Madam Speaker, at the GATT negotiations in Geneva, dairy producers were taken on a roller coaster ride, especially in relation to the talks on article XI, and the talks on whether the supply management system should be preserved were far from reassuring.
The new accord to be implemented following the conclusion of this round of GATT negotiations will force the farming sector to rapidly adapt to a new economic environment.
Dairy producers in particular are facing an enormous challenge. By virtue of the GATT's definition of an export subsidy, NAFTA will force dairy producers to do away with their system of export levies by August 1, 1995, that is, in two and a half months.
Bill C-86 amends the Canadian Dairy Commission Act in order to resolve the problem of export subsidies. I would like to mention that the commission's chairman is Mr. Prégent. In particular, this bill would implement a national pooling system of market returns which would be used to promote the export of dairy products.
Currently, producers pay a levy of some $3 per hectolitre of industrial milk, which is used mostly to make butter and powdered skim milk for export. This levy which was labelled under the GATT and NAFTA as an export subsidy, even though it is paid by the producers and not by the government, is justified because the levy is paid at source, like the Rand formula for unionized workers, as I was explaining to my colleague from Lévis earlier. Union dues are deducted from wages. In this case, the Quebec federation of dairy producers takes $3 for each hectolitre from the farmer's pay. Because it is a deduction at source, NAFTA and the GATT consider it a direct export subsidy, and, as of next August 1, it will no longer be permitted.
Therefore, the pooling allowed under Bill C-86 will be consistent with the international agreements and will permit dairy producers to keep the advantages of the existing system. In 14 and a half months, there will be a single milk pool for all of Canada. In other words, on August 1, 1996 all that will matter is that it is milk, not that it is unprocessed or industrial milk.
The hon. member for Brome-Missisquoi will find that it will not matter whether the cows were Holsteins, Ayershires or Jerseys. The issue is milk, and milk alone. And to top it all off, there will be a single price. No longer will there be two prices, one for fluid milk and one for industrial milk.
We should, however, be aware that if the United States, which is only too ready to challenge, of late, decides to challenge this two price policy for milk, one for the domestic market and one for the international market, the dairy industry could be accused of dumping.
However, the United States, or whatever country feels it has been adversely affected, would have to prove that Canadian exports were prejudicial to its market. Since we do not export a lot, and since our exports are increasingly value added processed products, this proof could be very elusive.
Bill C-86 is the response of producers to the impact of new international rules on the dairy industry. Dairy producers have rolled up their sleeves and found ingenious solutions to their predicament. We in the Bloc Quebecois support Bill C-86 because it allows producers to adapt to the requirements of international trade agreements signed by Canada.
The main purpose of the bill is to replace export levies going into an export subsidization fund with the pooling of returns from the marketing of dairy products.
Since some provinces-such as Quebec-export more dairy products than others, the commission will ensure that each province's contribution to the export fund matches its percentage of quotas. That is fair. If Quebec produces 47.5 per cent of industrial milk, it will pay 47.5 per cent of the export fund. If Prince Edward Island produces 6 per cent, it will pay 6 per cent.
For once in this country, we will have ensured a process that is fair. It will be different from the research and development funding system, in which Quebec receives barely 17 or 18 per cent of the funds allocated to R and D every year. In this case, each province will pay according to its percentage of dairy production.
The pooling of revenues from the marketing of dairy products from every province will allow domestic producers to continue to share market risks equitably and to balance the costs of the system, as the levy system often did. For example, if Quebec produces 48 per cent, it will pay 48 per cent; if Prince Edward Island produces 12 per cent, it will pay 12 per cent, and so on.
As you can imagine, I am pleased to point out that this bill will also allow the commission to delegate its powers to provincial marketing boards and to receive in return any similar powers granted to provincial boards, since fluid milk presently comes under the provinces while the Canadian Dairy Commission's authority is restricted to industrial milk.
The bill provides for a delegation of powers between the commission and the provinces for the purpose of managing the pooled fund. In the absence of a signed agreement, the commission would administer the pool only for industrial milk.
I look at the Liberal members opposite and I think that they, as well as the Minister of Agriculture, who is here this afternoon, will understand. How can this be in a federal system variously described as renewed federalism, courtroom federalism or flexible federalism? Those who talk about courtroom federalism probably worked for the Barreau du Québec or some such organization and see in this an opportunity to line their pockets. As the Minister of Intergovernmental Affairs told us again this afternoon: "If you are not happy, all you have to do is sue".
In a normal country, do we go to court every day, one part of the country suing the rest? That is this government's vision of Canada.
Fluid milk, the type we drink every day, comes under provincial jurisdiction, while industrial milk comes under federal jurisdiction, that is to say our jurisdiction, here, in Ottawa.
That is federalism for you: the same cow has to have two sets of udders, with the federal government drawing from the left side and the provincial government from the right. This agreement will help a little bit in correcting this distortion. I can see Liberal members laughing. They are laughing because they did not even know that industrial milk fell within their jurisdiction. One of them just woke up, poor him. He finally realized that reality in the legal world is quite different from the reality of agriculture.
These are the technical changes introduced by Bill C-86 regarding the Canadian Dairy Commission. It is interesting to note that the bill is put forward in a context where six provinces, namely Quebec, Ontario, Manitoba, Prince Edward Island, Nova Scotia and New Brunswick, have signed an agreement in principle to pool their whole milk supply system.
I must say that, among the ten provinces, there is one exception and that is Newfoundland, because it has only fifty of so dairy producers, producing mainly fluid milk, which comes under provincial jurisdiction. So, Newfoundland is not a member of this consortium, leaving nine potential members.
The three Western provinces-Alberta, Saskatchewan and British Columbia-have not joined the other six yet. Should they be called sovereignist provinces? Or secessionist, indépendantiste or even, as the Prime Minister says, separatist? I do not think so. These are elected people who want to properly manage government affairs, adequately represent their constituents, and also check with them to see if this is a good solution. I must say that, regardless of what happens, the six other provinces account for over 82 per cent of Canada's milk production.
Even if all the provinces keep their current quotas, there will only be one milk. There will no longer be any distinction made between industrial milk and fluid milk. Consequently, only one price will apply to milk across the country. The provinces will split the increases in quotas among themselves, and producers will be able to buy quotas from other provinces, which is a nice change.
A Quebec producer will be able to buy a quota in Ontario or in New Brunswick, and vice versa. Of course, there could be an increase in consumption if we help each other, if this government stops reducing subsidies to industrial milk producers, as it just did. The hon. member said that the Minister of Finance was not increasing taxes. What a naive statement on his part, given that the federal tax on gas has gone up half a cent per litre. And the member claims this is not a tax. Oh no, this is not a tax.
The government reduced its industrial milk subsidies by 30 per cent. This is not a tax. However, the cost of milk will increase and the government reduces its subsidies. But this is not a tax. Oh no. It is not a tax. Go and ask producers. Go to Lafaille's for example. I did go last Monday to the Lafaille and Sons' auction, in the riding of my friend, the hon. member for Mégantic-Compton-Stanstead, and I talked with some of my fellow farmers. Let me tell you that the minister should stay away, because if he went there-but he would not dare do that, of course-he would find out what farmers think of his budget.
Admittedly, it took some doing to conclude this agreement. It is the result of lengthy negotiations in which Quebec demonstrated commendable leadership. When the topic of grain and cereals comes up in the House, the West takes the lead role. But in this case, where for once a bill affects Quebec, I am sure you will not mind if I take a minute this afternoon to congratulate some of our own experts on their tireless efforts. I am thinking of the Quebec federation of dairy producers, its president, Claude Rivard, and its vice president, Jean Grégoire, as well as economist Guylaine Gosselin, the UPA milk expert.
I would also like to pay tribute to officials of the Quebec federation of dairy producers for their unremitting efforts throughout these negotiations. There is no doubt that our milk producers in Quebec are very well represented by their elected officials and by their union, the UPA.
I invite my Liberal colleagues to occasionally take a look at La terre de chez nous. They would find this weekly newspaper very instructive regarding the views of Quebec farmers and other questions. Speaking of the West, La Terre de chez nous carried an article this week about the Canadian milk pool, which threw out an invitation to Western indépendantistes, the three provinces that have not yet signed up: British Columbia, Saskatchewan and Alberta. Despite their hesitation, the repercussions of this historic agreement may well be greater than first thought.
From a practical point of view, we need only mention that in 1996, Quebec dairy producers should see their income rise by 60 to 70 cents per hectolitre. Of course, 60 or 70 cents is not a fortune. It is an increase of a little over half a cent a litre, which has nothing to do with the increase they should have received, given the rise in the cost of living and the cut of the 30 per cent subsidy that the federal government is getting ready to implement on July 1. This increase of 60 to 70 cents per hectolitre results from the realignment of prices for industrial milk and unprocessed milk in Quebec and the prices of milk in the other
provinces, since by 1996, there will be one national price for milk in Canada.
Because of the GATT, Canada will have to allow butter to be imported this year, which will probably affect quotas. But, with the pooling of all returns, the six provinces will share the impact of market fluctuations on all milk prices and no one province will be hit harder than any other.
What must be stressed is that this kind of agreement is based on the economy. It is the kind of agreement which maximizes the strong points of each and every member, who are all working together. Even with a referendum around the corner, producers from various provinces did not hesitate to collaborate with Quebec because it was in their best interests to do so. When we get down to reality, not hypothetical disaster scenarios, we see that the voice of reason prevails over political considerations.
In a document written by The Council for Canadian Unity, largely funded by the taxes paid by all Canadians, and in particular by Quebecers who are forced to pay for this kick in the behind, the council strongly suggests that the word "separation" be used, although the explanation it gives of the term in the glossary simply refers the reader to the definition of sovereignty.
And a few weeks ago, I saw that, regarding the separation of Quebec, the Prime Minister once again uttered the sentence that he just loves to repeat: "Does Quebec want to separate or not?" He knows very well that his only way of convincing people is by fearmongering.
Last week, when I was doing the rounds in my riding, I made a point of visiting-and I hope you did too, Madam Speaker, because I know you have a very special relationship with seniors and as you know, last week was national seniors homes' week-so I made a point of visiting the homes in my riding, and to my surprise, I found that more and more seniors support sovereignty for Quebec.
When I read in La Presse that the Premier of Quebec went to the Lower St. Lawrence, in the riding of the Quebec minister of agriculture, where at a home for seniors, he renewed the membership card of the oldest member of the Parti Quebecois on that member's one hundred and first birthday, I thought that was splendid.
This always reminds me of my elderly mother-unfortunately she passed away three years ago-who said she was going to vote for sovereignty because all her children were in favour of sovereignty. But she always added that this was the only weapon we have against their scare tactics. In fact, in a document the Council for Canadian Unity recommends using the term "separation", but they have a nerve, it is not even in the dictionary.
According to them, with sovereignty Quebec would immediately lose-and this is just to scare our farmers-all its market quotas in Canada. According to them, it is unlikely that farmers in other provinces would agree to maintain those quotas. When I say them, I am referring to the Council for Canadian Unity, led by a bunch of dyed in the wool federalists who are biased and misrepresent the facts.
Does this mean that after making substantial changes in their operating procedures during this referendum year, producers outside Quebec would be so inconsistent as to drop the whole thing this fall? Madam Speaker, let us be reasonable. In business matters, farmers know which side their bread is buttered.