a handle on. I have heard figures from $5 billion to $30 billion. Whatever the number is, it is huge. By increasing the tax burden, we will only inflate that figure, whatever it is.

Today we introduced the taxpayers' budget. It is the first time this has ever happened in Parliament to my knowledge. No party in opposition or third party has come forward with an alternate budget.

We said when we were campaigning that we would offer constructive criticism. That is what we have done. We have been saying cut. In this budget we are outlining where those cuts should be made and the departments in which they should be made.

Twenty-five billion dollars in three years is not a draconian target. We are talking about $8 to $9 billion a year from a $750 billion GDP. That is about 1 per cent a year. It can be achieved and it must be achieved.

It will bring some pain but it will be short term pain for long term gain. The cuts have to be made in all sectors, not just in the social services. We have to do it in the public and in the private sectors.

I get concerned when I hear the message that we are out to destroy the social programs. That is not true. We have been spending $80 billion on these social programs. What we are talking about is $65 billion. That is not destroying the social programs.

If these people really wanted to protect those truly in need, they would be working with us to see that the cuts are made. There is lots of room to improve the efficiency of those programs and deliver them in a better way at far less cost to the taxpayers.

When taxpayers hear that they do not understand what they are asking for when they ask for reduced spending, you are insulting their intelligence. They do understand. The taxpayer in many ways is miles ahead of the politicians, and when taxpayers read that their protests are futile, we forget who is working for who.

We are dealing with an aroused and an informed voter. They understand. They are aware of the situation. No longer are they prepared to roll over and take it. They are speaking out. They spoke out on the cable situation and found out that they can make a difference. Government will ignore the messages that are being given to us at its peril.

[The Acting Speaker (Mr. Kilger)]

I might ask the member for Simcoe Centre to indicate to the Chair if he is splitting his time.

[Ed Harper, Reform, Simcoe Centre, ON]

Yes, I am splitting my time, Mr. Speaker.

[The Acting Speaker (Mr. Kilger)]

There will be five minutes for the member for Simcoe Centre, subject to five minutes for questions or comments.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, today I stand here with a great deal of pride in being a Reform member of Parliament who was a part of the Reform team that put together the taxpayers' budget that was presented across Canada. I am proud of that, but what we are talking about today goes far beyond partisan politics.

It goes to a problem that truly threatens the country. It deals with a problem which has come from successive flawed assumptions under which governments have been operating for some time. I will talk about those flawed assumptions later.

I would first like to talk about the warnings that have come from various sources which the government must not ignore. These warnings come from various groups and individuals across the country and from around the world. They are telling the government that its target of reducing the deficit to 3 per cent of GDP in three years simply is not good enough.

These warnings have come, as I have said, from a variety sources. Most recently they came from Moody's Bond Rating Agency. They have come over the past from the C.D. Howe Institute, and from the Fraser Institute at various times. The warnings that this target is not good enough came from the Wall Street Journal and the Washington Post just a few weeks ago.

I attended a conference in Toronto in November entitled "Hitting the Wall" at which the warning came from a wide range of speakers from various backgrounds who had been involved in governments which had gone through economic collapse and had been part of government and opposition parties who were involved in the clean up after the economic collapse. Their warning was very clear. It was that the scenario we are living right now is so similar to what they lived through in their countries that Canada should heed the warning.

The warning came at this conference from a Japanese bond buying agency that said that already Canada is paying unnecessarily high risk premiums on money that it borrows from outside the country. The reason I say that the risk premiums are unnecessarily high is that if governments in the past had been more serious about setting targets far stronger than the 3 per cent of GDP in three years, we would not be paying interest rates nearly as high as we are paying now. The warnings came from a public sector actuary who talked about the fact that the Canada pension plan is non-sustainable. It is not actuarially sound and it cannot be sustained under the present set of rules.

The warnings came from others, but there were several consistent messages that came from each and every one of the speakers at the conference. I know the government has heard these messages before but it should hear them again. The messages are as follows.

First, Canada has a serious overspending problem. It is a very simple and direct message and the government must hear it.

Second, the problem must be dealt with quickly. Again, this message has been given by people from across the country and around the world but it does not appear to have been heard.

The third message is that the Minister of Finance's budget is a last chance budget. The speakers at this conference, "Hitting the Wall", to a person said that this is the last chance. If the government does not get serious beyond the target of reducing the deficit to 3 per cent of GDP in three years there is a very real possibility of economic collapse.

This is a last chance budget because it will be much more difficult for government to deal with the problem next year than it is this year. It will not happen. The political will just will not be there to make the extremely tough cuts and to take the tough measures that will be necessary a year from now.

Compounding interest, rapidly increasing debt, ever-increasing proportions of government spending going to interest payments on the debt would all make it much more difficult next year. These speakers said that there is no precedent in the world where a government has taken the tough measures necessary without going through economic collapse.

The warnings are there. The Liberals should consider this Reform budget as another warning. There are a lot of measures in it that I have heard expressed as recommendations by people in my constituency and in other places across the country who I have spoken with over the past several months and years. These are not just measures which were dreamed up by a group of Reform MPs. These are measures that have been proposed by Canadians.

I would like to go through something that is presented in our budget material and talk about the flawed assumptions which have led to the mess we are in now, the flawed assumptions which this Liberal government will continue to operate under. Then I would like to go through the positive results that would arise from the new set of assumptions which the Reform Party has presented. I will begin by reading the motion which we are debating today. The motion reads:

That this House reject this government's totally inadequate target which reduces the deficit to 3 per cent of GDP within 2 years and will leave Canada, at the end of the period with a federal deficit of about $25 billion, a federal debt of over $600 billion, $50 billion in annual interest payments and higher taxes.

That is the motion we are debating today. This motion stems from one of the flawed assumptions under which this Liberal government has been operating since it came into power a year

and a half ago. I will go through these and talk briefly about the consequences which arise from them.

The first assumption is with respect to jobs. The assumption is that government can solve the unemployment problem through public spending. That is the flawed assumption we have laid out in our budget today. In fact, that assumption was presented an hour or so ago by a member from the Liberal Party when he was talking about all of the things which his government had done. One of the wonderful things that member said was that his government had created jobs. I believe he said that his government created 40,000 jobs.

When Reformers reminded the member across the floor that it probably was not his government that created those jobs, that it was probably the private sector, the member backed off on that statement. He realized the error of his ways, at least for the moment. The error was that government does not create jobs; private business does.

The consequences of this flawed assumption and operating under this flawed assumption are that government spending is now at an all time high and there are over a million unemployed people in the country. If government spending would create jobs I would suggest that all Canadians would have more than one and more than they need.

Governments have been overspending to a point where we have an accumulated debt today of over $550 billion. Governments have been overspending for 30 years. Has that helped to deal with the problem of unemployment? The answer is no, we have over a million unemployed Canadians today and that is an unacceptable level of unemployment.

The second flawed assumption is in the area of social security. The assumption is that government is the best provider of social security through publicly financed universal programs. I think I can fairly say that is the assumption the Liberal government and past governments have been operating under.

The consequence of operating under this flawed assumption is that despite big government programs, the social fabric of Canada is unravelling. Health care, pensions and other programs are in financial trouble. Programs like UI and welfare create a disincentive to employment.

The third flawed assumption is that government spending, deficits and debts are okay if they are incurred in the name of jobs and social security. The consequence is that government spending and overspending are the biggest threats facing Canadians with regard to social programs today.

I invite members opposite to read our budget with an open mind and to consider its contents seriously in the final preparations of the budget to be presented next week. I certainly welcome their questions.

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I have been here for a good part of the debate today and I am dismayed to learn that Reform Party members in making their remarks are not really addressing their budget document.

Indeed I was here for the opening two speeches this morning from the Reform Party and they like the last one constituted really nothing but denunciations of the Liberal Party position which they are waiting to hear in the budget next week.

However they managed to use their document as some kind of launching pad for attacks on a non-existent government budget at this point. They are still attacking last year's budget and saying that government measures are inadequate when they have not yet learned what they are.

It surprised me that I could not get copies of the Reform Party budget for the longest time. I have finally obtained one. We were told in all the news reports this morning that their budget was going to be announced in the House. I am surprised that we have not heard more about the Reform budget.

I have some questions that I would like the hon. member to answer. I know he has very limited time, having wasted most of his presentation on attacking the government instead of dealing with the positive aspects, if there are any, in the Reform budget.

What is in his own party document that will be so popular with Canadians? Or, is it so unpopular that they do not want to talk about it in the House today? They want to use the opportunity to try to blame the government for all the ills instead of looking at the document they have produced, coming clean with Canadians and telling them what bad policies they have proposed in their budget document.

Why have they not discussed it? They keep referring to it but they never give specifics. Would the hon. member give us specifics and tell us what cutbacks in social programs his party proposed in their budget document so all Canadians can hear what the Reform Party has in mind?

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, the hon. parliamentary secretary commented on copies of our budget not being available. Of course they were. We announced that our budget would be unveiled in West Block, Room 200, at nine o'clock this morning. Liberal members of Parliament were more than welcome. I was pleased to see that one attended the unveiling. Copies have been readily available. They are certainly available in the lobbies now, as the member knows.

The parliamentary secretary of all people should know that when debate is on a certain topic we should try to stick to the debate as much as possible. The debate today is on the Liberal government's very weak deficit reduction target of 3 per cent of GDP in three years.

We will talk about our budget as we have been today. We have presented some important information regarding the budget. However we have to make sure it fits in with the topic for discussion today, the motion that has been presented rejecting the 3 per cent of GDP in three years as a target.

In terms of specifics, if the hon. member has read this document which is available and which he acknowledges he now has, he would know that we presented a lot of specifics. We presented detailed numbers in terms of reductions in the social program spending area and in areas outside social programs.

We cannot only look at spending when we talk about this budget. We also have to look at the empowerment measures that Reform has presented along with the numbers. The numbers are important in the budget but they are there for anyone to see. It is important to balance that. If we are talking about spending cuts in the area of social programs and other areas, it is really important to show the empowering measures to help people deal with the coming cuts.

This approach is far more valid than the Liberal approach of pretending that we do not have a serious problem and therefore not bring forward a budget to deal with the serious problem we in fact have.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I am shocked at the message I have heard from Reform members opposite today. It is difficult to believe that a party would be so irresponsible as to easily play the game for international monetary traders and talk about problems that do not even exist: rhetoric and no specifics.

I have read the document and I have seen no specifics in it. I would call the paper put forward by hon. members opposite Reform draconianism. That would be a good description.

The facts are contrary to what the motion states. We have the first Minister of Finance in ages who has set targets and is prepared to meet them. He is willing to take the tough measures in a reasoned and planned way.

Could the hon. member opposite name the cuts specifically in summary? Could he bare them to the bone so that we can see what he is specifically talking about in the paper he mentioned?

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, there is a list in our budget document that explains in detail our proposed cuts and the background supporting information on why it is necessary to make cuts in those areas. As we go through our debate today these numbers will be presented. They are here to read. Surely Liberal members can read as well; I believe they can.

The hon. member for Malpeque talked about Reform draconianism. I want to talk about that. The reality is that if we continue down the path we are taking now with government overspending to the tune of $38 billion this year and a debt of $550 billion, we will lose the bulk of social programs.

Which is more draconian: losing the bulk of social programs or reducing spending on social programs by $15 billion out of total government spending of about $155 billion in that area, that is reducing federal and provincial spending together to about $140 billion? Which is more draconian: saving social programs and targeting them to the people in need or losing them?

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, it seems to me that Reformers are Tories in a hurry and we know what the Tories did to the country.

Everyone knows we must get our fiscal house in order. We must reduce spending and a draw a line on further taxation. We must reduce borrowing. We need to move toward better accountability in government programs and allow people to participate in these decisions to a greater degree.

I have been amazed by my colleagues in the Reform Party. That party supports the concept of a flat tax. We might as well call the earth flat. In a statement the leader of the Reform Party proposed a flat tax allowing lower income families to be exempt. Interestingly enough, those with average incomes in excess of $94,000 are currently paying 66 per cent of all personal income tax in the country. If one was to create a flat tax it is clear that income tax would have to be collected more from the middle class.

It certainly has been a strange week for me debating with Reformers and the Canadian Taxpayers Federation. People are saying no more taxes, while these members with their hidden agenda intend to increase the relative burdens of the middle class.

The Reform Party talks about funding of special interest groups. I object to the funding of these groups. However, what special interest groups do the Reform Party represent? I do not remember a groundswell of opinion of people in the country to transfer tax burdens from the wealthy to the middle class. The middle class is taxed beyond belief. Forty-five per cent of the average family income goes to some form of taxes. The concept of reverse Robin Hood is not supported in any progressive jurisdiction in the world.

For my own part I have initiated what I like to call a taxpayers' bill of rights which basically has three components.

It is a private member's initiative of my own. It talks about accountability, the accountability of existing and future government programs, that they must be costed in totality and on a taxpayer basis. If this legislation had been in place I believe taxpayers and the electorate in general would have made better decisions that would have possibly prevented us from being in this mess today.

I also proposed a taxpayers' ombudsman that would act as an ombudsman between taxpayers and tax collecting authorities to protect from onerous collection procedures that often occur. As members of Parliament we can all think of how acts have actually been to the detriment of many honest law-abiding people in Canada.

Another part of that bill talks about freedom from undue taxation. It basically sets a cap of 55 per cent in totality of income on which total taxes can be paid. It simply attempts to reduce that by one per cent a year for the next 15 years. It starts with a 55 per cent cap and reduces it. It is a clear solution to some of our spiralling taxation problems.

The motion is just more of the Reform Party's fantasy world. It must be nice to get up in the morning to all this glittering tinsel but, alas, it is truly a wonderland.

To move too fast in the direction of deficit reduction is just as problematic as moving too slow. As programs are cut it will reduce the federal government's share of income taxes, exacerbating the problem. Let us remember the legacy of the Tories reducing spending, increasing taxes and spiralling deficits, caught in a continual loop. This is where the Reform Party would take us but only faster.

We must break the back of deficit and debt. However we need to walk the fine line between reductions and allowing the economy to grow. We would have thought that a party from the west would be familiar with the tight-fisted policies of R. B. Bennett and how these turned the west into a virtual wasteland of the thirties.

People come to rely on aspects of government programs whether social or rapid write-offs for capital investments by businesses. That does not mean they cannot and indeed will be changed. What we are talking about here is a rapidity by which change occurs.

Creating uncertainty in the business sector as well as other sectors of the economy may well witness a flight of capital. To the extent that we create contraction in the economy, other countries will look more promising to invest in. An outward flow of investment will result in the loss of jobs, further exacerbating our deficit and ultimately throwing us into a recession or worse. I am talking about a situation of reverse economics. Clearly to take government moneys and contract the economy is going to create a bigger deficit than we already have.

These are the policies of the Reform Party, the policies of wrack and ruin. It has taken us 20 years to develop the situation we now have. Regrettably we have to deal with it. The question is how quickly.

A slash and burn mentality does not work. We have to maintain the underpinnings of the social fabric of this nation. More important, we cannot afford to turn the corner that is basically going to put us into a recession or worse than that, a depression. Other countries have dealt with this matter in similar circumstances and have created some of these negative spiralling effects that will actually drive the economy into worse shape.

Clearly the way to get out of a deficit problem is to slowly grow the economy. As the economy grows, revenues from governments increase. By going too fast we run the risk of contraction. That contraction will just exacerbate our problems. The Reform Party does not seem to recognize that. The Reform Party would have us driven into a recession or depression within the next three years. This is unacceptable.

What is the solution? Keep the economy growing. Gradually reduce the deficit with targeted or slightly better than 3 per cent of GDP. Increase foreign trade.

Of the component aspects of national income another very important one is our current account deficit. As we can attract more foreign dollars into our country we can deal with the deficit more aggressively. I am happy to see that during our tenure that account deficit has been reduced from $30 billion to $15 billion.

Trade initiatives such as China, South America, more trade with the United States through NAFTA, these are all positive things to bring Canada out of its deficit situation and controlling debts and deficits as they continue in the future. This is clearly the way to go, not through a tremendous contraction of the economy.

In conclusion, we simply cannot afford pushing our economy back into recession. Worse, we cannot afford the luxury of letting the upper income brackets of this country shift their taxes to the middle class.

Once again it has been amazing to me in the last two or three weeks to watch the large crowds the Reform Party has put together. People are saying to cut spending. The other day in Pickering a gentleman was sitting with a sign which read "cut spending". After the meeting he came up to me and said: "I live in your riding. I am on unemployment insurance and I need a training grant".

It is clear that Reform Party members are misleading people, that somehow these cuts do not affect their own people. Worse than that, the flat tax, or as I say the flat earth tax, is an allocation of taxes from the upper income groups to the middle income earners. Do the middle income earners really know that is the Reform Party strategy, that they will bear proportionately more of the taxes?

I can think of no other country in the OECD or any other nation on the earth that subscribes to this policy. The Reform Party will tell us this gives incentive, it creates jobs. What it really does is it lines the pockets of the rich. This is not the policy of the Liberal Party and never has been.

Progressivity in the income tax system is accepted throughout the western world. As I said, I do not think the Reform Party has been totally honest with Canadians and with this Parliament. In conclusion, clearly we cannot afford the Reform Party.

[Lee Morrison, Reform, Swift Current—Maple Creek—Assiniboia, SK]

Mr. Speaker, I listened with great interest to the hon. member's suggestion that a reduction of government spending equal to 1 per cent of GDP would cause an economic contraction and downturn in this country. Surely the Canadian economy is not that feeble.

The hon. member stands there and uses the old Keynesian magic of pump priming. Just spend more money. Get the government involved as deeply as it can in the economy and everything will be fine.

If that discredited philosophy worked, this country would have no problems. Canadian governments have spent like drunken sailors for 30 years. If Keynes was 100 per cent right, then there would be no unemployment in this country. There would be no debt. There would be no deficit.

We have heard it all. The previous two governments have done it all. They have wrecked this country by abiding by their faith in this wonderful pump priming philosophy. They should have the gumption to face up to reality, see what has been happening in this country and perhaps join the new parade. Start to realize the people out there know what is going on. That is why they come to these rallies. The ordinary common people are speaking and telling us as parliamentarians to get our act together.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, once again we are talking in some similarities. We know we are going to have to cut spending. All my Liberal Party colleagues have talked about cutting spending, so this is not new.

To start off on a little study of economics, the Keynesian philosophy was basically correct. The problem with Keynesian economics is that we did not take the other side of it which is that during periods of expansion in the economy we save. We continued to spend during good economic periods and we are paying the price for that.

Having said all that, Keynes also talked about levelling off the areas of the ups and downs of the business cycle. These are the things the Reform Party does not understand. In other words, we cannot have a situation where we create a tremendous contraction in the economy so that there is no growth. In fact there would be negative growth. There would be a recession.

By moving too quickly on the deficit, this is where the Reform Party will take us. We will be going nowhere. We will be in a worse situation because we will not have any tax revenues and our deficits will continue to spiral. It is very important that we continue to foster growth in the economy, to create certainty and to keep and meet our deficit target.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Mr. Speaker, the question that the Reform Party asked about the federal government's deficit and debt will obviously get a lot of press because they are very serious issues. We all know it.

I think that the cuts that the Reform Party will propose will not fix the monstrous problem facing Canada. The Reformers will table their budget, a bogus budget containing $15 billion in cuts to social programs.

This is nothing new, since their policies centre on eliminating social programs, even though they have contributed the most to Canada's success up to now.

They propose another $10 billion in cuts to government operations, for a total of $25 billion, and they think that these cuts will stimulate an economic recovery and that the economy will create jobs all by itself.

I must concede that the Reform Party had the best intentions when it made this recommendation-the deficit and debt are very serious problems-and I must agree that when we look at these problems from a critical distance, they are very disquieting. Moody's already issued a warning to Canada last week regarding the budget. Several foreign investors are also worried, all the more because, according to the federal government's own calculations, it is projected that Canada's debt will reach $800 billion by the year 2000.

In other words, they project that it will climb by around $50 billion per year in the next six years. It is as if the federal government were stuck in a vicious circle of debt increases, and of deficit increases even, because I have yet to see tangible proof of the government's intention to reduce the deficit and to get the debt under control. We can only hope that they deliver something concrete in the next budget.

Up to this moment, we have been grappling with a debt and a deficit that are out of control. We have a federal system that, for all intents and purposes, is teetering on the brink of bankruptcy, like a ship that is slowly sinking to a watery grave. That is the situation in which the federal government currently finds itself, a serious one indeed.

I would even go so far as to say that the problem goes beyond simple economic calculations. It is also a historical issue. This debt and deficit were not created yesterday, they are not the result of poor management. A country, like a political system, is not a business like any other. There are needs and policies. We invest in programs which are not cost effective, unlike other businesses. This may be one reason among many why the current Canadian federal system is creating a debt, as well as a deficit, and is poorly managed.

There is a problem within the federal system. Right within the Canadian federal system, there is a mechanism which allows money to be wasted, to be spent in certain ways while the debt merely increases. I would like to give you a few examples. Let us consider some of the history of the federal system.

One must recognize first of all that Canada was founded on concepts which are no longer valid today. It was founded on the concept of uniting east and west. This is the great Canadian dream. This country, as we know, was shaped by an ideology which may have had validity at the time, but is now completely outmoded. We know that true, concrete and cost-effective economic trends involve a north-south dynamic, whereas for years and even a century the federal system has attempted to implement an unnatural system, basically between the east and the west, going against the natural north-south dynamic.

To achieve this goal, the federal government had to introduce several very costly policies. This attempt to keep east and west unified was of course no easy matter. It was very expensive; it has been very expensive. Considerable investments were necessary to maintain a system which was, shall we say, artificial.

In cultural matters, for example, think of the billions of dollars invested to create a Canadian culture, while most English Canadians now wonder what that culture is. But if we consider the billions of dollars spent on creating this culture, the image of a unified country, we would have to say it has been a waste of money. In the area of culture alone, we can think of cultural industries that were set up after the second world war, after the Massey commission, which set up the Canada Council and the National Film Board, and which made all sorts of demands on the CBC.

They set up, so to speak, with great panache and a lot of money, an industry to try to create an image of Canadian cultural unity. It did not work. It cost a lot, however, but it did not work. So, today, we are left with all the debts from this unfortunate undertaking, this unfortunate policy. Now we are paying these debts off and we are paying dearly. Those of us in this House are not overly concerned, because we will not be the ones to pay, really. It will be future generations, for sure. We can see from the policies of the federal government how the young people in particular will be paying.

I would like to give you another example. I could give quite a number of examples of mistaken policies by the federal system, which established these grand policies in an attempt to ensure its own survival as a system. The federal system established these policies in order to survive as a system. Not to protect the interests of the public, not to protect the interests of the regions or of communities, but to protect its own priorities here in Ottawa. It is as if the federal system in Ottawa had a life of its own. The policy of bilingualism, for example, established by Pierre Trudeau, which cost a lot, was not necessarily what was recommended by Quebec, the major stakeholder in this issue.

Of course, bilingualism cost billions of dollars and we know very well that, if we look at it analytically, that investment achieved nothing at all. There was no positive spin-off whatsoever following the investment of billions of dollars in that policy. We all know very well that anyone who knows anything about francophones outside of Quebec knows that those billions of dollars were spent with the best of intentions but they were attempts at artificially resuscitating communities gasping for their last breath. This was another unsucessful policy.

We can say the same for several other areas, including health. Just look at how the federal government has imposed itself on the provinces since the 1940s in areas falling exclusively under provincial jurisdiction, like health and education. The federal government did this in order to survive as a system. Once again, today, we find ourselves in a situation where our system is on the brink of bankruptcy, is insolvent, and is unable to continue to apply its policies because they were senseless from the start and are still senseless today.

I would like to say to you that one of the reasons Quebecers want sovereignty is to get out of this absurd system. It is not only weakened by a monstrous debt, but, considering all of the policies the government is trying to enforce across Canada, it is absurd.

[John Bryden, Liberal, Hamilton—Wentworth, ON]

Mr. Speaker, I appreciate the remarks of my colleague from Québec-Est. I would like to ask him a question in the context of his remarks that Canada as an entity always trades north-south and that a lot of the east-west trade we have is arbitrary, expensive and not profitable.

Do I take it he would recommend the Quebec dairy producers trade only north-south, that milk marketing arrangements between Quebec and the rest of Canada, particularly Ontario, should be dismantled forthwith and Quebec would be better off if it traded only north-south in that context?

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Mr. Speaker, I thank the the member for his question. It is quite interesting. However, I think he has misunderstood what I said with respect to east-west economic ties in Canada.

It does not take an expert to explain and every economist recognizes that the east-west link in Canada is historically and artificially built and that the natural tendencies in our economic trade are north-south. However, this is not to say that Quebec when it becomes sovereign will not want to trade with western Canada, Ontario or the other provinces.

Those economic bonds that have developed between Quebec and the other provinces are good and should continue. It is good not only for those provinces, Ontario and the west, it is good for Quebec as well.

Let us not be simplistic in our economic approach. It is not a question of severing those good things in the system. It is a question of liberating us and all the regions in Canada to be able to develop where economic development is due.

Take Alberta for example, a province well represented by the Reform Party. If we look at its economic situation, we will see that 40 per cent of its trade is with British Columbia, and another 40 per cent is with Asian countries, with the far east; a small 20 per cent with the rest of Canada.

It is totally normal. It is not a political statement to recognize those facts. It is just normal, economic practice.

[Patrick Gagnon, Liberal, Parliamentary Secretary to Solicitor General of Canada]

Mr. Speaker, I listened with a great deal of attention to the rather passionate but highly erroneous speech by our colleague opposite.

I find it strange to hear them describe the Canadian federation as being bankrupt. I do not think this is true. I am sure that if you look around you, and I see the hon. member opposite-