Debates of April 26th, 1995

Budget Implementation Act, 1995

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

The Leader of the Opposition.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

Oh, yes, the Leader of the Opposition. He helped to bring in these budgets. I forgot about that. I am glad the chief government whip reminded me of it.

In any event, in 1992 and 1993 when we were debating Bill C-93, time allocation was used after eight hours and nineteen minutes of debate. We have already had almost double the debate before time allocation was used on this bill.

I know the hon. member for Beaver River was here and I suspect she may have even spoken. Let me just check the list. No, I do not see her name. She did not get to speak on that occasion. I am sorry she did not because I am sure she would have denounced the Conservative budget too.

She should be praising this one because it is doing all the things she used to say the Tories did wrong. We have corrected the Tory errors. We are trying to make up for their blunders. She used to denounce them for failing to do things that we are now doing. I am sure that in her heart of hearts she supports this budget and would like to be able to vote for it today.

[An hon. member]

She does. She does.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

Except that her leader has told her she cannot, so she is stuck.

[An hon. member]

No free vote.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

I will leave her out of it for the time being.

I want to point out that we have moved time allocation in respect of the bill because we have had 15 hours and 40 minutes of debate before today. We will have the rest of today on the bill, all of the time allotted for Government Orders.

I am sorry we could not get any arrangement to extend the time beyond that. Had we been able to get agreement pursuant to the rules to limit debate to a certain time, the government House leader in his beneficence would have given the time. We were prepared to do that. However there was no willingness on the part of the opposition to indicate when they would terminate debate so the government has taken the step of bringing in time allocation.

[An hon. member]

Shame.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

It is a reasonable and fair use of the rule. The hon. member from the New Democratic Party is yelling shame, but he is smiling at the same time. In fact he knows we are letting the opposition off the hook by using this because they were running out of people who could make any intelligent remarks on this bill. Virtually everyone had spoken. The well was running dry. By using time allocation today we are in fact helping the opposition.

Let us turn to their criticisms of the budget. We are getting it on both sides. It is worth the opposition parties hearing this. We have the Bloc Quebecois on the one hand saying our cuts are too draconian, and we have the Reform Party on the other hand saying the cuts do not go far enough.

[Ed Harper, Reform, Simcoe Centre, ON]

We are right and they are wrong.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

There we have it. We hear it from the hon. member for Simcoe Centre. He says that they are right and the Bloc is wrong. The thing is they are both wrong. It is the government that has it right.

[Larry McCormick, Liberal, Hastings—Frontenac—Lennox And Addington, ON]

It shows in the polls.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

It shows in the polls, as my friend from Hastings-Frontenac-Lennox and Addington has indicated. It shows in the polls and it shows in the hearts of Canadians. They realize the government had to take tough measures. The govern-

ment took tough measures and Canadians support their government in the tough measures.

The hon. member for Simcoe Centre wags his head and says that somehow they are not tough enough. The hon. member for Bellechasse wags his head and says that they are too strong. I will not choose between the two extremes. We have chosen a reasonable path, a tough path but a fair path. That is what the Minister of Finance did in his budget.

It is important, in looking at what he did, to bear in mind the fact that he was trying to achieve equity, fairness and a balanced budget. That was important.

[Ed Harper, Reform, Simcoe Centre, ON]

And he failed.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

The hon. member says that he failed. I point out some facts that indicate it did not fail. It was a very significant budget. It will be a great success.

It takes action to reduce government spending and refocus activities of government on priorities and needs. The goal of the strategy is clear, concrete and compelling. It is to restore national fiscal health to Canada. In so doing it will reshape the role of government to build a stronger and more dynamic Canadian economy.

The budget will provide sustained growth for Canada and confidence in Canada's future. New jobs will be created as a result of the budget in spite of the ones that are lost, which we all regret. It will also allow the Canadian government to preserve its ability to help those in need. Major cuts in the social programs of the country are not contained in the budget.

To meet the goal, the budget delivers on the commitment to cut the deficit to 3 per cent of the economy in two years. That was a red book commitment. Hon. members opposite do not like to hear about the red book because it upsets them. It was a success. It worked and it is still working.

[An hon. member]

We will probably exceed it.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

The hon. member says: "We will probably exceed it". I agree with him. I intend to refer to that later in my remarks. If the economic performance is stronger than the very prudent forecast of the minister in his budget, the deficit should fall even more.

The fiscal actions taken in the budget will total $29 billion over the next three years, more than any budget since World War II. In two years program spending will be $10.4 billion lower than it is today.

Just as important, the budget also changes the structure of how the government operates. The changes will ensure that spending will be restrained beyond the two-year target period so that the deficit will continue to fall, much to the dismay of Reformers, and will reflect the government's commitment to eliminate the deficit entirely.

To achieve these results the budget takes fundamental action across government programs and operations. It implements the results of program review, a comprehensive examination of departmental spending. The government will focus on what is essential and the government will do it better. The budgets of some government departments, as hon. members know, have been cut in half.

The budget also acts on the new vision of the federal government's role in the economy, one that includes substantial reductions in business subsidies. These will drop from $3.8 billion this year to $1.5 billion by 1997-98. They are very substantial cuts.

The budget reforms major transfers to the provinces, modernizing the federal-provincial fiscal regime and making it more effective, flexible and affordable. These wide ranging reforms will mean a smaller public service. Some 45,000 jobs will be eliminated as we have heard in the budget speech, but we will manage this difficult process with as much fairness as we can manage including the use of early departure and retirement incentives, some of which have already been announced by the involved ministers of the crown.

It is also essential to be fair to the taxpayer, and the budget is fair to Canadian taxpayers. The tax changes are modest. They affect only the most wealthy. The cuts are $7 to every $1 of increase in tax. It is a fair budget; it is a good budget. The hon. members opposite should be voting for the bill.

[The Acting Speaker (Mrs. Maheu)]

I remind hon. members that debate is now 10 minutes maximum with no questions and comments.

[Ted White, Reform, North Vancouver, BC]

Madam Speaker, the hon. member for Kingston and the Islands did a desperate job of defending the restrictions on debate this afternoon, but there really is no excuse for restricting debate on such an important topic. It is not because the media do not think it is a hot topic any more but because people out there are aware of the budget and the problems it could produce.

At the various public meetings I am attending people keep asking me: "What did you think of that budget?" It is almost as if there is this background awareness that the budget, which was a major anticlimax, might just come back to haunt us.

Several weeks ago when the finance minister had his short meeting with Moody's bond rating service it was clear that Moody's went away dissatisfied with the explanation from the finance minister. The Financial Post predicted the same day that Canada's debt rating would be downgraded within a few days. As we see that is exactly what happened.

Even when Moody's announced the downgrade the markets had already anticipated the news and there was very little reaction out there. As the lack of substance in the budget becomes more and more apparent, it is quite likely we will continue to incur ever higher interest rates to finance our borrowings.

We have been lulled into a false sense of security lately by a dollar that seems to have risen a little in value. I even heard the business reporter on CTV this morning saying that our dollar was holding up very well. However, when we look at our currency against a basket of major world currencies instead of simply comparing it with the U.S. dollar, we find that our currency has continued to drop against the basket of major currencies.

In an international sense we are actually losing ground quite rapidly. This means that price inflation is just around the corner. Significant price jumps have started to occur already in some consumer products. In my office we recently purchased a second laser printer. The price had jumped more than 8 per cent in six months. Can anyone remember when the price of electronic goods actually went up? Prices have been dropping for years now, and all of a sudden we have price increases on things like cameras, VCRs, vegetables, garden tools, paint and cars, almost everything. It is starting to look like standard Liberal economic policy: allow the dollar to drop and inflation comes roaring back in.

The dollar dropped in the late seventies and early eighties from $1 to 85 cents. Inflation rose. The export sector boomed. It all looked very rosy. We had the appearance of prosperity while our deficit and debt were ballooning dramatically. Unfortunately the strategy is not going to work this time. We are a little too close to the debt wall for it to be effective.

Because of my business background I have quite a number of friends who are small business people. I have taken the time to ask them in the last few weeks about their sales and price levels over the past six months. In a group that includes one of the most productive realtors in the country, a hardware and garden tools importer, a car dealer and a furniture sales company, all have experienced dramatic drops in sales over the past two months at the same time as they have experienced huge price increases from suppliers because of the low dollar.

Stacey's, a large furniture manufacturer in Vancouver, revealed on a radio talk show last week that bankruptcies in the furniture industry were imminent because sales had suddenly dropped to levels lower than they were in the last recession. On the same radio talk show, bankruptcies of car dealers were being predicted as well.

The hardware importer I know has had two price increases exceeding 15 per cent, in some cases since January, and reports that some retail clients have declared bankruptcy in the past month. Sales in this sector have dropped sharply at the same time as the price increases that they are trying to pass on because of low profit margins.

Except for the export sector, the good news is not being passed on to other parts of the business sector. In the meantime there are those sneaky budget tax increases in place taking a bite out of everyone's spending power.

The Liberals and the NDP must be the only people in the country who think that the penalty tax on banks announced in the budget will not lead to higher bank service charges or loan charges for the average Canadian.

Liberals and the NDP must be the only people in the country who think that a 1 per cent increase in corporate taxes and a change that forces corporations to report their income at the end of a calendar year will not lead to an increase in the price of goods.

Liberals and the NDP must be the only people in the country who think that a 1.5 cent increase per litre on gasoline will not lead to an increase in the price of gasoline. Actually the new gas tax also increases the GST because GST is added on after the other taxes on the price of gasoline.

Incidentally the Deputy Prime Minister said during the election campaign that if the GST had not gone within a year of the election she would resign. She has not done that yet.

As I have said before, despite the tax increases and the token spending cuts, the ship of state is still going down a little bit slower with a smaller crew on board. That is all. In three years the increase in interest payments on our growing debt will consume every cent of savings the minister made in his budget. He did not go nearly far enough and he is not going fast enough.

I mention New Zealand all the time in my speeches. It has shown us the way by making some pretty massive cuts in government spending at the same time as it lowered taxes. New Zealand is now expecting a budget surplus in excess of $3 billion. It forecast $2 billion and is getting in excess of a $3 billion surplus. It has increased spending on social programs. Its unemployment rate is down to 5.6 per cent.

I cannot use props in the House but I have a full page advertisement from a New Zealand newspaper wherein Roger Douglas, the architect of a lot of New Zealand's restructuring, has now proposed that by the year 2000 New Zealand could have zero income tax.

I am not suggesting we could follow the procedure here because New Zealand is going to run on a 15 per cent GST. That is easy to do with a consumption tax when there are no bordering countries. Perhaps by the year 2000 New Zealand could be income tax free and running on just a consumption tax. Imagine zero per cent income taxes. That is pretty good.

I repeat what I have said before. The best way to put more money in the hands of the poor, of families, of business, of everyone, is to cut spending and to cut taxes. Tax cuts and spending cuts make it easier for people to buy homes and improve their standard of living. Things work better when people make their own spending decisions instead of having big brother government make the decisions for them.

High taxes punish those who are the most productive in our society. High taxes are a symptom of a government's failure, incompetence and inability to see the damage taxes are doing to society.

The finance minister gave it his best shot and was overruled by what might be a socialist cabinet. I congratulate him for trying but I castigate him for not doing what he knew had to be done. He stands responsible for the massive loss of net worth that is now occurring for Canadians across the country who do not have offshore shipping companies and a multimillion dollar worth.

Shame on the government. Shame on the MPs who failed their constituents by avoiding the truth that we cannot buy our way out of poverty. We have not even begun to address other very real problems with government programs that lead to waste and cheating.

For example, I have a copy of an advertisement that appeared in the Vancouver Sun on March 4, 1995. It was sent to me by a constituent, Mr. George Brooks. The advertisement reads:

UIC top-up positions: two festival production jobs available mid-April with performing arts association. Outgoing individuals with festive or event experience sought. Must have minimum of 21 weeks UI benefits.

My constituent asks since when has UIC been a prerequisite for employment in Canada. Here we have blatant abuse of a program that is supposed to help people get retrained. Mr. Brooks has asked quite a good question.

Special interest groups know how to milk our system. Nothing was done about it in the budget.

Look at Bombardier. The hon. member mentioned government grants to business. Bombardier, a tremendously profitable corporation, is receiving grants from the federal government. These grants go directly to the bottom line because it is a profitable company. We have no business giving grants to a company like Bombardier.

I urge members to vote against the implementation of the 1995 budget on the basis that it has failed to address government spending and brings us one step closer to a debt and currency crisis.

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

Madam Speaker, I have to wonder what the hon. member who has just spoken has been reading, where he gets his information and why he is referring to what he believes to be a currency crisis or something like that. It is that kind of irresponsible talk on the part of hon. members which could do damage to the economy of this country.

Luckily for all of us, and I will put it as kindly as I can, very few people, if any, would believe what the hon. member has just said. That is why it likely will not do any damage. I could put it a bit less kindly but I will not.

The budget tabled in this House on February 27 by the hon. Minister of Finance provides for the most stringent measures ever adopted by any government in the last 50 years. During the last election campaign, we promised the Canadian people in the red book that we would reduce the deficit to 3 per cent of GDP by 1996-97. That is what we are going to do. Not only that, but we will probably do more: we will reduce the deficit even more vigorously than we announced.

Second, as you know, the deficit will be down to 1.7 per cent of GDP the following year and, who knows, Canada may even have a balanced budget one or two years later.

We in the Liberal Party have managed to do in a few years what the Tory government was never able to do during its nine years in office. During those nine years, Tory ministers made annual fiscal projections about Canada's deficit. Not once did the Tory government ever meet its objectives.

We have brought down two budgets. After the first budget, we not only met our objective, we exceeded it. Of course, the second budget was tabled only a few weeks ago, on February 27 to be exact, and we are still putting in place the measures needed to meet requirements.

Total savings over the next three years will be $29 billion: $5 billion in 1995-96, $10.6 billion in 1996-97 and $13.3 billion in 1997-98. Reform members just told us that no money would be saved. That could not be further from the truth.

Take a good look at some of the cuts that were made. We will have reductions, in departmental budgets for example, totalling $3.9 billion in 1995-96, $5.9 billion in 1996-97 and $7.2 billion in 1997-98. The public service will be reduced by some 45,000 positions. Of course, as a member of the party elected in the National Capital Region, I am not thrilled to see some of my constituents lose their jobs. But if we had not taken these harsh measures, that will work and have indeed worked so far, we would be much worse off in the future.

Subsidies to business will be reduced by some 60 per cent. That is a major reduction.

Only major banks are hit with tax hikes. Other businesses were almost all spared, except, of course, for the fuel tax, which increased by 1.5 cents per litre. That is the only new tax that will affect most of my constituents, generally speaking.

Some Bloc Quebecois members say that this budget is way too severe or something to that effect. Members of the Reform Party say it is not severe enough. Could it be that these two groups are at one extreme and the other? Could it be that the middle ground is what is reasonable? Could it be that the middle ground is the belief of Canadians and also the program on which we were elected? I say it is so and it is not just me. Let me read what some other Canadians have said.

Here is what Jayson Myers of the Canadian Manufacturers' Association said: "I am impressed. I applaud the minister for what he has done". That is a quote from this business leader. Reform Party members pretend they know what is good for business. Let us listen to another one.

"This is a good budget", said Ghislain Dufour, president of the Conseil du patronat du Québec. Again, this is from someone who ought to know what he is talking about.

This statement is by Fred Ketchen, chairman of the board of the Toronto Stock Exchange, probably not a bleeding heart socialist. He says: "A responsible, a fair, a realistic and even a humane budget".

[Charlie Penson, Reform, Peace River, AB]

Any grants?

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

I say to members across the way that grants to businesses have been cut by 60 per cent. Of course they probably were not listening, they never do.

Here is another quote: "It is a good budget on several fronts". This was stated by Peter Wolford of the Retail Council of Canada. The Retail Council of Canada sure does not get any grants. Let us listen to another one.

Michel Audet, president of the Province of Quebec Chamber of Commerce said: "This is a real budget based on concrete measures". Now listen to this: an economist with Nesbitt Burns-since the members opposite want to hear from the financial sector-said: "This is a great budget and not just a smoke screen". That person added that this was a realistic budget.

This is what Lloyd Atkinson of MT Associates said: "This is one of the few budgets I have seen in a very long time where the promise was matched by the reality". That is us. We made commitments to the people of Canada in the red book and we are going to live up to those commitments. Whether those commitments are for gun control, for restoring the financial integrity of this country, or for good government and sound and frugal management, all of those things will be delivered because that is what we said we would do. In fact, that is what we are delivering to the people of Canada.

[Charlie Penson, Reform, Peace River, AB]

What about the GST?

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

Some members are asking us about the GST. We are well on our way to correcting all of the things we want to. We were only elected 18 months ago. Our program is for a five year mandate and we will deliver. In our second mandate we will have another red book and we will deliver again. In our third mandate we will do the same thing, and so on. We intend to provide good government in the short, medium and long term for the people of Canada. The people of Canada know this and will recognize this in the next election campaign in 1998 or whenever it occurs.

While we are talking about election campaigns, Bobby Rae in our own province of Ontario is probably going to call an election within a few days. His mandate has completely expired. He tried to launch an attack against the budget until he realized that most, if not all, Canadians agreed with the budget except for him. Of course, he was unable to use the budget to launch his campaign. His left wing agenda is not going anywhere because that is not what the people want.

Neither will the common nonsense revolution of Mike Harris in Ontario. I am sorry, the common sense revolution as he calls it is not going to fly anywhere because again there are the two extremes like we see across the way.

The people of Ontario will also do the right thing. They will elect Lyn McLeod and a very good government for the province of Ontario, such as we are delivering to the people of Canada.

[Maurice Godin, Bloc, Châteauguay, QC]

Madam Speaker, the Bloc Quebecois decided to fight Bill C-76 tooth and nail. Basic reasons motivate us to keep this promise, for example, fairness. All too often, the budget hits the middle class and the needy instead of addressing inequities within the tax system.

The government has refused to review the tax system, despite the Bloc Quebecois' repeated requests over the past year and a half. In addition, the current budget cuts do not target unnecessary or extravagant spending, such as the purchase of furniture for the fisheries minister's office. No, they hit the neediest.

Another example is the army. The Bloc Quebecois recommended cutting the Minister of National Defence's budget, but only targeted unnecessary spending or spending in non-essential areas. For example, Operation William Tell, $7 million; the lavish fishing trips to the tune of $1.2 million; the number of generals, their assistants and retinues of support staff; mansions for high-ranking officers; the Reserves, which cost us some $532 million but have no specific mission, according to several generals.

Instead, with Bill C-76, the government hits the neediest, widows, orphans, and veterans, whose average age is 73 years.

Bill C-76 hits three acts which are administered by Veterans Affairs. The seven clauses of the bill which affect these three acts all cut benefits and allowances.

Clause 42 will have the effect of gradually phasing out education assistance benefits for the children of deceased veterans. In fact, clause 42 amends the Children of Deceased Veterans Education Assistance Act. This amendment initiates the gradual phasing out of a veterans benefit that provides the children of deceased veterans with the assistance they need to continue their education. With a few exceptions, the 85 students now receiving these benefits are the children of deceased military personnel who participated in Canadian peacekeeping missions. Students who were receiving the benefit on the day the budget was tabled will continue to receive it under this legislation but the department will not accept new applications.

Clauses 68 to 72, inclusive, amend the War Veterans Allowance Act by terminating the payment of allowances to allied veterans of resistance groups. As of September 1, 1995 or within two months after Bill C-76 receives royal assent, whichever comes later. The same provision will also initiate the gradual phasing out of allowances payable to allied veterans in uniform who immigrated to Canada at the end of their service and resided in Canada for at least 10 years before applying for veterans allowance.

Bill C-76 will terminate payment of allowances to about 3,000 veterans. Payments will also be terminated in the case of 1,000 veterans of resistance groups whose old age security and Canada Pension Plan benefits raise their incomes just above the threshold below which they would be entitled to certain health care benefits. The provinces will inherit this new set of clients, two thirds of whom are Quebecers.

Clause 73 (a) would terminate compensation for loss of income in the case of veterans who are required to appear before a review board.

Clause 73 (b) would also do away with compensation for income loss and includes other restrictions on travel and living expenses occasioned by a medical examination required by the minister. We oppose this loss of benefits for veterans. Society's disadvantaged-seniors, widows and children-are being attacked.

Let us look at a specific example: a woman in Montreal, a widow, who has just received a notice in the mail. The director general of veterans' benefits at Veterans Affairs Canada, Doris Boulet, is advising her that she will lose all the assistance she has been receiving for a number of years. Under the provisions proposed in Bill C-76, this woman will lose on a number of counts. First, she will lose her allowance. Second, she will no longer enjoy the related benefits she received from Veterans Affairs Canada, including her Blue Cross identity card. Third, she will no longer have access to veterans' independence programs, nor, fourth, to Veterans Affairs Canada contributions to long term health care. In short, she is being abandoned.

The letter tells her to act quickly to find other sources of financial and health care assistance. It reminds her of existing programs: federal government programs, such as old age security and the guaranteed income supplement, and provincial government programs, such as social assistance and health care plans. She is advised that these are her options to help her replace the financial assistance and the other benefits she will no longer enjoy following adoption of Bill C-76.

In fact, the need of that woman is recognized, but she is simply referred to other federal and provincial public services. This is a good example of duplication. That woman is told that she can get help from both the federal and provincial levels. Yet, as I recall, veterans affairs come under federal jurisdiction.

Here is another example. The hon. member for Saint-Hyacinthe-Bagot learned from Branch No. 2 of the Royal Canadian Legion that the Sainte-Anne-de-Bellevue hospital is increasing the monthly rate for its rooms from $547 to $704. This increase of 28 per cent brings to 198 per cent the total increase for these veterans since 1990. Veterans are offended, hurt and humiliated by such off-hand treatment on the part of a country they paid to protect. Why penalize these veterans by offloading onto them the financial burden related to the treatment of injuries which they suffered while defending our country? There are many other places cuts could have been made.

If I had suggested that the responsibility of the Department of Veterans Affairs should be decentralized and delegated to the provinces to ensure greater efficiency, federalists would immediately have objected, on the grounds that this is an exclusive federal jurisdiction. Bill C-76 leads us to one conclusion: the federal is no longer able to meet its responsibilities. Why not decentralize by delegating to the provinces responsibilities as well as tax points?

The federal system is obsolete. We need autonomous provinces which would give to the federal government, or to another economic and political union, a mandate and a budget to manage certain joint responsibilities. In short, the Bloc is opposed to the

loss of these benefits for veterans. The poor, the elderly, widows and children are too often the ones who are targeted.

[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 Ottawa West-Public service of Canada.