Debates of March 14th, 1995

The Budget

[Margaret Bridgman, Reform, Surrey North, BC]

Madam Speaker, to precede addressing specific issues, the Reform's taxpayer budget illustrates all the cuts that would occur over three years. We also look at pensions. The government has not actually identified and will not until autumn what exactly is going to happen there.

We are not suggesting that service will not be there. We are looking at a 15 per cent cut in OAS as an across the board of cut.

The other thing we are looking at is the RPSP concept. We have to look into this and work it out in the business community and see how this is going to work. However, that concept is quite reasonable and feasible to maybe replace our existing system and come up with something that is better in the long run, has a little more control from the individual's point of view as to how they wish to live their lives and also provide them with a sense of responsibility and a sense of security.

[Jean Landry, Bloc, Lotbinière, QC]

Madam Speaker, I paid careful attention to the speech by the hon. member. I have one small question. I heard her say she wanted to make the cuts in the federal budget over three years. I would like her to tell me how they see unemployment insurance in three years' time, what will become of unemployment insurance?

[Margaret Bridgman, Reform, Surrey North, BC]

Madam Speaker, I thank the hon. member for his questions.

When the idea for unemployment insurance was originally conceived it was seen as an insurance program for people temporarily out of work. That concept was very valid at the time. However, over the years there seems to have been a turn around in attitudes.

Let us get back to the original concept and make it the insurance program it was originally intended to be, directed at the people who need it.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Madam Speaker, I compliment my colleague on her presentation. The Liberal member opposite asked about the Reform Party's cutting OAS payments to seniors.

The Liberal members have not read the taxpayers' budget. If they had listened to the responses to the question they have asked over and over again in this House about how we are going to treat OAS, they would have heard us clearly say time and time again that seniors who have household incomes over $50,000 a year would be the only ones affected by the Reform Party budget. It would not be the seniors on lower income, as this Liberal member well knows.

[Margaret Bridgman, Reform, Surrey North, BC]

Madam Speaker, I may have been a little weak in my comment to the hon. member. I thank my colleague for clarifying that.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Madam Speaker, I am pleased to have the opportunity to speak today on this budget. I certainly spoke on it a number of times in my riding. The many hundreds of constituents who turned out to the town hall meetings concerning this budget certainly support the Reform position that this budget is as weak kneed as a Liberal Party can possibly get.

The budget will ensure that before the next election the Liberal government will add another $100 billion to our national debt. The budget by the Liberal government will ensure our interest payments on the national debt will rise to $50 billion-plus. All of this will occur before the next election. The Liberal budget attempts to put a happy face on a deficit target of $25 billion in 1997.

In examining all of these factors it is difficult to see how any fiscally conscious Canadian could consider this a tough budget as the Liberal Party purports it be or a budget that will, as the Minister of Finance has said, break the back of the deficit. We have heard this break the back of the deficit statement from finance ministers for over two decades. Yet somehow the government remains committed to a position of spending more money than it takes in in a year.

Finance ministers have consistently projected deficits which in reality turned out to be far higher than their forecasts. I would never go so far as to accuse the government and the finance minister of creative bookkeeping or even fudging the numbers. My confidence in the veracity of the numbers in this 1995 budget is about the same as my confidence in the Liberals reforming social programs before there is a referendum in Quebec.

Speaking of numbers, this necessarily brings me to this notion of targets that the finance minister has been so free with. We have listened day in and day out to the Minister of Finance emphatically declare: "We have hit our targets and we will continue to hit our targets in the future".

I guess when your target is the ocean and you are standing on the end of a pier and jump in, it is easy to say that you hit your target. What is meant by that is the target is so broad and so easy to hit. You cannot miss when you put your target so low.

Simply put, the target is low. This 3 per cent deficit to GDP the Liberal government has been so proud of is insufficient. It was labelled so by the IMF, the OECD and the entire Canadian business community. The Liberals know this. The Canadian Chamber of Commerce was arguing for a zero deficit budget by 1997-98 but the Liberals did not have the political guts to commit to a target like that.

Therefore it was up to Reformers to address the real concerns of the Canadian people. That is exactly what we did in our taxpayers budget. That budget was conceived out of input from the Canadian people that was listened to. It was a budget committed to eliminating the deficit in three years and thereby a budget committed to protecting the viability and the core of our social programs.

The Minister of Finance, despite stating before the finance committee that a balanced budget is the ultimate goal, has refused to lay out any plan that details when Canadians can expect a balanced budget. There are no plans and yet he said it. Could it be that like his predecessors, the minister is really not sure of what the actual deficits will be in the future?

We have heard of targets before and we have continually seen them missed before. So let us hear no more pontification from

the government benches about hitting targets. A deficit target of $25 billion and a debt target of $650 billion are certainly nothing to be proud of.

To demonstrate the effectiveness of prebudget consultations held by the Liberal Party, we saw witness after witness in committee. Individuals, associations, business groups and the like appeared before the committee and testified repeatedly day after day, hour after hour against any further tax increases by this government.

After all this consultation process, which the Minister of Finance still is very proud of, which the Liberals also find time to pontificate about, what do we discover in this budget? New taxation measures.

Despite the absence of pro-taxation testimony in the hearings, the Liberal majority on the committee concocted a dozen more possible tax options. They were obviously very good at reading between the lines and listening to what these anti-tax people really meant. They said: "We do not want any new taxes," but what they really meant was: "Yes, please hit us with another tax". So much for consultation. So much for listening to the views of Canadians.

It is shameful that the Minister of Finance, knowing full well that much more substantive cuts must come in the future, allowed this key budget-and it was a key budget. There was a window of opportunity to really break the back of the deficit, but the Liberal government and the finance minister missed that window of opportunity by a mile. They allowed this key budget to be watered down by the soft pedalling socialists in the Liberal Party.

In all, this budget will snatch $3.7 billion out of the economy through taxation in the next three years despite the fact that an OECD job study, a C.D. Howe report and a survey by the Canadian Chamber of Commerce demonstrated clearly that high taxes destroy job creation. The Liberals raised taxes despite the fact that the Prime Minister in June 1991 when in opposition stated, and this is interesting, that taxes on individuals were higher in Canada than in any G-7 country. Although he said that in 1991, the Liberal government raised taxes.

The Deputy Prime Minister when in opposition in 1991 demonstrated a rare concern for the Canadian taxpayer and revealed a suspect sensitive side when it came to their plight. She stated that Canadians are paying too much tax. Despite that, the Liberal government raised taxes in this budget.

That $3.7 billion should have been left alone to create growth in the economy, to create jobs, not rip it out of the economy in taxation. Now the government will say that these new taxes were fair taxation measures. What is fair about a 1.5 cent per litre tax increase on gasoline? This is simply a $500 million tax grab to offset the revenue the government lost when it lowered the cigarette taxes. If the government had the guts to enforce the law when all that cigarette smuggling was going on, it would not have to rip another $500 million out of the economy in a gasoline tax.

I want to wind up by quoting a Liberal. This is really something and members will recognize this: "Once a nation parts with the control over its currency and credit, it matters not who makes the nation's laws. Usury, once in control will wreck any nation. Until the control over currency and credit is restored to Parliament and recognized as its most conspicuous and sacred responsibility, all talk of democracy or freedom is idle and futile".

The Liberal government has ensured the control over our currency and credit is in the hands of our lenders, not in the hands of Parliament and the government where it should be.

[Jean Landry, Bloc, Lotbinière, QC]

Madam Speaker, I listened very carefully to the speech by the hon. member, which contained figures, figures and more figures.

A year ago, when the members of the Reform Party arrived in the House of Commons, I remember their comments in an initial newspaper article in which they talked about a club sandwich costing less in the parliamentary cafeteria. We in the Bloc Quebecois were talking about tax reform. They then went on to talk about the shoeshine people; we were talking about tax shelters. We were therefore not quite on the same wavelength for savings to really be made.

The government talks about reducing the deficit to 3 per cent of the GDP. Could the hon. member tell us what percentage of the GDP he would like the deficit to be at, himself, so the debt could be paid back as quickly as possible, but without ever losing sight of the most disadvantaged, the unemployed and seniors?

I am not prepared, politically, to say that we are going to go after the most vulnerable in our society, who are unable to defend themselves, and that we will leave the rich alone. As I have said in the past and will continue to say, the good Lord and good common sense must go hand in hand. Therefore there has to be a balance between the rich and the poor classes. I do not want the poor to get poorer. I want a balance to exist.

I would like the hon. member to give me an idea of the rate he would bring his percentage to without affecting the most disadvantaged.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Madam Speaker, for the umpteenth hundredth time in the House, it is amazing that so many members have not been listening to what we are saying. We have said over and over it is not fiscally conscious members of Parliament who are the big threat to our social problems in this country. It is not fiscally responsible MPs who are the threat to the unemployed, the seniors and the needy, as the hon. member said. The biggest

threat is our $500 billion debt and our some $50 billion interest payment on that debt.

Imagine if we did not have this huge half a billion dollar debt created by the Liberals and the Tories before them. Imagine if we did not have this $45 billion or $47 billion interest payment what that interest payment could represent in the way of providing services and programs for people and Canadians who are in need.

That is the threat to the social programs in this country, not fiscally conscious MPs like the Reform Party. That has to be understood.

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Madam Speaker, I have also listened to the Canadian people throughout much of my term as a member of Parliament. The last six years have been very tumultuous times, coming through the Mulroney era of putting a lot of pain on the backs of Canadians, and now sitting through this Parliament and the development of this budget, with taxpayers from coast to coast saying they have been taxed enough.

The finance minister claims this budget did not raise income tax for ordinary Canadians. That is not quite correct. A large number of Canadians were receiving and will receive to the end of this year the northern tax allowance. This tax allowance provides those who live further away from government services a benefit which other taxpayers do not enjoy.

The hon. member shares a part of the country with me, that is, people who currently receive northern tax allowances. Does he not believe it is unfair for those taxpayers in the phase out of the program this year to have to pay additional taxes?

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Madam Speaker, in answer to my hon. friend from The Battlefords-Meadow Lake, this is a time when the country is in a financial crisis. It is a time that can be compared to a financial crisis in the family home. The time comes when the family does not have enough money to live the lifestyle which it had grown to like. It is the time to separate the wants from the needs.

There are so many different areas in which we spend money which clearly could be described as needs. There is also a tremendous amount of ways in which we spend money that clearly could be described as wants. If we are ever going to get our financial house in order we have to make a clear distinction between our needs and our wants.

[The Acting Speaker (Mrs. Maheu)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Burnaby-Kingsway-Human rights; the hon. member for St. Albert-The Treasury Board; the hon. member for Wetaskiwin-Labour.

[Warren Allmand, Liberal, Notre-Dame-De-Grâce, QC]

Madam Speaker, I am pleased to have the opportunity to speak in the budget debate, but it is with no joy I say what I feel I have to say. I doubt, with the short time available to me, that I will be able to properly develop the case I would like to make. I doubt whether I will have the time to put on the record the many points which I think are essential.

There are some positive measures in the budget which I fully support. I have in mind the measures for tax fairness, those measures which deal with tax deferrals, with family trusts and with RRSPs. I also fully support the measures to put additional tax on large corporations and the new special tax for banks and bank-like institutions.

I regret that with respect to the balance of the budget I feel there is much that is wrong. Specifically I am opposed to those measures which attack our social programs. In the budget it is proposed that we cut transfers to the provinces for post-secondary education, health care and the Canada assistance plan by $7 billion over the next two years. It is also proposed that we cut from unemployment insurance a minimum of 10 per cent, a program which has already been cut by the last budget and cut savagely many times under the previous Conservative government.

For those Canadians who are not aware of what is covered by the Canada assistance plan let me refer to a few items. By agreement with the provinces it covers payments for food, shelter, clothing, fuel and utilities for disabled people and people who are not able to work. It covers rehabilitation for needy persons. It covers day care centres. It covers hostels for battered women. It covers nursing homes for old people. It covers the cost of children in foster homes. It covers homemaking and home support services. It covers adoption services. That is only a partial list.

These cuts are not only wrong in principle, they are contrary to the campaign promises which we Liberals made in the red book and throughout the last election campaign. They are, first of all, wrong in principle because social programs are not the cause of the deficit. In answer to a question in the House only a few weeks ago the Minister of Finance admitted that the cost of social programs as a percentage of gross domestic product was exactly the same today as it was 20 years ago in the mid-seventies. He admitted that they were not the cause of the deficit. If they are not the cause of the deficit why attack them and why propose such extreme cuts to them in the budget?

These cuts are wrong in principle because they will cause considerable harm and pain to a segment of the population that has already been hit very hard before. I have in mind the unemployed, single mothers, older workers, the disabled, the mentally ill and others. These provisions will widen the gap between the rich and poor, will cause further social unrest and will hurt the economy by causing unemployment and reducing purchasing power.

The cuts are not only wrong in principle but contrary to what we said in the red book, contrary to what we said during nine years in opposition and contrary to what we did during twenty years in government under Mike Pearson and Pierre Elliot Trudeau.

I have the red book here. I do not have much time so I will just read one or two quotes. I could read many. I refer to page 74 of the red book. It reads:

Since 1984, the Tories have systematically weakened the social support network that took generations to build. Not only have they taken billions of dollars from health care and from programs that support children, seniors, and people who have lost their jobs, but they have set us on the path to becoming a polarized society, divided into rich and poor, educated and uneducated, with a shrinking middle class. This is not the kind of country most Canadians want to live in. In a polarized society, crime, violence, intolerance and group hatred flourish.

That is just one quote from the red book but there are many others that are similar.

I also have here the complete list of the opposition motions that we tabled during the nine years we were in opposition. Motion after motion proposes solutions which are contrary to what is being put forward in the budget.

Again, I do not have time to read them all but I refer to one put forward by the member for Hamilton East on an opposition day:

That this House regrets that almost one million Canadian children are living in poverty, that 1.4 million Canadians each year must rely on food banks and that the current recession the proposed goods and services tax will make this situation worse; and that the House, desiring the elimination of poverty in Canada by the year 2000, demands immediate programs to ameliorate the plight of the working poor, including a review of the minimum wage, discriminatory employment practices, current available children's benefits and other income support programs.

I also have the amendments that we tabled to the Tory budgets during the nine years in opposition and they state similar sorts of things.

Some people say that times were better then and we could do things when we were in government that we cannot do today. That is not completely true. The government was in better economic shape then but the country, as the Minister of Finance said the other day, is better off today. The gross national product is higher today than it was 30 years ago. Canada is producing more goods and services. Unfortunately they are not being distributed as fairly as they should.

Some members have said, in trying to justify the budget, that being a Liberal means being flexible. One should be flexible but one should be flexible within a framework of principles. To be flexible does not mean that one completely junks all the principles that one has stood for and it certainly does not mean that one throws out the promises that one made in an election only a year and a half ago.

Yes, the red book and the election were only one and a half years ago. As far as I know there has been no significant change in Canada or in the world since that time. If the red book policy had to be changed due to changed circumstances then the case has not been made by the Minister of Finance.

Those are my specific concerns about the budget but I am also troubled by the longer term implications of the budget. There are several measures that continue to strip away in my view the federal government, to strip away the federal authority, to strip away the federal presence in this land, the presence and visibility of Canada as a nation.

I have in mind cuts to transportation, to communications, to the CBC and to social programs. These have always been the national glue, the national infrastructure which has bound this country together for many years. My concern is that the federal authority will be left as a hollow shell once these cuts are made.

I support the deficit reduction goal of 3 per cent of gross domestic product that we put forward in the red book. I support deficit reduction but I support it in the way that we proposed to do so in the red book: by cutting waste, by cutting unproductive expenditure, by encouraging and promoting economic growth, more jobs, more profits for business to bring about more revenue for the government and by filling in and closing down the unfair tax provisions in the Income Tax Act, not by cutting social programs. I support the goal of deficit reduction but not in the way in which we are doing it in the budget.

Yes, the fiscal deficit is important and I agree that it must be addressed. But it must not be addressed at the expense of a social deficit where we have more crime, more social unrest, more family violence, suicide, alcohol and drug abuse.

I saw a very good button the other day on a person. The button said: "If you think education is expensive, try ignorance".

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Madam Speaker, I would certainly like to thank the hon. member for Notre-Dame-de-Grâce for his speech, but at the same time remind him that we have one thing in common: we both represent ridings in the Montreal region. And someone who represents a Montreal riding is automatically sensitive, like the hon. member for Notre-Dame-de-Grâce, to the issue of poverty and to the hardship that the past two recessions, the last one being the 1982 recession, imposed on a good many of our constituents.

I find the hon. member very courageous, because he belongs to the government majority and it is to his honour that he is able to rise above the prevailing opinion. However, I told myself that he is asking us to remain keepers of the social conscience. He is asking us to make sure that we have an interventionist government and that we maintain one of the government's reasons for being, namely redistribution.

However, we have diverging views on the causes of the deficit. What I found surprising and very pleasing about the hon. member's speech, and I say this without any ulterior motive, was that he states that his government has no other choice but to cut transfer payments. By doing this, his government could destabilize provincial governments and force them to cut services which are basic necessities and financed through the Canada assistance plan.

I would like to hear the hon. member's opinion on the causes of the deficit. As far as we on this side of the House are concerned, the deficit is caused by the fact that it is impossible to maintain a continental country like Canada: Canada is the first and last example of a federation with a narrow ecumene stretched out between two oceans. We say that one of the causes of the deficit-when we analyze how we got into debt-is that we have had a strong central government which meddled in jurisdictions in which it had no right to. The hon. member will recall that he was a member of Parliament when Ottawa created, for example, a department for urban affairs and for recreation, which, under the constitution, were in no way related to the powers granted to the central government.

I would like to know if the hon. member will agree with me that it would be much simpler for Canada and for its financial situation to reorganize the country to give Quebec more power and for Quebec to create its own national government and for us to begin dialogue on the basis of our status as associated states.

[Warren Allmand, Liberal, Notre-Dame-De-Grâce, QC]

Madam Speaker, The principal causes of the deficit are speculation in currencies which cause changes in the interest rates and globalization of economies which allows large multinational corporations to manipulate and speculate on products, derivatives and currencies. For example, I was told yesterday by a prominent member of government that each time interest rates go up by 1 per cent it costs us $1.7 billion per year in additional payments on our debt. If it goes up by two points it is twice that amount. Those are the types of things that cause the deficit.

In addition, many people are getting away without paying the taxes they should be paying. The tax system is not fair. There was some movement in the budget to correct it. I applaud that and I support that but it did not go far enough.

With respect to the other question the member asked regarding a new way of arranging Canada, I supported in the House and voted for both the Meech Lake accord and the Charlottetown accord. Both were eventually defeated. Those accords would have rearranged the structures in Canada.

I believe in maintaining and even increasing the payments to the provinces for social programs, but I also believe that national standards should be set by the federal government. The federal government can equalize opportunity and care throughout the country. That is the humane thing to do.

[Dianne Brushett, Liberal, Cumberland—Colchester, NS]

Madam Speaker, it is pleasure to rise in the House to take the opportunity to address the second budget of the government as presented by the Minister of Finance on February 27.

I expect in the final analysis the budget of February 1995 will go down in history. It will be the budget that made a significant difference in Canada at a time when Canada was at a crossroads.

The budget will be viewed by future historians as a watershed budget, a turning point in which the government of the day had the courage to make the tough decisions and to make the necessary cuts in spending in accordance with responsible financial management.

While the budget makes drastic and unheard of changes to the face of government through spending cuts, it does so with fairness and compassion. Programs that are efficient and effective in serving Canadians will remain, but programs that are obsolete, redundant and dysfunctional will be eliminated. The budget prepares us for the inevitable trend of the 21st century, which is less involvement by government in the lives of people.

To do this we have implemented a transition process that encourages the individual to more self-reliant, more entrepreneurial, stronger as a community and less dependent on government programs and subsidies.

When the constituents of Cumberland-Colchester elected me to represent them I knew I would be coming to Ottawa at a very crucial time in our history, that I would be part of a government with a fiscal policy that would either make or break Canada, and that the Liberal Party would be the one to ultimately bear the responsibility of piloting the country out of deficit financing.

Canadians from coast to coast told the House that reducing the deficit and debt must be the number one priority of the government. They know how the deficit is like an albatross around the neck of each and every one of us and of future generations to come.

The government accepted the challenge, not only with the budget but with several budgets to come in the future, to work toward a balanced budget. It is not politically expedient but it is the right thing to do.

The measures taken in the budget will ensure that Canadians can face the economic challenge of international competition and that we will be able to do so with growth and confidence. The budget is about restoring confidence in government and confidence in the Canadian economy.

Measures that were taken last year in the first budget of the government showed positive results in our economy. Economic growth is at 4.5 per cent, the strongest of the G-7 nations. The most impressive year ever in Canadian exports was 1994. We showed a massive trade surplus with the United States. Inflation was at its lowest in three decades. There were more improved business profits than ever. Some 433,000 full time jobs were created last year.

The same implementation that saw the economy grow resulted in the annual deficit being reduced by $4.4 billion, lower than was budgeted for the fiscal year ending in a couple of weeks. That is the reality. That is progress in deficit reduction.

If we are to compare ourselves with the G-7 countries on how well our economy is doing, it seems only reasonable to compare ourselves and our debt situation to those of the G-7 countries.

It is sad to say that our net government debt as a nation is over 84 per cent of GDP second only to Italy of the G-7 counties. In comparison the United States has a net public debt of 32 per cent of GDP, while Japan's is around 10 per cent. It was therefore mandatory that the finance minister demonstrate in the budget not only to the nations of the world but to the financial lenders that Canada was serious about reducing its deficit and the high per cent ratio of debt to GDP.

Investors have been satisfied with the budget as have Canadians, but I must remind the House that it is only the beginning of a series of tough budgets until we have won the war on debt.

Cuts in government spending mean pain. The budget is about pain. However the pain was spread fairly to all regions. In the west grain transportation subsidies were eliminated while in the east the Atlantic region freight assistance program was abolished. However both the west and the east including Quebec will receive transitional funding, helping alleviate shipper hardship and upgrade transportation infrastructure.

Last week when I was in my riding I met with public servants whose jobs are being cut because they are classified as surplus or because long established forestry agreements were not renewed. These people are feeling the pain of the budget. However, after looking at options in the transition, one forester said to me: "Even though we are losing our jobs this had to be done and I would still vote for your government".

The people of Nova Scotia did not want me to come here to whine about the cuts. They wanted me to congratulate the finance minister for having the courage to do what he did. The people of Nova Scotia have a tradition of self-reliance and a grassroots fighting spirit. They have an entrepreneurial spirit that goes back to shipbuilding and merchant fleets of the 19th century.

The people of Nova Scotia know that the backbone of the economy is small business and that jobs will come not from government but from the private sector. The economy of Atlantic Canada is the fastest growing in the country. Atlantic Canada ended 1994 with the highest rate of growth per capita. It was 2.7 per cent, the highest of all the regions, followed by the prairie region with a rate of growth per capita of 2.5 per cent.

Dairy farmers in my riding are like dairy farmers across the country. They will see their subsidies cut by 30 per cent over two years. Public utilities will see the energy subsidy eliminated through the Public Utilities Income Tax Transfer Act. Alberta and Nova Scotia are affected by the change. The Nova Scotia Power Corporation has already indicated that higher rates are to be expected, which in turn hinders small business development. There is pain with the budget, but as the old saying goes no pain, no gain. The people of Canada have accepted the pain knowing there will be real gain in the months ahead.

The women of Canada have a greater appreciation for the budget than anyone. Many women have spent their lives living within the household budget and living within their means. I would bet there is not a woman in the country who has not at one time or another in her life watered down the stew and thrown in another handful of barley simply to stretch the pot of stew for another meal. The money she would save would go to buy a dress or a pair of shoes for a child who has a very special

concert. I have done it many times. Thousands of women across the country managing Canadian households are the financial experts, and they too have done so.

Under the previous government the 1980s were a time of greed, surplus and waste. The 1990s under the present government are a time of basic need, not greed, a time of high efficiency and productivity, and a time of sustainability, not waste. It is a time to sustain our finances as well as our environment, our resources and our fish stocks.

We made a commitment to the women and the men of Canada to reduce the deficit while restructuring social policy. We take that commitment very seriously. The budget of February 1995 is more than a bunch of numbers. It is one part of a very large social plan, an economic plan as well as a financial plan that maps a prudent, courageous and credible path not only for our generation but, more important, for the next generation of young Canadians.

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Madam Speaker, I listened carefully and was quite taken with the enthusiasm the member opposite showed for the budget. She talked about the budget being fair and talked in terms of understanding and knowing how the fairness is applied across the country. She talked about the policies of the government that were obsolete, dysfunctional or redundant being eliminated.

Those two matters have to be applied to the communities that I represent in Saskatchewan with the loss of the Western Grain Transportation Act subsidy, the Crow benefit, which the member mentioned in her remarks. The Crow benefit currently represents $560 million. Two years ago it was worth $720 million, $400 million of which applied to Saskatchewan.

How is it that the member can indicate that the Western Grain Transportation Act is obsolete, dysfunctional and redundant when it is anything but?

The loss of the Crow benefit to our communities at the delivery points in my riding represents approximately $1 million to each delivery point. The community of Glaslyn just north of where I live has two elevators and is quite similar to most communities in my constituency. We calculate that in the crop year beginning August 1, 1986 farmers at that delivery point will pay $1 million more for grain transportation in the coming year than they did in this year.

In terms of fairness, what other community in the country has been asked to give up $1 million in revenue? Absolutely none. Communities that service the world with grain from Saskatchewan have to pay extra. I ask the member for the evidence she has that these programs are obsolete, dysfunctional and redundant and that the budget is fair.

[Dianne Brushett, Liberal, Cumberland—Colchester, NS]

Madam Speaker, to the hon. member on his question as to what community has suffered pain, most of the communities across the country are suffering pain because we had to take the prudent steps in frugal fiscal management that we took. Canadians asked for it. The communities of Nova Scotia, the communities of Quebec and rural communities all have the same needs. The diversification and the competitiveness by which our farmers must meet the 21st century are parts of the budget.

Farmers in my riding, whether they are dairy farmers, feed producers or cattle producers, have told us to get rid of the subsidies. They said they could compete and would compete. Furthermore the government has allowed funding for transitional development through this period.

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

Madam Speaker, I will try to be brief in my comments. We have just heard our hon. colleague tell us that she feels this budget is very tough on ordinary people but that it is a necessary evil. She used the phrase "no pain, no gain". That is what Canadians expect, according to her.

Yet, if we look at all the other members of her own government, we see that the hon. member for Notre-Dame-de-Grâce, for one, feels that social programs are not really the main cause of the debt. Not too long ago, the hon. member for York South-Weston said that what the Liberals were about to do was what they had denounced when the Tories were in office. Our hon. colleague has just read some documents reminding us of the comments made by the hon. member for Hamilton West, who said the exact same thing.

I will close with this: Given that the cuts they are about to inflict on ordinary people are due to Canada's debt and that, despite these cuts, the debt will continue to grow, does my hon. colleague not feel that, in the current situation, there will be much pain and no gain at all?

[Dianne Brushett, Liberal, Cumberland—Colchester, NS]

Madam Speaker, no pain no gain is the watchword of today. Not only this government, but businesses have had to cut back. They have had to make the transition to be competitive and now the onus is on government. We have accepted the challenge. This is a watershed in budget. This is a turning point in financing for the government. That is because the people of Canada have asked us to deal with this. It is mandatory.

We are moving into the 21st century. We know we will create the jobs not through government, not through subsidization, but through the private sector. Small business is the backbone.

Nova Scotia is not unlike Quebec. We have so much similarity. Historically, we can go back to a time when Quebec was known as Nouvelle-Écosse. This is so important to us because it is the very backbone. In Nova Scotia with a population of 900,000 we have some 90,000 small businesses. That is one in ten. That is growing in Atlantic Canada, the highest in the country. That is because we are taking the prudent steps to deal with the deficit. We will go through the pain but there will be gain in the end.

[Benoît Tremblay, Bloc, Rosemont, QC]

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.

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Madam Speaker, I appreciate the words of the hon. member who just spoke.

I recall back in the early 1980s when the debate around the Crow rate, at that time the western grain transportation subsidy, was conducted in the House. The farm organizations and the people of Quebec were very supportive of the western farmers and the desire to maintain a strong transportation link for the export of prairie grown grain. That support carried over and a good number of changes were prevented from being made because of the alliance between western farmers and farmers in Quebec.

I wonder if the hon. member has given any thought to the current debate brought on by the budget over the Western Grain Transportation Act. Can western farmers count on the Bloc Quebecois and the farmers of Quebec for support in maintaining this transportation subsidy?

[Benoît Tremblay, Bloc, Rosemont, QC]

Madam Speaker, the issue is Quebec's support for western grain transportation subsidies. We must realize that agricultural organizations in Quebec never opposed the measure, as you said, and, on the contrary, supported it for years.

It is far from certain that the federal government has the means to continue subsidizing this area to the same extent. To me, one thing is clear: when the federal government implemented measures concerning energy, western Canada reacted very strongly and demanded changes which eventually were made. In my opinion, it is very clear that Canadian regions, with each totally different economies, now must work things out among themselves and stop waiting for the federal government to do it.

The longer we waited for the federal government, the more and more centralized the decisions became, even though the economies of each of the regions have grown increasingly differentiated. The economic space in which we sell our products is becoming more and more differentiated. Therefore, each region needs its own strategy, and that is what the rest of Canada urgently needs to understand. Do not expect the federal government to do it.

The mandarins in Ottawa, who like to delude themselves that they know the truth, will continue to set the game plan and will continue to think that they know what is best for Canada. It is time for the regions to wake up: they need to create their own transportation policies. They should no longer wait for the federal Minister of Transportation to do it. In any case, this is Quebec's firm belief, and I think that, after analyzing the situation, each region will also see the urgent need to take their affairs in hand.

I think that the vote planned on the sovereignty of Quebec this year, which I predict will be for sovereignty, presents a golden opportunity to reorganize economic relations. For example, a few years ago, Canada's economy exported 20 per cent of its output to the United States. Now, we have far surpassed 30 per cent and are even nearing 40 per cent. Therefore, a reorganization is urgently needed, but the federal government will not initiate it. Regions will have to take their affairs into their own hands.

[Antoine Dubé, Bloc, Lévis, QC]

Madam Speaker, it is as the official opposition critic on training and youth that I rise today to speak about the impact of the last federal budget on young people.

Like most of my official opposition colleagues, my initial reaction to this budget is that the federal government wants to transfer the blame for its cuts to the provinces.

On February 27, the Minister of Finance announced that, starting in 1996-97, he would reduce by $2.5 billion transfer payments to the provinces for health care, social assistance and post-secondary education.

By combining these three payments into a single consolidated block transfer called the Canada Social Transfer starting in 1996-97, the minister claims that "provinces will now be able to design more innovative social programs-programs that respond to the needs of people today rather than to inflexible rules. However, flexibility does not mean a free-for-all. There are national goals and principles we-meaning the Minister of Finance, of course-believe must still apply, and which the vast majority of Canadians support".

Such is the finance minister's flexibility. It involves national standards that Quebec does not want and never wanted in the first place. In this context, I think it would be a good idea to remind you of Bill C-28 respecting financial assistance to students, which was passed on June 23. This bill provides among other things that, from now on, the Canadian Minister of Human Resources Development, instead of the provincial governments as was the case before, will designate the appropriate authority in each province responsible for choosing educational institutions eligible for federal financial assistance.

Second, the provincial education ministers wanting the right to opt out with full financial compensation must convince the Minister of Human Resources Development that their provincial programs produce the same results as the federal programs in each of the areas targeted by the federal legislation.

Great freedom, is it not? You can develop programs, as long as they are absolutely identical to those decided on by the Minister of Human Resources Development, in an area of jurisdiction assigned to the provinces in the Constitution Act, 1867, an area of exclusive jurisdiction, not shared jurisdiction. Over the years, the federal government has encroached upon this exclusive provincial jurisdiction, pleading the right to spend the money of Canadians and of Quebecers.

Coming back to the cuts in transfer payments, it should be noted that the $2.5 billion figure quoted for all three categories combined in the Canadian social transfer is within $100 million of the cuts announced in the green paper with respect to post-secondary education. This leads to the conclusion that, give or take $100 million, the primary target of government cuts is post-secondary education.

By giving the provinces the choice while maintaining national standards, as it claims to do, the federal government will prompt the target groups benefiting from the three elements of the Canadian social transfer to turn against their provincial governments or fight among themselves to avoid cuts.

The federal government will create a situation where students will be competing with UI and welfare recipients. Our young people are the ones mainly concerned by these three programs.

In January 1995, there were 363,000 unemployed youth between the ages of 15 and 24 in Canada, over 100,000 of whom are in Quebec. If you add to that youth on relief-over 74,000 young people are on welfare in Quebec alone, but I do not have the total number for Canada-it makes for a terrible situation. It goes to show how little compassion this government has had for young people.

In light of a $2.5 billion cut in transfer payments to the provinces, combined with an additional 10 per cent cut in the UI program, the Minister of Finances was able to save enough last year to meet his targets. To meet his deficit reduction target for this year, the minister had to use the unemployment insurance fund, which now shows a surplus.

So to compensate for his improvidence, the Minister of Finance made cuts in unemployment insurance. The neediest in our society have to compensate for the incompetence of the Minister of Finance. This is appalling.

So what does the minister do to make his budget look good? He announces a temporary tax, for two years, that will raise $100 million from large deposit-taking institutions. But meanwhile, the government also makes cuts totalling $2.5 billion at the expense of the unemployed.

I see members of the Human Resources Development Committee who toured Canada with me. Like me, they were met by demonstrations in all major cities. Like me, they listened to the complaints of young people and the unemployed, especially in the Maritimes, about the cuts that will affect them. We will not be able to last until spring, was what we heard from the victims of seasonal unemployment. We heard them all, especially young people.

Today, as a result of a reduction in benefit periods, many are starting to feel the impact of cuts that were introduced last year. However, the $2.5 billion saved were, I repeat, used by the Minister of Finance to meet his budget target.

This is shocking, especially when we realize that last year, the banks made a record profit of $4.1 billion, and some banks managed to avoid paying any taxes at all. I am about to finish, Madam Speaker.

There are also the tax shelters. What did the minister do? Yes, indeed, the response to the official opposition's call for this for the past year and a half, was the announcement that implementation would take effect in 1999. That is impressive. They make the announcement four years ahead of time to the people who enjoy the benefit of family trusts, so that they can consult experts and find other ways to avoid paying tax. Four years ahead of time.

When could a Minister of Finance provide a better example, when does he tell interested parties four years ahead of time? We are not talking about the disadvantaged here. He did not warn the disadvantaged last year. He cut $2.5 billion dollars and, again this year, he is waiting for his budget speech to take effect and another 10 per cent cut is announced. We are supposed to find this funny? I do not find this funny at all, because I come from a riding where MIL Davie shipyards, among others, is located and where 2,000 jobs were lost. These people, who lost their jobs, are affected by the cuts to unemployment insurance and are now on social assistance. They are not finding this funny.

In the proposed reform, 90 per cent of associations, in addition to demonstrations, said no to Axworthy's reform and said no to the so-called improvements to the system. We know that increasing educational costs increases the debt load of students, at a time when there have already been 1,000 student bankruptcies in Quebec. Over 10 per cent of personal bankruptcies in Canada involve students or young people.

We ask them to give thought to the future. A fine message. A fine message, indeed. As the hon. member for Rosemont said, more and more Quebecers are realizing that, with no measures to enable people who want to return to the labour market, no active measures, a choice will soon have to be made. More and more Quebecers are realizing that the choice they have to make in the Quebec referendum in order to get out of this system that offers them little for the future is to vote "yes" in the referendum on sovereignty.

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Madam Speaker, I very much appreciated the words of the hon. member whose concern for youth I also share.

I was quite taken by the debate which began with the paper on social policy and particularly the section that applied to young people and tuition fees. The proposal would see additional money made available to young people, but the result would be a massive increase in tuition fees across the country.

Coming from a rural riding I am concerned for a number of reasons. The ability of farm families to meet some of the costs for post-secondary education are becoming more and more difficult with each passing year. I was quite taken with the words of the hon. member, especially when he quoted some of the figures from the corporations that do not pay any income tax.

I will be very brief. At a time when rural Canadian people, particularly those on the prairies, are being asked by the government to pay, because of the elimination of the Crow benefit, perhaps an additional $14,000 to $15,000 a year to ship their product to market, how can the government allow companies like Canadian Pacific to earn more than $422 million in pre-tax profits without paying a single cent in income tax?

I ask that question of the government. However, in doing so I ask the member who just spoke if he would agree with me that it is certainly not fair for corporations to be allowed off the hook when ordinary, individual, rural families are being asked to pay so much more, thereby compromising the education of their children.

[Antoine Dubé, Bloc, Lévis, QC]

Madam Speaker, my reply will be extremely simple. Why are they not changing the system? Because, for the most part, and here I must admit that the Reform Party may be an exception, Canadian political parties have traditionally been financed by big business.

Six of the 10 largest corporations which financed parties in power-the Liberal Party now and the Conservative Party in the past-were banks. And we should be surprised that banks have a

lot of influence on governments, interest rates, etc.? This obviously affects people earning low wages and farmers who need to borrow large amounts and it will affect students more and more because in the future they will have to borrow at least twice the amount that they currently need to pursue graduate studies.