House of Commons Hansard #15 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was budget.


Borrowing Authority Act, 1996-97Government Orders

7:35 p.m.

The Deputy Speaker

The evening has only begun.

The evening is just beginning. I hope hon. members will show respect for their colleagues, and I expect all of them to do so.

Borrowing Authority Act, 1996-97Government Orders

7:35 p.m.


Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I am pleased to address Bill C-10, which authorizes the Minister of Finance, as of April 1, 1996, to raise such amount or amounts, up to $18.7 billion, by way of a loan or by the issue and sale of securities of Canada, as may be required for public works and general purposes. This more or less defines Bill C-10.

Given the way this Liberal government has managed public finances over the last two and a half years, and given the recent budget brought down by the Minister of Finance, it is difficult for the official opposition to support with enthusiasm a bill that, in our opinion, confirms that the Minister of Finance and the Liberal government did a bad job of managing public finances. Yet, on behalf of Quebecers and Canadians, the government asks that we support this bill.

Let us take a look only at the last budget, which contained sad news for us regarding the debt and the deficit. Indeed, the Minister of Finance has already decided that this year, next year and the year after, he will not fight to eliminate waste, inefficiencies, duplication or, in other words, budgetary expenditures.

One need only look at page 14 of the budget where we find the direct budget savings for 1996-97 to see that, for the fiscal year 1996-97, this year's budget provides for savings of 0.0 per cent.

Another look and we see that for 1997-98, this budget forecasts cuts in government spending of only $200 million. And in two years, they are talking about $1.7 billion in savings based on the budget brought down by the Minister of Finance just a few weeks ago.

Taken over three years, we must conclude that the Minister of Finance is looking for savings of $1.9 billion. Imagine, $1.9 billion. That represents seven-tenths of one per cent in cuts per year. Seven-tenths of one per cent. Not one per cent, not even one per cent, but seven-tenths of one per cent, because we must not forget that federal spending is in the neighbourhood of $160 billion annually. So, for annual expenditures of $160 billion over the next three years, cuts of $1.9 billion mean seven-tenths of one per cent of the Minister of Finance's forecast.

How, therefore, can we give the okay to a Minister of Finance who shows no interest in limiting his spending? He is not interested in creating acceptable annual savings. How can we give him the okay to borrow, on behalf of Quebecers and Canadians, over $18 billion on the market?

Would that normally be done? Would someone who showed himself unable to generate savings, who showed himself unable to manage the public purse wisely, be given carte blanche to borrow, in our name, $18 billion? No.

Would the Minister of Finance be given authority to borrow $18 billion on the market, when during two and a half years of Liberal management he added over $110 billion to the federal debt, which will climb to over $603 billion this year?

Would you give the okay to a manager who has squandered public funds, who has, deliberately for political ends, not assumed his responsibilities with respect to reducing the size of government? Would you give him carte blanche to go and borrow, in your name, $18 billion on the market? The answer is no.

Mr. Speaker, would you give him carte blanche? Now I see that you are listening very carefully to what I have to say because it concerns your pocket book directly, and nobody would borrow, in your name, with this kind of track record in managing the public purse.

Would you give a finance minister carte blanche to borrow $18 billion, when all he had managed to do in two and a half years of managing your finances was to coast along with the growth in the economy, eat into the unemployment insurance fund, take advantage of the surplus generated by this fund to which the federal government has not contributed for several years now? It means dumping the deficit on the provinces, as he is doing.

Would you give carte blanche to this minister, who has made use of everybody except himself, who has put public funding on a healthier footing using everything except his own means, his own solutions?

I would not, and I do not believe Canadians would either. What consummate showmen the Liberals have turned out to be in the past two and half years. Each time, they have presented a budget which disguised the reality. The last budget is a most impressive theatrical production using smoke and mirrors.

They tell us: "We will reduce the deficit by several billion per year, not only attaining our objectives for the percentage of the deficit compared to the GDP, but surpassing it". But let us look more closely at how they are managing to disguise the truth.

If it were not for the cuts I have just referred to, if it were not for the cuts, if it were not for the systematic dumping of the deficit onto the backs of the provinces, if it were not for the Minister of Finance's dipping into the UI fund, if it were not for the economic situation of these past two years, which has brought in three to four billion in revenues this year, the Minister of Finance would not have a $24.5 billion deficit for 1996-97, but a $31 billion dollar one.

If it were not for the UI cuts, if it were not for the surplus the Minister of Finance has helped himself to out of the UI fund, if it were not for the systematic dumping of the burden onto the provinces, and if it were not for the economic situation, the Minister of Finance's deficit for next year would be, not $17 billion, as he claims, but over $27 billion.

In the end, when we look at the real deficit for this year, generated through the incompetence of the Minister of Finance, we see that little has changed since he became head of the department. In fact, if we look at the product of the new revenues arising from the state of the economy, from economic growth, if we look at the unemployment insurance fund, the minister's favourite fund, were it not as well for the shift of his responsibilities onto the provinces, the actual deficit, because we have to include the product of the economic situation, the actual deficit for 1996-97 would be $35 billion.

It seems to me that is comparable to the deficit at the time the Minister of Finance took over the department-it was about $37 billion or $38 billion. There has been hardly any reduction.

Apart from the economic situation and the Minister of Finance's tricks, the promised good management of public funds would never have materialized. It is all smoke. It is all hokum on the part of the Minister of Finance.

He could have cut duplication and overlap. They have long harped on that one. We have long harped at the Liberal Party, the party in power. We have long raised it with the Reformers as well; they prefer to close their minds to anything reasonable.

Instead of setting up a committee to study duplication, overlap and the doubling of positions in federal and provincial governments, the Liberal government, and it added more in the speech from the throne, and in the budget speech, wants to interfere

everywhere. Not only is it going to stay in areas it has invaded, exclusive provincial jurisdictions, but it is adding more.

In the throne speech, it said clearly, and it repeated it in the budget for certain aspects there, that it will, with the support of a majority of the provinces, continue to invade areas of exclusive provincial jurisdiction, that it will, for example, set up a Canadian securities commission. As if we needed the bureaucracy, the inefficiencies and the duplication of the federal government, when it has a hard time, with what it has, putting public finances in order and making the machinery efficient, so that this huge machine is not constantly seized up. It is adding more: a Canadian securities commission, when all the provinces operate efficiently in their area of jurisdiction.

All the provinces have harmonized their actions for years. Together the provinces have set up a system called SEDAR, which will be operational in a few months and which will eliminate the need for ten different issues, or a total of securities issues; a single one will suffice. This will be done with efficiency and expertise since it has been an area of exclusive provincial jurisdiction for several years. This is not the case of the government and the finance minister, who are making it more cumbersome.

Not only will they not eliminate duplication and overlapping, but they will create more of it. They think Quebecers and Canadians love to spend money. Obviously they do not visit their ridings very often.

They mentioned a national revenue agency, as if we needed to add a new administrative structure to the already huge government apparatus, which is gobbling up close to $160 billion a year. The finance minister's managerial attitude is questionable. We should not give a blank cheque such as this to a minister. We should not give a blank cheque to a government which is planning to cover the country with flags-one million, we are told-but which does nothing to put its fiscal house in order.

Where is the finance minister dealing with inefficiencies and waste? Has anyone ever heard him say, for instance, that there is a lot of fat to be cut in the defence department? Has anyone ever heard the finance minister or Liberal members condemn the squandering of two billion dollars on tanks? Has anyone ever heard the finance minister or his fellow citizens, his colleagues in the Liberal Party, in stringent budgetary times, and in peace time to boot, condemn the purchase of antitank missiles at $15,000 a piece? No one, never.

When did we ever hear of such shameful expenditures as those planned to modernize submarines and buy highly sophisticated helicopters in peace time, when our accumulated debt has reached $603 billion and the Minister of Finance is unable to keep this debt from growing? Never. When did we ever hear this government talk about what is happening in the other House or about the money spent on the governor general? Never. It amounts to $50 million a year but it never talks about it. It prefers to continue dealing with symbols, while the other House remains a haven of patronage, a reward for good Liberals-or, in the past, good Tories-who often doze off in front of TV cameras.

Did we ever witness a commitment to sound management of public finances, when the Minister of Finance or the minister of revenue was asked to go after the more than $6 billion in unpaid taxes owed the federal government? I am not talking about controversial matters but about things that are pending because they made lateral staff cuts in the federal public service. They cut staff, but wall to wall, starting at the bottom because it is easier, because the mandarins, the senior officials at the top are in charge so they are not likely to offer their own heads on a platter to the government.

So we get to the point where, at the department of revenue, there are not enough real workers to go after unpaid taxes. As a result, in the last two years, out of more than $6.3 billion in unpaid taxes, only $250 million to $300 million have been collected. Out of $6.3 billion. This is ridiculous.

If there was any reason to believe that they are concerned about managing public finances soundly, about making the optimum use of resources, about looking for money at the right place and taking it from those who have it, we would support Bill C-10. But that is not what the Minister of Finance has accustomed us to over the past two and a half years. We cannot give him a blank cheque when he is asking us to borrow $18.6 billion on the capital markets on my behalf and on behalf of my colleagues, of the people of Quebec and of the people of Canada.

The Minister of Finance is slowly starting to smell the coffee. It is none too soon; we have been condemning this situation for almost three years already. We have been asking him for nearly three years to reform the tax system, and the corporate tax system in particular, because it is full of holes. As usual, instead of taking his responsibilities, the Minister of Finance has decided to set up a task force to eventually look at the corporate tax system behind closed doors, a task force that would not include any parliamentarians-who, I should remind you, are elected by the people to account to them-and to prepare a report in which it would recommend revising the corporate tax system along such or such a line.

This report would be released and we would be expected to do our job based on a document that was biased from the start. How so? For the reasons we have already explained. As soon as the Minister of Finance announced his plans to set up a technical committee on business taxation and made the membership of this committee known, we came out against this committee's membership. Why? Because the committee is made up of experts from various consulting firms, firms advising big corporations on how to take advantage of innumerable tax loopholes to avoid paying Revenue Canada what they owe.

And we would have been gullible enough to accept not to discuss corporate taxation for a year and let these experts look at the issue behind close doors and come up with a report saying: "We reviewed the whole corporate tax system and found that there are not many problems with it".

Such will be the findings of that technical committee on corporate taxation. This is what the minister wants to hear. As we said when the budget was brought down, this is tantamount to a first class funeral for the work of that committee, and also for a true reform of the corporate tax system.

We might as well forget about that. That committee of experts will include people from firms such as Ernst & Young. These firms not only give advice to major corporations on how to avoid paying taxes, they also have subsidiaries in countries considered to be tax havens, where hundreds of millions go in and out. The result is that Canadian businesses that supposedly have to pay a 1.5 or 2.5 per cent tax are not taxed by Revenue Canada because their revenues have already been taxed in countries considered to be tax havens.

And we should have accepted that process? This is making fun of us. It is making fun of Canadians and Quebecers. We are no fools. The Minister of Finance intends to do with this committee exactly what he did with the family trust issue.

You remember, last year: "We are going to comply with the demands of the official opposition, we are going to reduce benefits linked to family trusts". We were pleased. But when he said "in 1999" it was like warning the thief a day ahead that the police were on the way. I would call it laughable. Now they are up to the same thing again.

If we were alone in thinking that the Minister of Finance had not tackled the real problems in two and a half years, we would say: "Maybe we are mistaken". But when we visit our ridings, throughout Quebec, and also outside Quebec, in Canada, and people come up and say: "Keep up the good work, we are very disappointed in the Liberal government", and tell us, often in English, in ridings that are Liberal bastions, in ridings often coveted by our friends in the Reform Party, but that they will never win if they keep on with their rather special attitude of the last two weeks, then we begin to tell ourselves that our message is getting across.

And, although it is not something I am used to doing, I have a fax to read-yes, we in the Bloc also get faxes, not just the Reformers. I got a fax last week from a Mrs. Jansen in Regina, in Regina-Wascana,the riding of the Minister of Agriculture, which reads as follows-please pardon my accent, but I shall try to render the spirit and to some extent the content of Mrs. Jansen's faxed letter. I would like, incidentally, to thank her for her excellent analysis. She wrote as follows:

"This fax is to express my appreciation to you for presenting several important issues during your response to the finance

minister's budget speech. While I recognize that your party, the Bloc Quebecois, has specific aspirations, your comments mirror the concern of many citizens in Canada. The duplication of services and the consequent waste of fiscal resources that might be used by the provinces, the lack of sincerity to attend to the tax break given to large corporations as indicated by the implementation of the secret commission to study this issue, and the $50 million apportionment to the anachronistic Senate are symbolic of a system that no longer works in the best interests of beleaguered taxpayers".

I continue to quote, since I find this letter extremely interesting. Mrs. Jansen continues:

"Cuts are not being made to senior bureaucracy but at the level of direct service providers to the public. The civil service will soon become so top heavy without sufficient support at the bottom that the pretence of providing services to the average citizen cannot be maintained. I have noted that since the election of the present Liberal administration, all programs designed to assist emerging and small firms have either been discontinued or dismembered.

"The rest of this country is beginning to severely suffer from the effects of an administration that does not adhere to the old democratic action of government of the people, by the people, for the people. Rather recent policies lead us to the conclusion that we have a government of the rulers, by the rulers, for the rulers.

"As the middle class and small businesses are increasingly diminished by taxation and outdated regulations, we may soon find ourselves within a feudalistic style of government: the rich and powerful at the top, a few disenfranchised workers in the middle, and the majority enduring poverty".

When a number of us, in Quebec as in Canada-and I could have read other comments from the Maritimes-think that this administration has been remiss in its duty, that this administration which is today demanding a free rein to go after $18.6 billion on our behalf, when we have reached the point, Quebecers and Canadians alike, francophones and anglophones alike, of castigating this administration for not shouldering its responsibilities, it may be time for this government to be brought back in line.

It is perhaps time for all, in Quebec and in Canada, coast to coast as they say, to be a little more vocal in our dissatisfaction with an administration which has not, in two years and a half, done anything more than pretend to Quebecers and to Canadians that everything was fine, everything was under control, when from the point of view of overall public funding, the exercise has barely begun.

As for the increasing debt, the Minister of Finance cannot long conceal from Canadians that this progression is not contained. For this reason, as well as all those I have just enumerated, we in the official opposition, on behalf of the people of Quebec and of Canada, will refuse to allow this irresponsible Minister of Finance, who is not fulfilling his responsibilities, who is not making cuts in the proper places, who is not making the desirable reform in corporate taxation in the timely manner it requires, to borrow $18.6 billion on our behalf. I shall be recommending that my Bloc Quebecois colleagues vote against this bill.

Borrowing Authority Act, 1996-97Government Orders

8 p.m.


Jim Silye Reform Calgary Centre, AB

Mr. Speaker, with respect to the borrowing bill, I rise to simply say I am disappointed that this government has to borrow so much.

Borrowing Authority Act, 1996-97Government Orders

8 p.m.


John Williams Reform St. Albert, AB

Too much.

Borrowing Authority Act, 1996-97Government Orders

8 p.m.


Jim Silye Reform Calgary Centre, AB

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.

Borrowing Authority Act, 1996-97Government Orders

8:25 p.m.


Roseanne Skoke Liberal Central Nova, NS

Mr. Speaker, I rise to speak on second reading of Bill C-10, the borrowing authority bill.

The government is asking this honourable House for $18.7 billion of borrowing authority for the 1996-97 fiscal year. This amount is comprised of the financial requirements stated in the budget for 1996-97 of $13.7 billion, exchange fund account earnings of $1 billion and a $4 billion non-lapsing amount.

As in previous years, the amount of borrowing authority requested in the bill is directly connected to the financial requirements set out in the 1996 federal budget. The financial aspect of the

bill is also contained in the budget plan tabled in the House of Commons by the Minister of Finance.

I urge the House to give unanimous approval of this legislation without delay. The Minister of Finance in the budget speech states: "Let us act not as special interests but as stewards of the national interest, knowing that the destiny of our children is in our hands".

I remind the House that the word economics derives from the Greek word meaning household management. The purpose of economic life is not simply to gain material satisfaction but to support families and the social institutions and identities that evolve from families as the fundamental units of human society and human actions.

Having said this, it should be noted that the 1996 budget does just that. It consolidates and extends the actions taken under the comprehensive strategy set out in the 1994-95 budget, together to help Canadians secure their future, to secure their financial future, to secure the future of the social programs, to invest in the future of our people, our families, our communities and our country.

The 1996 budget is the third mile post in the government's journey to securing fiscal stability and a vibrant, dynamic and competitive economy for Canadians who must compete in the tough global arena. Working together with the 1994-95 budget, this budget continues a comprehensive strategy for federal finances that is determined, measured and responsible; determined because we are not letting up. As the Minister of Finance emphasized, the attack on the deficit is irrevocable and irreversible. We will balance the books. Furthermore, we will put the debt to GDP ratio on a constant downward track year after year after year.

It is measured because our fiscal action plan is not indiscriminate and mindless but structured to a pace that is conducive to efficient adaptation. It is designed not as a quick fix but to achieve long term and permanent progress. It is responsible because it is a strategy that involves carefully weighing the needs of the economy and society and equally carefully designing the policy options to meet those needs.

Just as important, we are striking the balance necessary to keep Canadians onside for our deficit reduction efforts. There remains no question about the need for dramatic, disciplined action. High public sector deficits and debt have sapped confidence, soaked up domestic savings and led to a sharp increase in the country's net international indebtedness.

Canadians were paying a painful price through the punishing pressure that high deficits placed on interest rates. This drains consumer and business investment and drives down job creation. The lethal combination of high interest rates and deficit borrowing also meant that a growing share of government resources must go to interest payments on a growing debt.

This year those charges will cost the federal government $47 billion, money that cannot go to lowering taxes, aiding those in need and helping the economy create new jobs.

Tackling Canada's fiscal problem is a fundamental component for national growth, new jobs and economic security. With the first two budgets the government began the process of restoring Canada's finances and restoring credibility to the government's fiscal policy after years of missed deficit targets.

By setting credible two-year rolling deficit targets, by using prudent economic assumptions for fiscal planning purposes and by establishing substantial contingency reserves to handle the impact of unforeseen economic development on the achievement of the deficit target, credibility is being restored to the nation's finances.

The first two budgets implemented unprecedented reductions to program spending that are structural in nature and extend to the medium term planning horizon.

With these measures, the 1995-96 and 1996-97 deficit targets, bringing the deficit down to 3 per cent of GDP, are secure despite lower GDP growth than had been originally assumed. Contributing to this progress is the fact that interest rates are also significantly lower than projected. This has neutralized the adverse affects of lower growth on the deficit.

The measures in the 1996 budget consolidate and extend those in the first two budgets and further contribute to the economic and financial objectives. We have maintained our focus on reducing program spending because the debt is a problem created by government and the solution should focus on cutting in our own backyard.

There are no tax rate increases in the 1996 budget, not personal taxes, not corporate taxes, not excise taxes. Expenditure cuts in the 1996 budget amount to $1.9 billion in 1998-99 and build on the reductions of the two previous budgets to keep program spending on a downward track.

Here is a point that must be emphasized. Of the cumulative fiscal actions we will have taken from 1994-95 to 1998-99, a full 87 per cent have been expenditure savings. Together the three budgets will contribute $26.1 billion in savings for 1997-98.

This action, together with reform of the employment insurance program, will ensure we hit the new deficit target to bring the deficit down to 2 per cent of GDP. Through budget action, we have set a further $28.9 billion in savings for 1998-99. This means that the deficit will continue to fall.

There is no question that historic action has been taken. Program spending, that is everything but interest payments, will have declined six straight years through to 1998-99. Relative to the size of the economy, program spending will fall to its lowest level since 1949-50.

Over the last two and a half years, Canadians have turned to governments not to invent jobs but to provide an economic and social environment that will encourage the economic growth that makes new jobs possible.

We are proud of our record to date. Since taking office in 1993, unemployment has dropped by two full percentage points and about half a million jobs have been created, mostly in the private sector and almost exclusively by small and medium size enterprises.

We realize that there is much work ahead. Unemployment remains far too high and there is widespread national worry about the job future for young Canadians, older displaced workers and for women re-entering the workforce.

The government is intent on taking durable, meaningful steps forward. Rather than relying on short term direct spending programs, this more meaningful approach is being taken. It emphasized collaboration with partners and strategic investments to steer the forces of economic change toward greater employment.

First things first. For the sustained economic growth needed to deliver new jobs, we must start by securing Canada's economic fundamentals. That means getting the deficit down and keeping it down. High persisting deficits go hand in hand with high interest rates. High interest rates discourage investment borrowing and consumer spending and ultimately discourage jobs.

We also need to keep inflation down. Low inflation reduces pressure on interest rates and lowers business overhead. Of course, keeping the cost of doing business to a minimum will encourage investment and make us more competitive abroad.

Beyond providing a sound economic framework, the government has looked seriously at what more it can and should do. Some areas are so important to Canada's future prospects that they warrant significantly increased efforts from the federal government. Therefore the government has concentrated on youth, innovation, technology and trade, which is set out in the budget plan.

It also should be noted that financial institutions have a key role to play in facilitating the growth of Canadian business. Over the past year the banks have made progress in dealing with the concerns of small business. However, more needs to be done to ensure that financial institutions provide the best possible financing for growing export and knowledge based business, and for all small and medium size business.

Therefore the government will work with business and all financial institutions, including the banks and insurance companies, to ensure that this progress continues.

A temporary tax on large deposit taking institutions, including the banks, was introduced in last year's budget and it will be extended for a further year. Currently the legislation governing financial institutions is being reviewed with a view to improving the framework established in 1992. The conclusion is that the financial sector has yet to fully adjust to this framework. Therefore the present restriction on banks selling insurance will be maintained.

The present framework for selling insurance through agents and brokers will be preserved and the white paper covering this and all other aspects regarding financial institutions under review will be released in the coming weeks.

In conclusion, since I am sharing my time with another member, I want to emphasize that this budget is a budget that secures the future of all Canadians. It secures their financial-

Borrowing Authority Act, 1996-97Government Orders

8:40 p.m.

The Deputy Speaker

I am sorry the hon. member's time has expired.

Borrowing Authority Act, 1996-97Government Orders

8:40 p.m.


John Williams Reform St. Albert, AB

Mr. Speaker, the member finished up by saying that this budget secures a future for all Canadians.

The point to be made is that it secures an indebted future for all Canadians because in the life of this government it is going to add $100 billion and more to the debt.

If you take an 8 per cent interest charge on that amount that means $8 billion each and every year from now to practically eternity that are going to be paid in extra taxes to service the debt being incurred by this government.

I want to know how this member thinks debt secures the future of Canadians?

Borrowing Authority Act, 1996-97Government Orders

8:40 p.m.


Roseanne Skoke Liberal Central Nova, NS

Mr. Speaker, I am proud to support this budget. I maintain my position that it secures the future of all Canadians.

It secures the future of seniors and of youth. With respect to the growing national debt, I am proud to be a part of this government. This is the first government that has addressed the financial and economic issues of the country. It has also preserved the social programs. It has concerned itself with the poor, with the aged, with the needy and with single parents. It has addressed these issues.

The Reform Party is concerned about the rich and about preserving economic issues, not for the economic concerns of the people of Central Nova, the people that need to have these social programs

and need to know that they have a Liberal government that will protect and preserve them.

I am proud of this budget and so are the people in Central Nova.

Borrowing Authority Act, 1996-97Government Orders

8:40 p.m.

The Deputy Speaker

I would remind colleagues that we are talking about Bill C-10 which is a borrowing bill. We are not talking about the budget.

Borrowing Authority Act, 1996-97Government Orders

8:40 p.m.


Jesse Flis Liberal Parkdale—High Park, ON

Mr. Speaker, thank you for reminding hon. members that we are debating Bill C-10. I am pleased to participate in the debate on this.

Bill C-10 is an act to provide borrowing authority for the fiscal year beginning April 1, 1996. Under the borrowing authority act the Minister of Finance with the approval of the Governor in Council may raise money under the Financial Administration Act by way of a loan or by the issue and/or sale of securities of Canada.

I would like to take this opportunity to congratulate the Minister of Finance on his outstanding effort, not just with this budget, but for the previous two budgets as well.

For the first time in a decade we have a finance minister who not only sets objectives but he meets them. As well, he often exceeds them. In the platform book we promised to reduce the deficit to 3 per cent of the GDP by the end of our mandate. We started at almost 6 per cent when we took office and at the end of four years it will be down to 2 per cent.

Those efforts have allowed the Canadian government to restore its credibility, credibility not only among those in financial circles but among Canadian taxpayers as well. Canadians now feel they are getting value for the money they send to Ottawa every year.

Not since the 1980s have Canadians been able to see the light at the end of the deficit tunnel. We all agree on the need to eliminate the deficit. Now that objective can be clearly seen on the horizon. When we arrive there we can start paying down the public debt, as the spokesman for the Reform was saying in his speech, which otherwise would be a burden on our children. I agree with him.

Both the Bloc Quebecois and the Reform Party have been asking what is in this budget in job creation. The simple answer is: plenty. However, we cannot look at just one budget; we have to look at the government's entire program. Interest rates are consistently low and have been for quite some time. The spread between Canadian and American rates has almost been eliminated. The dollar is stable at a level that encourages exports and low interest rates. The deficit has been brought under control and on target. These things together have set the foundation and financial environment for a solid economy capable of creating jobs now and into the future.

In the month of February alone, 44,000 jobs were created. There are 170,000 more jobs in Canada today than there were in July last year. Critics on the other side ignore these significant accomplishments and have adopted the attitude of: What have you done for me lately?

This government does not want to sit on its laurels when it comes to job creation for Canadians. In the high tech field the government is creating Technology Partnership Canada, a $250 million program to facilitate the economic development of new technologies, technologies such as environmental management, advanced materials and manufacturing processes and the growing biotechnology field. As well, Technology Partnership Canada will solidify and build on the gains we have made in the aerospace sector.

We are continuing our efforts to help businesses of all sizes. Additional funding will be provided to both the Business Development Bank and Export Development Corporation to create new opportunities for business.

Team Canada trade missions have been an outstanding success. The delegations led by the Prime Minister have secured $20 billion in contracts and deals for Canadian companies. Ours is an export economy and every billion dollars in exports is worth over 11,000 jobs here in Canada.

The Minister of Human Resources Development is taking a lead in changing the Canadian focus from unemployment to employment. We are increasing the earned income tax credit to encourage people to re-enter the labour market. Both the educational expenses deduction and the transfer of tuition and education credits will be increased by 25 per cent. As well, more people will be eligible for the child care expenses deduction, including high school students. Single people will now be able to claim credits currently available to couples. In two years these efforts will put almost $300 million into the pockets of Canadians and will allow them to meet the challenges of today's job market.

For the young people of Canada, the government is working hard on employment opportunities. For many years young people were told that if they worked hard to get an education there would be a better job for them later. The economy has been slow in fulfilling that bargain so the federal government is stepping up its efforts. The government is doubling its funding for summer job creation for students. An additional $315 million over three years will be set aside to create employment opportunities for youth.

One of the Canada employment offices for youth is usually set up each summer in my riding of Parkdale-High Park. I know this additional funding will be welcomed by the young people looking for jobs this summer.

The Team Canada approach that has been successful overseas will be directed at home to co-operate with businesses to create entry level jobs for young people.

It is easy to see the Reform Party and the Bloc Quebecois are wrong when they say that this budget does nothing about jobs. Employment is the number one priority of this government and the facts and initiatives speak for themselves. The March 6 budget is about more than jobs. It is about promoting fairness and securing futures for Canadians.

The government has listened to the concerns of parents about the taxation of child support payments. Divorces granted after May 1, 1997 will require that parents who receive support payments will not have to pay taxes on that money. The total amount will go to support the children. As well, the government will introduce changes to the child support guidelines under the Divorce Act to ensure equitable support payments.

In recent months there has been much talk about how Canada's pension system is collapsing. Nothing could be further from the truth and the government is acting now to restore confidence. Starting in the year 2001, senior citizens will receive a new seniors benefit directed to those in need that will combine the old age security, the government income supplement, age and pension income tax credits. Seventy per cent of all seniors will be as well or better off under the new system. Indeed 90 per cent of single senior women will benefit under the new seniors benefit. A senior couple with outside income totalling $40,000 a year will receive over $7,500 in tax free benefits under the new system.

In an effort to help all Canadians, particularly younger Canadians, the government is eliminating the seven year carry over rule on RRSP contributions. In the future Canadians will be able to carry forward unused RRSP contributions for life so that young people, young families making sacrifices now to pay mortgages and educate their children will be able to make up for lost contributions in the future. This measure will help people better prepare for their retirement.

Canada's banking system has benefited greatly over the last couple of years enjoying record profits while most Canadians have been tightening their belts. The Minister of Finance has indicated that the special tax on banks will continue. As well, to maintain the present diversity of financial institutions, the government will uphold the ban on banks in the direct selling of insurance profits.

The budget is about hope and opportunity for the future. Measures taken will enable young people to get jobs they have been trained to perform. Seniors and those preparing to retire will be able to plan with confidence for their future incomes. Canadians in all walks of life will feel more secure and hopeful as they see the economy progressing forward with jobs and opportunities.

Most important, this budget is about trust. In 1993 the people of Canada put their trust in the Liberal Party to do things right and to get the economy moving again. I believe we have earned that trust and we will continue to earn it under the sound leadership of the Prime Minister and the Minister of Finance.

In conclusion I invite the government members, the official opposition and members of the third party to give speedy passage to Bill C-10 so that job creation can continue as promised in the budget.

Borrowing Authority Act, 1996-97Government Orders

8:50 p.m.


John Williams Reform St. Albert, AB

Mr. Speaker, the member asked that we give speedy passage to this bill. I was thinking the reason he wanted the speedy passage was so the government could raise some more money from the money markets to keep itself in business. He may wish to refute that.

At election time this government ran on a platform of jobs, jobs, jobs. I am sure we all remember that great slogan people voted for: jobs, jobs, jobs.

The government introduced the infrastructure program in which it would use $6 billion of borrowed money in order to put Canadians to work. It sounded good. However the President of the Treasury Board was before one of the committees I sat on last year. I asked him to tell us how many jobs this $6 billion infrastructure program had created. He sheepishly said as far as he was aware it had created 8,000 permanent jobs. That is $6 billion of borrowed money in the taxpayers' name created 8,000 permanent jobs. Those are the figures of the President of the Treasury Board. They are not my figures.

We would have been far better off to put the money in the bank and give the interest to the people rather than putting them back to work. The interest would have worked out to about three-quarters of a million dollars per job created. The program did not work but we are now more in debt.

Just a couple of weeks ago the Prime Minister rose in the House as we all know and he laid a heavy responsibility on the private sector by saying: "It is now up to you to create jobs, jobs, jobs because we are a miserable failure at it over on this side of the House".

I ask the member: What is this government going to do that will really provide meaningful, productive, creative jobs that people can be proud of and that they can be sure they will keep for the rest of their lives, rather than these temporary make work projects that are done on borrowed money?

Borrowing Authority Act, 1996-97Government Orders

8:55 p.m.


Jesse Flis Liberal Parkdale—High Park, ON

Mr. Speaker, it is clear the hon. member did not read what is in the budget. The hon. member did not hear a word of what I said. My whole 10 minutes was to emphasize how we have set the environment since we came into power to create jobs, create jobs

for young people, create jobs in high technology. He did not hear the Minister of Finance. He did not hear me when I said we are going to use the Team Canada approach that has been so successful internationally in generating $20 billion worth of deals and contracts for Canadians. For every billion dollars of exports generated 11,000 jobs are created. The hon. member does not seem to take that into account at all.

The Team Canada approach was used in the infrastructure program. The municipalities and the provinces told us what their needs were. It is the first time the three levels of government got together to meet the needs of the local communities. Each level contributed $2 billion. It did create immediate jobs which was the intent of that program.

I hope the hon. member will first of all read what is in the throne speech, read what is in the budget and listen when we are debating in this House.

Borrowing Authority Act, 1996-97Government Orders

8:55 p.m.


Francine Lalonde Bloc Mercier, QC

Mr. Speaker, I am pleased to speak tonight to the supply motion. But, as you may well understand, this motion would not have been tabled without the budget since the amount of money set aside is based on what is in the budget. I will therefore establish a very close link between the two and talk about this budget, as my hon. colleague did at length.

I know that, the day the budget was tabled, many Canadians and Quebecers were relieved to learn that there were no tax increases. This is quite a normal reaction at first. Nonetheless, for all curious but perceptive people who call a spade a spade, this budget contains bad news, which were announced last year.

Since the bad news was announced last year but included in the budget this year-it has even started to bear fruit-the government says that there is no bad news since it was announced last year. We should find an appropriate adjective to describe this way of submitting budgets, because, since taking office in 1993, the Liberals have brought down three budgets.

In only one budget out of three did the bad news it contained materialize in the year in which it was announced. And I must say that this first budget, tabled in 1994, was pretty terrible, in that it stuck a direct blow at the unemployed, those jobless men and women who need the kind of assistance provided through the UI program. It struck a direct blow at the people of the Maritime provinces in particular, who had voted Liberal full spin, yet finding themselves, without having been consulted even for five minutes, faced with a budget announcing a $630 million cut in UI benefits for Atlantic Canada.

That was the first budget, the one containing the bad news for that year and years to come, because the big cut, on which the government's claims of sound management are based, the bulk is in the UI program: $2.4 billion per year to begin with.

Then, in 1995, the bad news having already started taking effect, more bad news was announced for the following year, this year, in the form of additional UI cuts, on top of the Canada social transfer: $2.5 billion this year and another $4.5 billion next year.

As a result, this year's budget looks pretty good, because the bad news, the worst part of it, news that can be the dramatic in some cases, was announced earlier. Now, they can rub their hands contentedly and say: "This is a good budget".

We should find an appropriate adjective for a budget which does not really say things, a budget which announces now reforms that will affect pensions in five years, a budget which merely says that things will be done later. Some people think: "Whew, it will be for later". And since the other measures were announced last year, or the year before, some say: "Things are going well".

This type of management has little to do with transparency, to say the least. If one reads this budget without knowing what is said in the budgets of the last two years, one cannot see that the bad news was announced before and will be implemented this year, often in a pretty dramatic way.

Can the ordinary citizen figure out what is really going on? It is pretty hard to see through this budget. There is a place where he will figure it out though. It is in his workplace, assuming he has one. There he will realize that this good budget will cost him dearly, especially if he is a low or middle income earner.

There are some who pay a high price for the feeling of satisfaction of our Minister of Finance, who proudly wears a carnation on his lapel. I am not referring to businesses or high income earners. Not at all. The fact is that those who are paying that price should not be the ones affected by such drastic cuts.

Take the UI reform for instance. This cut was announced last year, so much so that it was already factored in-the government was so sure of itself that the House of Commons and everything else did not mean a whole lot-so the cuts were factored in the budget for 1996-1997. This means an additional cut of at least $800 million for this year and of $1.9 billion in the years to come. But what does that mean, in the years to come? In three years, or four years. In fact, it will be in the year 2000. But as soon as next year, these cuts will already reach $1.2 billion.

What does that mean? Let me repeat this, since, as we all know, repetition is the mother of science. Let us take the maritimes and the province of Quebec for example. In the maritimes or Atlantic Canada, since 1995, UI benefits have decreased by $630 million every year. This is a lot of money for Atlantic Canada, especially

since the unemployment rate is very high in these areas. And starting this year, there will be a new cut that will reach, in three years time, $944 million a year.

For Atlantic Canada, a cut of $944 million distributed among all its regions will mean that a lot of people will be affected. It also means that these people, who would have had otherwise hundreds and thousands of dollars more to spend, will have to do without. We are not talking about cuts of $100 a year, or $200 a year, but rather cuts totalling hundreds and thousands of dollars every year in provinces that can ill afford it. And to pay what? To pay the deficit. We finally get to the truth here.

This seems like a good budget, where we all wash our hands and nobody pays. But it is not true. There are people who pay. Quebec got $735 million less in 1994. And now the federal government is taking away $640 million more from us. Do not tell me that this $1.375 billion cut will have no impact and that ordinary people, folks who are not at all well off will not suffer from that.

But that is not all. It has an economic impact. You cannot deprive an economically weak region of that kind of money without weakening its economy even more.

Let us get back to the main objective of these deficit related cuts. Is it a sound decision to force regions whose economy is already in trouble into a situation that will inevitably worsen the general state of the economy and increase social spending in these areas? It is not a sound decision. I am sorry. The minister, Paul Martin, may be proud of himself, but I find this rather tragic. There are people who pay, and they pay dearly.

Borrowing Authority Act, 1996-97Government Orders

March 18th, 1996 / 9:05 p.m.

The Deputy Speaker

Excuse me, but the member has forgotten that it is not allowed to mention the name of a minister.

Borrowing Authority Act, 1996-97Government Orders

9:05 p.m.


Francine Lalonde Bloc Mercier, QC

The hon. Minister of Finance. It is much nicer anyway.

Basically, what we need to wonder, as Canadians and as Quebecers, is just how, after these budget choices, after all the polite and general small talk of the budget, we will face the economic and social realities?

I must pause here to add the bad news announced last year, which will have a dramatic impact on provincial budgets and on the most disadvantaged once again, or on the middle class: the Canadian social transfer. It will be cut by $2.5 billion, which will force the provinces to make painful choices between education, welfare and health. These are painful and agonizing choices, which will have economic and social consequences.

It is not true that this budget contains no problems, that it is a good budget, that the government is headed toward its objectives, that everything is fine, that everything is going along well and thus the economy will start picking up. It does not strike me as appropriate to say such things. Why has unemployment insurance been the target of so many attacks? Why? The gist of the government's defence was that continuation of social programs must be assured. But that cannot be applied to UI. It is a self-sustaining plan as it is required to be, and one that is sustaining itself admirably well since the first cuts.

Mr. Speaker, are you aware that, without the additional cuts in UI, by the end of 1996 there would be a surplus, an accumulated reserve of at least $4.3 billion? So, this reform, which will have such serious effects, is being launched despite a reserve of $4.3 billion and the rock hard certainty that, with the cuts approved in 1994, next year there will be another surplus of at least $2.4 billion. My figures are very conservative.

This means, that at the end of next year, there will be an accumulated surplus, very conservatively, without the announced reform, of at least $7 billion. Is this the program to be cut to bits? It is time to call a spade a spade. This so-called reform, counter reform of unemployment insurance is aimed simply at reducing, very temporarily and very artificially, the deficit or we could say it allows the minister to reach many of his objectives, because, let us be honest, that is what it is all about.

It must be said, however, that this approach to reaching objectives is faulty, because, if we sink-and I hope we will not-in two years' time into a deep recession, where the number of unemployed is such that the accumulated reserve does not meet the need, the government will not only not collect any more contributions, it will have to borrow. This is not a real response to the needs of the fight against the deficit. It is wrong. Unless, and this is unthinkable, unless the government decided at the start that, after collecting such excessive contributions to unemployment insurance, if necessary, rather than borrow, it would further cut benefits, this sort of action would be not only inexcusable, it would be downright manipulation.

If the government really wants to get down to the problem of employment and of preparing Canadians and Quebecers for the labour market and really wants jobs to be created, I can tell you this is not the way to go about it. It looks for shortcuts, simple solutions, the easy way out, although perhaps it will not be as easy as that, if the truth be told. Perhaps the rallying of forces we have seen is an indication of the disillusionment of the people who always end up paying. Maybe it will grow.

We have not seen a movement such as this for a long time in Canada and the hon. members opposite can tell us that the union officials and social organizers are professional agitators, but from experience I can tell you something. All the union officials and social organizers in the world can organize nothing when people, who do not let themselves be manipulated, know that it is not worth the trouble. But when people know that it is worth it, that there is

something there, they wake up, and you never know where it comes from or the proportions it can take.

We are talking about the people, and maybe they are angry because it makes no sense. There is such a huge gap between the conditions in which so many people live and the ease with which it is decided to cut here or there without considering the aftermath on social and economic productivity. It is possible that people are truly angry.

The Bloc Quebecois feels a responsibility to speak out, not because it wants people to rise up for nothing, but because it wants the people of Canada and of Quebec to have hope.

Borrowing Authority Act, 1996-97Government Orders

9:15 p.m.


Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, it is a pleasure to speak to Bill C-10, the Borrowing Authority Act 1996-97.

I am not going to dwell too long on the details. I believe the hon. member for St. Paul's, the Parliament Secretary to the Minister of Finance, laid out very well the details of the bill.

Very briefly, the government is asking for $18.7 billion of borrowing authority for the 1996-97 fiscal year. This amount is comprised of a financial requirement stated in the budget for 1996-97 of $13.7 billion, exchange fund account earnings of $1 billion and $4 billion non-lapsing amount.

The major portion of the borrowing requirement comes from the budget. Throughout this debate all day long I have sat here and listened to members comment on the budget and its relevance to the deficit, the national debt and the requirement for borrowing.

This is not subject matter which is only of concern to Canadians. I want to quote President Bill Clinton who, just a few weeks ago in his state of the union address, made comments such as: "We have opportunities for all who are prepared to work for it". He said: "We have to live within our means. The era of big government is over. But we cannot leave our citizens to fend for themselves. We need self-reliance and teamwork". Those words are also applicable here in Canada.

In November 1995, along with all members of my party, I had an opportunity to present to the finance minister our views and thoughts on how to approach the fiscal responsibilities of the government.

I want to read into the record the very first paragraph I wrote to the finance minister as I laid out some of the suggestions I had for him in this 10-page document. I stated: "Whether one talks about business or government affairs, the degree of stability shown and the level of confidence earned are critical factors to success. The public has responded positively to our government because we have demonstrated fiscal responsibility. Through our consultative approach, the electorate better understands our fiscal situation and the reasons for spending cuts and the reallocation of resources".

"We have also provided credible leadership, set overall fiscal targets that were realistic and achievable and, most importantly, we met those targets. We believe that these achievements have helped to promote the essential elements of stability and confidence that our future success depends on, continuing to reflect those elements in our policy initiatives".

The minister listened to the input of the House and of all Canadians because the members of this House reflect and respond, in our committees and in our communications with each other, the feelings of all Canadians.

Reflecting on President Clinton's comments about not allowing our citizens to fend for themselves shows the essential difference between the approach advocated by the Reform Party and the approach of the government. The government has said it has to get its fiscal house in order but it is going to do it in a way that does not leave tragedy in its wake.

Program spending for the government in the 1993-94 year, which was the fiscal year ending just after the last election, was $120 billion. When taken with revenues and other public debt charges, the deficit for that year was some $42 billion, a very large number. It is not a deficit that anyone in this place believes could be eliminated simply by doing something different, flipping a switch and making it happen. It cannot happen that way. It represented 6 per cent of the GDP of this country.

In his first budget the finance minister undertook to reduce that deficit to 5 per cent of GDP, 4 per cent in the subsequent year, 3 per cent for the year ending March 31, 1997 and in recent addresses has indicated that he will bring it down to 2 per cent of GDP by the 1997-98 year.

There is no question about the direction that the finance minister is going and why he has asked Canadians to look at the essential elements of what Canada must do to balance its budget, which is what all of us want to do. I should not just stop at balancing the budget, it is also to start creating a surplus in a way which will allow us to start paying down the national debt.

The national debt is somewhat over $550 billion.

It did not exist some 25 to 30 years ago. Over these last 25 to 30 years Canadians have taken out of the system something like $350 billion more in goods and services than have been paid for. The additional amount of the national debt is the compound interest that

has been accumulating. It is a problem to be dealt with. We have to deal with the deficit first. The deficit has been dealt with: 6 per cent, 5 per cent, 4 per cent, 3 per cent, 2 per cent of GDP by the 1997-98 year. We will have a balanced budget. We will be in a position to tell the Canadian people that a balanced budget has been achieved.

We will start addressing the debt which was the recommendation of the auditor general. We have to get past balancing the budget. We have to start looking at that debt. We have to reduce it to a sustainable level. The House will have to deal with that issue.

I could spend the rest of my time talking about each and every one of the budget elements and about how important it is to the achievement of meeting those targets that the finance minister has met. It is just as significant to have on the record what others have said. It is one thing to pat ourselves on the back, but let us see what others have to say about the finance minister's input.

Mr. Bill Good of B.C., a radio host on CTV Sunday Edition on March 10 said: "What the finance minister has done is he has gathered a considerable amount of credibility by hitting the targets he has said he was going to do".

Dalton Camp said of media reports: "Almost everybody liked the budget. The strongest defence of the finance minister's fiscal policies was uttered on budget night when the Reform Party leader simply was at a loss for words, saying nothing".

Borrowing Authority Act, 1996-97Government Orders

9:25 p.m.

The Deputy Speaker

Is the hon. member intending to use the rest of his time to read press reports which most of us have read?

Borrowing Authority Act, 1996-97Government Orders

9:25 p.m.


Paul Szabo Liberal Mississauga South, ON

I have only one more.

The final one is from Jeffrey Simpson who said: "If the federal government 10 years ago had introduced budgets like the last two, including yesterday's-The fight against the deficit-debt has been waged, thus far successfully, without major tax increases, to which Canadians have become politically resistant. It has instead being fought where it belonged-in the government's own spending and in transfers to the provinces".

These comments, along with others, are from people who actually follow this place and understand the government's approach to the question of the debt and the deficit and its need to borrow to finance that, which is the purpose of Bill C-10.

As I indicated in the letter that I wrote to the finance minister, the stability and the confidence demonstrated by the government are extremely important.

In one of the first speeches that the finance minister gave in the House, he included in his statement: "Good social policy makes good fiscal policy and good fiscal policy makes good social policy".

I listened today to the speech of the member for St. Albert who was talking earlier about the infrastructure program. He was talking about spending $6 billion. This money was borrowed pursuant to a borrowing act similar to the one we are talking about tonight. He tried to explain to us how that really was not an appropriate expenditure.

What he did not talk about was that the $6 billion, which was a contribution to all Canadians right across the country based on population, also had contributions from other levels of government that matched those moneys. Jobs were created, real jobs for people who were probably on unemployment insurance, people who were looking and desperately wanted the dignity of a job. They got it. Those jobs were created.

Because of that program people got off UI, they got off welfare. They started paying their fair share of taxes. They had the dignity of a job. I do not know how the member concludes that giving people jobs is not a good thing for us to be doing.

I listened also today to the member for Calgary North who started to argue what a terrible thing it was that RRSP limits were not increased from $13,500 up to $15,500.

Members probably know that to be able to contribute to an RRSP of $13,500 one would have to make $75,000 per year and much more to contribute $15,500. In most of her speech the member argued what an awful thing it was because we did not give a further tax break to the top 2 per cent income earners in Canada. This is unbelievable. Average Canadians are living from pay cheque to pay cheque, never mind contributing to RRSPs.

President Clinton said we have to balance the needs of the citizens and balance the budget. It must be done in an honourable way, not on the backs of the poor, the disabled and the aged, which is what I hear from the Reform Party. This is the kind of thing that defines the differences of the philosophies of members of the House.

One member is arguing on behalf of the top 2 per cent of income earners in Canada. I say that when the budget includes things such as eliminating the seven-year limitation on the carry forward of unused RRSP amounts, it is a positive step because it makes sure young Canadians who are just starting out and who do not have the cash to put into RRSPs will be able to make it up later on in their lives once they get a little cash in the bank.

I also heard the member for Lethbridge argue the Reform Party budget would have chopped health care less than the Liberals. It would have chopped post secondary transfers less than the Liberals and also that cuts to seniors would have been less than those of the Liberals. He also said Reformers would lower the deficit and start paying down the debt.

I did not get the chance to ask the member a question. How can Reformers do less cutting of spending than we did and still have a lower deficit? They did not answer the question. It cannot be both ways. These are contradictions.

The member for Nanaimo-Cowichan stood in the House and made the argument that we are not creating jobs and that jobs are the problem. I looked at the report which came out from Statistics Canada, March 8: 44,000 new jobs were created in February, following the creation of 44,000 jobs in January and 49,000 jobs in December 1995, for a total of 137,000 new jobs created in the last three months, 82,000 of which were full time jobs. That means that more than 600,000 new jobs have been created since the government took office in 1993.

Is that enough? No, not for a moment. There are still a million Canadians who want work. There are still young people looking for work. I have a son who is graduating from university at the end of this semester and he will be looking for a job. He wants the dignity of a first job. Unemployed young people, 25 per cent, want the dignity of a first job just like we had. We have to work harder to make sure they get it.

I mentioned that good social policy makes good fiscal policy. It made me think about an element in the budget, child support payments and their taxability. I quote again some points the president of the United States raised in his state of the union address a few weeks ago: "We must cherish our children and strengthen our families. We must take responsibility for our children. It is hard to be a parent, but it is even harder to be a child. All strong families begin with taking responsibility for our children. Families are the foundation of our country's life. Strong families mean a strong country".

He said all those things and the word family was repeated over and over. I thought about the words of the Finance Minister that good social policy means good fiscal policy and about the taxation of child support payments. I thought we have a tragedy here. We are upset and spending our energies debating who should pay the taxes on child support payments and we forgot that the family was eroding. We forgot about this being the result of two people who decided for one reason or another they were better off apart even when there were children involved.

How could this be that we are arguing tax dollars when it is the children there? How can we be arguing this when we know that family breakdown is a result of spousal abuse, economic and financial abuse and all these things? How is it we are arguing about the taxability of things?

The lady who argued this case in front of the Supreme Court, Suzanne Thibaudeau, made a very passionate plea. Here is a person who was paying less tax apart from her husband than they were paying when they were together.

Why is it that they are better off from a tax standpoint being apart than being together when we know that the family is the foundation of our society? The change was made to the taxability of the child support payment back to the husband and not to the wife. It simply puts couples who separated on the same footing as families have always been. That is the success in the budget move.

It is not a change in the taxability. It is a change that puts separated couples on the same basis as the family. It is amazing. I support the principle included in the budget but for a totally different reason. The family is the fundamental asset that we have in society.

If the family were cared for, if the family were honoured and cherished, if working in the family home and caring for our children were an honoured profession again, if spousal abuse were treated the way it should be in society where the costs of all the aggravation of spousal abuse in society were totally eliminated, the deficit would be gone. If the family were strong, the deficit would be gone.

That is the message that has to get out. It slowly came out in the state of the union address. It will slowly come out in the debate on the budget, on the borrowing bill and in the throne speech. It will slowly come out if the people in the House have the guts to stand up and speak up on behalf of the family. It is the family that will make it. If a strong family exists in Canada, Canada will be as strong as it can be. I wish I could spend the rest of my time talking about the family. Most of my work has been related to family issues and to taxation of the family.

The issue we are talking about, balancing the budget, has to do with getting right back to what I wrote to the finance minister in the very first place, stability and confidence. It is saying and showing by one's actions as well as with words that one cares about the country, that one cares about fundamental principles, dammit, including family values. Those have to be there. They are not strong enough. I will continue to speak out on behalf of the family. I will continue to fight for tax fairness and equity within our system.

We have opportunities before us and I hope all members will look for those opportunities so we can one day, very soon I hope, announce that not only do we have a balanced budget but that we will start paying down that awful national debt.

Borrowing Authority Act, 1996-97Government Orders

9:35 p.m.


John Williams Reform St. Albert, AB

Mr. Speaker, I will be splitting my time with the member for Capilano-Howe Sound. It is not too often that I start a speech with a compliment to a member

from the opposite side but I would like to echo the closing remarks of the member for Mississauga South. He said if the family were strong, the deficit would be gone. I believe the sincerity of his comments and I go on record as echoing the same.

Borrowing Authority Act, 1996-97Government Orders

9:35 p.m.

The Deputy Speaker

Permit me to apologize to the hon. member for Mississauga South on the record for interrupting his intervention. It was a result of sitting here for about seven and a half hours today. The Chair had no right to interrupt when he was speaking. I apologize to him.

Borrowing Authority Act, 1996-97Government Orders

9:40 p.m.


John Williams Reform St. Albert, AB

Mr. Speaker, we are talking about Bill C-10, an affront to Canadians. It is a very short bill. It is only about one page long but it has a very long tail on it.

I was reading in the Edmonton Journal a few days ago that this weekend there will be a comet coming into our view. We will be able to see something very small in the universe with a very long tail. I thought it quite appropriate that it would show up this weekend since here we are talking about a very short bill with a very long tail. We will be paying for this for years, decades and so on. We will pass it on to our grandchildren.

Clause 2(1) states the Minister of Finance may raise money by way of loan or by the issue and sale of securities of Canada in such amounts not exceeding $18.7 billion. That is $18.7 billion the Minister of Finance will hang around the necks of Canadians in the next 12 months. If that falls under his realm of good government I do not know why I am standing here and I do not know why he is standing there trying to tell Canadians this is good for us. It is not.

Eighteen billion, seven hundred million dollars of new borrowing dumped on the backs of the hundreds of billions of dollars that we already owe is an affront and has to stop. That is why the Reform Party members said let us get the job done and let us get it done now.

One of the previous speakers talked about the reallocation of resources and how good this was. The Minister of Finance is reallocating resources because he is cutting programs to the poor, he is cutting programs to the needy, he is cutting programs to families and he is transferring that money to the rich bankers and the wealthy people from around the world who now enjoy the greatest, richest and largest transfer program in the history of Canada.

According to the Minister of Finance's projections when he took office in 1993 it was consuming $38 billion of Canadians' hard earned taxes paid. By the time he goes back to the people in 1997-98 that program will have grown to $49 billion, the largest and most expensive statutory program in the history of the country. It benefits no one but the rich at the expense of the poor.

That is why the Reform Party is very concerned about the deficit. That is why the Reform Party said the deficit has to be eliminated. The growth of this program has to be stopped now. We in the Reform Party are concerned that we have money available to help those who need it, not those who want to take it from us.

That is the fundamental difference between Reform and those people on the other side who say let us ease this thing down gently so nobody gets their nose out of joint. That is not what it is about. It is about ensuring we can afford what is needed.

I hope the Minister of Finance and the people who support him on that side of the House realize the clock is ticking and the longer it ticks, the greater the chances he will run off the rails and the job will never get done. I could go on at considerable length.

I am also very disappointed that the Minister of Finance stands in the House and tells us about how he is meeting his targets, how wonderful the Liberal government is, how we should have confidence in the government and in what it is doing. Let us look at what it is doing.

Did anyone see the reference to Nav Canada in the Globe and Mail today? Nav Canada is this new not for profit monopoly the government is creating to run our air navigation services. I have a little problem with the monopoly but let us leave that aside for the moment.

The government is going to force Nav Canada to go out into the money markets to borrow $3 billion to buy these assets to pay for some kind of $1.5 billion profit the government is going to make as it sells these assets and turfs them over to this new not for profit monopoly called Nav Canada. The government is going to end up with a $3 billion windfall from the sale of assets that belong to the people of Canada paid for with taxpayers' money.

Did the Minister of Finance tell us: "Oh by the way, while I meet my deficit projections it is because of the windfall profits that I forced them to go out, borrow the money and give it to me"? Did he tell us that? No.

What about the fact that he has changed the rules in the collection of UI premiums to force people with large incomes to pay all the premiums in the first few months rather than spreading it out over 12 months? This forces them to pay sooner which means the government gets its money in this year instead of next year, and generates a $500 million windfall. Did he tell us that? No.

Did he tell us that when he got rid of the $2 bill and introduced a $2 coin which falls apart that through this whole concept called seigniorage the government is going to get a windfall profit of $500 million this year? Did he tell us that? No.

Did he tell us that while he is not increasing income taxes at all and has not for quite some time that people who are 69 and 70 years of age can no longer get a tax deduction for contributing to their RRSPs? They are now going to start paying taxes on the annuity as they start withdrawing from their RRSPs because he has changed the rules which force them to do that. No, he did not tell us.

Did he tell us that he is going to change the rules in child support to collect another $240 million out of the pockets of the people who in many cases need every penny they can to provide for the kids because there are two homes involved? In doing so a whole new business for the lawyers is going to be created so that money goes into the pockets of the lawyers rather than to feed the kids. Did he tell us that? No. It goes on and on.

He has forced small business proprietorships to go through endless hoops and expensive accounting bills in order for him to suck the money out of their pockets by changing their fiscal year end from whatever it was to December 31. He can collect his money faster and they have to scrape it out of somewhere, he does not care where, so that he can get a windfall bonus by squeezing it out of the people who are trying to create jobs. And he boasts about not increasing taxes.

He extended the surtax on banks so he will collect another $40 billion next year even though that was supposed to pay the way and he tells us he did not increase taxes. Smoke and mirrors, deception at every turn. The Canadian people are being led down the garden path.

The government talks about waste and the Minister of Finance talks about it explicitly twice in the budget speech. He was going to wring waste out of the system in order to ensure the taxpayers' money is well spent.

I read an article in the Globe and Mail today about Nav Canada. We have about 6,000 civil servants who are going to ``lose their jobs'' with the government. The following morning they will have a new job, which is the old job, working for a new employer which is this not for profit monopoly set up by the government. This new job, which is exactly the same as the old job, and they did not notice except the name on the paycheque is different.

These civil servants are going to share in a $200 million bonus. They get their severance pay because they are being laid off from their government job and they will be transferred in an off balance sheet situation.

The government can collect its $3 billion windfall profit. It is going to cost the taxpayers, people who are looking for jobs, people who are trying to keep their jobs and people who are not sure they are going to have a job next year, $200 million in severance pay for people who are not even going to be out of work one single day. It goes on and on. It is a shame and it is disgraceful.

I have one final point. I rather hate to bring this up but I do have to raise child care and child support. The government is now going to legislate child care and child support. I really appreciate the heartfelt sincerity of the member from Mississauga. Why for example in Alberta, does a parent with three children, who makes $38,000 going to have to pay $750? Parents in every province will have to pay over $700, yet in the province of Quebec and only in the province Quebec it drops below $700 all the way down to $640. Why the exception for that province?

There are many other things I would like to get on the record but my time is up.

Borrowing Authority Act, 1996-97Government Orders

9:50 p.m.


Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, I am not sure how much I look forward to speaking for 10 minutes on this subject since I have been here since eight o'clock this morning and it is now the 14th hour of my rather full day. Nevertheless, Bill C-10, the borrowing authority bill is a rather important bill or it should be an important bill.

For a long time I remember in the United States there used to be the need for the government to go to Congress every year to acquire permission to increase the debt limit. This bill focused the discussion on issues about spending and deficits which were very salutary.

I wish in the parliamentary system we had an opportunity to focus our discussion on what these deficits do to our children and grandchildren who are not represented here because they cannot vote. I know this is a cynical point of view, but I believe if they really were in our minds when we voted for these kinds of increases in deficits, these appropriations to spend more and add more to the debt, we would not do it if we remembered what we are doing to our children and grandchildren.

Unfortunately we have a system here where all the conclusions are pretty well pre-ordained. What we have is a lot of talk. Let me add to this talk on a subject that is of great concern to me.

Today several members opposite spoke about an article written by my good friend and colleague, Dr. Mike Walker, an economist and director of the Fraser Institute. He published an article in the Globe and Mail last Thursday. The title is ``Budget out-Kleins Klein-Another Perspective''. In this short editorial, Dr. Walker indicated his enthusiastic support for the budget that was brought down last week and which at this moment is being debated in the context of the need for more borrowing to which it gives rise.

The editorial bases its enthusiasm for the budget on something very interesting, an index which the Fraser Institute has called the Klein index. It is alleged to be an objective assessment of the fiscal restriction imposed by a certain budget. As Mr. Walker indicates, he believes this takes subjective judgment out of the debate. I am really puzzled by this. Dr. Walker in co-authorship with Robert Richardson in the February issue of Fraser Forum , a monthly publication of the highly respected institute, with circulation in the thousands, has published a paper entitled ``How to Balance the Federal Budget and Keep Canada together''. Mr. Walker suggests cuts in program spending. This is money spent on everything other than the debt and excluding social transfers to individuals and provinces.

Dr. Walker enthusiastically endorsed the need for further cuts. He would have doubled according to these proposals the cuts to program spending of $6.9 billion enacted by the Minister of Finance last year. He would have added $6.3 billion in order to achieve the targets he thought were necessary.

I will give in a moment his summary of why he liked and why he suggested this budget. He gives here a long table on how he would find the extra $13 billion. For the department of agriculture he suggested an additional cut of $600 million out of a budget of $1.2 billion, and so on.

The second element of his budget proposal which was very important suggested an increased clawback of all social transfers to individuals and families. His emphasis was on families, social transfers in the form of UI, OAS and CPP together. He gave a schedule on how he would have done that and he suggested that another $8 billion should have been taken out of this program.

Why did Dr. Walker and his co-author suggest this would be necessary? It would bring about in two years an elimination of the deficit, and a surplus would begin.

He concludes the article with the following paragraph: "By balancing its budget within the next two years and beginning to reduce the national debt, the federal government can restore the confidence of most Canadians in the financial, economic and political viability of one Canada for all Canadians into the 21st century".

This of course has been the platform of the Reform Party since its election campaign, reinforced in the taxpayers budget published last year.

The Liberal budget did nothing Dr. Walker proposed two months earlier. There were no further cuts. There was no dealing with the problem of social program spending to high income families.

It is a very puzzling phenomenon to me. How can a man within a couple of weeks change his mind? On the one hand he would have predicted that if this budget did nothing of what he recommended, it would have been a failure. He then turns around on the basis of an objective index and would say this is a wonderful budget.

I can see only two explanations. One is that, as he said, this is an objective index. Maybe he was not objective when he wrote the first budget, when he made his budget proposal. I do not believe that. I have co-authored several books with Dr. Walker. The last one has been published in Chinese.

The only other alternative I have as an explanation is that there is a serious flaw in the design of the so-called objective index. I believe what is missing is any kind of weight given to the speed with which a fiscal restraint is enacted. I believe that is a fatal flaw.

I look forward to talking to Dr. Walker on the telephone in order to clear up this puzzle. I can assure him he has given enormous support to the Liberals, all of whom rave on all the time about how this conservative leader of the economics profession in Canada has seen the light and swung around. It is a total puzzle to me. I tried to explain it. Maybe I will have more news tomorrow.

Borrowing Authority Act, 1996-97Government Orders

9:55 p.m.

The Acting Speaker

It being 10 p.m., pursuant to order made earlier today, the House stands adjourned until tomorrow at 10 a.m.

(The House adjourned at 10 p.m.)