Mr. Speaker, today I will deal with three aspects of the 1995 Liberal budget and Bill C-76, an act to implement certain provisions of the budget.
First, I will outline the cuts in agriculture spending and make some general comments on the cuts. Second, I will ask some questions on behalf of Canadian farmers about what will follow the WGTA. These questions and many others have been asked over the months since this budget was tabled in the House. Third, I will discuss how the shortcomings in the overall budget might affect farmers and the agri-food industry.
First, how do the cuts in agriculture spending compare to the cuts in other sectors of federal government spending? How do the cuts on payments to farmers compare to cuts in operating costs of the department itself?
Farmers have obviously been asked to shoulder an unfair portion of the spending cuts in this budget. I am not saying the cuts should have been the same percentage in all areas of government spending, but by any measure, agriculture was hit disproportionately hard. Had cuts been made in other sectors in a fair way, this would have produced a balanced budget and all the positives that go along with a balanced budget. To illustrate this point, I will give a brief summary of the cuts in agriculture spending.
In the agriculture department overall spending was cut by about 20 per cent. Total funds available for 1994-95 are $2.1 billion. There was a $445 million cut in spending in this budget to the agriculture department. These cuts came in safety net funding, subsidies to dairy farmers, research, and user pay fees for inspections and those types of things. As well, there were some cuts in the department itself.
There are also cuts in agriculture from the transport department. The Crow rate, $560 million a year, was the largest single cut to farmers and is effective July 31, 1995. The Atlantic Feed Freight Assistance Act and the Maritime Freight Rates Act will be eliminated by July 31, 1995. The cost for this subsidy was $99 million a year.
To summarize, the total cuts in agriculture spending from the transport department are approximately $660 million a year by the end of the third year. Total cuts to agriculture spending from the agriculture department itself are $445 million per year. Total cuts to agriculture spending in this year's budget are approximately $1.1 billion. By any measure, this is disproportionately weighted toward agriculture.
When the cuts in agriculture spending from transport and the agriculture department are combined, the reduced spending to farmers is 40 per cent in this budget. There is almost 50 per cent in cuts in payments when payments to the railways and direct payments to farmers are included.
How do the cuts to farmers outlined in this budget compare to the cuts in the operations of the agriculture department? The cuts in the agriculture department were 20 per cent compared to almost 50 per cent in cuts in the direct payments to farmers and the railways on the farmers' behalf. There is no balance when comparing those cuts.
I am not saying these cuts should not have been made. Rather, there should have been more balance across all sectors of government spending when compared to spending on the operations of the department itself. Later I will talk about the negative effects of the government not going far enough in this budget.
Farmers also needed a transition time to adjust to these cuts. For example, Reform proposed a trade distortion adjustment program nearly five years ago. This would have provided a gradual phase out of the WGTA benefit, putting the payment immediately to farmers so they could provide for the loss in the WGTA payment as was needed. It would have also provided for a fund to compensate farmers against unfair trade practices in other countries.
This transition time was desperately needed by farmers so farmers would have time to make the necessary changes in order to recoup the losses suffered as a result of this budget. Not only is there no transition time, but there are not enough substantial changes to allow farmers and agribusiness to become more efficient.
Some changes were made but they did not go far enough. For example, in branch line abandonment, the reductions that will be allowed are limited and uncertain. In car allocation, the method used will be based on historic allocation. That does not provide well for the changes which are needed to make this system more efficient. The Canadian Wheat Board will still be a government controlled body instead of a farmer controlled body which is what it should be and what farmers want it to be.
Payouts will be made to farmers under this budget. First, in regard to the WGTA there will be a $1.6 billion compensation package. The stated intent is to compensate farmers for a loss in land value which will result from the loss of this $560 million a year subsidy. When we examine this it allows for about a one and a half to a two year transition time for grain farmers. It is too short a transition time. There would also be a $300 million transition fund but we do not know where it will be spent and how it will be used. There is too much uncertainty.
In feed freight assistance the payment is eliminated entirely but there will be a $326 million transportation adjustment program. Again, it will be paid out over five years. The detail beyond that does not exist. The uncertainty is unacceptable.
Governments have talked a lot about trying to help stabilize the agriculture industry. It seems to me that they have caused a lot of uncertainty and instability. That is certainly the case with this budget. More questions have been left unanswered than have been answered.
I want to ask some of the questions which have been asked of me by western Canadian farmers over the past month. They concern the loss of the Crow benefit payment and how the payment will be made. Other questions concern the compensation and transition packages.
The stated purpose of the $1.6 billion WGTA payout is to compensate farmers for a loss in land value resulting from a loss of this benefit. If this is the intent, then why would the payment not be made on all farmland? If grain land loses its value, then would not other land lose its value as well?
Why did the minister call on owners and lenders to pass the payment on to renters and lessees? This seems inconsistent with the government's stated intent which was to compensate for the reduced land value. If the real intent on the other hand is to provide transition funding to grain farmers, then why is this not acknowledged and why is the payment not structured accordingly?
There is a second area of questions I will ask on behalf of farmers. Does the minister have any advice for renters or those leasing land and who are part way through a lease or rental agreement right now? These farmers will be caught paying up to $35 an acre more in freight costs for crops they will be seeding over the next two months. Because of crop rotations and herbicide planning, it will be difficult to make the appropriate adjustments in crop seeding to help reduce the added costs by changing to higher value, lower volume crops or indeed moving more into livestock and growing feed or providing pasture for livestock.
Does the minister feel it is reasonable to make a policy change which will have the magnitude of impact with virtually no transition time and no transition funding? That is the case for lessees and land renters. I am sure there are thousands of farmers renting land, and many in the minister's own riding I would suggest, who are looking for advice on how to deal with this unanticipated extra cost. I doubt very much they will be looking to the minister for this advice.
The third area of questions farmers have asked over the past month since the budget and indeed before it also has to do with the WGTA and the loss of that benefit. I have several questions to ask on behalf of western grain farmers regarding how the payment will be calculated and when the payment or payments will be made.
The budget implementation bill does state that payment will be based on 1994 acres seeded to grains and an adjustment will reflect historic productivity. This leaves many questions unanswered.
For example, how will historic productivity be determined? If the payment is based on 1994 grain acres, those who have been moving acres from forage to grain land in a rotation may be completely missed in terms of a payout. People who read the market signals and who made the appropriate moves could be completely missed by this payment through no fault of their own. The last question is when will farmers receive their payment or payments?
Another area is what measures will be taken to allow the system to become more efficient and to give farmers more flexibility in marketing. I have seen very little evidence this exists.
The Liberal government by not going far enough in the budget will make life for Canadian farmers very difficult. Cuts in agriculture are not matched in any way by cuts in other areas of federal spending. As well, changes which would allow farmers to make up for some of the losses in payments from government, or which would allow farmers to cut costs, are inadequate. Changes that would allow farmers more direct access to markets are non-existent.
The inadequacies in the budget will make the next few years very difficult for farmers. However, there is another overriding factor which if not dealt with quickly will make the future most difficult for farmers, other business people and all Canadians. This overriding factor is the continual increase in interest payments on the debt. Interest payments on the debt have increased from $39 billion a year, when the government took office, to $51 billion with the finance minister's own figures, an unacceptable increase in levels.
What this will mean to farmers is more cutbacks next year and beyond, higher than necessary interest rates, little hope of reducing input costs to help compensate for increased freight costs, losses in government payments and more uncertainty regarding the future of social programs. Farmers will face these extra costs and difficulties because the budget does not set a definite date for eliminating the deficit.
I have provided a summary of the cuts in agriculture. I have asked some of the yet unanswered questions regarding the WGTA payout. I have outlined the major, overriding factor, interest payments on the debt, which threatens farmers in so many ways.
Farmers need some answers in order to provide certainty in their lives. I am asking the government to give some answers which will allow certainty to replace the instability and uncertainty farmers will feel and have felt as a result of the budget.