Debates of March 14th, 1995

The Budget

[The Deputy Chairman]

Order, please. Debate resumes with the hon. member for Manicouagan.

[Bernard St-Laurent, Bloc, Manicouagan, QC]

Mr. Speaker, we were promised a tough budget focused on renewal. Tough, it was for sure. But it was tough for the disadvantaged, once again, with social programs being blithely cut directly and indirectly. As for the renewal part of it, it did not quite make it. There was

no provision for job creation. Let us look at a few examples to justify my remarks.

I represent the riding of Manicouagan. In this riding, social programs take on considerable importance because the rate of unemployment is higher than the national average and also because the distances between villages is a serious impediment to the region's economic development.

When I say the rate of unemployment is high, it is true. And when the minister once again with a vengeance went after the most disadvantaged, that is the unemployed, well, the people in our area were affected on February 27 by the tabling of this budget. Already, in a region like ours, where, east of Natashquan, 85 per cent of the population depends on fishing, the people had to work 12 weeks in 1994 instead of the previous 10, in order to qualify for unemployment insurance.

In my riding, and more particularly east of Natashquan, managing to have six weeks' work was quite an achievement, given that the department of fisheries, on the other hand, was cutting quotas in order to preserve stocks. I do not question the merits of this, but people were losing weeks of work on the sea so stocks could be preserved. When you try to relate these two, that is, preservation of stocks and therefore fewer weeks of fishing, on the one hand, and the need for more weeks of work to be eligible for unemployment insurance, on the other, things do not add up once again.

In his February 27 budget, the Minister of Finance found another way to go after the people of Manicouagan. Just like that, he said that he was going to cut their unemployment insurance cheques by 10 per cent. In a way, he makes no distinction between people who live in Manicouagan, Saint-Hubert, Laurier-Sainte-Marie or Charlevoix.

In addition, my region is affected by the $300 million cuts to the Canada Mortgage and Housing Corporation. The unemployment rate is very high, as I said, and, consequently, many people live in housing managed by the CMHC. For unemployed people, and for those who have gone a step further and receive social assistance, finding low-rental housing is of capital importance. With one stroke of the pen, the minister added another hardship to the lives of the needy who, like you and me, will always be in need of lodging.

There are vital needs that the government must not play with if it wants to maintain the standard of living, such as food and lodging. In one speech, the Minister of Finance went after both simultaneously.

By skimming 10 per cent from unemployment insurance cheques, he took away quality and a good part of the food. By cutting the CMHC's funding by $300 million, he deprived many households, many families, often single-parent families, might I add, according to the statistics, of decent housing. Therefore, how much respect can the government really have for the population if it is not even committed to keeping just the basic elements that make up society's standard of living? If that is not taking it out on the needy, I do not know what is.

People in my riding will also be affected by changes to the health care and education system, but naturally, in an indirect way. Indirect because the minister calls these indirect cuts "decentralization". Allow me to explain. The minister anticipates that transfer payments to the provinces will be cut by $7 billion. Now, we all know that the provinces use that money to provide health care and education to their population. Yes, there is duplication, because the provinces are already administering these programs. But it is not decentralization, it is dumping the deficit in the provinces' backyards.

They are offloading the deficit because the provinces will get $7 billion less but will still be expected to provide the same services. However, the federal government is careful not to withdraw completely from health care and education for the simple reason that it wants to standardize these areas and raise standards so that it will be a little more costly for the provinces to operate in these fields.

They cut their financial support every year but still manage to give just enough to impose standards that end up costing a lot of money. They cut financial support without giving the provinces any additional decision-making powers. The minister calls this "decentralization", but in truth it amounts to offloading their deficit onto the provinces.

When people get sick in my riding on the North Shore, where the roads are inadequate, they must be transported by plane. We must give financial help to some doctors so that they can travel to remote areas like the North Shore. One does not choose to get sick in Kuujjuaq or Natashquan any more than in downtown Toronto.

There is also the gasoline tax. Again, the Minister of Finance did not discriminate, but that is not necessarily a good thing. Let us not forget that unemployed people looking for jobs hope that any dollar they put in their gas tanks will yield results. This measure will affect them indirectly once again. The budget does not say anything about job creation. The Liberal government got elected on its red book promises by shouting from the rooftops that they would create jobs.

In the first year of his mandate, the Minister of Finance and all the other Liberal members proclaimed to all and sundry that they would address the deficit by creating jobs. Yet, the February 27 budget showed us the true face of the Liberal Party, which does not do anything to create jobs. Instead, they went after the most needy while protecting their friends and being careful to keep up appearances and look good, which is important to the Liberal Party, of course. When I say that they are protecting their friends, I am referring among other things to family trusts.

However, I will not elaborate on this, because I do not have enough time.

This budget is a skilful political juggling act but in fact, there is nothing in it which really addresses the real social problems by creating jobs.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, the hon. member talked about the cuts in transfers to provinces under the Liberal budget. He talked about them as being downloading, which they are.

In the Reform taxpayers' budget, the alternative budget Reform presented, we also had reductions in transfers to provinces. We transferred the tax points along with the reductions. We transferred the ability of the provinces to raise the revenue to compensate for this reduction in transfers to provinces.

Let us use the analogy of a chicken and an egg. The government now transfers eggs to provinces so they can pay for some of their programs, done through transfer payments. Instead of transferring individual eggs to the provinces, the Liberals transferred a carton of eggs except they removed two. Therefore they transferred 10 eggs instead of the dozen. They cut the transfers.

There are also strings attached because of the regulations under the Canada Health Act. Instead of transferring the carton with fewer eggs Reform transferred the whole chicken. That is the program. We transferred the revenue producing ability to the provinces. Instead of transferring individual eggs and keeping the chicken as the Liberals have done in their program, Reform transferred the whole chicken so that revenue is in the hands of the provinces. They can fund these programs.

This would be popular in Quebec. Quebecers want more control of their future. Quebec generally is in favour of decentralization to the provinces.

I would like the hon. member to respond to what the Liberals have done in cutting transfers and not cutting the revenue producing ability as compared to what Reform proposed in the taxpayers' budget of cutting transfers to provinces but giving provinces the power to collect that revenue instead of the federal government and therefore giving provinces much more control over their own programs and their own resources.

[Bernard St-Laurent, Bloc, Manicouagan, QC]

You know, Mr. Speaker, each minute the House sits is very important and certainly costs taxpayers a lot of money. I have great respect for the Reform Party's hypothetical budget, but if we start hypothesizing about hypothetical budgets in the House of Commons, we better change its name to House of Utopia.

I think our taxpayers deserve more respect than that. I have respect for the Reform Party and its budget, but unfortunately-or perhaps fortunately; Canada will decide after the referendum-this party is not in power. Let us look at more factual matters, matters before us today and that we have to deal with. Much as I respect Reform Party members, the fact remains that their Party's budget is nothing more than a piece of paper for the time being.

[Maurizio Bevilacqua, Liberal, Parliamentary Secretary to Minister of Human Resources Development]

Mr. Speaker, one of my most rewarding duties as a member of Parliament is to visit schools in my riding and meet with students.

Three weeks ago I participated in such a visit. As usual I found the questions asked by the students quite interesting, the Quebec referendum, unemployment insurance and the environment.

I was struck by a very distressing thought. Each of these students has a huge debt hanging over their head. Because of the size of our national debt, those young students are starting out life with a $19,000 mortgage. Unlike past generations that could build their hopes and dreams on the solid granite of public finances, these young people are building their dreams on quicksand.

I cannot accept that. I entered politics to give a voice to young Canadians too often forgotten by past governments. It is fundamentally unfair to expect young Canadians to pay a debt incurred by past generations. It is particularly irresponsible for Canadians who have lived beyond their means for so many years.

That is why I am so proud to be a member of this government. This is a moment of great importance in our history. For the first time in many years Canada has a government and a finance minister ready to do what must be done in order to control the deficit.

The minister's budget speech was nothing less than a call to arms to all Canadians. We must band together to defeat the deficit and the debt. Steadily, silently these two economic forces are robbing our government of the strength and sapping it of the vitality it needs to foster growth, care for the needy and invest in the future.

For too long governments have postponed tough decisions. For too long governments have been pretending everything was fine while borrowing another $30 billion and $40 billion from our children. Now we have finally turned the corner.

A nation that has been sleep walking toward the precipice of bankruptcy has awakened with one foot on the edge of the cliff. Our government has the will to do what is necessary. As important, it has the support of the Canadian people.

Canadians are willing to support this government because they have seen the positive results of our financial stewardship. In the first year of our mandate 433,000 new jobs were created, all of them full time. Canada's economy grew at about 4.5 per cent, the fastest of the G-7. Manufacturing output is up over 9 per cent and inflation is at its lowest rate in 30 years.

At the local level the results are as encouraging. In Toronto unemployment dropped from 12 per cent to 9 per cent between January 1994 and January 1995. In my area of York region unemployment insurance claims have dropped from 70,491 to 13,773 in the same period.

When I speak to people in my riding I sense a renewed sense of hope, a sense of confidence. Business people are investing again, Canadians are working again.

Canadians know that our recovery will be threatened unless we get our financial house in order. They realize everyone must make sacrifices. Canadians must all share the burden of debt reduction.

Our government will reduce spending but it will also rationalize its operations, targeting spending to where it can do the most good. For every $1 of new tax revenue there will be $7 worth of cuts in expenditure.

Above and beyond deficit targets, this budget is about reinventing government. It clarifies the role of government within a new socioeconomic order in which the old rules do not apply.

To improve Canada's social safety net our government will introduce a number of innovative measures. It will establish the Canada social transfer. The CST will replaced established programs financing and the Canada assistance plan. It will cut unnecessary red tape, ensuring that the provinces will have maximum flexibility to design the programs that meet their needs.

The budget also calls for the creation of a human resources investment fund. The fund would involve a broad approach to employability issues. The functioning of the Canadian labour market would be in congruence with UI reform and the consolidated transfer.

The human resources investment fund could encompass support for a wide range of employment development services including assessment, counselling, training, work experience, self-employment and community development; the development of occupational standards; national labour market information; sectoral councils; child care for working parents; a national workplace strategy; programs and services responsive to the needs of aboriginal Canadians; assistance for persons with disabilities; and assistance for students and adult learners.

The restructuring and redesigning of programs could be based on principles established by the social security reform and linked to increased flexibility in the use of the UI fund. These principles include tailored programs to individual client needs, delivery involving community partners and the private sector, the use of modern technologies, national standards and priorities.

The government intends to reform the UI system to bring it into line with the new economic realities facing the nation. A greater emphasis will be placed on helping Canadians acquire skills and find work. We will move away from traditional UI and focus on investing in people. We will replace despair, dependency and defeatism with ambition, autonomy and advancement.

The government has signalled its intention to protect senior citizens. At present old age security and the guaranteed income supplement cost Canadians over $20 billion a year. It is estimated the cost will increase by 60 per cent over the next 15 years as the population ages. Clearly Canadians would want us to do something about it.

The 1995 budget sets out the principles that will govern the reform of OAS and GIS: undiminished protection for less well off seniors, continuation of full indexation of benefits, OAS benefits to be provided with reference to family income levels, greater progressivity of benefits by income level and control of program costs. This will be a very important step toward achieving intergenerational equity.

These are all positive developments in the evolution of the nation. The budget holds the promise of a better tomorrow. It says to Canadians that the sacrifices we make today are for a greater good. Sound public finances are the bedrock of a prosperous future. Freedom from debt is the greatest legacy we can leave our children.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, let me first congratulate the parliamentary secretary on his last phrase. He said that freedom from debt was the greatest legacy we could leave our children, if I understood correctly. I only wish he had said that in the years he was sitting on this side of the House. However that is another story.

I want to put a question to the parliamentary secretary who I know is very much in the loop in terms of what is happening within government. I asked him a question about 10 days ago in the House relative to pension reform that he talked about in his speech. He evoked principles relative to pension reform. I am very interested in the issue. It is one that needs to be tackled head on. I agree this is something that requires the immediate attention of the country if we are to resolve some of the difficult issues.

I am assuming the government is not improvising pension reform, something so important that the parliamentary secretary chose to speak to it. For example, he mentioned a 60 per cent increase in expenditures over 15 years. That is not a number he

invented or drew out of a hat. It must have come from somewhere.

Given the importance of the issue to all Canadians and the consequences evoked-and I believe there is a bit of a hidden agenda in the budget-I have a very direct and simple question for the parliamentary secretary. In fairness to Canadians is the government willing to have all Canadians participate in the debate so we will all know what the choices are?

I guess whether he answers will be an indication of whether there is a hidden agenda. Will the government agree to table in the House of Commons for all of us to see, read and reflect upon the studies the government has undertaken with regard to pension reform?

[Maurizio Bevilacqua, Liberal, York North, ON]

Mr. Speaker, I agree with the hon. member that it is a very important issue. A lot is at stake in the issue of social security reform.

Unlike past governments that ran away from the challenge of discussing major issues such as training, unemployment insurance, child care, and reforming and modernizing the system, we decided to engage Canadians in the dialogue and to consult with Canadians.

The hon. member can rest assured the government will consult Canadians on any measure we take related to the issue of pension reform. It will consult all members of the House in the same manner and fashion as we engaged in prebudget consultations, social security review and many other issues ranging from defence to external affairs. The government has created many opportunities for Canadians to participate in dialogue with the Government of Canada.

With reference to the specific question on pension reform, the hon. member has clearly read the budget documents. He has read the five principles outlined. From the day the Minister of Finance tabled the document until today nothing has changed on the government's agenda.

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

Mr. Speaker, I enjoyed the parliamentary secretary's kind words, but there is a saying on the farm that kind words and good intentions do not feed too many animals.

I am just wondering how he can say that the government is after financial stewardship. At the research station at Morden, one of the most successful research stations in Canada, 40 per cent of the jobs were cut. It took away the buckwheat program and the potato program. It moved them up north where they could all freeze. Is that good financial planning?

I see their pension funds have not been cut too drastically. However, does he know of a program called the Canadian polar commission? The polar commission takes $1,081,000 from the government. It employs six people and half the money goes to salaries. The commission spends on the dissemination of information. The amount of transfers to people looking into this matter is $20,000.

Is it financial responsibility to spend $20,000 out of $1,081,000 on the actual work and the rest on salaries? I would like to see some improvements there.

[Maurizio Bevilacqua, Liberal, York North, ON]

Mr. Speaker, at the expense of sounding immodest, we have to look at the record. When we look at job creation under the government we see 433,000 new jobs. We also see a government that is looking at a number of issues including program reviews. It is looking at the programs that are working and the ones that are not. It is creating a climate for new jobs.

If the hon. member had listened to the speech of the Minister of Finance speech, he would have found that we are hitting all the targets we have set. We are moving toward achieving the results that Canadians wanted during the election campaign.

The red book is being honoured and Canadians seem to be extremely happy with the performance of the present government. Perhaps the hon. member should join in the applause.

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Mr. Speaker, I am anxious to participate in the debate on the 1995 budget because I believe it represents an historic occasion in our country's evolution.

It is not the kind of budget I would normally want for Canada. I would rather enhance programs than reduce them. I would rather be involved in introducing new programs than analysing the effectiveness of existing ones. As Liberals I am sure most of us agree that the budget was born of necessity, not ideology.

Our social programs are threatened by our cumulative debt and our annual deficit. I am not one of those obsessed by debt. My banker can attest to that. However, I am very protective of our sovereignty as a nation and our ability to design and implement public policy and programs that reflect Canada's values as a generous and civilized nation.

Because we borrowed to finance our programs we have allowed foreign lenders to affect domestic policy in a manner that simply is unacceptable. We must reclaim our ability to pursue a style of governance that reflects Canadian values: compassion, equity, tolerance and pluralism. These are Canadian values. Many elements of the Canadian way of life may be uniquely Canadian. Our responsibility is not only to these ideals as they affect us as a nation. Our responsibility is to these ideals as a world leader, as a country that others turn to.

Another threat our social programs face is much more practical. In 1995-96 debt charges will consume $49.5 billion of our annual spending. Over the last 15 years interest payments have grown from $8.5 billion to $42 billion and have devoured over $445 billion of taxpayers' money, dollars I would much prefer to

see placed in the hands of Canadians in need, dollars better spent on social housing or literacy instruction, dollars we need to eradicate child poverty, and dollars we need to meet our international obligations as a nation of great wealth and advantage. The thought of how much better we might use these dollars causes me to accept the need to reduce the deficit.

The unproductive nature of interest expenditure is partially responsible for the resistance of Canadians to broad tax increases. Our citizens pay more but see less in return as we finance past expenditure.

Even as I speak in favour of deficit reduction, I call on our government to exercise compassion and creativity as it implements the budget over the next 12 months. All Canadians must share in the mission of reclaiming our fiscal and monetary autonomy. In return, government has the responsibility to be fair, creative, thoughtful and forthright.

The approach I endorse contrasts dramatically with that outlined by the Reform Party in its recent attempt at a budget proposal. While the Reform Party's position does not surprise me, I do find shocking that my colleague from Saint John would support it. Does the fact that she supports the view we have not eliminated the deficit quickly and decisively enough also mean that she supports the approach as outlined? The Reform agenda would destroy the fragile but real recovery we are experiencing in New Brunswick. It is sad its prescribed medicine would only push us back into the sick bed of dependency it speaks of so often.

The government is committed to a balanced but disciplined approach to deficit reduction. Canadians have been asked to help and I believe there exists an acceptance of the need to bring revenue and expenditure closer together.

The Minister of Finance is committed to seeing social tax expenditures scrutinized with the same vigour as has been applied to other social spending. He has acknowledged the need for more comprehensive tax reforms.

The government has spoken of Canada's commitment internationally on the need to come to terms with currency speculation and sharing more fairly the benefits of new technologies.

Not only does the government need to balance spending reduction with tax fairness, it is also necessary to be prepared to do things differently, to be more creative, to consider solutions quite outside conventional thinking in the application of the budget.

Significant change does not come easily in large bureaucracies. Through no one's fault inertia is a powerful force and change, particularly dramatic change is seldom seen. Canadians from all walks of life have been asked to change their thinking, to expect less and contribute more.

I believe we will meet that challenge but in return, government must be prepared to change its thinking, to listen seriously and consider outside, sometimes unconventional, solutions.

As a member of the parliamentary committee on human resources development, I can attest to the fact that many Canadians believe for example that the federal government should show leadership in eliminating overtime and considering a shorter work week. This would soften the effect of expenditure reduction on our employees while setting an example for other governments and the private sector with the view of sharing better the jobs that currently exist in this country.

A second area where government must show leadership is in our approach to economic development. We must carve out clearly in a mixed economy the role of government and apply available resources and regulatory power toward that end. We must be prepared to use our legitimate power to make the market work for as many Canadians as possible, whether it is increasing the availability of capital to small and medium sized businesses, direct financial support for community development, pushing more forcefully the need for private sector retraining and upgrading, or taking a more vocal stand internationally on questions of employment standards or tax fairness.

If the government can no longer afford to offer as much protection to those for whom the market does not work, it must accept a larger role in ensuring that the market works for more Canadians.

I said at the start that I was anxious to participate in this debate because it marks the beginning of a new era for Canada. Some Canadians have said we are getting meaner. Others, unhappily, say we have not been mean enough. I am an optimist. I believe we can find that place where we gradually disentangle ourselves from the vulnerable relationship we have with the money markets but where we also recognize the vulnerable relationship many Canadians have with us.

Yes, we can find that balance but ultimately it is not in the numbers. The balance we seek and must find lies in the hearts and minds of Canadians, in our compassion, our creativity, our generosity and ingenuity.

As a member of the committee that travelled Canada for the social security review, I can assure the House that Canadians have ideas, ideas born of a desire to eradicate poverty, to teach people to read and offer shelter and jobs. They want us to listen,

to work with them, to be more inclusive both in our policy development process and in the results we hope to achieve.

Over the coming months the government will be engaged in discussions with the provinces among others on the question of the social transfers. Much of what Canada will look like in the future will be affected by these discussions. They must be driven by a vision for the kind of Canada we want and can afford for our children.

To engage in the exercise without considering affordability would be irresponsible and frankly silly. However, to engage in the exercise without a national vision would be equally irresponsible. What is more, it would be an abdication of our responsibility to those whose vision and determination have brought us to where we are: the country recognized objectively as the best place in the world in which to live.

What is better than that? We have to stop beating ourselves up. We have to stop beating each other up. All this talk of crisis and catastrophe should not cause us to lose sight of the comparative credibility and objectivity between the United Nations and some analyst with the Wall Street Journal.

We have a debt and deficit problem. We will fix it. We are a wealthy, safe, generous nation with a magnificent future. For those who think otherwise I can only turn to the vocabulary of my 10-year old son and say get with the program.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, the Liberals constantly talk about the whole issue of cutting slowly.

I wonder if the member has had a mortgage on his home. I will assume that he has, along with probably 90 per cent of Canadians. Let us say it is a $50,000 mortgage and he is paying $500 a month. He probably knows that when he first starts paying on the mortgage very little goes toward the principal. Most of his $500 payment is going toward the interest. I also wonder whether the hon. member has had the opportunity perhaps through an inheritance or hard work on his part to put $10,000 toward the mortgage and seeing that instead of the money going toward interest that suddenly he is paying more on principal.

In other words, going slowly on deficit reduction simply does not work. To get the deficit to a point where it is not continuing to add to the burden of the debt there must be prompt, aggressive action so that we will not be doing away with our ability to fund the social programs, so that we will be able to reverse the situation that is forecast and planned for by his government of increasing interest payments from $38 billion to just under $51 billion. That $13 billion is eating up the ability to fund social programs.

Surely there must be some Liberal in this House who has had the experience of making an abrupt payment down on the principal of a mortgage. Can the hon. member not see that that principal might not apply to Canadian finances, therein being able to correctly and properly protect social program funding.

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Mr. Speaker, I thank the hon. member for Kootenay East for his question.

I am painfully familiar with mortgages. I was not kidding when I said my banker knows I am not obsessed with debt. Having said that, I do not think that in the interests of making a payment on the principal of my mortgage that I would be prepared to feed my family any less or take away from the college trust fund or my life insurance.

The reality is we have to engage in this exercise in a very practical, common sense way. Perhaps it is a regional problem, I am not sure but over and over again we hear particularly from our Reform Party colleagues that we are not moving quickly enough. I can only say as an Atlantic Canadian that to move any quicker would place us exactly in the position we are trying to escape from in terms of generating economic activity in our region. We benefit from social programs. We benefit from transfers.

To respond to earlier analogies with regard to chickens, the fundamental problem with the argument that if we give every province the chickens is that not all chickens are the same size. Consequently, part of what this nation is about is sharing the coop so to speak.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, the hon. member has referred to this government taking control of Canada's finances again and the importance of that happening. I applaud him for recognizing that.

When we look at the Liberal budget and examine where the biggest change in transfer payments has taken place, has there been an increase in transfers to provinces? No. There has been a reduction of at least $4.5 billion in transfers to provinces. Has there been an increase in transfers to individuals? No. In fact the biggest threat of this Liberal budget is in transfers to individuals through social programs. These programs are not sustainable because there has been no definite target for elimination of the deficit.

The largest change in transfers of government money in this budget is in fact in transfers of money to bankers. When this member talks about Canada regaining control of finances, how can that possibly be happening when this budget in fact involves an increase in transfers of $12 billion to bankers, some of which are foreign bankers. More and more are foreign bankers.

I would like the hon. member, who happens to be on the social programs committee, to explain to me how this budget fits in with his stated goal of Canada taking control of its finances. Being on the social programs committee, can this member explain how social programs will be funded down the road when $12 billion more will be spent on interest payments within two years, and then ever increasingly more beyond the two years?

[Andy Scott, Liberal, Fredericton—York—Sunbury, NB]

Mr. Speaker, it is merely a question of balance. It would be ridiculous to annihilate social programs in the interests of saving them. Consequently, we have to find the place in the system where we strike the balance that allows the programs to be affordable.

I have great faith in the wisdom of Canadians. They were presented with the option put forward in this budget of a target of 3 per cent at the end of the third year and were also presented with the option put forward by the Reform Party. They picked our solution. I have some faith in the good judgment of not just the Minister of Finance and my colleagues in the government, but also the good judgment of Canadians who chose a balanced approach.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, a point of order. I believe that every member should be permitted to speak in this house, particularly on issues like this debate.

However, I note that in the last House our party had one independent member, the hon. member for Beaver River. When she was in the House the Conservatives consistently dealt her out of being able to enter into debates.

I wonder if the Chair might be able to explain to the House under what rules the next member is permitted to speak, considering that he, as a member of the previous government, did everything he could to stop our member from being able to speak.

[The Deputy Speaker]

The member for Kootenay East raises an important point. There are about 300 members in the House. On a mathematical basis, the unrecognized party members are entitled to speak about one every 25th slot. We are at that point now, approximately. I take the point of the hon. member for Kootenay East because I sat in the corner back there, too. I know exactly what the member is talking about.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, I will not pursue the point of order except to say that maybe the hon. member for the Reform Party should let go at one point in time. When does he think kicking someone around should stop, if that is the case? Or does he feel that we have abused our privileges in this place? Anyhow, we probably witnessed a new definition of what meanness is in this place, but for many reasons, I am a lot more interested today in addressing the issues relative to this budget.

This budget has the advantage of putting things into focus and perspective in regard to a few elements that are important to Canadians. First is where the Liberals really stand on these issues and what their real agenda is or is not. It puts into perspective the previous accomplishments of other governments and what their records mean and what do they not mean. It also brings into perspective the real issues we have to address.

I wish to begin by being as frank and straightforward as possible. There are things in this budget we agree with. There are things in this budget that we think are positive for the country. We intend to support those proposals that are positive and constructive.

I do not think it is very useful for us to enter into any phoney indignation on budget night in terms of what the budget is all about. It is not useful to stray around with inflated vocabulary that only rings false in the ears of the Canadian public when they try to look at this budget.

Frankly, in trying to assess how the government needs to deal with this issue, anything I have heard is that Canadians want government to succeed. Canadians want the government to do well in dealing with the budgetary and fiscal problems facing the country. They do not want to see the government face another crisis. On the contrary, they hope that it will make the right decisions. It is very much in that spirit that I would like to offer my thoughts and comments today.

The most interesting part-I happen to be one of the few members in this place who has a view on this because I happened to be in the other Houses-is that this budget also brings into perspective the policies and positions of the Liberal Party of Canada. That has to be one of the first assessments that we need to make about the budget.

To be brutally frank, it needs to be said that the budget is a denial of the principles espoused by the Liberal Party during its nine years in opposition, a repudiation of the policy it placed before the Canadian electorate 16 months ago, an abandonment of those people whose defenders the Liberal Party pretended to be.

For nine years Liberals purported to defend old age pensioners against any reductions in benefits, to fight for the jobless against changes in unemployment insurance, to maintain the annual increases in parliamentary grants to VIA Rail, to the CBC and to all the cultural agencies. They called for the expansion of day care.

The parliamentary secretary this morning even had the temerity to raise day care when if one reads page 40 of the red book as Canadians have, one will find there is a clear commitment to increase day care spaces by 50,000 a year the moment the economy goes beyond 3 per cent.

Is there anything about that in the budget now? That was the Liberal position. They vowed to stand shoulder to shoulder with single mothers, with poor families, with refugees and immigrants, with the regionally disadvantaged, with the sick, with

needy children here at home or abroad, all of whom were to be given more, not less, financial support by a Liberal government.

Maybe I am naive but I am still young enough to be disheartened by the treachery and old enough to know that in time the Liberal Party will pay for this. It is said often enough but it bears repeating because it is true: Liberal policies in opposition were unrealistic. Their promises were irresponsible, their opposition to budgetary restraints of any kind in any circumstance at any time over nine years were not principled, but dishonest, totally political and wilfully ignorant of the national interest.

Everywhere they sought to obstruct-I was in that House for nine years-systematically and without question any cuts or reductions in expenditures. In fact when the government was elected in 1984, previous expenditures were growing at a rate of about 13.4 per cent a year. Program expenditures under the previous Liberal government were brought down to under 4 per cent a year. Did Liberals support that? No, not once that I remember.

What now? Do we congratulate them on having seen the light? Is their policy any more principled than the old policy? Is it any more credible? Is it any more reliable? That is the real question.

Liberals bitterly fought the Canada-U.S. free trade agreement. I remember that well. Under the present Prime Minister's leadership, they opposed NAFTA, the North American free trade agreement, in Parliament and promised on the hustings they would not ratify it unless specific amendments were agreed to.

They opposed the previous government's energy policies. They obstructed the changes in pharmaceutical patent protection. We are still not sure where they stand on that today. They fought the dismantling of the foreign investment review agency. They denounced deregulation and privatization. They also swore to abolish the GST, to scrap the GST. We even heard in their first budget-

[Bob Nault, Liberal, Kenora—Rainy River, ON]

It is coming. Don't be disappointed.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

The hon. minister responsible for financial institutions says it is coming. Is that not what they said in their first budget, that they were going to accelerate reform of the GST? Is that not what the Liberal government said in its first budget?

What has happened since? Nothing, except the vain hope that the Deputy Prime Minister will resign if it is not done. That is the glimmer of hope they have offered to Canadians with regard to changes to the GST.

The vindication of these Tory policies lies not in their dubious embrace by today's government but rather in the results now being achieved in the country's productivity, its increased investment in exports and the new job creation.

Our economic growth today and in the foreseeable future is based for the most part on these Conservative initiatives so mindlessly and vigorously obstructed by the Liberals in opposition. It is one thing for the opposition to say that everything that is wrong with the country today was the previous government's fault. If we were to follow that line of thought, then they would have to admit that what is working would also be the previous government's fault.

Things as trivial as an increase of 40 per cent in trade between Canada and the United States, which is the number one reason we have job creation in the country today, that they fought against vigorously and at every turn. Things like changing the GST because it actually changed the federal sales tax for manufacturers in Canada. If we ask manufacturers today why they are more competitive, it happens to be because of the GST.

There is more than one side to this story. Those are things that are forgotten. For all of these policies they demonized Prime Minister Mulroney. They and their acolytes would not even concede the elementary assumption of civilized discourse in a democratic society, that their opponents acted in good faith for good motives but maybe with a mistaken policy. That usually would be the presumption. No.

As far as the Liberals were concerned, Tories wanted to sell out the country. We were bent on dismantling the federal government. We were going to balkanize the country, killing the Canadian dream. This was imposing the Thatcher-Reagan neo-conservative corporate agenda on Canada. That is what they were saying during the nine years in this place.

Now the President of the Privy Council is quoted in the Toronto Star of March 4 acknowledging that he cannot recall the Conservatives cutting anything like the $7 billion the Liberals plan to take out of the provincial social programs between 1996 and 1998. The same minister in the same article is quoted invoking the name of the Hon. Erik Nielsen, boasting that this budget was a mega-Nielsen exercise.

These are the same people who for nine years behaved in a way that is totally the contrary of what they are espousing today. As far as I know there is only one Liberal member of Parliament who has stood by his convictions. Only one Liberal member of Parliament has said he is offended by this. That is the hon. member for Notre-Dame-de-Grâce who is quoted in the same newspaper article as saying it is a repudiation of everything the party stood for in opposition and promised in the 1993 campaign.

This is not the member for Sherbrooke. This is not a member from the Reform Party. It is not my colleague from Saskatchewan saying this. It is a Liberal member of Parliament sitting on that side of the House who was there for the last nine years, who

was there before that also and still sits, for now, with the government. We await his vote on the upcoming budget in regard to these issues.

As for other Liberal MPs, their critical faculties and social consciences seem to have been dulled or blunted along with their political instincts, lulled by the most insidious narcotic known in politics: the polls, the fast results and public opinion polls.

The Minister of Finance now boasts that his budget policy is such good politics that there will be more of the same, more again and yet even more as we get closer to the election campaign. Let me offer some advice to members in the House. Save those quotes. Cut them out. Keep them close. As we approach the days of the election campaign you will find them very useful.

We will also find out in the next two or three years that the government has an intended raid on the treasuries of other governments. That is what the budget is really about. From 1995 to 1997 there is a series of delayed action bombs which it hopes will explode in provincial jurisdictions and take out provincial and not federal politicians.

Most of all, we should give credit to Canadians. If anyone deserves any credit in this country in regard to some of the good decisions that are being proposed it is the Canadian people who have spoken in a loud voice and with consistency in regard to these issues.

The bottom line in the budget is that the cost of servicing the debt is going up as fast as program expenditures are coming down. Fiscal improvement is the product of increased revenue from economic growth. That is what we are seeing. So far as balancing the budget is concerned it has to take place at some unspecified time.

The government has made hay of the fact that it has a 3 per cent commitment in terms of reducing the deficit to GDP. It even has the temerity of adding that this is the standard of the European Community. What it forgets to say is that in the European Community this standard is applied to national governments.

In Canada, in the federal system, the provincial governments also incur debt. This year alone it is estimated that they will add $16 billion to the annual debt of the whole country. This is a false standard and the marketplace has recognized it. In fact, if we were to speak objectively of the reaction to the budget, at first what seemed encouraging has since then soured. The bank rate since the budget has gone up. The prime rate has gone up and the dollar has fallen. Those are objective facts.

I will recognize that there are other factors out there in the international marketplace but if the government makes a pretence of telling us to look at the numbers because it is on course, it reveals to us that it is certainly not on course in terms of the provisions it has made.

One group of people had it right. One rating agency grasped the essence of the budget very quickly. It was the Dominion Bond Rating Service. This service looked at what was proposed in the budget and then went on to place Ontario's rating under negative review because the provinces stand to lose billions of dollars in federal transfers. It understood what had just taken place. The problem had now been transferred to the provincial governments. It then turned to Ontario and saw who was in trouble now. It was Ontario that was going to be losing the money. It understood the real impact of the budget.

Some apologists for the government and some wishful thinkers explained the budget as a triumph of pragmatism.

Let us not kid ourselves. When the government says it is taking a pragmatic approach, the fact of the matter, what we have actually seen, is that it is all improvised, an off-the-cuff, ad hoc, last minute approach, which is interestingly enough reflected in the decisions that are made, particularly with respect to provincial transfers for social programs. It will all come out of the same big transfer pot, so to speak, with as little connection as possible.

In its budget, the government even had the nerve to suggest putting the Minister of Human Resources Development in charge of negotiating new standards with the provinces. After his first mission-which was a flop, a complete fiasco, ending in humiliation, and ultimately disowned-he is asked to go and consult again with the provinces, while cuts have already been announced.

Mr. Speaker, let us not be naive. We were not born yesterday. Just between you and me, what is going to happen when they get together with the provinces? How do you think things will go? The provinces are going to say: "Look, you made the decision to cut. There is nothing left to negotiate. Give us whatever money is left and leave us alone." This certainly reflects a lack of planning.

This brings me to what I see as the first major weakness of the budget: there is no plan. It reflects nothing of what the Liberals said, did or stood for in the last nine years in this place. The budget reflects nothing of what is written in the red book. All promises have been thrown out the window. The red book has been scrapped and the government and the country are left with no plans and no priorities. What kind of a situation does thatlead to?

This government is cutting R and D and the granting councils 14 per cent, the same way it is cutting small craft harbours across the country at a time when R and D is important for the country. This is a government of one of the only modern countries in the world to have closed universities. That is what happens when there are no priorities. That will be the first weakness of this government.

I have already alluded the second, this false objective of 3 per cent of GDP which frankly is not good enough and will not last. The country needs a very firm commitment to balance the budget with a timeframe.

The third weakness in the budget is in its approach. The budget and its unilateral ways go against the very essence of what federalism is about. Rather than setting national objectives for deficit and debt reduction, rather than sitting down with the provinces to avoid a situation, we are only off-loading debt into their yards.

How do we know a provincial government will not choose to increase taxes as a consequence of the budget? Where does that leave the taxpayer, the men and women, individuals who pay taxes today? There may be more than one level of government but there is still only one taxpayer. The approach is wrong and will not work.

The fourth area is the hidden agenda. Pension reform is the most glaring one. Here is a government that says it wants to undertake pension reform but will not share with the House of Commons the studies it has done in this regard when we know the impact and the consequences of what it is proposing are tremendous.

Let me give another example of the hidden agenda of this government with regard to the budget. The Prime Minister went on a TV show with Mike Duffy, stating as a matter of policy the government wants to reduce the cost of health care 1 per cent of GDP.

Mr. Duffy had a guest on his show last week, Dr. Jane Fulton, Ph.D., a professor of health policy and ethics at the University of Ottawa. I do not remember anything being said in the budget about cutting health care in Canada 1 per cent relative to GDP. This is not an ordinary member of Parliament who said this. It was the Prime Minister.

What does this mean? According to Dr. Jane Fulton: "I think if we have to talk between $7 billion and $10 billion, and every time we cut $1 billion out of any kind of public funding we cut about 10,000 jobs". I am not quarrelling that there need to be serious thinking and reduction of funding in health like in every other area of government.

What I find objectionable is that the government in this case has a hidden agenda. It is not coming clean with Canadians. Why did the Prime Minister not say this? Why did the Minister of Finance hide this from the House when he came forward with his budget? I am assuming the Prime Minister did not think this up. Did it just appear in his mind during an interview that this would happen? If that is the case, we all need to be enlightened with regard to this.

There is one advantage to the budget in terms of what it means to all the issues we are confronted with. It certainly puts into perspective the real accomplishments and the failures of previous governments. If this government likes to blame the previous government on anything that went wrong, it would also want to acknowledge the strong growth we have in our economy today was also because the previous government restructured our economy, brought forward the FTA, the NAFTA, the GST, privatized, deregulated.

These were the main features and the Liberals fought every one of them for nine years. Those enabled Canadians today to have economic prosperity and see some real job creation as we now go on to deal with some of the really tough issues we are confronted with.

This government has no compass, no plan. The last nine years were a complete farce. Whatever it was saying or purporting to present as positions were all thrown out the window. The red book has been thrown out the window.

I see my colleague here, the Parliamentary Secretary to the Minister of Foreign Affairs. Foreign affairs took a deep hit in the budget, contrary to anything the Liberals purported as being a position for ODA in the years they were in opposition. It does not resemble it at all.

Canadians will now watch very closely as this government tries to get its act together and await whether there will be a sense of priority and planning in terms of where this country is going.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Speaker, I congratulate the member for Sherbrooke on his fine speech. I would say he is quite loquacious.

I note that he is attributing the current rise in the interest rate to the budget tabled by the Liberals, whereas, about a month ago, he attributed it to the political uncertainty in Quebec. I am happy that the member for Sherbrooke is making amends and recognizing the real source of our difficulties.

I find him wordy; I like him; I think he made a fine speech, and I would like to ask him this. Why did he not give the same speech during the electoral campaign in Brome-Missisquoi just before February 13? He never opened his mouth there. He said nothing of all that, and yet he knew it to be true. He did not say a word. Are we to understand-and this is my question-that there was an agreement with the Liberals not to hurt them during the electoral campaign in Brome-Missisquoi?

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, I will first comment quickly on my colleague's allusion to a comment I allegedly made about interest rates. I made no such comment.

I will stop immediately here and ask him his source.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I listened with interest and it sounded like a death bed repentance, a true confession, a catharsis for the hon. member.

I want to share this time with other members. The member talked very seriously about the implications of the reduction of transfers to the provinces.

The member well knows the transfers are a combination of tax points and cash and that under the existing EPF and CAP provisions, in certain provinces the amount of cash would be reduced to levels which would eliminate the leverage the federal government would have with regard to maintaining national standards with regard to education, health and so on.

I wonder if the member would admit or agree that the consolidation of the programs under one transfer, where there is a consolidation of tax points and cash, does assist the federal government to ensure appropriate national standards?

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, the member for Mississauga South may be a little confused in what he is saying. If I understood him correctly, he was saying the proposed reduction in cash and tax point transfers would reduce the leverage to a minimum, the leverage of being able to ask for standards. He said how we think the government can impose some standards or allude to the fact that we should continue to do so.

If the government is to act unilaterally in this way and announce the cuts in advance I hope he is not naive enough to think it will sit down with the provinces and negotiate some sort of standard. There is nothing left to negotiate.

If the hon. member has ever been to a federal-provincial meeting he would find it quite startling to sit down with ministers of other provinces who will say to the Minister of Human Resources Development: "There is nothing left to discuss. You have made the decision on the cuts. What do you want from us?" That will be the dynamic of the meeting.

This points to one of the major weaknesses in this approach. During the election campaign our view was that if we were going to deal effectively with deficit and debt reduction, given that it is all the governments that enter into deficits and debts, it required a joint effort by all governments.

There should have been a formal process, a federal-provincial meeting, in which the government should have set joint objectives in terms of deficit and debt reduction and as a consequence of that, because it would imply reductions in transfers to the provinces, examine line by line areas of joint spending where the federal government uses its spending power to determine where each level of government should be intervening. That was the common sense approach we proposed. His government chose instead to act unilaterally.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I found the speech of the hon. member for Sherbrooke extremely interesting, especially considering the member ran for the leadership of a party which took the hole the prior Liberal government dug $170 billion deep and proceeded to dig it even deeper to the tune of $420 billion.

I find it interesting how he would, in his first opportunity, attack a Liberal budget. In opposition people tend to attack government budgets. We did the same thing. There are some things about this budget that are worth while commenting on, such as the $9 billion in cuts the government has proposed which the opposition has been urging for over two years. It is soft, it is too slow, but that is another story.

I have three specific questions for the hon. member for Sherbrooke. When he was part of the Conservative government why did it or could it not reduce the deficit? What does he think currently is the biggest problem in this country, the debt, the interest costs to service the debt or the deficit? Does he agree or disagree with the Reform Party solution of a zero deficit in three years, working toward a balanced budget and protecting the taxpayers from increases by government with a taxpayers' protection act?

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Mr. Speaker, I want to thank the hon. member for Calgary Centre for the question and for the opportunity to set the record straight, as the budget offers us an opportunity to put things in perspective.

He asked me, with respect to the Conservative government, what were the things it did or did not accomplish. Let me point them out in real, objective terms.

When we became the Government of Canada in 1984 program expenditure was rising at an annual rate of over 13 per cent. We brought that down to below or around 4 per cent. When we took over government in 1984 the annual deficit relative to GDP was in excess of 8 per cent. We brought that down to somewhere in the area of 5 per cent or 6 per cent.

I will go further because I know he will be interested in the facts and less in the rhetoric. A document was put out by this government, "Agenda, Jobs and Growth: Creating a Healthy Fiscal Climate". I am sure people can write to the Department of Finance to obtain a copy.

This Liberal document of October last has at page 8 a very interesting graph on the federal deficit as a percentage of GDP. If we watch the line very closely, as of 1984 when we became the government the line started to go down dramatically. That reflects the real efforts we brought forward as opposed to the inflated demagogy we have heard from time to time. We produced a surplus on the operating budget of the government

of $13 billion over the nine years we were the Government of Canada.

Does that mean everything we did was right or perfect? Obviously the answer is no. Those are the facts as opposed to the fiction proposed by others.