Too much. Having said that, let me lead into my commentary about budgetary process, borrowing process and the finances of this country.
Mr. Thomas Walkom wrote in the Toronto Star : ``To watch the federal Liberals from afar is to marvel. This is a party with no memory and no shame. In opposition, sanctimonious, in government, hypocritical. It has raised duplicity to a high art''. I concur with that quotation and I would like to submit some evidence I have dug out myself.
No matter that the Prime Minister is on record as saying he was firmly committed to universal social programs such as old age security, the government ended it by replacing it with a means tested program called the seniors benefit in the budget. No matter that the Prime Minister promised to scrap NAFTA unless it was renegotiated, the Liberals signed it anyway and now they take credit for it. No matter that many Liberals promised to abolish, kill, get rid of, scrap the GST in order to get elected, even with this third budget they have not kept their final promise: replace. We know why. They are trying to put the blame with this promise on the provinces. Their latest kick is harmonization. Replace is what they said; replace is what they should do. Now they have taken the pressure off themselves and have shifted it on to the provinces saying that if they do not comply with their proposal it will be the provinces' fault.
The Liberals are downloading on the provinces just like they did with the Canada health and social transfer. They have reduced the funding and guess which Parliament gets rocks thrown at it: the provincial parliaments, not the federal Parliament. Guess which Parliament has to handle most cuts to health, education and welfare: not the federal government, the provincial government.
No matter that the Liberals promised to protect civil servants and then turned around and fired 45,000 people while entrenching a multimillion dollar pension plan for themselves.
No matter that the Liberals promised jobs, jobs, jobs and now that they have failed they are blaming the private sector or the business community, which never elected any Liberals; I do not think they ran as a party; they never made the promises. Nevertheless, the federal government is now saying: Private sector, you create the jobs.
No matter that this government is spending $4 million more per day than it brings in. It claims it has broken the back of the deficit.
No matter that this government said no new corporate or personal taxes, but through the tightening of some tax preferences like deductibility of child support payments, increased revenues in the next fiscal year by $100 million and $245 million next year, these represent tax increases. This government is truly sanctimonious, hypocritical and smacks of duplicity.
The finance minister brags about his budget. Let us see what he has really done. Let us see how he has handled his first kick at the cat. Is the problem the deficit or the debt? Is it one or the other or is it both?
The deficit is defined in layman terms as that which is spent in excess of what is generated in a year. It is an annual amount. It is a deficit if the government spends more than what it brings in and it is a surplus if the government spends less than what it brings in.
The debt is the amount of money that is the accumulated series of deficits over a number of years that go all the way back to Confederation. Thirty-two years ago our debt was zero. This debt is an accumulated amount of deficits since Confederation, but in the last 31 years we have managed with the two status quo parties, the Conservatives and the Liberals, to inch our way up toward $600 billion in debt.
The government identified the deficit as the problem. This finance minister said that the deficit as a percentage of GDP will come down to 3 per cent. He set a target. Not only did he say he set
a target but he is going to beat that target. In this way he is going to solve the problem.
If we look at the definition of a deficit and the definition of debt, is this government solving the problem or is the government adding to the problem? The problem is the debt because it keeps growing as the deficit, although it is shrinking with this lower target. Is the government adding to the problem or is it solving or eliminating the problem?
I submit that by using the deficit as a percentage of GDP and continually spending more money than what we bring in this government is adding to the problem. Yes it can brag all it wants that it is a lot less than the previous government and is this not a lot better and therefore we can keep spending money over here for this program and keep spending over here to subsidize business on that program and we can keep wasteful spending up. But it is not solving the problem. It is an illusion. It is duplicity. It is hypocritical.
The government failed to recognize the problem. The problem is the debt. The best way to measure the fight against the debt is to look at the debt as a percentage of GDP instead of the deficit as a percentage of GDP. If the percentage of debt to GDP goes down, we are now solving the problem. We are now adding credibility.
I know the finance minister is aware of this. I know the finance minister knows that is the button this party was going to push. I know because in the Standing Committee on Finance I listened to all the leading economists talk about this: the fact that this government was going too slow in its cuts; the fact that there was going to be a bigger price to pay for future generations. That aside, what Canada needs and what Canada must have sooner than later is a surplus budget and it must stop deficit spending or financing. I will come back to the deficit and the debt as a percentage and see how this government is attacking it on that basis.
The finance minister talks about a plan and setting targets. He should identify the right problem and use the correct measurement for achieving his target. It is amazing that when we analyse the budget we find many facts that contradict the finance minister's claim that the balance sheets of this country are in good order. Are they in good order? Let us take a look.
The government had the privilege of running the country when the economy started to come out of a recession. How do I know that? The first thing in the budget documents and budget analyses of the various years shows that when this government came into power revenues were only $116 billion. They go to $135 billion and they project to $141 billion in 1997-98, revenues due to the growth in the economy, due to the recession starting to be eliminated and things improving somewhat. Revenues. This government has had the benefit of revenue increases of $25 billion. I would also submit and remind Canadian taxpayers that some of that extra revenue is about $3 billion to $5 billion in tax increases the finance minister imposed in the two previous budgets.
Let us look at program spending which is an objective of the Reform Party. When this government came in it showed program spending at $120 billion. I am not sure but I seem to recall this government wanted to blame the previous government for billions of dollars and somehow or other it inflated it. It was the other guys' fault. I believe that high number on program spending the government uses is a bit inflated. Nevertheless, program spending has decreased by $14 billion.
That is where the error has been. In the first year of government it only cut $2 billion, the next year another $5 billion. Its cutting habits have gone too slow. Its cutting habits have not kept up with the interest costs. That is what the problem is.
Let us look at the interest costs. The public debt charges when the government came in in 1993-94 were only $38 billion. That was bargain basement. Now the government is projecting $47.8 billion, close to $48 billion, a $10 billion increase. What is the purpose of all these cuts if it is only going to go to service the interest costs to service the debt? That is my case. The debt is the problem, not the deficit.
Thank God the interest rates are low. Thank God this government can stand up and brag about how interest rates are 3 per cent lower than a year ago, six months ago or whatever. Imagine what kind of statement this would be if it were not like that.
The interest costs to service the debt are proof that the deficit is not the problem, the debt is the problem. The deficit is also the area for which the finance minister has been getting lots of compliments from certain members of the financial community because the deficit is going from $42 billion down to a projected $17 billion. During the whole course of the government's mandate it is still spending more than it brings in.
Yes, it is going down. Yes, it is good he set a target. Yes, it is good he is meeting that target, but the target he is setting and the measurement of the economy he is using is not solving the problem. It is adding to the problem.
What happens when we take a look at the revenues that have been generated, the cuts in spending, the servicing charges? When we add all that up what do we notice? Something very interesting. After four years of government management under this finance minister, the master of myth, we end up with revenues up $25 billion and, guess what, the deficit down by $25 billion.
What is left at the end of the day? There is still 17 per cent left and the Liberals brag that it is only three per cent or might end up being two per cent. Who cares? Are they not missing the point? Is it not the point that we need to solve the debt, that we have to make a payment somewhere along the line on that debt, that we have to have a surplus budget in somewhere in there?
That is why we have argued for and pushed all along for a balanced budget. That is the advantage of having a government that during the course of its mandate makes a commitment to the Canadian taxpayers and says: "Sooner than later we will balance this budget. Sooner than later we will get our financial house in order so that we sooner than later will break the back of the deficit. Sooner or later we will have a good balance sheet for the nation". The way to do that is with a balanced budget, not leaving with a $17 billion deficit and claiming victory.
At the end of four years the government, and let me be accurate here, will have added $111.7 billion; almost $112 billion it will have added to the debt. It came in here with $508 billion debt and it runs the country for four years and just after four years, never mind if it wants to take another year at it, it adds $112 billion to the debt and says that is good financial management.
It says we can play with the future lives of our children and our grandchildren, that we can gamble on interest rates staying low, that we can gamble on uncertainties in the economy and the global that we are all participants in. That stuff is all okay because come hell or high water we will meet our targets and we will beat our targets and we will keep our feet to the fire.
It is all great rhetoric. It is beautiful rhetoric. It is all the right buttons to push to convince people when you are trying to fool them that you are solving the problem.
My speech today is intended to shift the debate to the problem. I believe the problem for all economists, for all business people and for all taxpayers is the debt. The sooner we shift the debate to the debt and look for ways to measure our success against that evil monster, the sooner we will start to solve our problems.
Let us get to the GDP and using the debt as a measurement of economic growth. I am submitting that a truer measurement in using projections in how the economy is doing is the debt to GDP ratio. If we take the actual numbers, looking at the budget from 1993-94 when the GDP was $712 billion to a projected $806 billion in 1996-97, it shows actual numbers and it shows growth of about 3.3 per cent.
Then we take a look at the debt as a percentage of GDP from the government's first year at 71.3 per cent to 72.8 per cent. Did it solve the problem in year one or did it add to the problem? Under the truer measurement it added to the problem. Even those renowned economists from the Fraser Institute better be taking note and paying attention to this.
The next year, 1994-95, the GDP went up from 72.8 per cent to 74.2 per cent. Did the government solve the problem, reduce the problem or did it add to the problem? It added to the problem.
This year the government is projecting a further increase that is smaller. Nevertheless there is another one-half of one per cent increase in the debt to GDP ratio. That means the economy is not improving. Our financial resources, our financial situation, our net worth is not improving; it is diminishing, it is decreasing. Yet throughout the past three years all we have heard is how we have set our targets, met targets, beat our targets and how everything is so wonderful.
A colleague of mine mentioned a statistic earlier in the debate. An Environics poll asked whether budget goes fast enough, deep enough and is it the right way. Roughly 60 per cent to 70 per cent said no and yet the government is claiming victory.
We arrived at an interesting point in the budget presentation by the finance minister. This was where the master of myth started to show his best stuff. He projected on the net public debt that two years from now, although we have been averaging 3.3 per cent, the GDP will grow by 4.3 per cent. He projected a whole per cent more. What did he base it on? I do not know. I sat on the Standing Committee on Finance where all the leading economists said that for the next two years the most we could hope for was 2 per cent to 2.5 per cent. No, all of a sudden the government can put 4.3 per cent out there.
Then with the deficit at $17 billion, that number as a percentage, the government said we went down to 73.7. Now the government is agreeing with us that is the better measurement. It is agreeing with us that is a good way of looking at it and two years from now things will get better. These are projections.
Earlier the Parliamentary Secretary to the Minister of Finance said we may not hit these, these are just projections. That is what scares me. It is the uncertainty of meeting these targets that could hurt.
If the government wants to solve the problem it has to stand up and identify the right problem, which is what this party is trying to do. We are trying to set the debate on the right issue. The issue is the debt and the best way to measure our progress in the fight against the debt, that monster, is through the debt as a percentage of GDP. We get to see how our economy is growing. We get to see the share of that growth, the share of the value we produce annually, what we generate in sales, what our debt load is against that. That is what tells us whether we have a good credit rating rating.
That is what helps the financial community continue to reinvest the money we have to borrow from the foreign market. That is what tells the brokers of this country that it has its resources in order. That is what will tell the taxpayers there will be a reward at the end of the tunnel.
After we have a few surplus budgets and we have paid down that debt somewhat we do not have to do it; we can carry it. Once we have a surplus budget, which includes debt servicing, that is when we have a balance sheet in good order.
The government will exit having added $112 billion to the debt, bringing it to $620 billion from $508 billion. I know I am repeating this. I said this earlier. That is the legacy the government is bragging about. That is the deeper hole it has dug while it has had the privilege and the honour to run the country, to try to do what is right for the people of the country. That is what it has really contributed.
Another day older and deeper in debt, as the old song goes. How that represents good sound financial management, how that represents breaking the back of this evil monster, this evil problem, is beyond me.
We have suggested and argued for a balanced budget in the House. To this day not one member, not even the finance minister, will give us a date at which we will see a balanced budget. It is just promised.
It is on a wing and a prayer that the economy will continue to grow as it does. That is what they are hoping. Keep interest rates down. Sneak in a few tax treatment preference changes. They will not call them tax increases. Take away a few more loopholes. They will not call them tax increases. Eventually they will get to a balanced budget somewhere, whenever. It will be soon because we have gone, six, five, four, three, two-but, but, but. It is those buts I am worried about.
If the government had really listened and had the political will to do what had to be done and skipped the argument of whether it would be over a three or four-year period, it could have produced a balanced budget over a fixed period of time and done it as soon as possible in its mandate so that the benefits would reflect in lower interest costs, especially considering the size of the debt.
We have done the checks and the calculations. The difference would have been $62 billion less to the debt. If the government had listened to the Reform Party it would not exit with a $620 billion debt. It would have exited with a $580 billion debt. Even a Reform Party government would have added to the debt, we acknowledge that, but only at half the amount. We would have a surplus by the end of our mandate.
Let us talk about the difference. There would have been $62 billion less added to the debt. That means, depending on the interest rates, $3 billion less in interest payments. That is the reward, the advantage. Then the government could have decided whether to put that toward programs spending, education, health or welfare or apply it to the debt. Pay down the debt. Service the debt or reduce taxes and offer tax relief if the economy is strong enough.
If the percentage of debt to GDP ratio starts to come down by 1 per cent to 9 per cent, perhaps 2 per cent per year, there will be more flexibility. The government does not have that flexibility. This is a very dangerous budget. Liberals are acting as if they have succeeded. They are already starting to spend money as though they have money to spend. They are already redistributing how they are to do social programs when they are in fact looking for ways to increase tax revenues. They are looking for ways to convince us they have the answers to a very difficult problem.
I submit this whole debate on fiscal reform and on what is in the best interests of the country lies in identifying the right problems. I humbly admit that the government presented a red book in which it made a lot of promises. It has broken a lot of those promises. It seems it checked to see which way the political wind was blowing and that is the direction it took.
The Liberals recognized that we agreed with the way a lot of people were thinking. Now they have copied and followed some of the recommendations we have made. However, it is unfortunate they did not do it fast enough. They still have the opportunity to do it with one more budget coming up. They could still address the waste in government spending. They could still cut about $4 billion to $5 billion in spending.
I am sorry to say the government will not do it. It is unfortunate that this budget is more of the same; feel good, everything is okay, do not worry, be happy.
The last time the Prime Minister spoke and behaved that way we almost lost the nation.