Debates of April 3rd, 1995

Budget Implementation Act, 1995

[Pierre Brien, Bloc, Témiscamingue, QC]

Madam Speaker, the hon. member referred to the fiscal coup which is in the making, which could also be called the Stéphane Dion strategy, and which seeks to hurt Quebec after the referendum. We are bracing ourselves for that.

On the other side of this House I see Quebec members who support this legislation, who smile and who do not dare get up to protect Quebec's interests, as they claimed they would do when they were elected. Now that they are here, they are a lot more polite and conciliatory. They are members of a party in office, so they want to protect their personal career. This has priority over the interests of the people, the riding and the Quebec nation which they are here to represent.

I want to say a word about the last federal budget and its major component, which is the new structure of transfer payments. This is an extraordinary camouflage exercise, and I will tell you why. The government is trying to make us believe that it will be more flexible, that things will go better and that the same services will be provided with less money. Less money, more standards and probably more controls.

I participated in an English radio talk show, in Montreal, with the Minister of Human Resources Development. The moderator asked: "Does this new Canada Social Transfer mean that the federal government will no longer have control over transfer payments"? The minister replied: "No, quite the contrary. We will have more control than ever before. We did not have controls in certain areas before, but now we will". All this remains to be defined.

Of course, the federal government will invite the provinces to come and negotiate with a loaded gun to their head: "If you do not want to lose even more federal support, then approve these standards". An internal document circulating among party ranks indicates that this is just the beginning. Other financial objectives will be set.

After these initial cuts of $7 billion to transfer payments, which will primarily affect Quebec, the process will continue since we must solve the federal government's financial problems. This, without any consideration for the problems which will result from this process, particularly for some provinces, including problems related to their credit rating and to the

imbalance which these measures will create in provincial budgets.

Let me put transfer payments in their proper context, because this is a complex issue. I want to point out some specifics for the benefit of those who are listening to us. There are currently three main types of transfer programs. First, there is the Established Programs Financing, second, the equalization program, and third, the Canada Assistance Plan. Let me review them briefly one by one.

First, under Established Programs Financing, taxpayers pay taxes to the federal government who, according to certain criteria, sends part of the money to the provinces for their health and post-secondary education programs.

As for equalization, it is a measure of wealth redistribution or rather a measure of redistribution among the provinces of the capacity to generate income. Seven provinces benefit from the equalization program; the amounts they were entitled to were recently capped. Whenever something is expensive, they put a limit to it so that the costs will not increase too much in the future.

So, one of the first bills that the government tabled before the Parliament was Bill C-3, to limit equalization payments so that they would not increase too much. And yet, the objective of this program is to redistribute wealth. Consequently, that bill meant limiting the ability to redistribute wealth.

Obviously, the Liberals have lost this concept in the last few weeks or months, or even in the last years. They should now be called the old Liberals, since they look more and more like Conservatives. Even if they do not like to hear that, they must be called by their name, they must wear the hat that fits them.

The third type of transfer payment is the Canada Assistance Plan. That is mainly in the welfare sector. The government is funding a part of provincial spending in that sector.

So, there are these three components. Let us take equalization payments from that, because they are not affected by the new Canada social transfer. All there was to say on this is that the government has limited the potential growth of that system.

In the new Canada social transfer, the two other types have been amalgamated: the Canada Assistance Plan and Established Programs. They become one single program.

Obviously, because this government intended to cutback post-secondary education and attended the demonstrations made by students-I remember well seeing them on the Hill-they said: "It is true. When they are told directly that education or health will be cut, they react. Therefore, we should mix everything together and proceed with cuts thereafter. This way, they will not be able to say that we have made cuts in a specific area, be it education, health or social welfare. Provincial governments will be totally free to choose where to cut. That is flexible federalism". That is what you are told. You are free to choose in what area you will cut: education, health or social welfare. That is what this government is defending, almost with a smile, in joy and almost with conviction. This is veryastonishing.

This new Canada social transfer will reduce the amounts transferred by $2.5 billion, not this year, obviously, because it knows perfectly well that this is a very important year on the Canadian political scene because of what is going on in Quebec. Therefore, it is waiting. Since it does not want to decide now how to define the new Canada that it wants to build, it will reduce the amounts transferred by $2.5 billion next year and by $4.5 billion the following year, without saying who will be affected and to what extent. All that is known is that it will happen in the second year, that $650 million of the $2.5 billion will be cut in Quebec, and that in the following year, as much as $1.9 billion of the $4.5 billion could be cut in Quebec.

Quebec would assume more than its share since the criteria used for allocating funds under the Canadian social transfer are going to be reviewed. Given the lobbying efforts which will be made by the wealthiest provinces, such as Ontario, one can be sure that these provinces are going to try to get a bigger share.

Furthermore, we are all aware of the upcoming election in Ontario and of the possibility that their Liberal colleagues will be elected. They are going to show great compassion for their colleagues and no doubt help make their transfer payments more generous. Again, Quebec would assume more than its share. As I said earlier, these cuts could add up to $1.9 billion.

During the two minutes remaining, I will show how intolerable it is to implement all these cuts while insisting on maintaining the same standards and probably raising them. All the while federal members of Parliament are strolling through their ridings, patting themselves on the back and claiming that we have an extraordinary health care system. They say to their constituents that they will be protected, that they will define standards. They will do it and the bill will be paid not by the federal government, but by provincial governments. They are the ones who will be stuck with the difficult job of deciding how to do it. The federal government will only ask them to adhere to standards-that will probably be raised-with less money. Go figure.

We do not want to allow for flexibility or to leave the governments some room to adjust. We prefer to remain good members of Parliament and, as such, protect the principles and preserve the universal aspect of social programs. So we let them manage the monetary aspect of the matter.

This is basically what this budget does, although it tries to hide it. Here is another point that I was just about to forget. This budget talks about tax points, equalization and cash transfers. What is being cut by the budget are the cash transfers to the provinces. This is the part which is changed and remixed.

The government adds up cash transfer payments, equalization and also tax points, on which it has no control whatsoever, and says: "Look how little we are cutting".

This is a terrible cover up by people who, during the election campaign, were going around with their red book in hand saying that their objective was a more open, a more transparent government, so transparent in fact you could almost see through the front cover of the red book. They were going around everywhere saying: "We are going to have something very understandable, very clear so that people know what the government is doing".

This budget manipulates, messes around with and monkeys with figures to make people believe that they will hardly be affected. This is what we have to expect from a Liberal government which has become more conservative than the Tories and has grown more and more like the Reform Party. This is the kind of Canada this government is shaping. For our part, we are going to have to explain all this to people who will have a choice to make.

We will have the opportunity to conduct the same debate in a few months since the government will only implement its new vision next year, being afraid of doing it before the referendum. We will be there to remind Quebecers, before they make a choice, that they have to find out who these people who govern us are, where they are leading us and what will the consequences be.

[Val Meredith, Reform, Surrey—White Rock—South Langley, BC]

Madam Speaker, it is interesting to hear the debate on the budget and whether or not it should be delayed. I believe that although the budget is not really what I would have liked to have seen, the government had better get on with it and start instituting some cost cutting measures. If the government were to be prudent, it would come up with another budget in the fall to continue the process and start working toward a balanced budget.

I come from a province that is often criticized for living in a different world. It is the province of British Columbia. It is quite true, we do live in a part of the country that is quite different from the rest of Canada. The Rocky Mountains separate us from the rest of Canada. Because of our separation from the rest of Canada, our trade has been north-south. Our communication has been with our neighbours to the south.

My riding is on the Canadian-American border. We are not afraid of Americans. We are not afraid of trading with them or of being friends with them. We have established in our province a relationship with the states of Washington, Oregon and California that has developed its own economy. It is very distressful for me to see, because of the strength of the flow of goods and commerce north and south, that some Canadian businesses in my riding and in neighbouring ridings have chosen to move their businesses south of the border. They have not only chosen to move their businesses south of the border, but they have taken jobs south of the border. The reason they gave me is it is because of the cost of doing business in Canada. A lot of the cost of doing business in Canada is made up of high taxes and regulations that governments impose on the business community. It troubles me that these businesses are taking their money and their jobs and moving south.

It gives me some encouragement when I hear of groups such as Cascadia, which is an economic union between some of the northwestern United States and some of the western provinces of this country. I believe it is a union that includes Alaska, Washington, Oregon and northern California, with Alberta and British Columbia. It is an economic union that has some powerful economists and business people who are looking at the potential of a more secure economic union between western provinces and the western United States. That gives me some faith that there are other ways of addressing some of the problems that are created by the government.

I would hate to think that this economic union, which seems to be blossoming, might ever become a political union. It is important that I represent my constituency and my country in saying that this government has a mandate from the people of this country to try to reduce the cost of government so that businesses, not only in my constituency but in all constituencies across the country, will stay in Canada, will keep the jobs in Canada and will keep the money in Canada.

It is my concern that this government take seriously the task it has at hand, to make sure it is up front with Canadians as to what reducing government spending will cost. The government must be honest, it must be forthright, and it must look to the future of this country, not just to what is happening today.

It is very important for the government to get on with the business at hand, not to delay implementing the budget, but to get on with implementing it today. It is just as important for the government to look at coming back with another budget, a mini-budget if you will, that will carry it forward until the next budget year.

I would like to think this is only a first step, albeit a small step, in a process of the government balancing a budget. Canadians expect that. The Reform Party, in listening to what constituents are telling us, has come up with a vision which seems to be lacking from the government. It is a vision that looks at balancing the budget in the near future, not in 10 years when it is too late.

It is very important that we balance the budget as soon as possible. Only then can the government start eliminating an interest payment, or at least reducing an interest payment, and start eliminating the debt that has accumulated to over $550 billion. Our children and grandchildren can expect nothing less from all of us but to look at that very real problem, the problem that in three years time, if the government continues with its plan, we will be paying $50 billion in interest payments.

At least the Reform Party has acknowledged the problem, has identified the solution to the problem is short term pain for long term gain. In its taxpayers budget, the Reform Party has been up front, honest and has shown the Canadian public what is necessary for the country to get its financial house in order. The Reform Party has shown vision when it has talked about other ways for people to look after their own interests, to look after their own economic needs.

We have been visionary in looking at what is wrong with the system as it stands today and where we can go with it. When we talk to Canadians about the potential of an RPSP, a personal plan where they invest in their own future to look after their own needs, it is something Canadians can understand and they look for.

I do not know how many constituents I have talked to have contributed to the unemployment insurance plan and find that after 30 years of working it is not there for them when they need it. I do not know how many Canadians I have talked to in my constituency have contributed money to the civil servant pension plan or the RCMP pension plan or the defence pension plan, the armed forces pension plan. They think that money is sitting there in a pension plan, that it is protected. In reality that money is in the big black hole and is part of our national debt.

There is no security in there for any of these people who are looking at the Canadian pension plan or the individual pension plan. That concerns them. They look at this visionary RPSP where they are contributing to a plan that is there for them when they need it. They decide how much they will take out to assist them when there is unemployment or any other situation. They look at that as a new way, an interesting way, an interesting concept and something they can really get into.

I look forward to the days and months to come of expanding on that idea and sharing with Canadians how that can work for them. Canadians are looking to their government to have that kind of vision, for their government to be able to look for new ideas, not always falling back on the old way of doing things.

The old way of doing things which the Liberals brought in many years ago, 30-odd years ago, in deficit budgeting followed by the Mulroney Conservatives, has put us in this position. It is incumbent on the government to start taking the lead from the Reform Party with a newer vision and to start looking for some real answers instead of doing things the stale old way that only gets us deeper and deeper into debt.

[Richard Bélisle, Bloc, La Prairie, QC]

Madam Speaker, in speaking to Bill C-76, I would like to draw the attention of this House to what is really at stake in the budget tabled last February 27 by the Minister of Finance. This bill is supposed to be an act to implement certain provisions of the budget, according to the wording in the bill.

These provisions will change the financial and social framework of this country, independently of any constitutional or administrative agreement with the provinces.

The creation of the new Canada social transfer to replace the Canada assistance plan and the program to fund established programs will completely change the division of financial resources between Ottawa and the provinces in the future.

Through this Canada social transfer, the federal government will reduce drastically its contributions to the funding of health and social programs. Clause 48 of part V of the bill mentions, and I quote: "Subject to this part -for the purposes of (a) establishing interim arrangements to finance social programs in a manner that will increase provincial flexibility; (b) maintaining the national criteria and conditions in the Canada Health Act ''.

Despite the talk of greater flexibility for the provinces, the federal government is going to reduce its financial contribution substantially and the provinces will have to implement all aspects of the Canada Health Act, including the key components of public administration, comprehensiveness, universality, portability, accessibility, extra billing and user charges. How can the provinces be flexible when they must comply with all provisions of the Canada Health Act while Ottawa is reducing its financial contribution to health care and social programs in general?

Given the current overtaxation of the middle class, which, it must be said, remains the real cash cow of all levels of government, and the chronic indebtedness of the federal and provincial governments, the provinces will have no room left to manoeuvre. Although the federal government is withdrawing from financing, it will continue to make the rules.

For 30 years, the provinces have been fighting against federal government interference in areas of provincial jurisdiction. Until now, Ottawa used to compensate for invading provincial jurisdictions by footing part of the bill. Today, Ottawa is interfering even more, even if it is paying less. It is transferring onto the provinces the horrible task of increasing taxes and cutting elsewhere. The federal government is literally putting the provinces in a straitjacket. It even goes as far as forcing the provinces to refer to the Canada Social Transfer in all their ads and documentation concerning the health services they provide. All this window-dressing only to cut $7 billion on the backs of the provinces through the implementation of the Canada Social Transfer.

So, Bill C-76 will offload the federal deficit onto the provinces; since the legislative framework for health-related matters will stay the same, the federal government will only have to transfer its deficit.

Because of the pressure exerted by the richer provinces, the federal government is seriously thinking about changing the envelope for the main provincial transfers, except of course for the equalization payments which will in any way be significantly reduced beginning in 1996-97. As I was saying, the government is thinking about reducing the envelope for all provincial transfers according to the population figures instead of the wealth index which is now being used. If distribution is based on population, as the government is contemplating, then Quebec will have to deal with almost 42 per cent of all the cuts made to the provincial transfers in 1997-98.

Bill C-76 even provides for new health criteria and paves the way for new criteria in the areas of welfare and post-secondary education. Is this what the flexible federalism the Liberal government has been pushing for is all about?

Education is a very sensitive area for Quebecers who make up a distinct minority in Canada. The prime minister's centralizing federalism does not recognize this reality, and that is why more and more Quebecers do not want to be part of a country whose government shows so little sensitivity to their cultural identity and their most legitimate aspirations.

Quebecers are puzzled about one thing: Quebec's debt is at $70 billion, whereas the Canadian government has borrowed about $126 billion in the name of Quebecers since 1972. Therefore, Quebec's share of the federal debt is 45 per cent higher than its own provincial debt, although the latter remains high.

Quebecers have come to wonder how a federal government that has done so poorly in managing their hard-earned money can still be trying to impose its will upon a Quebec government that is also closer to them from a cultural standpoint.

By withdrawing its funding and by forcing the provinces to comply with new national standards, the federal government will be dealing, in a few years, with provinces whose tax base will be considerably weakened. This will give yet more power to the central government which will have greatly reduced its fiscal obligations and which will be in a position to interfere even more in areas under provincial jurisdiction.

The newspapers reported last week that Jean-Claude Rivest, an independent senator, and Claude Forget, former health minister in Quebec, fear a fiscal coup by Ottawa after a victory for the "no" in the Quebec referendum. My colleague from Trois-Rivières talked about it very eloquently a while ago.

Mr. Rivest and Mr. Forget, who have good connections within the federal government as reported in the Journal de Montréal on March 30, have no reason to worry. With this Bill C-76 and with the budget tabled on February 27, the federal government has already launched its fiscal coup against Quebec, even though the referendum in that province has not yet taken place.

Neither the finance minister's budget nor the bill before us today contain any provisions about the tax system, especially as it applies to families and young households, the only ones that would be likely to stimulate consumption and economic activity and to give some breathing room to provinces, which could intervene more freely and more energetically on their territory and in their particular jurisdictions by involving the stakeholders.

The centralizing federalism practised by the Liberals goes against every attempt at decentralization toward the provinces. Therefore, we must strongly reject Bill C-76.

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

Madam Speaker, I am pleased to speak to the amendment the Bloc has put forward. It wants to delay the implementation of the budget for six months. I am sure it has a political agenda behind this amendment. I would imagine that it is to try to add more credence to its failing sovereignty program. I can think of no other reason for an amendment like this.

However, I suggest the government delay the implementation of the budget for eternity. This is not a budget the Canadian people were asking for. While the hon. member for Halifax a short time ago said eastern Canadians were smarter than western Canadians, there are a whole lot of western Canadians who apply some good, common sense to getting this financial crisis and the House in order.

I want to paraphrase part of a speech by Mackenzie King in the House in 1935. What he was saying applies to the situation we have today. He said that when a government loses control of its currency and credit in effect all talk of democracy in the country is both useless and futile. That is exactly the situation the country is in. We have lost control of our currency and credit. Every decision we try to make in the House is influenced by the

fact that we are some $500 billion in debt. We have an annual interest payment of some $47 billion.

As we discuss issues in the House, no matter what they are, industry and trade, Indian affairs and northern development, the health problems or the social problems, they are influenced by the fact that our country is seriously hemorrhaging in debt. Every decision we make has to take into account that we owe $500-plus billion and we are paying an annual interest rate to service that debt of some $47 billion. We are being held captive by the irresponsible spending that was started during the Trudeau administration and carried on by the successive governments under Tory prime ministers Clark and Mulroney.

Before the Trudeau administration came to power we were basically running a balanced budget. We had a small national debt that was perfectly manageable. Somehow the special interest groups got to the Trudeau government and said: "Listen, if you will give us more of this and more of that, we will vote for you". The Liberal government heard that message and thought: "This is a good thing. Let us go out and tell all of Canada they can have whatever they want and not to worry about paying for it. As long as they vote for us, we will give them whatever they want". They instilled in this country, in the Canadian people, during those years an attitude of entitlement, that the Canadian people were entitled to every single thing they wanted. The government told them: "Do not worry about paying for it. We will borrow the money and sooner or later we will get around to looking after the debt."

Well, now some 28 or 29 years later, look what this got us. We have a half a trillion dollar debt and an interest payment that would pay for all the social programs in this country if we did not have it. This government talks about its famous red book and its promises. This government is trapped by the promises in the red book. The Canadian people are demanding that the government get control of its financial house. The Liberal government knows what it has to do. The Minister of Finance knew what he had to do, but the soft-headed Liberals in that party would not let him make the drastic and severe cuts that are needed.

They are trapped by the promises in the red book. The red book says: "We will bring the deficit within 3 per cent of our GDP". Big deal. That can be done by increasing the GDP. Spending does not have to be cut. That is fine as long as the economy stays buoyant. But what happens if there is a downturn in the economy, as was forecast in The Globe and Mail just a couple of days ago?

Under the government's budget plan and deficit reduction plans, if we have another downturn in the economy our fiscal house is headed for disaster once again. The government will use the same excuse the Tory government used. It will say: "Well, there is nothing we could do about it. We inherited this debt from the Tories." The Tories said: "There is nothing we could do about it. We inherited the debt from the Liberals."

The Canadian people are sick and tired of excuses. They want action. The people who invest in business in this country are sick and tired of excuses. They want action. Everywhere we go in this country people are saying: "We want a balanced budget". The Liberals say: "Oh, no. Sorry. Canada does not need a balanced budget. You do not know what you are talking about. We have a plan that is going to cut the deficit to $25 billion in 1997 and everything is going to be okay. It is a feel good budget". At the same time they are going to add $100 billion to our debt and maybe another $10 billion to the interest payments.

Madam Speaker, any economist will tell you that if you are deeply in debt-as a matter of fact, my wife will tell you, because she runs our household budget and does a darned good job, that the time to reduce your debt is when things are good, when you have a good paying job. Let us apply that same simple principle to this budget. This government should apply that same principle. Things are pretty good in this country right now. Now is the time to make some drastic cuts and get rid of the deficit. Get the fiscal house of this country in order.

The Canadian people, the consumers in this country, have no confidence in the financial affairs of this government. If they did, consumer spending would be far higher than it is now. The investors in this country have no confidence in the future of the financial plans of this government. If they did, investment would be higher now. That is where we have to target. We have to get back people's confidence in the investment community.

I would like to tell the Liberals how they can be heroes. All they have to do is balance the budget. Give the Canadian people a definite time line to balance the budget. Regain the confidence of the Canadian people in the way the government handles the fiscal problems. Get rid of the deficit. Say to the people: "We have shown you that we have our financial crisis under control. We have eliminated the deficit".

Once there is a balanced budget the Liberals can say to the Canadian people: "We think you have confidence in us once again. Here is what we want to do. About 30 per cent of our national debt is foreign owned. Let us bring that foreign owned portion of our debt home. We are going to issue something similar to a war bond. We are going to declare war on our foreign debt. We want all Canadians to invest in these war bonds". That is something saleable, but only when Canadians are confident once again that the government is in control of its financial house.

I think many Liberal members would agree with that. I thank the hon. member for her support. I think it is a good idea.

This budget should be thrown out the window. This government should bring in a budget with a definite time line on balancing it. If it is 1997-98, so be it; if it is 1998-99, so be it, but give Canadians a light at the end of the tunnel. Show Canadians the government is serious about getting the deficit and debt under control. Only then will confidence be returned to this government.

I can assure you that confidence will be returned once again in 1997-98 when the Reform Party of Canada forms the Government of Canada.

[John Solomon, NDP, Regina—Lumsden, SK]

Madam Speaker, it is my pleasure to participate in this debate on the Bloc amendment with respect to Bill C-76, the budget implementation act.

What we have seen is an effort by the Liberal government opposite to try to get a handle on its budget without considering the effects on the economy in western Canada or the effects on the national economy.

What this budget has done is described in one word in terms of an impact on the province of Saskatchewan and on rural Canada. The day after the budget there was a one word headline in big bold black letters across the front of the Leader Post . The word was ``devastated''. Western Canada and rural Canada have been devastated by two major planks of that budget. I refer specifically to the elimination of the Crow benefit and the abandonment of rail lines in rural Canada.

The present minister of agriculture used to be a parliamentary secretary to Minister of Transport Otto Lang back in the mid-seventies. At that time the Liberal government attempted to commence the dismantling of the Crow rate as it was called then. The minister of agriculture who sits in this government today was defeated in 1979. He was defeated in 1980. He was defeated a number of other times provincially after that involvement with Otto Lang and the Liberal government to dismantle the Crow rate. He was re-elected in the 1993 election and was appointed minister of agriculture. In one fell swoop of a budget not only does he dismantle the Crow benefit but he also eliminates it entirely from the rural Canadian population.

What we see as a result of this very treacherous act on farmers who supported him in the last election is an act of betrayal. The minister of agriculture has stood in this House and betrayed rural Canada with the elimination of the Crow benefit. For the members opposite, as a result of this budget, I predict that not this summer, not this fall, perhaps not even next year, but in the next election which is held in this country no Liberal members will be elected in the province of Saskatchewan.

The budget and the elimination of the Crow benefit will be the major reason for the defeat of the minister of agriculture and all of his Liberal colleagues from Saskatchewan.

What is the argument for abolishing the Crow benefit? If the argument is that the Crow has to be cut to conform with the GATT, farmers do not buy it. The requirements of GATT can be otherwise met. At least that is an argument. If Canada cannot afford the subsidy, at least that is an argument. What is the argument for essentially scrapping this transportation policy and putting nothing in its place? It is not fair.

It is also not fair to reduce dairy subsidies by 30 per cent, but transport subsidies to Saskatchewan grain farmers are cut by 100 per cent. We know Ottawa has a deficit and debt problem, but we must do our bit. This means we should tailor the suit to fit the cloth.

The scrapping of the Crow has left serious questions unanswered. In the short term the issue of who gets the $1.6 billion payout and how and when it will be distributed must be answered now for the farmers in very clear terms so they can make informed decisions about this year's operations.

More important, Ottawa must look at the long term because these long term costs will be high. The former chairman of the agriculture committee, who is participating in this debate from his seat, is quite upset with the fact that farmers are upset with his government and his party for having eliminated the Crow benefit.

I can assure the member that when the next election is called even the Alberta members in the Liberal Party will be defeated as well and perhaps also those from the Liberal Party in Manitoba.

I want to recognize the impacts to farmers in Saskatchewan of the abolition of the Crow benefit. Swift Current is a city in the western part of the province. The tonnage, the freight rate for a tonne of grain, will increase from $13.82 in 1994-95 to $28.58 in 1995-96. That is about a 125 per cent increase. Also, the projection for 1996-97 shows the freight rate for a tonne of grain will increase to $32.28, a further increase.

In the eastern part of our province, the southeast where we have a Liberal member sitting, in Estevan district, the increase will be from $11.80 per tonne in 1994-95 to over double, $23.48 in 1995-96. For 1996-97 the projection is $34.64, tripling the current rate.

Those in the eastern part of our province will be hardest hit. The overall result barring crop adjustments will be a loss of $320 million a year in net farm income in Saskatchewan alone. This represents a drop in income of about 50 per cent for farm families, and any shortfall in grain prices will compound their loss.

At the same time, federal safety net funding is to be cut by 30 per cent over the next three years, again hitting mostly the grain sector. We see substantial increases to transportation in Atlantic Canada for highways and roads but we do not see any comparable increase for the loss of the Crow benefit which will severely impact our good road system in Saskatchewan.

Ottawa's changes to the regulatory system mean that as of January 1, 1996 some 500 miles of light steel rail lines will be subject to abandonment with no review, affecting 48 communities in Saskatchewan. Another 3,000 miles of branch lines become eligible for abandonment after an as yet undefined review process, affecting another 383 cities, towns, villages and hamlets. This fast tracking of branch line abandonment means higher trucking costs and the further one is from a main line, the higher those costs will be. For instance, the distance from Kyle, Saskatchewan to the nearest main line is about 70 kilometres; from Val Marie it is about 150 kilometres.

What about the higher road maintenance costs to support this increased trucking? Who pays for this? I am encouraged Ottawa finally recognized the road impact, but the $300 million adjustment spread over six years and across three provinces with only part of this designated for roads-

[The Acting Speaker (Mrs. Maheu)]

Your time has expired.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

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

Madam Speaker, I would like to thank you once again for giving me the opportunity to address questions to the government which the people of Saskatchewan, particularly farm people and the communities they support, are concerned about.

On March 17, on behalf of the Minister of Agriculture and Agri-Food and the Minister of Finance, the Minister of Transport answered, inadequately, two important questions I put to the government in regard to the Liberals' plan to eliminate the Crow benefit.

First, I want more information with regard to the future of the Canadian Wheat Board and its request for regulatory control over freight rates. The minister was aware that the Canadian Wheat Board asked the federal government to give farmers a short term break on freight rates and I agreed with the board.

There is no debate about how the elimination of the Crow benefit will affect the increased costs of shipping grain by rail. Those costs will increase dramatically. In fact, for the benefit of those who are uninformed here in the Chamber tonight, it should be noted that when taken to its lowest common denominator, the average benefit of the Crow rate to a Saskatchewan farmer in 1994-95 terms is $15.63 per tonne out of a total grain freight cost of $30.35 per tonne. On an average sized farm this means an average increase in costs of $10,000 to $12,000 per year per farm as of August 1, 1995. As members heard me say in my speech in the House last week, this means a community increase of about $1 million for every delivery point in the province.

Given no other changes, the government's decision to eliminate the Crow benefit will result in a doubling of farmers' shipping costs at the same time that farm income support from the federal government will drop by 30 per cent over the next three years. There is nothing to say that when the federal government removes itself from the business of helping to move grain to port by rail that the railways will not immediately increase the cost of the freight. The Canadian Wheat Board, most Saskatchewan farmers and I would like to see some sort of regulatory control put in place to ensure that there are no immediate or later unnecessary increases imposed on farmers during this most vulnerable time.

On March 17 I also raised the question of the future of the Canadian Wheat Board because no studies have been done on this subject. The government is eliminating the Crow benefit with the stated intention of reducing the amount of grain grown on the prairies in favour of more crop diversification. With less grain, especially wheat, and with the need of the Canadian Wheat Board to have a secure supply of product on hand for our many customers around the world, I want to know if the government has spent any time studying what the long term implications of the decision to eliminate the Crow rate will have on the Canadian Wheat Board and the security of its supply.

In a supplementary question I expressed concern about the pending payout of $1.6 billion. It is already acknowledged that farmers' costs will be increased by the elimination of the Crow benefit and it was speculated from day one that land values would decrease. Now it seems that the Liberals are acknowledging that land values will decrease and, as a result, they are putting in place a financial compensation package which seems to only address the decrease in land values.

[Jean Augustine, Liberal, Parliamentary Secretary to Prime Minister]

Madam Speaker, I am responding to the hon. member's question of March 17.

The WGTA reform will have a major impact on our grain handling transportation system. The Ministers of Agriculture and Agri-Food and Transportation, in consultation with all stakeholders, have developed plans and strategies to assist farmers in making the transition to a new market environment.

This will include a legislative and regulatory framework which will assist in the achievement of efficiency gains. For example, the provision of the National Transportation Act will help to foster competitively priced grain transportation services and cost savings for farmers and shippers. A system will be put in place to ensure the provision of necessary information, monitoring and review processes. These in turn will be used to track system revenues, costs, efficiency achievements and an appropriate sharing of benefits. In other words, provision has been made to pass efficiency savings on to the farmers.

Regarding the hon. member's concerns related to the government's ex gratia WGTA payment, it is important to note that the transportation subsidy had an impact on land values. With the elimination of the subsidy, the payment addresses the subsequent changes in these land values.

In addition, the payment is decoupled. This means it will be market neutral with respect to future production and marketing decisions of producers. It is also in keeping with Canada's international trade obligations.

It is important to note the government's assistance is not limited to this payment. Saskatchewan will share in a $300 million adjustment fund.

[Maurice Godin, Bloc, Châteauguay, QC]

Madam Speaker, my remarks tonight follow up on my question to the Prime Minister on December 8, 1994, about the contract awarded to Saint John Shipbuilding without a call for tenders; the MIL Davie Shipyard, which had submitted a bid, was wronged in the process. Here is the question I asked:

How can the Prime Minister explain that, despite the clear directive issued by him to the president of the consortium, Mr. Ken Hall, Hibernia has refused to redress the injustice to which he has himself so strongly objected?

The Prime Minister answered:

I think the company should not have acted in this way. I have said it clearly, but since we own only 8.5 per cent of the company's shares, we cannot force it to change its decision. I still think it is a bad decision for both the Newfoundland shipyard and the Quebec shipyard.

The answer given by the Prime Minister is not complete. In my opinion, it is not true that the federal government is not in a position to force its views on the Hibernia project. It is true that the federal government owns 8.5 per cent of the shares in the Hibernia project for $340 million, but the Prime Minister forgot to tell us that the government invested $400 million more in 1992, when Gulf pulled out. The federal government also pays almost $100 million in cost overruns. It granted $1 billion in subsidies and gave $1.7 billion in loan guarantees. More over, it undertook to pay the difference in production costs between the market price and $25 a barrel.

Let them not pretend the federal government is just any other investor. It is the main investor in the project with $3 billion out of $6 billion. The Prime Minister should have taken a tougher stand and demanded that the consortium follow his directive. Hibernia is the perfect image of Canadian federalism with the lobbyists making the decisions and the Prime Minister carrying them out. As a result, we have policies which lead to waste and a debt of $500 billion, megaprojects which are ruining us and will never be profitable.

Of the five modules ordered for the amount of $100 million, two were made in Korea, two in Italy and one in Newfoundland, following construction of a shipyard 25 per cent of which was paid for out of our tax money. We were told that the study recently claimed that MIL Davie was not profitable, but who produced this study? It was Ernst & Young, which contributed $116,452 to the Conservative and Liberal Parties in the last election and received federal contracts worth $2.4 million in 1993-94. Can Quebecers trust such a partisan study? What I would like to know is if the Prime Minister will make a commitment to ask the consortium to grant the contracts for the construction of future tankers to MIL Davie as was done for Saint John Shipbuilding, that is without a call for tenders?

[Jean Augustine, Liberal, Parliamentary Secretary to Prime Minister]

Madam Speaker, I am pleased to respond to the member.

The hon. member was not satisfied with the response of the Prime Minister to his question of December 8, 1994. The question at the time related to the process followed by the Hibernia consortium last fall when it became necessary to remove some work on drilling modules that had commenced at the Marystown shipyard in Newfoundland. The work had fallen seriously behind schedule.

In order to avoid jeopardizing the schedule for the entire project, an outcome which could lead to severe cost overruns, the Hibernia Management Development Company decided to place the completion of this contract in the hands of another shipyard on relatively short notice.

The contract was transferred to Saint John Shipbuilding for completion in New Brunswick without giving the MIL Davie a formal opportunity to rebid on the remaining work. The member knows that MIL Davie had submitted a bid on the contract when it was originally tendered but lost out to Marystown.

After the Canada-Newfoundland Offshore Petroleum Board reported on the process, followed by the HMDC, the Government of Canada and the Prime Minister again asked the Hibernia consortium to review its decision. The owners did review the decision and four out of five concurred with the chosen course of action.

With an 8 per cent ownership interest in the project, the Canadian government is not in a position to direct decisions taken by a basically private sector consortium.

I hope this clarifies the matter for the member.

[The Acting Speaker (Mrs. Maheu)]

It being 6.41 p.m., this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 6.41 p.m.)