Madam Speaker, I will be sharing my time with the hon. member for Lévis. The show put on these past few weeks reflects how completely outdated our parliamentary institutions are when it comes to public financial management and economic policy.
After the session reopened, when questioned by the official opposition, the Minister of Finance systematically refused to answer any question dealing with public finance, arguing that we would have to wait for the budget to be tabled, a budget prepared in the strictest secrecy as budgets are. Yet, once tabled, the budget speech has nothing short of force of law, since the government majority is forced to support it without debating it in detail.
In our system, the vote on the budget amounts to a confidence vote, as a negative vote would immediately result in the government stepping down and general elections being called. It follows that any member of the government majority who dares to vote against this budget would face immediate expulsion from the caucus and would have to sit as an independent member thereafter.
That is why every Liberal minister and member will stand by each and every page, line and word of this budget, although many of them would call for major changes were they given the choice. The budget preparation and adoption process is getting us nowhere fast. It has to change. We will come back to this in the coming weeks. That being said, because I have very little time, I will get right down to the subject of today's debate.
We have talked at great length, these past few days, about the impact the budget will have on the various population segments that will bear the brunt of the proposed cuts and tax hikes. We too, in the official opposition, have seen through the media campaign designed to make this budget out to be the beginning of a new federalism, when in fact the federal government is passing the buck to the provinces, while maintaining decision-making power in its own hands.
After spending shamelessly in fields of provincial jurisdiction, the federal government still displays the same arrogance by announcing that it will keep on levying taxes, that it will no longer pay the bills, and that it will force the provinces to make the necessary cuts to put the fiscal house in order. Although it may look innovative, this budget uses old recipes which are typical of the federal government's approach.
The financial markets were quick to figure out the government's ploy. After an initial positive reaction which lasted about 22 minutes, the value of the dollar started going down again, while interest rates resumed their upward trend. The financial markets realized that the federal government's consolidation was minimal and that true leadership will have to come from the provinces.
The fact that Ontario's credit rating was put under review the day after the tabling of the federal budget is a direct consequence of that budget. Its impact on Quebec's public finances will also be considerable. However, since this is the referendum year, the real consequences will only be felt next year.
The government's ploy was not any more successful from a political point of view. That the Leader of the Quebec Liberal Party, who was desperately counting on this budget to prove federalism's flexibility, prefers not to comment at all at this point is quite revealing. Maybe he realized that although the federal government has pulled out financially, the same duplication persists, generating the same problems and the same inefficiencies.
This budget has yet to be fleshed out by a thorough restructuring of the federal government. As a society, we have not improved our ability to respond to people's needs and to meet the challenges of economic growth and job creation.
During the last election campaign, the Minister of Finance was an ardent supporter of reducing the deficit through economic growth and job creation. In a matter of months, he has become, at best, a poor accountant. What happened? The present Minister of Finance is largely responsible for the mess we are in today. After an election campaign full of promises that were close to being misleading, he was incapable of doing anything at all, starting with his first budget.
Remember that during the election campaign, the Leader of the Bloc Quebecois proposed a credible plan for reducing federal spending by $10 billion, while the Liberals promised to deal with the deficit through economic growth.
Remember that after the election, the Leader of the Opposition urged the government to act quickly by setting up a special committee of the House of Commons that would determine what
cuts were necessary and make them part of the government's first budget. The government refused.
I may recall that after this government's first budget was brought down, the Prime Minister was telling people everywhere in Canada that no new cuts would be necessary to meet his objectives for reducing the deficit. And now that we know what is in the second budget, we cannot really say that the Prime Minister was lying but there is no doubt that he misled Canadians about the real challenges they could expect.
Today we are paying a very high price for this government's refusal to act decisively in its first year. The loss of credibility on financial markets is reflected today in the astronomical level of real interest rates we have to pay. According to the Minister of Finance, in 1995 we can expect interest rates to be 4 per cent higher for the short term and 3.6 per cent higher for the long term than was forecast in the 1994 budget.
If we only consider the cost of servicing the federal debt, higher interest rates will an additional $7.5 billion, although the deficit is not as high as forecasted in 1994. Unfortunately, there are other consequences as well. The level of real interest rates forecast in this budget cannot be sustained when we consider that the Canadian economy is functioning well below its capacity.
Allow me to quote a short sentence from page 21 of the government's budget plan, but which the Minister of Finance took great care not to quote in his budget speech:
The good economic performance in 1994 and 1995 will substantially reduce, but not eliminate, the amount of spare capacity in the economy. Spare capacity will persist through 1996 as real growth slows-
This is what the Minister of Finance hides in his fine speeches. He who promised to resolve the deficit problem through economic growth and job creation, today predicts that Canada will still experience an amount of spare capacity in the economy in two years' time. This is the real drama of the Canadian economy.
By refusing to act in the first year of its mandate, the government has clearly complicated the essential job of ensuring sustained economic growth. If we want to get out of the rut in which we find ourselves, the provinces must not be content with shouldering the cuts imposed on them by the federal government, they must insist on a complete reorganization of the way the Canadian economy is managed.
Keeping policies on economic innovation and adjustment centralized flies in the face of the very different needs of Canada's regional economies. What is the federal government doing in manpower training, in the area of fishing, for example? The complete fiasco in this regard should prompt the federal government to hand over responsibility to the coastal provinces as quickly as possible.
Clearly the systematic review of the roles of the federal government must no longer be conducted only in secret by federal mandarins. In the case of Quebec, I know we will soon have a favourable referendum. I hope the other provinces in Canada will take the opportunity to develop a framework that suits their needs and those of their people.