Debates of Dec. 9th, 1996

Finance

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I rise on a point of order. Are we still rotating speakers, or are we now at questions and comments?

[The Acting Speaker (Mr. Milliken)]

Debate has resumed and we are again rotating. There was only one question during the period for questions and comments, because it was a rather long question. We have already used up the 10 minutes allocated to questions and comments.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, is it not the Bloc Quebecois' turn in the rotation? The Liberal Party had its turn, and so did the Reform Party. I think it is now the Bloc Quebecois' turn.

[The Acting Speaker (Mr. Milliken)]

I must inform the hon. member that the rotation was the following: the hon. member for La Prairie had 20 minutes; two members from the Liberal Party, namely the hon. member for York-Simcoe and the hon. member for Durham, had 10 minutes each; finally, the hon. member for Calgary Centre had 20 minutes. After that, it is once again the Liberals' turn, and that is why I recognized the hon. member for Hamilton-Wentworth.

[John Bryden, Liberal, Hamilton—Wentworth, ON]

Mr. Speaker, I am pleased to take part in the prebudget debate, particularly because today the finance committee submitted its fifth annual report of the Standing Committee on Finance entitled "The 1997 Budget and Beyond: Finish the Job".

The finance committee went into quite a bit of detail about proposals that would increase and encourage charitable giving in Canada. This arises from some of the remarks of the finance minister during the 1996 budget debate when he suggested that government should be getting out of some services and perhaps charities should be encouraged to take up where government is leaving.

The finance committee held hearings, heard from the charitable industry and made a number of recommendations to encourage charitable giving both by individuals and corporations.

We should remember, however, that when individuals or corporations give to charity this money does not go into the tax coffers in Ottawa. In a sense every time money is given to a charity it is money that is not given in taxes to the government to spend. It is given to private corporations to spend.

In one very real sense I was disappointed by the finance committee's report because while endorsing various measures to encourage charitable giving it did not mention about encouraging the charitable sector to be more accountable.

I have an interest in that because two months ago I tabled before the finance committee a report I had prepared entitled "Canada's Charities: A Need for Reform". This was a result of an effort entirely on my part in which I examined the financial information returns of about 600 charities and compared them to the financial statements of individual charities when I could get them.

I discovered that for decades and perhaps forever Canada's charitable sector had been managed without any reasonable measure of government accountability.

The most elementary things are lacking in the way charges are managed. We do not even have a definition that is more recent than 1601, the time of Shakespeare. That is the definition Revenue Canada uses to define what a charitable organization is when it comes to giving and to tax deferral.

There are no penalties; there are no measures. Even in the T-3010 form, the financial reforms I examined, I found all kinds of inconsistencies. Charitable organizations were able not to fill out the form adequately because there were no penalties in legislation other than revocation of charitable status to ensure compliance.

Something very big is at stake. It is not just a matter that the finance committee proposed encouraging people to give more to charities. It is also the fact the charitable industry is a huge sector of the economy. As of 1993 there were 73,000 charities in Canada. The revenue going in and out of charities accounts for about $86 billion.

I say to the member for Vancouver East that it is equivalent to the GDP of British Columbia. She would know the charitable industry, which is basically unmanaged by the federal government, has an enormous consequence on the economy in general. In fact 1.6 million Canadians are actually employed by charities.

I examined several areas but I will only give a few instances because time is short. Revenue Canada rules would require that charities spend 80 per cent of their tax receiptable givings on charitable activities. There is a huge loophole in this regard. Charities get revenue from a variety of other sources, mainly from government and including some other charities like the United Way. Only a very small percentage of a charity's revenues in general come from tax receiptable donations. Most of it comes from other sources. Consequently many charities spend 50 per cent of their total revenue, 40 per cent of their total revenue, or almost none of their total revenue on actual charitable activities. It is a huge loophole.

To become a charity is as simple as filling out a two-sided form, putting names on it and sending it in. The difficulty is that someone like myself, a member of the public or a member of Parliament cannot even examine that charitable application form to see who filled it out. The opportunities for abuse are legion. It is a very difficult matter.

Worst of all, I hate to suggest that Canadians suspect their charities. I am afraid they do. There is lack of guarantee that the charity one is giving to is managing its affairs competently. A difficulty is the Canadian public thinks that because a charity obtains registered status the federal government in some way is overseeing the charity and making sure it performs in a competent and responsible manner. I regret to say that is not necessarily so.

I could have wished the finance committee would have at least suggested to the Minister of Finance, in encouraging more donations to charities, that he demand at the same time increased responsibility, increased openness and increased accountability.

In the final analysis Canadians are generous. Canadians want to give. However they want to be sure that when they give they give to organizations that are accountable and that the maximum amount of the dollar they give actually gets to the worthy cause. Right now there is no such guarantee.

I made 64 recommendations and would like to highlight the main one. In the next budget I would like to see new regulations applied to charities such that the information Revenue Canada receives from charities is good, reliable information. To make sure it is reliable the government will have to apply penalties. Penalties will have to be introduced for charities that do not supply accurate information.

Once the information is received by Revenue Canada and we know it is accurate, Revenue Canada should take advantage of the electronic age and put that information on the Internet so that any individual or corporation considering making a donation to a charity can call up the financial information on that charity and know it has been vetted by Revenue Canada and is good information. They could see for themselves if the charity is wisely spending the money it is receiving from the public.

That one move would save billions of dollars which could go toward the deficit. It would also give Canadians a sense of confidence in the charities to which they are donating and would increase spending rather than decrease it.

I saw in the report of the finance committee that Canadians give less to charities than Americans give because in the United States the requirement for openness on the part of charities is much more rigorous than it is in Canada.

Charities are not the only problem. There is also the problem of non-profit organizations that are also tax exempt. There are 66,000 non-profit organizations ranging from Canadian automobile clubs to athletic clubs. They have revenues probably in the area of $40 billion a year. These non-profit organizations are not accountable to Revenue Canada. The financial information returns they send in are secret. The public has no access to them. By law in the United States any person can walk into the office of a non-profit organization and demand to see its financial statements. That is not the case in this country.

I hope the finance minister and the revenue minister, in looking to charities to take up part of the slack left by government as it abandons certain areas of social services and health services that have traditionally been a part of government and in encouraging corporations and individuals to give to these charities, will remember that the ultimate responsibility is to ensure these organizations are as accountable as government departments.

[Anna Terrana, Liberal, Vancouver East, BC]

Mr. Speaker, I am rising to speak because of my strong concerns regarding new problems that are being created by our focused concentration on deficit reduction. The Liberal government has done extremely well in reducing the deficit, bringing confidence back to our country and ensuring at the same time low inflation and low mortgage rates. In all, our Liberal government has been the catalyst in re-creating a healthy, vibrant and competitive Canadian economy.

Low mortgage rates are putting money back into the pockets of consumers and are greatly contributing to increased housing starts in Canada. However low mortgage rates are an advantage only to those who can afford to purchase a house.

It was crucial for our Liberal government to follow the path of fiscal responsibility, for by staying this course we will have a balanced budget for the first time in over 20 years and will be able to start reducing the federal debt in the next millennium a mere three years from now.

During the 1993 federal election the Liberal Party promised that if elected as government it would put Canada's fiscal house in order. I am proud to stand in the House today as a member of the governing party caucus to say that the Liberal government has kept its word. Consequently Canada's fiscal situation is the envy of the industrialized world.

Though the course we took was necessary, it has also resulted in hurt for many Canadians across our great country. Hurt has resulted in human misery for an increase in the number of Canadians who now live in poverty. Hurt has resulted in many Canadians facing difficulties in getting out of a cycle of dependency that is both demeaning and destructive.

Today I would like to talk about poverty. I encourage the government to start working toward improving the situation of the Canadian underclass which statistics say is increasing in our country, and the quality of life of many people who do not just need help, but also need a voice.

In January 1996 at the Fraser forum, Chris Sarlo defined the "Basic Needs Poverty Lines" as follows:

A person is defined as poor if they can, at best, afford only the basic physical necessities of life. These necessities include: an appetizing and nutritionally complete diet; apartment rental accommodation with the number of rooms appropriate to family size and with the full complement of essential furnishings, household supplies and telephone service; clothing which is purchased new, appropriate to the season and with replacement rates assuming normal wear and laundering; a full range of regular, preventive and emergency health care, including personal hygiene, vision, and dental care; and essential transportation linking one's shelter to other basic needs. In all cases, the standard of quality of each of the basic needs is that which is considered minimally acceptable in Canadian society.

In a country as rich and prosperous as Canada, all Canadian people are entitled to at least these minimal basic needs. But if we take these needs one by one, we realize how different reality is. According to Statistics Canada, my riding of Vancouver East has within it the poorest postal code area in all of Canada. In many areas in my riding, poverty is rampant and the daily reality of life for people is often as follows.

An appetizing and nutritional complete diet. A large number of children in my riding have one meal a day and this is in school. Due to the unsafe nature of many areas of my inner city riding, some schools in my constituency have joined together to start the Kidsafe program, which exists to feed and protect local children. This community initiative, which offers children a safe place to go to during school breaks and after school, began after a young child in my riding, who had no place to go to after school hours, was physically assaulted.

A school's responsibility is not to babysit children. Children generally are better off at home where their parents are. However, in repeated cases across Canada, many children are better off at school and away from their homes. For Vancouver's schools that offer the Kidsafe program, this service is very costly and demanding. However, the schools' principals and staff are to be commended for taking such action and helping children survive in a safe environment.

Apartment rental. Decent housing is extremely important for all of us. How can you have a decent life without decent housing? The federal government is currently committed to $2 billion a year to subsidize 661,000 social housing units across the country. This program has provided a large number of people, many of whom are children, single mothers, elderly, disabled and people on social assistance with a decent and affordable place to live. Unfortunately the government is devolving to the provinces the authority for administering this program.

Before I entered politics, I was involved in social housing. I administered Casa Serena, a senior citizens home that was built by the Italian Cultural Centre Society of Vancouver with the support of the federal and provincial governments. I was responsible for interviewing the people who applied for accommodation and I was appalled to learn of the condition of certain housing facilities.

Recently I visited the inner city area of Vancouver East and I can assure the House the skid row hotels are places not fit for human beings. Over 10,000 Vancouverites live in what is said to be the most expensive housing in Canada. These rooms are only 80 square feet and have just a bed and hotplate and rent for an average of $375 a month. Vancouver East offers concrete evidence that the government should stay in the social housing field.

Clothing which is purchased new. Many of the students of the inner city schools in my riding never wear new clothing. They have to count on the charity of others and only if they are lucky will they have proper clothing to wear.

A full range of regular, preventive and emergency health care. These benefits are available for all those who are on social assistance, but the moment they start working, they lose all these benefits. That is one of the reasons the working poor remain poor. They are people who work for minimum wages and have to pay for all their benefits, including a portion of child care costs, dental and drug costs, and in B.C. medical insurance premiums. Essential transportation. The same problems encountered with benefits is also encountered with transportation. The working poor are not earning enough to meet their basic expenses.

It is time to take these problems into serious consideration. This year the United Nations has given Canada a low ranking for its record on child poverty and suicide. In June 1996 the UNICEF program of nations report was released indicating that Canada has the second highest number of poor children among the 18 industrialized countries. This is unnecessary and I strongly believe that the government has a moral obligation to find workable solutions to resolve this grave problem.

The United States has the largest number of poor children, Finland has the fewest. Among our poor children, the majority are aboriginal who at times live in abysmal conditions. Among aboriginals, poverty is much higher than among other Canadians, suicide is seven times more common, infant mortality twice as high and

the high school dropout rate is 50 per cent higher. What a waste of human potential.

Some of my colleagues and I have been very concerned about the children of the working poor. After much work, we were relieved to learn that in the last budget the Minister of Finance partially addressed the problem by increasing the maximum annual benefit from $500 to $750 in July 1997 and to $1,000 in 1998.

When fully phased in, this working income supplement will provide an additional $250 million annually to an estimated 700,000 low income working families, one-third of which are single parent families. I was also extremely pleased to find in the 1996-97 budget a whole section devoted to increased support for children.

The coming budget must continue the trend toward helping the working poor and children living in poverty. My ideal budget would include increased assistance to those in need through tax credits; continuation of benefits for a period of time to those people who join the work force at minimum wage; assistance to make people with disabilities full participants in Canadian society.

Early prevention programs through Health Canada. It is important to help children start their life healthy and in a good environment. This can partly be accomplished through the continuation and expansion of programs like the Community Action Plan for Children and Head Start. Both of these programs have been very successful in teaching poor families about nutrition and helping them curb violence and in empowering many parents in their parental role.

Finally, a national child care program. I know that at times the federal government has to work with the provincial and territorial governments to implement programs. The negotiations which are currently taking place between governments is heartwarming. Hopefully we will be able to work together and alleviate some of the problems that touch people in need.

After all, in a 1994 Angus Reid poll, 89 per cent of Canadians agreed that child poverty was a priority for government and in 1995, prior to the federal budget, Canadians listed child poverty as one of the top three priorities of government. Let me remind the House that wherever there is a poor child there is at least a poor parent.

The recent report presented by the Standing Committee on Finance speaks to the concern I express and I would like to thank its members on behalf of my constituents.

[The Deputy Speaker]

I do not like to interrupt the hon. member, but her time has expired.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I have listened carefully to my colleague's speech. I cannot let some of her remarks pass without comment. It is a pity, because I had the impression that my colleague had a heart, and could be moved from time to time by child poverty or the situation of single parent families.

It is clear from her speech that she is prepared to go to great lengths in this area in order to do something for the poorest members of society. But she has made a colossal error in her remarks about social housing. I am sorry, my dear colleague, but despite the promises made by the Prime Minister in 1993 during the election campaign, and the promises made by the Minister of Finance during the same period concerning social housing, nothing has as yet been done.

They were going to give money to housing co-operatives so they could make improvements. But, since 1993, nothing more has been heard. There has been nothing. No money has been made available. The same thing goes for construction of new social housing.

Since 1993, this government has not come up with a red cent for building new social housing. It is therefore incorrect to tell Canadians that this government is trying to do something about the problem of social housing. It is true that the budget shows it is paying a certain amount for social housing, but this is for existing housing. It therefore has responsibilities towards those residents.

Now, this responsibility has been transferred to the provinces, but minus the tax points or the money that should go with it. The result is that now the whole social housing policy in Quebec must be reviewed because the federal government is not meeting its obligations, even though they were renewed during the election campaign. I would therefore ask my colleague across the way simply to rectify what she said about social housing.

[Anna Terrana, Liberal, Vancouver East, BC]

I do not think I need clarify anything. In fact, my colleague is right, we are no longer building new housing. Naturally, I am not happy about this, but we have had to take decisions to get back on track with our deficit and the economic situation of the country.

The situation my colleague has criticized is very crucial, but I would also like to add that, although the government is turning responsibility for the administration of housing over to the provinces, it is also going to promise to transfer to them the funds necessary to pay for housing in which people are already living.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I am pleased to speak on this motion relating to the fifth report of the Standing Committee on Finance.

I must acknowledge the honesty of my colleague across the way for rectifying the facts in response to the question I asked. She corrected herself with respect to social housing, and gave Canadians the truth: that this government has done nothing since 1993 to

build more social housing. She even gave me a scoop, by indicating that she was going to strongly debate in caucus the fact that this government is transferring to the provinces the equivalent of what the entitlement for social housing would be. I congratulate her on the aptness of this remark. I will, moreover, carefully reread today's Hansard in order to get all of the details of what she said.

This motion on the fifth report of the Standing Committee on Finance worries me a little, and the title of the report grabs the reader's attention right away.

The title of the report, "Finish the Job", speaks volumes on the Liberals' intentions. When one reads this report carefully, one sees that they do, indeed, wish to finish the job, the job they are doing on the unemployed, by tightening the requirements for receiving UI benefits. To me, then, this is not a reassuring title, when one knows very well how the Liberals have treated the public since their election. We need only think of the blind cuts this government has made in order to do away with its deficit, unprecedented cuts in areas as important as health, education and social assistance-areas I also care about.

The government's sole purpose is to reduce its deficit by hitting on anything that moves, especially the middle class and the neediest in our society. Not those who take advantage of tax shelters, not the large corporations or the chartered banks. It prefers to attack this part of the population first.

Personally, I agree with deficit reduction. Of course I do. We used to have governments that could not handle their spending power. They would spend taxpayers' money as though it were going out of style, and today we have to pay the bill. So it is absolutely necessary to reduce the deficit.

However, I do not agree with the way the government is going about this. As usual, the government is coasting. It is not meeting all these problems head on. It is trying to avoid them. Its only purpose in life is to tell the public that it is reducing the deficit. This is like having a healthy bank account but not using it to feed your family. It is like going shopping for groceries but not giving these groceries to the people who need them.

The family is the Canadian public, which believed this government, which was elected because it shouted from the roof tops a single word: jobs. Instead of saying it just once, it went so far in its hypocrisy as to say it three times. Everywhere we look in the red book, it says, not once, but three times: jobs, jobs, jobs.

According to the latest forecast given by the Minister of Finance, the federal deficit will have decreased by $25 billion between 1993 and 1998. Let us take a look at how the government managed to do that. Personal taxes, in the meantime, have increased by $23.1 billion since 1993. So there is no longer much of a difference. The money comes from somewhere. We must not fool ourselves.

Obviously, if revenues increase this way, we can certainly lower the deficit. However, have this government's expenditures been reduced accordingly? They have been reduced by only $14.4 billion. So the government is misleading the public to no small extent when it says it has reduced expenditures and that the savings go directly to reduce the deficit. That is not the case.

"Finish the job" simply means that our taxes-direct or indirect-will be increased in the next budget. We run the risk of once again paying for the government's lack of understanding, as the unemployed are already doing.

If people were at least finding work, if our young people were at least coming out of our educational facilities with the hope of finding a job, if parents could at least ensure a modicum of comfort for their children, we could say that the economy is moving and we would not have the social problems we are facing now. However, this is not what is happening.

Our young people are leaving their regions in the hope of finding work elsewhere. I say, "in the hope", because after a while they come back empty-handed.

What we are also seeing is fathers and mothers who must rely on social assistance to survive. What is this government doing? It is reducing its deficit on the backs of these people.

I repeat, we are in agreement with the principle of reducing the deficit, but the way in which this government is going about it, despite its promises, is hurting the public badly.

One approach the Liberal government has taken, and which is still the most unacceptable, is to keep dipping into the unemployment insurance fund over the last three years. This is nothing but a hidden tax on employment.

Of course, they tell us that it is not, but let us ask the following question: Where does the unemployment insurance fund surplus go? We are talking about $5 billion out of the unemployment insurance fund that the government uses every year to lower its deficit.

They keep trying to make us believe in their discourse that the government wants to build up a cushion, for use in the event of a recession, for example. However, at the rate things are now going, the rate it is taking money out of the fund, the cushion it is trying to build up is more like a mattress, a great big overstuffed mattress, whose purpose is not to provide for the lean years, but to reduce the deficit.

We have only to look to our riding offices. What is going on is very revealing. We in the Bloc Quebecois regularly meet with people in employment centres. I do not know if members across

the way do the same. At the present time, employment staff in the human resources development centres are being given training to explain what the new employment insurance program is all about. We know that it will come into effect on January 1, 1997. A number of questions have been asked on that point, and the responses have been evasive enough to prompt newspaper headlines such as "Minister of unemployment insurance-to call it what it is-not familiar with his own files".

This is a new insurance regime, a word I choose because it describes exactly what we are going to see in 1997: the people will be put on a weight loss regime, a diet. For a number of our fellow citizens, our constituents, this may turn into a starvation diet.

What keeps being repeated in the training courses, what the employees, the public servants, are being told, is that the new "regime" is based on the money saved in the unemployment insurance fund. Is this not scandalous?

This means that as much money as possible must be left in the unemployment insurance fund. This fund must be fattened up as much as possible, instead of being given to those in need of it. The eligibility criteria will be raised so high that, eventually, very few will be able to benefit from it.

When you get elected on a platform of "jobs, jobs, jobs", you can hardly afford to rationalize taking money out of the unemployment insurance fund or premiums. Instead of using the unemployment insurance fund surplus to absorb his deficit, the Minister of Finance should use that money to deal with the unemployment problem.

They are applying bandaid solutions right and left. Have these people on the other side of the House really weighed the pros and cons, have they really thought about the whole unemployment question?

In my region last month, we lost the dubious honour of being the unemployment champions of this country. However, on the weekend, according to the latest statistics, we won the trophy back, with a rate of 15.1 per cent. That was the worst news they got in my region last week.

According to the Labour Market Bulletin for the second and third quarters of this year, many young people are the main victims of the deteriorating situation on labour market.

Among young people in my riding, the unemployment rate is 20 per cent. What is the government doing to turn this situation around? It offers young people absolutely nothing. The exodus of young people will continue. Of course that means that our regional unemployment rate will go down, but the unemployment rate will go up in other parts of the country, in the big cities.

I can hardly ignore the disaster that struck my region and especially my riding last July. In addition to the damage and the buildings that were destroyed, the disaster had an impact on jobs as well. Businesses had to lay off 3,000 persons temporarily. Of that number, many hundreds have yet to go back to their jobs. The tourism industry was hit very hard.

At this very moment, we may be seeing an increase in jobs in certain sectors like the construction industry. And obviously, there has also been an increase in retail sales. That is not thanks to the government but as a direct result of the disaster. When a family loses everything, it has to replace everything it lost. There are hundreds of families in that situation.

With all these job losses, you would have thought the federal government would have set up a special program to provide support for these businesses and the tourism industry and for all those who lost their jobs at that time.

The government provided assistance to non-profit organizations. This assistance came almost immediately, I must admit that. In this sector, the government was indeed present, but in other areas, where jobs were affected most, the only program offered was to owners of businesses who could get federal assistance, provided they hired people to do exceptional work. Let me explain.

Pretend you own a convenience store, a restaurant or a grocery store. You have to lay off your employees, your capital is gone because the business has been closed for six months, and there is an offer to fund a job involving unrelated activities. Try asking a convenience store owner to hire a dressmaker. Try asking a restaurateur to hire a pump operator. It is that crazy.

It is therefore this government, the people opposite, that have lost touch with reality. People do, however, want to work. They want to re-open their businesses. But it has been difficult. We have been unable to find a receptive ear. And yet, we have met these people at all levels, ministers too. The results are not there.

In his next budget, the Minister of Finance will have to recognize, for once, that the people have given enough. They pay enough income tax. Employers need support to keep creating jobs. If the minister sticks to his present course, he will absolutely have to find ways to repair the wrongs he has done.

The Bloc Quebecois has, through its members sitting on the Standing Committee on Finance, submitted a slew of measures this government could use. It is up to you first to read them, examine them, study them in depth and remedy the state of this country's finances.

As I said at the outset, this report "Finish the Job" should join the multitude of government reports gathering dust on the shelves. What this government has to do is not finish the job but get on with it.

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

Mr. Speaker, I listened to the member for the Bloc talking about the prebudget run-ups. I just want to get a clear understanding what the member would say to this question. If there were one thing the Government of Canada could do to help the unemployment situation in his particular riding and in the province what would that one thing be? Would it be to pour millions of dollars into the province and into his riding by way of job creation projects, or would it be to give the private sector in the province of Quebec and in his riding an incentive through the lowering of taxes and the lowering of costs of doing business so that the environment of the business community would be such that it could flourish and prosper, thus creating more jobs? I want to be clear on exactly which one he would choose.

If the province of Quebec was in fact a separate state or nation, would the member ask those running the country to do exactly the same thing?

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I thank my hon. colleague for giving me the opportunity to address issues I did not have time to mention earlier. I did not have time to elaborate.

The Bloc Quebecois' approach to making changes has been known for some time. Those who have been following the Bloc's performance in this House over the past three years know that suggestions to improve the employment situation were made to the government in several reports, but that, in most cases, as usual, the government ignored our suggestions.

In response to my hon. colleague from the Reform Party, regarding specifically the unemployment insurance fund, if, instead of using the surplus to absorb the national deficit, employer and employee premiums were substantially reduced to ensure this fund is balanced, our businesses could already make use of that money to create new jobs.

As for involving a mix of business people in privatizing public functions, different schemes could be considered. The Bloc Quebecois suggested several. We are of course in favour of making every effort to create jobs. What is happening at present with this government? They are talking about subsidies left and right, but none are actually granted in any area. Businesses go to the business development bank, but nothing happens. There are no programs specifically designed for these businesses. It is a disaster, any way you look at it.

For the time being, what is required is perhaps not so much to create jobs as it is to strike a balance. All in all, there were not that many jobs created over the past three years. Since we have been allowed to speak about Quebec, when Quebec will take over manpower training-and I think this is the key to job creation-we will be able to train people in those areas where jobs are available. All too often, it is in high technology areas where productive and well paid jobs are created that employment can be found. Quebec could easily train people under those circumstances.

Even now, if only Quebec were getting its fair share from this government, it could create jobs in almost every sector. In research and development for example, Quebec's share currently amounts to 16 or 17 per cent. This is a very productive area.

It is the same with defence. Quebec is not getting its fair share in that area either. Give us our share, what is rightly ours, then the Quebec government will be able to create productive and well-paid jobs.

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, I wonder if the hon. member would give us his impression of the effect of the high levels of taxation, particularly payroll taxes, on the economy in Quebec.

I am speaking specifically of the underground economy. It is the impression of many people that the underground economy is alive, well and thriving in areas of high taxation.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, the question is twofold.

First, there is the Canada social transfer. To be sure, the federal government transferred responsibilities in various sectors, including health, housing, as I pointed out earlier, and education, without also transferring related budgets. There is no doubt that the federal government dumped on the provinces, thus forcing the Quebec government to review its social programs, so as to balance its budget.

As the Bloc Quebecois has been telling the government in this House, the whole issue of clandestine work must be reviewed.

Bloc members sitting on the Standing Committee on Finance made a number of proposals on this issue. You can rest assured that, in Quebec, the same thought process is going on and the Government of Quebec has taken steps in certain areas to control this problem. I do not think any politician can oppose such measures. At some point, we must absolutely give ourselves the necessary means to control clandestine work, something which the members opposite are not doing. Yet, they have received, on

several occasions, suggestions from Bloc members sitting on the Standing Committee on Finance.

[Gar Knutson, Liberal, Elgin—Norfolk, ON]

Mr. Speaker, I will be splitting my time with the member for Beaches-Woodbine.

I begin my speech by commending the government for the job it has done on getting the deficit down. Regardless of any of our views on the actual details of the budget concerning how the money should be spent, we could probably all agree that the country is in far better financial shape now than it was three years ago.

In 1995-96 the government achieved a budget of $28.6 billion. By 1996-97 it is estimated that deficit will drop to $24.3 billion and go down to $17 billion or better by 1997-98. In 1992 Canada's deficit was double the G-7 average at 7.4 per cent of gross domestic product. This was a huge burden on our country and I believe we were on the verge of financial ruin. By 1996 our deficit had fallen to below the G-7 average and by 1997 will the lowest of all G-7 countries.

While there has been a tremendous cost to achieve these results, with many people enduring serious cuts, layoffs or whatever, as a country we should feel pleased with the results to date. We are enjoying lower interest rates, which is good for the economy, good for jobs. It is good for the housing market. It is good for consumer spending as people have lower costs when they borrow money. It is good for things like purchasing cars. These are all important issues in driving the economy and helping to create jobs.

Jobs were the key issue when this government ran in 1993. Unfortunately they remain the key issue to date. Let us look at the positive aspects of our record to date. Since 1993 the country has created 670,000 net new jobs. Currently Canada and the United States have the fastest job growth of any countries in the G-7 but unfortunately we all recognize that more needs to be done.

An unemployment rate of 10 per cent is very high and we should work collectively as a nation to solve it. There are no magic answers to the problem of lowering the unemployment rate but we must all appreciate that 10 per cent is far too high. It represents a drain on our economy of lost productivity. It represents a waste of human potential, a waste of human dignity. We must all come together and try to find a solution.

I will talk specifically for a moment about two of the more minor areas in the budget which are unrelated to the broader macro issues of deficit, debt, inflation and jobs. First I will talk about expenditures in the environment portfolio.

Under the current government budget plan we are scheduled to spend roughly $480 million on the Department of the Environment by 1998-99. That is an annual figure. I would like to point out to the government, as I see there is a cabinet minister here, that the defence budget is roughly 20 times higher. I suggest we would be hard pressed to find a Canadian who felt that the defence or military threat to our country was 20 times greater than the environmental threat.

When we look at what people are worried about in terms of climate change, air pollution and toxic chemicals in their water supply, we would be hard pressed to say those are all very serious issues but the military threat is 20 times greater. Not one of us would believe for a moment that those numbers are in proper proportion. If anything, Canadians would probably want us to spend 20 times more on preventing pollution and cleaning up the environment than we currently spend on defence.

The reason we spend so much on defence is probably that concerns about the military and defence have about a 5,000 year history while concerns about the environment probably have a 50 year history. I will leave the issue of defence spending and environmental spending to talk about another important issue, child poverty.

In his budget speech in 1996 the finance minister asked: "Why not decide together that in 10 years hence increasing child poverty rates will be a thing of the past?" The finance minister should do just that. He should decide that increasing child poverty rates should be a thing of the past. Each year something in this regard should be done in the budget. I know we cannot cure the problem in one year, but every year we should put forth a new program or new expenditure designed to cure the problem of child poverty.

Currently Canada's child poverty rate is only exceeded in the OECD by the rates of the United States and Australia. The consequences are well documented including poor health, rising crime and reduced educational achievement. Campaign 2000, as stated in its report card, indicates that child poverty rates in Canada have risen 46 per cent since 1989. The exact data for 1994 is not yet available but it is estimated the problem has not been alleviated with the recovery. Cuts to unemployment insurance expenditures and provincial welfare rates have likely offset any gain due to the improved employment numbers and the increase in the working income supplement.

I do not want to just criticize the government. It is also important to remind ourselves that current government programs including GST rebates, working income supplement, the child tax benefit and others prevent another 64,000 children from falling into poverty.

Let me talk for a minute about the child tax benefit which pays a maximum of $1,020 per child to families with net incomes of $25,921 or less. Benefits are gradually reduced as income rises and

eliminated for a family with a net income of approximately $67,000 annually and one or two children. Neither the benefit rate nor the income level for the benefit reduction is fully indexed to inflation.

I should like to hammer away on this point. Currently the rate for the child tax benefit only goes up, if inflation is above 3 per cent, by the amount that inflation is greater than 3 per cent. The first three percentage points of inflation represent a real cut to the child tax benefit.

Although this might not seem like a lot of money in any one given year, the accumulated inflation year after year can have a huge impact. For example, it is estimated that on a $5.2 billion program, which is what we currently spend through the child tax benefit, almost $600 million in annual expenditure have been eroded away since 1993 when the Liberals were elected. That represents a $600 million cut to poor and middle class families with children. As a starting point the government should say it will protect all programs that protect children from erosion by inflation.

Perhaps the government wants to know where to get the money from. Since tax brackets are not indexed to inflation we actually gain revenue simply by inflation. As the incomes of people go up by inflation they pay more in GST and income tax. The Minister of Finance and the government as a whole should put some of that money into protecting programs that affect children from inflation.

I appreciate that my recommendation if implemented would not solve the issue of child poverty. Issues such as the general level of unemployment, literacy and domestic violence are all part of the problem. However I firmly believe small steps are important particularly when made in combination. Furthermore, small steps will pay off politically for all of us. I ask the government to take into account what I have said and implement full inflation protection for the child tax benefit.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, I listened with great interest to the hon. member's speech. I know that he cares about the issue of child poverty. I also know that he supports his government's strategy against the deficit.

I do not think he mentioned the enormous problem we currently have with the unemployment rate, which exceeds 10 per cent in Canada and 12 per cent in Quebec, with the cuts made by his government to social programs, and with the fact that over 4 million Canadians live below the poverty level.

His government has demanded tremendous sacrifices from the most vulnerable in our society, like the unemployed and welfare recipients, but not from rich Canadians.

This is in contradiction with the traditional Liberal philosophy, which was based on compassion. A former Prime Minister coined the phrase "just society". Where is the compassion? Where is the traditional Liberal ideal of promoting a just society? I do not see any compassion in the government's agenda. On the contrary, the government is relentless with the unemployed and with welfare recipients, who are the poorest members of our society.

I would appreciate it if the hon. member could explain the contradiction between his stated concerns about children, and his government's policy, which in no way reflects his own concerns.

[Gar Knutson, Liberal, Elgin—Norfolk, ON]

Mr. Speaker, the question the hon. member asks is a legitimate one in an age when such significant cuts have been made. Certainly some of them have fallen on the disadvantaged in society.

He asks how we can call ourselves Liberals and how we can call ourselves caring. Unfortunately the only answer I can give him is that oftentimes the decisions we have made represent the lesser of various evils. If we had not made decisions to get the deficit down, the country would have been in virtual ruin and somebody else would have come in and made those decisions for us. The poor and the disadvantaged would have paid the highest price from rising interest rates and a country in economic ruin.

Certainly the economic system does not work well for all Canadians. There are far too many Canadians who are not participating in the recovery, far too many Canadians who do not have jobs and far too many Canadians who are suffering from the restructuring. When we take into account all the decisions the government has made and look at them as a whole package, I am not sure any other decision maker, whether the Tories or any other hypothetical government, could have done a better job on the whole.

We know many people are hurting. All I can say to Canadians is that the worst is behind us. We are now enjoying the benefits of lower interest rates. The federal government is the major borrower in the country and is enjoying the benefits of lower interest rates in the cost of borrowing. We should now push the federal government to use some of those savings to try to correct the imbalances and unfairness in the economy over the last few years.

[Maria Minna, Liberal, Parliamentary Secretary to Minister of Citizenship and Immigration Lib.]

Mr. Speaker, for some time now some we have had some discussion with respect to the situation of our economy. Now that we have surpassed the concern of the deficit, or at least now that we have reached the targets the government has set for itself, interest rates are the lowest we have had in decades and inflation is low.

There is a great deal of discussion in all corners of the country about what should be done now with what is perceived to be extra moneys available to ease up the pressures of the deficit situation. A great deal of what we here is also about tax cuts. I have some serious concerns and recommend that the government should not take this direction.

Tax cuts are not the solution. Lower interest rates have helped to save a great deal of money across the economy. Tax cuts in themselves tend to help people with the highest incomes and not those with the lowest ones. They tend to lower revenues, which means at a time of deficit and high debt there must be another way to replenish revenues.

It has been done in the province of Ontario where user fees are being brought in for just about everything. User fees are a regressive form of taxation because they hit everybody equally, especially those who have low incomes. They hurt people who are struggling at the moment. I do not see tax cuts as a solution to the situation of today.

The government has to look at the whole issue of how to ease up funds, what do do with them and in what areas of society to invest. It has to look at how to encourage the creation of jobs, assist people in difficult situations and invest in the future and the people of the country, the best resource we have.

I would like to look at what I call the social economy. We tend to look at social issues as having something to do with charity and social programs as opposed to something directly tied to the economy. The two are one and the same. I call it the social economic policy as opposed to one or the other.

The working income supplement was increased for poor families in the last budget. I am glad the finance committee recommended a further increase. That will put money into the hands of average families. These people do not have extra money. They do not use the money for holidays. That money is used to survive. It is used to buy products in their communities. It assists the economy at the same time as it helps families.

We need to address the issue of child care very aggressively so that affordable quality child care across Canada is accessible. A proper child care program allows people to work. Some family members are not able to go to work. Some are working and the children are being left in situations which are not healthy and nurturing. That does not assist in their development. That affects their future ability to produce and contribute to our society.

There is the whole issue of child poverty. Child poverty is very detrimental to the family. The Standing Committee on Human Resources Development recommended-and the government is now committed to dealing with it-enhanced child benefits which puts money into the hands of families that require it. Again that assists in the nurturing of the child.

It is no secret that a child who is assisted from birth to three years of age or six years of age is an investment in society. These children will have a greater opportunity to develop normally and compete with the best in the world. We need to invest in the future of our children. Otherwise we will not be able to compete with the rest of the world. That is reality. That is part of our economy. The social costs down the road will be that much less.

We must guard our health care system. We must ensure that it is protected and that it remains a wholly public system. Health care is not only an economic issue. If people are worried about whether they will be able to protect their health tomorrow it increases their stress. The health of people contributes directly to their ability to work and to their ability to contribute to society.

In addition, the Canadian health care system enhances the ability to attract business. The quality of our health care system is one of the reasons businesses come to Canada, as well as the quality of life and our safe cities. Money spent in social and physical infrastructure attracts business to Canada. That is very positive. It has to do with the economy; it is not only a social issue.

When we invest in literacy, people are able to work. It is very sad that there are jobs going begging in the country which people cannot fill. Investing in literacy is investing in people: people are able to take the jobs which are available and we are able to compete with the world. It is an economic issue.

Let me touch on the whole issue of work. We need to look at work in a different way. We cannot simply talk about employment. We have to look at the quality of work. What does that mean?

It is time to look at things such as work sharing and possibly a four-day work week. Husbands in my constituency have said they would love to be able to work four days so that they could share in child rearing responsibilities with their wives. It is social, but it is part of the economy and helps the employment situation.

Any moneys invested in assisting youth in the transition from education to employment or in youth training are very important. The recent announcements of the government in this regard are excellent. It is investing in people.

The Donner report to the government stated that it would like to see the government implement a 40-hour week, giving people the right to refuse overtime. Overtime in this country has become enormous. People go home so stressed that it is affecting families. When stress becomes chronic, it affects health, production and the

economy. Again, it is something else that we need to look at. It is very important.

We need to find a way to bring together the skills of Canadians in a national apprenticeship program. We need to negotiate with the provinces an agreement for portability of trade. This is something that is very critical. We cannot have people who are trained in one province that cannot work in another. It is not a social program. It is an economic program.

Finally, we must begin to recognize that protecting the environment does not kill jobs. It creates jobs. We call them brain jobs sometimes.

We have tremendous ability in technology that we can sell abroad and invest in protecting our environment. At the same time it is creating jobs. Protecting the environment not only protects the future of Canadians and our planet but it also creates jobs.

I want to give a bit of an emphasis today on how to approach social infrastructure. When we talk about social infrastructure we are talking at the same time about economic infrastructure. The two are not separate. They are one and the same. They are very interlinked. I want to encourage the government to take that direction very aggressively in the next budget.

[Stéphan Tremblay, Bloc, Lac-Saint-Jean, QC]

Mr. Speaker, I listened to the remarks by my colleague opposite. She spoke of fine principles, job sharing and such things.

I am prompted to make a few remarks. Some two months ago, the government organized a national conference on young people in the new economy. With the job crisis faced by young people, the government panicked and wondered what could be done. So it invited young people from across Canada-from Vancouver to Newfoundland-in order to siphon off their ideas.

What was the outcome? Each speaker at the conference had a key role in the community. What was the outcome? A sort of consensus. I know, because I led a workshop. What appeared to come out was that employment problems, both social and economic, are regional. I know that in English Canada, when they talk of regions, they mean the Rockies and the Prairies. In Quebec, when we talk of regions, we mean the Saguenay-Lac-Saint-Jean or Abitibi regions, where economic and social realities differ.

My question therefore for my colleague opposite is as follows. Does she not think that decentralization of powers and funds would lead to more activity? My perception of this great Canadian Parliament is that we are trying to study a national problem and find a national solution. Most of the time, however, we know that problems vary from one region to the next, because the realities are different.

So, would it not be better to involve the regions more and decentralize power in order to have solutions to the real regional problems?

[Maria Minna, Liberal, Beaches—Woodbine, ON]

Mr. Speaker, the hon. member tends to generalize when he talks about decentralization. It depends on exactly what we are talking about.

If the hon. member is referring to my comments with respect to training and education as well as trades and portability, there is no question that the needs of the country, because of its vastness and regional differences, are different from region to region and sometimes within the regions of a province.

That does not negate the fact that at the same time the economy is national, that we sell ourselves around the world, that we try to export the talents that compete around the world. We have broken down trade barriers with everybody but ourselves.

One of the strongest comments I heard continuously throughout the human resources committee hearings two years ago was that people wanted to see some semblance of principles and objectives in the area of trade as well as portability. People wanted to be able to move across this land and be able to use their skills regardless of whether they are working in Montreal or Vancouver.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is a real pleasure to speak to the prebudget debate.

I begin by acknowledging the chair of the finance committee who has always been extremely fair. He was fair again and did a good job of conducting things, speaking from a logistical point of view. Again, he has always been more than fair to members of the Reform Party.

Unfortunately I cannot say very many good things about the government members' report on the prebudget hearings. Frankly, I think there are a lot of problems with it.

I just complimented the member on how he ran the hearings, but it was fairly obvious to me and my colleagues that many witnesses had the big problems with the whole process surrounding the prebudget hearings. People who travelled on either leg of the prebudget hearings will acknowledge that we had to cancel all kinds of sessions this time round simply because witnesses did not show up. Apparently there was some confusion but also people did not see the value of appearing before the finance committee once again.

In fact, there is no question in my mind, if people ever knew they no longer know why we are having prebudget hearings. My

experience has been that a lot of people came and put forward issues that had absolutely no chance of being accepted by the government. It is acknowledged in the government's report that many social groups advocated all kinds of ideas that simply were not on.

It is incumbent on the government, if it is going to invite people to come and speak before it and spend hours putting together a presentation, that it says outright that there is no chance that those types of ideas are going to be accepted. In other words, there were no clear parameters for the debate. It is even acknowledged in the document. It states:

If anything, the success of the Government's approach has intensified the debate and transformed it. Advocates of spending cuts now argue that even deeper cuts can be and should be made to create room to reduce taxes on the deficit. On the other side of the spectrum, the advocates of higher taxes on corporations and "the rich" to finance deficit reduction now argue more vigorously for this approach and for the restoration of spending programs.

The Committee has preferred to avoid these extremes, supporting instead the approaches that are working and which are supported by the broad mainstream of opinion as demonstrated in its hearings.

There is a quote from Jordan B. Grant, chairperson, Bank of Canada for Canadians Coalition. It states: "You have savings of about $4 billion. Our immediate suggestion is that in this budget you put the $4 billion back into the economy".

Obviously Mr. Grant, whom I certainly do not agree with, was invited to the hearing, took some time to put forward a report and then has it dismissed out of hand. It should have been very clear early on that the government had a particular vision and then asked people to debate it. That is not what happened. People spent countless hours putting together reports and then they were completely ignored.

Meanwhile, we had all kinds of other people who should have been invited before the committee and simply were not. I speak of the C.D. Howe Institute, a well known and very reputable organization that comments on all kinds of economic matters, that was not invited. Neither was the Fraser Institute invited, one of the most prominent institutes with respect to economic matters in the country. The Atlantic Institute was not invited. It just delivered a report on the effect of the $185 billion in subsidies of various kinds to Atlantic Canada. That report had a very high profile in the media but strangely it was not invited to appear before the finance committee.

The Canadian Taxpayers Federation attempted to appear. There was a little bit of a mix-up with respect to it appearing and its delegation said it would put it off for a little while. The people at finance said: "That was fine, put it off until next week when we return from our trip and perhaps you can come then". As it turned out that was the end of the hearings and its delegation never had a chance to come forward. The Canadian Taxpayers Federation, that speaks for about 83,000 people in the country, never had a chance to appear before the committee and bring forward its members' views.

Do not take my word for it. I want to quote from the Alberta Chamber of Commerce "Policy News and Views" dated November 25, 1996. Chamber president Cheryl Knebel states: "We were extremely disappointed by the way this year's consultation process was organized. We came prepared to speak to budget specific issues like program spending, the deficit-debt, interprovincial trade barriers and regulatory overlap".

Ms. Knebel continued: "There is an expectation within the business community that when the government asks for advice on the budget process it is prepared to seriously consider views pertaining to the issue". She paid me a personal compliment which is nice, but is it is not the point. She goes on to say: "He pressed to refocus the debate on the need to eliminate the federal deficit and reduce the debt as a fundamental means of addressing every other issue in government but there was just no support".

Obviously the whole thing is way off track. If you do not have goal any answer is equally good. People can say whatever they want. If there is no clear vision it does not matter what people say because the government has not laid down the parameters. It has not told the people what it wants. It is pretty difficult to get input when people do not know what the input is on.

Clearly the process is flawed. People were not coming out. The media was not very interested this time round. This should be exposed for the sham that it really has become even though initially perhaps the intentions were good.

I want to mention a couple of things about the report. I mentioned a minute ago that the government members on the committee had written in their report that the committee has preferred to avoid extremes. I am talking here on the one hand about spending reductions and tax cuts, and on the other hand about increasing spending. It supported instead the approaches that are working and which are supported by the broad mainstream of opinion as demonstrated in its hearings.

The government claims that these are working. Canadians are not working. If these approaches are working so well, why are Canadians not working? Unemployment stands at 10 per cent. We saw this in the Friday unemployment numbers. The premise rather obviously does not bear scrutiny.

If these approaches are working, why has the government's record on child poverty been so poor? It has gone to great lengths in the document to talk about the need to address child poverty. On the other hand it says its approaches are working. It is fairly clear they are not. By the government's own numbers we know that child poverty has actually become far worse under the Liberal government.

In 1989 a motion was moved in this place which said there are one million children living in poverty and that poverty should be eliminated by the year 2000. Today the number is 1.3 million. It is worse by one-third. I do not understand how the government can say that these so-called extremes, like cutting taxes, is somehow out to lunch. Looking at the empirical evidence, the government's approaches have not worked and we have to start casting around for some new ideas. That is exactly what the Reform Party has tried to do and we offered that in our minority report. I see my time is up.

[The Deputy Speaker]

The hon. member will have 12 minutes left if he so wishes the next time the matter comes before the House.

The House resumed from December 5, 1996 consideration of the motion that Bill C-70, an act to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account Act and related Acts, be read the second time and referred to the Standing Committee on Finance, and of the amendment.

Excise Tax Act

[The Deputy Speaker]

It being 6.30 p.m., the House will now proceed to the taking of the deferred division on the amendment standing in the name of Mr. Loubier at second reading of Bill C-70.

Call in the members.

(The House divided on the amendment, which was negatived on the following division:)

[The Deputy Speaker]

I declare the amendment lost.

(Amendment negatived.)

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