Debates of March 20th, 1995

Canada Labour Code

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

moved for leave to introduce Bill C-317, an act to amend the Canada Labour Code and the Public Service Staff Relations Act (scabs and essential services).

Mr. Speaker, it is my pleasure to move, on behalf of the Bloc Quebecois, an anti-scab bill. This bill would prohibit the hiring of scabs by employers under federal jurisdiction, by crown corporations or by the Canadian public service and would also legislate on the maintenance of essential services during a strike or a lockout within the public service or crown corporations.

This bill is to allow for labour relations to take place in a civilized context so that, in many cases, social peace can be restored.

It is inconceivable that the federal government has not yet passed such a legislation when more than 70 per cent of Canadian workers are already protected against scabs, that is in Quebec, Ontario and British Columbia. The lack of a federal anti-scab legislation is often the cause of the worsening of labour-management negotiations. During negotiations, the equity of pressure tactics amounts to the respect of the parties. An anti-scab legislation means the respect and dignity of workers.

It is high time that the federal government take some measures to put an end to labour disputes such as the one at Ogilvie Mills of Montreal, which have been on strike for nine months now.

(Motion deemed adopted, bill read the first time and printed.)

[The Acting Speaker (Mrs. Maheu)]

I wish to inform the House that pursuant to Standing Order 33(2), because of the ministerial statement, Government Orders will be extended by 26 minutes.

Borrowing Authority Act, 1995-96

[Doug Peters, Liberal, for the Minister of Finance and Minister responsible for the Federal Office of Regional Development-Quebec]

moved that Bill C-73, an act to provide borrowing authority for the fiscal year beginning on April 1, 1995, be read the third time and passed.

[David Walker, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, it is for me a great pleasure to give today my support to Bill C-73, the Borrowing Authority Act, which has reached the third reading and final concurrence stage in this House.

This bill is in fact an internal economy measure which is introduced once a year to allow for the continuation of the permanent operations of the government. This does not mean that the government does not consider this measure seriously, quite the contrary.

This bill follows the presentation by the Minister of Finance last month of the most important and significant budget for the future of this country since the Post-War years.

This budget brought in-depth changes to the nature of federal spending. Its provisions were adopted because the need for a sound administration has become incompatible with a growing national debt that has a destructive impact nation-wide.

This bill provides for a borrowing authority of up to $29 billion. A large portion of this amount accounts for the appalling and unacceptable gap that has developed between projected federal expenditures and revenues.

Canadians are well aware of the situation. They understand that the cost of outrageous deficits means higher taxes and interest rates and less economic growth in the future.

These same reasons explain why the 1995 budget and its harsh measures have had so much support from the people.

In the 1994 budget, we undertook to keep the deficit under $32.7 billion in 1995-96 and to reduce it even further to 3 per cent of the GDP, that is $24.3 billion in 1996-97.

This budget contains harsh measures that will make sure we reach those goals despite higher interest rates than expected.

However, this budget goes much further than the goals set for the next two years. Our reforms will continue to be productive in the following years and will allow us to go on and hit the final target of this government, that is a balanced budget.

We will be able to claim that our mission has been achieved the day this kind of bill is no longer necessary.

To hit our deficit targets we are implementing cumulative savings over the next three years of $29 billion. This is the largest set of actions in any budget since the demobilization after World War II.

These actions mean changing the size and shape of government. By 1996-97 program spending will fall from $120 billion last year to just under $108 billion this year. The structural changes we are making will ensure significant deficit reduction continues in 1997-98 and beyond. The bottom line benefits of this will be dramatic

The deficit will fall to $32.7 billion in 1995-96 and to $24.3 billion the year after, as we promised. With the deficit in 1996 at 3 per cent of GDP, this will be the lowest level since 1974-75.

By that time our financial requirements, the new money we have to borrow from the markets, will drop to $13.7 billion. That will be just 1.7 per cent of GDP, lower than any currently forecast for any other G-7 nation. We are again backing up our prudent economic assumptions with substantial contingency reserves; $2.5 billion in 1995-96 and $3 billion the year after. This means we can still come in on target next year, even if interest rates are 1 per cent higher and growth half a per cent lower than our forecast.

Our contingency reserve can do more than protect our target. If it is not needed it will not be spent. It will go to reducing the deficit even further. This underscores another benefit our prudent planning could deliver.

If interest rates and growth do better than are forecast and just conform to the private sector averages, the 1996-97 deficit could drop below $19 billion. That is $5.5 billion less than this budget projects. That would bring our deficit down to 2.3 per cent of GDP.

Even if we do no better than our projected targets, 1996-97 will be an important milestone since the debt will no longer be growing faster than the economy. The debt to GDP ratio will have begun to decline at last. That is the key to fiscal sustainability, to put our debt ratio on a permanent downward track.

I need not go on summarizing our budget plans and the promise they carry. The House has heard days and days of budget debate. The court of public and market opinion has ruled strongly in favour of our courageous strategy.

Let me turn briefly to the thrust of Bill C-73. I again ask the House to support and speedily pass this bill.

If borrowing authority is not in place early in the new fiscal year there will be severe constraints placed on the government's financing program. Without passage it could lead to a situation in which no government bonds could be issued except to fund maturing issues. The bottom line here could be increased costs to taxpayers because it would expose the government to the additional interest rate charges and risks implied by increased short term funding.

Bill C-73 contains three basic elements: authority to cover financial requirements for 1995-96; a provision for exchange fund account profits; the renewal of a non-lapsing amount. In total we are requesting authority to borrow $28.9 billion for the 1995-96 fiscal year.

The largest element is the provision for $24.9 billion of borrowing to meet the net financial requirements as set out in the budget. There is a provision to cover $1 billion of exchange fund account earnings, earnings which would make necessary additional Canadian dollar borrowing requirements. These earnings, although reported as budgetary revenues, are retained in the exchange fund account. They are not available to finance ongoing operations of the government.

There is the well established, over the last seven years, $3 billion non-lapsing amount. This sum can either be used during the course of the year to manage contingencies such as the unexpected foreign exchange requirements or it can be carried forward into the next fiscal year.

There are some technical provisions in Bill C-73 that more clearly link fiscal year borrowing authority with fiscal year borrowing requirements.

For example, one provision provides that the 1995-96 borrowing authority may only be used after the new fiscal year begins. Another provision stipulates that for the purpose of calculating borrowing authority usage the effective date is April 1.

Until the bill is passed the government may continue to use the $3 billion non-lapsing amount provided for in last year's Borrowing Authority Act. Any portion of this non-lapsing amount used will be deducted from the basic amount of borrowing authority being sought today. This prevents the non-lapsing amount from effectively adding to the borrowing authority next year. Once it is passed, this bill will also cancel all borrowing authority remaining from fiscal 1994-95.

This bill is a regular feature of each year's legislative agenda. It contains no remarkable or unexpected provisions. Its supporting background was fully documented in the budget, the main estimates and related documents.

However, what is remarkable in both senses of the term is the clear, courageous and concrete action the Minister of Finance set out to set the federal deficit on the fast track. By doing so, our government is laying the foundations for continued national economic renewal and restored national unity.

I therefore encourage the House to approve Bill C-73 post haste so the new borrowing authority will be in place at the beginning of the new fiscal year, 11 days from now.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, it is with pleasure that I participate in the third reading debate on Bill C-73, concerning the federal government's borrowing authority.

From the outset, we must say that the official opposition is against this bill. We are opposed to it because it flows from the last budget presented by the Minister of Finance of Canada.

So, logically, we are against the borrowing authority because we were opposed to the finance minister's budget. It is with great pleasure that, during the next few minutes, I will remind you of why we are opposed to the bill and of why we were so opposed to the finance minister's budget.

First of all, I would like to make it clear that we have never been against putting the fiscal house in order, on the contrary.

If you have an opportunity of rereading the Hansard for the last year, you will see that every time we had a chance to do so we asked the finance minister to have an item by item review, in

the normal course of activities of a parliamentary committee made up of parliamentarians, not of experts nor officials working on the sly, of all the federal budgetary expenditures, including tax expenditures, that is the various provisions of the Canadian tax legislation that allow certain individuals or corporations to avoid paying income tax.

That is absolutely not what we are challenging in the last budget, nor therefore in Bill C-73. We are against two specific elements of the budget. First, we oppose the means to be used to stabilize public finances, because we cannot agree with them. Those means include a downright offloading of the federal government's deficit problems onto the provinces, and also a downright offloading of the federal public financing problems for the unemployment insurance account, because year after year billions of dollars are taken off the UI account in order to address the public finance problem, and also budget cuts made at the expense of the neediest members of society, that is cuts in the transfer payments for social assistance and post-secondary education.

The second element of the federal budget we cannot agree to, and the second reason why we therefore cannot agree with Bill C-73 providing borrowing authority, is related to the fact that the real problem of Canadian public finances is hidden from the people of Quebec and Canada, and that is the explosive problem of chronic and massive debt, a problem that is likely to stay with us for the next few years.

If I may, I will take the next few minutes to review our major objections to the budget, and therefore to Bill C-73. As I said earlier, the first of these budgets over the next three years will offload the federal government's deficit onto the backs of the provinces. For the government of Quebec alone, this represents over the next three years a shortfall of almost $3 billion. In addition, not content with cutting transfers, the federal government is still attempting, even though it can no longer afford to do so, to impose its view of things on the provincial governments and on the government of Quebec in particular by imposing standards in all the areas where it has made cuts and where it is going to continue to cut in the coming years. These areas would include health, post-secondary education and social assistance, as I mentioned.

Just as he did last year, the Minister of Finance again this year went after the unemployed. Over the next two years, he will cut $7.5 billion in the unemployment insurance fund. Out of this fund, to which the federal government no longer even contributes, he will take $7.5 billion. What is this if not an indirect tax, because only employers and employees contribute to this unemployment insurance fund. And for three years now, the federal government has been merrily dipping into this fund, although it should not be doing so.

I would remind you that $7.5 billion in cuts represents 120 times what is being asked of the banks over the coming years. They are being asked to cough up $100 million as an additional, temporary tax over the next two years. The government is laughing in our faces when they leave the banks intact in this cost-cutting exercise and ask the unemployed, who did not make a profit of $5 billion last year, to contribute $7.5 billion to social assistance programs. This is how this government defines social justice and fairness.

These cuts are part of a vision of economic and social development that does not correspond with Quebecers' view of society. I would remind the Secretary of State, who said earlier that everyone was happy with the budget, that that is not the case. In Quebec, 58 per cent of Quebecers have just said that they are against this budget, that they are not confident that this budget can even begin to bring about job creation. So he should check his polls and he should also verify elsewhere than in financial circles the reaction to this budget.

I would remind you that, in the last budget, this government had so few concerns regarding jobs and unemployment that, for the only program of any interest-the infrastructure program-, it found a way to cut $200 million from this fund which had been set aside for investment in infrastructures across Canada.

I would also remind you that, in terms of employment, more than 800,000 jobs still need to be created, with all the jobs we have lost since the big recession in the first quarter of 1990. For this government, unemployment is not a problem, as the Minister of Finance indicated in his budget speech, but jobs are not a priority either.

We oppose Bill C-73, since, as it stems from the budget, it does not directly attack the duplication that is costing taxpayers billions of dollars. Moreover, as we have said in recent weeks, this duplication and overlap will continue. Members opposite who say this is not the case should have a look at the budget and note that nothing has changed in terms of expenditures or tax revenues.

They should also look at all of the departments. Not one department has been cut. Not one. If duplication and overlap were being eliminated, departments would be cut, because expenditures are being cut, and 45,000 people are being laid off. Where is the big machine being restructured? It is not. It remains intact and will continue to generate billions of dollars in wastage paid for with the income and other taxes of Quebec and Canadian taxpayers. This is the fine way the Liberal government manages public finances.

We oppose Bill C-73, because the budget is silent on one serious problem in the Canadian tax system: the many tax inequities. The budget contains no tax reform that would allow for a reduction in government borrowing on the capital markets. It contains only taxation measures and measures that will perpetuate the wastage, as well.

The Minister of Finance is not going after the tens of thousands of companies that pay no income tax. We have been drawing this problem to his attention for months. We have been saying for months that some 70,000 profitable companies in Canada do not pay income tax. The minister has done nothing to correct this tax inequity, this preferential tax treatment given business.

Neither does the budget contain any provision concerning 16 tax conventions entered into between the federal government and countries considered as tax havens for hundreds of millions of unpaid corporate taxes. In the end, the budget offers only superficial changes aimed at hiding the $7 billion cut in transfers to the provinces.

For instance, while the government announces that it will make permanent cuts to the unemployment insurance program, it is increasing, on a temporary basis, for two years only, the capital tax imposed on banks, which will raise approximately $100 million. This represents a fortieth of the profits made by Canadian banks as a whole, in 1994-95. Imagine the fiscal effort required of banks. Imagine the fiscal effort required of the Royal Bank, for instance, which last year recorded profits of $1.2 billion.

As far as family trusts are concerned, we are told that the very rich who, in Canada, do not have to pay any capital gains tax, for a maximum period of 80 years, on assets worth hundreds of millions of dollars held in family trusts, will see their benefits diminish slightly.

In his budget speech, the finance minister told us: "Do not worry. We will eliminate the undue benefits available to the very rich in Canada". He gives them four years to dismantle their family trusts, put their wealth somewhere else, and ensure that for the next four years they will not pay their rightful share of federal tax. This is a reflection of the inability and lack of political will on the part of the federal government to close the tax loopholes which benefit very high income earners, and explains the financial predicament it is in.

We oppose Bill C-73, which is a spin-off from the budget, because Canada still operates its farming sector with a double standard. To compensate western farmers for abolishing the western grain transportation subsidy, which enriched Prairie farmers by $560 million, they offer a direct subsidy of $1.6 billion to offset the decline in land values.

When a ways and means motion was introduced last week concerning the Crow's Nest Pass agreement, it was a replay of the problem we had in 1982 when another Liberal government attempted to abolish the same agreement and to compensate western grain producers without compensating those in the east, in particular in Quebec. They want to base compensation to western producers on cultivated acreage, not on whether producers exported their grain in the past and even benefited from the Crow rate. They want to compensate all western producers based on cultivated acreage.

On top of the $1.6 billion, western farmers will receive another $1 billion in loan guarantees and $300 million specifically earmarked for diversification. They are subsidizing the diversification of western farm products outright. These products will directly compete with Quebec products and this is what makes no sense: that close to $3 billion, of which 25 per cent comes from Quebec, will be dedicated to the cause of diversifying the economy in the west, which will eventually impinge on Quebec's share of the market.

[An hon. member]

We should give ourselves a good swift kick in the behind.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

That is the idea. And that is what the federal government is doing when it cuts some advantages and compensates one part of the country more than it should in a budget, while another region must content itself not only with a neutral budgetary position but must also assume some budget cuts without any compensation, as has happened to it time and time again. For example, the 30 per cent cut in dairy subsidies will hit Quebec the hardest. Why the hardest? Since about 50 per cent of dairy products, including cheese, yogurt and ice cream, are processed in Quebec, a large proportion of dairy producers live in that province. So let me tell you that the federal government's $35 million cut to dairy subsidies over the next two years is hitting Quebec hard.

It could even be said that this is a special measure against Quebec and its dairy producers. Where is the compensation for this $35 million cut? Do you know what this represents, Madam Speaker? In Quebec, this represents dairy production losses of around $4,500 per farm on average. In ridings with many dairy farms, like my riding of Saint-Hyacinthe-Bagot, this represents losses of about $8,000 per farm.

With annual net revenues of $25,000 per farm at the end of the fiscal year, you can say that this federal measure without any compensation, unlike what is being done in Western Canada, reduces Quebec dairy farmers' net revenues by about 25 per cent to 30 per cent. That is the federal budget for you, and that is why we are opposing it, Madam Speaker.

[An hon. member]

Shame!

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Yes, it is a shame, because they tell us we must tighten our belts, while cutting $560 million in Western Canada but compensating by injecting $3 billion in that region. This does not make any sense.

We are also opposed to the proposed measures related to international aid. They are cutting the international aid budget by $532 million, thus placing Canada, which already ranked pretty low in terms of the assistance provided to the millions of children who starve to death every year, at the bottom of the list of donor countries. When I see that, despite Canada's tradition of compassion, the federal government is maintaining until 1997 the $1.5 billion in direct subsidies to business while

cutting by $532 million the budget to help reduce child mortality around the world, I find this simply revolting.

We oppose Bill C-73 resulting from the last budget because this budget forgets a fundamental consideration: the federal government's chronic debt problem.

With the national debt currently standing at $548 billion, the federal government is responsible for over 70 per cent of the public debt burden in Canada. In terms of the size of the overall public debt, the debt of all levels of government put together, Canada ranks first among G-7 countries. Not a very enviable position.

Just at the federal level, the debt is so huge that debt charges alone presently account for more than one third of the taxes paid by Quebecers and Canadians. In the case of Quebec, for example, this means that of the total amount paid by the people of Quebec in taxes of all sort, which is about $30 billion, $10 billion goes to pay debt charges, that is to say the interest on this huge debt.

The last budget does not provide any relief, none at all. To the point that, next year, the portion of the taxes paid by all the taxpayers in Quebec and Canada that will be required to service the debt, just to pay the interests on the federal debt, will be more than 37 per cent, or a 4 per cent increase in just one year. Before you know it, in four or five years, nearly half of the taxes paid by the taxpayers in Quebec and Canada will go to servicing the debt. If you extrapolate these figures, five or six years from now, the federal debt, which will have increased steadily since the Minister of Finance tabled this budget, will be between $750 and $800 billion.

If the federal debt is already a huge problem at $548 billion, you can imagine what a problem it will be at $800 billion. It will be a nightmare in terms of public financial management. It will be such a nightmare that the Minister of Finance tried-we can talk about the response of the financial markets-to do some window-dressing. He does not talk about the debt any more. He does not talk about it. But based on the assumptions and growth rates contained in his budget, you get this $800 billion figure. This is not a figment of our imagination: it is reality.

Similarly, using the Minister of Finance's own calculations and the same growth rates, we arrived at the following conclusion: in five years, the percentage will be 50 per cent. In other words, the proportion of tax revenues allocated to federal programs, including transfers to provinces and individuals, and the proportion used to pay the interest on the debt will be the same. One year later, the tax revenues used to pay the interest on the debt will be greater than those allocated to federal transfers to provinces and individuals.

In the private sector, if we had a product to sell and if interest costs related to that product were greater than its value, we would have declared bankruptcy a long time ago, we would have gone belly up as they say. That will happen in five or six years, and this is what the Minister of Finance tried to hide from Canadians and Quebecers.

There are two major reasons for this enormous, chronic and inescapable federal debt. First, the federal system is obsolete. It can no longer meet the challenges of the nineties and of the year 2000; it does nothing to help the country adjust to the new international economy by being productive and competitive, by having the best possible products and skilled workers, and by striving to provide humane conditions in this new competitive environment. Such support is greatly lacking in Canada right now, but we hope to find in Quebec.

The second main reason why we have such an enormous debt is what is called the structural deficit. We are not making that up: it is mentioned in the Minister of Finance's documents and it has been for about seven years in the documents released by his department. What do these documents say?

The Canadian economy does not generate enough jobs. Since the unemployment level for the next three years is expected to reach 9.5 per cent in Canada and about 12 per cent in Quebec, it is obvious that we have a problem here. The annual deficit and the debt increase are caused by the fact that the people who do not work do not pay taxes, which means a loss in tax revenues. This loss of revenues is reflected in the deficit and then in the debt. This is the structural component of our deficit and our debt.

What does it do? It creates a spiral: we have foregone tax revenues, a higher deficit, a steadily increasing debt, higher interest rates following incursion into the capital markets and foreign borrowing, investors demanding incentives because our debt in not under control, which means we pay more interest and our debt service costs are on the rise.

Our debt service costs are rising, which entails another increase in interest rates, the expected investments are not forthcoming and all the jobs that we were promised and that we need-we are 800,000 jobs short-will not be created. This is the structural component of our deficit and our debt, and it never changes.

Why? Because there is no major change to this structural component in what was tabled by the finance minister. It remains with all the duplications, overlapping, federal interference and, now that the federal government can no longer live beyond its means, it is reducing its vision to its means. It goes after the provinces, imposing national standards and pretending

to have the right to do so for ever and ever. That is what flexible federalism is all about.

For all these reasons, the official opposition will reject Bill C-73 at third reading. This bill to provide borrowing authority stems directly from the budget. We, and Quebecers with us, have enough reasons to reject this bill. I remind you that 58 per cent of Quebecers are against this budget. They are convinced that it undermines job creation and economic recovery and that it does nothing to solve the basic debt problem, as I just explained. Therefore, we will reject it.

I would like to send a message to my fellow Quebecers. I would like to ask them what they want for the years to come. Do they want to continue to live in a system which will at best make decisions they will not necessarily agree with, because the Bloc represents only 25 per cent of the votes in this Parliament? Twenty-five per cent of a board of trustees, that is not much.

Do they want to go on within a system which has nothing to do any more with the image we have of a government of the 90s and beyond, with how we have been been percieving our society for the last 30 years? An image that we have tried to fashion through various constitutional conferences, through various negotiations, through various submissions in the history of Quebec?

Quebecers have been very patient. One could hardly be more patient than we have been over the past 30 years, trying to change the system a little so as to better reflect a reality that we have wanted to see reflected since 1867, that is the reality of two founding nations with some kind of recognition of Quebecers' legitimate aspirations.

Finally, we have two choices. We can stay in a system that is sinking-a big boat that is taking in water on all sides-a system that neither the federal government nor English Canada want to reform. This system may be satisfactory for English Canada, but it cannot be satisfactory for Quebecers with their particular aspirations.

Do we want to stay in this system or seize the opportunity that is offered to us this year to leave it voluntarily, maintaining the peace of mind that has motivated us over the last seven years since the failure of the Meech Lake Accord?

Would it not be preferable to get out of this system in a democratic way and to envision a less morose future than what we have had for several years with a system that is continually slowing down and that is becoming a burden, a ball and chain for Quebec and Canada's economic advancement?

I would say that if my fellow citizens get out of this system, they must do so by ignoring the fear-mongering campaigns and also ignoring the distorted analyses based on dubious methodologies and often containing a web of untruth.

Last week-end, I had the opportunity to take a look at one of these truncated analyses, one that distorts reality. I am talking here about the analysis made by Mr. Marcel Côté, from SECOR, and contained in a book entitled Le rêve de la Terre promise ou le coût de l'indépendance . That gives me an opportunity to digress somewhat, using the distorted elements of this analysis. Mr. Côté presents 15 questions on sovereignty.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Speaker, I rise on a point of order. If the hon. member wishes to send a message to his constituents, he could probably use the post office or Statements by Members and not when commenting on a borrowing bill.

[The Acting Speaker (Mrs. Maheu)]

I am sorry but that is a point of debate.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I fully intend to prove that what I am saying is relevant to the budget.

I will not deal with all fifteen points raised and agreed by Mr. Côté. One is entitled to query these, however. I did select five which deserve a somewhat different treatment based on facts, on the truth, on genuine scientific methods and not on political bias and the kind of methods for which Mr. Côté is unique or occasionally, on a tissue of lies.

I will address point six in Mr. Côté's document.

Madam Speaker, since you asked the hon. member to sit down and show respect for the official opposition, I think he should show some respect for your decision as well.

Point six. Mr. Côté wonders what was the net benefit to Quebecers from the federal budget. You know what he said? Three billion. In other words, Quebecers get three billion more from the federal government than they contribute to the federal treasury. I say that is not true and is not borne out by the facts.

In 1991, when the Bélanger-Campeau Commission conducted its hearings, even André Raynauld, who is not known for his sovereignist views, concluded on the basis of a genuine analysis of public finances in Quebec and Canada that at the time, we were receiving more or less what we were paying to the federal government. In other words, the taxes we as Quebecers paid into the federal treasury and the transfer payments made by the federal government amounted to about the same, until 1988. Subsequently, we started getting less. And now, after the last two budgets and especially the last one, we see that, according to the experts where there used to be a surplus, there is now a deficit.

Take the Unemployment Insurance Fund. There is no surplus over what employers and employees in Quebec pay in to the fund. There is now a potential loss of $118 million. In other words, what the federal government pays in the form of unemployment insurance benefits in Quebec will be $118 million less than was contributed by Quebec employers and employees. The same applies to transfer payments. Mr. Côté is definitely out to lunch.

Federal transfer payments to Quebec were cut by 32 per cent for the three year period from 1994 to 1997. Therefore, in my opinion, Quebecers are currently in a deficit position when we compare the amount of taxes and income taxes that they pay to federal coffers with what the federal government spends and invests in the province of Quebec.

So, why did Mr. Côté say what he did? Do you know why? Because he took federal spending as a whole and divided it by the population. This methodology is not only dubious, it is also dishonest. As an economist, Mr. Côté has no right to make such a calculation. He does not have the right and, what makes it worse, he knows it. He knows, for example, that Quebec never gets one quarter of research and development spending or agricultural spending, and that, from 1984 to 1993, the federal government only spent 16 per cent of its total investments in Canada in the province of Quebec, although Quebec accounts for one quarter of the population. He knows this but it did not stop him from saying such rubbish.

I am happy to see that I have a few minutes more. I will go on to point 7. What does Mr. Côté say a sovereign Quebec could hope to save by eliminating overlap? No more than $500 million.

How did Mr. Côté arrive at his figures? I am going to let you in on it. I would like to say, though, that I am almost ashamed to tell you because it puts economists in such a bad light. He took 10 per cent of the federal government's operating budget, so 10 per cent of $18 billion is $1.8 billion, and he multiplied it by 25 per cent, which is the population of Quebec, and he got $500 million. Just imagine, Madam Speaker! I have never seen such an analysis, except the utterly preposterous one which the Royal Bank delivered during the Charlottetown debate, according to which almost one half of Canada's population would flee to the United States. Mr. Côté's calculations are not any better.

In 1991, the Bélanger-Campeau Commission, which used exact and scientific sector analysis methods, calculated that, for three items of expenditure alone, Quebec would save $800 million: $289 million in tax and income tax administration; $233 million in the communication and transportation sectors; $275 million in the job training sector (this figure was issued by Gil Rémillard and Marcel Bourbeau).

Using a ludicrous methodology, Mr. Côté says that we will be lucky if we save $500 million overall.

When we speak of duplication and overlap, we are not just speaking of administrative expenses. We are speaking of inconsistent policies, manpower policies that have the federal government going in one direction and the government of Quebec going in another, with the result that at a certain point no one knows what anyone else is doing and there is no more sustainable job creation. These are more of the costs of duplication and overlap.

The endless negotiations on regional development are another example of costly duplication and overlap. They go on for years and years, while entire regions are left hanging. This is the cost of duplication and overlap, not just ordinary administrative costs, especially according to the arbitrary and completely ridiculous method used by Mr. Côté.

Mr. Côté's eighth question was what percentage of the debt would Quebec inherit? He starts out by saying that it will be according to population, therefore 25 per cent. Why would we pay more than our share of the debt today? Why, when Quebecers are covering 23 per cent of the cost of servicing the debt now through the taxes they pay, would they take on 25 per cent the day after sovereignty? Here, already, Mr. Côté seems intent on artificially inflating the figures he is presenting. We are paying 23 per cent of the cost of servicing the debt at the present time and it is too much.

Why is it too much? Because our assets in Quebec do not justify our paying 23 per cent annually to help service the debt. And the Bélanger-Campeau Commission made it very clear, with three international observers who confirmed the commission's calculations. The proportion of assets in Quebec is 18.5 per cent, and it is therefore 18.5 per cent of the debt that the government of Quebec would inherit, with sovereignty.

So, why did Marcel Côté ignore this fact? Why did Mr. Côté, who has a degree in economy, choose to ignore a basic fact, unless he has forgotten what he learned in his economics classes, in which case he can no longer claim to be an economics expert or write books on the costs of sovereignty with titles such as Le rêve de la Terre promise .

One last thing. I would like, at this stage, to say that this man really talked through his hat. He does not know the first thing about the subject and it shows. Third, Mr. Côté wonders if Quebec dairy producers could continue to sell their products to Canada at twice the world price and expect to receive what amounts to several millions in subsidy from Canadian consumers every year.

Three things are incorrect in this short statement. First, it is incorrect to say that the price of dairy products in Canada and Quebec is twice the price on the international market. It is not true. Second, dairy production, which is subject to interprovincial distribution through quotas, is centred on processing milk to make cheese, yogurt, ice cream, mozzarella and what not. This is the part to which an act of Parliament and a federal milk subsidy apply.

If our products in Quebec were not competitive, if they were not competitive in price and quality, they would not sell on the Quebec market, they would not sell on the Ontarian market or even in some specific segments of the American market. They would not anywhere. The fact is that Quebec's milk production is quite competitive and if 50 per cent of all the industrial milk produced in Canada is currently produced in Quebec, it is because we have great producers in Quebec. We have the best, and I dare you to compare the productivity of Quebec milk producers with that of American producers.

What we have been presented with is basically a tissue of fabrications, as a scare tactic, and let me tell you that while cut-throat competition may have characterized international trade before 1947, it is no longer the case. It is no longer a free for all. There are specific rules, the GATT rules or the rules of the World Trade Organization. According to these rules, no GATT member, whether it is Canada, Quebec or the United States, regardless of its size or importance, can block the export of dairy or other products to its territory, for reasons of politics or resentment following a democratic vote by Quebecers in favour of sovereignty. So, Mr. Côté can go back to the drawing board.

As regards the issue being debated here, the official opposition will oppose Bill C-73, which provides borrowing authority to the government, since it is the direct consequence of the Minister of Finance's budget, which is fundamentally unacceptable.

[The Acting Speaker (Mrs. Maheu)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Sherbrooke-Stay in School Program.

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

Madam Speaker, it is a privilege and probably an honour to stand in the House and speak to this borrowing bill.

I have heard a number of comments from the Liberal side and also from the hon. Bloc people. During my speech I will point out that sometimes we in the west also feel that we are mistreated and we have some reasons to gripe about things.

By now we are probably all aware that Liberal governments of the past owned the patent on borrowing. It has become clear that they know how to borrow and they love to borrow.

My brother who is a medical doctor always tells me that when you have a problem with a patient and you cannot pinpoint what exactly his ailment is you should look back into the medical history of that person, a generation or two, and see what the family history tells of their previous problems. After looking at the Liberal government we start to realize that it has a borrowing problem, probably called spendingitis. It seems to be more or less the system that it used during the seventies and early eighties.

I would like to go back to a few comments on Liberal governments of the past so that we can put into context why we are having this problem.

When I came home from the Soviet Union in 1981, where I saw my $3.50 wheat was being sold for $20 a bushel to the citizens there so they could keep their livestock alive, it bothered me. What bothered me more was seeing in the local paper shortly after I got back that the Soviets were applying for credit from the western nations to a tune of $40 billion for a period of 30 years at 4 per cent.

I thought that sounded interesting. The Liberal government at that time in 1981 were trying to bring down inflation and we were saddled with 24 per cent interest rates in the farming community. I wondered how the Soviets could try to coerce us into borrowing money at that rate.

I thought it might be interesting to read through Hansard and see what really happened with that request. This is what I found. This is the hon. member for Winnipeg-Assiniboia speaking on Bill C-130, an act to authorize continual financial assistance to be provided to certain international financial institutions. This is from Hansard , so it is recorded in history and will probably stay there for all time. It states: ``I have considerable experience with CIDA and foreign aid going back to 1975 when the Liberal government tried to conceal information regarding loans to Cuba. It provided public information that the loans were being made at an interest rate of 6 per cent and higher.

However, I obtained internal documents which showed that it was concealing the interest rate being charged on loans to Cuba which was zero and 3 per cent. Also we are well aware of the low interest rate loans to the Russians for the building of a gas pipeline.

The Liberal government is borrowing money at 17 and 18 per cent and lending it to the Russians at 12 per cent. This is a great loss to the Canadian people. In addition loans are being made for the building of statues in other countries.

In 1975 I presented a motion to the Standing Committee on External Affairs and and National Defence calling for a full scale investigation into foreign aid. I did this because of all the secret documentation which had come into my hands with regard to hidden loans, hidden percentages with regard to Cuba. This of course was defeated by the Liberal members on the committee. The last thing they wanted was an investigation into CIDA. I certainly commend you, Mr. Speaker, because you were the lone Liberal to vote with the Conservatives in the committee calling for a full scale investigation into CIDA".

Does that not remind us all of what we have been hearing in the House the last while? Spend more, borrow more, try to justify it by covering it up a bit.

When I hear the Bloc members today complaining about the bad treatment they have had in the east, I would like to remind them that during the Liberal regime of the seventies, which was called the just society, we very quickly learned in the west that it meant just the east, not the west. One hundred billion dollars of national energy money was siphoned from the west into the east. If that is mistreating the east, I cannot really say where that theory came from.

Not only was the Liberal government not too concerned about the west, but to give us a goodbye it aimed its guns at the Crow and killed it dead. However it felt a little regret so it gave us the WGTA, which I consider as the Liberal vulture of this century. What did this Liberal vulture do for us? It gave us subsidies that guaranteed railways a return on investment and also a return on operations, no matter how efficient they were. That is why today we have strikes like the one presently going on.

During this era the railways siphoned off $7 billion in subsidies. These subsidies did not go into the pockets of farmers. They probably went toward purchasing rail lines in the U.S. Today they own more track in the U.S. than they do in Canada. The CN and the CP can deliver grain on their tracks all the way to Mexico.

The WGTA allowed the railways to enter into contracts with its workers where after eight years of work for the railway there was a lifetime guarantee of a job and pay. I wonder where the farmer has been considered and where these subsidies have gone.

During all these years of Liberal and Conservative governments, we borrowed and borrowed. That is what we are debating again today. As farmers in the west we had to contend with the dusty red grain beetle. Today another insect has entered our grain bins. I want to call it the red book worm.

This red book worm is not just eating up the grain, it has taken our bins, our machinery and our land. How we are going to exterminate it, I do not know. I do know we have to put up with it for at least another three years.

In 1984 when the Liberals turned their patent on borrowing over to the Conservatives, the national debt was $200 billion. During the nine years of Conservative government, it was increased to $450 billion.

It is interesting. I do not think the Liberal members in the House did too bad at that time. For their troubles and their efforts in the House, they somehow continued to build up MP pensions which today are worth $120 million, according to the National Citizens' Coalition.

Is it any wonder that we have to borrow and borrow instead of paying some back? It makes me wonder when the taxpayer is finally going to stand up and say: "This is enough". We heard quite a bit of that recently. Maybe it is sometimes wise to let a symptom grow until it finally busts a vein or kills the whole system. That is probably what we will experience in the next Parliament.

Last session this Parliament was controlled by a party that can now get into a Honda Civic. Soon we may have another one that only needs a table for one. It is almost enlightening to witness that.

During 1993 we in the west heard so much about this tremendous Liberal machine, this red book machine that was going to change things around just like the Mulroney government was going to do. The Liberals claimed they had the people, they had the plan: jobs, jobs, jobs. I wonder what those at the research station in Morden say after losing 40 per cent of their jobs and PSAC losing 45,000. The plan got sidetracked a little bit.

The Liberal ticket in 1993 was to jump on board; get on the Liberal train. "This is the train that is going to board at the land of opportunity and take you to the promised land of milk and honey," as the Quebec members would say. After two budgets, I think we should rename the train the Liberal train to ruination. Board at Fantasyland; pass through Hooterville and Never Never Land; final destination: Poverty Point, the land without milk, bread or money.

I had the pleasant experience of getting a phone call just before the break from the Manitoba dairy farmers and milk producers. They wanted to talk to me all of a sudden. During the election all I heard was to vote everything else but Reform. All of a sudden, these people wanted to talk to me.

I made the effort and said I would talk. I appreciate visiting. I asked them what was the concern. They said that during the election they heard the Liberals promising how they would

protect article XI and how they would support the dairy farmer, and how they would make this thing as golden as they could for all the dairy producers. I was told that the Liberal dairy policy kicked the farmer's milk bucket over into the gutter.

They have lost 30 per cent of their subsidies. That is protecting the dairy farmer. They told me I had warned them that subsidies would have go to, that they would have to go tariffication. It makes me feel pretty good that once in a while I do seem to side with the right people. It is not very often when you are a farmer, but in this instance I was right.

What the dairymen told me was astounding. They said they did not mind losing 30 per cent of their subsidies but the Liberal dairy policy took its dirty ugly tail and hit them another swipe right in the eyes. The Liberals did away with the funding for the genetic recording and milk allocation programs, while the United States increased the program by $600 million. This is the level playing ground that the Liberals are giving to the dairy policy.

I can assure you I think these people will make an x twice before the Liberals in the next election, striking out the name and not voting for it.

[Rex Crawford, Liberal, Kent, ON]

Never.

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

We will see. I think there will be some changes made. Who knows what can happen?

I would like to clear up a few misconceptions this afternoon-if I have the time but it could take more than I have-that farmers have been getting all these transportation subsidies. I have learned a few things since I have come to sit on the transportation committee. I hope the hon. members from Quebec are listening.

I really love Thunder Bay port because while I was farming, every time I turned on the combine it went on strike. You can see my love for that nice little port. In testimony before us at Thunder Bay, as the witnesses came before us, I was astounded I had never heard about some of these things.

Do you know that a pilot who gets on a ship at Montreal and takes that ship through the locks and the lakes up to Thunder Bay charges just approximately $2.65 a tonne for his services? This is 15 per cent of the total freight cost from Thunder Bay to northern Europe. These pilots-I call them pirates, not pilots-charge a range of from $3,800 to $5,000 a day. That is where grain transportation subsidies are going. No farmer, no manufacturer, no producer or processor ever can expect wages like that. That is not the whole side of that story.

This pilot association is run by a federal crown corporation which over the last 20 years has cost the taxpayer $50 million. This year, that corporation is going to be in debt to the tune of $5 to $7 million. Are you surprised why we have to continue borrowing? This borrowing disease, this spending-itis is going to bankrupt this country one of these days. I am wondering what labour unions will say then.

Another few interesting facts I found out, usually when we talk of $500 million in transportation subsidies to farmers, that is all somewhere in the farmer's pocket or bankbook. I will throw in a few more figures and tell you what fair treatment we do get by some of our terminals.

In Thunder Bay, Cargill Grain pays $1.002 million in property taxes. A couple of hundred kilometres down the road at Duluth, $64,000 is paid. Then we wonder why farmers are looking south of the border to try to move some grain.

I will give some stats I received at these hearings. They are based on tonnages of storage and property tax per tonne. At Vancouver it costs $6.27 per tonne of storage for property taxes. At Thunder Bay it costs $8.03 per tonne of storage for a terminal. At Duluth it costs the American farmer 27 cents. AGP, Inc., another grain terminal, is paying 15 cents. And we as farmers are being accused of taking subsidies. These subsidies are going to taxes that have been developed by overspending, mismanagement and corruption.

I want to tell the Liberal members from the west coast when the transport minister talks of becoming a market economy and becoming more efficient, the farmers with some government help did build the Prince Rupert high throughput elevator so that we could move grain faster. But what has happened there? Because we can move it faster than Vancouver, we are not paying $6.27 per tonne. We are paying $16.43 per tonne for property taxes. Now tell me, how do you think the producer can stay alive with those types of inconsistencies and discrimination?

The story does not end at Thunder Bay. Manitoba Pool Elevators testified and pointed out that for the same type of operation in Thunder Bay, it also paid $110,196 in corporation taxes. In British Columbia $18,615 was paid for the same amount of operations.

After hearing these figures when the labour unions came before us I could hardly sit still. I told those gentlemen that I knew a lot of times we in the west were being downtrodden but I never thought it was that bad. I said that when I went home I would tell every grain farmer not to ship one more bushel of grain through Thunder Bay because I am fed up with it. If I have to, I will take every bushel of grain to Churchill by dogsled before I will ship a bushel to Thunder Bay. Something people have to start realizing is that things have to change or there will be no producers left.

If they want to realize why we have to borrow because of this WGTA, which I called the vulture, in testimony before the standing committee on agriculture Ted Allen said that they have not rationalized the rail system or the elevator system in a very significant way or as significantly as they should have for about

10 years because the Western Grain Transportation Act encouraged them not to make those changes.

Now we have a system that is 10 years behind the American system. This Liberal government is throwing the whole mess on the farmers' backs saying: "Fix it. We got you into the mess. Here it is. Help yourselves". It astounds me that politicians cannot see that if they do not have producers or manufacturers they do not need a rail system. One of these days we will smarten up and realize that.

How inefficient is this system? I would like to read a few statements made by Ted Allen. Last summer he said: "We moved two vessels seven times to different terminals for a load of barley. It took a long time. Every time one of these vessels moved one way, it cost $18,000". Now you are trying to tell me that is the farmers' way of doing business?

A 25,000 tonne vessel went to Mexico in November 1994 on which there was loaded 9,000 tonnes of No. 1 Red, 5,000 tonnes of No. 2 Red and the balance, less than half, was No. 3 Red. Who do you think paid for that? The western farmer.

This government tries to tell us that Mexico is dictating to us telling us to take the subsidies off grain transportation or it will not buy. Something is wrong in this country when a government that has a $2.5 billion trade surplus with us tells us what we have to do.

I have raised four children and four grandsons. When I see my wife giving an equal number of crayons to the youngsters to play with and one of them says: "My colour is not right, I want yours," and the other child does not ask for one in return, very soon one of the kids is without crayons. That is exactly what has happened to our agriculture policy. Everybody has taken our crayons and now we have nothing left to colour with. It is sad but it is a fact.

There are a few other statements I would like to read. I was pleased last December when the transport minister acknowledged that labour on the Canadian railways was 64 per cent as efficient as the U.S. We were losing about 40 per cent efficiency in the labour force on the train system.

Using simple mathematics, I have used 50 per cent, giving them the benefit of the doubt. If 50 per cent of the labour costs are wasted, out of the 22 million tonnes of grain we export and the $10 million we ship internally farmers lose $220 million. That sounds as if the farmers are getting rich on transportation subsidies.

Not only that, there is good reason to wonder why the grain elevator system tariffs are as high as they are. When we compare the results of shipping through the U.S. on terminal and primary elevator tariffs, we lose roughly another $360 million. There is over $500 million gone right there. Where are farmers putting the money into their pockets? I hope someday we become honest enough to look at these problems and address them so we can resolve them.

It is always encouraging to see some people trying to solve these problems. I am impressed with some of the statements we have heard from members on the opposite side. I think if they would really buckle down and do what they are saying, a lot of things would get resolved.

Verbal agreements or promotions of some things are not as good as the real thing. I was not surprised by some of the statistics in the papers when Team Canada went off to Europe. It was to really promote some industries and get some extra business for this country.

I could not believe some of the results that came back from that meeting. I had been talking in the House about the agriculture subsidies, the boneless beef coming into Canada and how the GATT had more or less set quotas of 75,000 tonnes. Then I saw the trade minister in Australia and New Zealand promoting more offshore beef into this country while we were being told at the same time to diversify by increasing beef and pork production.

I have seen them over import 30-some thousand tonnes of boneless beef which was more than the GATT organizations had set for a quota; 30,000 tonnes went straight from Canada into the U.S. It reminds me very much of the cap that was put on our wheat because of our wheat board and grain companies dumping grain.

The problem here again is that Australia and New Zealand have a $300 million trade surplus with us. We are borrowing this money. What are we paying for interest? What is it costing us for jobs? Five jobs are lost for every boner cow exported to the U.S. instead of doing it ourselves. Is this job creation?

It really took the cake when Xcan, which I imagine was a member of the Team Canada approach, went to China and probably started looking at investment opportunities. There was a news release on March 2. This astounds me: "Pools pull out of China project".

The three prairie wheat pools have decided to drop out of a malting barley plant development in China. The pools, along with the ITI world investment group, were negotiating with the Chinese to build a $58.8 million malting plant in Quingdao, China. Barley would be sourced in Canada and Chinese beer would be brought back into this country. That is diversification. That is the type of support we get from our own agriculture community. Where do we go next?

I would like to dwell for a few minutes on an issue that has been very near and dear to my heart, the inquiry I asked the justice minister to make into the dumping of Canadian wheat into the U.S. I provided the facts I had from farmers who had taken samples and had given me the information. I acquired the documents from the U.S. customs people on what had happened. When I found out that $3.50 a bushel of wheat was being exported into the U.S. by Sask-Pool at $2.02 to $2.05, I could not believe it. For every bushel of grain that we are exporting at

that price into the U.S. we are hurting our own economy because we are losing millions of dollars that could be running our country and promoting more industry.

When this hit the news the co-operator phoned Lorne Hehn, the chief commissioner for the Canadian Wheat Board. Mr. Hehn said: "Sales of 1992 wheat to American companies could have lowered prices or plugged individual elevators, but I don't believe our sales into those areas really impacted on the price in a negative way". One can dump grain at lower prices and plug elevators and it is still not impacting in a negative way. This is his reason: "We were very careful about that factor. Prices for feed wheat rose during the year, while large Canadian sales were being made so that proves that price pressure was not there".

When in an up market we can dump grain into the U.S. at half price and the market continues to go up, how is that helping our country? Can members see why American farmers are furious? I do not blame them one bit. It is unbelievable but those are the words of Mr. Hehn.

What do we do about it? I have waited for two months now to see what is going to happen and so far nothing has happened. I made a challenge under that news release on behalf of the pasta producers in western Canada. They came to see me around the middle of November, claiming this heavily subsidized pasta from Italy was coming into our country and they could not afford to process at that price any more.

When I showed my facts and figures to the prairie pools which were a little upset about my claims, I do not know what happened. They all of a sudden sat back and had no answers. This is what is happening in our pasta industry today.

We sell durum wheat to the Americans for the pasta industry. We sell it to the Italians. The Americans bring back into this country on a yearly basis about 40.896 million kilograms of pasta for a value of $84 million. This pasta is costing us about $2 per kilogram. The Italians ship in 17 million kilograms of pasta at $19 million, about half the price the Americans are putting their pasta into this country for.

I asked representatives at the prairie pools if they could explain how we can sell durum wheat to Italy, ship it over there, have it manufactured and bring it back into this country for half the price. It is not subsidized. They just shook their heads and said they have no explanation.

Do we know what that means in Canadian dollars? I wish somebody would figure it out. Italy has a $982 million trade surplus with Canada. We are borrowing almost a billion dollars to have the Italians process pasta and then ship it back into our country and we pay the interest. That is supposed to build a country? That is supposed to help us diversify? I wonder how. I hope somebody can explain that to me.

We have heard so much about R and D, about where the money is really coming from. The Reform Party has said time and time again that R and D is one of the most important things and we will never cut that back.

Here is a statement a Liberal member made in Manitoba. I feel these people do have a grip on things but they are afraid to stand up for what they believe in. The government member needs to focus on the fact that dollars spent on research and development are returned 10:1 in the livestock field and 40:1 in grain. He said currently only 17 per cent of government spending on agriculture goes to R and D. What an enlightening statement from an hon. Liberal member.

I will point out what the government has done for R and D. While a budget background document cites a 11 per cent cut to agriculture research, almost half the total, 2,069, job cuts came in research; 779 research scientists will retire or join the UI fleet; 138 vacancies will not be filled. While the white coats may have been hit hard by the budget, the white collars survived relatively unscathed; 149 full time positions were removed from the corporate services. The fat in Ottawa continues while people in the rest of the country get cut.

I encourage members to not only stand up and make comments but provide action. History will record it, no matter how we joke about it. When I read in Hansard about what took place in the 1970s and 1980s, it is there forever, and that is exactly what is going to happen here.

[The Acting Speaker (Mrs. Maheu)]

I wish to remind the House that we are now starting the five hours of debate. Each speaker will have 20 minutes followed by a 10 minute period for questions and comments.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, I will be sharing my time with my hon. colleague for Waterloo. I have been listening to my fellow colleagues from the Bloc and the Reform. I felt very depressed when they talked about history and all the things that have gone wrong in the country.

The reality is we have a very good and very strong country with a bright future. It is five years before the 21st century and it

is time to focus on how we need to change. We have had a good history together but there are things that have to change in the country. That is what the budget and the borrowing authority are linked together to do.

My colleagues have possibly missed the real point of the budget. I became involved in politics and came to the House for some of the very fundamental reasons we are discussing today. I was very concerned about where our country was going economically.

I can see where we have overborrowed and where we have made lots of mistakes. We made genuine mistakes because we wanted to do the right things. In some ways they went askew but we are learning the process of government. The budget is an attempt to address how we will change. I would like to deal with the basic concept of how the budget is about change and about a new future for Canada.

I took the time to go to my riding where I conducted a number of tax forums with the professional community and lay people. While there were some exceptions to parts of the budget, they were all very supportive. They said that it was about time a government had taken leadership to try to move us away from our debt and deficit problems to a new tomorrow. The younger generations were concerned that they would never have better incomes or a better way of life than their parents. These negative aspects existed prior to the budget. The country feels a lot better today because of the actions of the Minister of Finance.

In what ways are we changing? We could talk about the history of the country which is good. I am a great believer in history. The lessons of the past teach us a lot about the future. Also some of the things we did in the past have not worked very well.

Basically the budget is about seeing government a little differently than we possibly have in the past. We see government today as being a referee of the country, a referee between business groups and individuals, making certain that people disenfranchised by the system become part of the system and making certain that the wealthy do not abuse their power. Some things in the budget try to strike a path toward the 21st century in which all Canadians can share.

How is the budget different? I do not remember a government bringing in a budget like the one for this fiscal year which was $2 billion lower than projected. I do not remember that in my lifetime. We have developed a whole culture of assuming that every time a government brings down a budget it will overshoot it. The government did just the reverse and the people of Canada are happy about it.

How are some of the things we have done in the past being addressed in the budget? We have a bloated civil service. It is not the fault of people in the civil service. Nor is it the fault of anyone in particular. It just happened. It happened in all other governmental administrations in the western world.

Technology has caught up to Canada. Sometimes it caught up with us a lot faster than we wanted it to. In some ways people are having problems with job security because the country is being pushed into a technological framework with which we have to deal. It is global. It not only affects Canada. It affects all countries of the world. We will either be part of it or we will be washed up on the shores of disaster by not taking it into account.

We need to restructure the civil service in fundamental ways. Not only do we need to reduce some of the numbers within the civil service. We need to do it equitably as well.

There is a human side to the downsizing buzzword. There are real people involved. The government is committed to finding approaches to retraining and to finding new entrepreneurial skills so people will be able to share in the massive expansion of our labour market which saw over 422,000 new jobs created last year.

By restructuring the civil service we are also talking about a new way of government. We want the civil service to be more responsive to the needs and the desires not only of government but of the people generally. It should be responsive to the needs of the community. We need more quantifiable measurement tools to remunerate people and progress them based on their success. This is healthy for government and for the civil service because it gives them a future and it gives them a challenge. After all, that is what most human animals really want.

What other areas do we need to change? The government has come to the conclusion that it cannot be an interventionist in the economy any more. In past times it has worked; new industries and so forth have been created. Today we simply cannot afford it and it has not been very efficient. I think governments are realizing that business can run business a lot better than they can. That does not mean we give a total licence to business. It means that we temper it and recognize the rights of citizens. At the same time we realize that governments should simply govern and business should do business.

How is this affected by the last budget? Clearly privatization of CN is one such aspect. Another one is the possible sell off of Petro-Canada. In a number of other areas the government will gradually withdraw and allow the private sector to make up the difference. It is good for the economy and it is good for the taxpayers of Canada.

That came through loud and clear before the budget, indeed in the last two or three years. Canadians feel overtaxed. They do not think they are getting value for their tax dollars. They want us to be more efficient. That is what the budget was all about.

We are downsizing. We are also cutting out subsidies to industry. Different types of people are living off the governmental system. One is industry living on subsidies and getting grants. These things will be curtailed. Most people in the

business community recognize that it is no way to run a business.

I referred to subsidies. We talked about rail subsidies with which I will deal in a minute. There are also grain subsidies. The first intentions of a subsidy program are usually good. We want to encourage some kind of action. Unfortunately what invariably happens-and history has told us-is that it becomes a dependency. It distorts trade.

We have heard from many members about grain travelling all the way to Thunder Bay when it is on its way to California from Regina. These are some of the ridiculous aspects of subsidization. We need to create value added products in Canada and I believe by reducing subsidies we will do just that.

Industrial milk production is another area that will be curtailed by subsidy programs. We need to become more competitive. GATT has told us that we will have to be part of an international marketplace. Gradually reducing tariffs is a way to make the Canadian economy much more efficient.

The rail industry is on our mind these days. Much like government it has some prehistoric systems within its employment structure. Some of the contracts entered into hearken back over 100 years to a guild system. I understand there are still blacksmiths in some machine shops in Toronto. We pay people to be blacksmiths even though the whole industry has disappeared. We must revisit the contracts that people have with the government through crown corporations. We cannot let job security ruin the security of the whole country.

We have to revisit these matters. We have to retool the country. We have to make it whole again. That is what the budget was all about. It was positive in terms of change for Canada and for the people of Canada.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Madam Speaker, I listened with great interest to my colleague from the government party. It is quite surprising since on the front page of this morning's Le Droit , a veteran of this party is described as a lion that turned into a mouse.

How things change. When the hon. member for Glengarry-Prescott-Russell sat on this side, he was a member of the so-called "rat pack". He was a very dedicated member, especially for his constituents, including the many farmers in his riding. The article says that the hon. member "was uncompromising on agricultural issues, denouncing all the measures likely to affect the farmers making up a large part of his constituency. Today he never opens his mouth".

My colleague from the Liberal Party has 1,001 good things to say about the budget tabled a few weeks ago, for which we now have to provide borrowing authority. He is currently sitting on the government side. In four or eight years at the most, he will find himself on this side of the House, or elsewhere looking for employment. However, with some members of his party finding themselves again on the opposition side, he will rediscover his old rhetoric as a member of the opposition. I ask him whether he is really sincere in listing all the good things about the budget?

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, the hon. member of Glengarry-Prescott-Russell is still very much a lion in the House. I have heard him at various times assaulting the policies of the member's party and I think he does it quite well.

Talking about absenteeism, we have in our minds how much space we will have on this side of the House at the end of June. We are certainly looking forward to it. I could certainly use a lot more space when I conduct my business. I would be happy to observe that when we come back.

It is a borrowing bill. I would be happy to stand in the House some year when there is no borrowing bill. That is where the budget is taking the country. It will reduce the need to borrow on the market and hopefully get the country in the position where it can actually calculate surpluses.

That is what this is all about. I am sorry if my colleague has missed that.

[Andrew Telegdi, Liberal, Waterloo, ON]

Madam Speaker, I am pleased to have the opportunity to speak in favour of Bill C-73 and to express my thoughts on the budget delivered by the finance minister on February 27.

I will make a short response to the comments made by the Bloc Quebecois and the Reform Party in debate. It is worth recalling the climate or the mood in the country before the budget was brought down on February 27 and the political instability posed by the possibility of Quebec separation, which continues to be a problem.

The BQ complains that we cut too much and that we singled out Quebec for the cuts. The Reform Party claims we did not cut enough and that we were unfair to western Canada. If Bob Rae, the New Democratic premier of Ontario, had his say, he would tell us the budget was unfair to Ontario.

These three groups were disappointed by what happened in the budget. The BQ is disappointed because the budget is no help to it in the upcoming referendum, where it will destroy Canada as we know it, as well as the economy of Quebec. The Reform Party found that its tax revolt did not materialize. The Reform Party has been doing its best to add a couple of percentage points

to borrowing costs by forever preaching that our fiscal situation is not sound. As for Bob Rae, he is also disappointed because he does not have a launching pad for the election in Ontario.

The finance minister is putting Canada's fiscal house in order. The budget outlines concrete measures for real deficit reduction and fulfils commitments made by the Liberal Party during the election campaign. The government had to make difficult decisions in the budget process. The Kitchener-Waterloo Record from my community said the budget showed how tough it is to eliminate the deficit. The budget is tough but it is also fair. Everyone must share the burden of deficit reduction.

The Minister of Finance has worked hard to ensure that spending reductions are balanced evenly in all regions. The government's deficit targets are reasonable and achievable. The Reform Party should learn from the lessons of previous governments. We cannot balance the budget with unrealistic deficit targets.

Over the last few months I have spoken to many constituents about what they wanted in the budget. They wanted the government to reduce the deficit through spending cuts and not through tax increases to the average citizen; do not tax health or dental plan benefits; do not tax RRSP contributions; increase taxes on large and profitable corporations; make the public service more efficient and effective; eliminate the waste of hard earned tax dollars.

The budget shows the government has listened to the concerns of ordinary citizens. The Minister of Finance has focused his efforts on spending cuts. He recognizes the heavy tax burden borne by average Canadians. The minister has not raised personal income tax rates and has not taxed health or dental plan benefits. For most Canadians the RRSP contribution limit has not changed. The budget also makes taxation more equitable. Large corporations will pay their fair share of taxes. The profitable banks will pay a new temporary tax. The taxation of family trusts will be tightened. Individuals will no longer be able to defer tax on business or professional income.

The Minister of Finance has also made a commitment to reduce the size of government and eliminate unnecessary expenditures. The minister has said a basic philosophy of program review was the federal government should not be doing what someone else can do better.

I urge the government to stop the military's rip off of taxpayers' dollars by inefficient management of government moves. The government should implement its own reports and contract out move management, as was recommended by so many of the government's committees.

The government has consolidated its transfers to the provinces for health, post-secondary education and social assistance. The new Canada social transfers will be more effective and more sustainable than the old program funding. The CST will mean a drop of about 3 per cent of provincial revenues. However, it will also give the provinces more flexibility to structure and innovate their social programs.

This small change in funding to the provinces will not affect medicare. The federal government will still enforce national standards for health care. Medicare will continue to be universal, comprehensive, portable and accessible.

The government has protected the average senior citizen with full indexation to protect them from inflation and old age security on the basis of family income.

Education is an important concern to my constituents. The riding of Waterloo includes the campus of Conestoga College and two of Canada's leading universities, the University of Waterloo and Wilfrid Laurier University. The concentration of post-secondary students in the Waterloo region is the highest in the country.

Post-secondary institutions have played a crucial role in my community's economy. The residence of the Waterloo riding are proud of Canada's record of excellence in post-secondary education. They also know our education system must continue to develop in order to meet the challenges of the next century.

I am pleased the government has reaffirmed its commitment to our internationally renowned system of higher education. We need to ensure our post-secondary institutions are accessible to our youth who must compete in the international marketplace. We must maintain accessibility through the income contingent loan repayment scheme.

The University of Waterloo and Wilfrid Laurier University are renowned for excellence in research. Because of their efforts the Waterloo area has become a breeding ground for entrepreneurs and information technology.

Waterloo riding is home to 125 export oriented information technology companies. These companies have revenues of more than $600 million annually and employ 5,500 people in knowledge based jobs. By the year 2000 they project that 25,000 to 30,000 people in the Waterloo region will be working in the area of information technology.

It is imperative when we talk about wealth generation that we recognize our post-secondary institutions are vital to this effort. The government must make a strategic long term investment in wealth creation through research funding. The government has worked hard to limit the cuts to research and development. This is not enough. I encourage the Minister of Finance to do everything possible in these difficult times to continue to fund vital research that will help us compete in the next century.

My constituents and all Canadians demanded a fair and equitable budget. This is what the government has delivered.

There is an area in the budget on which I must express a bit of personal disappointment, the budget of the Solicitor General. That is one area which was not cut. There was a slight increase.

I am concerned that there is more and more push in the climate of the House for longer sentences and putting more people in jail. This is a waste of resources. It costs much more to keep somebody in a federal penitentiary than to put somebody through a Ph.D. program. There are far too many people serving time in jail for non-violent crimes.

There are much better ways of dealing with that. I hope in this session we will start working toward that and start implementing some programs we have talked about in the House such as crime prevention and community safety. We know every dollar we spend on prevention results in savings of $5 to $6 at the end of the line and we are not wasting the money on penitentiaries.

Last year Canada once again was declared the best country in the world in which to live. The job we in the House have, not just the Liberals but all parties, is to make sure Canadians from coast to coast and in every province enjoy that kind of lifestyle in the future.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Madam Speaker, I listened carefully to the remarks of my colleague. I will especially dwell on his two or three first sentences. He said without any distinction that the current instability in Canada was the result of the actions of the Bloc Quebecois here, in this House. I am sorry but I think that all the Bloc Quebecois has done since its advent has been to inform Canadians of the position they are really in.

I say that the political instability in Canada only reflects the situation of the federal system. I do not want to address again here all the issues that we raised, but I will simply go back to the theme of the debt.

The debt has become so huge that the federal government is forced to borrow overseas to meet its commitments. It is as if one of my constituents visited his or her bank manager each and every year to ask for a loan to be able to keep afloat and assume his or her family obligations.

The instability also stems from the written word, from the daily newspaper reports.

Instability was created, in January 1995, when the Wall Street Journal , New York's main financial newspaper which investors from all over the world refer to, compared Canada to a third world country. It openly evoked the possibility that Canada could go bankrupt. The Bloc Quebecois did not bring Canada to that level. No.

My question is this: It is easy to see that, due to the budget, Canadians are now taxed more, $2.2 billion more. One cannot deny that, or that cuts of $13.4 billion will be made over two years. This is not the work of the Bloc Quebecois. Cuts will be made, but not in the right places.

The government also offloaded some expenditures onto the provinces, so it taxed, cut and transferred other things, raising the debt by 17.4 per cent over three years. So much for putting our financial house in order according to the current government. Is this the direction in which the federalism will go? If so, the solution we have in Quebec is to become sovereign.

[Andrew Telegdi, Liberal, Waterloo, ON]

Madam Speaker, I want to thank my hon. friend for his question. There is no question there is instability when we are talking about the political liability of Canada.

Let me refer to something which appeared in the Globe and Mail today: ``Quebec's economy would collapse like a house of cards after a yes vote in the referendum, and Canada's would not fare much better, a respected economist predicts in a new book. Marcel Côté, a senior partner with Groupe Sécor and a former economic adviser to Canadian Prime Ministers and Quebec premiers, writes that a sovereign Quebec would be pummelled by an unprecedented convergence of negative economic factors''. Of course it would not help Canada either.

We have some negative forces, one being separation. It hurts the average citizen who tries to borrow money. It hurts government but it hurts the person who has a $100,000 mortgage and has to pay a higher premium. It is not assisted any by the Reform Party which is trying to say our economy is unstable.

We are not a third world country. The member is gravely misinformed if he believes we are. We are a country that was judged by the United Nations for the second time as the best country in the world in which to live. That is what Canada is.

[Michel Gauthier, Bloc, Roberval, QC]

Madam Speaker, one thing we have to realize, when we talk about a bill to provide borrowing authority to the government, is that the borrowed money will be used to implement the measures announced in the government's budget. So, you will understand why most of my comments will focus on the budget that was tabled in this House by the finance minister and that has been the topic of a lot of our discussions these last few weeks. It is important to demystify a few things, because Canadians no longer know what to think about the budget that was tabled.

First, I want to make my position very clear: The Minister of Finance has not reduced the annual deficit enough to deal with the public debt. I will elaborate on this a little later on. In order to reduce the annual deficit, the finance minister offloaded the federal expenditures onto the provinces, which does not do a thing to improve the debt situation of the Canadian people.

Thirdly, the Minister of Finance and the Liberal government have cut federal expenditures, but for the most part, they did not cut in the right place. I will show in which areas the members of the Bloc Quebecois, the official opposition, would have liked the government and the finance minister to cut.

Lastly, the Minister of Finance missed a really good opportunity not to increase the tax revenues from large corporations in a way that would have protected the average citizens, the middle class and the underprivileged in our society who, unfortunately, have always borne the brunt of the decisions made by the various finance ministers over the years.

Let us go back to the deficit issue. I said earlier that we think the Minister of Finance did not reduce the deficit enough. If we use the federal finance minister's own figures, we can see that, by the year 2000, Canada's total debt, including the present debt and the annual deficits forecast by the minister, will have reached a staggering $800 billion.

It must be understood that this $800 billion represents an increase compared to the recent estimate of the debt at $300 billion. So an extra $300 billion will be added to the debt between now and the year 2000, plus annual interest payments of, say, 8 per cent on this $300 billion, which is a rather conservative assumption.

It is not difficult to understand why anybody in Canada and elsewhere in the world-my colleague from Chicoutimi mentioned the Wall Street Journal a while ago-who watches closely what is going on on the public scene can see that, under the existing structure, Canada's uncontrolled and almost uncontrollable debt will become such a heavy burden that it will gobble up most of the money we hope will be generated by economic growth, money that would normally be used to create jobs, to stimulate research and development, to promote economic development and to provide services to Canadians. According to the finance minister's own figures, the federal debt will reach $800 billion, which is beyond comprehension at this point in time. So that is one problem.

Interestingly enough, the Minister of Finance did manage to reduce to $25 billion an astronomical deficit of some $38 or $40 billion. That target is commendable and worthwhile. Yes, this is interesting; and no, it is not an easy task. But he may have been prevented from doing even better by the sheer weight of the federal system. Or his efforts may have been thwarted, as I am trying to demonstrate, by the government's refusal to really deal with the ills that are eroding our financial situation in Canada. Because of that, the debt burden will grow heavier as years go by and will soon become unbearable.

I said at the outset that, when the government reduced its deficit, it did not go about it the right way. In fact, the most important and significant move of the Minister of Finance and his government to reduce the deficit was to transfer to provincial governments expenses of some $7 billion that will no longer be met by the federal government. But the Canadian government will still set national standards, shift its own responsibilities to provinces, cut their funding and leave them scrambling to deal with that $7 billion loss.

What a lack of courage on the part of both the minister and the government. Instead of taking the drastic measures that are needed to reduce the costs of its own administration, the government simply decided-this was really too easy-to reduce funding by $7 billion and shift the burden to the provinces. It leaves that problem in the hands of provincial governments which will have to do what it did not have the guts to do.

The Minister of Finance and the Prime Minister know perfectly well that, this year and more particularly next year, provincial governments will have to do the work the government of Canada refused and did not have the courage to do.

Just imagine the reaction of the citizens listening to us when the Canadian Minister of Finance tells them there will be $7 billion less spending in the federal budget and that he feels the government has done its job.

As for the ineffable Minister of Intergovernmental Affairs, he simply stated on one of his visits to Quebec City: "We have done our job; now it is up to the provinces to do theirs. Our clean-up job is done". Can you imagine: "Our clean-up job is done. We swept the dust into the neighbour's apartment". That is the original way the federal government has found to reduce its deficit: offloading it onto the provinces.

What is the difference, as far as the citizen of Quebec, for example, or of any other province is concerned? Deficits are run up at both the provincial and the federal levels, and they add up to a deficit he still has to pay in full. Just imagine that citizen today when the Canadian Minister of Finance tells him: "Rejoice, my dear fellow citizen, we reduced our share of the deficit". He should continue, saying: "Sorry, my dear fellow citizen, I just shifted that share to the provincial government, in your name". What a great operation. It reflects an unspeakable lack of courage.

Furthermore, for the last 15 months, the opposition has been constantly asking the government to take the drastic measures needed to reduce this tremendous deficit. We have constantly asked the government to sit down with members from all parties to set up a working committee to undertake an item by item review of all government expenditures. One has only to look at the Auditor General's report to notice the wasting of tens of

millions of dollars through mismanagement. The government never took any heed of that suggestion.

Instead, it is the Minister of Intergovernmental Affairs who took charge of the exercise and ended up finding some things to cut here and there. He finally decided to cut 45,000 civil servants, and this was the biggest part of the budget. The federal government will lay off 45,000 civil servants.

What it forgot to ensure is how the work will be done after these 45,000 civil servants have been laid off. The government will do what it has always done, that is turn to contractors in order to do the job usually done by regular employees. What will be the result of these cuts? The savings made by the left hand will be spent by the right hand a few months later.

How do you want the people who are watching us, who are fed up with these hollow words, not to get worried when they see this government bragging about the fact that it has succeeded in reducing the size of the public service, and know that it will probably rehire as contractors friends of the regime to do the same job.

In reducing the public service, the government should have met the following conditions: first, that it be done after a large consensus had been reached in society as a whole, including the unions concerned by this operation. The unions can also understand that the government has objectives to reach. And I believe that we could have formed, in a common effort with employers and unions as well as representatives of the government and the opposition, a discussion group which would have taken on the task not of eliminating a certain number of civil servants to be replaced by an equivalent number of contractors, but of eliminating unnecessary government activities.

Government employees are aware of dozens and dozens of areas where the government is literally wasting taxpayers' money through duplications and by putting in place a process so cumbersome and so complex that it is a waste of efforts and money. Instead, we should have worked with all those concerned to scrutinize government spending in order to find waste and mismanagement within the huge federal government machinery.

Unfortunately, the government is saying: "We are going to put 45,000 civil servants out of work. Give us the credit. We have done our job". And the Minister of Intergovernmental Affairs adds: "We did our job and now the provinces have to do theirs".

Frankly, one must know nothing about public administration to address problems in such a casual manner and to make speeches in order to put forward great principles like those which make nice headlines but which, in fact, do not bring any solutions.

Let us look at another area where the government has decided to make cutbacks. I was saying that the government had made cutbacks in the wrong areas. What was its main target in the last budget and the previous one? The unemployed, the most vulnerable members of our society were the most affected. And I challenge all the Liberals opposite to tell us that the unemployed were not the main victims of this government in the last two budgets.

I remember quite well Liberal Party speeches, and letters signed by the present Prime Minister, who was then Leader of the Opposition, where unemployment insurance cuts, implemented by the Tories, were condemned in no uncertain terms. The Liberals said they were outraged to see the Tories so lacking in imagination that they found no other way to solve the fiscal problems of the country but to pick on the have-nots of our society.

In my region, Saguenay-Lac-Saint-Jean, I remember the member for Jonquière almost left the Conservative caucus because he disagreed so earnestly with the proposals of his party. The Liberals disagreed with these proposals and denounced them. They made several promises to the Canadians during the last election campaign.

And, in their last two budgets, the one group they treated most harshly were not the civil servants, not the banks, not the rich families who profit from the family trusts, and not the businesses which often pay no taxes at all, but the unemployed Canadians.

Allow me to say, since there is so little imagination on the other side, that the Minister of Finance seems very proud of the cuts he made in some government expenditures. Why did he not cut in the army reserve force when we all know it is the second most expensive in the world? It is very simple, we have the most expensive reserve after Switzerland, an extremely wealthy country compared to Canada. The Canadian reserve is the most expensive; it costs nearly one billion dollars, and that amount is spent very inefficiently.

Why? Instead of taking $700 million away from the unemployed, why did we not think about the Canadian reserve? Why did we not try to get 300 or 400 million dollars out of a reserve force which is totally inefficient, according to the Auditor General and the observers?

Why not? God only knows. The Minister of Finance's conscience is clear. He did his job of making cuts. However, we keep saying he cut in the wrong place. How do you explain the

Auditor General's criticism, month after month, year after year, that it is impossible to establish with certainty which native populations are receiving fairly major funding through agreements with the federal government for native businesses? Everyone is wondering why the federal government does not take an exact census with native bands before transferring the money.

Nothing has been done. What effort have you seen the government make to try at least to ensure that this money is properly spent, that the native people are receiving their due and that the money is being given on a basis that is really fair for all other Canadians? None, none. This sort of thing is of no interest to the Minister of Finance. I must also tell you that, in addition to insufficiently cutting his deficit, in addition to doing it wrong, by dumping it in the laps of the provinces, in addition to cutting expenses for the wrong people and in the wrong place, the Minister of Finance and his government refused to increase revenues where money was to be found.

This is a fine state of affairs. You tell me who feeds me, Madam Speaker, and I will tell you who gets my loyalty. How is it that this government and this Minister of Finance were so timid in setting up measures to obtain money that might have helped Canada through its difficulties? Why were the banks-which, by the way, made together some $4 billion in profits-asked to make a temporary effort of $100 million?

Just imagine how much money is available there. These corporations are saving a lot in taxes. Considering the circumstances, they are fabulously rich. They are getting richer and richer while most Canadians are getting poorer. In a context of justice and equitable sharing, should not a responsible government distribute fairly fiscal funds? I conclude since I see my time is up. It is unfortunate because I still have a lot of recommendations to make to the government. Why did the government spare banks and large corporations from paying their share of taxes? Why did it give family trust holders four years to stash their money elsewhere? This is outrageous.

In concluding, I will simply state that the two Canadas did not see the budget the same way. As for the rest of Canada, opinion polls indicate that 60 per cent of Atlantic Canadians think it is a good budget, as well as 55 per cent of Ontarians, 54 per cent of Prairie residents and 51 per cent of British Columbia residents, whereas in Quebec, 57 per cent think it is not.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, I would like to ask my colleague from Roberval a number of questions. He mentioned he was not good at numbers and I would have to agree with him.

He talked about the deficit climbing up to $800 billion. What he seems to ignore is we have a thing in this economy called growth. Canada is one of the fastest growing economies in the western world right now. If he actually applied an element of growth he would see that deficit start reducing under the finance minister's plan.

He also talked about his great imagination. It is very true. He does have a terrific imagination. The federal government basically collects money on behalf of the provinces. That is part of the constitutionality of this country.

Everyone realizes all governments are in this together and we have to reduce spending. This argument has been going on in Ontario for years. We keep blaming each other. Someone else is always responsible.

The taxpayer is not fooled. In Ontario people are fully cognizant that the province has to reduce spending. We have reduced the transfer payments to the provinces far less than we reduced our own expenditures.

I do not think you can fool the people of Quebec. They know governments have to reduce spending. This includes Quebec, which to this day has a $70 billion deficit. It is not doing anything about it. The leader of Quebec is running around with a referendum or something but he is not dealing with the economic problems of that province. Blaming all the problems on the federal government is not going to wash. I do not think it is going to wash in Quebec either.

Everybody shared in the budget. We did increase taxation on some of our largest banks. Some things are not told. The Royal Bank had a billion dollar profit. What some do not understand is it had losses year after year before that.

Far be it from me to defend the banks, but I am telling the reality of it. Sometimes a billion dollars sounds like a lot but $125 billion worth of assets is not a very good return, especially considering losses in the previous year.

Blaming everything on the banks is not going to cut it. We all have to do something to get our costs of government down. That is what the budget does. It does it from the federal perspective and will do it for the provinces. I would like to have my hon. colleague address that.