House of Commons Hansard #167 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.


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March 15th, 1995 / 3:55 p.m.

Western Arctic Northwest Territories


Ethel Blondin-Andrew LiberalSecretary of State (Training and Youth)

Mr. Speaker, it is an honour to rise in the House to speak today on a matter of great importance to the economic and social future of the country, namely the budget presented by the Minister of Finance two weeks ago.

In order to fully understand the measures taken by the Minister of Finance, it is useful to recall the fiscal and economic reality that confronted us upon taking power just 16 months ago. Unemployment and interest rates were high. Corporate profitability had plummeted. Business failures were at record levels. Many Canadians had quite literally lost hope. We were confronted with a huge national debt and growing deficit that threatened our economic and social futures.

It was a daunting challenge. However we tackled it head on and made job creation, economic growth and fiscal responsibility our top priorities.

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The Speaker

My colleagues, if you have some things to discuss, I would ask you to do it behind the curtains. I now give the floor back to the Secretary of State.

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Ethel Blondin-Andrew Liberal Western Arctic, NT

I thank hon. gentlemen on the other side for observing the decorum accorded each speaker on such an important issue as the budget debate. I hope I did not lose any time.

We tackled the issues head on and made job creation, economic growth and fiscal responsibility our top priorities. The new budget is the latest step in our ongoing drive to restore Canada's fiscal health and reinforce investor confidence. When completed this drive will make Canada a magnet for investment, which will in turn encourage economic growth and create the jobs and training opportunities Canadians need to cope with the technological revolution under way.

The measures announced by the government on budget day were more than a cost cutting exercise. They represent a major restructuring that will redefine the way government operates and what role government will play in people's daily lives. The budget represents a basic restructuring of Canadian society as a whole.

As the Minister of Finance stated in his budget speech, government must only do what it does best and leave the rest for those who can do it better. This presents Canadians with an incredible opportunity to step forward and have a direct impact on the way their lives are shaped and the way their communities develop.

As we debate the merits of the budget today and the necessary actions the government must take to get its fiscal house in order, we must remember we are not in a unique position in Canada. Other countries have waited too long before taking adequate measures and have in a sense hit the wall, while others have taken strong and affirmative actions and as a result have positioned their economies to compete aggressively in the new global marketplace.

We can learn a lot from those examples. New Zealand is a case in point of a country that found itself with debt and deficit that became too large for its economy to sustain. Over the course of the past eight years New Zealand has gone through a dramatic and painful restructuring that saw whole government programs cut, eliminated or commercialized, user fees introduced for many aspects of government services, and the introduction of new tax measures such as the GST.

As a result of these measures New Zealand has drastically restructured its government and improved its fiscal health to the point where it posted a deficit of 1 per cent surplus of deficit to GDP ratio. However the painful lesson learned by New Zealanders and one we must not ignore is what happens when we wait too long to take these measures and what happens when we essentially hit the wall. When this happens countries quickly discover that decisions on social spending are no longer theirs to make but instead made for them by investors and international agencies.

Sweden, a country that has been long looked at as a successful model of society with a highly successful social safety net is on the verge of hitting the wall. In 1994 Sweden's debt to GDP ratio was an alarming 93 per cent while its deficit to GDP ratio was at 11.2 per cent. The year before, Sweden's deficit to GDP ratio was at an all-time high of 13 per cent.

The government there is facing enormous obstacles to overcome and put its fiscal house in order. Because Sweden has waited so long to restructure how its government operates, the very social programs that are the envy of the world are threatened simply because it has lost many of its options to manoeuvre.

This is a situation we must avoid in Canada. On the other hand, there are shining examples of countries that have identified the need to reform before it is too late.

Australia has taken a systematic and measured approach to restructuring how its government operates. It has been done in a way that not only brings down the expenses of government but also makes its programs more efficient, more effective and more relevant to the people who really need help and support. In 1994 Australia posted a 34.4 per cent debt to GDP ratio and a deficit to GDP ratio of 4 per cent.

That is why we have to act now. Our debt to GDP ratio has consistently been rising from 17 per cent in the mid-1970s to more than 71 per cent today. In order to ensure that we remain the masters of our own destiny, of our own ship, we must change. We must adapt.

Last year the government spent nearly $58 billion on social programs. During that same period $38 billion went to pay for interest on the public debt. If we do not get our fiscal house in order now, these interest payments on the debt will be greater than what we spend on social programs. If unchecked, we as other countries have, will hit the wall.

That is what this budget is all about. It is a major step in restructuring the government so that it can give us the kind of strong foundation we need upon which we can build strong social reforms which truly reflect and address the needs and priorities of Canadians in the 1990s.

Initiatives contained in the budget actually support Canada's social policies by creating an economic and fiscal climate conducive to job creation. This budget reflects the sense of balance expressed by a man from the Northwest Territories who responded to the social security reform workbook. He said: "There must be a basic safety net for those who, for whatever reason, are unable to provide the encouragement and the opportunity for people to become self-sufficient".

Some people have been concerned about how the budget might affect Canada's social programs. This is not surprising given the vast amount of speculation and misinformation which

surfaced prior to the release of the budget. No doubt most of this has now been laid to rest by the budget.

For those who might still have some lingering doubts, the best evidence of the government's unwaivering commitment to protecting our social programs comes from the social security reform initiative currently under way.

This initiative seeks to improve our current system by helping Canadians respond to technological and workplace change. It seeks to assure them of the jobs training and security they require. It does this by improving the efficiency of the system, thus guaranteeing its sustainability in the future.

At the same time, our government has no intention of waiting for the benefits that will flow from this budget and social security reform. Instead, we are acting now to ensure that all Canadians have the job and training opportunities they need to enter the mainstream of this country.

Here I think especially of those programs directed toward some of the neediest people in this country, the aboriginal people who have traditionally faced barriers to obtaining access to employment, training and promotions.

Pathways is a program designed for aboriginal people by aboriginal people in partnership with the Government of Canada. It is currently being reviewed to ensure it continues to reflect the needs of the aboriginal people in labour market training.

In addition, the new Canada social transfer, CST, will not affect aboriginal peoples living on reserves since there is no relationship between the CST and funding arrangements for social assistance and services delivered on reserves. This is because the Department of Indian Affairs and Northern Development provides funding on reserves through arrangements that are separate from the current Canada assistance plan. These arrangements will continue to be separate from the CST.

As well, the CST will not alter the existing responsibilities of the provinces for social assistance services to aboriginal peoples living off reserve. This goes for the government's program review as well.

While the program review will affect all aspects of government operations, the government is committed to providing programs and services to aboriginal peoples. We will continue to live up to our commitments in such areas as human resources development, aboriginal strategic initiatives, First Nations and northern communities child care and the pathways strategy which I mentioned earlier.

In preparing for the budget the government used a series of overarching principles to guide its course.

First, it was critical that government get its own house in order. The budget must focus on cutting spending, not raising taxes.

Second, every dollar counts. Governments do not have money. They are given money and with it they must act like every dollar counts because every dollar does count.

Third, it had to be fair and equitable, fair among our regions and fair among individual Canadians. In this essence the north has not been spared in the budget, but has shared equally and responsibly its burden of fiscal restraint.

As an example, the territorial formula financing payments to the Government of the Northwest Territories will be frozen in 1995-96 and reduced by 5 per cent in 1996-97. This will result in $8 million less in the first year and $58 million less in the second year. It should be noted that the majority of the population of the north is aboriginal.

Weather offices will close in Yellowknife and Inuvik, eliminating seven positions. There too, a bit of innovation and imagination is needed. It opens up an opportunity perhaps for the private sector to look at the possibility of offering this kind of service, maybe in partnership with learning institutions to train the individuals necessary to provide that service.

The Geological Survey of Canada office in Yellowknife will close. Considering the amount of activity in that area with diamond exploration, gold and a whole array of mineral exploration going on, it has been difficult to do that, but I think there is a commitment from the industry itself to pursue interests in that area. It is something we are living with.

The Canada-N.W.T. forestry co-operation agreement will not be renewed when it expires on March 31. The federal excise tax on gasoline and aviation gasoline increased by 1.5 cents, increasing the price of goods and travel in the north. We already have prohibitive costs since for the most part the first choice and option for travel is by air. We do not have a highway system. Most of the isolated communities are off the transportation grid.

The tax on airline travel increased by $5 per flight from $50 to $55, increasing the cost of air travel which is so important to northerners. We do not have the luxury of just getting into our cars or vehicles and driving out onto the highway. The highways we do have are in need of repair and are being repaired constantly by the Government of the Northwest Territories with ever depleting resources.

It shows, that every part of the country was affected, including that part of the country. It is the whole effort of getting back

to basics. People are taking another look at how they do business, how government runs its administration, its bureaucracy and delivers services.

The elimination of the public utilities income tax transfer is not just a problem for Alberta or some of the other provinces. It is a problem for different communities in my area. It will mean the elimination of $700,000 in transfers to consumers of private utility companies.

This is a very hard pill to swallow. In this country we have a partnership with individual Canadians to get our house in order and this is what this is all about.

As difficult and painful as it is, cuts in budgets and programs to aboriginal friendship centres will affect how the friendship centres in the north operate and deliver their programs. However, northerners are resilient people. Like every Canadian, they recognize the importance of getting our fiscal house in order.

Northerners also see opportunity in this budget. Occasions like this one when new arrangements are to be forged and new relationships to be established create positive opportunities for the territorial government to have greater flexibility and for northerners to have a greater say in developing and administering the programs and services which address their needs.

This is an excellent opportunity to see the successful completion of the northern mineral accord. This can give the territorial government along with its other partners the aboriginal groups greater responsibility and autonomy over the economy and fiscal situation in the north. Greater autonomy also means greater flexibility over the programs and services required to meet the needs of northerners.

Every part of this country wants to become self-sustaining and the Northwest Territories is no different with all of its complex diversity of cultures. Its population is not just one race or one group of people, but it is a whole mix of people. Greater autonomy also means there is greater opportunity for co-operation, for consensus building and a whole range of human dynamics that must be considered.

Restructuring through program review, the territorial transfer or the CST also presents the opportunity for constructive dialogue in a process that is inclusive. It is a process which gives a greater voice to all stakeholders and not just government, including community leaders, activists, social workers, youth organizations. It is a comprehensive and inclusive process. It is an opportunity that can lead to greater independence from government, to become increasingly self-sufficient and self-empowering, to become masters of their own destiny and masters of their own ship.

The fourth principle used by the Minister of Finance is that we must have priorities as a country that mirror our needs as a people. These priorities must be reflected in the way government defines its role. It is that principle I would like to expand on and what this will mean on how government will operate in the future, but more important, on what role government will play in the lives of people.

In order to ensure that the needs of Canadians are met, to ensure that programs and services remain relevant and to ensure our continuing economic sovereignty, the budget measures also included a major restructuring of government through program review. Its main objective was to review all categories of federal government spending in order to bring about the most effective and cost efficient way of delivering programs and services to Canadians.

The exercise of program review is not simply a way of bringing down how much government costs. It also makes government more competent and more relevant to the people who really need help and support.

It is time for government to get back to the basics and to reflect the priorities of people. As the Minister of Finance stated in his budget address: "We are acting on the new vision of the role of government in the economy and in society. In many cases that means smaller government. In all cases, it means smarter government".

This government restructuring will have implications on what role government will play in the daily lives of people. To a certain degree government restructuring also means a restructuring of society, and that is where the real opportunity lies in the budget. As government gets back to the basics there are opportunities for Canadians to step forward, to rethink and redefine their values and responsibilities to themselves, their families and their communities.

Governments do not have all the answers and solutions. In redefining its role in Canadian society, the government will need people to step forward and share the burden of responsibility. Where governments have failed in the past, individual Canadians will have to stand up, play positive roles and contribute not only their knowledge but local solutions to local problems and also their sweat equity, their sweat, blood, and tears, to ensure success.

The government is calling on Canadians to participate and to be part of a process that is going to set the future straight for years and generations to come, to ensure a future for our children. This commitment will need to be ongoing even with restructuring; government can only go so far.

I conclude by saying that in the end active participation is the ultimate challenge of the budget. It is a challenge and a

responsibility not only to members of the government and members of the House, but to every person in the country.

As the Prime Minister stated, the key-

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4:15 p.m.

The Deputy Speaker

I have given the minister extra time already. I am sorry, her time has expired, unless there is unanimous consent that she be given more time.

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Some hon. members


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René Canuel Bloc Matapédia—Matane, QC

Mr. Speaker, I listened attentively to my colleague's speech. The problems she described in her region sound pretty similar to those in mine, except that the solutions she offers are almost unacceptable, and I will tell you why.

If I understood correctly, she is telling the poor, people with major problems, the unemployed, people on UI and income security that they must show more imagination and initiative.

I also heard the other day one of her colleagues on the other side of this House say that a former member of Parliament who has been without a job for eight years is having a very hard time finding work even though he is well-known. Yet, he is not lacking in either imagination or initiative.

Whenever the poor-whether it is a single person, a couple or a family with a father, mother and four children-are unemployed, they are asked to show initiative and imagination. Yet, when a person whose salary was much higher has trouble finding another job, we commiserate.

The budget may also hit seniors next year. In my region, farmers face cuts of 15 per cent this year and 15 per cent next year for a total of 30 per cent, which represents about $2,500 a year for the average farmer. This leads me to ask my colleague if we are looking for revenue in the right places or if we simply get the money from the pockets of the most disadvantaged and the poorest.

My colleague did not say that these people were lazy, but she said that they should show more imagination and initiative. Seventy-five per cent of the time, they are full of imagination and initiative, but they are still without jobs. I would like her to explain this to me.

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Ethel Blondin-Andrew Liberal Western Arctic, NT

Mr. Speaker, I would like to tell my colleague that anything I said certainly was not prejudicial to the people who are poor or people in different wage categories. We understand we have equality of opportunity. Everyone has the opportunity to participate. Everyone has the opportunity of freedom of speech, to be mobile, to move, to look for the opportunities. Sometimes it is more difficult. I agree that can be a problem.

When I talked about innovation I was not just talking about the consumers of government programs or people looking for jobs. I was talking about all sectors of society. It is a process where government will participate but sometimes people or organizations can do it better so we will defer to them because it will be more cost efficient and more effective.

As for opportunities for people, we cannot step back and be ashamed of the fact that we have managed to create 400,000 jobs. One hundred thousand of those were directly related to government initiatives. Many of those jobs were in Quebec. We are not ashamed of that. We are quite happy to recognize that and affirm that we have a commitment to continue helping people.

It is not just government's responsibility. People want us to change the way in which government works so that they will have the opportunity to be active participants rather than to have a passive role. They are dying for the opportunities. We want to make those available to them.

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Len Taylor NDP The Battlefords—Meadow Lake, SK

Mr. Speaker, in the remarks of the Secretary of State for Training and Youth she commented quite extensively about programs for aboriginal people and the ability of aboriginal people to participate in our economy as a result of budgetary measures.

She mentioned a number of programs but I notice she did not mention the aboriginal economic development program, something that is absolutely essential to provide assistance to aboriginal people who have difficulty in achieving financial commitments from existing financial institutions to develop the economic means by which to create self-sufficiency within their own communities.

The aboriginal economic development program, just when it is needed most, has received a more than unfair reduction in commitment from the federal government, a reduction of approximately 30 per cent as I understand it.

I wonder if the secretary of state could comment on the need for the aboriginal business development program and what her thoughts are about this unfair cut or reduction in federal commitment to that program.

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Ethel Blondin-Andrew Liberal Western Arctic, NT

Mr. Speaker, I was not speaking just to aboriginal issues. I was speaking to those within the department that I work in. I was not speaking to the ones in the Department of Indian and Northern Affairs or Industry. I am not ashamed to speak to those issues. I am not afraid and I am not reluctant. I just did not mention it.

There was a 25 per cent cut. Part of the effort in the program review and looking at the way we deliver services to people is to make these programs more efficient, more effective, more directly related to delivering services to the individuals, to the

people they serve rather than developing an administrative bureaucracy which would tend to serve the industry itself rather than its clients.

Yes, we have made cuts. I just finished saying in my speech that every Canadian is going to share the responsibility in this exercise. I know. I am no stranger to the poverty of those people. Those are my people. I understand that.

Every Canadian is going to share the responsibility. Let us weigh things fairly. The Department of Indian and Northern Affairs which serves aboriginal people was the only department that has an $8 billion budget that is going to have an increase of I believe 6 per cent when all other departments were cut.

I acknowledge that there have been cuts to some aboriginal programs but there have been cuts to almost every program and service across the board in every department and crown corporation.

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4:25 p.m.


Jean H. Leroux Bloc Shefford, QC

Mr. Speaker, I will share my time with my Bloc colleague, the hon. member for Matapédia-Matane.

The Minister of Finance tabled his budget on Monday, February 27. I rise today in this House to state my position, my concerns and my disappointment in reading this budget. I will also share with you my personal analysis of the negative impact this budget will have on the participation rate of Quebecers in the Department of National Defence. While this budget is well received by the business community in general, and foreign investors in particular, the fact remains that once again low and middle income taxpayers are the hardest hit.

The government wants us to believe that Canadians from every walk of life, including the wealthiest, are affected by its budget cuts, but there is a world of difference between the finance minister's claims and actual fact. The fact of the matter is that the wealthy have until 1999 to convert their family trusts, to shield them from the minister's cuts and not pay any tax on their accumulated and future wealth. Also, the Liberal budget completely ignores the recommendations made by the Auditor General of Canada in his last report which made reference to $6.6 billion in unpaid taxes. The federal government does not propose anything to recover that money.

How can the government pass up so much money without immediately taking the necessary measures? Is $6.6 billion not enough money to spur it to take concrete and effective action?

Let me give you another example which illustrates the inconsistency of the budget and fiscal strategy announced at the end of February by the minister, and which shows that the minister's goal of tax fairness is merely an illusion. This example is also taken from the Auditor General's report: In Revenue Canada's opinion, 470 accounts of over $100,000 each, representing a total of $350 million, were at the collection letter stage, which means that no collection officer was involved, except in terms of reviewing the risk of loss.

By not taking action in this specific case, the Liberal government is sending the message that it is easier to get the money from low and middle income taxpayers, than from corporations or wealthy individuals who do not pay their fair share. This system is supposed to be fair, but who profits from it?

In my opinion, the 1995-1996 budget plan includes other examples of unfairness. Take a look at the summary of the Main Estimates, by department and agencies. Two thirds of the departments and agencies will see their budget reduced, while the other third will be getting more money.

Who will get an increase in 1995-96? The Senate, with a total budget of more than $42 million; the Governor General, with a budget of over $10 million; the Department of Indian Affairs, with an increase of $327 million; Treasury Board, an increase of $32 million; Finance, an increase of more than $9 billion, $9 billion to service the debt; the Privy Council, which is responsible for defending the "no" side in the Quebec referendum, will have an increase of nearly $5 million; and the list goes on.

And even worse, the federal government's total estimates will increase by more than $3.7 billion, which will bring total spending up to $164.8 billion. Incredible. With a deficit of $37.4 billion for 1994-95 and a projected deficit of more than $32.7 billion for 1995-96, we are sinking deeper and deeper into the hole.

By the end of the current fiscal year, the net federal debt will be $578.8 billion. Incredible. The federal government's present financial situation is a reflection of what the future has in store. Furthermore, the budget brought down by the Minister of Finance contains no prospects for jobs in the short and medium term. Where are the jobs we were promised in the Liberal red book? Ask the federal public servants who believed those promises.

The steps taken by the federal government to put this budget together fall far short of the expectations of taxpayers in Quebec and Canada. These measures are an outright breach of our social contract.

Now for a few words about the Department of National Defence. The budget announced cuts totalling $1.6 billion over three years. The Bloc Quebecois, in the minority report of the Special Joint Committee on Canada's Defence Policy, insisted

on additional cuts of 15 per cent, which would put the National Defence budget at $10 billion as of the first year.

I question the federal government's strategy, since additional cuts could have been made in certain budget items in the Department of National Defence, including capital expenditures, materiel and new equipment purchasing policy, the armed forces organization and, finally, program management.

For the same three year period, the Bloc Quebecois proposed cuts of $4.8 billion-three times the government's figure. Unfortunately, the federal government preferred to slash transfer payments to the provinces and cut the federal public service this year.

In this regard, I would like to recall the commitment the Liberal Party of Canada made in its famous red book, which it did not keep. It said that, once in power, it would set up a defence conversion program that would have attractive spinoffs for private enterprise. This was their promise.

What did the budget say about defence industry conversion? Not one word-nothing. For the past 15 years, the federal government and the Department of National Defence have failed in their role of equitable allocators of military expenditures for Quebec.

In a study for the École nationale d'administration publique, made public in February, the author revealed a shortfall of $650 million a year for Quebec.

The situation is very clear. Unfair treatment in the allocation of military expenditures has had disastrous consequences for a number of areas of economic activity in Quebec. Although Quebec contributes 25.4 per cent of the budget for national defence, it gets back a meagre 17 per cent in military spending. It has been the same old story for the last 15 years. This very unfavourable distribution continues to cost Quebec jobs and investment dollars.

Quebec is even worse off when it comes to the funds that the Department of National Defence allocates for research and development.

In 1990-91, Quebec received only 12.45 per cent of this spending-12.45 compared with the 73 per cent that went to Ontario. The situation has not changed since then. In addition, francophones have great difficulty rising through the ranks of the Canadian armed forces. While francophones occupy between 22 and 29 per cent of the lower-ranking positions, they occupy only 10 to 13 per cent of the higher ranks, according to the latest statistics. It is not difficult for francophones to enlist in the forces, but it is very difficult for them to become generals. It always has been and still is.

In 1994, the Minister of National Defence took away the country's only French-language military college, the military college in Saint-Jean. What a decision! Once again, the federal Minister of Finance is asking Quebec to do its share in his budget. The government is closing the military base at Saint-Hubert. Over 600 people will lose their jobs. It is cutting another 285 jobs on the Bagotville base. Before the cuts, less than 15 per cent of all federal military facilities were located in Quebec. What is left? Not much.

What should we tell taxpayers in Quebec who feel that the federal government costs them too much money for the return they get on their investment? If Quebec were to patriate the power to tax and to spend-about $30 billion is in question here-we would be able to set up a system which really is fair and we would make our own decisions. That is how Quebec will best be able to develop and grow.

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John Bryden Liberal Hamilton—Wentworth, ON

Mr. Speaker, I thank my colleague for his remarks. They were spoken with such passion they left me almost breathless.

I would like to put a question to my colleague which will take him a little beyond his remarks. It is probably well known to him as it is to many members in this House that I have an interest in special interest groups.

The budget did introduce for the first time the concept that new guidelines would be brought in for the funding of these special interest groups which receive direct grants from government with very little accountability for what are often advocacy groups.

Does he feel this is an area of reform for the government applicable to Quebec? Should groups which have these special agendas see their funding cut as we hope to see elsewhere in the country?

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Jean H. Leroux Bloc Shefford, QC

Mr. Speaker, I wish to thank my colleague for his question. All I can say is that if we look at the budget as a whole, the federal government faced a $37 billion or $38 billion deficit last year, compared with a $33 billion deficit forecast for this year. The government is saving money on the backs of the provinces. Since the provinces will have less money, they will have to cut spending for post-secondary education, health care and other services under provincial jurisdiction. That, in my opinion, is tragic.

I would also like to go back to the closure of the military college in Saint-Jean. I think that this is an appalling decision. It is appalling for Canada, because Canada has always maintained that it is a bilingual country and tried to give that impression. However, by closing the military college in Saint-Jean-as we can see, enrolment is already way down, a drop of 40 to 60 per cent this year-the government is simply telling us that, at the end of the day, bilingualism is not important.

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René Canuel Bloc Matapédia—Matane, QC

Mr. Speaker, on February 27, the Minister of Finance tabled his budget in this House. This event extensively covered by the media was preceded by a fear-mongering effort to scare the public. They said the budget would hurt all taxpayers, but they did not tell us the most important part.

And that is that the creditors to whom the Canadian debt is owed wanted to make sure Canada would be able to pay the interest on its debt in the years to come. That is what the problem was. It was also most important to let it be known that the federal government was waiting until after the Quebec referendum to make major cuts, once again deceiving the people.

When I was first elected to this place by the residents of the riding of Matapédia-Matane, I was sure I was coming here to serve the interests of my region and that is what I have been doing ever since: serving the interests of my fellow citizens. But since February 27, I have had to admit that it is not really the hon. members and ministers opposite who run the country, but rather big financial players.

What are the ministers and members across the way doing here if they let their Minister of Finance table a budget like this without saying a word? I must admit that certain members did stand up and denounce this budget and I am proud of them. I only wish others would follow suit.

What power do these members and ministers have in this House? I hope they are not mere puppets. When the creditors of a country tell its finance minister what to do, it means that the country has lost its monetary and financial independence.

Who has led us into that tunnel? None other than the Prime Minister, when he was the Minister of Finance. The process started with him. That farce shows a serious lack of respect for Canadian taxpayers, particularly those from Quebec, for whom the big cuts will come after the referendum.

Why not tell the people the truth? Why not tell them now what they are in for? Stop hiding your despicable and partisan goals. The Minister of Finance's action lacks any consistency and is a monumental hoax. I can tell the minister that Quebecers will remember him and his party on referendum day. My constituents in the riding of Matapédia-Matane will not be fooled.

The federal budget will hit them very hard. Let me give you a few examples. There will be cuts at the Maurice Lamontagne Institute, in Sainte-Flavie, in the Supply and Services division in Matane, and in the offices of the Department of Human Resources Development; fishermen will be hurt by the service charge in fishing ports and harbours; cuts will also affect farmers and milk producers; finally, there will be a gas tax increase, in a region where gas is already more expensive than elsewhere. Last year, Rimouski residents blocked a road in an attempt to have the price of gas go down. It did go down one cent, but now it is going up one and a half cents.

Since the budget was tabled, the only ones to speak in favour of the government's strategy were the creditors, and even they had mixed feelings about it.

A few days later, we were again faced with rising interest rates and a falling dollar on financial markets, a quick response to the minister's budget.

Blaming Quebec for this country's financial situation shows an unprecedented lack of logic. If Quebec were to blame, would members opposite not tell us to become sovereign as fast as possible?

The impact of this budget will be shocking, and pretty soon the minister will tell this House he can no longer control the deficit or stop the growth of the debt.

In the days following the budget, we saw that Canada's provinces, including Quebec, rejected the minister's vision, and today, everyone openly condemns that vision, especially Ontario.

And now for a closer look at the disastrous impact this budget will have, starting with the catastrophic impact the spiralling federal debt will have on job creation and corporate investment.

For people who do not have a job and those who will be affected by unemployment insurance cuts, the future is very bleak. Because of the poor economic climate, consumers will spend less, and businesses will postpone investment projects because of the high cost of borrowing.

It is clear that this government, which promised hundreds of thousands of jobs, has missed its target by a mile. It misled everyone. I would say it practically lied to the entire population. It has turned its back on its commitments.

In addition to letting the debt grow at an alarming rate-everyone is saying it will reach $603 billion in 1996-the government has just cut 45,000 jobs in the Canadian public service. This government is now producing unemployment instead of encouraging job creation. How many of these government employees will join the ranks of the unemployed? And there are hundreds of indirect jobs that will disappear in the process.

In the outlying regions, these job losses will have a disastrous impact on an economy already weakened by a recession that is still smouldering.

The government has just created a feeling of uncertainly, which will have very serious repercussions on the performance of the public service as a whole and on other related areas of activity.

There is nothing in this budget for the 800,000 unemployed and people looking for work in Quebec. On the contrary. Fortunately, the Government of Quebec knows how to create jobs.

The only good federal program is the infrastructure program, and it is being cut by $200 million.

We are all aware that Canada's debt has mortgaged the country's future. Quebecers have made this point repeatedly. At the hearings on the future of Quebec, everyone where I come from fears the worst, because it is clear that the ship is leaking and the captain has abandoned his duties. The people of Quebec will give a clear response to this government in the upcoming referendum, and neither fear nor threats will change the course of history. After the victory of the "yes" votes, the other provinces will have to decide what sort of country they want. I am sure that others will want to follow the road the people of Quebec are preparing to take.

In concluding, I would say: Long live Canada without Quebec, and long live Quebec without Canada.

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4:50 p.m.

The Deputy Speaker

It seems that I must split the time. First, the hon. member for Durham.

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4:50 p.m.


Alex Shepherd Liberal Durham, ON

Mr. Speaker, I listened with interest to my colleague's comments. Every time we get into this debate somehow Quebec seems to be a very interesting place with no debt problems but a simple examination of its financial record indicates quite the reverse. I believe the province of Quebec's deficit is currently about $70 billion. This was done in Quebec by Quebecers. It continues to expand and if my memory serves me correctly, it is probably expanding a lot faster than the federal government's deficit.

While the leader of the Government of Quebec is out talking about sovereignty, he is not dealing with the very problems of his own province. It costs $5 million for a sovereignty debate that nobody wants. This is irresponsible. I do not believe the people of Quebec are going to be happy with this expenditure or with the continual pushing of Quebec into a deficit situation.

Bonds are a big financer of government debt. Quebec government rated bonds continue to escalate their interest costs. Why? Because people have many misgivings about where this is going.

The hon. member talked about job creation. Job creation and job losses are an absolute. They must be netted together. Sure, there will be job losses in the civil service. Everybody in Canada, including Quebecers, have said how necessary it is that governments downsize and become more efficient.

I have heard my colleagues from the Bloc say those very things. Stop duplication. When the government stops duplication they say: "You should not lay these people off". The reality is that 433,000 new jobs were created in Canada last year, net job creation. That is positive and it includes Quebec.

Finally, $78 billion of the federal government debt is held by Quebecers. They believe in Canada, but what is their future with this crazy concept they have? How are they going to get reimbursed in this strange emulation of a new country? There is $78 billion that Quebecers hold in Canada.

I would like to have the hon. member answer those questions.

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4:50 p.m.


René Canuel Bloc Matapédia—Matane, QC

Mr. Speaker, I would like to thank the hon. member for his question. You talk about duplication. I want to know what duplication has been eliminated over the past few years. None.

Another point. I agree that Quebec has a high debt. However, for years and years, decades and decades, the federal government has been transferring money to Ontario and to other provinces for research and development, while the money it has been transferring to Quebec has been in the form of unemployment insurance benefits. One thing is sure: when one region is without work while research funds are sent to another, there is something wrong.

Regarding sovereignty, I want to say that even though our debt is high, we can handle it, and that we are prepared to pay part of Canada's debt, because we are part of it and we have a moral obligation to do so. If I were on the other side of the House, a government member from Ontario, the maritimes or the west, do you know what I would say to the Bloc? I would say: "If you want to leave, go".

Why try holding us back? Why tire yourselves out in the effort? We are convinced, I am convinced that we are able to manage our debt intelligently and at the same time help to pay off yours.

Then what more do you want? I, myself, have never understood why the rest of Canada is saying: "Why not you stay with us. This is terrible. It is going to cost you". We are going to spend a few million dollars on the referendum. But how much are you going to spend? I rephrase my question. If we are so poor and have so many problems, why are you so desperate to keep us in the federation?

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4:55 p.m.

Essex—Windsor Ontario


Susan Whelan LiberalParliamentary Secretary to Minister of National Revenue

Mr. Speaker, I would like to inform the House that I will be sharing my time with the hon. member for Davenport.

Many Canadians are concerned with Canada's future prosperity and with maintaining our quality of life. The finance minister's February 27 budget is a key element in maintaining prosperity and Canada's way of life.

The budget is a plan that will bring this country into the 21st century. It demonstrates our commitment to reshaping government to meet the needs of Canadians and to deliver on our promise to get our fiscal house in order. It supports our primary economic objective to sustain growth and job creation by cutting our deficit. It demonstrates our commitment to fiscally responsible government.

I will not make any bones about it; I believe that the budget is tough, very tough, but fair. The budget is tough but fair both in what it does but also in what it does not do.

Like many members of Parliament, I took advantage of the finance minister's opening up of the budget process. The government held the widest and most open prebudget consultations ever held. To ensure that my constituents had their say, I held two prebudget meetings in my riding of Essex-Windsor. The actions of the finance minister proved that this was not a cynical exercise. My constituents and many Canadians asked the finance minister to tackle the deficit in real terms. That is what this budget does.

This government is the first government in years to set deficit reduction targets and to meet those targets. Let me reassure the House that the deficit will be brought under control and our deficit targets will be met. The government has shown that it has the resolve and commitment to Canada's long term future to do what is necessary to meet our targets.

By 1996-97 Canada's deficit will be at 3 per cent of gross domestic product. That is $24.3 billion. If the economy keeps growing, and it will, this figure may be even lower. The bottom line is close to a cut of $7 in spending for every dollar for new revenues over the next three years.

To ensure fairness, both business and individuals are being asked to share the load. Recognizing that individuals' income taxes have increased over the last decade at a much faster rate than corporate taxes, the budget includes measures to address that inequity.

The large corporation tax rate will rise from .2 per cent to .225 per cent, an increase of 12.5 per cent. The corporate surtax, which is currently 3 per cent of the basic corporate tax rate, will increase to 4 per cent. There will also be changes made to strengthen Revenue Canada's ability to enforce the law and ensure that all Canadians pay their fair share of taxes and to reduce unfair competition for businesses that do play above board, that play by the rules.

Banks and trust companies are also being asked to contribute further toward deficit reduction during the next year and a half. They will contribute $100 million through a special tax on deposit taking institutions.

Big business has often stated that it does not need or want the level of assistance it receives from the federal government. Accordingly, the government has listened and taken these claims at their word. We will reduce spending on subsidies for big business by close to 60 per cent over the next three years.

However, the government, unlike the last one, realizes that a successful tackling of the deficit requires a two track approach, as was advocated in our red book. To eliminate the deficit, the government must also create a climate that creates jobs.

This budget recognizes that small and medium sized businesses are the cornerstone of Canada's economy. They are the number one job creator. To further help small business we intend to work with Canada's banks and trust companies to establish clear rules so that small business loans are easier to get.

In my prebudget consultations many of my constituents recommended Canada re-examine our commitment to foreign aid in view of needs in Canada. The government has done this and will reduce foreign aid by 20 per cent over the next three years for savings of over $500 million.

Many of my constituents also questioned the need for so many agencies, boards and commissions. As a result of the government-wide review of these government bodies, decisions have been made affecting 120 of them: 73 of these will be closed, 47 will be streamlined and restructured. The result will be 665 fewer government in council positions, fewer ministerial appointments and savings of $10 million a year.

In my prebudget consultations my constituents had many suggestions on what action the government should not take. Do not eliminate RRSPs, they said, and we did not. Do not increase personal income taxes. We did not. Do not introduce a health or dental tax benefit. We did not. Do not eliminate capital gains exemptions for farmers and small businesses. We did not. Do not introduce a tax on casino winnings. We did not.

I have said that this budget is tough but fair. Many of the reviews have also been tough but fair. A Windsor Star , editorial of February 28 stated: ``What we can applaud in the budget is the vow to create a smaller and smarter government. The 14 per cent reduction in the civil service over the next three years combined

with the $10 billion in cuts to departments will result in a fundamental reshaping of government".

The Windsor Star also reported that Windsor's business community was encouraged, shocked even, by the wide swing of the minister's budget axe.

The Windsor Chamber of Commerce chair, Othmar Stein, was quoted in the Star as saying of the finance minister: ``He's got the message. A lot of this was overdue. A lot of the subsidies are gone, even for business''.

Mr. Stein, a vice-president of Chrysler, concluded: "Overall I'd say it's a very realistic budget, quite positive. It's one of the first budgets in a number of years that has not been smoke and mirrors."

Aron Gampel of the Bank of Nova Scotia says it is a strong fiscal statement that meets all the tests.

The Wall Street Journal reversed its editorial stance regarding Canada, summed up in its headline several weeks before the budget as "Bankrupt Canada". After the budget it proclaimed Canada made a right turn.

The editorial commends the finance minister for showing the determination needed for Canada to claw its way out of the debt hole which decades of spendthrift policies landed it in.

The budget charts a new course for agriculture. In agriculture the government has set a target to achieve by the turn of the century, annual food exports valued at over $20 billion. This is an increase of at least one-third over our record setting performance in 1994.

To do this the government will be introducing a new export credits guarantee program to support grain and other agri-food export sales up to a value of $1 billion.

Consistent with the red book, the government will implement a Canadian agri-food marketing council and Canadian agri-food marketing service to ensure enhanced market development and effective use of the global information highway.

Our first fiscal year was not all doom and gloom. The Canadian economy is stronger than it has been in years. Real economic output grew at about 4.5 per cent in 1994, the fastest of the G-7. Over 433,000 jobs were created in the past year, almost all of them full time.

The unemployment rate has fallen by 1.7 percentage points nationally. Manufacturing output is up over 9 percent in the past year. Improved cost performance has lead to record breaking exports, a growing trade surplus and a dramatic improvement in the current account.

I assure my constituents the budget belongs to a Liberal government. A Liberal government brought in new and innovative programs in the sixties and seventies to meet the challenges and needs of those decades. The government is adapting all programs to meet the needs and challenges of the nineties and the 21st century.

We understand change. We have always been at the forefront of change. The budget is change. The Liberal Party has been traditionally a pace setter. I know the budget sets the pace for the 21st century.

I will end with a comment one of my constituents sent me during the prebudget process. With reference to the difficult choices facing the Minister of Finance, he wished him resolve: "My two young children will thank you, as you will be remembered as the finance minister who saved Canada from bankruptcy".

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5:05 p.m.


Charles Caccia Liberal Davenport, ON

Mr. Speaker, I am pleased to have the opportunity to participate in this debate. Canadians know very well that we have inherited an economic mess from the Conservatives and that steps must be taken to reduce the deficit and the debt. On that we all agree.

The major preoccupation of this budget is to appease the marketplace, in particular rating agencies. Having done so this year one may expect Wall Street to demand more measures of the same kind in future budgets.

To deal with this the Prime Minister is taking the issue of currency speculators and their impact on national economies to the next meeting in June of the G-7 nations, a very timely initiative for which he is to be congratulated.

There are a few positive measures in the budget for which the Minister of Finance is to be congratulated. For instance, from the perspective of sustainable development one could highlight his decision to remove the 20 per cent limit of a donor's income when donations qualify as ecologically sensitive land. There is a commitment in the budget to study barriers or disincentives in the use of recycled materials over virgin materials.

There is a promise to examine the tax system in search of disincentives to energy efficiency and renewable forms of energy. Subsidies were cut in the energy sector that encouraged uneconomic and unsustainable supply development. Much more needs to be done if we are serious about reducing greenhouse gas emissions.

This brings me to the end of the list of good news and back to the question of how to reduce the national debt and the deficit. It is a necessity on which we all agree.

In the weeks and months preceding the budget several presentations were made repeatedly that social spending is not the cause of our economic ills and that our deficit problem, rather than through cuts in expenditures, ought to be resolved through increases in revenue by way of closing tax loopholes. Billions of dollars a year are forgone in revenue because of existing tax loopholes, including items such as lottery winnings, business meals and entertainment expenses and other existing items well

identified in a report by the Department of Finance dated January 1994.

To his credit, the Minister of Finance closed a couple of loopholes but the tax system remains unprogressive as a result of nine years of Conservative government, Conservative budget making.

It is time for a thorough review of our tax system as it stands now. This review is made even more urgent and necessary and relevant by the fact that the social envelope as announced in the budget is being reduced by $7 billion. Had more tax loopholes been closed, had the tax system been put under the microscope to the same extent that the social security system has been, it would have not been necessary to reduce the social envelope. We would have funds available to diminish the necessity of cutting expenditures. We would have funds for the creation of employment programs for youth desperately waiting for job opportunities which are now not materializing despite our vigorous economic growth.

In other words, closing tax loopholes would provide the government with badly needed revenues to combat unemployment and to apply less severe cuts. Time does not permit to comment on the many cuts and I will therefore comment only on a couple which are particularly painful.

One reduces the social housing budget by $270 million at a time when in Toronto alone an applicant has to wait over four years.

Why reduce the protection of our natural resources by one third, the estimates of the environment department, and allocate to the department of defence almost 20 times as much, $9 billion? What is more important?

Why reduce international aid at a time when health and development projects are so badly needed for the stability of nations most in need?

How can we implement our red book commitment to sustainable development with a 70 per cent cut in the federal allocation to the Canadian environment industry, while leaving the nuclear industry unscathed from any budget cuts?

How can we maintain and strengthen the Canadian identity when the budget of the Canada Council is cut in half? How can we promote and sustain artistic talents without the support of the federal government?

In a way it is too late to talk about the budget, but not too soon to talk about the next one. For 1996 we will keep on working so the budget will have a different orientation, an orientation to the promises made in the red book, an orientation to deal with unemployment, the protection of the weaker in society and the social needs of Canadians.

Over the years Canadians have turned to the Liberals at election time because they trust us as the party that knows how to strengthen and intertwine social and economic policies. This principle is as valid today as it will be 20, 40 or 60 years from now. Hopefully the budget will have the desired effect and we Liberals will be able to turn our attention to the other half of the equation, developing strong social and job creation initiatives and policies in the second half of our mandate for the benefit of the total Canadian society.

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5:10 p.m.


Ed Harper Reform Simcoe Centre, ON

Mr. Speaker, I wish I could say at the beginning that it is pleasure for me to speak on the budget. I cannot do that. My feeling is one of great disappointment. The government is still not facing the reality or the severity of the problem Canada is in today.

The budget has given us minor cuts when major cuts are needed. It did include some hidden taxes where no tax increases were justified.

We owe a debt of thanks to the thousands of citizens who wrote in and attended tax alerts to send the very strong message to the government that there was no room for tax increases and that the books had to be balanced and that balance had to be brought about by cuts or reductions in spending with no new or increased taxes. We did achieve that to some degree. However, there were some hidden taxes in the budget.

This was a two stage budget. I will review the first budget and this budget. In the first budget it was interesting that the government said: "Canada has a problem. It is not too serious. Do not get too excited about it. Take an aspirin and when you get up in the morning you will feel fine. Do not feel bad. Be happy". It introduced a budget that actually aggravated Canada's condition because our debt over the year of that budget grew from $490 billion to $550 billion. Canada is in much more serious difficulty.

We even thought in that first budget we could buy our way to prosperity. It included the $6 billion infrastructure program.

Canada's problem has worsened. With the second budget the diagnosis is that Canada is gravely ill. We do have a very serious problem with the deficit and the debt and it must be attacked. However, the cure is $650 billion of debt, still overspending by $25 billion and $50 billion in interest payments. I hardly call this progress. I hardly call this a cure. Canada is going further and further into the hole.

The government has diagnosed that it understands the gravity of the situation. The government has moved over to our position. It has agreed that Canada is gravely ill. The only thing we disagree on now is the treatment to cure our problem. The deficit, if we agree, is life threatening. Then why if it is life threatening to our country would we vote for, or go for a slow,

hopeful, drawn out recovery; we hope we will get the books in balance.

Suppose someone were in a life threatening situation and the doctor said: "We can give you pills for the next five years and you might recover but the alternative is major surgery and you can be restored to health very quickly and get on with the healing process". Why would he take a chance?

Why would we gamble our future on the uncertainties of the marketplace, of interest rates? We do not seem to have anything in this budget to prepare for the eventual downturn in the economy that will come. It is not a question of if it is going to come, it is going to come. It is a question of when it is going to come.

There are some dark clouds on the horizon. Even south of the border, the situation in the United States could deteriorate and it would have a grave effect on the economy right here in Canada. We know that and we are not preparing for that in this budget. Time is running out. We do not have unlimited time. Unfortunately, that message is not getting through and has not been reflected by the government.

I was interested in the remarks of the Secretary of State for Training and Youth. She spoke about the New Zealand experience, how New Zealand realized the magnitude of its problem and did something about it. New Zealand's debt was at 50 per cent of its GDP when it realized its problem. Ours is currently about 70 or 71 per cent of GDP and we still are not facing the realities and doing the major surgery which needs to be done.

The claim in the first budget was that the government did not have enough time, that it had just taken over. The present government had been in opposition for eight years. What was happening in those eight years? What was happening in those eight years is that those members were adding to the problem in opposing any attempts to bring the deficit and the debt under control. I very well recall the UI debate when there was an attempt to reduce costs. The protest came from the other side at the attempt to reduce spending.

Here we have a budget. We had no plan to get us to zero or to balance the books in the first budget. We still do not have a plan with this budget. There is no fixed date to arrive at what we must arrive at, which is a balanced budget.

We have lost our credibility with the markets in this budget because we did not do anything about the MP pension plan. We had to do something to restore our credibility because it is low. That would have said very loudly and very clearly to the markets and to the Canadian people that yes, the government is serious about the problem and it is showing leadership by example. It failed to do that. Canadians did not miss that message, nor in fact did our lenders. Our lenders have spotted the fact that we were not serious about the problem we face.

There are three ways to get the books in balance. We can raise taxes. We can hope for growth in the economy. Or we can cut spending.

Raising taxes, I would suggest, is no longer an option. The Canadian people have revolted and said that they are taxed to the limit. Raising taxes at this point becomes counterproductive because it fuels the underground economy that is there and is growing.

We can hope for growth in the economy, but we do not control that. That has been the problem for the last 25 years. We projected growth in the economy and at the end of the year it was said: "Oh gee, it is too bad it was not there. We are deeper in debt". We do not control that.

The one thing we do control, the one thing we can do to get our books in balance is to cut spending. We have absolute control there and it is where we should be targeting our efforts. This budget does not do that. It makes some scrapes when indeed it should be making cuts in spending.

We have had 20 years of raising taxes. Those 20 years of raising taxes have achieved the exact opposite. The deficit has grown and the debt has grown. There is absolutely no justification for any tax increase. It does exactly the opposite to what it is hoped to achieve. It is a job killer. It kills the economy.

That there can be no pain is not reality. When we have lived for so many years beyond our means, there has to be some pain. We cannot escape that. The Canadian people understand and are ready for that. The problem is many in this place do not understand that but the Canadian people are ready for it.

We just have to look at the results of the surveys done since the budget came out. The Canadian people supported the move the government made but said they were looking for more. Those same surveys said there should be more cuts and those cuts should be made now because time is running out. We do not have unlimited time.

The tough action we have been taking on the east coast with the fishing problem is interesting. Overfishing is just like overspending. Fish are limited and dollars are limited. There is a bottom to the barrel. We are getting tough on fishing but we have not yet got the message on spending. We still think we can keep on spending. We can kill an industry or we can kill a country. We can kill an industry by overfishing; we can kill a country by overspending.

Moody's fired a shot across our bow and we missed the message. It fired a shot across our bow just as we did to that Spanish fishing vessel. The message Moody's shot across our

bow was that 3 per cent of GDP is too low a target and there is no plan to get to zero. The budget has failed on both counts.

For anybody on the other side to assume that the markets have bought this budget, the verdict is not yet in. Moody's has not changed its position. The verdict is still pending on whether the budget was successful in convincing the money markets that Canada is a good place to invest.

We shoot the messenger who is giving us good advice: "You are in trouble. Get your books in balance or we are not going to buy your bonds". As I say, we are still waiting for the background on that.

There was nothing in this budget for small business. My background is in small business. That 1.5 cent increase in gasoline tax is to raise $500 million a year.

In my riding a number of people commute to Toronto. They will have $250 per year in additional costs just to drive to their business. It is also going to increase the cost of doing business for example for those who use gas in delivery services.

It is going to take about $3 million out of the economy of my riding. There goes the new stove, the education and the new car. It really was not necessary and it is not productive to creating the employment we need. There was no justification for any tax increase.

We are indeed living in the greatest country in the world, but we are doing it on borrowed dollars and time is running out.

I see we are making an attempt to get Canadians to invest in Canada by buying bonds and keeping the money in Canada. The answer to getting Canadians to invest in this country is for the government to show some responsibility that it understands the magnitude of the problem and it is going to cut its spending. Canadians will then stop sending their money out of the country and will spend and invest it right here.

Canada is in a battle for its survival, make no mistake about it. I visited Dieppe just a year ago. It was a very moving experience to see the men who had the courage to go over there and give their lives. I am suggesting that it is going to take courage right now to tackle the very serious problem of overspending.

I hear words about compassion, generosity and fairness. What about responsibility, accountability and fairness to the taxpayers who have been carrying the burden all these years? The Canadian taxpayers are demanding some responsibility, accountability and fairness. We owe it to them and we owe it to future generations.

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5:20 p.m.


Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I found it interesting that the member would spend so much time during his speech defending the Brian Mulroney government saying that somehow the Liberal Party frustrated the prior government for nine years. He is nodding his head now, but I should remind him that the government of Brian Mulroney, which was turfed out, had a majority in both terms and had full control of its actions. We cannot pass on that blame. The member is just making rhetoric. In fact the prior Conservative government got exactly what it deserved.

I listened with interest to the medical analogy the member used when he talked about cuts, that we have only had scrapes and not deep cuts. The member tried to somehow imply there was a tax increase in this budget when he well knows there were $7 of cuts for every $1 of increased revenue and there were no increases in personal income tax. It was pure fabrication.

I want to ask the member a question with regard to his strategy and the response that his own leader gave to this House. His leader stood in this House and attacked the government for cuts to social programs. Yet this member is saying that we should have more cuts than what has been proposed by our government. How does this member square his position with the position of his own leader?

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5:25 p.m.


Ed Harper Reform Simcoe Centre, ON

Mr. Speaker, I am very pleased to respond to the questions from the hon. member.

I will deal first with the fact that the Liberals spent eight years in opposition and they could not do anything about the fact that the debt and deficit were increasing. I suggest to the member that they did nothing but encourage the deficit and debt to increase. They did not understand the magnitude of the problem then; they do not understand the magnitude of the problem now. Nothing has changed.

The Conservative government was turfed out for not listening. I would suggest that three years down the road this government will be turfed out because it is still not listening to the Canadian people.

Cuts of $7 for every $1 in increased revenue. There is no justification for any revenue increase. There is more than enough to balance the books in cuts. When there has been overspending for 20 years we cannot keep saying that we need more dollars, but a strong case can be made for saying: "Yes, we have been going into your pockets deeper and deeper; we are going to start pulling back now". Now is the time. If the Liberals have missed that message, they will go the same way the Conservatives did in just a few years.

My leader has never said that social programs should not be touched. The books cannot be balanced without touching the social programs. That is the reality of the amount of money we spend in that area. The word is that they have been responsible for the problem. They have not been responsible for the problem. However, there have to be cuts in there. The books absolutely cannot be balanced without doing it.

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5:25 p.m.


Dan McTeague Liberal Ontario, ON

Mr. Speaker, my hon. colleague for Simcoe Centre made reference to the famous tax rallies which took place across the country. He will know the most notable one took place in my riding of Ontario. An estimated 3,500 people came out to protest against any notion of tax increases.

Of the 3,500 people who attended that meeting not one has called to tell me this was a bad budget. We have had over 50 calls telling us it is a budget that hit the mark and that the government has definitely listened to the voices of Canadians.

What was interesting about that evening was that it crystallized what these tax alerts were really all about. They were fronts for the Reform Party. That is very clear in the presentation I made a couple of weeks ago.

It is more interesting that one of my hon. colleague's cohorts by the name of Diane Francis in her paper The Financial Post on the same day that tax rally took place mentioned Morgan Trust, a famous bank. It does a lot of business in Canada, and has made some $9.5 million in profits at the expense of the Canadian economy and has only paid 3 per cent in effective taxes.

The hon. member says we do not need any new taxes in this country. He applauds the tax alerts that have taken place. But surely to goodness he is not saying that some people should be indulging themselves while advocating austerity for the others as the banks have done.

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5:25 p.m.


Ed Harper Reform Simcoe Centre, ON

Mr. Speaker, the hon. member is talking about tax fairness. I did not get into the question of tax fairness. I will agree with him that the current tax system is unfair and we have to address that.

I do come back to my point that we have a spending problem, not a revenue problem. The government can go after the loopholes and tax the rich but it will not come close to balancing the books. What will balance the books is to get our spending under control right now. That is something we have full control over. We need to do it right away. We cannot afford to delay.

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5:25 p.m.


Jan Brown Reform Calgary Southeast, AB

Mr. Speaker, we are debating the budgetary policy put forward by this government that permits it to borrow more money using the fragile future of our country as collateral.

The Reform Party appreciates the grave financial situation in which we find ourselves. In fact, it has been our dogged determination to address the issue of government accountability in the areas of spending and taxation that have dictated the course of the government's fiscal agenda.

The Liberal budget took a very tentative first step in the direction of deficit reduction, but it did not go nearly far enough. Overall spending increased. Taxes increased. It failed to make the necessary changes to Canadian social programs. It failed to identify which programs are essential and which are not. It failed to explain where and how Canadians will find jobs. The Liberal budget did not lead by example. Cuts come from the bottom up it appears. Canadians are asked to tighten their belts while the Liberal fat-pack have secured their gold-plated pensions.

There has been much talk about Liberal red book promises. Let us focus on some of the promises that are made in the budget.

The Liberals are promising to borrow $29.8 billion this year because they cannot balance the budget. The Liberals are promising to add over $100 billion to the national debt in the next three years. This will drive the federal debt load well beyond $650 billion by fiscal 1997. This Liberal promise will jeopardize the long term viability of social programs.

The Minister of Human Resources Development had a tremendous opportunity to make a positive contribution to changes in the delivery of social programs. Instead he dropped the ball and in fact has dropped out. What the Liberals are offering now is a block transfer of funds to the provinces. This Liberal approach simply downloads the federal debt, penalizing the provinces, especially provinces like mine, Alberta, which is working aggressively toward a balanced budget.

The Liberals promised to increase funding to special interest groups. To pick one example, the status of women, after we factor in the new grants transferred from HRD, it still has an increase in its operating budget of approximately 20 per cent. How can this be justified when funding to provinces for health care and education has been reduced? Canadians will not tolerate such foolish inequity.

The government has not been entirely open about its plans for balancing the budget. I am going to use the example of the Canadian heritage ministry to illustrate a wilful lack of disclosure regarding budget matters. If such dismal performance exists in one department, in one ministry, does it exist in others?

The Minister of Canadian Heritage had plans for the future of the CBC which he did not include in the budget, but which he did provide to the president of the CBC. Let us look at the Liberals' promises regarding the CBC. On February 3, 1994 in a letter from the minister to Mr. Manera, the minister wrote:

The government considers that stable multi-year funding for the CBC is the most effective way of enabling the CBC to return to a healthy financial position. I am therefore pleased to confirm that the government is prepared to commit itself to a plan and to affirm that it does not intend to impose new reductions on the CBC over the next five years.

However, in the budget the minister announced cuts of $44 million to the CBC. It now appears that the minister plans to cut of over $350 million to the CBC. When I asked him a question about the plan in the House he denied the plan, suggesting that my allegations were pure invention and that Mr. Manera, who had subsequently resigned, had done so for personal reasons and that no more cuts were planned. It sounded like an incredible soap opera to me. That night, in an interview, Mr. Manera stated that he had resigned because of future cuts to the CBC and not for personal reasons. Only one of the two men could be telling the truth.

The next day in the House I presented to the minister a copy of the secret document, which the minister's officials had given to Mr. Manera, which outlined three years of cuts to the CBC. This is how the minister interprets honest and open government. First, he purposely withheld this information from the budget figures. Second, he denied the document and the accompanying cuts even existed. Third, he now admits the document exists but that it means nothing and that the president of the CBC is misguided.

This kind of pathetic performance eats away at the integrity of government. Canadians want to know how their money is being spent and that it is being spent wisely, based on a responsible plan for future spending. The Minister of Canadian Heritage has a different story every time he is asked a question. How can anyone take him seriously, especially organizations within the cultural community? His performance has left the CBC rudderless, without a chairman, without a president, at a time when it needs leadership the most, at a time when it needs to make the transition to the private sector.

Further, last year the CBC was given a special borrowing authority for $25 million. It turns out that this borrowing authority is $25 million into perpetuity. Last year, at the end of the fiscal year the CBC proved it could not meet its budget and came back, cap in hand to Parliament, and as stated in the supplementary estimates it received another $3 million. The CBC is just one example of gross financial mismanagement in the minister's portfolio.

The finance minister alleged that the Liberal government met its financial targets last year. However that can only be Liberal math, for when we look at the Department of Canadian Heritage's supplementary estimates we see it is very much in the red, that none of the targets were met.

Let us look at some of the government organizations which ran over budget: the Department of Canadian Heritage corporate services program, $1.1 million over budget; the Canadian identity program, $1.4 million over budget; the parks program, $3.5 million over budget; Advisory Council on the Status of Women, which thankfully is gone, $76,000 over budget; the CBC, $3 million over budget; the Museum of Nature, $82,000 over budget; the National Archives, $561,000 over budget; the National Battlefields Commission, $125,000 over budget; the National Capital Commission, $12 million over budget; the National Gallery, $187,000 over budget; the Public Service Commission, $4.5 million over budget; and last, the Office of the Co-ordinator of the Status of Women, $162,000 over budget.

Thirteen organizations under the control of the Canadian heritage ministry went over budget. Canadians expect and deserve more from government. When will the minister finally take responsibility for the complete disarray and overspending of his department?

When governments continue to deficit finance they hurt Canada's future economic health. By failing to balance the budget, by failing even to announce when the budget will be balanced, the Liberals have shown they understand little about fiscal planning.

The Liberal Party continues its tradition of being borrowers of both money and ideas. The continuing failure to bring in a single, new, original thought begs the question of whether it will be able to lead Canada to economic stability within the current mandate.

The BudgetGovernment Orders

5:35 p.m.


John Bryden Liberal Hamilton—Wentworth, ON

Mr. Speaker, I thank the member for Calgary Southeast for her remarks but she left me wondering. In the early part of her discourse she reported a 20 per cent increase to the status of women.

I do not know to what organization she refers. I would like very much if she could elaborate on that, what her information is, what details she has and what her sources are, if she would not mind.