Debates of March 2nd, 1995

Borrowing Authority Act, 1995-96

[Michel Bellehumeur, Bloc, Berthier—Montcalm, QC]

Madam Speaker, at least let me finish.

[The Acting Speaker (Mrs. Maheu)]

Order. I just want to advise the hon. member that, speaking on a bill dealing with such matters as borrowing authority, the government can raise just about any issue directly or indirectly related to public finances.

The hon. member for Kindersley-Lloydminster has the floor.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Madam Speaker, I rise on a point of order. The Standing Orders have some descriptions of Statements by Ministers. What we have just heard more aptly fits the description of a ministerial statement under citations 348 and 349.

[The Acting Speaker (Mrs. Maheu)]

As I stated earlier, on a bill such as Bill C-73 respecting the borrowing authority, the government may discuss any of its dossier.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Madam Speaker, I wish to respond very briefly to the point of order.

The Chair is quite correct. The government does not attempt by a point of order to censor opposition or any criticism toward a government borrowing bill either to increase or decrease expenditures, alter them, initiate a government program, cancel one and so on, or advocate any such change. Similarly when a government member, a member of the ministry or another member, speaks on the borrowing bill he or she has exactly the same latitude as an opposition member would have.

You are quite correct, Madam Speaker, in the way you have assessed it. It is definitely the way such bills have been handled in the past.

[The Acting Speaker (Mrs. Maheu)]

Before giving the floor to the hon. member, I would remind the House that a bill respecting borrowing authority is indeed a continuation of our budget debate.

Unless the hon. member for Kindersley-Lloydminster is seeking the floor on another point of order I will continue with debate.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Madam Speaker, I am agreeing with your position. What I am asking is for unanimous consent of the House to allow a 10-minute question and comment period in light of the fact that this was more along the lines of a ministerial statement where there is a chance for the opposition parties to respond.

I believe the government would be open enough to allow a question and comment period. I am just asking for unanimous consent.

[The Acting Speaker (Mrs. Maheu)]

The House has heard the request by the hon. member for Kindersley-Lloydminster. Do we have unanimous consent?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

I am entitled to have the floor to ask questions.

[The Acting Speaker (Mrs. Maheu)]

Order. The Chair has ruled on this point of order. Is the hon. Opposition Whip rising on a separate point of order?

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Madam Speaker, just a comment. I think that you are quite right: the minister was in order. It is just that what he did lacks class. Thank you.

[The Acting Speaker (Mrs. Maheu)]

I am sorry, but this is not a point of order.

[René Laurin, Bloc, Joliette, QC]

Madam Speaker, I apologize for the frog in my throat this morning.

[The Acting Speaker (Mrs. Maheu)]

Order. The hon. member for Joliette has the floor.

[René Laurin, Bloc, Joliette, QC]

Madam Speaker, thank you for your support. My voice being as it is this morning, I will have to ask my hon. colleagues to please be as quiet as possible if they want to be able to hear me.

When the budget is tabled at about this time every year, it always raises either fears or hopes in the population, some interest groups, the financial community and all walks of life depending on what is perceived as an improvement in our personal circumstances and whether individuals or organizations consider the latest budget will increase their tax burden or make their lives more difficult.

And each year, since Parliament was established I guess, the opposition has raised numerous questions during this budget preparation period to try to provide guidance to the government and point out where we would not want the budget to hit our most disadvantaged taxpayers. So, representations have been made for as long as there has been governments.

In the past 30 years however, this budget preparation period has become, in Canada and most provinces, but even more so in Quebec, a much greater source of anxiety because expectations are high. There is always a chance the federal government will use the budget to decentralize powers to the provinces and to give them the tax points that go with these powers, so that the provinces can better set their priorities, be it in education, occupational training, public health or social programs.

Finally, this whole period lets us hope for a better future. Unfortunately, budgets rarely come up to everyone's expectations and this one is no exception. Indeed, while some members of our society, some groups were reportedly pleased with the budget measures, others felt short-changed.

In any case, if I had to sum up the level of satisfaction derived from the budget, I, for one, would say first of all that the federal budget cuts in the wrong places. It launches a full-scale attack against the most disadvantaged and slashes social programs, unemployment insurance and the public service. It hardly touches the wealthiest, for example by sparing tax shelters and profits made by banks and large corporations. It does not cut deeply enough in places where fat remains, such as National Defence, business subsidies and duplication.

Second, it is easy to see that there is nothing at all for employment development in this budget. There are no recovery measures or job training. On the contrary, they are using the infrastructure program put in place last year by the same Liberal government to backtrack and reduce municipal subsidies.

In summary, it could be said that this budget is generally unfair, especially for Quebecers, in particular in the agricultural sector, in the area of national defence, and in terms of deficit decentralization and its impact on Quebec's economy.

In the few minutes available to me, I will elaborate on each of these points to try to explain how we arrived at this conclusion.

I said that the government picks on the most disadvantaged, as shown by its handling of social programs. The federal government contributes to social programs by transferring money to the provinces. Between 1994-95 and 1997-98, transfers for social assistance, health care and post-secondary education will go down from $17.3 billion to $10.3 billion. This 40 per cent cut will have a devastating impact on the most disadvantaged.

Next year, Quebec will lose $350 million, and cuts in transfers for post-secondary education could raise tuition fees by over 60 per cent and threaten free college education in Quebec, since the bill is always picked up by the taxpayer. In the short term, these increases would restrict access and lead to low education levels among the poorest, who cannot afford such exorbitant tuition fees.

As far as unemployment insurance is concerned, again this year, the government is cutting UI by 10 per cent. New legislation in the fall will once again slash UI by tightening eligibility requirements and reducing insurable amounts.

These drastic measures will hit those members of society who have trouble finding jobs and may well have to turn to provincially-funded social assistance if they no longer qualify for UI.

This is another form of offloading, since the government takes a UI beneficiary and sends him to the welfare roll. Of course, this means that the person comes under another jurisdiction, since unemployment insurance is a federal program, while social assistance is a provincial one.

Using a logic which I would call perverse, the Liberal government tells us that it considers the unemployed to be cheaters. However, Quebecers refuse to endorse such a view. Even more revolting is the fact that, while cuts are being made to the UI fund, that program shows a surplus of $2 billion and it is estimated that, by 1996, that surplus will exceed $5 billion. Yet, instead of taking that money to help the unemployed find jobs, the federal government uses that surplus to reduce its deficit. Again, this confirms that the government wants to reduce the deficit at the expense of the poor.

As regards the public service, the government intends to abolish 45,000 positions over the next three years. These cuts should be made in a fair manner, based on a prorated distribution between the various groups and also according to the number of federal public servants in each province.

The decision to go all out and cut 40,000 to 45,000 jobs is particularly illogical considering that the government continues to contract out work at an almost unacceptable level, to the tune of $7.7 billion annually, according to PSAC estimates.

In other words, what the government saves by reducing the number of public servants, it spends by contracting out work. As you know, contracting out work is a good way to reward friends of the party, something which is called patronage.

We agree that the government should cut the fat, but this streamlining exercise must not be done exclusively on the backs of public servants. There is fat in many areas, not just in the public service. I already mentioned the transportation services

used by members of this House and of the other place. Why have two services? Both houses could use the same service and save money in the process. I do not want to discuss every public account, but this is a striking example. I could mention many others.

Managers should also be let go, not just members of their staff. The cuts should be spread fairly between management and the employees. This is essential if the Liberal government is going to ensure fairness, as it claims to want to do.

According to the daily Le Droit , 114 managerial positions, out of 12,642, will be cut. This represents 0.9 per cent of all the cuts. By comparison, 2,508 clerical positions out of 40,145 will also be eliminated, which amounts to 6.2 per cent of the cuts. We can see clearly that the proposed cuts will affect seven times more clerical employees than managers, once again penalizing low income workers.

Cuts affecting the wealthy are also by far too timid. First, tax shelters. Nothing has been done about thousands of businesses that do not pay taxes. About 60,000 businesses that have shown a profit for the past few years are not paying taxes on those profits. This is not a matter of tax evasion or trying to manipulate the tax people. Under the current provisions of the act, these companies can take advantage of certain tax loopholes and make a profit without having to pay taxes on those profits.

The government has done nothing to change the 16 tax treaties signed with countries considered to be tax havens. The preferential treatment given by the Liberals to the wealthiest in this country is particularly obvious in the case of the notorious family trusts. The government has deferred taxing capital gains in family trusts until 1999. The Minister of Finance has refused to act on recommendations by the Bloc Quebecois to do something immediately about tax loopholes that deprive the federal government of hundreds of millions of dollars in tax revenue each year, mainly from Canada's wealthiest families.

I think we should recall certain statements made by members of this House when they were in the opposition. In 1992-93, the hon. member for Glengarry-Prescott-Russell had the following to say about family trusts: "The 21-year rule is the Robin Hood in reverse rule. It is designed specifically to give help to those who least need it. Why does one want to give an additional tax break to billionaires?" This is still the hon. member for Glengarry-Prescott-Russell: "It is kind of like having two goalies in the net. In case the puck misses the first one the rich have this extra large hockey stick which can deflect anything right at the back of the first one- It is simply bad and we should not renew those provisions at all". This was said on March 29, 1993. I am pleased to see the hon. member for Glengarry-Prescott-Russell is here to listen, and I hope he recognizes this quote.

Madam Speaker, there is a member of this House who occasionally sits in your chair, the hon. member for Edmonton Southeast, for whom I have every respect and who had the following to say on the same topic: "We should perhaps call it the comfort bill for family trust holders in Forest Hill Village, Rosedale, Upper Westmount, Park Lake Circle and perhaps parts of Shaughnessy in Vancouver. There is no reason why those very few Canadians who are fortunate enough to have family trusts should have preferential treatment. There is no reason to extend what was a more than generous deadline". This was said the same day, on March 29, 1993.

Another hon. member of the government, who, on May 4, 1993 was a member of the opposition, the hon. member for Broadview-Greenwood, whom I also greatly admire, said the following: "When that kind of unfairness- is out there it affects people's spirits and it affects their attitudes in terms of the workplace. When one multiplies that right across the country, it has a devastating effect on productivity, profitability and everything else. The exemption period has been extended indefinitely, depriving us of billions of dollars in tax revenues. I find it really disgusting that we adopted this bill. I am just talking about fairness, not confiscation, about taxpayers who do their fair share". This is what the hon. member for Broadview-Greenwood said on May 10, 1993.

I could go on, but there is another statement, which was made by the hon. member for Gatineau-La Lièvre. I do not want to leave him out, and I want to identify him as well. He said, on April 2, 1993, and I quote: "This government is allowing them to keep accumulating wealth at the expense of the middle class and the poor of this country. What happened yesterday in the House is a disgrace, and the day will come when people will have to answer for certain social injustices". I will quote one last member of this House, who today is a minister-the hon. member for Ottawa South. He said, on March 30, 1993, with regard to family trusts, and I quote: "The answer that was proposed- is to say 21 years is a long enough trust and every 21 years, whether the property is disposed of or not, it will be deemed to have been sold even if it has not and capital gains tax will have to be paid. I do not think we can have any idea how much tax this money could have generated under such an arrangement, but I would think it would be a tidy sum, to say the least".

These people are still around today. They sit in this House. I wonder how it is, only a year or two after making such statements, that they are unable to act on them and acknowledge what they said at the time.

Despite all these statements, the Minister of Finance is refusing to act on the recommendations of the Bloc Quebecois and take immediate action to close these loopholes, which are depriving the government of hundreds of millions of dollars in revenue every year primarily from the major wealthy Canadian families, and I believe I have identified them fairly clearly.

However, to calm widespread taxpayer indignation at the huge bank profits, the Minister of Finance is going to levy a small token tax on banks, a small additional and temporary tax. Accordingly, while billions are cut each year in unemployment insurance-the figure mentioned earlier was something like $5 billion next year-the banks are going to have to pay an additional $60 million this year and $40 million more in 1996-97. Do you think it is going to hurt the banks to be taxed this amount? One hundred million dollars over two years: $60 million the first year and $40 million the second.

I would remind you that the six largest financial institutions in Canada made over $4.28 billion in profits in 1994. The Royal Bank alone made over $1.2 billion in profits.

It is ridiculous to say that everyone is affected by this budget. The government is taking just $100 million from a potential tax source of $4 to 5$ billion and suggesting that this amount is equal to what is being asked of other elements in society. How utterly ridiculous. We could even say this increase is hypocritical, since it may well be passed on to consumers, which banks and large corporations usually do, because such increases are always reflected in the price of these companies' final product.

So in the end, the consumer has to foot the bill. Large corporations are facing a 12.5 per cent tax increase under this budget, which will generate additional revenues of only $460 million over the next three years. This is very small compared to the $1.5 billion to be gained from the increased tax on gasoline. In this case too, the government is trying to show people, through this measure taken by the finance minister, that everyone has to do his bit.

Everyone doing his bit apparently means in this case that some have to make drastic sacrifices while only minimal ones are expected of others. If this is supposed to be a just society, I think we are on the wrong track. Compared to a 12.5 per cent tax hike for major corporations, a very slight tax on the price of gasoline will bring in three times as much or $1,5 billion.

The government boasts that it is not increasing taxes. And yet only a third of new revenues or $900 million which the government intends to collect will come from corporations. The remaining amount of $2.8 billion will come out of taxpayers' pockets. Where is the fair budget we were promised? What happened to the minister's promises that he would above all tax the rich? That being said, Madam Speaker, I would like to quote a few figures comparing personal taxes and corporate taxes.

From 1980 to 1994, personal taxes increased by 70 per cent, a rate indexed for inflation. The source of this information should be reliable and I hope it will not be disputed; it comes from the Finance department. Only the governments in Scandinavian countries and Belgium draw a higher proportion of their revenues directly from their citizens. What has happened to corporate taxes during this period? Let us look at the period extending from 1955 to 1992. In 1955, 25 per cent of federal revenues were drawn from companies. In 1975, corporate taxes accounted for 17 per cent of federal revenues and in 1992, they made up 7 per cent of federal revenues.

So we can see that corporate tax rates are in a free fall. In 1980, the tax rate was 46 per cent for big corporations and 25 per cent for small business. From 1988 to 1995, corporations were taxed at a rate of 28 per cent and small businesses at 12 per cent. It is very clear that the trend has been reversed and that from now on individuals and not corporations will pay more tax to the government.

The latest profits make the following corporations members of the billionaires' club: the Royal Bank, with $1.2 billion, Bell Canada, with almost the same amount-$1.178 billion, and General Motors of Canada, with $1.3 billion. How much tax did they pay? It would be very interesting to see their tax bill, if Taxation would only give it. It would reveal what the government is planning when it talks about a just society.

To elaborate on what I said earlier, the federal government did not trim enough of the fat. I alluded to this earlier when I said that the public service is not the only place where fat could be trimmed-National Defence is another potential target. Its budget will be cut by $1.9 billion over three years. A cut of $4.8 billion over the same time frame is what the Bloc Quebecois has been suggesting for two years now as an alternative to cutting social programs.

Close more bases and cut defence spending more. The Auditor General mentioned that the number of bases could be reduced to 12 without compromising the army's ability to function. In addition, it apparently costs over $125 million just to relocate members of the armed forces within Canada. This was said at the defence committee and echoed at the public accounts committee: between $125 and $130 million per year, not to transport troops to peacekeeping missions, but just to relocate transferred employees. Even with the army doing the transporting, it costs $125 million. That is fat if I ever saw it, Madam Speaker.

Housing for families of members and officers of the armed forces is a losing venture, it loses $30 million per year. Since 1978, the cumulative loss in this area is $2.3 billion. All the while, some officers pay only token amounts for rent, amounts

that are considerably lower than what renting a comparable house would cost on the market.

The Bloc Quebecois is happy to see that Minister Martin has cut business subsidies. He is on the right track in that regard. Congratulations! But the Bloc Quebecois believes his 60 per cent cut does not go nearly far enough.

Even the Conseil du patronat agrees that these subsidies should be dropped altogether. Here is an additional $1.6 billion that could be cut over the next three years. Even business agrees with the Conseil du patronat that these subsidies should be cut, because more often than not, they amount to a means of giving friends of the government a competitive edge.

The money such a move would save could be used to fund social housing, in order to avoid the planned cuts of $307 million over the next three years.

We also talked about the billions of dollars wasted by duplication between the federal and provincial governments. The Liberal government's budget does absolutely nothing to eliminate or even reduce this costly duplication. The federal government is not withdrawing from areas of provincial jurisdiction. It has not abolished the departments where duplication occurs: health, human resources development, natural resources, and we could name others.

It is also not withdrawing from other areas of provincial jurisdiction, such as forestry, mining, tourism, housing, recreation and municipal affairs.

The second point I made was that there is absolutely nothing in this budget for employment. In order to return to the pre-recession level of employment, more than 800,000 jobs would have to be created in Canada. During the last election campaign, the Liberal Party proclaimed loudly that job creation was their number one priority.

And yet, the budget before us contains no measures, either general or specific, to encourage job creation. There is no sign of any overall plan being implemented or even proposed. Nor does the government seem to have any intention whatsoever of taking action in the medium term to help the unemployed find jobs. Even the unemployment insurance surpluses that are supposed to contribute towards job creation will be used to bring down the deficit.

This budget is proof to us that the Minister of Finance has scrapped the red book and given up on doing anything about the present rate of unemployment. The budget forecasts unemployment rates of 9.5 per cent for 1995 and 9.4 per cent for 1996. The Liberal government's vision is cruelly insensitive to the millions of unemployed Canadians. I hope that in this area the federal government's forecasts are more accurate than its forecasts in recent years with respect to the rate of growth, because if it has made the same mistakes, we will be facing unemployment rates of 10.5, 11 or 12 per cent and not 9.5.

As regards job training, this is an area of jurisdiction over which Quebec has been requesting exclusive control for a number of years now, even under a Liberal government. In the present budget, the federal government creates additional duplication, instead of reducing it. It has announced the creation of a human resources investment fund. For the time being we are told that this should encourage solid and sustainable job creation, but we do not have many details yet. It is essential, however, that a provincial job training plan be put in place.

As long as the federal government continues to hang on to responsibility in this area, thus duplicating what is being done by the government of Quebec, many resources and precious time will be lost forever, with disastrous consequences for the job situation in Quebec.

Through its failure to act and its stubborn refusal again in this budget to let Quebec look after its own job training, the federal government is adversely affecting Quebec's economic development.

I would like to touch briefly on the infrastructure program. This $2 billion program, which was announced with great fanfare during the 1993 election, was supposed to create 45,000 temporary jobs over three years. We can only assume the program has gone very well, because the government has decided to terminate it ahead of schedule. This was the only concrete measure that would have helped the government keep its job creation promise, and even that was not followed through on. In fact, the budget cuts the $200 million that remained in this program.

The provincial and municipal governments have been told that they will not get the remaining $200 million federal subsidy that they were counting on, regardless of what they might have hoped and expected. So, $200 million for the federal government, $200 million for the provincial government, $200 million for each of the provinces.

This means a $600 million shortfall in Quebec's economy in terms of infrastructure projects. That is a pretty penny. This government apparently committed to creating jobs is actually pulling out of these projects, thus depriving several municipalities of funding they had been promised. The Minister of Finance would have easily won the lemon award for unkept election promises.

I will comment briefly on this budget which is unfair for the people of Quebec in particular. With respect to agriculture, the

Martin budget is plainly appalling, depriving farmers of $560 million in Crow's Nest subsidies. In Quebec however-

Madam Speaker, you are signalling that my time is up, while I thought I had five minutes remaining. I will therefore keep my other comments for another time.

[Jim Silye, Reform, Calgary Centre, AB]

Madam Speaker, I rise today to not only address the government's borrowing bill, C-73, but to also make a few comments about the budget.

The single biggest problem facing Canada today is the national debt of over $550 billion and the interest costs to service that debt. It is all too easy to think of this debt as a government problem, but it is not. The debt does not cost governments, it costs Canadian taxpayers. We pay for the debt directly every day in interest payments paid from taxes.

Whatever the party or Prime Minister or finance minister, the Government of Canada has not had a single balanced budget in 25 years. As a result, every Parliament has to pass bills like C-73, borrowing bills, to give it the ability to borrow money to service this debt.

For these two decades our governments have been living beyond their means, creating a delusion that we can live indefinitely on borrowed money.

How do they get away with it? How do they get taxpayers to fall in line when the cornerstones of our society like health care are in jeopardy because we are forced to borrow $89 million every day and $625 million every week to finance the debt? The answer in a word is sophistry, using clever but misleading arguments to justify actions.

One thing I noticed in my first year as MP was that an experienced cabinet minister could spin even the most unsound logic into what seemed to be publicly accepted government policy. The finance minister is no exception. He is an extremely clever man politically, and I often wonder what he is really doing with the Canadian taxpayer.

As a businessman and a taxpayer, I finally realized that we are all being hoodwinked. By waxing eloquent about breaking the back of the deficit and floating frightening trial balloons of higher income taxes, the finance minister has finessed many Canadians into believing that it is okay to go into debt, but just not as much as we have been in the past.

I would like to walk through the budget to demonstrate the art of sophistry at work, necessitating this borrowing bill we are debating today. Sophistry is defined as false reasoning or clever but misleading arguments. So much of what is served up in the 1995-96 budget is both politically clever but economically misleading. Is this truly a sound budget as the finance minister claims, or an unsound budget based on false reasoning?

If these walls could talk about the history of deficit fighting in this House, what would they say? They would tell of a former finance minister, now a Prime Minister, who in 1978 said significant reductions in the deficit can be expected. The deficit then was $13 billion. He is back at work now and the deficit is $39 billion. Seventeen years later he is saying the same thing, singing the same tune. When will he learn that times have changed?

These walls would also tell us about Liberal finance minister Allan MacEachen, who in 1982 said the government cannot responsibly add to the deficit. The deficit then was $28.7 billion. Today the Liberals continue to add to that deficit.

These walls would also tell us of Michael Wilson, who in 1990 said: "We will reduce the deficit to $28.5 billion next year. We will cut it in half to $14 billion in three years. We will reduce it even further to $10 billion the year after that". Does that sound like the current finance minister? Is that not what he sounded like the other day when he presented his budget? That deficit grew to $32 billion.

Finally, if these walls could talk they would tell us of our current Minister of Finance, who one year ago promised to break the back of the deficit and attack it head on. He had a projected deficit of $42 billion and the actual deficit that he will announce will probably be around $38 billion.

Deficit has been the focus since 1975. Meanwhile the real problems, the debt and the interest cost to service that debt, keep growing. Adding to the debt and therefore increasing interests costs, regardless of interest rates, regardless of the growth in the economy, will eventually erode program spending, reducing the amount of money for social programs and job creation initiatives.

That is what is wrong with the current direction in which this government is going. Before a single dollar of income is redistributed, before a dime goes to social programs, before a penny is spent on any other government program $2,200 must be paid yearly in interest for each and every person in Canada. Each Canadian's share of direct federal and provincial debt has risen from $4,500 in 1981 to over $25,000 today.

Here we have our clever finance minister talking about the deficit and the fact that he will spend less. He is misleading the Canadian taxpayer with the argument that by lowering the deficit through instalments he is solving our economic problem of the debt. He is not solving the problem. We have to get to a zero deficit. We have to stop adding to the debt. We should have a balanced budget as our immediate target, not somewhere down the road, that floating two-year revolving door.

In their reaction to the clever minister's budget the chartered accountants of Canada have stated: "The government has failed to set firm targets for the reduction of the deficit after 1997. Achieving a $25 billion deficit in 1997, which may well be the high point in the current economic cycle, is not sufficient. We must seize the opportunity now to break the deficit cycle and not risk facing unsustainable levels of deficit in the next economic downturn. We need a longer term plan to bring government spending under control".

Reformers have done this. We set out a clear spending reduction plan in our taxpayers' budget which would reduce the deficit to zero in three years. As our leader has pointed out, the biggest spending decision that the finance minister has made by not cutting program spending more quickly is to increase spending on interest charges from $39 billion when they first were elected to $51 billion when they are defeated in 1997 or 1998.

When the Liberals came into power in 1994 their total government spending was projected to be $158 billion. By 1997 their total projected spending will be $158.6 billion, despite all these spending cuts. On the spending side they will be right back where they started. They have failed to take the necessary steps to deal with the severity of our fiscal crisis and are leading Canada on a track destined for bankruptcy. Where is the benefit for people who have been hit with public service cuts, program cuts and cuts to transfer payments? The only purpose of these cuts, it appears, is to service the ever increasing debt. It is all going to interest.

The debt is the problem. The deficit is simply a contributing factor. It is politically clever but misleading to tell people that by slowing the digging we will fill the whole.

Another clear example in the budget of the finance minister practising the art of sophistry or false reason or clever but misleading arguments is evident when he states that the Liberals are not raising personal income taxes. Of course not. That would have knocked him way down in the polls and the minister knows that. The challenge was therefore to squeeze more money out of the taxpayer without waking them up to that fact. The minister succeeded.

I will give the House four examples. The tax rates of large corporations were raised by 12.5 per cent and corporate surtaxes increased by 1 per cent, from 3 per cent to 4 per cent. These increases will be passed on to consumers and will ultimately fall on the middle class, the very heart and soul of the support of the Liberal party, in the form of higher prices.

The Liberals placed a temporary capital tax on large deposit taking institutions. A temporary tax, there is an oxymoron. It is like a prominent backbencher. In 1917 income tax was originally supposed to be temporary.

Taxing banks means higher costs to Canadians for banking transactions. Watch how quickly service charges change in the next year.

A third example is the Liberals have raised gasoline taxes by 1.5 cents which will cost the average Canadian and so too will higher taxes on cigarettes which the minister sneaked in through a ways and means motion a few weeks ago.

The Liberals have eliminated the public utilities income tax transfers to the provinces which means if your utilities are provided by a private company you will see your rates jump by as much as 25 per cent because they no longer get the same treatment as fat cat government owned utilities.

This is another clever technique used by the finance minister to punish Alberta MPs. Let us punish the city of Calgary for voting six Reformers. Let us reward Edmonton for electing four Liberals. This blatant partisan political endeavour will only come back to haunt the Liberal Party. This was a selective tax grab against Alberta. The Minister of National Resources yesterday did not even have the courage to answer one of my colleague's questions about her support for the PUITTA transfers to the provinces. Eventually those provinces that are considering privatizing their utilities will not do it now because of the extra costs.

Clearly this budget is nothing more than a tax on the consumer. It is a consumer budget. It raises about $1.5 billion that consumers are going to have to pay, not on their personal income tax which they are all happy with, but through hidden taxes, through consumer taxes. It is a form of a GST.

Automobiles do not pay taxes. The people who buy them do. Once again the Minister of Finance is practising the art of sophistry by using a clever but misleading argument to make taxpayers think that he is doing them a favour by not raising their individual tax burden when he is by $1.5 billion.

Another example of sophistry can be found in the finance minister's use of soft targets in his budget projections. The real test of spending cuts from one year to the next is if we spend less than the year before. This government for the second time in a row will be spending more that it did the year before. It is up to $163.9 billion from last year's projected $163.5.

If the Liberals were truly going to spend less they would be below that $163 billion figure. Once again the minister does not sell it that way. He talks about spending cuts, lowering the deficit and that reaching his target of 3 per cent of GDP will solve all our problems. Meeting the 3 per cent target depends on the continuation for another three years of recovery in the business cycle. That is very unlikely to occur. That is why it is called a cycle.

The Liberals continue to delude taxpayers that things will turn around. They believe strongly in overly optimistic economic growth projections. Their hopes for gradual improvement lead them to delay, to defer, to minimize the need for tough and immediate action.

They think gradually they will work this through. It appears as though gradualism has become a Liberal policy. Change should not be introduced too suddenly. To avoid any shocks to the system reforms of any kind should be introduced gradually.

In an article I was recently reading the writer suggested that we use a gradual approach to introduce new traffic laws from driving on the right side of the road to the left side. Do it gradually, buses and trucks this year, cars next year. Gradualism is not going to work.

All that Liberal rhetoric about rolling two year targets does is side track us from the real problem of the debt. Once again gradualism sounds appealing but it is misleading. Interest costs continue to rise. At the end of the Liberal term they will have added another $10 billion to the interest costs of this nation. This is what they are doing. This is where their spending cuts are going. Everybody is sacrificing in this country just to pay the darn interest costs on the debt instead of getting the deficit to zero so that interest costs will not rise.

Why is it on the question of fiscal common sense finance ministers continually react by saying they will balance the budget tomorrow, they will get at it first thing next year, they will aim for a balanced budget but in the meantime they have to tackle the deficit? How would members react to someone who had cancer and planned to wait to seek treatment until he felt better? This is yet another example of a clever but misleading argument by the Minister of Finance.

The Minister of Finance has said that small business is the engine of our economy. It creates 85 per cent of the jobs in Canada. Yet in his budget he tried to take credit for the 400,000 jobs that have been created in this past year in Canada when all the government can take credit for are the 60,000 jobs it created through its infrastructure program which has simply added to the debt.

It is absolutely amazing how many times we heard that the infrastructure program was a huge success, creating years of employment. It was not just short term. Now we see in the budget that funding for the program will be reduced.

If the infrastructure program was such a success, then why has it been cut? Was it not living up to its potential? Through pork barrel programs like infrastructure, the Liberals are being politically clever but, as their budget demonstrates, economically misleading.

Another example of sophistry at work can be found in the finance minister's criticisms of the Reform Party's policy on old age security. The finance minister said the Reform Party's taxpayer's budget would hammer seniors at the low end of the income scale, which simply is not the case.

During the election campaign the Conservatives accused us that this would effect seniors who made $17,000 a year. Now the finance minister has the gall and the nerve and audacity to stand in this House and tell Canadians that we will hurt and harm seniors who make $11,000 a year. That is pathetic.

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

Where are the cuts coming from?

[Jim Silye, Reform, Calgary Centre, AB]

I will get to that. I will show exactly why the finance minister should retract what he said at some point in the future.

These scare tactics are clever but they are misleading. In our taxpayer's budget Reformers propose that key changes to OAS would include basing the program on family income. Guess what?-that is what the Liberals are going to do as well. We say who it is going to effect. We say at what level it will effect but the Liberals do not have the courage to say what they are going to do on social programs.

In the two-year projections, the money on social programs stays at the same level of $39 billion. The transfers to provinces go down by about $2 billion without any of the tax points going over there, but they do not come clean. That is the problem. It is a budget of broken promises and it is a budget of slight of hand.

Our budget would protect those currently receiving guaranteed income supplements and not paying benefits to high income families. That is what our policy would be on the OAS. This is what the Liberals have suggested in their budget.

Let me now give a definite example. Members have been waiting for me to get to this. I am sure this is the part that is very interesting. They want to know where we get our figures. We get our figures from the government's own numbers. It is a document it produced. It is a book. I think it is coloured. It means this government is good on colours. It has the red book, the grey book, the green book, the mauve book, the white.

This is from "Creating a Healthy Fiscal Climate", page 70, annex table 26, distribution of net federal elderly benefits by household income, 1994.

Eight hundred thousand households receive less than $15,000 in income. The benefits they receive which include the OAS, the spousal portion and the GIS, are $7 billion. That would be untouched by our taxpayers' budget.

Where does the finance minister get his $11,000 figure? The next level up is $15,000 to $20,000 for 390,000 households; $2.6

billion goes there. That is nobody who receives a household income of $20,000. Even if you divide that in two, you are at 11.

Twenty thousand to twenty-five thousand dollars is the next level: 380,000 households, $3 billion goes there. Twenty-five thousand to thirty thousand dollars: 250,000 households; $1.7 billion goes there. Thirty thousand to forty thousand dollars household income: 280,000 households; $1.8 billion goes there.

Even if you took the $40,000 you would end up with $20,000. Where does the finance minister get his $11,000 number? He says if $11,000 is what we would do, I challenge the finance minister if he wants to restore and retain his credibility, because he has said this publicly, to confirm that his numbers are right in this.

If these numbers are right then there is no way that taking $3 billion out of OAS, a $20 billion envelope, and reducing it to $17 billion we going to harm one single senior who makes less than $20,000 in income. Our target is about $40,000.

I insist that if the finance minister catches wind of what I have said here today-I see that the parliamentary secretary to the finance minister is present-we deserve a correction on that. We deserve a clarification.

We are playing with peoples' lives. We do not want to scare people. We want to get to a zero deficit. We want to cut more than the Liberal government. We would cut faster than the Liberal government and you can take all the credit you want about ours being slash and burn, but we know that our projections and the way we want to do it is the right way, it is the correct way, and is the way it should be done.

For the government to accuse wrongly, neither party should do that. Both parties and all members of Parliament should try to be accurate. They have a responsibility to be accurate when they are talking about numbers and how they affect lives. We can disagree on philosophy but we should not disagree on numbers. I think I have said enough on that.

Let us turn to income security for members of Parliament. Has the finance minister made any sacrifices there? The answer is no. Canadians have to sacrifice but not MPs. They are not paid enough so the MP pension makes up for that. The old time politicians will benefit from the original plan to the new two tiered plan that will make millionaires out of many of them while future politicians will be asked to accept the reformed plan.

It is outstanding to sit in this House and listen to the Prime Minister compare his salary with professional hockey players' every time we ask him a question about pensions. Why does he compare his pension with the pension of a hockey player? Why does he not compare his pension to those pensions out there in the private sector?

What we are saying is that the compensation package has an imbalance. The compensation package for MPs is out of whack. The compensation package has to be revisited and the whole thing has to be looked at. The MP gold plated pension plan is too generous. The $64,000 a year is too low. However, this government is too heartless and lacks the courage to address the problem head on. It wants to protect all the old cronies from the past and will not address what should be addressed in the proper fashion.

There is no way that any member of this House should receive any more than matching contributions to what a member puts into a pension plan, one for one. I do not care if it is 5 per cent, 6 per cent or 8 per cent, it should only be one for one.

To boot, the Prime Minister has said he cannot reform the MP pension plan retroactively because there is a rule in democracy that we do not pass retroactive legislation.

Considering the fact the Liberals applied retroactive legislation to the Pearson contract, the EH-101 helicopter contract, the public service contracts and to Canadian taxpayers working overseas, why is it that these same Liberal politicians are not subject to the same rules as those Canadians? How can the Prime Minister contradict himself this way? It is a clever thing to say but it is a misleading point to make when the facts betray what he is saying. It is a double standard. It might be sophistry.

Once again the Liberals are leading the taxpayers to believe that they are actually reforming the system when all they are doing is making it less gold plated for the young MPs but still very generous. I cannot believe the number of rookie Liberal MPs who have been coerced and have just sat there. They are the strongest number in caucus and they sit there and let these veterans push them around. They sit there and are forced to go back to their constituents, most in Ontario, and say sorry, but they had to take this two tiered pension, they cannot sacrifice because the Prime Minister and cabinet will not let them. I cannot believe that.

The rookie Liberal MPs have an opportunity to set an example. The rookies have an opportunity to crack the whip and to show them in caucus what it is all about to be an MP: real integrity, real honesty and real leadership, not the old style partisan, pork barrelled system that has been going on for the last 25 years.

What has changed? We have a Prime Minister who is still going out to $1,000 parties that 99.999 per cent of Canadians are not even invited to. We still make blatant partisan appointments, not the Liberals who deserve to be there but blatant ones that should not be made. The Liberals are still spending $40 billion more a year than they bring in. They fail to recognize the real problem.

The finance minister talks of downsizing and reducing the cost of government when the fact is that in Ottawa Canadians still have a big government and a high spending government. Reformers believe that government governs best that governs least and the best government is smaller government.

Why is it that in the state of California 52 congressmen, 2 senators, 1 governor and 1 president represent at a federal level 29 million people?

Let us say that Canada is pretty close to 29 million people for the sake of argument. We have for the same 29 million people 295 MPs, 104 senators and one Governor General representing the taxpayers. Are we not as competent as congressmen? They can represent 500,000 people while we can only represent 100,000 people? Do we not have the intelligence? Do we not have the technology to have representation by population with a higher population base? I think we can.

Talk about downsizing the public service by 45,000 people over three years. Why do we not downsize the House of Commons? What are we doing instead? We are not going to downsize the House of Commons. While the government lays off 45,000 civil servants it is going to bring in six more MPs. There will be six more MPs in the next federal election.

Once again the Liberals want to increase the size of government. Make it big. Keep the backbenchers happy. Let a small cabinet control things. They refuse to consider more effective approaches to accommodate shifting, growing populations.

Reformers believe the House should have 265 members. Taking into account the floating nature of the population we cannot cap it because of all of the deals that have been made since Confederation. We would then have a reasonable House. We would have members of Parliament that represent more people. We would have members of Parliament that would really have some value and some input into what is going on rather than this huge size. Except for the 20 people that sit around the Prime Minister, the rest of us are just here for window dressing.

We believe the House should be reduced to a fixed number. If the size is continually expanded to match population increases, the House will reach unmanageable proportions with unsustainable overhead costs. The answer to population growth is not to increase the numbers of representatives but to periodically redraw constituency boundaries-redistricting; to redistribute seats according to population shifts-reapportionment; and introduce an elected, effective and equal Senate for regional control.

The time has come to bring back financial responsibility to government, not to make government bigger. Politicians have to be accountable to the people of Canada, to be trusted to handle their money. More faces will not improve the system. I heard a little comment about Alberta?

[Murray Calder, Liberal, Wellington—Grey—Dufferin—Simcoe, ON]

How many seats do you have from Alberta?

[Jim Silye, Reform, Calgary Centre, AB]

We have 27 seats from Alberta.

[An hon. member]

That is 26.

[Jim Silye, Reform, Calgary Centre, AB]

For instance, the city of Calgary has six MPs. I would cut two out of the city of Calgary. We only need four MPs from the city of Calgary.

[Murray Calder, Liberal, Wellington—Grey—Dufferin—Simcoe, ON]

Which two would the hon. member cut?