Mr. Speaker, I am pleased to rise again today, the day after the budget, to state the official opposition's views on the budget brought down yesterday by the Canadian Minister of Finance.
The budget before us consists of the usual downloading of the deficit by the federal government onto the provinces, which harms not only the very poor, persons on social assistance, the unemployed, students and senior citizens but also, as of next year, will also harm all Quebec and Canadian taxpayers, all the while- and this is the most unacceptable part-sparing big business, banks which are given a further reprieve, notwithstanding a minimal increase in the taxes they must pay this year.
Businesses and banks benefit from federal tax breaks as well as from the government's subsidies while everyone everywhere, the provinces, the most destitute people, taxpayers, as of 1996, will pay more and more for the laxness and incompetence of this government.
This budget entails first of all a decentralization of the federal deficit, a decentralization of the federal bill starting with cuts in federal transfers for post-secondary education, health and welfare.
This government is definitely proceeding in an underhanded, harmful way in 1995. There will be no cuts in 1995. It is easy to see why, this is the referendum year. There will be no cuts so Quebecers will be led to believe that this government is doing a
fine job. Because it is the referendum year, the true picture is not being given; they hide the extent of this government's failure in 1995. But as of 1996, look out, then we will feel it, then it will start to hurt. The Minister of Finance is asking us to go above and beyond tightening our belts, he is asking us to tighten them to the last notch and to avoid taking deep breaths.
In 1995, the federal axe is going to lop $2.5 billion off of federal transfer payments to the provinces; in this year, Quebec alone will be hit by a drop of over $700 million in transfer payments. Worse yet, with the referendum campaign safely behind them, the federal government will cut $4.5 billion in transfer payments in 1997; for Quebec alone this will mean a drop of approximately $1 billion.
Where are we going to get the money to make up this shortfall? There is only one taxpayer in Canada and Quebec, and he or she will have to absorb this shortfall. The tax hikes in this budget which purportedly contains no tax hikes are hidden, deferred and devious. And the provinces are forced to swallow the bitter pill.
The Minister of Finance does not talk about what will happen after 1997-98. But we know what he has up his sleeve, because year after year-and he is carefully hiding this from Quebecers in this referendum year-his government will remain as voracious, as money hungry and spendthrift when it comes to public funds as it is at present in a structure that is out of sync with Quebec's and Canada's socio-economic realities. Time and time again, taxpayers end up footing the bill for the Minister of Finance's lax approach and downloading to the provinces.
Quebecers will ultimately pay and will continue to pay because, what is left unsaid, what the federal government does not want to advertise, is that, although it downloads $7 billion in transfer payments up-front, the federal machine remains the same.
Have any departments been abolished? No. We will still be stuck with the Department of Health, the Department of Human Resources Development and all other departments that cause duplication and overlap, for which the Minister of Finance is proposing to stiff the provinces with the bill. The tax bill that Quebecers and Canadians will have to pay in the next few years will actually increase, despite the downloading of part of the deficit onto the provinces. Quebecers, Ontarians and everyone in the country will pay more because the federal government has given up some of its financial responsibilities.
What this amounts to is that, as of next year, Quebec taxpayers-because I am addressing them in particular today-will pay dearly in the year following the referendum. They will pay dearly if they do not create a real country, a normal country, a country which will assume total control for its public finances and will take the measures needed for recovery, a country totally committed to the plan, instead of a government that slowly demolishes its plan by arbitrary decisions, such as arbitrary cuts to transfer payments.
Quebecers will pay dearly if they do not make the choice this year that is in their best interests, which is sovereignty, a choice in favour of efficient budgeting and resource allocation. The situation is being hidden from them.
Nor are they being told that in 1997-98, despite all of their sacrifices and all of the tax hikes they were subjected to at the hands of the Quebec or federal government, the federal debt will still be $625 billion. Moody's has the federal government's rating under review because of the size of the debt in the mid-term and the government's lack of control over the situation.
The decision Quebecers must make is becoming increasingly clear, and became even clearer yesterday. Staying within the federal fold in the years to come pretty much boils down to this: fewer and fewer federal services and benefits; more and more offloading of deficit problems onto the provinces, which will ultimately result in tax hikes, because it is the same taxpayer; more bad news year after year; a reduction in the Quebec government's ability to do something about job creation, to put in place a plan to revitalize the economy, bring about more jobs and growth in all regions of Quebec, because we do not know what will hit us next with federal decisions. This is the scenario in 1996 if we stick with the status quo and stay in the federal fold.
Quebecers have a choice to make, a choice that will be instrumental in encouraging economic growth and employment and putting an end to the slump for which the federal government is to blame.
Not only is the Minister of Finance offloading his responsibilities onto the provinces, but he is still taking aim at his favourite targets in a feeble attempt to improve the state of Canada's finances. These targets are students, those on social assistance, the ill and the unemployed. He is still targetting the unemployed, as if they had not already paid enough since this government came to power, since this government broke its promise to help them and create jobs.
Already this year the Minister of Finance planned to cut unemployment insurance by $2.4 billion. Next year, he was going to cut another $2.4 billion, and now he has added a further 10 per cent cut, to the tune of $1.5 billion, on top of the billions in cuts already announced. Is this a pro-employment position? Is this the concern for the neediest members of our society that the red book promised? The famous red book that we heard about for months on end and that they have now forgotten.
All the talk about creating jobs does not square with what we see in this budget. As far as job creation is concerned, the only program set up resulted in precious few jobs, 45,000 temporary jobs was the figure mentioned, and yesterday the Minister of
Finance decided to cut the $200 million remaining in the program. Jobs, jobs, jobs-is this what they meant?
My colleague from Rosemont pointed out to me this morning that the government's forecasts show unemployment in Canada holding steady at about 9.5 per cent over the next few years. The government has deliberately, for these forecasts are produced by the government, forgotten all about job creation. It even goes so far as to predict that unemployment will settle at around 9.5 per cent over the next few years. Do you know what that means for Quebec? It means an unemployment rate of 11 per cent that will not change as long as we stay with the status quo.
We went over the budget carefully and found a lot of things, one of the more astonishing being that this record unemployment rate will be achieved and maintained without any increase in productivity. And a good thing, or maybe not. If there had been an increase in the productivity forecast for the next few years, the unemployment rate would probably climb to 13 or 14 per cent in Quebec and in Canada.
At the same time, we must be increasingly productive, improve our performance, for with the globalization of trade, the new GATT agreement and the World Trade Organization, this will be essential if we want to hold our own and capture a greater share of international markets. But the Minister of Finance does not forecast any increases in productivity.
This budget is already bad news in terms of employment, especially since the Minister of Finance tells us in his projections that in the next three years and even after that-his projections stop after a while because he is certain that we will realize how bad things are in Canada-, the unemployment rate in Canada will stay 4 per cent higher than in the U.S.
By conscientiously basing his projections on such data and turning his back on measures to promote long term jobs, the minister spells disaster. While the minister picks on the provinces by shifting onto them the burden of these odious large scale tax reforms, while he picks on students, welfare recipients, sick people and perhaps seniors-he is now putting in place a committee to review all old age security programs-, this government is maintaining undue privileges for big business and the very wealthy.
As far as business is concerned, the Minister of Finance took the trouble to denounce business subsidies in one paragraph, saying that these subsidies distort competition and that they no longer have their place in the new international order, that they result in unfair competition among nearby businesses, or at least among Canadian businesses. He strongly denounces these subsidies and then what does he do? He cuts these subsidies by 60 per cent over three years when, in the opinion of the Quebec employers council, headed by Ghislain Dufour, who is certainly no lefty, he should have eliminated these subsidies completely and quickly. Although he agrees with this analysis, the Minister of Finance will maintain $1.5 billion's worth of direct business subsidies in 1997.
By then, the government will have cut social housing by more than $307 million. What compassion, what social conscience from this government, which talks about jobs, jobs, jobs, about the most disadvantaged, whose rhetoric is worthy of that of the NDP in its good years, but which, in fact, is worse than the Tories, if not very close to the Reform Party.
If at least the Minister of Finance and his government had been smart enough to slash half of the $3.8 billion in subsidies now available to business and redistribute this amount equitably among R&D efforts in Canada to improve business competitiveness and social housing, we would have understood and applauded this better distribution of resources. Instead, not only does he maintain large direct subsidies, but he also slashes social housing and pursues the shameful reforms he started last year.
The same goes for tax reform; preferential treatment is left untouched. In 1991, several thousands of big businesses did not pay a single cent in tax to the federal government, thus depriving the federal treasury of hundreds of millions, if not billions of dollars in lost revenue. These thousands of big businesses, which still make profits despite the downturns in the economy since 1990, will continue to avoid paying their fair share of taxes. There is nothing in this budget which resembles a minimum tax, precisely so that these large businesses can still enjoy all kinds of roundabout ways to avoid paying their fair share.
As far as tax agreements are concerned, as the Auditor General himself pointed out and as we have been saying for a year and a half, there are now 16 countries considered to be tax havens, which help those businesses refusing to do their corporate duty and pay their fair share to the federal treasury. These tax havens help such businesses divert hundreds of millions of dollars by reporting fictitious losses by phoney businesses and deducting them from revenues, thus diverting money from the federal treasury.
No changes were made to those tax havens. Quebecers and Canadians are asked to tighten their belts to the last notch, but nothing is done about such outrageous things. Do you not find anything wrong with that picture? I know you cannot answer, Mr. Speaker, but there is something wrong.
Yesterday, the finance minister-I do not know whether he had a horn to honk but he should have had one on hand-said that businesses, big businesses in particular, were contributing
more in terms of taxation and that banks were finally going to be paying taxes to the federal government.
As regards banks, the poor banks, over the next two years, the minister plans to impose a temporary tax, not a permanent one, on them to appease public pressure. Because the public was saying: "We pay. Since 1984, that is all we have been doing: pay, pay, pay. We undergo cut after cut, while banks make profits and pay no taxes".
To respond to this public pressure and give the impression that social justice matters to him, the Minister of Finance plans, over the next two years, to collect a whopping $100 million from them. One hundred million dollars from all Canadian banks. Just to give you an idea of the order of magnitude here, the Royal Bank of Canada, this small bank, generated a record $1.2 billion profit this year. How much we will collect from this bank over two years? No wonder that interest rates went down slightly today. You scratch my back and I will scratch yours.
Where businesses in general are concerned, the Minister of Finance said that they will be contributing to put our public finances on a healthy footing. See how they will do so. Through a 1.5 per cent tax increase. Since businesses already pay $18 billion to the federal taxman, this will bring their contribution to approximately 17 or 18 per cent of the tax pie. The money filling the federal coffers really comes from the taxpayers.
The business sector will pay an additional $260 million in 1995-96, $270 million in 1996-97 and $280 million in 1997-98. The amount was indexed to give the impression that it had actually increased. Did you know that not only this effort represents a 1.5 per cent increase in the "tax burden" because businesses may seek ways to avoid paying it, but it is ten times less than the effort asked from the unemployed this year. Ten times less. And they tell us it is fair. There is something very wrong with this government. It is not the first time I tell you this, but I do think it is profoundly unfortunate. It makes me very uneasy.
The same deceitful practice, or just about, was applied to tax treaties. The Minister of Finance said he was acting on a request from the official opposition. Yesterday, the finance minister literally laughed in our faces. He laughed in our faces because he is not planning to eliminate the unjustified privileges enjoyed by the wealthiest of Canadian families-I am referring to family trusts-until 1999.
This reminds me of the story of the police officer who gives thieves two hours notice that he will be coming over to arrest them. By 1999, some family trusts, not all, because we never said all family trusts were bad, but those used as powerful tax planning instruments by wealthy Canadian families, will have been transferred in other instruments, instruments that the minister has left untouched in this budget. Any tax that should have been recovered on the capital gains made on these trusts every year will be lost. In coming up with such things, the minister is laughing in our faces.
As for duplication and squandering, it will continue. It will continue because the federal government is not withdrawing from areas of provincial responsibility. The Minister of Intergovernmental Affairs himself indicated that the federal government would continue to have its say in all areas of provincial jurisdiction. It will continue to pry into these areas, while at the same time contributing less and less.
Duplication and overlap will continue because, as I mentioned earlier, those federal departments where there is a problem will remain. When has a department ever been dismantled? Never. How can one say that duplication and jurisdictional overlap will be reduced and that the federal system is undergoing a major overhaul when nothing has changed?
This brings me to these wild layoffs in the Public Service. There are two ways to trim an organization that is too fat, which is what the federal public service is, in the opinion of the official opposition. There are two ways to streamline: the good one and the bad one.
This government is going about it all wrong. I can still see the Minister of Intergovernmental Affairs-I could have cried when I saw him-sitting comfortably at his desk, typing away on his computer, deciding how many jobs to cut in each federal department and crown corporation. Not for a moment did he did think of going to talk with those concerned. Not for a moment did the minister think that behind these figures on his computers there were real people. Not for a moment did he stop and think that these people have duly elected union reps, representatives from the Public Service Alliance of Canada, with whom he could have got together to discuss his plans.
It is obvious that the public service needs to be restructured. It is obvious that it is too large. It is obvious that manpower reductions are required, but there is no need to make wild, inhumane cuts, as contemplated by the Minister of Intergovernmental Affairs, and without any guarantees. There are no guarantees.
Who says that laying off 45,000 people will result in gains, in terms of effectiveness? Who says that the low morale in the organization will not affect services to the public? What guarantee do we have, and this is important, that the Liberals across the floor, who are prone to patronage appointments, will not favour their friends by contracting work out to them? This happened in the past. Yet, there is no guarantee that it will not happen again. There is only a risk that the indiscriminate lay-offs which are
taking place will result in a need to contract work out and that, instead of saving money, the federal government will end up spending more than ever before. That is also something which happened in the past.
We always forget that, within the public service, there are competent and experienced people who do a good job. If you contract the work out, it often ends up costing you more because you deal with businesses whose only objective is to make a quick profit at the expense of Canadian taxpayers. Let us not forget that.
As I have said several times, when the official opposition talks about trimming the fat in the federal administration, when it says that Canada is overgoverned, it does mean that the public service is too large and that there are too many public servants. However, there is a proper way to deal with that. We do not endorse indiscriminate layoffs. Even the Public Service Alliance of Canada told us that it was prepared to discuss restructuring, provided it was properly thought out, did not merely mean cuts which will end up costing taxpayers more for fewer services provided by disheartened public servants. This is a difficult situation.
I do hope that the government will again meet with PSAC officials to discuss that issue, something which it has not done since it came to office. The first thing the government did when it took office was to stop discussing, even though it had criticized the breakdown in discussions between the previous Conservative government and the unions representing public servants. This government should sit down with the PSAC. These people have suggestions to save money. They have ideas as to how the federal administration can be streamlined in an intelligent way. The government should rely on their expertise.
As regards agriculture, yesterday the minister avoided the real issues. He did not want to stir up old controversies.
I remember one such controversy in 1982, when there was talk of amending the Crow's Nest Pass agreement. Back then, I noted that there was a very real conflict between the interests of western cattlemen or beef producers, which even differed from those of their fellow grain producers, but which were mainly at odds with those of easterners, particularly Quebecers.
In his budget, the minister eliminates the $560-million subsidy for grain transportation to railroads in the Prairies. However, to make up for that loss, the minister will give western producers, based on their cultivated acreage, $1.6 billion to compensate the alleged loss of land value in the West. However, the Minister of Finance and the Minister of Agriculture both forgot that the Crow's Nest subsidy created a healthy balance in Canadian agricultural production. Indeed, while western farmers concentrated on grain production and enjoyed subsidized transportation of their products, livestock breeding developed in the East, particularly the dairy and pork industries.
If you break that balance by eliminating the Crow's Nest subsidy, and if you give compensation for the alleged loss of value of western lands, you overlook an important element, namely the impact of such a measure on eastern producers.
Nowhere in the budget speech is there any mention of compensation for eastern producers, particularly Quebec producers, who will also suffer. Doubly so. Indeed, not only will western producers get a $1.6-billion subsidy to adjust, but they will also be able to use that federal money, 25 per cent of which comes from Quebec, to compete with Quebec livestock breeders. Is that the federal government's idea of fairness? Is that the nice balance between the East and the West? Things do not work that way.
Moreover, western producers will get a loan guarantee of one billion dollars, plus $300 million to adjust to the new situation. They will receive $3 billion to make up for the loss of the $560-million Crow's Nest subsidy. There is something very wrong right there. It is unfair to use federal moneys, 25 per cent of which is comes from Quebec, to support the competition from out west on our own markets.
While the West will get $3 billion, Quebec will lose $30 million because the Budget provides for a 30 per cent reduction in dairy subsidies to eastern producers, which will affect industrial milk, cheese, yogurt, ice cream and the rest. Fifty per cent of the dairy products we consume are produced in Quebec. So the government gives $3 billion to the West and takes $30 million away from dairy producers in Quebec. Is that fair? Is that how the government wants farmers in Eastern and Western Canada to help put public finances back on track?
Mr. Speaker, fair is certainly not the word here. As for dairy producers, this merely adds to existing pressures, because we should remember that during the past two years, under the new World Trade Organization agreements, dairy producers in Canada and Quebec have had to face increased competition. They lost one of the basic pillars of the dairy production system, referred to as Article XI. Since that time, competition has increased steadily, as the tariffs that replace protection at the border under Article XI go down and foreign products are allowed to compete with Quebec and Canadian dairy products.
And now, the government is asking them to tighten their belts even more. Yesterday, Laurent Pellerin, president of the UPA, said that farm producers were prepared to do their fair share, but this was too much. This was absurd.
I would also like to comment briefly on the international assistance envelope.
Time and time again, when the members of this government were in the official opposition, they condemned the Conservative position on international assistance. Time and time again, the Minister of Finance-who was not Minister of Finance at the time-and the present Prime Minister expressed their outrage because the Conservatives were cutting international aid. What they are doing is far worse.
The Budget brought down yesterday by the Minister of Finance provides cuts totalling $532 million in international assistance, thus exacerbating a situation where Canada is already reluctant to reach a helping hand out to the neediest international communities. When we talk about the neediest, we are talking about millions of children who are dying every day.
It exacerbates a situation that was already criticized under the Conservatives, and the cuts in international assistance continue. Not only is this government utterly lacking in compassion for the neediest in Canada and Quebec, it is even more so in the case of children who are dying daily throughout the world.
And now for National Defence. Another area where everyone has to do his fair share. The minister says the government will close the base at Saint-Hubert, in Quebec, and will cut back staff and reduce infrastructures in Bagotville, also in Quebec. His own analyst at National Defence believes that, in Quebec, the expenditures by the Department are short by some $650 million, on average. Six hundred and fifty million dollars. This is the minimum figure.
Year in and year out, despite the size of the population in Quebec and the significance of tax contributions-Quebecers pay $30 billion in income and other taxes into the federal coffers, we are not talking about gifts here-despite all that, defence department spending in Quebec is short annually by a minimum of $650 million.
In addition, even though Quebec has roughly 24 per cent of the population and contributes 23.5 or 24 per cent of the federal tax base, only 15 per cent of national defence infrastructures are located there. A highly disproportionate amount compared to the demographic weight and the tax contributions of Quebecers.
Despite all of this, we are told that everyone has to make an effort. We have been streamlining for years, we have been paying for it for years. In Quebec, we have had our fill of paying for it. When they say that everyone has to pay for it, they should have a look and see what we have already paid without getting our share in Quebec of the annual expenditures and investments by the Department of National Defence. They should have thought twice before they did it. Quebecers will remember because we will constantly remind them of it.
This budget is hypocritical, as I have already pointed out, because the truth has been kept from senior citizens. They have been told that things are fine and that nothing will change within the federal plan, just when a committee is being set up-and the Leader of the Opposition raised the problem yesterday-to examine the whole problem of pensions and old age security next year. As the Leader of the Opposition and member for Lac-Saint-Jean put it so well yesterday, committees are not set up to increase pensions.
However, in 1995, a referendum year, the federalists, and the Liberal Party in particular, would lose a major argument if they tackled the seniors now-the argument that seniors' pensions would decrease if they changed governments. They did not want to do this before the referendum. They are keeping the truth from Quebec seniors just the way they are keeping it from all of the people of Quebec. And the truth is that there is no more money in the till.
The finance minister has found a way to betray the Prime Minister's promise not to raise taxes during the first two years of his mandate. Last year, his strategy of cutting the age tax credit for senior citizens brought in $500 million in extra revenues. This year, taxes on gasoline and tobacco will bring in a total of some $800 to $900 million.
This budget does not address the real problems or respond to people's real needs. Maybe the federal government will get away with it this time. Maybe the bond rating agencies will allow its credit rating to stand if the government appears to have public finances in hand. But these agencies will most surely have their eye on the provinces since the federal government has offloaded all of its financial problems onto the provincial governments. So regardless of whose credit rating is dropped, there will be an increase in interest rates when the time comes to refinance the debt, whether the federal debt or the provincial debt or Quebec's debt, the burden will still fall onto the same taxpayer.
This situation, this observation is deceptive. My Reform colleagues would do well to bear this in mind. Nor does this budget in any sense set a strong, solid course in regard to the accumulated national debt in the medium term, something which Moody's bond rating service has clearly pointed out. It is precisely the magnitude of the national debt which worries investors and has a major impact on interest rates, the lack of investments, the lack of significant job creation to recover from an unemployment rate hovering around 10 per cent. As of 1997, and I am warning my fellow Quebecers, more sacrifices will be imposed on them. The federal government will continue cutting and offloading, leaving the Quebec government the hateful task of increasing taxes or cutting spending on essential services.
But that will not be the end of it since this budget has resolved nothing. We will always face a monstrous debt if we do not take steps of some sort toward renewal, true structural renewal, to create a new country and breathe new life into Quebec. If this is not done, we will pay for it and go on paying.
In Quebec we have the chance to start afresh, to create our own social plan, to make an honest general effort not to be at the mercy of this government's arbitrary measures year after year which result in higher taxes any way you look at it. We can decide to extricate ourselves from this system or to keep sinking with the big federal machine.
I think that Quebecers will choose to change governments, they will opt for renewal instead of the doldrums year in, year out, with no real social plan, without hope for job creation, without hope for enrichment, other than the enrichment of the federal debt.
I would like to suggest the following amendment to the Minister of Finance's budget speech; I move:
That the motion be amended by striking out all the words after the word "That" and substituting the following:
"the House of Commons reject the government's budget which systematically offloads the federal government's financial problems onto the provinces; makes no provision whatsoever to ease the tax burden of the middle class while preserving tax loopholes for wealthy Canadians and large corporations; and completely disregards the pressing needs of the unemployed and the most disadvantaged who will bear the full brunt of additional cuts to social programs". brev