Debates of Feb. 28th, 1995

The Budget

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, the fundamental flaw in the minister's answer is the same fundamental flaw that was in his budget yesterday.

It does not come clean about the imminent threat to Canada's social programs from rising interest payments. Under the minister's budget plan program spending will be reduced by $12 billion over three years, yet the interest on our debt will grow by $13 billion to $51 billion a year in 1997. The reality is that the interest payments are growing faster than the ability to either cut or raise revenue.

My question to the finance minister, and this is just looking for a straight figure, is can he tell Canadians how many billions of dollars per year they will be paying in interest in the year that the budget is finally valid?

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

Mr. Speaker, the member opposite knows that his question is nonsense. We have said that we are going to get to a balanced budget through a series of short term targets and therefore obviously we are looking at the ultimate thing.

I cannot believe that once again this party stands up and talks about preserving social programs when last week it brought down a budget which said that the ultimate purpose of it was to make sure that every poor Canadian stays poor and that the middle class becomes poor.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, the minister claims that his budget protects social programs from unfair unnecessary cuts, but the real social cut is lurking in the massive unnecessary interest charges that this government is irresponsibly building by not attacking the deficit more quickly.

This means that when Liberal social cuts come, as they will, they will be bigger and more desperate and more destructive than Canadians could imagine.

Will the finance minister honestly admit to Canadians that he has put social programs in the gravest of jeopardy by failing to balance the budget more quickly when he had the chance?

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

Mr. Speaker, the way to clean up this nation's finances is to bring in a budget that brings federal spending down from $120 billion in 1993-94 to $108 billion by 1996-97.

The way to deal with the nation's finances is to have program spending at 13 per cent of the total, which is the lowest number since 1951. The way to preserve social programs is to make sure that the party which said it would claw back the old age pension from people on the guaranteed income supplement never takes power.

[Some hon. members]

Hear, hear.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, my question is directed to the Minister of Finance.

The budget tabled yesterday provides for additional cuts of $7 billion in payments to the provinces over the next three years. By transferring an additional $7 billion shortfall to the provinces, Ottawa is again downloading part of its deficit.

Would the Minister of Finance agree that the additional cuts his government has ordered in transfer payments to the provinces will inevitably cause either a reduction in services to the public or an increase in provincial taxes or a combination of both?

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

Mr. Speaker, not at all. At our meeting with the finance ministers, they asked us, first, to give them at least one year's notice: no surprises. And we did that.

Second, they asked us to cut our own spending first and to cut more than we would cut in payments to them. In 1996, for instance, there will be a 7.3 per cent cut in federal spending and only a 4.3 to 4.4 per cent cut in payments to the provinces. If we consider the province of Quebec, it is only $350 million compared with this year. So these cuts are less than 3 per cent of provincial revenues, and I think that is reasonable.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, the minister's figures are wrong. He is looking at total transfers, and he knows perfectly well he is only cutting cash transfers.

Would the Minister of Finance confirm that the cuts in transfer payments to the provinces he ordered yesterday will result in a shortfall of over $2.5 billion for Quebecers, three years from now?

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

Mr. Speaker, compared with this year, it is $350 million.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, during the 1980s Michael Wilson used to deliver budgets that contained the same rhetoric and projections of stable debt to GDP ratios as did the budget tabled yesterday. As

analysts said then and are saying now, planning for stable debt to GDP ratios during prosperity is not sufficient.

Why would not the next inevitable economic downturn again increase the deficit and once again put the country on the unsustainable path of a growing debt to GDP ratio?

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

Mr. Speaker, the hon. member's premise is wrong. First, when Michael Wilson brought down his budget his cuts were not real. As the member knows, they were simply cuts from rising reference levels.

Second, Michael Wilson did not do it according to any kind of vision of the country or sense of priorities. They were simply blind cuts across the board.

Third, Michael Wilson never hit his targets and we have.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, Michael Wilson was also in the very fortunate position of having had a debt of only $250 billion rather than $550 billion.

The absolute spending cuts of $10 billion in the budget just about match the expected increases of $9 billion in the cost of servicing the debt over the projected budget period. The expected revenue increases due to prosperity and tax increases amount to a staggering $12.7 billion.

Does the minister expect similar spending cuts and revenue increases in the next budget to simply maintain the debt to GDP ratio?

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

Mr. Speaker, as the hon. member knows, in 1996-97 the debt to GDP ratio will not only stabilize but it will commence a downward track which, may I assure the member, is going to be permanent.

The member has raised a very important question. The debt to GDP ratio is a very important target. It is one that we are very conscious of and we will keep it down.

The member refers to the level of debt that I have to deal with compared to Michael Wilson. There is another difference between Michael Wilson and me. Michael Wilson had the good fortune to take over after a Liberal government. I had to take over after the Tories.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, the government did not dare reveal in its budget its real intentions with regard to old age pension reform, preferring to put off yet again a study that was to be published last year.

Would the Minister of Finance confirm that his government intends to reduce old age pension benefits for thousands of Canadians and in fact limit access to the plan for thousands of seniors?

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

Mr. Speaker, not at all. The answer is a definite "no". What we do intend to do is study the Canada Pension Plan fund with the provinces, and, at the same time I am sure, they will look at the Quebec Pension Plan fund, because it is this fall that the necessary revision will have to be made. It is perfectly natural to look at them all together, with the provinces.

I can assure you and I can assure the hon. member that we intend to protect those who are most vulnerable in our society, our senior citizens.

[Michel Gauthier, Bloc, Roberval, QC]

Mr. Speaker, you understand how surprising it would be if the Minister of Finance were to set up a committee to raise old age pensions. I would be very surprised.

Will the Minister of Finance acknowledge that if he is not revealing the terms of his proposed old age security reform right now, it is because he does not want seniors to know his intentions until after the referendum in QQuebec?

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

Mr. Speaker, legislation has for a long time included a schedule to review the Canada Pension Plan fund and the Quebec Pension Plan fund every five years. We were not the ones who established the schedule. I repeat again, tell us when you will have the courage to hold the referendum; we will resolve the problem, and then we can go on with building the country.

As you know, there are many issues to be resolved in Canada. The economy has to be managed, and perhaps I should ask the question once again. The great thinker of the great separatist movement, Richard Le Hir, stated that he was not ready to meet Quebec's liabilities as far as the debt is concerned. Is that the position of the Bloc Quebecois? Is there still a difference of opinion?

[Diane Ablonczy, Reform, Calgary North, AB]

Mr. Speaker, Canadians were promised a plan by the government to preserve and protect our future social security while dealing with fiscal reality. They never received such a plan. Yesterday the budget promised yet another discussion paper from the Minister of Human Resources Development.

My question is for the finance minister. Why should Canadians entrust social program reform a second time to a process and a minister who have done nothing but fail them in the past?

[Lloyd Axworthy, Liberal, Minister of Human Resources Development and Minister of Western Economic Diversification]

Mr. Speaker, the hon. member, once again with the hope of trying to obtain some kind of rhetorical response, does not know what she is talking about. I regret it because we are dealing with very serious matters.

As the budget clearly outlined yesterday, we have clear plans and initiatives on social reform. There will be major legislation this fall on unemployment insurance. We established a new human resources investment fund in yesterday's budget that will give us the flexibility to begin initiating now many of the reforms that were proposed.

We have already begun reorganizing the Department of Human Resources Development to begin to decentralize its delivery in a very different way so that we can begin to end duplication and overlap. We have initiated a new transfer program that will again eliminate duplication and overlap with the provinces.

It seems to me that is an awfully good start at social reform, much better than anything the Reform Party has offered.

[Diane Ablonczy, Reform, Calgary North, AB]

Mr. Speaker, I did not realize the minister expected the Reform Party to do his job for him.

Speaking of serious matters, the minister knows that every dollar borrowed today means two dollars in cuts tomorrow. Worried Canadians are asking: "What will this do to our social programs?" What answer does the finance minister have to give them?

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

Mr. Speaker, it is very clear. The major difference between the Reform Party and ourselves is our deep belief in the social fabric of the country.

There are those in the House who simply feel that cutting is an accounting trick, balancing the books and not balancing the needs of a nation. That is not the view of the government.

The government is cutting the deficit, not because we think people should be without but because we want to preserve social programs and the legacy of the Liberal Party.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, after making cuts to unemployment insurance of $5.5 billion over three years in his first budget-and the unemployed have not yet fully felt the effect of these cuts-the Minister of Finance is not letting up, cutting an additional 10 per cent from the unemployment insurance budget for next year.

Does the finance minister realize that these additional cuts he has announced for unemployment insurance will deprive the unemployed of at least $700 million more in 1996-97?

[Lloyd Axworthy, Liberal, Minister of Human Resources Development and Minister of Western Economic Diversification]

Mr. Speaker, the hon. member should first look closely at what was in the budget papers and at the kinds of initiatives we have talked about in reforming unemployment insurance.

The reform of unemployment insurance is a way of trying to change a system to help people get back to work, to take away many of the disincentives in the system, and to give people real resources to get good training, good counselling and good programs. To do that we can use the money from the savings we are about to introduce as part of the legislation.

The hon. member is totally wrong. The fact of the matter is that we want to convert unemployment insurance into an employment insurance fund to give people new hope, new jobs and new opportunities. That is what the reform is all about.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, while the Human Resources Development Committtee was travelling, we were told repeatedly that it was not merely a question of training but of jobs, real jobs. And yet this budget contains nothing about employment.

How does the finance minister dare demand an additional sacrifice from the unemployed, to the tune of at least $700 million, when he has imposed a temporary tax of $100 million over two years on banks and financial institutions although we know that the Royal Bank alone recorded profits of $1.2 billion last year?

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

Mr. Speaker, as the minister just said, the best way to create jobs in Canada is to move away from passive support toward active assistance to give workers the tools they need.

The best way to achieve this is to reduce unemployment insurance premiums so that small and medium size businesses can afford to hire new employees. Thirdly, the best way to achieve this is to keep economic recovery rolling. We created 433,000 jobs last year, and this year, we will match that number.