Debates of Feb. 28th, 1995

The Budget

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, this is the longest question I have had in a long time. My question for the Prime Minister concerns page 58 of the budget plan and the granny tax.

On pension reform, the government announces it will include in its changes the provision of OAS benefits on the basis of family income. That would mean that women who are 65 and over receiving OAS would lose their OAS based on their spouse's income. Will the Prime Minister confirm this to the House of Commons?

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, my answer is that the hon. member's claim will not come true. At this point, we want to ensure that the pension plan is reviewed. We are required, under legislation enacted by Parliament, to meet with the provinces every five years. We must meet them this year to discuss that issue. We must ensure that Canada's pension plans can continue to exist for generations to come, as the Minister of Finance indicated in his budget yesterday.

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

Mr. Speaker, my question is for the Minister of Finance. Yesterday, the minister announced that the grain transportation subsidies would be eliminated, adding that a generous compensation of close to $3 billion, which includes direct subsidies, would be given to western producers. The minister also reduced by 30 per cent the subsidies to dairy producers, who are not so lucky since they will not be getting any compensation.

How can the Minister of Finance justify such an unfair double standard: dairy producers, most of whom are in Quebec, will not get any financial compensation, while western grain producers will?

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

Mr. Speaker, first, there is a fundamental difference between the two. Clearly, we just eliminated the Crow benefit. However, as regards subsidies to the dairy industry, the Minister of Agriculture is in Quebec City today to meet with association officials. We did not abolish that subsidy: we reduced it by 30 per cent. I have some problem with the member's point of view, but I do understand it. We have to be consistent. We did reduce the subsidy by 30 per cent. May I quote the Leader of the Opposition when he took part in a debate with Joe Clark? Mr. Clark said:

"We have substantial subsidies of industrial milk production. As you are going to try to make an independent Quebec more competitive, would you drop those subsidies, Lucien?"

And the leader of the Opposition replied, and I quote:

"If you ask me yes. Yes, we should stop doing that".

[Some hon. members]

Oh, oh.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, my question is for the Minister of Finance.

While normal Canadians are taking a hit in this budget, this year's spending estimates reveal that the budgets for running the Senate and ministerial offices have been increased.

Why is it that senators and politicians continue to ride the gravy train on planet Ottawa while overtaxed Canadians have to tighten their belts?

[Art Eggleton, Liberal, President of the Treasury Board and Minister responsible for Infrastructure]

Mr. Speaker, I believe the Senate line in the main estimates shows a $1,000 increase.

I understand that the members of the other house are still looking at possible cuts, as has the House of Commons. The chief government whip announced just last week that cuts are being made in the budget of the House of Commons. Not to mention that yesterday in the budget the Minister of Finance announced 19 per cent cuts over three years. These are the most massive cuts which have been made in government expenditure in modern times. In addition to that 19 per cent, a 33 per cent reduction in the MPs pension plan has been made in one year.

Presence In The Gallery

[The Speaker]

My colleagues, I would like to draw your attention to a person in the gallery who is no stranger to this House. He is a former Speaker of this House, my brother Speaker, the Hon. Alan A. Macnaughton.

[Some hon. members]

Hear, hear.

The House resumed consideration of the motion that this House approves in general the budgetary policy of the government; the amendment, and the amendment to the amendment.

The Budget

[John Harvard, Liberal, Winnipeg—St. James, MB]

Madam Speaker, I want to offer my congratulations to the Minister of Finance on his presentation of yesterday's budget, a budget in my opinion that was fair and balanced. I think it meets the first test that was put down by all Canadians, that it had to be fair and balanced, fair to all Canadians, all individuals and all regions. The finance minister has succeeded in doing that, at the same time making a major effort in bringing down the deficit and the debt and getting government right for the first time in a good many years.

I rise in the House today not only to address the budget which was introduced yesterday but also to comment on a disease which I see gripping Canada, a disease which becomes more visible and widespread during events like this budget debate. It is a disease born from a lack of understanding, compassion and acceptance. It is a disease which focuses on self. It is a disease perpetuated by individuals, businesses, media types and hon. members alike. I am referring to what I call the culture of victimization.

This culture is both painted and exacerbated with brushes almost exclusively from the political right. I believe that in the last 10 years there has been an alarming increase in the perception that we, each and everyone of us, is a victim. Canadians are victims. We live in fear of further victimization. In truth, I believe that this paranoia has created a society in which we are all victims of something out of necessity.

We are victims of crime. We are victims of taxes. We are victims of government. We are victims of big corporations. We are victims of interest groups. We are victims as westerners. We are victims as Quebecers. We are victims as easterners. We are victims if we speak English. We are victims if we speak French. We are rarely just people who share a single common bond. However, we do have that common bond. We all are Canadians. It is this undeniable fact that we are all Canadians upon which the Minister of Finance has based his budget.

The $7 expenditure reduction for every dollar in new tax revenue is not a burden attributable to one type of Canadian but to all Canadians. If we are all affected, can we possibly all be victims? As I listened to some hon. members opposite I hear those ominous words reinforcing the notion that we are victims.

Some interest groups and even provinces which did not get what they wanted from this budget have said that this government has not been straight with them. Like spoiled children, our critics demand more for themselves with little or no regard for others. At the same time they demand greater fiscal restraint and usually expect someone else to shoulder their burden.

They tell Canadians to believe, really to expect that it is the government's responsibility to make things better for themselves. It is the government's job to make life happier: "If life is not the way I think it should be it is because that big, mean government machine will not let me succeed, for I am a victim". We have all in some way contributed to the creation of this culture in which we perceive ourselves as helpless victims.

For example, economic indicators suggest that Canadians are recovering from the recession of the early 1990s. Yet a certain trauma lingers. The Minister of Finance surpassed his 1994 cost cutting goals and yet the opposition howls. Program spending will be reduced by about $10 billion and that is a benefit to all Canadians. The opposition howls again: "What about me?".

In many ways, and thanks to the critics, Canadians have become more dependent on government. Government is expected to ensure that we all have jobs and also accommodate our every whim. Government is even expected to bandage our scratches. We have become less reliant on ourselves and on our own abilities. Thus we have let ourselves become victims. We cannot think only of ourselves. Nor can we accept this characterization that we live in a culture of victimization.

Kennedy was right when he said our privileges can be no greater than our obligations. The protection of our rights can endure no longer than the performance of our responsibilities.

Reformers would have us slash and burn programs and services to all Canadians; let us cut deeper and indiscriminately. The political right in this country would never have conceived the notion of compassion and human understanding as demonstrated by the introduction of the new Canada social transfer to the provinces.

It is true that money to the provinces will be reduced as a means of getting our financial house in order. This action cannot and should not be viewed as an indirect means of attacking individuals. Rather, such action demonstrates our commitment to getting government right by reducing overlap and duplication.

Canadians are being presented with the opportunity to help create and develop a more mature fiscal federalism. Through initiatives like the Canada social transfer the government has met the requirements needed to accommodate citizens' con-

cerns for more sustainable programs and provinces' concerns for greater flexibility.

Keep in mind that the Minister of Finance has taken into account that change requires a period of adjustment. This government has not lost sight of the individual faces which will be affected in this budget. This government does not intend to perpetuate the notion that we live in a culture in which we are victims.

Reformers in their budget played on the fears of those who see themselves as victims. Some members opposite would have us believe that if we simply cut, cut, cut then everything will be better. At the same time Reformers will not commit to one course of action. If you do not like where we have made cuts, then the response is simple: make your own cuts. They had better add up to the bottom line. Such a nonchalant, bottom line approach implies that wherever the greatest burden exists according to your own criteria, cut that. Just make sure you meet the bottom line.

It is that kind of naive analysis which perpetuates our cultural victimization. It would be wonderful to look at our own personal budgets and cut those items which seem to cost the most. Why worry about food, clothing and shelter? According to some members it is only the bottom line that counts. Why concern yourself with being human? We simply must balance the budget regardless of the social cost.

These types of cuts to food, clothing and shelter are unrealistic on a personal level and are unacceptable at a federal level. We must evaluate what is important to us and from there determine where we can reduce expenditures. That is the approach taken by this government and by this finance minister.

Simply cutting to meet a bottom line would make us even greater victims. Sound reasoning and methodology were used to determine areas of waste, areas of duplication and areas lacking profitability. Through this realistic evaluation of Canada's economic house, the Minister of Finance has introduced an approach for fiscal responsibility which affirms the notion of cultural success. The government is not contributing to the disease of cultural victimization.

Essentially the third party would leave us to our own greed: "I live in the west, so I will cut services in the east". Let us be honest. Society cannot survive if we are enthnocentric. This type of self-absorbed regional attitude creates a slippery slope; we pick at the cultural threads of the Canadian fabric in a futile attempt to hang on.

What happens is that the fabric becomes warn and ripped. We must not continue to think we live in a cultural environment as victims. We must not succumb to the notion that in order to survive we must be the strongest or the most resourceful.

Reformers would have us all fall prey to this logic, a logic which would throw out the social fabric and not repair it. If use of this type of logic has as its only goal the elimination of the debt, then what this approach does is forget that each and every one of us, regardless of our province or country of origin, whether from Manitoba or Prince Edward Island, whether Yukon or Nunavut, new Canadian or native Canadian, is still a member of a community.

We cannot survive if we focus on only my needs or my wants. By virtue of our tendency as human beings to exist in groups because we are social creatures we must look beyond our own shadows.

Canadians wanted and deserved a budget which espoused the virtues of fairness and equity. The minister has accomplished that goal. Both corporations and individuals are equal partners in the fight to save Canada.

We know that the Minister of Finance is serious. That is why both individuals and corporations have been brought into alignment. Through improvements to the tax system, for example, requiring professional and other unincorporated business to pay taxes on income in the year in which it is earned, just like wage earners do, this budget has actively removed barriers which have contributed to the culture of victimization.

We are fortunate that we live in a society that enables us to exist as a synergistic entity where the whole is greater than the sum of its parts or members. I will not deny that each of us has problems, some unique to a few individuals, some to a particular region of Canada, which affect all of us.

We must be able to stretch out our arms further and run faster so that we are not borne ceaselessly into the past. We must accept our responsibilities first as Canadians. We must also realize that change is not inherently bad or negative. We must realize that we are not victims but victors.

At this point I want to congratulate the Minister for Human Resources Development and fellow federal Manitoba Liberal caucus members for their hard work and commitment with regard to this budget.

Two months ago the prospect of losing air command became a horrible possibility. However, after yesterday's budget the reality for Manitobans is less severe. Only about 350 to 375 jobs will be affected as a result of air command's closure. This is a significant difference from the anticipated number of jobs which would have been lost. Although loss of air command will be difficult for Manitobans, I am confident that once the government's reasons are understood, Manitobans will be able to accept this change.

Acceptance will result from a sense of fair play because it was not only air command that was closed, but naval command in the Atlantic region and army command in Quebec were also closed.

I can tell members there were people in Winnipeg who thought that we would not be fair, that we might close air command but we certainly would not close army command in Quebec. It was done because the minister and the government believe in fairness.

Manitobans will be able to appreciate that we were not singled out for cuts. All regions have been affected. We cannot forget that these closures are significant to their respective regions but we will not lose sight of the fact that an entire level of management has been removed at considerable saving to all Canadian taxpayers.

The budget introduced yesterday redefines Canada and its relationship with the provinces. Canadians are entering a new era, a significant step has been taken toward eliminating the culture of victimization which we have created. At long last, government has sought to ensure that fundamental values are preserved while appreciating the inherent differences among provinces. Through the decentralization of airports in Canada, for example, the government is preserving its role of guardian but accepts the realization that people in Winnipeg, Toronto and Barrie, Ontario are able to oversee the successful operation of their local airports.

These efforts not only remove layers of bureaucracy but also serve as positive motivation for all Canadians who are able to function within a federation and not be victims of our regional identities.

There is more to government than just cutting. There is smart government which appreciates the social, cultural and moral obligations. Perhaps now we can move beyond an attitude that asks: What do you expect in a regional country? Of course we are going to complain. Perhaps the Leader of the Opposition will come to appreciate the notion of fair play and understand that Quebec may receive $2 billion less in transfer payments but that all the provinces will experience the same kind of reductions.

Perhaps members opposite will learn something of fair play and refrain from trying to manipulate reality to suit a limited agenda. I am referring to comments made that immigrants living in Quebec should not be allowed to vote in a referendum, the question evolving to include the notion of who is a real Quebecer and who is not. We must work from our most common denominator. We are all Canadians and we should all be entitled to the pain and to the glory.

Ironically, most times, leadership is equated to economic performance. President Clinton is doing the very same thing across the border as we are doing here. He is trimming the bureaucracy and reducing the debt. Despite President Clinton's efforts the economic outlook is not nearly as positive as it is in Canada. Yet Americans seem to believe in themselves and in their ability to overcome any adversity.

In Canada, however, we are being convinced how bad it really is. We listen to the leader of the third party, who when talking with the media uses words like dishonest, cowardly and hypocritical. I wonder how we can forget that ever-ominous threat that the chickens will come home to roost. I suspect that the grassroots are having their gooses cooked. The political right would have issues decided by polls. It would be democracy by telephone. There would be no consultation, no research, no compromise or leadership. Opinion would reign supreme.

I suspect that the Reform leader would soon find out that burdening every Canadian with every decision would have a number of disastrous results, much like a grassroots guru attempting to split atoms like he splits economic hairs.

This may come as a surprise to members opposite but the reason behind democracy and having an elected representative is the notion of efficiency and leadership. To govern is to choose.

If we are to survive we must learn to believe in ourselves and in this great country. We must accept the economic and social realities and strive for tomorrow. Some would suggest that things can only get better, but I submit to the House that it is a subjective goal.

In the eyes of the United Nations, Canadians live in the best country in the world. In a recent Swiss survey four Canadian cities were considered among the 12 best places in the world to live. Other nations and other cultures believe in and envy the Canadian reality. The question now is: Why are Canadians so cranky? Why is it that the majority of Canadians feel victimized in one way or another?

Our challenge is to create a culture not of victims but of victors. We must nurture the creation of a culture in which we act out of compassion for others, not necessarily only for monetary compensation. Success should be measured by the results, not by the amount of money spent. Let me repeat, success should be measured on the basis of results. These results must be evaluated both according to economic criteria and social criteria. That is what members opposite fail to appreciate about the minister's budget of yesterday.

When has a Reformer asked us to think of others before thinking of our own individual interests? When has the Leader of the Opposition considered the wants of Quebecers when he muses about postponing the referendum date so as to be able to manipulate the results? This is not democracy. When will Canadians be allowed to seek appreciation and elevate their

self-esteem, receiving joy from the notion that the receiving is in the giving?

This is a budget debate, but there is more to a budget than numbers. There are the people who are affected by change.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Madam Speaker, the hon. member used the word manipulating several times, as in manipulating facts and figures in our analysis of the budget that has just been brought down, and as in political manipulating with respect to the referendum. I may remind the hon. member that in Canada, political manipulation is what happened in 1982 when the Canadian Constitution was patriated against the will of a unanimous National Assembly in Quebec. The terms of the contract that binds us were changed. That is political manipulation.

I would like to ask the hon. member, since we have nothing to gain by staying in Confederation and, eventually, we will have a referendum, whether he thinks the budget that was brought down yesterday is likely to help matters?

[John Harvard, Liberal, Winnipeg—St. James, MB]

Madam Speaker, there is a body of opinion in the province of Quebec that says we are committed to the so-called status quo, that the choice in the coming referendum will be between the status quo and sovereignty.

I submit there is another choice. It has to do with a progressive federalism, a federalism that is alive, a federalism that grows and evolves. Looking at the budget you can see how the federalism we have is flexible and how it can grow. The changes recommended under the Canada national transfer program give more flexibility to the provinces, which is something they have wanted for a long time.

We in the federal government want national standards and national principles and we will have them. The budget shows that federalism, as we know it, is a living thing. It is a living organism. It changes with the times. It adapts to new circumstances. It adapts to new conditions.

I know this will come as a great disappointment to the sovereignists that go around telling their friends that our kind of federalism is carved in stone or frozen in ice. Nothing could be farther from the truth.

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Madam Speaker, there is a lot of talk about flexible federalism. In 1980, Quebecers said no to sovereignty for Quebec, one of the main reasons being that we were told if we voted for sovereignty, we would have a terrific problem with debt, unemployment, the deficit and taxes. Of course we said no.

In 1980, Canada's debt was $80 billion, and now, 15 years later, it is $550 billion. Is that progressive federalism, is that flexible federalism? Would the hon. member not agree that this much vaunted federalism is "broke"?

[John Harvard, Liberal, Winnipeg—St. James, MB]

Madam Speaker, when we came to power in the fall of 1993 after nine years of Conservative rule our fiscal house was in shambles. It was not in order. It has taken us a number of months to get to where we are today. However, this budget is going to get our fiscal house in order.

If there is disenchantment in the province of Quebec or anywhere in the country, it is because we had a federal government for nine years that simply would not address the nation's finances, that would not address our national problems.

This government will address those problems. The deficit and debt will be reduced systematically and methodically. In the not too distant future we will be in a situation where there will be no deficit whatsoever.

[André Caron, Bloc, Jonquière, QC]

Madam Speaker, I welcome this opportunity to speak to the budget brought down yesterday by the Minister of Finance. I want to take this opportunity to inform the public that although the Minister of Finance promised to do something about the debt and tax reform when he brought down this budget, he failed to keep his promise.

Yesterday, the Minister of Finance started his budget speech by identifying Canada's two major problems. First, the Quebec referendum and second, the debt. Upon reading the budget I have to conclude that the Minister of Finance is only considering Canada's problems. Of course Quebec seems to be a problem for Canada. What is the Minister of Finance doing and what has the federal government been doing for the past 20 or 25 years? The federal government considered the problem, looked at it, examined it, thought about it, but did nothing to resolve it.

This is somewhat the case with the debt as well. For 25 years, finance ministers have been looking at the debt. Both Liberal and Conservative ministers, including Mr. Lalonde, Mr. Wilson and Mr. McEachen have had a look at it. Each one has said, "It is really too bad, we spend more in Canada than what we earn. It is too bad. We should reduce the deficit. We must reduce the debt". And if we take a look at the tables, we see that Canada's debt has been growing for the past 20 to 25 years. We looked at the tables produced by the Minister of Finance following his budget, and the debt continues to grow.

So Canada is looking at its debt problem as it is looking at the problem of Quebec, at what for it is the problem of Quebec. I think that one of Canada's greatest weaknesses is that it looks at its problems, but never resolves them.

There is another problem in Canada as well, which the minister has failed to identify. It is a problem he raised in many speeches during the elections-the problem of jobs, the problem of unemployment. During the elections, Liberal Party material spoke of jobs, jobs, jobs. Today, there is no more talk of jobs, the word is debt, debt, debt and cut, cut, cut. The problem of the unemployed is far from the mind of the Minister of Finance.

Looking at my own region, my city, my riding, an industrial area which has been under direct attack for about ten years, all the restructuring, modernization of businesses, new technology, have left unemployed people who had worked for big business for years, earning average or even above average salaries. These people have been unemployed for a year for a lack of specific policies to help them get retrained. Now they are turning to welfare.

This budget contains nothing for the unemployed. It contains absolutely nothing to give them hope for the future. There is indeed talk of possibly reforming unemployment insurance while at the same time cutting the program by 10 per cent. There is also talk of reform providing for the unemployed to train for new jobs.

This seems to be a roundabout way of presenting minister Axworthy's famous unemployment insurance reform, a two-tiered unemployment insurance system, what someone in my region described as generous UIC and miserly UIC. Some people in Canada will have to make do with the miserly version of UIC. When I look at the finance minister's budget, it is these people I think of. What is new in this budget for the unemployed, persons on welfare, fully trained young people trying to find jobs?

Training is not the issue for young people. For young people, it is a point of fact: they are trained in leading edge technologies. Take the young people trained in technical fields at the Jonquière CEGEP, for example, they have been trained in every advanced technical area. These people should not have any trouble finding jobs because they are competent and have all the necessary training. But they cannot find jobs. Why not? Because there are no jobs.

There is no work for people looking for it. Even to restore employment to levels we had before the economic crisis, we would have to create 400,000 jobs in Canada. With those jobs, we will find ourselves where we were three years ago, and furthermore, this does not include newcomers on the job market.

I was surprised when the Minister of Finance said that Canada's two biggest problems were Quebec and the debt and that he did not mention unemployment.

Now to the budget: what is the verdict? This morning's papers ran stories on people who are happy and who say the economy will finally have room to breathe. That was the title of an editorial from La Presse . Before the budget, people were saying that these were hard times, that Canada was on the road to bankruptcy and that its credit rating was going to be downgraded. After the budget, people are now saying that things have improved, and accounting associations have given the Minister of Finance a mark of 80 per cent. Therefore, all is well. But who is telling us that this is because of the budget?

Big business, banks and brokerage houses that sell Canadian bonds, in fact, all of the people who gain from the system. They are well paid and work in a sector where the economy is well developed: the financial sector. While this sector often does not generate much wealth, it plays with it, taking a cut from it in passing. Those people are happy.

Two insights into this comment. Firstly, these people are happy because they see that the budget contains a solution to the debt problem. Curiously, a budget that appears to close certain debt-related gaps is enough to make the other problem-that Quebec is one of Canada's major problems and may scare off potential investors-disappear. They are not saying that Canada has succeeded in solving the Quebec problem, but that Quebec is simply no longer a problem. That is something I have noted.

What do ordinary taxpayers think about the budget? I have the impression that they simply feel relieved because they avoided major cuts this time. Of course, they will pay a little more for gas. Dairy producers in Quebec will see their subsidies reduced, by $2,000 or $3,000 in some cases. It is still a significant amount. Some taxpayers may have to pay a little more in taxes but, in general, taxpayers feel that they have avoided the worst.

But what about all the others, those who have been forgotten, that I mentioned earlier, those looking for jobs or trying to improve their socio-economic status in Canada? Those people are not praising the budget in newspaper headlines. They are not heard. They are silent.

In the last few years, Canada's major newspapers, whether in Quebec or in English Canada, have been paying significantly less attention to those people than they did in the 1970s. Probably because owners have succeeded in selling a little more their philosophy that the state should intervene less and less and let the disadvantaged and less fortunate in society fend for themselves.

This philosophy has spread to the newspapers where everyone has good things to say about the budget. Where are the budgets that used to take care of the less fortunate without excessive spending? This is not done anywhere in this budget.

And there are other things that must not be forgotten. We must not forget that, according to the Minister of Finance, this budget was aimed in a way at restructuring Canada to a certain extent through decentralization. They said that Canada was too centralized, that it was too costly, that they wanted to shift some responsibilities to the provinces.

They are transferring certain things to the provinces. In the next two years, they will transfer $7 billion to the provinces for health, education and social assistance. We note, however, that they are not really decentralizing but rather transferring problems. This is not a transfer following negotiations in good faith on restructuring Canadian federalism.

More importantly, this budget will not bring about tax reform. RRSP provisions will be tightened a bit. The large corporations tax rate will rise from 0.2 per cent to 0.225 per cent, which amounts to only $145 million. The surtax on profits will go up from 3 per cent to 4 per cent, which represents $350 million over three years. There will be a temporary tax on banks.

A tax which will raise about $100 million total, from all banks, when the Royal Bank of Canada alone turned profits of $1.2 billion this past year. What is $100 million as compared to the aggregate of all bank profits? Peanuts.

Why does the Minister of Finance come up with such a measure, a proposal which is almost insulting to those who pay taxes? Actually, I think this may well have to do with the public perception of a shockingly low level of taxation. Next year, the banks will again turn huge profits. Given the current interest rates and the streamlining efforts of the past three or four years, banks stand to make huge profits. So, you can expect more hoopla in the press. What will the Minister of Finance have to say? He will be able to say: "But we did impose a temporary tax on them, a special tax to bring in $100 million". That is one hundred million dollars in taxes on profits perhaps as high as $10 billion.

That is a mere one per cent. It is somewhat insulting to those who often have to pay as much as 40 or 50 per cent of their incomes in taxes. Of course, they are probably among the wealthy.

The fact of the matter is that the budget before us has not put our fiscal house in order as it should have. The tax shelter issue remains unresolved, as do the ones raised on the French television network newscast Téléjournal , last week, where the situation of two individuals earning $100,000 was compared. One hundred thousand dollars is not peanuts. These are wealthy people. The salaried worker would pay $40,000 to $43,000 in taxes every year, while the self-employed person earning just slightly less, thanks to all kinds of tax loopholes and tricks, and with deductions for children, would end up paying $22,000 in taxes.

When Canadians see things like that-even though they often have little sympathy for those who earn $100,000-when they compare the two situations, they realize that there is something wrong with our tax system.

Consequently, we feel that this budget is unacceptable because it does not include a major tax reform.

Let us now turn to the debt. Again, it would be one thing if there were some concrete results, but such results are not obvious. The Minister of Finance, who is not making whimsical predictions, currently estimates that the debt will be somewhere around $500 billion this year, and that it will reach about $603 billion in three years. Therefore, regardless of what the minister does, the debt will increase by another $100 billion. The interests on that debt will increase from $42 to $50 billion. As well, the deficit will remain around $24 billion in 1996-97.

So, the government talks about reducing the debt, but Canadians who are watching, and who may be prepared to make sacrifices, cannot help but think: "Sure, but the debt is still there. It will still grow. We will still have to pay high interest rates on it". Where is the improvement?

Canadian taxpayers will be even more sceptical when they find out what these assumptions are based on. These forecasts are based on the prediction that the economy will continue to grow after 1997. Therefore, the debt will continue to rise even if the economy is doing well or continues to do well over the next three years.

The budget also forecasts interest rates. I am a little surprised to see the Minister of Finance forecast interest rates two years in advance when he often fails to forecast accurately two months in advance. Whatever. Nevertheless, the budget does have to contain some numbers to make it look scientific and serious.

There is another issue that is probably scandalous and that, in my opinion, will floor the average person who ponders the issue and that is that they predict a drop in the rate of job creation. This year, it will be about three per cent; next year, it will only be about two per cent.

They forecast an unemployment rate of around 9.4 per cent. That is no low rate. In fact, 9.4 per cent represents only the unemployed workers who are included in the survey, but many of them are not. This means that regions like mine will again face real unemployment rates of 15, 16 or 17 per cent.

The budget tabled by the Minister of Finance offers no comfort to those who want to work to support themselves and their families.

I have two last points to make. This budget does not offer solutions to the debt problem. Why not? Perhaps because the budget is based on a number of assumptions, which do not take into account the Bank of Canada's potential influence on the monetary policy.

Many financial players say that making the monetary policy more flexible would stimulate the economy by reducing interest rates so that people could invest in and revitalize the business sector. In an approach that I would describe as doctrinaire, the Minister of Finance refuses to make any change to the monetary policy, in spite of the fact that there is no inflation, so to speak, in Canada. So, it would be time to cut some slack in that area to give the economy a chance.

I will conclude on this. I suggest there is another solution that we, Quebec sovereignists, could bring about. We think Canada is in need of economic restructuring. I think that Quebec's achievement of sovereignty, which will no doubt happen within a few years, will provide a welcome opportunity to restructure the economy, start over based on new presuppositions, review our policies and build on new bases.

For all the foregoing reasons, I will be voting against the budget.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I listened with interest to the member and noted one particular aspect. I do have a comment and one specific question for the member.

He asked about the young people and what is there for them, that there are no jobs. There is no question there are still a large number of Canadians, particularly young people who do not have jobs.

Governments in themselves do not create jobs; businesses, and particularly small businesses do. Over one million small businesses in Canada employ over 70 per cent of Canadians. They are the ones who are the engine of this economy. They are the ones who are going to help to create jobs. The member well knows that over the past year the government has assisted in the creation of over 433,000 jobs.

I looked at the economic statistics for the last year. The fact is our growth rate over the last year was 4.25 per cent, the highest in the G-7. According to the OECD, Canada will continue to lead the industrialized world in growth for the next two years. The unemployment rate has dropped below the 10 per cent level and in fact we have virtually no inflation.

The member concluded his remarks by getting back to the essence of why he is here. It has to do with sovereignty, the separatist question and the separation of Quebec.

Would the member not admit that the ability of Canada to move forward and to achieve economic growth and greater job creation depends a great deal on the confidence level of investors in Canada and the certainty that people have with regard to the affairs of Canada? Would he not agree that once the referendum question is dealt with, once this issue which has cost Canada so dearly over all these years is finally resolved, Canada's economic position will be much stronger?

[André Caron, Bloc, Jonquière, QC]

Madam Speaker, I thank the hon. member for his comment and question.

With respect to his comment, I would just like to say that, when the Minister of Finance talks about job creation or when the Liberal Party was talking about job creation during the election campaign, they never said: "We will create 400,000 jobs". What the Liberal Party said is: "We will create jobs". And what the Minister of Finance is telling us is: "We have created 450,000 new jobs in Canada". I suggest he qualify this statement by saying "we contributed to the creation of", if we follow my hon. colleague's reasoning.

On the issue of confidence and Quebec, I do not think that shoving our problems under the carpet will resolve anything. The Quebec issue is that of a people who wants to achieve sovereignty. I could tell you a long story, but it would be the history of Quebec, to make the point that, for us, this is a culmination. And Canada will not make this problem disappear by denying this reality. A better way of dealing with this problem would be to recognize it and look at the potential impact of Quebec's sovereignty on both Canada and Quebec.

I have the distinct impression that Canada would survive if Quebec were to secede. Why not? I think that those who say that people are reluctant to invest because Quebec wants its sovereignty are just using this as a scare tactic. Interestingly, after the defeat in 1980 and the patriation of the Constitution which was supposed to create a new order in Canada, we did not experience a major boom in the economy. I remember what happened in 1982. There was a serious recession, and that was two years after Quebecers said no in the referendum. I do not think there is a relationship between the two.

But there is something I would like to say to the hon. member in closing. As long as the issue of Quebec has not been resolved, Canada will always identify this issue as a problem. I do not think that holding people against their will, scaring them and threatening them will solve the problem. Whether the answer is yes or no in the referendum, the problem will still exist and there will still be sovereignists in Quebec who will continue to stand

up for what they believe in because not only is it an emotional issue, but it is also a matter of interest for Quebec.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Madam Speaker, for many months and in fact for a number of years, federalists have claimed that all Canada's economic ills are caused by political instability. When in recent months interest rates went up and the Canadian dollar went down abruptly, people said: It is all because of those nasty separatists.

Perhaps the hon. member would care to explain why, the day after a budget that was rather well received by the financial community, interest rates seem to be going down and the dollar seems to be going up? Why, since the Quebec problem still exists? How would he explain that?

[André Caron, Bloc, Jonquière, QC]

I want to thank the hon. member for his question. Madam Speaker, I would say that the connection is tenuous and as far as I can see, non existent. We heard the same excuse after the results of the referendum on the Charlottetown accord in 1992. I remember seeing certain studies, including one by the Royal Bank which said that if Canada said no or Quebec said no, that would be the end of Canada, and I remember, this was either in the study or maybe it was a political cartoon, there would be train loads of Canadians heading for the American border to take shelter in our neighbour's economic paradise. In fact, there is no connection. If you look at the economic situation and the whole issue of Quebec's sovereignty, there is no connection between the two. Often, support for sovereignty is strong while the economy is weak, but often it is the other way around.

Unfortunately, some politicians are using this issue to make political gain. I deplore that because politics is a noble art, a noble science, a noble calling, and it is the art or the science, if you will, of government. It is the art or science of guiding and moving societies. When we use all kinds of tricks and excuses to try and get at our opponents and even resort to blackmail on these issues, I think that in addition to weakening our case, we also diminish our performance as a politician.

I want to thank the hon. member for Louis-Hébert for giving me this opportunity to say that I do think economic issues are linked to the question of Quebec sovereignty. I agree, but I do not agree that this very fact weakens the Canadian economy. I would say that people are waiting. People are waiting, and if we manage to reach a decision, I am sure the economy will recover, both in Canada and Quebec, and that we will then have the resources to restructure our economies and ensure that within Canada's present borders there are two countries that are comfortable financially and whose citizens will be able to work together.

[Raymond Bonin, Liberal, Nickel Belt, ON]

Madam Speaker, I rise in the House today to express my support for an innovative budget that sets the Canadian economy and Canadian federalism on a new course, a budget that at the same time remains faithful to the most fundamental Liberal principles. I commend the Minister of Finance on presenting a budget that strikes a balance between the need for a quick return to fiscal responsibility at the federal level and the need to maintain what identifies us as a people, the compassion of our social programs.

Since the pre-budgetary consultations began, the message from my constituents has been clear: we must tackle the deficit, but at the same time, we must be fair and equitable.

My constituents have told me unequivocally that, like each household, the government must learn to live within its means. It must concentrate on reducing the deficit by significant cuts in government spending, not by increasing the burden on the middle class.

They have also told me that they wish to see increased fairness in the taxation system and a continued protection for our most vulnerable by way of efficient and modern social programs. Those same constituents conveyed to me their belief that our social programs are in need of reform to modernize them and make them more efficient and pertinent to the realities of the 1990s.

I am pleased to state that I believe this budget to be a significant first step in achieving the delicate balance requested by my constituents. However, I must say that balance is only achievable because Canadians want and are ready to support real change, a new policy direction and a new approach to governing in Canada.

Getting government to live within its means is our first challenge. Not unlike a household, a government that lives above its means eventually faces hardship.

There can be no doubt that the accomplishments of Canada and Canadians, a nation with a small population base, are unprecedented. Canadians have banded together to build the best nation in the world. Our resource base is abundant. Our population is well educated and hard working. Our private sector is dynamic and entrepreneurial spirit abounds.

Last year we led the G-7 in growth. Our inflation is low, exports are booming and jobs are being created. Our economy is on track. The fundamentals and basic ingredients for guaranteed economic success are in place.

However, our interest rates and the currency are at the mercy of the international financial markets that speculate on our ability to control public debt and deficits. Those markets have us living under a microscope and any rumour can send our interest rates upward and our dollar plummeting. Under those conditions, Canadians live under a perpetual cloud of economic uncertainty which affects personal financial decisions as well as business decisions.

Year after year governments have spent more than they have taken in. We have borrowed to the point where our ability to repay is in doubt. We are now at the mercy of lenders that monitor our every move. It can be said that public policy is now judged by its impact on Canadians and on our creditors, who are more concerned with our ability to repay than our aspirations as a people. In a true sense, because of the rising debt and persistent deficit we are losing control of the public policy agenda.

The budget is unprecedented in scope and comprehensiveness. It builds on last year's initiatives and sets the stage for regaining control of public finances and the public policy agenda, signalling the eventual return to our traditional focus of building a fair and just society.

The budget significantly reduces the deficit. In three years the government will have saved $29 billion. We will have reached the target of 3 per cent of GDP by 1996-97 and if private sector forecasts are correct, we will even surpass it. As the Minister of Finance has repeatedly stated, we must meet the deficit reduction target or risk remaining vulnerable to the speculation of the international financial markets.

The budget does more than set out a deficit reduction plan. It also defines a new approach to government, a new approach more in tune with the needs and challenges of the nineties.

When the government accepted the challenge of deficit reduction it rejected the slash and burn approach or the notion of across the board cuts. Across the board cuts of 20 to 30 per cent are not the key to deficit reduction for the simple reason that a 30 per cent cut in a bad program still leaves 70 per cent waste, whereas a 30 per cent cut in a good program just does not make sense.

A slash and burn approach to deficit reduction may achieve results, but more often than not at the expense of those most vulnerable. That is not our way. We believe in fiscal responsibility. We also believe in fairness. The government knows that in addition to deficit reduction, the machinery of government has to be renewed to better serve Canadians in a new economy.

The budget makes the federal government smaller while it lays the foundation for a government that is smarter, more efficient, more responsive and more focused on renewed priorities. That is the essence of a program review. Under program review the departments started with a simple question: In the nineties, what should a federal government do for the people? Those things a federal government should do are being analysed to determine the best way to deliver them.

The things a federal government should not do were either discarded as something that no government at any level should do or were determined to be best achieved by a level of government closer to the people. The end results are smaller departments, $16.9 billion in cuts from program review alone, but smarter departments with renewed mandates, a tighter focus and new priorities that will better serve the taxpayers and better support an innovative economy.

The process of reinventing the role and the machinery of government clearly demonstrates that Canadian federalism is flexible and continues to evolve to meet the changing needs of Canadians and of the new economy. We all know that well-publicized constitutional conferences at which little is produced but disagreement and divisiveness are not a viable source of change.

Change in our federation occurs incrementally, through discussion, through dialogue and through negotiation on practical issues of concern to everyday Canadians. It is at this level that Canadian federalism is flexible and responsive to the needs of all their citizens.

As a francophone from northern Ontario, I have witnessed this change. It is because of Canadian federalism, flexible federalism, that I am able to stand in this House today and speak in my mother tongue to talk of my heritage, which I have kept and enriched, and of my pride in being a French Canadian.

The road has not always been easy, and there have been struggles on a number of occasions. However, without Canada, without federalism, the battle would have been lost from the start.

A critical component of program review has always been that the level of government best positioned to deliver a service should do so. Such a bold statement clearly demonstrates that the federal government wishes to actively promote the evolution of federalism because it is in the best interest of Canadians. Federalism in Canada is not about the status quo.

That federal wish is inherent in the new transfer system to the provinces. The block funding system discards the cost sharing roles to give the provinces more flexibility in delivering programs funded in part by the federal government. This measure acknowledges the need to tailor social programs to meet the specific needs of Canadians living in different parts of the country. The 4.4 per cent reduction in transfers to the provinces is a necessary measure to help the federal government meet its deficit reduction target.

However, it must be emphasized that in 1996-97 the federal government will be transferring to the provinces $35.3 billion. I know that the majority of Canadians will agree that transfers in the order of $35.3 billion per year confirms the government commitment to equalization payments and the support of provincially run social programs. In addition, the government is always prepared to meet with the provinces to establish prin-

ciples which govern the distribution and the use of those transfers.

My experience at the local level has clearly demonstrated to me that much of the funds targeted for social programs are consumed by administration. The money directed to the poor is not reaching them because of the high cost of administration. With flexibility I am hopeful that the provinces will be in a position to lower administrative costs and get more money out of the hands of administrators and down to the people who need it. If properly managed, savings could even reach the 4.4 per cent of reductions in transfers.

Some provinces or provincial governments may try to characterize the cuts and transfers as a personal attack or downloading. I would remind those people that we have three levels of government, including the municipalities, but we only have one taxpayer. In the end, that one taxpayer does not draw any benefit from a provincial budget that is balanced by way of transfers from a debt ridden federal government.

Deficits and accumulated debts are common problems throughout the federation at all levels of government. We must learn to work together to solve them in the best interest of that one taxpayer.

As many of my colleagues have already mentioned, the budget is unprecedented in scope and comprehensiveness. It puts us on the right track for deficit reduction. For every $1 of new revenues the budget will generate, there will be $7 in cuts.

No government likes to cut but we were left with limited choices. We proceeded in what we believed to be a rational and fair way. We did not cut blindly. As I mentioned earlier, we began with non-priority areas and also sought to renew the role of the machinery of government to bring about significant savings of $16.9 billion. We applied the principle of shared responsibility to the concept of deficit reduction. To protect the more vulnerable, we asked those who could afford it to shoulder a larger part of the burden.

For example, the budget sets out massive cuts to industrial programs, business subsidies, regional development agencies, transportation subsidies. There are also significant cuts to defence, natural resources and Canadian heritage. All in all, there were significant cuts in varying degrees in the vast majority of departments.

On the revenue side we have moved decisively to introduce new fairness into the tax system. We have sent a clear message to those able to pay that they will have to shoulder an increased responsibility for deficit reduction. For example, we have set temporary limits on RRSPs at $13,500, affecting only those who earn in excess of $75,000. There will be a new tax on investment income of private corporations. We will eliminate deferral of tax on business income. We will limit some incentives. We will tax family trusts. We have increased tax on large corporations. There is a new corporation surtax. We have a new capital tax on banks. Finally, there is the gasoline tax.

Looking at the overall picture of the revenue side I am sure the majority of Canadians will agree that we have met the criteria of fairness. I am sure that in the future we will move again to close more loopholes.

I would like to take a few seconds to tell the House what the budget is not about. The government has demonstrated the courage to open the budget process to let Canadians in. Throughout the process we emphasized that we would use a balanced and fair approach.

The opposition has used this consultation process to falsely suggest that the government would impose additional taxes on the middle class. Members said we would overburden the middle class with the budget. We have not. They said that there would be a health tax. There is none. They said that there would be a dental benefit tax. There is none. They said there would be a tax on RRSPs. There is none. They said there would be a tax on lotteries. There is none. Finally, they said there would be income tax increases. There are none. I would also add that there are no increases in UI premiums.

In the end, I believe we have achieved a fair distribution of restraint among all Canadians in all regions of the country.

Madam Speaker, some individuals and groups tell us we have gone too far, while others say we have not gone far enough. I answer them by saying that we have done what we said we would: we have formulated a budget that will meet our objectives and targets for deficit reduction.

We have chosen the best route. Our budget is carefully balanced. It balances the need to control government expenditures with the need to provide the protection of social programs to our most vulnerable. Cutting too much in order to satisfy the financial circles would mean too great a cost to the disadvantaged and would weaken Canadian confidence in the economy. Cutting too little, on the other hand, would threaten our ability to pay our expenditures and make us more vulnerable to control by foreign markets.

In hard times, the provinces turn to the federal government for leadership. Unfortunately, during the last nine years, the provinces turned to the federal government for leadership, and the Mulroney government failed to provide it.

I would like to repeat the quote given by the Minister of Finance in his speech: "Government must not live in the past- Every day there are new needs to be met. If inflation is to be

fought, unemployment countered and something done, and soon, to get Canadian prosperity back into its stride, the government must begin to plan ahead-not timidly, not tentatively-but boldly, imaginatively and courageously".

It is no coincidence that the person with the Prime Minister is the son of the individual who made this statement. He is the person, the son of Paul Martin, Senior, who will return stability, confidence and prosperity to Canada.

Furthermore, Canadians may be assured that their federal government will provide the leadership sought by the provinces. If we are now facing a new opposition consisting of two parties, the Reformers and the Bloc Quebecois, it is because the Mulroney government did not meet the provinces' call for leadership.

For this very reason, the Liberal team will respond to this call by the provinces and these new parties will inevitably disappear.

In conclusion, I would like to bring to the attention of the House another issue in the budget. I would like to offer the services of my riding and my region to help the Minister of Finance fulfil this commitment. Sudbury and the region of Nickel Belt have rich mines, skilled workers and all the skills and institutions in place to provide to the Government of Canada the new $2 coin that is referred to in the budget. We would be pleased to provide that service for the rest of Canada.

[Leon Benoit, Reform, Vegreville, AB]

Madam Speaker, I have heard this member and others before him make the comment that we are targeting spending better with this budget.

The most substantial spending measure in this budget is as a result of what was not done rather than as a result of what was done. That is the increase in interest payments on the debt.

Does that mean that it is the deliberate intention of this government to target spending more to interest payments than in the past?

[Raymond Bonin, Liberal, Nickel Belt, ON]

Madam Speaker, this question has been asked so many times in the House. I will attempt to answer it differently because it seems that Reform members do not understand.

There is a balance to be offered when there is such a huge problem as we have in this country. We inherited the problem.

I like to compare it with a program I saw on TV. In New York City the underground infrastructure of the water system is so old and rusty that they cannot check to see if a valve is working. There is so much rust that the valve will break if they turn it. I like to make that comparison.

The people I share this with, the people of my riding and other ridings and the people from my party and other parties, except for the Reform Party, seem to relate that there is a danger in overkill.

Definitely, Canadians and the Liberal government would like to say let us slash and burn and there is no more debt. The only serious difficulty is it would affect human beings. That is the part the Reform Party cannot associate with. We include it in our answers and try to explain to them that they have to have some compassion. That word is used often by a good many members in this House but it is never used by members of the Reform Party.

A society with compassion is often judged by the way it treat its seniors. Taking $3 billion out of the seniors' pockets is not my idea of compassion. I have answered the question for the people who understand. I feel like the minister or the priest who preaches to the people who do not practise. They sit there having heard the answer so many times and still they do not understand.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Madam Speaker, I would like above all to respond to the initial remarks made by the member for Nickel Belt. He seems to regard it as quite an exploit that, thanks to Canadian federalism, he is still able to rise in this House and speak in French.

I must say, it is very difficult for me to understand how this view can be so easily accepted since the opposite would indicate assimilation. So he admits that it is exceptional that he has not been assimilated.

As he comes from a French speaking community, I find it rather difficult to understand how someone like him could say that; he is aware of the incredible rates of assimilation in Canada. In 1971, the rate of assimilation for all English speaking provinces was 27 per cent, but by 1991 it had increased to 37 per cent.

Equally, he is a member of a government whose language commissioner recently released a totally shocking report on this government's inability to provide francophones in other provinces with services in French. He is also a member of this government which will make cuts to the CBC, no doubt equally in the French and English networks, without realizing that the French network has been discriminated against for 20 years, although audience ratings are identical and budgets are one third higher for the English network, identical ratings and identical schedules, unless I can be convinced that the English language CBC network is on the air 36 hours a day, which I would find very difficult to understand.

I find it difficult to understand those remarks and I would like to know how he can rise in the House and praise a federal system which has created these things which are after all neither very interesting nor very praiseworthy.

[Raymond Bonin, Liberal, Nickel Belt, ON]

Madam Speaker, I am surprised to see the knowledge that my colleague opposite has cultivated regarding the situation of francophones outside of Quebec. When I first came to Ottawa, at the same time as he did, his party thought that I was one of their own when they heard me talk.

Most of these people have never ventured outside of Quebec. Most of these separatists were oblivious to the fact that there were any francophones outside of Quebec. My riding is 40 per cent francophone. I represent such a riding, and our separatist colleagues from Quebec do not even know we exist. At the end of 1978, René Lévesque came to Laurentian University in my riding in Sudbury and said to francophones outside of Quebec that Quebec had enough problems and had no time for us. That is what he said.

My colleagues from the Bloc Quebecois are surprised and moved that there are francophones outside of Quebec. I will give them a little background on northern Ontario. There were nine children in my family, all francophones. I organize family picnics for the Lefebvre family in my riding, and we invite all of the descendants of my grandmother and grandfather. I recall one year where 750 people registered, all francophones. So, come out of your shell! Excuse me, Madam Speaker, I meant to tell them through you to come out of the shell in which they have been hiding.

It is never adviseable to propose to separate from something you do not know. Go see the rest of Canada. Go see whether it exists, get a taste of it and you will conclude that it is worth keeping Canada together. Yes, if I rise in this House today and am so proud to speak to you in my mother tongue, French, it is because I had the opportunity to live it, to be raised in it and to speak it at university. My son is registered in a family medicine program in French in northern Ontario and my wife teaches at a French school.

Before being elected, I taught French in a French college; the new college is under construction. I was the president of a French-English school board, the majority of whose members were francophones. So do not try to tell me that francophones outside Quebec have no rights and that our rights are being taken away from us daily. We had our problems in the past, but we got to know one another instead of deciding to separate. We decided to sit down together and learn to work with one another.

I played hockey with the anglophones and I enjoyed it. They are good people. I also played in another league where everyone was French and we spoke French on the ice and in the locker rooms. We learned to work at overcoming problems, to respect one another. The respect of one person for another is very important for a federation.

The message is not complicated. For the separatists, if you wish to separate, at least know what you are separating from, because you run a very great risk of hurting the people you represent. This is not right, because the members of the Bloc Quebecois in this House do not represent the majority of Quebecers. They are playing a dangerous game and those of us from northern Ontario know it.

With reference to Radio-Canada, I am going to tell you about one of the problems we have in northern Ontario, because I think something needs to be said. Most of our programming comes from the province of Quebec, but we would like more local programming. The propaganda we get on the television and the radio is driving us to switch to our other francophone stations in northern Ontario.