Debates of March 14th, 1995

The Budget

[Val Meredith, Reform, Surrey—White Rock—South Langley, BC]

I thank the hon. member for the opportunity to remind the government when it talks about making smaller cuts that what it is talking about is increasing the interest payments in the year 1997 to $50 billion. When the government is spending $50 billion on interest payments it means there will be less money to spend on social programming.

The only alternative the government has is to take the long term approach by taking short term pain by making the cuts now, making sure that interest payments do not escalate to the level they will be escalating.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I will be speaking for 10 minutes and will be sharing my time. Thank you very much for recognizing my opportunity to speak.

I believe that the Minister of Finance has done a masterful job of calming and appeasing the the bond holders, the people who move capital around the world, Wall Street, all the currency speculators. He has done a masterful job because it was only-

[Val Meredith, Reform, Surrey—White Rock—South Langley, BC]

With sun glasses on.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

It was only about a week and a half ago when I was actually inspired by the Reform Party's budget.

I challenged the Reform members saying they did not put enough focus and attention on the human deficit. All they want to talk about in this Chamber is the federal deficit. They do not seem to communicate their concern enough, in my judgment, about the human deficit that is being inflicted not just upon our communities and our country but all countries of the world because of the monetary system that has evolved which many sovereign countries right now do not seem to have a handle on. We are one of them.

The day I spoke in the House on that issue I received a paper from Professor Morris Miller. His paper is entitled: "Where is Global Interdependence Taking Us? Why We Need a New Improved Bretton Woods". I will read directly from the paper:

By early 1994 there was a perceptible rise in the level of concern with the focus placed on the business of derivatives that are estimated to be outstanding in the amount of about $16 trillion. The size and volatility has provoked a congressional committee hearing and prompted The Economist to devote the cover and lead editorial of the May 14-20, 1994 issue to the theme ``Your financial future'' and to ask what the fuss is all about. The reason given is that

"the industry is new, global and already very big: the telephone number figures for the supposed value of outstanding derivatives, $16 billion-plus, make the eyes spin-.Lastly, there are fears that the derivatives fuel financial market uncertainty by multiplying the leverage, debt based buying power, of hedge funds and other speculators, an uncertainty that could, if things went wrong, threaten the whole of the world financial system".

I want to quote from an article which appeared in the Sunday, March 5 Toronto Star business classified. It is the cover story ``Billion-dollar boys'':

The Royal Bank is Canada's biggest player in international currency trading, turning over $20 billion U.S. or more every working day. That translates into $325 million a year in revenues and a healthy chunk of the $150 million in profit the bank earns from its treasury operations.

It is a 24-hour a day, 365-day a year floating crap game where the players never see each other, rarely talk to each other, yet can often tell by the buying patterns on their monitors which bank in which city is offering them the business.

I started off by saying that I believe the Minister of Finance has done a masterful job in calming and appeasing the bond holders. I say that because the reaction from all of these players has been extremely positive.

However, I share the view of many in this House and even members of the opposition who ask the question: What will we do 30 months from now when the interest bill on our national debt might be $50 billion to $60 billion? What will we do when we have sold off federal assets coast to coast? What will we do when we have privatized everything that is left to be privatized? What will we do when transfers to universities and hospitals have been cut back? How will we pay the bill?

I suggest to the opposition that what we should do is not unlike what world leaders did after the second world war when they organized the United Nations conference on monetary and trade reform called Bretton Woods. Professor Morris Miller talks about that in his paper. That is the challenge for all of us in this room.

The world monetary system is not working. It is broke. We are in a canoe going down the river and all of a sudden we are in the rapids. We all want to be responsible. We do not want to tip the canoe. That is why I think the Minister of Finance has done a masterful job in cooling out these croupiers, these international casino operators that move capital and control our currency. Exchange rates and interest rates are up and down with no public accountability. They are not just doing it to us, they are doing it to all sovereign states.

Who are the losers? A certain group in our community is getting a whole lot richer and another group is getting a whole lot poorer. We all know this. How are we going to challenge these casino operators? How are we going to get at them? Canada cannot do it alone. Canada must have the support, not just of the G-7 countries but of all countries, even the new countries since Bretton Woods, that got together and said: "Hey, we have a mess on our hands".

I see lots of things in the budget that are very tough for people who will lose their jobs. The Minister of Finance has stated that. What could he do? This is the best he could do with the situation that has evolved.

[Jim Abbott, Reform, Kootenay East, BC]

Oh, really.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Absolutely. One thing that the Minister of Finance stated in the budget that has not received a lot of attention is the responsibility the financial institutions in the country have toward small and medium sized business. He challenged the financial institutions to become more supportive, more compassionate and caring toward the small business community. We all agree that in that community rests the best hope for putting Canadians back to work.

In a couple of weeks we will begin meeting with the banks again and challenging them. I for one will be asking them: "How is it that you can operate private casinos, most of them in

my city of Toronto, pushing unaccountable billions and billions of dollars a day but we cannot seem to figure out a way to deal with small business". The Minister of Finance has issued that challenge.

I realize my time is up but I would appeal to all members to let us start directing our attention toward a new Bretton Woods.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Speaker, I listened with great interest to the comments made by the hon. member for Broadview-Greenwood, and I realize that they are not different from those made by other hon. members who debated the budgets tabled in the last 30 years: reassure investors; reassure the big banks; reassure everyone except the Canadian voters, taxpayers and workers.

We remember their red book slogan. Strangely enough, they do not quote the red book as they usually do. Every time we put a question to the people opposite, they reply that it was in the red book.

You will note that, since the budget was tabled, they tend to ignore the red book more often than not. Their rallying cry in 1993 was "jobs, jobs, jobs". In Quebec and across Canada the Prime Minister repeated one single slogan: "jobs, jobs, jobs". I saw him do just that in answer to a few questions during the leaders' debate. Whether the question had to do with turbot or ski slopes, his answer was always the same: "jobs, jobs, jobs".

What does the famous budget that was tabled recently have to say about "jobs, jobs, jobs"? Nothing at all. They reassured everyone. They reassured investors and foreign markets-that is very important. However, the 29 million Canadians needing to be reassured are never mentioned. Therefore, I wish to ask him what he is doing to create jobs?

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, I realize that I cannot flash the red book around because some people would consider it a display. I want to read from it. At page 109 it states:

New multilateral regimes are needed to address many emerging global issues: the management of global fish stocks, the protection of the world's atmosphere, the maintenance of biodiversity, the control of population growth, the resettlement of refugees, and the equitable sharing of global wealth and resources. A Liberal government will foster the development of such multilateral forums and agreements, including an improved Law of the Sea, a new agreement on global warming, an improved international code of human rights, and a new agenda for development that matches the Secretary General's Agenda for Peace .

I would like to think that when the red book talks about an equitable sharing of global wealth and resources, that deals directly with my remarks today.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, I was rather surprised, if not disappointed, that the hon. member again brought up the issue of the so-called human deficit, as though human deficit means that if governments are not prepared to make the cuts today they are somehow more compassionate than if they make the necessary cuts to be able to protect the ability to fund these programs.

I submit that the government with this budget has gone further to lose the ability to control our currency and we are becoming involved in the international currency casinos, as the hon. member has stated.

Pragmatist that he is, I wonder if he is being realistic in suggesting that Canada, as a bit player in the global world economy, can actually bring about the kind of restructuring he is talking about. Second, what is his position on the so-called Tobin tax, that is, trying to recapture some taxes in the actual exchange of currency around the world?

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

Mr. Speaker, first of all, I want to deal with Canada's role on the world stage. I had the privilege of working for a prime minister who, the history of the world will show, was one of the great leaders on the world stage and helped move Canada forward on that stage with the respect of nearly everyone.

The popularity of, the current Prime Minister is even greater than my former boss'. His relationship with President Clinton is extraordinary. I am optimistic that if they get together with a few other leaders-the problems are the same for all-we can get the process started.

In response to the second point on the Tobin tax I say briefly that part of a new Bretton Woods would have to look seriously at the Tobin tax.

[Pat O'Brien, Liberal, London—Middlesex, ON]

Mr. Speaker, it has been two weeks now since the Minister of Finance presented his budget. I appreciate the opportunity to reflect on it and to share some of the views of my constituents after having two weeks to consider its implications.

The people of London-Middlesex have been very congratulatory toward the Minister of Finance. Despite the remarks of some members in the opposition they are very pleased the minister actually met the deficit targets he had set. There may be debate about those targets but he announced the targets and actually met them. He is the first minister to do so in years. This was very positively received by my constituents.

[An hon. member]

He has exceeded them.

[Pat O'Brien, Liberal, London—Middlesex, ON]

He exceeded those targets. They see this not as the ultimate end but as a major step in the right direction, contrary to what we have witnessed over the past several years.

What the minister has done in the budget is put the Canadian family on a diet. We have gained an unhealthy, crushing weight which must be lost. We know that. It is the deficit and the debt. This weight was not gained suddenly. It was not gained overnight. No one party, no one group of our society is at fault here, despite the views of some that look for simplistic answers and are quick to point the finger. This crushing weight was gained as a nation and that is how it must be lost. It must be lost gradually. It will not be effectively lost in any sudden downsizing or slash and burn approach to the problem.

Similarly it is a sensible way for an individual to lose weight. Canadians are all too familiar with the problem, many of them being overweight, as I confess to be. It is the sensible approach to take in trying to deal with the serious economic problems we face.

In October 1993 two visions were put before the people of Canada about this serious problem. There was the gradual, determined downsizing approach of our party and the more dramatic, sudden effort to downsize put forward by the Reform Party. In a democratic way the people of Canada spoke on October 25, 1993. They made it very clear with the results by passing judgment on the previous government's efforts in this regard. They very clearly chose between the two options presented by the Liberal Party and the Reform Party.

It is clear to me as it is to most Canadians that this nation deliberately chose a sensible, gradual approach to downsizing and to eliminating the deficit and debt. Given the reception of the budget in the two weeks since it was presented, Canadians have once again endorsed this approach.

Acceptance of this budget is very high. National and international financial experts have lauded it as balanced, as fair, as a common sense way to deal with our problems. I am not necessarily enamoured of experts, frankly. The people I am most interested in hearing from are the people of Canada. Roughly 70 per cent of them-this has varied by a point here or there from day to day-have consistently said they are pleased with the budget brought in by the Minister of Finance.

There are those critics that feel the budget was too easy, too soft and not tough enough. It is interesting because in consulting very widely with my constituents I have not heard that from the poor in the country. I have not heard it from the unemployed. I have not heard from the disadvantaged that the budget was too easy or too soft. I would submit that it certainly was not too easy or too soft.

Then we have critics who suggest that the budget is much too fair and is draconian in what it is attempting to do. I do not hear that from people who are trying to find work and are looking to us to help create jobs.

The unemployed with whom I have spoken know full well that if the government is to help create the climate for jobs and help them find meaningful employment, it will be done by putting our financial house in order.

I was gratified to hear from some of the unemployed in my riding that they understand the minister had to make the tough choices he made and the road to their personal economic future is that the nation's finances must be put back in order.

We hear seven or eight provinces claiming to be the hardest hit. How seven or eight provinces are hardest hit by the budget is beyond me, but that is exactly what we have been hearing.

When I hear a cry from one side that it is much too tough and from the other side that it is not tough enough, I am inclined to say that many of my constituents believe the budget is well balanced. It is tough but fair and the minister got it about right.

They do not like all of the budget. I do not like each and every single thing in the budget. Certainly Canadians do not like the pain that is in the budget for them individually, be they farmers in western Canada or some of my farm constituents, be they business people-

[John Cannis, Liberal, Scarborough Centre, ON]

Nothing is perfect.

[Pat O'Brien, Liberal, London—Middlesex, ON]

That is right. Nothing is perfect and no budget is perfect. However Canadians generally accept that the budget is tough and fair and that the cuts undertaken were necessary.

Let me come to my constructive criticism that I have had the opportunity to make personally to the Prime Minister. In certain cases we could be selectively tougher. That is the way I would put it.

I hope future budgets will be a little tougher on wealthy individuals and corporations. I applaud the move to be tougher with the banks, but perhaps we will have to go further. Quite frankly the signal I hear from the minister and from the government. There is a message in the budget for the banks, for wealthy individuals and for corporations that there are other budgets to come and if they are not going to do more to help the economy of the country get going tougher measures can be brought in. This is something I will be watching closely as a Canadian and as a member of Parliament on the government side of the House.

The specifics of the budget are well known, but let me recall for Canadians two or three of the most important points. The key interim deficit target, as I said, was met and exceeded as my colleagues have pointed out: 3 per cent GDP by 1996-97.

The debt to GDP ratio, the size of the debt relative to the economy, begins to decline in 1996-97. The cartoon many of us saw was very appropriate. It was of Canada moving along the road, suddenly hitting something called the Martin budget and making a significant turn in the road. The budget represents a significant turn in the road. We are now on the path to getting out of the deficit and debt spiral we have put ourselves in for too long as a country.

For every dollar in new tax revenues $7 in expenditure reductions were made. That is the kind of downsizing Canadians are looking for from government.

To those who say that the budget was too tough, I say reflect on the debt load of the country. We do not want to see a collapse of our social programs. The cuts that were undertaken are necessary to ensure the social programs put in place by past Liberal governments, with I acknowledge many ideas coming from the NDP, will be preserved.

To those who say the budget was not tough enough, I say consider the reduced spending, the downsizing of government and the hitting of our targets. Indeed it was a job well done. Seventy per cent of Canadians support the budget. That is the reality.

I know it is not politically popular in certain parts of the House to acknowledge that fact. I understand that, but the reality is that it has been a widely accepted budget. It is one that Canadians can look forward to seeing repeated in years to come by the minister and the government.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Speaker, I always enjoy hearing the hon. member for London-Middlesex talk about fairness in the country and in the budget. I remind him that during the election the government promised to keep article XI of the GATT negotiations. It had to break that promise. Fairness is fairness; it could not do much about it.

In the federal budget the government announced a three-year withdrawal of funding for genetic evaluation and milk recording programs because they were contrary to GATT. It seems to me the same week the U.S. government announced an additional $600 million of funding toward these programs. Is that fairness? Is that the type of protection the government is to give its dairy farmers?

I know we do not need subsidies, but surely to goodness there should be some fairness. Or, are government members trying to make sure they have a good supply of chocolate milk from the president? We could be running short of fairness and I am wondering how he would justify it.

[Pat O'Brien, Liberal, London—Middlesex, ON]

Mr. Speaker, I appreciate the question from my colleague.

On article XI, 20 per cent of my constituents are agricultural people in rural settings. As the hon. member well knows, one of the first issues the government dealt with was article XI. My constituents and I submit that most Canadian farmers understand, as the member said, we could not do much about it. Canada stood alone and voted to maintain article XI. I do not know what else the government could have done than to stand alone, virtually totally alone in the world on something that important.

For my colleague's information, my riding of London-Middlesex in southwestern Ontario is one of the most active dairy farming parts of Canada. Before the budget the concern brought to me was that the government would somehow give into pressure and suddenly totally end dairy subsidies.

Frankly as late as last week some leading dairy farmers in my riding advised me that the 15 per cent cut followed by am additional 15 per cent cut was the kind of gradual, common sense reduction that would allow them to adjust. They were relieved that the government had the common sense not to suddenly end the subsidy because there were those calling for it.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, the hon. member said that he was proud of the government's budget, that he was proud it met the deficit target for the first year, and that the budget must be balanced slowly.

If the budget must be balanced slowly, how will the government explain to Canadians in two years when interest payments will have increased from $39 billion a year to $51 billion?

The member for Broadview-Greenwood asked the question a few minutes ago. What will we do when Canada faces federal government interest payments of $50 billion to $60 billion a year? His answer was that we would hold a world meeting like the one held after the second world war to deal with the problem.

Does the hon. member think the problem should be dealt with in a world meeting which may or may not happen? Or, should we face the reality of government overspending and deal with the problem in Canada by setting a definite target for deficit elimination, complete elimination, and meeting it, not just reducing the deficit?

[Pat O'Brien, Liberal, London—Middlesex, ON]

Mr. Speaker, the question is whether we should concentrate on the problems here or have a world meeting, The answer is pretty easy and obvious. Of course we should do both. Canada does not stand alone in the world. No country, not even the greatest economic giants, can isolate itself from the global world situation.

Obviously we have to do both and the Minister of Finance has done just that. That is why the budget is being applauded both at home and by international experts throughout the world.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I must inform you that I will be sharing my speaking time with my colleague from Manicouagan.

On Monday, February 27, the Minister of Finance tabled his 1995 budget before this House. Make no mistake about where I am coming from. I am, of course, in favour of streamlining public expenditures. I am also for a fair and efficient method of taxation by which the rich pay more and the less fortunate are protected.

How can this government keep hitting on the same group of people time after time, with each new budget measure, penalizing middle income taxpayers and digging into their pockets for millions and millions of dollars when it would be so easy to deal with the real problem and collect substantial amounts in a jiffy by making those who can afford it pay their share?

With its new budget, this government will cut $560 million in subsidies paid to railway companies with respect to grain transportation. At the same time, milk producers are seeing their subsidies cut without any compensation. It will be no news to anyone if I tell you that half of milk produced in Canada comes from Quebec. Yet, let it be known that our province is not as fortunate as Western provinces. No one told us about the rise in the price of milk, bread, butter and other dairy products that will result from this budget.

Who will foot the bill, if not the little people? Stop cutting essential public services and social assistance, which are so vital in these times we are going through. Why wait until 1999 to enforce the 21-year rule with respect to taxing capital gains on investments in family trusts? Why not start right now? Can you tell me why this four-year delay is necessary? Must I remind you that the Liberal government is thereby forfeiting hundreds of millions in revenue each year? Can we afford to do without such revenue at this time? Not likely.

And what about tax havens? There is nothing whatsoever in this budget concerning the 16 tax treaties Canada has signed with countries considered as tax havens. What are we to make of a $100 million temporary tax on the capital of banks, when the Royal Bank's net profit for 1994 was $1,169,000,000? The same year, it paid its president $2,740,000. I wonder at what rate that salary was taxed.

What is the result of that nice performance? The Royal Bank laid off 3,500 employees.

Let us recover the unpaid taxes and GST payments. According to the auditor general, thousands of companies owe several billion dollars in unpaid taxes on their profits. This is unacceptable.

Can the Minister of Finance put himself in the shoes of an ordinary person, who does not share his philosophy and certainly not his definition of philanthropy?

The speech made by the hon. member is laudable, honourable and perhaps justified, but can the same be said of his motives, or are those merely related to the referendum?

The money saved by making cuts to the UI program and transfer payments to the provinces is now used to finance part of the provinces' spending on welfare, post-secondary education and health.

I do not understand why these cuts do not apply to 1995; they are being postponed until 1996, 1997 and 1998.

Does the minister really think that no one will notice? I am convinced that, faced with the same situation, the federal government would have noticed.

On February 26, it was reported in the media that Quebec was deprived of $650 million in the national defence sector. What better way to correct that injustice than to eliminate 285 direct jobs at the Bagotville military base? The same could be said about the Saint-Hubert base. Yes, 285 jobs and, in the process, an elementary school with 10 classrooms. The fact is that over 1,000 people will be affected by these cuts. Once again, a decision was made without those affected being consulted. Entire families will be uprooted from their community. Following these cuts, how many small businesses from my region will have to lay off people or even shut down? The local population just does not accept that decision. It would be more appropriate to refer to my region as the queen of unemployment rather than the kingdom of Saguenay.

That decision will result in the loss of several million dollars for the region. While the province of Quebec is starting to recover from a hard recession, our region of Saguenay-Lac-Saint-Jean is sinking deeper and deeper into an inescapable economic slump. Our young people are leaving in droves.

Just take a look at the most recent data released by Statistics Canada. Last month, our unemployment rate jumped by one per cent, while it went down by one per cent just about everywhere else in the country.

The ICI organization in my region summed it up well when it stated that, and I quote: "Our region is a group of distinct communities which, as everyone knows, contribute a lot, in their own way, to the social, cultural, economic and political enrichment of Quebec and Canada".

What better way to thank that region and its residents for their support than to cut over 285 jobs in the military sector?

In addition to holding many surprises for the years following the referendum, the 1995 budget does not deal with the real issue. It does not deal with unemployment.

The Liberal government refuses to use the surplus in the UI fund to implement concrete job-creating initiatives. The government wants to reduce the deficit, but it does not resort to concrete measures and prefers to transfer the problem to the provinces.

I realize once again that, with its budget, the Liberal government is showing all Quebecers that the federal system does not work and that it would be much wiser on our part to get rid of it.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, I have a very simple question for the hon. member for Chicoutimi. He referred at length to the budget and to the connection he sees with the forthcoming referendum in Quebec.

Since he brought this up, I wonder whether the hon. member for Chicoutimi is in favour, as his leader seems to be, of changing the question for the referendum. The issue is relevant to this debate on the Budget, since he mentioned it himself. Furthermore, it creates a climate of uncertainty, as Premier Parizeau clearly admitted in his various speeches and statements on Parti Quebecois policy.

Considering the impact of this issue on the economy of the country and on the budgetary process, I would like to know whether the hon. member for Chicoutimi personally favours changing the question, or whether he would agree that this is a lot of window dressing, in other words, an attempt to manipulate the electorate. The option has not changed. It is still the same. The option is independence or federalism, and as far as I know that has not changed; but as far as change in the referendum question is concerned, we can expect, or at least we have the impression that there is some trickery afoot. I would be interested to hear the hon. member's position on this matter.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, first of all, I am not so sure the question as such has a direct connection with the budget. However, I will respond to the issue raised by the hon. member for Sherbrooke and tell him that, for the time being, everything is on the table.

If the hon. member for Sherbrooke had any suggestions for the Government of Quebec as to the form and substance of the question to be asked in the referendum, he could have participated in a democratic exercise in which the National Assembly of Quebec gave all residents a chance to be heard. He failed to participate in this exercise which would have given him a chance to explain his position before the public.

I could also mention the outcome of the election in Brome-Missisquoi. I think voters made it quite clear to the hon. member for Sherbrooke that what he represented was not what they wanted. His party came in fourth or fifth.

My position is that, with our natural resources, with our culture and with everything we have developed in Quebec in recent years, the people are ready for this question, and they are ready to say yes.

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

Mr. Speaker, sometimes I wonder how much longer we will have to endure this same tiresome line from the Bloc, constantly referring everything that happens in this House to the specifics of how it will affect Quebec. Never mind the country, just Quebec. Frankly, it drives me nuts.

He mentioned the milk subsidies and the 30 per cent cut over two years. He said the west received a much better deal because it received restitution for the cut of the Crow benefit. I wonder if he realizes or if he chooses to ignore that the cut to the Crow benefit was 100 per cent and immediate. He is talking about a 30 per cent cut over two years.

He also states quite correctly that 50 per cent of fluid milk production comes from Quebec. I wonder what he thinks will happen to all that subsidized milk production if he gets his dream of independence and the Canadian market is cut off, as it naturally would be-

[The Deputy Speaker]

I think the question is clear.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, first, I must say that Quebec has been trying for over 100 years. Quebecers delegated members of Parliament to this House to defend their ideas.

We realized, at the end of debates, that our very simple questions were getting very little response. Whether it is agriculture, rail transportation or natural resource development, Quebec has always had to fight harder to achieve its goals. Today, with what we are offering Quebecers-and rest assured that we will be able to sell our dairy products, regardless, because they are quality products-