House of Commons Hansard #183 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.


Government Response To PetitionsRoutine Proceedings

10 a.m.

Kingston and the Islands Ontario


Peter Milliken LiberalParliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to two petitions.

PetitionsRoutine Proceedings

10 a.m.


Janko Peric Liberal Cambridge, ON

Mr. Speaker, I have two petitions. The first one is on human rights. It bears 50 signatures and was forwarded to me by constituents of my riding of Cambridge.

The petitioners pray and request that Parliament not amend the human rights code, the Canadian Human Rights Act or the charter of rights and freedoms in any way that would tend to indicate societal approval of same sex relationships or homosexuality.

PetitionsRoutine Proceedings

10 a.m.


Janko Peric Liberal Cambridge, ON

Mr. Speaker, the second petition concerns BST. It bears approximately 25 signatures and was forwarded to me by constituents of my riding of Cambridge.

The petitioners are concerned about drinking milk from cows injected with BST because BST is known to be a health hazard to both humans and cows. The petitioners call on Parliament to ban the use of BST and not accept dairy products from countries where BST is used to treat cattle.

PetitionsRoutine Proceedings

10 a.m.


Bill Gilmour Reform Comox—Alberni, BC

Mr. Speaker, pursuant to Standing Order 36, I am pleased to present two petitions from constituents in my riding of Comox-Alberni.

The first petition contains 97 signatures. The petitioners request that Parliament enact legislation providing for a binding referendum to accept or reject two official languages, English and French, for the government and the people of Canada.

PetitionsRoutine Proceedings

10 a.m.


Bill Gilmour Reform Comox—Alberni, BC

Mr. Speaker, the second petition contains 209 signatures. The petitioners request that Parliament immediately extend protection to the unborn child by amending the Criminal Code to extend the same protection enjoyed by born human beings to the unborn.

Questions On The Order PaperRoutine Proceedings

10 a.m.

Kingston and the Islands Ontario


Peter Milliken LiberalParliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I am answering question No. 143 today.

Question No. 143-

Questions On The Order PaperRoutine Proceedings

10 a.m.


Ted White Reform North Vancouver, BC

With respect to the unemployment insurance program, for the past five years, ( a ) how many cases of fraud were reported each year, ( b ) how many convictions for fraud were secured each year, and ( c ) how many frauds were there as a total of overall claims?

Questions On The Order PaperRoutine Proceedings

10 a.m.

Winnipeg South Centre Manitoba


Lloyd Axworthy LiberalMinister of Human Resources Development and Minister of Western Economic Diversification

Mr. Speaker, the response is as follows:

Questions On The Order PaperRoutine Proceedings

10 a.m.


Peter Milliken Liberal Kingston and the Islands, ON

Mr. Speaker, I ask that the remaining questions be allowed to stand.

Questions On The Order PaperRoutine Proceedings

10 a.m.

The Acting Speaker (Mr. Kilger)

Is that agreed?

Questions On The Order PaperRoutine Proceedings

10 a.m.

Some hon. members


SupplyGovernment Orders

10 a.m.


Jean-Guy Chrétien Bloc Frontenac, QC


That this House denounce the government for reducing the general budget of the Department of Agriculture by 19 per cent and milk subsidies by 30 per cent and for converting grain transportation subsidies into direct subsidies to Western farmers, thereby enabling the latter to diversify and enjoy an unfair competitive advantage over farmers in Eastern Canada.

Mr. Speaker, I take great pleasure this morning, as agriculture and agri-food critic, to start the debate on this opposition day on agricultural issues because we in the Bloc Quebecois believe that these matters must get all the attention they deserve.

With the cuts it set in motion, the federal government recently gave the impression that the agricultural sector is of secondary importance.

I would like to thank my colleagues who agreed to speak today in the course of this opposition day on agriculture. They are the hon. members for Joliette, Champlain, Mégantic-Compton-Stanstead, Shefford, Matapédia-Matane, Kamouraska-Rivière-du-Loup, Lotbinière and Québec-Est.

You will note, Mr. Speaker, that, with the exception of the hon. member for Québec-Est, all of them represent ridings with a high percentage of farm producers and a wide variety of farm types. Therefore, should you take the time to listen carefully to all the speeches, you will be fully versed, by the end of the day, in Canadian agriculture and, especially, in Quebec agriculture.

Accordingly, with the motion we are putting before this House today, which you have just read, we are strongly criticizing the cuts the government is preparing to make on the backs of farmers. In addition to slashing in the agricultural sector, the federal government is wielding an axe there, completely indiscriminately.

I will take the liberty of reading word for word the motion tabled in the House today by the official opposition: "That this House denounce the government for reducing the general budget of the Department of Agriculture by 19 per cent and milk subsidies by 30 per cent"-this is a direct attack against the 12,000 dairy farmers of Quebec-"and for converting grain transportation subsidies into direct subsidies to Western farmers, thereby enabling the latter to diversify and enjoy an unfair competitive advantage over farmers in Eastern Canada"-and, of course, farmers in Quebec.

We denounce not only the cuts, but the Liberal government's lack of long term vision for this sector. I see the Minister of Agriculture across from me. I salute him and invite him to spend the entire day in the House to discover what Quebec MPs think of his recent budget and his vision for agriculture in Quebec and Canada. All he is succeeding in doing is throwing the market off balance with inappropriate compensatory measures.

It looks like a wind of concern is blowing through the Liberal camp. They are trying to target the agricultural sector by waving the spectre of the catastrophes that will befall us when Quebec achieves sovereignty. We will therefore take this opportunity to set the record straight.

Of all the spectres being waved by the federalists, milk quotas are, by far, the one most often hauled out of moth balls to frighten the farming community. Just recently the paper, La Terre de chez nous , and the daily, La Presse , described in length the disasters awaiting farmers in a sovereign Quebec, according to an agronomist.

Also in La Presse , a columnist said that sovereignty is dangerous because, if Quebec voted yes in the referendum, its supply management system would be dashed to pieces.

The Council for Canadian Unity has made milk quotas the cornerstone of its campaign of fear targeting the farming sector. It says that if Quebec separates, it would lose its milk quota for sales to Canada immediately-not tomorrow or the next day but immediately. That hits home harder and is scarier.

Seriously now, is that really the no side's strategy? The conclusion to be drawn from this line of argument from federalists is that they have no idea how the dairy industry in Canada and Quebec works.

What saying that sovereignty would be catastrophic for Quebec's dairy industry shows most of all is that federalists have found no other way of scaring our farmers. The biggest myth going around is that Quebec's industrial milk quota would be cut at least in half-that hits home even more-forcing many dairy farms in Quebec to close. We all know that Quebec producers have 48 per cent of the industrial milk quota while 25 per cent of Canada's population lives in Quebec. Now, several farmers from Quebec, who have gone to the trouble of coming here to listen to us today, are in the gallery facing me.

SupplyGovernment Orders

10:15 a.m.

The Acting Speaker (Mr. Kilger)

Order. Since it is an opposition day and the agriculture critic is leading off the debate, I would simply ask the House to maintain the spirit of debate that prevails at all times. Although there are no specific rules regarding the mention of the presence of certain people in the gallery, I would ask all hon. members from both sides of the House to co-operate during this debate on agriculture, a very important issue affecting all Canadians.

SupplyGovernment Orders

10:15 a.m.


Jean-Guy Chrétien Bloc Frontenac, QC

Mr. Speaker, I will comply with your instructions willingly and I would like to stress that I always send my salutations along with the Speaker's to the dignitaries who are acknowledged in the gallery behind me.

I was saying just before you intervened that the links between Quebec and Canada would be cut if Quebec voted yes in the referendum. Trade between Quebec and Canada-get a load of this, my friends across the way-is over $80 billion per year. This economic integration alone is justification for maintaining some kind of economic tie between Canada and Quebec or Quebec and Canada. Isolating the case of milk quotas to show that Quebec would lose its exports, and that the opposite would not take place, is pure bunk.

Quebec dairy farmers play a leadership role in the present supply management system. With about 48 per cent of industrial milk quotas, Quebec is the main supplier of dairy products for the whole of Canada. For example, did you know, hon. colleagues, that 40 per cent of Canadian cheese consumed by the rest of Canada come from Quebec? It is with this in mind that we must consider the future.

We will soon have to make a decision regarding the future of Quebec. I strongly believe that no matter what we decide, it is in the best interest of the rest of Canada, as well as of Quebec, to co-operate in order to preserve the dynamism of our agricultural sector. On Wednesday, March 29, we had very concrete proof that this co-operation goes way beyond the political level. This did not happen a century ago, this was last week. Dairy farmers in Quebec and Canada signed a memorandum of agreement integrating the marketing of industrial and consumer milk in six eastern provinces. I would like to name them: Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island. I would remind you that Newfoundland is not part of the supply management system.

An agreement was signed to create a common market between these six provinces. Under this agreement all farmers in these provinces will receive the same amount of money for their milk and will have a common quota. You have to understand that an unfair practise had existed for years. A farmer who had an industrial milk quota sold his milk for up to 10 per cent less than what he could have gotten for consumer milk. If two identical cows had been branded, one for consumer milk and the other one for industrial milk, the farmer would have gotten less for the production of the latter.

In less than 18 months, this inequity will have disappeared. We had this distortion, and it was not in Central America or in Central Africa, but here in Quebec. We had two different prices for the same milk, depending on whether it was to be processed or consumed as such. The six provinces now party to this agreement account for 85 per cent of the Canadian industrial milk quota. This integration will allow them to put in place a single system of milk marketing. In the medium term we can even see the total elimination of interprovincial barriers to milk supply.

The lesson to be drawn from this agreement is that even in a referendum year dairy farmers in Canada demonstrated that they are willing to integrate economically with Quebec. Why should they take the risk of signing this kind of agreement at the present time? Surely because they know that following a yes vote in the referendum, Canada will keep its economic union with Quebec in order to protect its own interests.

This proves that economic reality is stronger than emotional considerations.

Federalists raise another important issue, namely what will happen to customs tariffs with the U.S.? When renegotiating NAFTA, the U.S. will probably try to get a better deal than they already have, which will not be any different from what is happening right now. Just as Canada does at the present time, Quebec will answer that tariffs are protected by GATT, which is what the agriculture minister tells us every time we ask a question in this House regarding the sugar negotiations, wheat exports, and the tariff issues raised by the U.S. the day after New Year. This very minister invariably answers that GATT agreements take precedence over NAFTA. If this is true in his case, it should also be true for Quebec.

The real threat against the dairy industry and Quebec agriculture does not come from Quebec's possible sovereignty, but from the federal government opposite which is increasingly neglecting Quebec agriculture, and especially the dairy industry. It comes from a total lack of planning on the part of the government opposite and, above all, from the lack of fairness of the budget measures proposed by the Liberal government.

February 28 was a sad day for dairy producers in Quebec and Ontario. On that day, the finance minister announced, in his

budget, a 30 per cent reduction over two years of the federal subsidy for industrial milk. Since Quebec farmers alone produce 48 per cent of the industrial milk quota, it is obvious that they are the ones who are the most unfairly affected.

Mr. Speaker, I do not want to use props, but there is in Ontario a farming magazine called Farm and Country. It is the equivalent of Quebec's La Terre de chez nous . Every farmer at least flips through it from cover to cover, if they do not actually read all of it. This week, there is a cartoon on the front page, showing a beautiful Holstein cow and, sitting on a small stool, a farmer who bears a striking likeness to our finance minister. He is milking the cow. His pail is empty. The teat is full of scars. When he squeezes it, all he gets is one lonely drop of milk. This is the kind of future this government is shaping for dairy producers.

Also, last week, Mr. Laurent Pellerin, president of UPA and a great advocate of Quebec farmers, whom I salute today in this House, estimated that the 30 per cent reduction in industrial milk subsidies will cost producers $4,485 over two years. If you allow me, I will take a few seconds to explain how he reached this figure. I would like the agriculture minister to listen very carefully because there is something I want to point out.

Dairy farmers will not receive any financial compensation for these cuts, unlike western wheat and grain producers, who will receive $1.6 billion in non-taxable funds, which is the equivalent of $2.2 billion. But there is absolutely nothing for Quebec and Ontario.

A farmer who produces 2,500 hectolitres of milk per year and who buys 71 tonnes of mash every year to feed his cows will be hurt because, as you know, the feed grain transportation subsidies have also been cut in the East. The Maritimes will be hit hard. The subsidy on 2,500 hectolitres has been cut by $5.43 per hectolitre times 2,500, or $5.43 less 30 per cent or $1.51.

Dairy farmers face cuts of 15 per cent this year and 15 per cent next year for a total of 30 per cent for every hectolitre produced. Next year, they will lose $1.51 per hectolitre. A farmer producing 2,500 hectolitres per year faces a $3,775 cut.

To this must be added the cuts to the feed grain transportation subsidies. The resulting increase for farmers is estimated at $10 per tonne. Farmers will be asked to do their share to correct the past mistakes of successive federal governments that accumulated huge deficits. A farmer buying 71 tonnes at $10 per tonne would add $710 to the $3,775 cut and end up with a $4,485 contribution to deficit reduction.

As you know full well, what will happen in August is that dairy producers will ask the Canadian Dairy Commission to increase milk prices, and I hope that their request will be granted. Dairy producers are not stupid. They do not have to suffer such a major drop in income. The Canadian Dairy Commission will allow them to raise their prices, I hope, to compensate for cost of living increases and the losses incurred.

As a result, consumers will pay much more for powdered milk, butter, cheese, yogurt and ice cream. This is called hidden taxes. Farm and Country , the Ontario magazine I referred to earlier, estimates that every dairy farmer contributes $56 per cow to deficit reduction.

Surprisingly enough, not a single Liberal member rose in this House to denounce the 328,000 flights. As we read in the newspaper last week, these trips cost nearly $1 billion in travel expenses. I have the newspaper article in front of me: the 328,000 flights taken between April 1993 and March 1994 cost taxpayers $275 million so that Canadian Forces members and senior officials, in particular officials at the Department of Transport, could travel.

In closing, I urge dairy farmers in Ontario and Quebec to look out for the ordeal that this government will inflict on them in the next 24 months.

SupplyGovernment Orders

10:35 a.m.

Regina—Wascana Saskatchewan


Ralph Goodale LiberalMinister of Agriculture and Agri-Food

Mr. Speaker, I am very glad to have the opportunity to participate in this discussion about the 1995 federal budget, particularly the impact of that budget upon agriculture and agri-food.

It goes without saying that I profoundly disagree with the conclusions that have been drawn so far in this debate by the member for Frontenac. I would suggest that his analysis is incomplete, entirely negative in its focus and, with the greatest respect, his analysis is wrong.

To support what are clearly his separatist objectives he seeks to sow the seeds of division in a narrow and partisan manner. He seeks to pit region against region, province against province and farmers against farmers. It is indeed sad to see this rather destructive approach, but coming from the Bloc Quebecois it is no surprise. Their objective is not to build this country up; their objective is to tear this country down. So I am not surprised by the motion today from the BQ.

What is perhaps surprising is the similarity in approach that is taken by the BQ and the NDP. Two weeks ago the NDP and the Bloc Quebecois joined together in a rather bizarre alliance in this House to block speedy passage of vital government legislation to restore services in the Canadian railway system. Until they recanted and belatedly changed their position, the NDP lent aid and comfort to the Bloc Quebecois in inflicting totally unnecessary damage upon the entire Canadian economy, particularly upon agriculture.

The work stoppage in the rail system could have been ended and full service could have been restored within perhaps no more than 48 hours. However, the Bloc made that impossible

and the NDP helped them in doing damage to Canada. The rail dispute lingered on for more than a week and the cost of that delay was very expensive.

In the Canadian grains industry alone, that one lost week represented a loss of revenue from grain sales in the order of $100 million, plus the delay caused by the Bloc Quebecois and the NDP damaged Canada's international reputation as a reliable agriculture and agri-food supplier to world markets. It is truly impossible to fathom why the NDP would give credibility to the Bloc by supporting the BQ in stalling the legislation to bring the work stoppage in the rail system to an end.

But the rail dispute is not the only example of a similarity between the NDP and the BQ. They also have similar approaches when it comes to an analysis of the federal budget, which is the subject of the motion today. Both of these parties, devoid of any national vision, without a serious commitment to Canada as a whole, resort to the small and petty politics of fostering regional divisions. Each of them in their own way try to make the case-the erroneous case-that their region has been unfairly treated and some other region has been given some unwarranted advantage.

The BQ claim unfairness toward Quebec and they attack western Canada. The NDP claim unfairness toward the west and they attack Quebec. Both of them are absolutely dead wrong.

The 1995 federal budget has in fact been very well received across this country, and significantly in all parts of this country, for three reasons. First, it launched a genuine and concerted attack against the horrendous problem of government debt and deficits. This budget is for real. It is not smoke and mirrors. It sets the government on a true and definitive course toward achieving our deficit reduction targets as promised in our 1993 red book platform. What we are doing in this budget is what we committed ourselves to do in the last election. We are bringing the annual deficit down below 3 per cent of gross domestic product over three fiscal years.

Consider the problem of debt that we inherited when we came to office in November 1993. The annual deficit at that time was running in excess of $40 billion a year. That was about 6 per cent of the country's gross domestic product. Think of this. The agriculture and agri-food sector of the Canadian economy, all included, amounts to about 8 per cent of our GDP. So the deficit, at about 6 per cent of GDP, was eroding three-quarters of the economic value of the entire agriculture and agri-food sector.

The total accumulated federal debt was running, when we came to office, at something in excess of $500 billion. Interest costs were approaching $45 billion or perhaps even $50 billion a year. That works out to $850 million every week, or $120 million every day just to pay the interest. In fact, if we were to add together all the net incomes of every single farmer in Canada for the next ten years, we would barely have enough money to pay the interest on the national debt for one year. That indicates the magnitude of the problem. The problem is huge, it is urgent, and in that last budget it demanded swift and decisive action.

We have acted. We have met and exceeded our deficit reduction requirements for 1993-94. We have met and exceeded our deficit reduction targets for 1994-95. We will continue to meet our objectives with respect to the deficit in 1995-96 and in 1996-97. We will bring the deficit down below 3 per cent of gross domestic product within three fiscal years, as we promised to do. Beginning in 1996, for the first time in a long time, Canada's debt-not just our deficit but our overall debt-to-GDP ratio-will also begin to come down.

Yes, the budget is strong medicine. Yes, it is tough. However, Canadians have supported it because they know it is necessary to deal with the horrific debt and deficit problem that this government inherited.

The second reason the budget has broad and general support is that it is fair and balanced. It tries very hard not to single out sectors or regions. The toughness in the budget is evenly distributed everywhere.

There are two kinds of measures in the budget to deal with the deficit. On the one hand we have reduced the overall level of government spending; on the other hand we have increased the level of government revenues. For every dollar raised in new revenues there are nearly $7 in spending reductions. That, of course, is consistent with what Canadians told us to do: focus on reducing spending.

When we add together the combined impact of all the budget measures, the spending cuts plus the revenue increases, and then analyse how that impact is distributed across the country, we find that in every region of Canada the budget's impact is closely in line with each region's share of the total population of Canada and each region's share of total federal government spending. The variations from region to region are only a few small percentage points, so there is a fair and balanced distribution of the burden.

With respect to agriculture, my department has not been singled out for any extra burden. In 1994-95 our budget was $2.1 billion. Over the next three years we will reduce that budget amount by $405 million, bringing it down at the end of the three-year period from $2.1 billion where it is today to $1.7 billion. That amounts to a cut of 19 per cent, and 19 per cent is exactly the average of all departmental spending reductions across the entire government. Most of the economic portfolios of government are reduced by an amount greater than 19 per cent. Most of the social portfolios of the government are reduced by an amount less than 19 per cent. Overall the full government average is 19 per cent. That is the reduction in the

Department of Agriculture and Agri-Food exactly on average. We have done our share in the crucial fight against the deficit, no more and no less.

There are some who argue that when transportation budget reductions affecting agriculture are added on top of the direct reductions in agriculture the percentage of all related spending cuts goes up above the 19 per cent average. This figuring is misleading. It ignores the transitional programming put in place by the budget to offset the impact of the transportation changes. When those transitional measures are added back into the equation over the next three years, as they must be to make a fair comparison, the impact on agriculture is on the average of that level of 19 per cent. Overall the balance is fair.

Within agriculture we have tried very hard to achieve internal balance as well. For example, in dealing with personnel costs we will be reducing our public service employee count by just over 2,000 positions. That is a reduction of 18 per cent, very close to the overall departmental spending reduction of 19 per cent.

The same can be said about our approach to different departmental spending programs. Take our income support programs for example. There are two major programs of that type within Agriculture and Agri-Food Canada. One is the dairy subsidy which is significant primarily in eastern Canada. The other is our farm safety net system which is significant primarily in western Canada. Both are being reduced by the same amount of 30 per cent. Again, there is fairness and balance, east and west, farm sector by farm sector and for agriculture overall in comparison to every other aspect of the economy.

This is the second major reason the budget has won general approval among the large majority of Canadians; that characteristic of fairness.

The third reason for budget support is we have coupled the hard reality of fewer government dollars everywhere for everything with a proactive agenda for renewal, restructuring and innovation to smooth the process of transition from the old economy to the new economy and to better position a sector like agriculture and agri-food to do better in every available marketplace in the world.

What I have heard so many times from farmers all over the country, whether in the east or the west, is they really do not want subsidies. What they want are fair market opportunities and decent prices from those markets from which to earn their living.

For this reason we are increasing our emphasis on market development and trade. Within our overall smaller budget a greater proportion than ever before will be directed toward gaining and keeping new and expanding markets. Similarly, with respect to research, the cutting edge of innovation to keep Canada ahead of the rest of the world, we have found a creative way to save precious tax dollars while increasing the overall Canadian investment in agricultural research and development.

We will achieve about $50 million in savings on research overhead and infrastructure over the course of the next three years or so. At the same time up to $70 million in both public and private funding will be injected into research through joint ventures with our private sector partners. We are doing this through a new initiative called the matching investment initiative for research in agriculture. It is a program that thus far, even though it is very new, has been received very well by the agricultural sector.

We will maintain Canada's renowned reputation for the best agricultural inspection system in the world but we will also save money. We will do that through a combination of cost reduction, cost avoidance and cost sharing together with the introduction of brand new technology and the elimination of unnecessary overlap and duplication among government departments and between different levels of government.

I am pleased to say that all my provincial counterparts are working very hard with me in the development of a national Canadian food inspection system to be top calibre, the best in the world and highly cost efficient.

We have also recycled some of our budgetary savings into a series of adaptation and rural development funds to assist in some of the necessary sectoral changes that must be made in the wake of the budget and to take advantage of future economic opportunities.

We have such a fund to help deal with the changes to be made in the feed freight assistance program. The Secretary of State for Agriculture and Agri-Food is now leading a consultation process to define the parameters for how that fund can best be used in those feed deficient regions of the country which have heretofore benefited from the feed freight assistance program.

As another example, within our overall spending envelope for farm safety nets there is scope for a series of innovation and adaptation funds to be established depending on the priorities and preferences of different agricultural sectors and the provinces.

This notion of an innovation or adaptation fund has been offered as old safety net schemes like the national tripartite stabilization program are phased out and as new safety net plans are developed, as is now the case in Saskatchewan.

In this direction with respect to the dairy program, apart from the subsidy reductions in parallel with safety net reductions elsewhere, we offered in the budget to undertake consultations with the Canadian dairy industry to develop the very best possible uses in future for the remaining subsidy moneys to enhance the industry's competitiveness. I know a lot of thought

is now being given to this suggestion by the dairy industry representatives in the country, including those in Quebec.

Another example of adaptation and innovation is with respect to a series of subsidy programs previously known as the Atlantic and maritime freight rate subsidy measures which will be discontinued as a result of the budget, but there will be transitional measures put in place with respect to those programs as well. That is under the purview of my colleague, the Minister of Transport.

In addition to all these issue specific funding initiatives, we have provided for a general $60 million per year adaptation and rural development fund for Canadian agriculture over all. It will be used to enhance access to pools of developmental capital, to enhance human resources in rural Canada, to enhance farm safety, to enhance rural innovation and infrastructure and to offset some of the regional implications of transportation reform.

Let me deal briefly with that aspect of the opposition motion today which refers to western grain transportation reform. Here as well there is a program being put in place to ease the transition away from 98 years of subsidization. These transition measures are temporary, as all adjustment measures are. However, they are also specifically within the parameters of acceptability as defined by the Quebec coalition on western grain transportation. It is interesting that the member from Frontenac earlier today failed to observe that fact which indicates consistency across the country on the basis of certain principles.

The benefit from transportation reform for western Canada comes not from any form of ongoing subsidization because the subsidy will be ended. The western benefit comes from a new freight rate regime that eliminates discrimination in its structure against higher valued production, value added processing, diversification and economic growth.

The prime difference between our approach in the government and that of Bloc members is that, as we have heard today so far in the debate, they have a tendency to cling to the past. They seem to be rather intimidated by the future. I do not think, from what I have seen in my many encounters over the last 17 months as minister of agriculture, that intimidated point of view is representative of Quebecers.

I have just returned from a sales mission, a trade mission with Canadian agriculture and agri-food representatives throughout South America. We visited Chile, Argentina and Brazil. Included in my delegation of private sector representatives was a broad cross section of agricultural representatives from Quebec. They were among the most outgoing, the most vigorous, the most aggressive in looking for new opportunities and broadening horizons, pursuing the future with great optimism and vigour. They did not seem to have this kind of negativism reflected in the remarks delivered today by the Bloc Quebecois.

For example, they were talking about the opportunities for the pork industry. They were not worried about any kind of transportation reform in western Canada. They were not worried about one region winning at the expense of another or one region losing because of something happening in another region of the country. What they were looking at together with their Canadian colleagues from across the country was broadening horizons, more markets, more trade opportunities, all of us selling more and doing better in the markets of the world rather than worrying about one group gaining at the expense of another.

If we have that kind of negative, inward looking defeatist attitude, we will probably end up being defeated. The secret for Canada's future is to broaden our horizons, to look outward, to take on the world with the confidence that we as Canadians have in agriculture and agri-food the very best products in the world to sell.

We have the most productive and efficient farmers in the world producing those products. We have a vital and vibrant processing sector. We have the capacity to excel in international trade and marketing and we do not have to worry about one market getting smaller because another is getting bigger. We must expand markets everywhere. We will all do much better in that new trading environment of the future.

That is the optimism we need to have. With that kind of attitude Canadians, all of us, within Quebec and outside, can take on the world and we will win.

SupplyGovernment Orders

10:55 a.m.


Jean-Guy Chrétien Bloc Frontenac, QC

Mr. Speaker, I want to thank heartily the Minister of Agriculture for making the time in his heavy schedule to participate in this debate on agriculture today.

On the other hand, I would like to remind the Minister of Agriculture that there is a new dynamics in Quebec, in Canada and in this House in particular. I can remember in the years 1968 to 1970 and up to the 1984 federal elections, Quebec was represented in this House by 74 Liberal members and one Conservative, in the person of my friend Roch LaSalle. There was nobody to denounce inequities. That hurt the Minister of Agriculture.

Mr. Speaker, is it an attempt to set the West against the East? Is it an attempt to set the Maritimes against Quebec when we, Bloc members, elected representatives of Quebec, rise in this House to say, for instance, that Quebec's share of the $3 billion budget for agriculture in 1993 was $372 million, or 12.4 per

cent. That is not even one eighth of the agriculture department's budget. Yet, taxes paid by Quebecers account for 23 per cent of the budget as a whole.

By denouncing inequities, are we trying to pit the West against Quebec? In the old days, the 74 Liberal members did not rise in this House to do so.

I am doing my duty today by stating loud and clear that $300 million of federal agriculture expenditures went to Quebec in 1980, as compared to $1 billion to Western provinces, and $410 million as compared to more than $4 billion in 1987.

There are about 18 Liberal members from Quebec at present. When will the new member for Brome-Missisquoi for example rise in this House to defend the interests of the Brome-Missisquoi farm producers? Never. Is it an attempt to set the Maritimes against Quebec to state in this House that, from 1980 to 1987, federal expenditures on agriculture have grown six times slower in Quebec than in the rest of Canada?

The list of inequities goes on and on. I would like the Minister of Agriculture to give Quebec farm producers the same treatment given farm producers from his region, Western Canada.

SupplyGovernment Orders

11 a.m.


Ralph Goodale Liberal Regina—Wascana, SK

Mr. Speaker, I am very pleased to have the opportunity to respond to that question because it indicates a certain misunderstanding of the nature of agriculture in this country.

In western Canada the agricultural sector is dominated by export industries such as grain and beef. Those export industries have to compete of course in the marketplaces of the world. The expenditure levels referred to in the question were levels that were triggered by international trading distortions.

For example, the introduction by the United States of its export enhancement program caused the price of grain in the world to collapse and the obvious necessity for a government reaction within Canada. When those trade distortions occurred internationally, the level of government expenditure in Canada with respect to the grains industry went up accordingly to try to offset those international implications.

In eastern Canada, agriculture is somewhat more diversified. It tends to be dominated by domestic industries that have the advantage of a Canadian supply management system. As a result of that Canadian supply management system, those agricultural sectors in eastern Canada tend to be sheltered against international circumstances. They do not have to face the difficulty which has been faced in western Canada of those distortions in international trade. It is a bit of a mug's game to compare the numbers because two systems which are not directly comparable are being compared and the numbers at the bottom line get to be a bit misleading.

The hon. gentleman may want to draw comparisons of the values provided by the Government of Canada to western Canadian agriculture compared with the values provided to agriculture in eastern Canada and make that east-west comparison. To do that he has to take into account the regulatory benefit provided to central Canadian and eastern Canadian agriculture by means of our supply management system which has in fact been worth billions to the agricultural sector in eastern Canada.

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11 a.m.


Jay Hill Reform Prince George—Peace River, BC

Mr. Speaker, at the outset I would like to say to the hon. minister that I have paid particular attention to his remarks today and I found them quite interesting. I agree with some of his statements, in particular the assessment of what took place during the debate on the rail dispute and how members of the NDP and the Bloc certainly acted against the best interests of all Canadians, including the interests of Quebecers which the Bloc purports to represent.

I too found it very disparaging that the NDP, the bulk of whose caucus comes from the province of Saskatchewan would act as it did. It certainly, in my mind, was not representing the best interests of producers and constituents.

I agree with some of the statements in the minister's remarks today. I would make a few further comments about his assessment of Canada's debt and the need to address it through spending cuts. That is certainly an area where Reform has taken the lead since the formation of our party in 1987. In fact it was a real driving force in getting our party started and attracting people to the Reform message and the Reform cause.

We agree that cuts have to be made. We are not opposed to that and in fact our cuts would go much deeper. We have already outlined in great detail where we would make the cuts, not only in the department of agriculture and the area of farm subsidies, but also in all levels of government spending.

Another point has to be made in light of the minister's comments. I find it more than ironic that this Liberal government has suddenly discovered the advantages of having a free and open system of trade and trying to capture foreign markets. This is the same party which was opposed to the free trade agreement. It spoke vehemently against free trade when Reform was very supportive of the whole concept of a free trade agreement not only with the United States but also an expanded

one which would include other countries and the benefits which would flow to the Canadian economy because of that.

I find it ironic that the Liberals have such short memories not only with regard to free trade and the benefits of trade in particular for the agriculture sector but also for all the other sectors of our economy. They seem to conveniently forget that it was the Liberal Party that started us down this road of deficit spending. I can recall quite clearly in 1984 when the Conservatives were sent here with a massive mandate. They continually said that they inherited the problem. Now we hear the same thing from the Liberals.

My question for the minister concerns something I hear raised by grain producers in my area. I myself-

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11:05 a.m.

The Acting Speaker (Mr. Kilger)

Order. The time is so short and if we want to entertain a response from the minister, whom I will have to ask to be brief, I would ask for the question.

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11:05 a.m.


Jay Hill Reform Prince George—Peace River, BC

Mr. Speaker, I was just getting to the question.

A concern I hear raised constantly about the payout of the WGTA is that it is the understanding of the producers that it is to be targeted to land owners. In the area I am pleased to represent a big percentage of our land, not the majority, but a big percentage of our land is owned by foreign owners. I would ask the minister through you, Mr. Speaker-

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11:05 a.m.

The Acting Speaker (Mr. Kilger)

Order. I would ask the minister's co-operation for a brief response.

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11:05 a.m.


Ralph Goodale Liberal Regina—Wascana, SK

Mr. Speaker, I understand that time is short and in order to deal with this issue might take more time than is available right now.

The budget indicated that in order to obtain the advantage of a capital gains tax treatment as well as for other reasons that the $1.6 billion payment would be directed toward farmland owners. We also indicated a flexibility in wanting to hear from farmers and farm organizations about their preferences on that subject matter.

The consultations with farmers and farm organizations have been ongoing for the last two or three weeks. I expect to conclude them probably this week. I hope to be in a position to provide definitive direction on that question after the end of this week.

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11:05 a.m.


Leon Benoit Reform Vegreville, AB

Mr. Speaker, I am pleased to rise today to respond to the Bloc motion on the fairness of cuts in agriculture.

I will do this by first outlining the cuts in agriculture spending and making some general comments on the cuts. Second, I will ask some questions of the minister regarding the WGTA and the payout under the WGTA and other questions on efficiencies in the rail system and so on. Third, I will talk about the cuts to supply management and how they compare to cuts in other areas of agriculture. Finally, I will discuss some of the general shortcomings in the budget that impact on every Canadian and will impact heavily on farmers if more action is not taken by this government to get to a balanced budget within a definite targeted time frame.

The Bloc motion reads:

That this House denounce the government for reducing the general budget of the department of agriculture by 19 percent and milk subsidies by 30 per cent and for converting grain transportation subsidies into direct subsidies to western farmers, thereby enabling the latter to diversify and enjoy an unfair competitive advantage over farmers in eastern Canada.

This motion demonstrates that members of the Bloc are not evaluating this budget fairly particularly in regard to agriculture. I will outline the cuts in agriculture and then speak about some of the comparisons.

The budget clearly demonstrates that farmers have been asked to share an unfair amount of the burden of the cuts that were made by the Liberal government. I am not saying that the cuts should have been distributed evenly in terms of percentages in the different sectors of spending. I am saying that any way the cuts in agriculture are evaluated, they are unfair when compared to cuts in other areas of federal spending and they are unfair when compared to cuts in the agriculture department itself. I will demonstrate that by going through some of the numbers.

The overall cuts in the agriculture department spending amount to roughly 20 per cent over the next three years. The total funds available for 1994-95 were approximately $2.1 billion. A 20 per cent cut means that under the Liberal budget $445 million will be cut from the agriculture department.

Just to summarize the cuts, there will be an approximate cut of 30 per cent in safety net funding. Safety net funding is spread right across Canada. The safety net money provided by the federal government is spent in western Canada, central Canada and the maritimes. There will be an increase in the amount of user pay fees which will be spread right across Canada.

The subsidy for dairy farmers of about $217 million a year will be cut by 15 per cent over two years, which is a cut of approximately 30 per cent. It will be cut to about $160 million after the third year. Research has been cut substantially by the budget. Of course, research spending in agriculture is spread across the country.

Another major area of spending was cut by the budget which is not in the agriculture department but is a spending cut to farmers and agriculture. That is the end of the $560 million a year Crow benefit. That is the largest single cut made to agriculture in this budget. Along with that there was about a $99 million cut to the Atlantic Feed Freight Assistance Act and the

Maritime Freight Rates Act. Those cuts were originally scheduled to end on July 1, 1995 but have been extended.

Looking at the summary of agriculture cuts we see about $660 million in cuts to agriculture coming from the transport department through the cuts in the WGTA benefit, the old Crow benefit, the Atlantic Feed Freight Assistance Act and the Maritime Freight Rates Act. In addition there will be $445 million in spending cuts in the agriculture department. That makes a total of $1.1 billion which will be cut from agriculture by the budget.

I listened to the agriculture minister explain earlier that the cuts in agriculture have been in line with cuts in other sectors of federal spending. That is absolutely untrue. In fact, the cuts have been weighed very heavily to agriculture. My concern is that if similar cuts had been made to other sectors of federal spending, a balanced budget would have been presented in February. We would have had along with that all the benefits that come with a definite target for arriving at a balanced budget.

When the cuts for agriculture and transport are put together it comes to about a 40 per cent cut in total agricultural spending. That is totally disproportionate when compared to other sectors of federal agricultural spending. It is almost a 50 per cent cut in direct payments to farmers.

How did the cuts to farmers, as outlined in the budget, compare to the cuts in the agriculture department itself? This is a valid point that the Bloc member has brought up today. He points out that farmers have been cut by almost 50 per cent when direct payments and payments on behalf of the farmers to the railways, through the WGTA and the feed freight assistance and so on are taken into consideration. When those payments are put together it works out to a 50 per cent cut to farmers compared to about a 20 per cent cut in the department itself.

Farmers in my constituency and farmers across Canada say that is not right. Farmers are generally saying they know they have to accept the cuts that were made because of the mess the finances of the country are in. They accept their share of the responsibility but they do not accept the fact that these cuts have not been balanced between spending for farmers and spending in the department. A 20 per cent cut in the department compared to about a 50 per cent cut in payments to farmers is not balanced.

I am not saying that these cuts should not have been made. Rather I am saying there should have been a better balance between cuts to farmers, cuts within the department and a better balance across the country.

The motion of the Bloc states that cuts have been unfair and that some of the compensation packages given have been unfairly weighed in favour of western Canada. I am going to talk a bit about that and explain that the cuts have been unfairly harsh to western Canada. I am not getting into a struggle between western Canada and central Canada. I am just explaining what has happened in the budget. A little bit later I am going to talk about some of the real difficulties that the supply managed industry faces. They have very tough times ahead of them. I have concerns for farmers in the supply managed sectors but I will deal with that later.

One of my biggest concerns about the way the cuts were made is that the transition time farmers needed was not provided, particularly in regard to the Western Grain Transportation Act subsidy, the Crow benefit. For example, for farmers who rent or lease land the subsidy is cut off overnight. They will not have the approximately $15 a tonne freight rate benefit paid to the railways on their behalf as of this year's crop seeding.

Over the next two months, those farmers who will be seeding their land will be asked to shoulder anywhere up to $35 an acre in additional costs. The $35 an acre is an extremely high figure. Normally the extra cost will be about $15 an acre. That is an awful lot to ask farmers to shoulder with no transition time and no compensation package. For farmers who lease or rent land there is no compensation package in the budget.

The compensation package that has been presented is available only to land owners, except for farmers who rent or lease land from the Farm Credit Corporation. Those payments will be passed on to them. However, generally speaking, land owners have additional costs to shoulder immediately and no compensation.

I would like to ask the members of the Bloc if this sounds like an unfair situation weighed in favour of western Canada? Some of my other concerns were not so much with the way the cuts were made but with some of the things that were not done to allow the system to become more efficient.

A limited amount of branch line abandonment will be allowed. We are very uncertain exactly which branch lines will be abandoned.

The agriculture and transport ministers have stated that the present car allocation system, based on historic car allocation, will be kept in place, at least for now. Keeping the old allocation levels in place will not allow for the changes needed to make the rail system work more efficiently.

The government will still be fully in charge and will fully control the Canadian Wheat Board. For years I have been arguing that Canadian farmers should be given control of the operation of the Canadian Wheat Board. Canadian farmers pay all the operating costs of the board. Why on earth does the federal government still control the operations of the Canadian Wheat Board? The answer is it should not. Canadian farmers should gain complete control of the wheat board. Then they could decide what they want the wheat board to be like, what they want the organization to be in the future. That was not provided for in the legislation.

Another thing that was not provided for that is extremely important is legislation that will prevent work stoppages in the area of grain handling and transportation. I have seen a lot of fingers pointed, even this morning, on this issue. I saw the agriculture minister point a finger at the Bloc and the NDP saying that they are responsible for the stoppage in the rail system.

I see it a little differently. I recognize that the Bloc and the NDP did stall the back to work legislation. It is beyond me to understand why. I do not understand why. They should not have, but they did. Let us take another step back from this. If the Liberals had done their job, we would never have had a stoppage in the grain handling and transportation system.

Since the debate that ended the lockout of grain handlers last February, Reform has called-and I personally have called-for legislation which would end the stoppages in the grain handling and transportation system. That is more than one year ago.

Over that year, again and again Reformers said not to let stoppages occur. It was evident there would be stoppages this year. There was no contract in place for several groups, unions and management, including rail transportation. No contract was signed. It was predictable there would be a stoppage.

When the Liberals blame the Bloc and NDP for the stoppage, they are only really telling half the truth. The other half of the truth is that the Liberals could have prevented this. Reform pushed them to prevent it and they just ignored our pressure. I encourage Canadians to recognize where the blame for this disruption really should lie.

I would like to talk now about how payments provided for in the budget will be made to the WGTA, dairy, et cetera. First, the $1.6 billion compensation package seems to be the area the Bloc has targeted in its motion. Its members feel that is unfair. The farmers had the Crow benefit, which became the WGTA benefit, which subsidized rail freight to port position. It has been around for almost 100 years. At times the subsidy has actually been $900 million a year. It is an incredibly large subsidy. Recently that has been reduced to approximately $550 million a year, based on last year. The compensation payment is $1.6 billion.

Look at the way the compensation payment will be distributed. The phase out will only be available to farmers who own land, not those who are renting or leasing land. In essence, this provides a very short transition period for farmers who depend on this subsidy. Farmers will shoulder an immense extra costfor transporting grain to terminal positions as a result of thephase out.

Also provided is a $300 million transition fund. This is in place to help farmers deal with the termination of the subsidy. We do not know how the money will be spent and the uncertainty is very difficult for farmers to accept. It will be difficult not just for grain farmers, but alfalfa producers and processors that also used the subsidy.

Feed freight assistance will be eliminated entirely. The date was set back recently from that initially announced in the budget. Three hundred and twenty-six million dollars are available for an adjustment program regarding feed freight assistance. The compensation package will be available for farmers in the maritimes and in parts of Quebec, as will the $1.6 billion be available to farmers in western Canada.

How do these cutbacks in the WGTA and feed freight assistance compare to cuts in dairy? The dairy subsidy will be cut by 15 per cent per year for two years. This subsidy can be passed on to consumers. In fact it has been announced that the increased costs will be passed on. I have some concerns about that.

People in supply managed industries will have a difficult time dealing with the changes that are going to take place. These will be as a result of more competition coming in, perhaps from the United States. This is going to happen. I do not doubt that at all. I cannot say for sure when or how but it is going to happen.

With regard to supply management, Reform feels that farmers should have the right to operate together as they do under supply managed systems. I refer back to 1990 when I was on the Reform agriculture task force that developed the first Reform agriculture policy. At that time we noted that supply management is moving toward a more competitive system. We said that government should not hide this fact from dairy and other supply managed farmers. Back then we recognized the need for government to be very honest about this.

I found that over the past six or seven years governments have not been really honest with supply managed farmers regarding their systems and how they will be subject to more competition in the future. That is really providing a disservice to supply-managed farmers, governments not being honest and open. If the Bloc really has any doubt that there is this movement to more competition in the supply-managed industry then I want to point out a few things that I think will show that in fact supply-managed farmers will be subject to far more competition in the future.

I am not saying that I like the change I see. I know it is going to be very difficult for farmers in the supply-managed sectors.It is going to happen. I am not going to hide this fromdairy farmers and from other people in the supply-managedindustries.

We are headed for more GATT negotiations in the year 2000. Under the present tariff levels there is good protection for supply-managed farmers. We are going to see a rapid reduction in tariffs resulting from the new negotiations in GATT around the year 2000. As a result of these negotiations there will be far more open access to Canadian markets on the part of American dairy farmers and other supply-managed farmers.

However, there is a more pressing negotiation that is going to take place, which will lead the supply-managed sector to more competition. That is the new NAFTA negotiations. Bill Clinton and Jean Chrétien announced that within four years Chile will be in NAFTA. That means new NAFTA negotiations within four years.

I would like to ask the members of the Bloc if they feel there is a realistic probability, better than a 50 per cent probability, that these new NAFTA negotiations will not include more access to the Canadian market for American supply-managed farmers. I believe the answer is no. There will definitely be more access to the Canadian market by American supply-managed farmers.

I do not believe the Americans will sign a new NAFTA deal that will allow Chile into this NAFTA group unless they are given more access to Canadian markets. I am not saying this is what I want to see; I am saying this is what I believe will happen. There is an extremely high probability that this will happen.

Any politician who pretends this is not going to happen is really depriving the farmers involved of transition time that they desperately need to deal with this very difficult situation. It is indeed going to be very difficult for supply-managed farmers.

Instead of taking a day in this House to debate the relative unfairness of the cuts between east and west, between Quebec and the rest of Canada, it would be far more productive to spend our time talking about how we can help, if we can help at all, supply-managed farmers to move to a competitive market system. It is an issue that is too important for us to ignore in the House.

In the future I look forward to the Bloc using an opposition day to deal with this subject. I believe it would be of far more value to Quebec dairy farmers and other supply-managed farmers in Quebec than this type of motion.

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11:30 a.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup, QC

Mr. Speaker, I listened with interest to the hon. member's speech, who wishes that, the next time, the Bloc will table an opposition motion on other aspects of agriculture. In the last year, the Bloc Quebecois raised the issue of agriculture on two different opposition days. If the Reform Party wishes to do so, it can use its opposition days to debate this issue.

We can probably agree on one point, I think. The 1995-96 estimates provide for the elimination of 429 jobs in the research and development sector of the Department of Agriculture and Agri-Food. The department's staff will go down from 3,454 to 3,015.

We know that jobs in the research and development sector help build the future, but they are also career development jobs held by people with university degrees, technical training or some other more practical training, and these people help their industry develop and prepare for the future.

I wonder if the Reform member shares my view, which is also that of the Canadian Sheep Federation. The federation feels that the federal government is abandoning, without justification, a production in full development. Indeed, this government decided to pull the rug out from under sheep producers by completely withdrawing from the R and D sector of the sheep raising industry. Consequently, that industry, which must face market globalization and international competition, finds itself without any support regarding the development and the improvement of its products.

Does the Reform member feel that such penny-pinching on the part of the Department of Agriculture is a good solution? Would it not be wiser to maintain R and D support at its current level, or at least delegate that responsibility to Quebec and the other provinces, so that they can develop their agriculture? Why would the federal government withdraw from a whole sector of agricultural production after supporting it for years? Is this not an unacceptable decision? Is the Bloc not right in raising this issue in the House?

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11:35 a.m.


Leon Benoit Reform Vegreville, AB

Mr. Speaker, I also received the memo from the sheep producers, who expressed their concern about the cuts in research funding to their industry. I received the letter yesterday and I look forward to talking with the sheep producers to see exactly what will happen to research in that area.

With respect to the hon. member's comment that these petty cuts are not acceptable, there is an overriding concern resulting from the budget that requires that cuts be made. Most farmers I have talked with have recognized, reluctantly, that the cuts to their industry, while unfair, are absolutely necessary in order to deal with the severe fiscal problem we have. Again, I say they are unfair because they were not balanced between cuts directly to farmers and cuts to the department, and they were not balanced across the country.

The biggest concern of farmers is that the cuts did not go far enough. There is no definite target for the deficit being eliminated. I would like to address the impact of that on farmers. When the member spoke of petty cuts, I became very concerned because these cuts were needed, and more cuts are needed.

However, I hope future cuts will be made in other sectors of federal spending in order to have some balance in the equation.

This budget did not go far enough. Our interest payments will have increased from $39 billion, when the Liberals took power, to $51 billion a year by the end of the three-year budget projection period, which ends two years from now. Those are interest payments on our debt alone. The result of that is an extra $12 billion of taxpayers' money that is being spent on interest payments on the debt. Still, with the Liberal budget, the debt will increase by $24 billion a year at the end of these three years. That means ever-increasing interest expenses.

Where is the money going to come from to make these ever-increasing interest payments on the debt? It will come from the taxpayers, and there are not enough taxpayers' dollars to pay for increased interest payments. That means that tax increases are not an option. That means that cuts will have to be made somewhere else in order to pay for these extra interest payments.

I encourage the government to take a step over the next five or six months to present another budget that will go far enough and set a definite date on which the deficit will be eliminated. I encourage them to do that. However, because that has not happened, and by not having enough cuts or a definite date for when the deficit will be eliminated, interest rate costs will be higher for farmers, because this continuing deficit has put upward pressure on interest rates. Lenders will be hesitant to lend; getting financing is going to be more difficult for farmers. There is also the threat to social programs, which will continue.

So not only are farmers asked to share more of the cost, but there is a real threat to social programs, including pensions, health care and other social programs that they depend on and want.

I do not think any of these cuts can be called petty. In fact, this government must go further in the very near future or the damaging results will go way beyond the pain that has been caused by the cuts in this budget.