Debates of April 4th, 1995

Supply

[The Acting Speaker (Mrs. Maheu)]

I would like to remind the hon. member that, in remarks made earlier today, he used words that almost fit my description of unparliamentary language. I would simply ask him to be careful when referring to what the hon. member for Glengarry-Prescott-Russell said.

[Charlie Penson, Reform, Peace River, AB]

Madam Speaker, I would like to thank the hon. member for Mégantic-Compton-Stanstead for his spirited speech regarding agricultural producers in his riding. I too represent an agricultural riding in Alberta. I am a farmer and I appreciate his concerns for the people who are affected.

However, I do want to remind the hon. member that no one is talking about refusing to buy milk from Quebec, even though Quebec now enjoys 50 per cent of the Canadian fluid milk market with only approximately 25 per cent of the population. If Quebec were to separate, that might influence whether the rest of Canada would buy milk from Quebec. It certainly would not buy milk based on a 351 per cent tariff. It would be looking for a price based on a world price. If it is going to be competing it has to meet the competition. I see that as the biggest threat, not the decision of whether to buy from Quebec.

I would like the hon. member to give us some idea of how the supply-managed producers in his riding can make the transition from the current system, with 351 per cent as the high tariff on butter-they are all in that range-down to free trade in agricultural products, which is going to happen over a period of time. How do we make that transition easier for the producers? It is of concern to all of us. He talked about the hundreds of thousands of dollars that these people have invested. The same situation exists in the grain farming industry in western Canada.

It seems to me that as responsible people we have to not pretend that we will have the supply-managed tariffs in effect forever. We must look at the reality that we are going to have free trade and there will be zero tariffs down the road. We have to help these people make the adjustments necessary to get there. I would welcome his comments in that regard.

[Maurice Bernier, Bloc, Mégantic—Compton—Stanstead, QC]

Madam Speaker, I thank my colleague from the Reform Party for his question which seems quite relevant. I will answer his question as clearly as possible. In fact, he is asking me how farmers can adjust to the new international trade context, that is, the reduction in tariffs now set under GATT?

Of course, this is a major concern of farmers in my riding and throughout Quebec and of all dairy and other producers affected by international trade and tariffs.

Allow me to share with him some farmers' reaction with respect to dairy production in particular. Many farmers in my riding said in response to my questions that they would be willing to compete with U.S. farmers-since they are our main competition in the area of dairy production-provided they played by the same rules. In other words, they would if they were in the position to offer products as good as those on the American market.

It must be pointed out that in both Quebec and Canada-since the milk marketing system is the same across the country-not only production but also quality is subject to regulations. This is something we can be proud of. If we want to preserve this quality, we must pay the costs involved. The whole matter must be considered. I will surely have the opportunity to get back to this later.

[Morris Bodnar, Liberal, Saskatoon—Dundurn, SK]

Madam Speaker, I will be sharing my time with the hon. member for Gatineau-La Lièvre.

The motion before the House today suggests this government is providing western farmers with an unfair advantage over farmers in eastern Canada. Our job has been and always will be to work with all sectors of the agriculture and agri-food industry to create opportunities and advantages, not to promote one sector at the advantage of another or one region over another, as my hon. colleagues would suggest.

This government's first and foremost priority is to win the national battle against the deficit. Within that reality of fewer government dollars, this government is working extremely hard through the Department of Agriculture and Agri-Food Canada to help position the Canadian agriculture and agri-food sector to increase Canada's share in every available marketplace, at home and abroad. That work has not been at the expense of one part of the country over another. Western and eastern farmers alike have said repeatedly that they do not want to be subsidized; they just want good markets and fair prices.

The changes outlined in this government's budget will help farmers reach that goal while helping reduce the overall cost of government through changes that are designed to improve our efficiency and competitiveness, to remove impediments to development and value-added production and processing, and to take maximum advantage of the world's new trading environment.

This government recognized that structural reform in our transportation system was long overdue. Reforming the Western Grain Transportation Act will eliminate barriers to value-added opportunities, diversifications and economic growth. Eliminating the WGTA will provide Canada and the agri-food sector with a faster, lower-cost and more efficient transportation system. Transportation reform can help us more effectively comply with the new international trade rules under GATT.

There is a big difference between subsidies for grain transportation and dairy producers. In fact, eliminating the $560 million subsidy addresses competitive concerns raised by farmers in eastern Canada. The annual subsidy, which has already been reduced by over 23 per cent in the last two years, is now being completely eliminated as of August 1, 1995. The dairy subsidy meanwhile is being reduced by only 30 per cent over a period of two years.

The adjustment package this government is offering to the grain industry reflects the potential impact of eliminating a 96-year-old commitment to the western grain sector. To eliminate the subsidy with no funds to help the sector adjust would seriously disrupt the prairie grain economy because it has traditionally represented an important source of land value for prairie producers. An ex gratia capital payment of $1.6 billion will be paid to owners of prairie farmland in recognition of the impact on land values that may result from the termination of the long-standing freight rate subsidies. This one-time payment is not tied to production or marketing decisions.

A multi-year adjustment package of $300 million has also been established to address specific issues arising from the transportation reform. The amount is not excessive. It does not give western farmers an unfair advantage. Rather it is necessary to help adjustment of the industry and the transportation system in the west.

It should also be noted that while the GATT agreement has brought some discipline to export subsidies, the prairie grain sector will face considerable competition from subsidized exports of grain. While the dairy subsidy is being reduced, it is not disappearing. In fact, our national supply management system, one of the great advantages of our federal system, ensures a reasonable return to efficient producers, and this management system will be maintained.

It is rather ironic that the hon. opposition member calls our approach to transportation reform an unfair advantage for western farmers. Some western provinces and producers have argued the budget cuts to western Canada are substantially greater than to eastern Canada. They have argued that eastern Canada is receiving a greater share in adjustment transitional funding relative to the magnitude of the subsidy programs that are being eliminated or reduced.

What this tells us is that all farmers, and indeed all Canadians, are sharing equally, as we must, in the responsibility for deficit reduction. It is a responsibility we must all shoulder to ensure the future growth of our agriculture and agri-food sector and to maintain our competitiveness on a global scale.

This government is creating opportunities for western and eastern Canadian farmers alike. As my hon. colleagues know, this government has set aside considerable funding for adaptation initiatives. While the overall budget for Agriculture and Agri-Food Canada may have been reduced by 19 per cent, the department has initiated a 20 per cent increase in its adaptation funding. This reflects the industry's shift in direction toward acquiring financial security from the marketplace rather than from government programs. This adaptation funding is available equally to farmers in eastern and western Canada to help improve the sector's ability to grow and capture markets.

This government's package of reforms to grain transportation is not inconsistent with the position set out by the Quebec coalition on the WGTA in December 1994. The package of subsidy reform is fair and balanced with respect to different situations in different regions of our country and in different sectors. All will have to do their share in contributing to deficit reduction and all will share in reaping the benefits.

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

Madam Speaker, I am pleased to rise in the House this afternoon to ask a question of the member for Saskatoon-Dundurn.

I am quite taken aback by his very weak defence of the elimination of the Crow benefit for western Canadian farmers. I am taken aback because he says in his remarks that the elimination of the Crow benefit will take away almost half of the net farm income from farmers in Saskatchewan alone; it will reduce their land values by a significant amount; and it will double and in many cases triple freight rates for the transportation of grain. He said: "This is creating opportunities for farmers", that the Liberal program of eliminating the Crow benefit for farmers, which will devastate rural Saskatchewan and western and rural Canada, is creating opportunities for farmers.

This is reminiscent of another movie. The movie I refer to is in Saskatchewan with Grant Devine, the PC premier who bankrupted the province-he and his cabinet-almost single-handedly in nine short years. It was one of the wealthiest provinces in Canada. They fired 275 highway workers and their comment at that time was not "creating opportunities for farmers"; their comment was that they were freeing up the workers to participate in the private sector. That is exactly the same kind of comment, the arrogant positioning of the Liberal government with respect to the elimination of the Crow, that we hear today in this House of Commons.

I find that personally distasteful. I predict, and many farmers and other people in Saskatchewan predict, that come the next federal election we will not see one Liberal member of Parliament re-elected as a result of this single attack on farmers, as well as the rail-line abandonment issue.

The member for Malpeque, another Liberal member who voted in favour of the abolition of the Crow benefit, is now chairman of an agriculture subcommittee going around the country listening to farmers' concerns, joined by Reformers and other Liberals, to see what impact the elimination of the Crow benefit will be. We can tell them what the impact will be, but having the Liberal member for Malpeque and his other members go around the country listening to farmers' concerns is like putting a pack of wolves in charge of the hen-house. Liberal and Reform members are saying: "We want to hear what the impact will be, Mr. and Mrs. Farmer. Please tell us. Although we voted to eliminate it, we are going to try to listen to your concerns." That is a sham. That is a scam.

The Liberal member for St. Boniface, who participates in this debate from his seat, does not understand the issue because he does not have any rural component in his constituency. If he did, he would be in jeopardy of losing his seat as well.

How does the member from Dundurn explain that the elimination of the Crow benefit and massive rail-line abandonment will increase exports when in fact grain will not be produced for export in the same quantity as it is now? Farmers will be going bankrupt in substantial numbers and people will see a smaller number of farmers farming in western Canada. How does he square that?

[Morris Bodnar, Liberal, Saskatoon—Dundurn, SK]

Madam Speaker, the hon. member mentions the bankruptcy of farmers. The bankruptcy of farmers in Saskatchewan, should any arise, will be as a result of the provincial NDP policies not as a result of Liberal policy at the federal level.

Let us not forget that some policies in Saskatchewan which the hon. member has been espousing as being so wonderful are by the NDP government. It is the same NDP government in Saskatchewan that would not lower the provincial sales tax, which chased away business into other provinces. It is the same government that would not reduce the aviation fuel tax until pressured to do so, again chasing jobs away. This is because the NDP government in the province of Saskatchewan did not want to lower its equalization payments from the federal government.

The NDP government in Saskatchewan has been living like a welfare bum off the federal government. That is what it has been doing. As fast as we have been creating jobs in Saskatchewan under infrastructure and other programs, the Government of Saskatchewan has been destroying those jobs.

I do not believe the hon. member is in a position to be commenting on the devastation of the agricultural industry, which is not occurring in Saskatchewan. In fact, production is going up in other sectors such as hog production and cattle production. The whole industry will benefit rather than suffer, as indicated by the hon. member.

[Mark Assad, Liberal, Gatineau—La Lièvre, QC]

Madam Speaker, the remarks made by the hon. member for Saskatoon-Dundurn and the questions posed by the hon. member for Regina-Lumsden show the conflict that exists in the agricultural sector and the need for reform.

Of course, we are concerned about the changes or budget cuts recently announced by the Canadian Minister of Agriculture and Agri-Food. In its motion, the opposition denounces as unfair to some Canadian farmers the budget cuts recently announced by the Minister of Finance. These people are clearly acting in good faith but I am sure that they are mistaken.

Sometimes, our colleagues opposite do not realize that this country is facing a crisis as a result of the deficit accumulated over the past 15 to 20 years. Our deficit represents 73 per cent of GDP. We can no longer put it off. Whatever difficulties await us in the future, certain problems must be solved, namely bringing public spending under control and introducing sound management for all Canadians without exception.

The Department of Agriculture was asked to cut spending by 19 per cent. Other departments were also required to make sacrifices. The Department of Agriculture met the challenge and found a way to sweeten the pill by ensuring that the cuts are fair to all farmers across Canada.

Breeders in animal feed deficit areas receive feed grain transportation subsidies aimed at reducing the cost of this feed and allowing breeders to compete. Financial help is provided to breeders almost everywhere from the Atlantic provinces to the Yukon, including parts of Eastern Quebec, Northern Ontario and British Columbia. Those are the facts.

A subsidy on which rely the producers in most provinces, including Quebec, is about to disappear, but there is more. The government recognizes that this may not be a popular measure. It also knows that it cannot, and must not, ask producers to drastically change their operations overnight.

Contrary to what some might think, the government is willing to listen. During our post-budget consultations, we learned that

the initial date set for the elimination of the FFAP, the Feed Freight Assistance Program, which was October 1, did not give enough time to the producers and to the industry to adjust to such a major change. Consequently, the government agreed to wait until December 31, 1995, and not reduce the level of assistance provided during that period.

While the government will eliminate the subsidy provided under the FFAP, it will inject $62 million, over the next ten years, in the regions where the FFAP is currently in effect. Part of these funds will be used to make the payments provided under the program, until it expires later this year. The government is also providing financial assistance by giving a lump sum payment to western farmers affected by the repeal of the WGTA. We are receptive to the concerns of producers, while also showing fiscal restraint with the taxpayers' money.

This financial assistance will be provided to affected producers in every province and region in the country. How will that money be spent? As you know, we do not have that answer yet, but we decided to seek the help of experts. The government feels that those who are most qualified to answer that question are the producers, the people in the food and cattle industry, the feed producers and the animal farmers from the regions which will be most affected by the gradual elimination of the FFAP.

This is why the Minister of Agriculture and Agri-Food announced that consultations would be held with the producers, in the coming weeks and months, to look at ways to use the FFAP adjustment fund and the transition fund. Moreover, these people will look at various financing options offered by other programs run by the Department of Agriculture, including the joint investment project in agri-food research.

The government is aware that hard times lie ahead. This is not necessarily the best solution, but under these circumstances, we have to act. However, we would be grateful if the opposition could come up with better solutions. I remind the House that, because of the disastrous economic situation we have inherited from the previous government, we have no other choice but to take rather drastic measures.

National consultation is the only way to establish closer ties with representatives from the agricultural industry. Together, we can find solutions, come up with new ideas and even reach compromises that would ensure that all farmers are treated fairly. This agricultural reform should have been implemented several years ago. Think about what is happening in the area of fisheries and oceans, where the fish stock has been declining for the last ten years, where we are still waiting for changes that should have been made more than 10 years ago, and look atthe results. We do not want the same situation to occur inagriculture.

The whole world is undergoing unprecedented changes and in turn we have to make fundamental changes to preserve our agri-food industry.

Finally, all those who know something about agriculture realize that this industry has been very efficient in the past in Canada. We are one of the most fortunate countries in the world, because our agri-food industry has evolved rather nicely. However, with all the changes that were made in terms of GATT and NAFTA, and with the competitiveness of the United States south of our border, we are under a lot of pressure.

There are times, I must say, when the dealings of the United States on the world market create unfair competition. A country with a tenth of its population is bound to be affected by its actions. This is why the Department of Agriculture must make changes. We do not want the situation to worsen. It could have very disastrous consequences for all of Canada.

So, we must recognize that the measures put forward are not perfect. But nothing is perfect in this world. Any way, the important thing is to act. As the situation evolves, we will make adjustments to ensure that all farmers are treated fairly.

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

Madam Speaker, I agree up to a point with the hon. member for Gatineau-La Lièvre who shares with me the position of vice-chairman of the Standing Committee on Agriculture and Agri-Food. I must admit that the hon. member is very knowledgeable on agricultural matters.

However, I may remind him that the country's current debt was not created by the Americans, the French or the Mexicans. Around 1969-70, the debt was almost nil. I will not tell you who was governing the country at the time, since you know that better than I do. But in 1984, when Liberals were ousted, the debt totalled around $250 billion.

In nine years, the Tories brought the debt close to $500 billion. His team was responsible for creating at least half of the cumulative debt. Today, the government is asking or rather telling farmers to do their share to reduce the deficit it created in the first place. And farmers, oddly enough, are being asked to do a bit more than that.

My friends opposite did not mention the fact that during the past fiscal year, 328,000 flights were logged by public servants, not including members of the House of Commons and senators. The cost: $275.5 million. They do not mention that.

Earlier, while listening to the hon. member for Gatineau-La Lièvre, I was reading an editorial by Claude Rivard, Quebec

president of the dairy producers, who had the following to say: "As far as reducing the deficit is concerned, we expected Mr. Martin and his government to do what they promised: a budget that would be hard but fair". You may recall that for a month they were saying that the budget would be hard but fair. The article goes on: "Well as far as we are concerned, the Chrétien government was hard but unfair". That is the perception Quebec farmers have of this budget.

And what about the major banks that declared a profit of $3.5 billion in one year? They will be asked to pay a meagre additional $100 million as a temporary tax, spread over 18 months.

I realize that the major banks are among those that make the biggest donations to the party's coffers. There was the Conservative Party, but since they are out of the picture, I will not mention that.

So I agree we have to reduce the deficit. But, instead of coming down hard on farmers, I would like to add, for the benefit of the hon. member for Malpèque, that in 1988-89-and I am about to conclude, Madam Speaker,-spending in the agri-food sector, as a percentage of total federal spending, was 3.5 per cent. In 1994-95-the fiscal year which just came to an end-this percentage was 1.6 per cent; and in 1996-97, it is expected to be 1.2 per cent. So I am not very pleased with the way this government has treated and will treat agriculture in Canada.

[Mark Assad, Liberal, Gatineau—La Lièvre, QC]

Madam Speaker, I must correct something. My colleague opposite said that, in 1984, the Liberal government left behind a debt of $250 billion. The debt was not $250 billion, but $160 billion. There is a big difference. In 1984, in terms of the Canadian economy, the debt was one of the lowest among the industrialized countries. I therefore find it a bit odd that he is providing incorrect figures. He could look at the facts.

Secondly, he mentioned that Mr. Rivard, the head of the dairy producers association, had said it was a tough budget. It is true. It is pretty tough, but it must be remembered that a Liberal government elevated the dairy industry to its present level. With milk quotas, dairy farmers in Quebec have become some of our wealthiest farmers. We must look at both sides of the issue.

I would tell my colleague across the floor that he should try to quote figures accurately. There are consequences for failing to do so.

[The Acting Speaker (Mrs. Maheu)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Verchères-international trade; the hon. member for Cumberland-Colchester-health; the hon. member for Lévis-youth strategy.

Debate resumes with the hon. member for Lotbinière.

[Jean Landry, Bloc, Lotbinière, QC]

Madam Speaker, I rise today to talk about agriculture, a critical sector of our economy.

The official opposition is using this day devoted to agriculture to set the record straight in this area. I would not be surprised if, last week end, some members opposite forgot to reset their clocks.

Our job is to set the record straight regarding the last budget which has left Quebec farmers with a rather bitter aftertaste.

This last budget shows once more how unfair this government is.

The transition measures planned for Western producers following the elimination of the Crow rate are typical of the double standards applied by this government. Our party's position is clear: we support the elimination of this subsidy which created undue distortion in grain transportation.

However, we are against the $2.2 billion transition payment to western producers. By reneging on its commitments, the federal government is pitting eastern producers against their western counterparts and creates new trade distortions. Once the subsidy is eliminated, grain producers in remote areas will be tempted to dump their products on the domestic market. Otherwise, they will have to pay for transportation costs to foreign markets. This will lead to lower grain prices in the west, and higher prices in the east, since they will reflect the real transportation costs.

Moreover, beef and dairy farmers in the east will be doubly penalized, compared to their competitors in the west, since they use cereals as feed.

This is not an attack against western producers. It is the federal government, and no one else, which is upsetting domestic markets by introducing compensatory measures which apply only to the west. The government created an imbalance when it introduced the Crow rate and it now creates a new imbalance by doing away with it. It should have either cut the subsidy without compensation or cut it and compensated equitably all producers. It is probably too much to ask from people who, as usual, acted without considering the consequences.

Following Martin's budget, the Minister of Agriculture and Agri-Food will see his budget go from $2.1 billion to $1.7 billion in three years. Two thousand positions will be abolished because of these cuts.

Rather than cutting the budget in this way, why did the federal government not transfer the resources to the provinces? They could have rationalized spending, taking into account the programs they already manage. All the federal government had to do was withdraw from this field of provincial jurisdiction. Again, this is a perfect example of duplication since two levels

of government are going to compete against each other at the expense of the industry. By eliminating overlaps we could have avoided some cuts.

Quebec would certainly not have slashed research and development, and the experimental farms of La Pocatière and L'Assomption would have survived. In the farm community, as well as many others, we question the relevance of paying taxes to Ottawa when we do not get in return the necessary resources to develop our industry.

Also, we are still not getting our fair share of federal spending in agriculture, since we are only receiving about 12.4 per cent when 17 per cent of agricultural revenues come from Quebec. Meanwhile, the west is taking the lion's share with about 60 per cent of federal spending.

The situation in Quebec worsened since 1980, when our share of spending was 16.4 per cent. Moreover, taxes paid by our farmers help maintain policies which compete with their own production. Yes, many Quebec farmers are questioning the use of remaining in a country which lets them down at the slightest provocation. On the other hand, we know that we will have to counteract the fear generated by federalists.

The fear campaign began when federalist mercenaries published statements concerning the dairy industry in Quebec which, according to them, would be threatened by sovereignty. We are told that a sovereign Quebec would loose half its quota of industrial milk, which would lead to the closing of thousands of dairy farms in Quebec.

According to federalists, sovereignty would be catastrophic for the Quebec dairy farmers who supply the federation with 48 per cent of its industrial milk whereas Quebec only represents 25 p. 100 of the Canadian population.

Let us analyze the facts calmly. It is incorrect to say that a sovereign Quebec will no longer trade with the rest of Canada. The Quebec dairy industry is not a blessing, nor a gift or an advantage of federalism. It is just an economic fact.

Therefore, the worse case scenario should take into account the fact that the value of the trade between Quebec and Canada is more than $80 billion and that trading is not one way only. If Quebec is to lose its trade with the rest of Canada, is not the reverse also true?

Comparing one scenario to another, members will admit that this one defining an economic area which is advantageous to both parties is more realistic. True, it will not win an Oscar in the horror category or for fiction. But it is also true that people prefer movies with a happy ending. Here is a true script: just last Wednesday, dairy farmers from Quebec and Canada signed a memorandum of agreement on the integration of marketing operations for fluid milk and industrial milk in six eastern provinces. In these six provinces, farmers will be paid the same price for their milk and will share a common quota.

Together, these provinces represent 85 per cent of the Canadian industrial milk quota. Such integration will eliminate interprovincial barriers to milk supply. Quebec played a substantial role in this issue. Nobody was tempted to ignore it.

Without Quebec, the Canadian milk policy would fall down. The dairy farmers from other provinces know that and understand perfectly. In this pre-referendum period, they acknowledge the importance of economic integration with Quebec. We have put the federalist scare scenario far behind us, have we not? Canadian dairy producers know that the day after Quebec votes yes in the referendum, Canada will maintain an economic union with Quebec, not to please Quebecers but to protect its own interests.

Who would dare think of excluding Quebec from the supply management system, from quotas? Producers from other parts of Canada would have to compete with the highly competitive Quebec dairy producers and the Canadian market would experience a shortage of products from Quebec. The GATT would prevent Canada from slapping on new trade restrictions to prevent dairy products from Quebec from making inroads into its market.

The GATT prohibits the imposition of new restrictions on markets. Maintaining a common economic link would permit us to ward off pressure from the Americans, who have remained opposed to customs tariffs on Canadian dairy products. Federalists are also trying to use NAFTA to scare us.

Even though the United States always tries to get the most out of its trading partners, Quebec will invoke the GATT to protect its customs tariffs, just like the Canadian government does.

If we absolutely must talk about threats to the dairy industry in Quebec, let us talk about the latest federal budget. That is the real threat to the dairy industry. The government is reducing its industrial milk subsidy by 30 per cent over a two year period. Obviously, with 48 per cent of the quota for industrial milk, Quebec will have to absorb a large part of the cuts.

Calculating quickly, that will represent an income loss of $3,775 for medium sized dairy producers, whose average net income is $25,000. This will mean a 15 per cent drop in income, in addition to the increased cost of livestock feed stemming from the loss of subsidies for grain transport and feed transport, to which I referred at the outset.

I repeat that no compensation will be offered in this budget to Quebec farmers, who will be the hardest hit.

In closing, please allow me to quote the Quebec Minister of Agriculture, Marcel Landry, after the Martin budget was tabled. He said that Canada's new federalism is a big tax grab, a reduction of services, and national standards. On this subject, he recommends taking control over our taxes as soon as possible and starting to map our own paths for the future-

[The Acting Speaker (Mrs. Maheu)]

I am sorry but the hon. member's time has expired. Questions and comments. The hon. member for Malpeque.

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, I want to point out to the hon. member that I am one federalist who is not trying to scare Quebecers or Quebec farmers. I am trying to make sure the farmers understand the facts as they relate to Canada, especially in terms of the supply management system.

I am assuming it was an oversight on the part of the member when he talked about 12.4 per cent of the direct moneys to Quebec farmers and that he did not think was a fair share. Quebec has 48 per cent of the dairy quota.

Has the hon. member done any calculations? If he has could he table any calculations on the real benefit to farmers in Quebec of the Canadian supply management system in terms of dairy, poultry and eggs?

The member talked about the loss of the subsidy. I will agree that is a loss. I am a dairy producer and I accept the cutback in the subsidy in terms of my contribution to deficit reduction. At the same time I know full well, as does the member, the dairy industry operates on a cost of production formula which assures efficient farmers reasonable returns on their cost of production, labour and investment. That is a pretty good deal. We know they are getting that deal from Canada.

I have a last point I want to make. It may just be a factual error, but I would not want the member to leave the wrong impression. The member said there was no compensation for the loss of the feed freight assistance program. Adjustment moneys have been put in place for the loss of the program. We face that in Prince Edward Island as well. In fact $60 million has been set aside for farmers to use in order to adjust to the loss of the program.

[Jean Landry, Bloc, Lotbinière, QC]

Madam Speaker, it is a pleasure to respond to my colleague from Malpeque. He spoke about equity. He admitted in his speech that an inequity problem had existed for a long time between Quebec and the rest of Canada.

He said that he used to be a farmer in the Maritimes. He knows full well that, a few years ago, potatoes from the Maritimes were fully subsidized for export to the Quebec market, while Quebec farmers had to pay transportation costs for their potatoes. Farmers in Quebec and the Maritimes were competing for the same Quebec consumers. If we are going to talk about equity, we should really do so.

With regard to transportation, the Crow rate has been eliminated, but some compensation formulas are still unfair to Quebec. Twenty-five years ago, I was too young to be involved in politics but some politicians, in whose footsteps I have followed, have told me: "Jean, you will see when you grow up how difficult it is to fight the federal government". I now realize that what I was told 25 years ago is still true today. All I am asking the government is to be fair to Quebec and the rest of Canada.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Madam Speaker, I would gladly let my hon. colleague from Mégantic-Compton-Stanstead speak but, as you so rightly said, I am the member for Québec-Est. My riding of Québec-Est is an urban riding. I am not from a rural but an urban riding. I know of a number of farmers in my riding but they are all retired.

I nonetheless appreciate the importance of agriculture. I know that agriculture is one of the pillars of the economy, particularly in Quebec, which is about to become a country. Agriculture is a basic economic sector. I also learned a thing or two about this sector from working, a few years ago, for Agriculture Canada minister Eugene Whelan, who was considered as one of the greatest ministers of agriculture in Canadian history.

So, I am familiar with this inequity issue that was discussed at length today. It is well known that Quebec farm producers were treated less fairly than those from the rest of Canada, and Western Canada in particular. The latest budget tabled in this House by the Liberals provides a most glaring example of inequity. It is plain obvious.

While Western producers are very generously compensated-we are talking about $2 billion-subsidies paid to milk producers in the East are being cut by 30 per cent. I must say that this is nothing new. There was much talk about this here today. Quebec has not been getting its fair share for ages now.

Had one quarter of federal spending for Canadian agriculture been going to Quebec, since it is normally calculated on a per capita basis, Quebec would have been much better off. Instead, Quebec got 10, 12 and sometimes as much as 15 per cent, but never a full 25 per cent share of federal spending. According to my calculations, on this basis, Quebec's shortfall for the past 15 years, since 1980, is between five and seven billion dollars.

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

It is a disgrace.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Quebec has paid between five and seven billion dollars out of its own pocket in support of agriculture in Western Canada and the rest of Canada. If only Quebec farmers had benefited from such investments in their province, Quebec's agriculture would have been even stronger than it is, and that does not include the Crow rate, which cost the federal government between $600 million and $800 million a year. These

investments in western grain transportation were very discriminatory and they were made solely in favour of western farmers.

A quarter of that money came from Quebec and statistics show that, during the last 15 years, Quebec lost two billion dollars more. These are huge losses. When the federal government announces the elimination of the Crow rate and talks about a compensation package, it only has in mind western farmers, the constant winners for 15 years, with the grain subsidy and the unfair federal investments in agriculture. Quebec has always lost out. The unfairness is blatant, even more so when one recognizes that Quebec farmers earn on average about $25,000 for their very hard work.

A farmer can work up to 80 hours a week. He works the equivalent of two jobs for a total salary of $25,000. So, the 30 per cent cut in milk subsidies and the 15 per cent cut in farmers' revenues are a blow to milk producers. It is a blow because their revenues are not that high. The inequity is obvious and we have discussed the subject at length.

The overriding theme is that Quebec, in practically all areas, has always been subjected to this sort of unfairness. Even though the other members in this House will not admit it, Quebec has been a cash cow for the rest of Canada. This is obvious in every sector, whether it is the sale of goods and services, or the research sector. As regards the latter, over the last 15 years, Quebec has been getting, on average, 10 to 15 per cent of research investments. Ontario was the big winner, with an average of 50 per cent of the total federal assistance. Again, Quebec lost money.

I could give you a whole list of examples where Quebec was the loser, but I will stop here. At some point, Quebecers will have to put their foot down and say: "Enough is enough! We are fed up with these injustices".

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

Hear, hear.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

This is why Quebec farmers must also assume their share of the risks involved in that venture. Obviously, there are some concerns. Achieving Quebec's sovereignty will not be a breeze. Nobody said it would be. However, in the middle and in the long term, there is no question that Quebecers will benefit from such a move. This is no question about that.

There is a transition period which raises several issues, including for the farming community.

Indeed, farmers too wonder what will happen once Quebec opts for sovereignty.

The hon. member for Lotbinière answered some very important questions earlier. The government is resorting to fearmongering when it says that Quebec dairy producers will lose all their quotas. Such arguments are not reasonable and are obviously based on emotions.

Quebec buys beef from Alberta, grain from the western provinces, corn and soya from Ontario. We buy a lot more outside the province than we sell. Do you think that, all of a sudden, the rest of Canada will refuse to buy our butter or our cheese, and that Quebec will no longer buy beef from Alberta? Of course not. It is totally unreasonable to think that the rest of Canada would force us into such an unfair situation.

I certainly believe that sovereignty will be beneficial to Quebec farmers.

[Maurice Bernier, Bloc, Mégantic—Compton—Stanstead, QC]

Madam Speaker, I want to thank my colleague from Québec-Est who clearly described the obvious advantages for Quebecers to opt for sovereignty as soon as possible. It has also been demonstrated that the federal system does not work. I know that my Liberal and Reform colleagues do not like it when we talk about inequity, even though it reflects the real situation, so let us say that the federal system does not work, if this is the expression the federalists would rather use.

On that issue, the hon. member for Lotbinière was very eloquent. He used figures and several arguments to show that it is impossible to ignore how the Canadian Department of Agriculture has harmed the interests of Quebec.

Let me conclude my remarks which can be interpreted as a question to the hon. member for Québec-Est.

Without asking for more than what Quebec is currently giving to the federal government in the area of agriculture, and given the fact that Quebecers already pay 25 per cent of all federal taxes, if we were to get our hands on a similar proportion of the agricultural budget and to manage the whole thing, then we would be able to provide our farmers with an additional $500 million-since the federal Department of Agriculture has a $2 billion budget-in addition to the $300 or $350 million budget of the Quebec Department of Agriculture.

I know how capable, passionate and proud our Quebec farmers are and I am sure this will give them a competitive edge. So, I want to say thank you to my colleague from Québec-Est.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Madam Speaker, I want to thank my colleague from Mégantic-Compton-Stanstead.

What he said is true. Quebec farmers will likely have a greater share of the province's revenues, money that was not available to them before because it was distributed elsewhere. But once

Quebec becomes sovereign, farmers will have the chance to receive more money from the government.

We must also recognize the strength of the UPA and of Quebec farmers. Our province is certainly the best organized province in the agricultural industry in Canada. It is in excellent shape. It is well structured. Farmers have a good knowledge of their trade which will allow them to take advantage of new markets, particularly of the new American market that is opening up. If I am not mistaken, under the new agreements, we will have access to 5 per cent of the American market. Therefore, Quebec farmers are in a good position to take advantage of Quebec's sovereignty.

I would like to come back to the issue of milk quotas. Dairy producers must understand that Quebec will not become independent overnight after a victory in the referendum. There has to be a period of negotiations. The current agreements, such as the GATT and NAFTA, will stay in place. There will be negotiations between Canada and Quebec and they will not necessarily be conducted sector by sector, farmers with farmers, bankers with bankers. These will be comprehensive negotiations between Quebec and Canada. A framework will have to be established, and when the parties are able to look at the situation rationally, without letting their emotions interfere, the rest of Canada will understand that, in the agricultural industry, Canadian producers will have to maintain a good relationship with Quebec producers in all sectors in order to protect themselves against unfair competition from Americans.

[Robert Bertrand, Liberal, Pontiac—Gatineau—Labelle, QC]

Madam Speaker, I am glad to have the opportunity to comment on the Official Opposition's motion denouncing the government for giving Western farmers an unfair advantage over their Eastern counterparts.

The facts do not support the motion. They show that each individual, each region and each sector contributes its fair share, no more and no less, to reducing the deficit.

The 1995 Budget contained fair and balanced measures to address circumstances that differ from one region and sector of the country to another. It is worth mentioning that our reform of the WGTA is consistent with the position adopted by the Quebec coalition in December 1994.

Generally speaking, the government is eliminating its transportation subsidy programs, including the WGTA in the West, feed freight assistance in BC and Central and Eastern Canada, as well as various transportation subsidies in the Maritimes. What we are looking at is not a proposal to draw a parallel between the East and the West, but rather a principle to be implemented nationwide.

However, where we have eliminated transportation subsidies, we are providing assistance to those who are hit the hardest, be they in the East or the West.

As the hon. members know, the Western grain transportation subsidy will be abolished as of August 1, 1995.

In the adjustment measures it has offered, the government took into account the potential impact of the elimination of this 96-year old commitment toward the Western grain industry. The prairie farmland owners will get an initial payment of $1.6 billion in relation to capital, which is equivalent to three more years of the annual subsidy of $560 million.

In the budget he brought forward, the Minister of Finance made it clear that this ex gratia payment to prairie farmland owners was to offset the potential impact of the WGTA reform on the land values. This is not a gift from above nor a regional development subsidy.

The financial aid granted is not excessive and does not provide undue benefits to Western farmers. However, it will help grain producers adjust to changes. The GATT Agreement established certain disciplinary rules for export subsidies, but the prairie grain producers still have to compete with subsidized wheat exports.

The dairy subsidy is to be reduced by 30 per cent over a two year period, but the government remains committed to maintaining our national supply management system.

This system is one of the major benefits of federalism and it gives a reasonable income to efficient producers both in the east and the west.

Dairy farmers do not get a compensation package because their subsidies, contrary to the WGTA subsidies, have not been eliminated. But we are looking for ways to improve the dairy industry competitiveness. Consultations will take place with dairy farmers on the future of their subsidies.

We have been considering for 25 years the pros and cons of a reform of western grain transportation subsidies. So, we understand very well the reasons behind such a change. The solution we found with the industry takes into consideration the new circumstances of world trade, our fiscal situation and the need to be more sensitive to market forces.

This kind of dialogue did not take place in the dairy industry. We do not advocate any particular reform, but we think the time has come for us to determine with farmers and other players the best way to support the competitiveness of the dairy industry. We intend to initiate discussions this year.

The minister has announced that his parliamentary secretary, the hon. member for Prince Edward-Hastings, will hold consultations with the industry on the way we should use the large amount of money still available.

Cuts in agricultural spending take into account the improved financial outlook for the agricultural industry, the new discipline imposed by the new general agreement on international subsidies and the difficult fiscal situation of the government.

Interestingly enough, while the official opposition condemns us because we allegedly make deeper cuts in eastern Canada than in western Canada, others accuse us of doing just the opposite. Critics take the elimination of the WGTA subsidies out of context and ignore the $1.6 billion compensation payment. The official opposition does the same with the 30 per cent reduction in the milk subsidies and forgets about factors that will cushion the impact of that reduction and the government's commitment to the national supply management system.

The 19 per cent cut in the agriculture department budget is exactly the same as the average reduction in all federal departments. In other words, the budget cuts at Agriculture and Agri-Food Canada represent about 4 per cent of the total cuts of $7.2 billion proposed in the federal programs review. The fact that the AAC expenses represent approximately 4 per cent of the total federal expenses is not a coincidence.

We had some difficult choices to make given the critical situation of the debt and the deficit. All the budgetary changes reflect the need to materialize the government's vision of the agri-food sector in Canada and the need not to let the deficit jeopardize our future.

Our vision is based on financial security and the vitality and viability of that sector. Only a continuing and sustainable growth of the rural regions and the urban areas will make this materialization possible. This government's priority is to implement the necessary framework to help that sector find new markets, create jobs and ensure its own development.

An investment in the agri-food sector is an investment in growth for all regions of Canada-whether from the East, the West, the North or the South.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to President of the Treasury Board]

Madam Speaker, I would like to commend my colleague for his balanced speech that looked at both sides of the issue. I would like to ask him a very important question.

I suspect-if he disagrees with me, I will not be upset in any way-that the motion put forward by the Bloc Quebecois today was just to score political points, to try to play one part of the country off against another.

They did not sincerely believe that one region had been treated more or less favourably than another, they simply wanted to get one region to play off against another. They have been unable to look at the situation and this issue in a balanced way. As I said earlier, I will not be upset in any way if my colleague disagrees with me. I would like to have his comments, sincerely and honestly.

[Robert Bertrand, Liberal, Pontiac—Gatineau—Labelle, QC]

Madam Speaker, I wish to thank the hon. member for Saint-Boniface for his question.

I sort of agree with what my colleague has said. Il is true that our government was faced with very tough decisions to make and I sincerely believe that the decisions the Minister of Finance had to make were very difficult for all regions in Canada, whether in the East or in the West. I believe that the cuts that have been announced in the past or that will be in the future are fair and legitimate. I can hardly understand why the Official Opposition is trying to set the East against the West.

[Bob Speller, Liberal, Haldimand—Norfolk, ON]

Madam Speaker, I wish to take the last couple of minutes to state my disapproval of the motion being put forward by the opposition.

I am surprised that my colleagues in the agricultural sector of the Bloc Quebecois would actually put together such a motion. I know and work with them very well in our committee. I am surprised that they are trying to suggest to the House and to the Canadian people that those areas of the budget related to agriculture are anything but fair to all areas of the country.

Everyone in the agricultural community recognizes that we require fairness in dealing with our debt and deficit situation. That part of the budget prepared by the Minister of Finance dealing with agriculture certainly was given a great deal of input by the minister of agriculture. They tried to deal in a fair and equitable manner with the areas of supply management and the western grain transportation issues.

One disappointment I have had since becoming chair of the standing committee on agriculture has been hearing hon. members in the House claim that one part of the country is getting a better deal than another part. I also was disappointed that a number of commodity groups and farm organizations spend too much time arguing over who got what rather than working and pulling together not only as commodity groups but putting together different aspects of an organization to help Canada in our commitments to export trade.

It will be in the export sector that agriculture and rural Canada will find the jobs in the future. The government has made a large commitment to exports. I feel that if the different groups get together and if the Bloc Quebecois put aside its partisan political interests, it would want to co-operate with all Canadians to make sure that Canada's agricultural products are exported around the world.