Debates of March 21st, 1996

Borrowing Authority Act, 1996-97

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, I know that my good friend across the way will find this a very difficult thing to realize but the economy grew. The increased tax revenues were as a result of the

economy growing. The tax rates were not increased. Almost none of the total revenues were as a result of tax increases.

It is a funny thing. Does the hon. member not want the economy to grow? Would he be happier to see the economy not grow?

When the economy grows, corporations make profits, people become employed and they both pay taxes. Not only that, many people go off unemployment insurance and that cuts expenses. When that happens the deficit is reduced. That is the way it works. I did not think I would have to explain that to a fellow economist.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Chairman, I thought we would keep it between two fellow economists. I am very disappointed at receiving such an unsatisfactory answer.

The hon. minister cannot deny that the government plans two years from now to have a budget which will benefit from taking away from Canadians, partly through economic growth, partly through gasoline tax increases and other surcharges on corporations, another $25 billion. At the same time, that increase has done nothing but matched the reduction in the deficit. On top of that, $14 billion less will be spent on government programs in that two-year period.

I ask the minister again, where is that money going?

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, as a banker I have always felt that it was important to pay the interest on the debt. Unfortunately the Government of Canada has a very large debt and a very large portion of that debt bears interest. Some of it does not, but most of it does. A large part of that interest is paid and that is why a large part of the additional expenditures or the program spending has been down each year for a number of years. Since we have been in office it has been down.

The cost of carrying the public debt has increased because the public debt has increased.

A light has gone on in the hon. member's mind because he realizes there is interest paid on the public debt. I am sure it does not come as a surprise to the hon. member that there are interest payments on the debt. Unfortunately we have to pay interest.

Maybe the Reform Party has a better idea than paying interest. Maybe it does not want to pay interest on the public debt. Maybe that is the system which that party has. However, it is not the system of the government. It has obligations and believes that the interest payments on the public debt should be paid. That is where the additional expenditures will go.

Program spending has been down year after year and the public debt costs have increased. It is very simple. I think the hon. member knew that answer.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Chairman, I hope the people of Canada will begin to realize that all of those painful spending cuts were used up to pay more interest.

Was the higher interest on the debt which was inherited or was it on the debt which was created by delaying the spending cuts? That is what I was driving at.

The Liberals inherited a certain debt which had a certain cost. However, that cost has risen by $14 billion. Why did it increase by $14 billion? It increased because the government added to the debt when it simply slowed down the rate at which it cut its expenditures.

I can understand all the political rhetoric about setting targets and so on, but what this minister has just admitted is that $14 billion increase in interest he had to pay by taking it out of the hides of Canadians is due to not having quicker targets. That is the criticism the Reform Party has made of the approach of having targets that are too low. If the same cuts had been made more quickly all those cuts would now have produced a balanced budget.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, the hon. member is quite wrong. We have had an operating surplus since 1994. That means our expenditures on program spending have been lower than the revenue we have generated. It is not our debt that has been increasing the payment of interest; it is the debt we inherited that has increased it. The interest payments on that debt are the total amount.

I am sorry, but the hon. member is dead wrong on that. We have had an operating surplus since 1994.

[Nic Leblanc, Bloc, Longueuil, QC]

Mr. Speaker, when the Reformers were speaking, we in the Bloc kept quiet, and I would ask them to do likewise.

I have listened with great attention to what the Secretary of State for Finance has had to say. He began by saying, quite clearly: "We are using UI receipts to reduce our deficit" or rather "Revenues from the UI fund will enable us to reduce our deficit". It seems to me that is fairly clear. At the same time, he is trying to convince people with his answers that this is not the case at all. Revenues from the UI fund are to be used as a cushion to protect against future economic crises.

I would really like an explanation, because this is really almost beyond understanding. He is saying that the UI fund will be used to reduce the deficit, and at the same time that these revenues will be used to create a cushion against economic downturns in future. But we know very well they are being used to reduce the deficit. We know very well, for it is written in the budget speech. The UI fund is being used to reduce the debt, moreover it is included in the debt consolidation calculations.

Honesty is needed; the public must be told clearly what the Minister of Finance is up to. In my opinion, the government's

approach to the UI fund smacks of dishonesty. We know very well that, at this time, the fund contains a surplus, which is being used to decrease the debt, and we know very well, too, that UI reform will make it possible to get even more money out in future to eliminate that debt.

What does that mean? It means that the government is using the unemployed, the small and large businesses, each of whom pays into the UI fund, and using those funds to reduce its debt. In other words, this is a new tax, a hidden form of taxation the government is using to reduce its deficit. At the same time it would have us believe that it has not raised taxes for several years, not since it came to power. It says it has not raised taxes or changed the tax system, whereas we know that it is using roundabout, sneaky methods to tax employers and employees, that these funds come from taxes siphoned off from the UI fund, and that they are being used to reduce the deficit.

I would like to know how much more he plans to get, next year, out of the UI fund than will be going back to the unemployed? What amount does he plan to get his hands on to help with his deficit?

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chair, the hon. member has made a little error. We have been reducing the rate on unemployment insurance premiums for several years. That means employed workers and businesses are paying a lower rate.

There is an unemployment insurance fund which forms part of the public accounts of Canada. I suggest the hon. member check with the auditor general. We follow the rules of the auditor general. If the hon. member does not like the rules which have been set out to handle the public accounts of Canada, he should make suggestions in the appropriate committee when the matter comes up.

We will not know the exact numbers in the unemployment insurance account until we know how many people will be applying for and receiving unemployment insurance and until the Minister of Finance and the Minister of Human Resources Development set the new rate for this year, which will be done sometime this fall.

In the meantime, we have a planning number. The planning number will reach by the end of 1997, if the planning assumptions are correct, approximately $10 billion. That is a sum which can be used in the future. It can be used to help the unemployed during a recession. It will prevent the very serious situation of having to raise premiums in the middle of a recession, the last thing any government wants to do.

That is the reason for the fund's being there. If the hon. member would like to follow the items through the government accounting procedures, he is welcome to do so. They are quite open and clear procedures.

[Nic Leblanc, Bloc, Longueuil, QC]

Madam Speaker, it is not very clear. Well, he partially answered the question, but he did not give me an answer about using unemployment insurance money for current expenditures.

Could he tell me how he can create an unemployment insurance fund, while he uses this money for current accounts?

I would like him to explain that, because it is not very clear in my mind. At first, he mentioned that the unemployment insurance funds would go to the deficit. Well, if these funds are being used for the deficit, it means the money is being used for current accounts.

How is he going to build up an unemployment insurance fund, when he is using this money for current expenditures. I would like him to explain that to me.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chair, I believe there is a difficulty of understanding.

There is no reason we could not set up a fund within the UI fund to look after a future problem. It is not being used for current daily operations of government. If the member looks at the budget papers he will find there is an operating surplus.

All of the revenues of the government must go into the calculation of the total revenues, including premiums from unemployment. That is the auditor general's rule as to how government accounts are handled. All of the expenditures, including the expenditures for unemployment insurance payments, go on the payment side. The net difference is the operating numbers. For the last few years there has been an operating surplus.

As I said, if the hon. member does not like that system or does not understand it, I cannot go beyond that. All I can tell him is we do have an unemployment insurance fund looking after the unemployed. If a future recession happens we will have the ability to handle that recession without raising premiums in the unemployment insurance fund to the severe detriment of workers and business when a recession hits.

[Nic Leblanc, Bloc, Longueuil, QC]

Madam Speaker, he admits that there is a surplus. Everyone knows that, as far as UI is concerned, the government collects more than it spends.

He also told us at the beginning of his speech that this surplus would be used for current expenditures, for deficit reduction. That is what I cannot understand. He admits to a UI surplus and, in the same breath, tells us that this surplus will be used to reduce the deficit. It is not clear.

I would like him to try once again to answer me if he can. I myself cannot understand, and I think no one can, when they talk about putting the money in the consolidated revenue fund and then use it for current expenditures, for running a surplus. We know the government is trying to reduce the deficit. If it is trying to reduce the deficit, then it cannot run a surplus since it uses this money for current expenditures. I do not understand, and it is hard to understand.

I would also like to know what the Minister of Finance has done to eliminate duplication. We know that Quebec is in the midst of a debate on manpower training, among other things, but we are fully aware that duplication between Quebec and Ottawa costs a total of some $2.5 billion to $3 billion a year. We also know full well that, by eliminating duplication with the other provinces, we would probably save $10 billion a year.

I wonder if the government has done enough to eliminate duplication to deserve our support for a loan or the disposition of the money. We may not agree to approve a working capital if the government has not made every effort to ensure that this money is managed as efficiently as possible.

Studies have been done on the most efficient way of managing money, and duplication is said to be extremely costly. There is now a wide consensus in Quebec that manpower training should be concentrated in that province. We know that we could save a lot of money. The government could save money and we would be much more efficient.

We would be much more efficient mainly because our workers would be better qualified. Our economy could be more efficient and our employees would be more efficient.

Not only would we save money by eliminating duplication, but we could be more efficient at the same time. We would have a more efficient economy, which would mean greater earning power in terms of government revenue. The taxpayers would pay higher taxes, businesses would make higher profits, and so on.

Has the government done all that could be done to make the entire government machinery more efficient? If that were the case, it would not be coming to us all the time to ask for extravagant amounts, like $18.7 billion, to cover current expenditures and have us believe, as the minister did in his speech, that taxes are not being raised when they are dipping into the UI fund to replenish the current account. In addition, the government is asking for higher and higher services charges.

They say there will be no tax increases, but at the same time they are charging more and more for services that the federal government is supposed to give or provide using the taxes it has collected. The government is increasing service charges. Those are taxes in disguise. I would like to hear the minister on this point.

How much did he increase service charges last year, for example, for the people of Canada? It would be important to know how much more Canadians are paying, perhaps not in raised taxes but in increased service charges. It would be very important to know that.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chair, the hon. member asked a number of questions. I remind him that in 1991 unemployment insurance had a deficit of $4.2 billion. The previous year the cumulative surplus was $2 billion, so that left the deficit at $2 billion. The next year, 1992, there was a deficit of $2.6 billion, cumulative deficit, $4.7 billion. The following year there was another deficit of $1.2 billion, leaving a cumulative deficit of almost $6 billion in those three years alone.

Surely the hon. member realizes that is not the way a prudent fiscal house should be run and is not a way to help the unemployed. At the same time there were increases in unemployment insurance premiums which again hurt the job efforts at those times.

We are running the surplus in the UI fund to prevent that sort of thing from happening again.

The hon. member also asked about duplication. At times there have been questions of duplication. We have done an enormous job over the last two and half years to eliminate duplication in government services in helping the provinces.

In my field we are working right now on a Canadian securities commission. We are trying with the provinces to get their co-operation. Do we get that co-operation from Quebec? Not yet but we hope to. Do we have the Bloc telling us it is a good idea to put a Canadian securities commission in? Is it a good idea to reduce the overlap and duplication in the securities business? Does the Bloc come out strongly in favour of that? No. From the questions I have heard it is quite the reverse.

I do not see why the hon. member is asking me what the government has done about overlap and duplication when they are the ones who have not come out in favour of reducing overlap and duplication in an area which could obviously be made into a much easier and simpler system at the federal level.

[Nic Leblanc, Bloc, Longueuil, QC]

Mr. Speaker, you know, it is funny, when we hear this talk of duplication. The federal government tells us that it is the provinces, like Quebec, that should withdraw and let it manage certain areas, when we know that after the war the federal government began to get involved in just about everything, in sectors that until then had been under the exclusive jurisdiction

of the provinces. At one time, Quebec and the provinces even had responsibility for unemployment insurance. It was only after the war that the federal government decided, almost unilaterally, through a sort of amendment to the Constitution, to take over unemployment insurance.

After the seventies, the federal government moved into the areas of education and health, and interfered in all sorts of sectors that do not concern it and that, under the Constitution, it should stay out of.

Who is interfering? The federal government is. Then it says the provinces should withdraw because of duplication. It is truly comical. In other words, the federal government wants to take over education and health and, at the same time, to tell the provinces to withdraw, to avoid duplication. Yes, but it was the federal government that charged in where it had no business. And it says: "Withdraw, this is not your concern. We are looking after education and health". And these exclusive rights are recognized in the Constitution.

But when we speak about education and manpower training, we mean education. As far as I know, education is provincial. And, in Quebec, we are capable of looking after our own education and training. It is hard to understand. I listened to the Prime Minister at noon, and yesterday and the day before, and that is also very difficult to understand. To us, manpower training means education. It comes under education. Training and education go together. To us, this is clear.

So we say to the federal government: "Withdraw from this field, it is none of your business. You are just confusing things". The federal government adds courses in our institutions, with rules different from ours. Who suffers? The students themselves, men and women who have lost their jobs and want to train for other jobs.

This hinders manpower training and economic growth. Because of this, our labour force is less skilled, since the federal government is involved in areas where it has no business. As for the return on investment in manpower training, the fact that both levels of government are involved probably reduces the return by 50 per cent. This is a waste of at least 50 per cent.

If the Secretary of State for Finance properly understood that, he would say: "It would be good for me to save money and be more efficient". But no. The federal government only wants to prove that it is indispensable. This is mere politics. The federal government wants to get involved in everything to prove that it really is indispensable. It thinks that without the almighty federal government people would not survive.

This is why it continues to interfere in manpower training. The federal government knows it has no business in that area. It intereferes in manpower training to prove, to Quebecers in particular, that without Ottawa they would be very unfortunate, when in fact it knows full well that it has no business in that sector.

How much money would the federal government save if it withdrew from sectors which do not come under its jurisdiction, such as education? This is the first question. There is also the health sector. The federal government interferes in that sector; it sets national standards. But some provinces, particularly smaller ones, would probably manage their health system differently if left to their own devices. Once again, the federal government has become the grand master controlling the health sector. Many provinces would like to manage their health care system differently and thus save money. However, Ottawa prevents them from properly managing that sector.

Again, how much does that cost the federal government? These are all questions that should be answered but have not been answered.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chair, if the hon. member does not believe there are any responses, I guess I do not need to reply.

However, I think it is a very interesting speech on revisionist history which would give credit to some governments of the 1950s.

The unemployment insurance was agreed to by all provinces, unlike what the hon. member said, I believe in the 1930s, before the second world war.

He spoke about overlap and duplication. There has been a clear offer from the minister of human resources on the table for some while. Has Quebec responded? Not yet. The minister of human resources was quite clear this afternoon in question period about those questions. It was quite clear that the areas of provincial jurisdiction were being respected by the government and have continued to be respected.

Other matters the hon. member discussed have little if anything to do with the bill on borrowing authority. However, that we have a national employment insurance scheme is and has been of substantial benefit to Quebecers over the last years and the member should recognize that.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Madam Speaker, I point out four facts to the minister about the unemployment insurance system. First, at the moment 23 cents of every dollar collected in premiums, clearly identified on the tax returns as premiums going to the unemployment insurance fund, are going toward fighting the general deficit.

Second, in 1997-98 the deficit of the general government is expected to be $17 billion. In that same year his budget document indicates that the unemployment insurance fund will run a $5 billion surplus.

That $5 billion surplus is of questionable appropriateness. I do not want to use the word legality. I have asked the unemployment insurance council what the law says. I did not get a clear cut answer out of this and therefore I will not use the word here.

I remind the minister the $17 billion deficit would balloon to $22 billion if this government behaves the way other governments behaved in the past with respect to the unemployment insurance fund and did not use a $5 billion surplus in order to reduce the general deficit.

During the very prolonged slump from 1990 to 1993 the accumulated deficit was $6 billion. According to his figures and the figures in the budget, the cumulative surplus accumulated will be $20 billion.

When is enough enough in order to cover for the contingency overcoming slowdown in economic activity, $20 billion in light of the fact that $6 billion was used during the prolonged, deep recession in the early 1990s?

The treatment of unemployment insurance funds at the moment is a ticking time bomb. If the minister is to be in this position come the next recession the general deficit will increase rapidly because of all the funds that have been devoted to pay the unemployed.

It is a two-edged sword. I do not believe it is in the interest of Canada to use an independent insurance fund for reducing general revenue in order to make it look good to avoid the necessary cuts all Canadians know have to be made.

I have another question for the minister. Following our earlier discussion, if I may summarize, there is $25 billion in extra tax revenue extracted per year at the end of this mandate according to his budget. That is exactly the amount by which the deficit goes down.

I ask the minister where the $14 billion in spending cuts went. He admitted it goes to paying more interest on the debt. Then I reminded him that was exactly what I expected him to say. He insisted it was not the government's fault that the $14 billion was going to service the debt.

I have the numbers here. When this government came into power the public debt was $508 billion. By the end of the expected cycle in this budget, the debt will be $619.7 billion. If calculated correctly, that is $115 billion in extra debt accumulated by this government.

That is exactly where the money saved from all the spending cuts is going, just to service the increase in the debt which was almost completely due to the fact that this government delayed the cuts. That is the point.

I have a question which I am sure the minister has been waiting for breathlessly. The government ran on the platform of jobs, jobs, jobs. The media and I have been looking and looking in this budget. We could not find any reference that was in all the preceding budgets as far as I know since the end of the second world war about what will be the level of jobs in Canada over the budget cycle and what will be the level of unemployment over the budget cycle. We found it very strange that a central promise of the election campaign was not even mentioned in the document which incorporates the centre, the focus of this government's program to deal with what it considers to be the most important issue.

I wonder whether the minister could tell the people of Canada why there was no mention of job targets or unemployment rates in the budget, or maybe I just missed that.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chairman, I have always had a high regard for Yale University. I thought it might have had a course in accounting that the hon. member might have taken at some point.

Let me remind him of a few numbers. He talked about a $17 billion deficit that would balloon to $22 billion. Let us look at that deficit the way those at Yale would look at it when looking at the U.S. deficit. If we look at the deficit in the same way as the hon. member did at Yale, the deficit would be $6 billion. It would be $6 billion if we did it the same way the Americans do their numbers. That is the difference.

That is so very close to a balanced budget that even the hon. member should stand up and cheer when he sees that number. All he has to do is go back to Yale and ask how the fiscal deficit is calculated down there. If he asked that question he would get the answer. If we did it the same way as it is done in the U.S., it would be $6 billion and not an imaginary $22 billion. That is the remarkable result of this government's efforts at deficit reduction.

The question was so long I have forgotten what the rest of it was.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Employment.

[Doug Peters, Liberal, Scarborough East, ON]

Employment. I read through the budget speech. I read through the budget papers. I could hardly turn a page without finding something that mentioned jobs. Jobs for the young people. Growth and jobs. It was all through the budget papers.

We promised jobs. It has not been an easy time. This country has only got about 600,000 new jobs since January 1994. Not bad, 600,000 jobs. There were only 140,000 in the last three months. It is not as many as we would like to have. We would like to have more than that and we intend to have more than that. I suggest that the hon. member just wait and see how this budget does have that impact.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Madam Chairman, I find it very interesting that the hon. member brings up the proud institution at which I received my Ph.D. some 35 years ago.

Unfortunately, or maybe fortunately, I have been infected by all the knowledge the bank where he used to work has broadcast. I used his documents in my classes at Simon Fraser University where I had been teaching for 25 years.

We are living in Canada, not the United States. That was a diversion of attention which I am sure the viewers of this debate will see right through. I did not get an answer to the question. The minister did not respond at all to the challenge that the deficit is $17 billion according to the budget. The same budget provides information which says that if the government stopped its accumulation of unemployment insurance fund surpluses, the deficit would not be $17 billion but $22 billion. He did not respond to that at all.

My questions about targeted employment levels, forecasts of employment and unemployment rates were not answered. I cannot even dignify his answer by saying indirectly it was a total smoke-screen. This is a breaking with historic precedent. It used to be a yardstick. When those government members sat over here on this side of the House, they constantly reminded the government on what the promises were on the unemployment rate and why they were not delivered.

I would ask the minister to respond to one other thing in this budget. The finance minister's father was responsible for introducing to Canada one of the achievements of which we was most proud, the universal access to social programs.

Universality of access to social programs. I looked it up in the dictionary. It is defined as receiving benefits without any questions being asked about the background of the individual. We all know that this is very important and efficient. It gets rid of the means test. It prevents people from hiding assets. It prevents all kinds of inefficient changes in behaviour and it increases the dignity of people who are enjoying these benefits.

The previous government introduced a slight violation of the principle of universality by saying to certain old age security recipients that they could get the money but if they were too rich, the government would take it back. Some people have called that a break in universality. I do not want to argue about that. One could interpret it this way and one could say that universality had already been broken by the previous government.

I think the hon. finance minister's father would probably turn in his grave if he knew that his son was responsible for breaking down the principle of universality. In the finance minister's proposed treatment of old age security benefits, eligibility for the first time since the 1970s will be based on income. A means test has been reintroduced. It is necessary to point out that it was this government which did this.

I would like to hear what the minister has to say to the people of Canada, all the strong supporters of members of the Liberal Party who went into the election campaign saying: "We have a record of looking after the welfare of people and universality is a sacred matter". What is the answer to the people of Canada who put their trust in the Liberal Party in relation to what it has actually done in this budget?

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chairman, first of all I would like to remind the hon. member that we are discussing a bill on borrowing requirements.

The reason I say that is that the number of $6 billion which I mentioned earlier, not this year's borrowing requirement but next year's borrowing requirement, is actually a borrowing requirement number. That is why I thought it pertinent to remind the hon. member that this was a borrowing requirement bill and not a budget. He will have ample opportunity under the budget legislation in committee to discuss all the matters he brought out today.

I would add that universality has been gone for some time with the income testing for the GIS. I think that was in 1988 or earlier.

It is very difficult for me to listen to the Reform Party say there is a need for universality and much more government spending, that a higher level of spending is necessary for social programs, when a little over a year ago that party suggested a slash and burn budget that would have affected these programs. The Reform Party would have taken money from medicare and social programs. The Reform Party would have ruined the social system. I find it very difficult to listen to the comments from the Reform Party.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Madam Chairman, the minister set the tone. When he made his introductory speech, he opened up the debate about the budget. He bragged about all the accomplishments in the budget. I have the right to respond to his bragging.

It is very clear the hon. member does not understand that the people of Canada are very unhappy about having voted for a party which said it would get rid of the GST, that it would respect universality, that it would not cut medicare. There were all kinds of promises of this sort.

When we knocked on doors these issues were brought up all the time. I felt very uncomfortable when I was confronted by constituents who said: "I am not going to vote for you. I am going to vote for the people who promised to get rid of the GST, preserve universality of access, will not cut transfers to the provinces".

Is that something we should take sitting down without reacting? The issue is credibility. What kind of credibility will the government have in the future?

There is constant reference to the fact that the red book promises are being fulfilled. Well, we have heard enough about the GST. It is time to pull out the promise that there would be no end to the concept of universality. Under discussion today is the government's budget, not what the Reform Party would have done.

What is relevant is the fact that we went to the voters and said: "We cannot act irresponsibly and promise the elimination of the deficit. We cannot act irresponsibly and say that the country's financial crisis is likely to be eliminated simply by economic growth" as was promised. Credibility is the issue. The government's broken promises are the issue. We are talking about the budget that delivers the core of the Liberal program for government in the next two years.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chairman, I know it is very difficult for the Reform Party when we are running at a 58 per cent approval rating and the Reform Party is running at 12 per cent.

I know how disturbed the Canadian people are with this government. They do not listen to the rhetoric of the Reform Party. They are not listening to the rhetoric of the Reform Party about all of the perceived items rather than real items.

The real truth is that this party has delivered good government and good, solid results, results the Reform Party would not have dealt with. We have handled our social programs with justice and fairness. We have made adjustments in those programs the Reform Party would not have even thought of. We have done this with care and kindness and with the fiscal result that we have met our targets again and again.

[John Harvard, Liberal, Winnipeg—St. James, MB]

Madam Chair, the hon. member for Capilano-Howe Sound was complaining about what he thought was an absence of reference to jobs in the finance minister's budget.

I submit it is because the hon. member's mind is in the past. In the old days when government was different people would look for large, so-called mega projects. Usually job numbers were attached to mega projects: 500 jobs, 1,000 jobs and so on.

What the member for Capilano-Howe Sound does not understand is that the economy has changed and the budgets have changed. The approach is much more sophisticated. For example, when we hear the finance minister talking about a reduction of 3 percentage points in interest rates, that means a lot of jobs. When the finance minister refers to more than a 20 per cent jump in trade, that means jobs. Every $1 billion in trade means 11,000 jobs.

To gain a fundamental understanding of the budget, one has to understand modern economics, the modern economy and modern government. I do not think the hon. member understands that. Perhaps he should go back to Yale and get a refresher course.

I ask the hon. secretary of state whether there is this new manifestation of jobs in the budget where something like a 3 percentage point drop in interest rates really does mean jobs.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chair, not only does a 3 per cent drop in interest rates mean jobs, it means there is more than that in the budget. Meeting our fiscal targets means the interest rates drop but there is more than that. There were jobs for young people. A technology fund will be set up. All of these things bring our budget to a modern economy in which there are not just jobs but useful, productive and interesting work for our young people and for all people in the country.

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

Madam Chair, it is not the Reform Party and the member for Capilano-Howe Sound whose thinking is in the past; it is the members of the Liberal Party whose thinking is in the past. They still believe it is up to the government to create jobs through job incentive programs.

History will show that the only real jobs that have ever been created in Canada have come from the private sector. The private sector has been telling the government to give it a break on tax levels, on the cost of doing business and on payroll taxes and it will create the jobs. In other words, get out of our face and get out of our pockets and we will create the jobs.

The minister said these jobs are all being created because trade has been increased. That may be true. We would not be getting half the trade business if the government had not gone to our trading partners and offered to finance the goods with taxpayer money in order to make the deals. Why is that? The cost of doing business is so high in this country that we are no longer competitive. We can no longer sell our products abroad unless we have government financing to help the deal along. Talk about being in the past.

I ask the minister whether he believes, yes or no, that real, long lasting, good paying, permanent jobs can come only from the private sector.

[Doug Peters, Liberal, Scarborough East, ON]

Madam Chair, of course they come from the private sector. They come from the private sector because this government gives the private sector an environment in which jobs are growing. That is the environment this government sets, not the environment the Reform Party would set.

The member complains about our social programs. Referring to the old age program, Solange Denis who shouted "goodbye, Charlie Brown" to Brian Mulroney but this is what she said about our budget: "No, I do not think it was used to attract people. I fully

approve of the finance minister's plan. I have always supported the Liberals anyway".