House of Commons Hansard #18 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was billion.
John Richardson LiberalParliamentary Secretary to Minister of National Defence and Minister of Veterans Affairs
Mr. Speaker, the job reductions that took place at Goose Bay had a positive intention.
It had everything to do with reducing costs because we wanted to make sure that our MOUs were signed by our allies. The project at Goose Bay generates $100 million worth of income for Goose Bay and Newfoundland; over 10 years it is $1 billion.
We did not let them go because the last day to apply for the public service reduction plan is April 1, which allows them to apply for this plan.
Jean Charest Progressive Conservative Sherbrooke, QC
Mr. Speaker, my question is for the Prime Minister and concerns the speech from the throne. You will recall that the government undertook, in the throne speech, to hold a federal provincial conference in the near future.
I would like to ask the Prime Minister today to tell us when the federal provincial conference will be held and what will be on the agenda. Is the Prime Minister ready to have the issue of manpower and the transfer of responsibilities to the provinces, including Quebec, put on the agenda?
Jean Chrétien LiberalPrime Minister
Mr. Speaker, I am now in the process of consulting with the provincial governments to find out what date would be the most appropriate for this conference. We are also discussing with our colleagues what should be on the agenda.
When the agenda is ready and the date set, I will be able to make an announcement in this House, but I do not think that that will be for a number of weeks.
Presence In GalleryOral Question Period
The Speaker
I draw the attention of hon. members to the presence in the gallery of Dr. Eberhard Brecht and Mr. Ruprecht Polenz, members of the German Bundestag and members of the Canada-Germany Friendship Group.
Jean Chrétien LiberalPrime Minister
Mr. Speaker, today I would like to pay tribute to the late Ernest Manning.
I had the privilege of knowing Mr. Manning when he was in the House and it is with sadness that I speak. He was quite a remarkable man and he had a very remarkable record of service to his church, to Alberta and to Canada.
He became the youngest cabinet minister in the Commonwealth at the age of 26. He served in the provincial government for 33 years, for 25 years as premier. He was radio host of Back to the Bible Hour for almost 50 years. It is no wonder that the people of Alberta came to know him and trust him.
More than any other politician, he was the architect of modern Alberta. He brought its finances under control, established the foundation of the provincial social services system, and ensured the development of the province's oil and gas industry which has been so vital to its prosperity. The results of his work are very evident today in a strong and prosperous Alberta.
In his eulogy, the member for Calgary Southwest mentioned that his father attended every first ministers conference from the day they were established by Mackenzie King until the beginning of the Trudeau administration. His commitment to Canada was never questioned.
I think it was this remarkable record of service that made Mr. Trudeau appoint him to the Senate. Mr. Manning understood better than most the way that Canada works. For 13 years he sat as an independent senator. Apparently he once said that a lot of people think senators are entirely preoccupied with protocol, alcohol and Geritol. Of course, Mr. Manning was not preoccupied with these matters. I had the honour to serve in Parliament with Senator Manning and he was always very conscientious in carrying out his duties.
Throughout his life he worked for a strong Alberta and a united Canada. He was a legendary figure in Canadian history and an outstanding model of public service.
We see very clearly that his legacy lives on in the work of his son. I know they were very close and this is a very sad loss for him.
On behalf of all members of the government, I extend our sincere condolences to the family of the late Ernest Manning.
I myself knew Mr. Manning as a senator. I even had the pleasure of speaking with him a few times. He was an exceptionally courteous man who enjoyed giving advice on request. He was not the type to dictate what we should do on a daily basis but, if we had an opportunity to talk to him and to ask him a few questions on his past experiences, he was always very courteous and eager to help. As I was saying earlier, Canada has lost a great patriot, a truly great Canadian.
Ray Speaker ReformLethbridge
Mr. Speaker, on behalf of my colleagues, I would also like to pay tribute to Mr. Manning, as I called him for many, many years.
In the annals of Canadian history, Ernest Charles Manning will be remembered as a statesman, a leader and a builder. Over the course of some 25 years as the premier of Alberta, he led Albertans from the poverty and destitution of the depression to the prosperity and affluence of today.
Inheriting a financially bankrupt treasury in 1935, he left Alberta debt free. Some 30 per cent of the budget of the Alberta government was cash in the bank when he left. That is a tremendous record and something we do not always see today.
At the time Mr. Manning took over in 1935, the bankers of the day were not willing to provide Alberta with money, nor was the Government of Canada. He had a very difficult time to start within that depression era. Presiding over the development of the oil and gas industry which reversed the province's fortunes, Mr. Manning made possible the economic, social and educational infrastructure which exists today in Alberta.
On the national scene he played a leading role in bringing the concerns of western Canadians to the halls of power in Ottawa. As the Prime Minister said very well, he participated in every federal-provincial conference from Mackenzie King to Pierre Trudeau and spent 13 years as a senator where he became the leading advocate for the reform of that institution. He has left his mark on our province of Alberta and our country Canada.
When I speak of Mr. Manning today, I pay tribute to the man himself, one whom I considered to be a teacher, a mentor and a very close friend. I had the honour and privilege of serving in Mr. Manning's government and cabinet for five years. The lessons I learned during that period of time remain with me today and will remain with me for the rest of my life.
There are lessons we would all do well to learn. Above all, they centre around three basic words: honesty, integrity and fairness. Mr. Manning stood for something at all times. Everything he did, every action he took was grounded in a very firm moral conviction.
Every decision he reached was in the embodiment of a fundamental principle. Mixed into that principle always was this element of fairness.
When groups would come to make presentations to us as a cabinet, he made sure that both sides were heard and that everybody was able to understand the problem. In the final analysis he was able to pick out of the conversation the key thing that had to be decided, then he would ask cabinet: "Is this what we are deciding? Is it fair and is it right for our people?" At that point we would make a decision and proceed. It was a very open, democratic process.
Every policy he brought forward in Alberta was sought to realize his goal of creating an environment in which each individual could have the freedom and resources to reach their full potential and make a contribution to society. A central characteristic of Mr. Manning was his strong ethical grounding, his sense of moral centre. It acted as his compass and the guiding means of his conduct in his government.
There was no room for favouritism in Mr. Manning's Alberta. There were no kickbacks, there were no grafts. It simply was not done. Even members of the business community who were very suspicious of social credit in its beginning came to respect him and to trust him. When he gave them his word, they knew it was good, and it was.
I remember many of our experiences together: the medicare discussions; the locating of the University of Lethbridge in southern Alberta; CPR's relocation in Calgary; meeting with the Metis people of northern Alberta; the paper on human resources development; the book on political realignment. I remember the one day in his office about a week before he resigned as premier when he sat back in his chair, pulled the right bottom drawer open and said to me: "There are many new things to do yet, Ray. I have a drawerful". His thoughts were always about the future and not on the past.
Mr. Manning, in his deeds and actions, set a standard by which all politicians are measured. A man of dignity and integrity, a devoted Christian and a loving father, he was a credit to his profession. Taken from us at the age of 87 he will be missed as a leader in our communities, missed by his family, by his son, by his province, by his country, but we are all richer, warmer and wiser for the great experience of having known him.
Michel Gauthier BlocLeader of the Opposition
Mr. Speaker, we all know how difficult political life can be. When a political figure disappears, it is only fitting to reflect briefly on the career of the deceased.
A political career spanning 46 years is very long and it certainly shows how much trust the people of Alberta had put in Mr. Manning.
What is impressive is the innumerable decisions that had to be made by this politician during his career, decisions which had an impact on the life of his loved ones and which were dictated, I am sure, by an extraordinary sense of duty and great respect for democracy.
Mr. Manning certainly was committed in the purest sense of the word. For all these reasons, the members of my party join me in extending our deepest sympathy to the leader of the third party, who was sorely afflicted by the passing of his father.
Going beyond political differences, we must bow down before great men and women and this, we always do. There is no doubt that, with a career spanning 46 years, including many years as premier, Mr. Manning was one of the great ones.
Deborah Grey Reform Beaver River, AB
Mr. Speaker, I would also like to share a few thoughts about Mr. Manning and some of the experiences I had with him.
I moved to Alberta from British Columbia in 1977 after Mr. Manning had gone out of power. All I knew was the incredible respect the name Ernest Manning had in the entire province of Alberta because of his history and his amazing political career.
When I first was elected to the House of Commons in a byelection on March 13, 1989, Mr. Manning's son, Preston, was with me in my campaign office. As one can imagine, we were pretty excited that night. Mr. Manning Sr. was down in Arizona and his son, Preston, phoned him. I think the conversation went something like this: "Dad, we won, we really won". He was so excited he said: "Put her on, I would like to talk to her".
I was a little nervous. My life had just been turned upside down already and then I got to speak with this famous Canadian. He said: "Hello, Deborah, this is Ernest Manning. I want to let you know we are thrilled that you just won the byelection. I do believe this is going to make some change in Canadian politics". That was an incredible moment for me when Ernest Manning knew my name and spoke to me on the telephone. It was a remarkable experience for me, one I will never forget.
Shortly after that I was passed the torch from one of the original Reformers, Mr. Doug Campbell, the former premier of Manitoba. I think about Doug Campbell, Stan Waters, who came to the Senate shortly after that, and Ernest Manning and the affect those people have had on my life. Of the three, Mr. Manning was the last to pass on. I have lost an incredible number of role models and heroes in Doug Campbell, Stan Waters and Mr. Manning. However, my life
is so much richer for having known them. They have had an incredible influence on my life.
In the spring of 1994, shortly after Lew and I were married, he was taking me to the Edmonton municipal airport for yet another trip to Ottawa. While we were saying our goodbyes and I was ready to get on the plane, Mr. Manning Sr. came up the escalator and around a post and we nearly crashed into each other. He was walking as upright and tall as he could walk carrying his briefcase. He was well into his eighties but was looking sharp and knew exactly where he was going.
When we realized we recognized each other he said: "Deborah, it is so nice to see you". He shook my hand and then looked at my brand new husband and said: "Lewis, it is so nice to see you". My husband said: "You too, Mr. Manning". We had a short visit and then he was on his way back to Calgary.
When he left I said to my husband: "Have you guys met before?" Lew said no. However, because we had sent a Christmas card to them, Mr. Manning, ages later, remembered my husband's name. That was an impression that will last on us forever. This was the kind of man he was.
He knew people because he cared about them. Because Mr. Manning had some sort of feeling for me and for what was going on in my life and that I was newly married, he took the time to memorize my husband's name. That was another moving experience for me which I appreciated so much.
In terms of his role modelling he was a man who integrated his strong personal Christian faith with his political career. I think that would stand to serve us all well, that those of us who have a strong Christian faith must never be ashamed to say yes, it is part of my political belief and I am not hesitant to share it.
I pay tribute to his wife, Muriel, today and to their son, Preston. Thank you for sharing your family with us. I know Preston has grown up in a very political and a very public home. I thank the Manning family, especially Mrs. Manning, Mr. Ernest Manning's widow. Thank you for sharing Ernest Manning with us.
Bill Blaikie NDP Winnipeg—Transcona, MB
Mr. Speaker, I would also like to pay tribute today to the late Senator Manning and on behalf of my colleagues in the NDP caucus express our sincere condolences to our colleague in the House, the member for Calgary Southwest, who was proud to call this distinguished politician, distinguished Albertan and distinguished Canadian his father.
It is interesting to note that the late Mr. Manning was born and raised in Saskatchewan near Rosetown. Had he not heard the call of Bible Bill Aberhart over the radio and enrolled in his school in Calgary at a young age, heaven knows what might have happened to his political consciousness had he stayed in that area. It was, after all, an area represented for many years by another distinguished Christian gentleman by the name Mr. J. Coldwell.
I say this by way of wanting to point out that many in the CCF and in the Social Credit had more in common than the fact they grew out of the dirty thirties. What they had in common, though they disagreed over implementation, was the insight attributed to former Alberta Premier Manning in a biography done of him that religion is something that should not just be taken down from the shelf on Sundays; that you cannot divorce spiritual values from the things of every day life and that therefore it is impossible finally not to mix religion and politics.
We in the political sphere are making spiritual judgments all the time and we would all do well to be instructed in that by honouring the life and memory of great Canadians like Ernest Manning who, like others of his day and generation, on the left and on the right, saw the reality of God as a decisive factor in their political deliberations.
Jean Charest Progressive Conservative Sherbrooke, QC
Mr. Speaker, I rise today to add my voice, the voice of my party colleagues on the Senate side and obviously that of the member for Saint John to all other members in the House to pay tribute to Ernest Manning.
He was a Canadian who had an enduring political career that in itself speaks to the values he espoused and also speaks to the values recognized in him by the men and women, Canadians all across the country, who were called from time to time to confirm and reaffirm their confidence in this great man.
He left an indelible mark on the country. From time to time Canadians may want to search their memories and look back on some of his views as we look to the future. For example, in 1981 he had his own views on the patriation process the country was confronted with. As we examine the situation we are in today there is no doubt there was some wisdom in the words he spoke at that time with regard to changes being proposed to the country.
Obviously his influence was beyond his own generation. Evidence is that we have today here in the House of Commons his son, the leader of the Reform Party, who has had some success, I am sorry to say for Conservatives in some regard, in his own political career.
I extend to him and to his family and to Mrs. Manning our very deep gratitude for having supported him, Mr. Ernest Manning, through those years. I extend our deep appreciation for his devotion to Canada and also our condolences at this time.
It may be of some interest to Mr. Manning and to all the Mannings and those who worked with the family from time to time to know that his influence went way beyond Alberta. Though I never had the honour of meeting him, I do have very fond
memories of his voice, something passed on from generation to generation through the magic of radio.
My other was a very devout Catholic. In our home in the kitchen after dinner in the evenings I remember very well her listening to the radio show of Ernest Manning. I still remember the jingle. I can still remember that voice and the words. She was a very big fan of Mr. Manning, although I should say for his ideas with regard to Christianity and its basic values.
Through my youth this voice was very familiar in our home in Sherbrooke, Quebec, thousands of miles away from wherever he was speaking. In that respect his influence has gone beyond the political forum into every area of our lives. We are appreciative of that.
Again, to Preston Manning and to his family we send our very deep condolences.
Gilles Duceppe Bloc Laurier—Sainte-Marie, QC
Mr. Speaker, could the Deputy Leader of the Government in the House of Commons tell us what the legislative agenda will be for the next few days?
Alfonso Gagliano LiberalMinister of Labour and Deputy Leader of the Government in the House of Commons
Mr. Speaker, first of all, on behalf of the government House leader, I wish to thank our friends opposite for their co-operation in preparing the legislative agenda for the coming weeks.
Tomorrow, we plan to begin consideration at report stage of Bill C-14 on transportation. Our intention is to continue debating this bill until it is passed, some time next week.
We will follow it with reference before second reading of Bill C-20 respecting air navigation. We will then call Bill C-7, the public works and government services departmental reorganization.
That will be followed by Bill C-9, the law commission bill. That will be followed by Bill C-19, the internal trade registration.
Depending on when Bill C-3, the nuclear workers bill, is reported from committee, we will enter it into the line-up for completion.
If time permits we will also call Bill C-15, the financial institutions bill; Bill C-11, the human resources development departmental reorganization; Bill C-18, the health departmental reorganization, in that order.
Our plan at this time is to begin business next Friday with Bill C-13, the witness protection bill, before resuming the list.
The House resumed consideration of the motion that Bill C-10, an act to provide borrowing authority for the fiscal year beginning on April 1, 1996, be read the second time and referred to a committee.
Borrowing Authority Act, 1996-97Government Orders
The Acting Speaker (Mr. Kilger)
Pursuant to order made Tuesday, March 19, 1996, the motion is deemed adopted on division.
Accordingly, pursuant to order made Tuesday, March 19, 1996, the bill stands referred to committee of the whole.
I do now leave the chair for the House to go into committee of the whole.
(Motion agreed to, bill read the second time and the House went into committee thereon, Mr. Kilger in the chair.)
Borrowing Authority Act, 1996-97Government Orders
The Deputy Chairman
Order. House in committee of the whole on Bill C-10, an act to provide borrowing authority for the fiscal year beginning on April 1, 1996.
Shall clause 1 carry?
On clause 1:
Doug Peters LiberalSecretary of State (International Financial Institutions)
Mr. Chairman, I have a few words to say to the bill. I welcome this opportunity to speak to hon. members on Bill C-10, the borrowing authority bill for fiscal year 1996-97.
Our goal once again is to have the borrowing authority in place on April 1, the beginning of the government's new fiscal year. This will ensure continued regular financing operations for the government.
All borrowing authority granted by last year's borrowing authority act, including the $3 billion non-lapsing amount, will be depleted by the middle of April. If this legislation is not in effect on time, it means that the government's funding requirements would have to be met by using section 47 of the Financial Administration Act.
Section 47 restricts borrowing to short term funds, and having to resort to these could easily be costly for the government and to Canadian taxpayers. It would expose the government to the additional interest rate risk implied by increased short term funding.
That is why it is critical that borrowing authority be secured as soon as possible.
Before I comment on the various clauses of the bill, it is appropriate to review our economic and fiscal progress. The Canadian economy has shown a mixed performance over the past couple of years. Growth in 1994 was very strong at 4.6 per cent for the year as a whole, again reflecting both a strong U.S. recovery which fuelled a surge in Canadian exports and the positive response of domestic demand to declines in interest rates.
In 1995 however, U.S. interest rates rose sharply to contain possible U.S. inflationary pressures. Higher U.S. rates spilled over into Canada in the form of both higher Canadian rates and slowing growth in Canadian exports. Canadian GDP rose only 2.2 per cent, a number which masks really the extent of the slowing. From the end of 1994 to the end of 1995 the Canadian economy only expanded by .6 per cent.
The weakness in 1995 in both U.S. and Canada has set the stage for stronger growth in 1996. Inflation pressures in both the U.S. and Canada have declined. Inflation in Canada remains below the midpoint of the 1 to 3 per cent target band that we set with the Bank of Canada. It is lower than the U.S. rate and the best domestic numbers in 30 years.
Interest rates also fell sharply. Short term rates are down 3 percentage points from the 1995 budget and the spread with U.S. short term rates has been eliminated. Indeed this morning there was a negative spread. This decline in Canada was aided by growing evidence that the Canadian government is getting its fiscal deficits under control.
Signs of stronger growth in 1996 are now becoming evident, particularly the recent strength in job creation in both Canada and in the United States. Low cost pressures and good productivity growth have translated into a sharp improvement in Canada's competitive position.
The trade figures show the results: a record merchandise trade surplus of $28.3 billion in 1995 and a current account deficit that fell to only 1.7 per cent of GDP, its lowest level in 10 years and an improvement even greater than that in the last quarter of last year.
The 1996 budget is the third milepost on the government's journey to securing fiscal stability in a vibrant, dynamic and competitive economy for Canadians. The first two budgets implemented unprecedented reductions to program spending which are structural in nature and extend through the medium term planning horizon.
With these measures, our 1995-96 and 1996-97 deficit targets bringing our deficit down to 3 per cent of GDP are secure despite the lower GDP growth than we had originally assumed. Contributing to this progress is the fact that interest rates are also significantly lower than projected. This has neutralized the adverse effects of lower growth on the deficit.
The measures in the 1996 budget consolidate and extend those in our first two budgets and further contribute to our economic and financial objectives. We have maintained our focus on reducing program spending. There are no tax rate increases in the 1996 budget.
Expenditure cuts amount to $1.9 billion for 1998-99 and build on the reductions of the previous two budgets to keep program spending on a downward trend. Together the three budgets will contribute $26.1 billion in savings for 1997-98. This action together with the reform of the employment insurance program will ensure we hit our new deficit target to bring the deficit down to 2 per cent of GDP on the way to a balanced budget. Let me now turn to the various clauses in the bill.
Clause 2(1) requests borrowing authority in the amount of $18.7 billion for the fiscal year 1996-97. This amount is required to meet financial requirements of $13.7 billion, to cover exchange fund account earnings of $1 billion, and to provide a $4 billion non-lapsing amount.
The $4 billion non-lapsing amount represents a $1 billion increase from previous years. Since 1986 the non-lapsing amount has been $3 billion. It was raised in that year from $2 billion. This increase is a prudent measure which will provide the government with the ability to manage foreign exchange requirements more effectively in light of the increased market flows and volatility in recent years. It can either be used during the course of the year to manage contingencies such as unexpected foreign exchange requirements, or it can be carried forward to the next year if the next year's borrowing authority is not passed before the beginning of the next fiscal year.
Clause 2(1) also ensures that the borrowing authority provided in this bill may only be used after the 1996-97 fiscal year begins.
Clause 2(2) ensures that any portion of the $3 billion non-lapsing amount granted by the Borrowing Authority Act, 1995-96 that is used in 1996-97, the next fiscal year, will be deducted from the 1996-97 borrowing authority. This prevents any use of the 1995-96 non-lapsing amount effectively adding to the borrowing authority for 1996-97.
Clause 3 states that all unused borrowing authority granted by this bill in excess of $4 billion will be cancelled on March 31, 1997. This allows the $4 billion non-lapsing amount to be carried forward into 1997-98.
Clause 4 stipulates that for the purposes of calculating borrowing authority usage, the effective date is April 1.
Clause 5 deals with the cancellation of unused borrowing authority from 1995-96. If this bill comes into force before April 1, any unused borrowing authority granted by the Borrowing Authority Act, 1995-96 is cancelled effective March 31. If the bill comes into force after April 1, the $3 billion non-lapsing amount granted by the Borrowing Authority Act, 1995-96 can be used in the period between March 31 and the date this bill comes into force.
Borrowing authority is a normal part of the operations of the government. It is important for the smooth functioning of the government borrowing program that authority be in place at the beginning of a new fiscal year.
I thank hon. members for their co-operation in agreeing that this bill pass so quickly. I am now open for questions.
Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC
Mr. Speaker, as I listened to the secretary of state explain his borrowing authority bill, I was very touched, but not in a positive way.
Contrary to what the hon. member just said, what is costly to the state is not the delay in passing this bill but, rather, the federal government's inability to make decisions that should have been made since it took office. It is also the lack of a true and sound management of public finances, with a determined effort to eliminate waste. It is the inability to make decisions that should have been made two and half years ago, so as to put our fiscal house in order with a real tax reform and not the smoke and mirror scheme proposed in the last budget.
It is also the inability to develop policies that would truly stimulate employment. All this is costly to the Quebec state and to taxpayers. What is also costly to the Canadian state is to have a government that does not do its job in its fields of jurisdiction and, moreover, continues to want to interfere in areas which come under provincial jurisdiction. This is costly to the Canadian state, as well as to the taxpayers of Quebec and Canada.
Earlier, the opposition leader lambasted the government because the Prime Minister will not make a decision and comply with Quebec's unanimous request concerning manpower training and active employment measures. The Prime Minister refuses to comply with the wish of 800,000 Quebecers who are waiting for a true labour market policy to rejoin the workforce, earn a living with dignity.
All this is costly to the Canadian state, but it is particularly costly to those who have been paying since the finance minister took over, and I am referring to the unemployed and the poor in our society.
The government is asking us to authorize it to borrow $18.6 billion on behalf of Quebecers and Canadians, while it is plagued by chronic incompetence. This is asking a lot from the official opposition. We will, therefore, oppose this bill.
Herb Grubel Reform Capilano—Howe Sound, BC
Mr. Speaker, it is my understanding I have about 20 minutes to question the minister on this budget. I would like to ask a number of precise questions which will require precise answers. I do hope that when I ask my first question the minister will have the courtesy of not taking the remainder of the time to prevent me from asking other questions. I hope we have this understanding, otherwise I will be forced to give a speech which would not be particularly productive.
I know how responsive, intelligent and well informed the minister is, especially since the Deputy Minister of Finance is sitting next to him and can help him with technical issues.
I will begin with one of the most puzzling treatments in this budget, the issue of the revenues gained from the unemployment insurance fund. We all know that the unemployment insurance fund was set up as an independently functioning system. The requirement was that during periods when the economy had slackened there would be an opportunity for the revenues to be smaller than the expenditures and for it to run a deficit. The cumulative deficit would then have to be eliminated when there was economic prosperity. Over time this account is to balance.
The question arising from these budget plans is that since 1993-94, the beginning of the mandate of this government, projecting forward to 1997-98, the end of this budget's cycle, there is a projected cumulative surplus in this fund of $23.1 billion. I am not entirely sure about the treatment of the accumulated deficit in the past, but it was clearly $6 billion which I think will come to $17 billion but I believe some of that $6 billion had already been repaid earlier. Therefore, we ended up with, let us say, a planned surplus of $15 billion. That $15 billion is clearly a very large sum relative to the total expenditure of the entire fund. In fact it covers practically one year's outlay.
I would like to point out one other fact. Between 1996-97 and 1997-98 budgetary revenues of the Government of Canada are planned to increase by $6 billion. When these are broken down we find that $5 million of that comes from the surplus generated by the unemployment insurance system. In other words, this is an improvement in the deficit, a moving toward the target of 2 per cent of GDP being financed to the tune of more than 80 per cent out of surpluses generated by the unemployment insurance system, a surplus which is not by statute supposed to go toward financing general deficit.
Does the minister have in place any rationale for explaining why suddenly the unemployment insurance system should be made into a cash cow to improve the general deficit when clearly the legal system is, the system of the unemployment insurance system is, that it be balanced over the long run? What criteria is he using in deciding when enough is enough?
Doug Peters Liberal Scarborough East, ON
Mr. Chairman, the hon. member did not give me a long question. I thought it was going to be a 55-minute lecture from the professor. I will be brief in my reply.
The unemployment insurance system is there to protect the unemployed. One of the methods used to protect the unemployed is to build a substantial surplus so that during the next recession, and there will be one some day as both the hon. member and I know, it will be unnecessary to raise the premium rates because there were insufficient funds. That is the reason for the cushion.
The hon. member mentioned revenues. On revenue increases I would refer to the fiscal plan, page 106. The total budget in revenues went up from $130.6 billion to $135 billion in 1995-96 and 1996-97; almost $4.6 billion. The unemployment insurance contributions went up 3 per cent. I would suggest to the hon. member that is considerably less than 10 per cent.
Herb Grubel Reform Capilano—Howe Sound, BC
Mr. Chairman, I did not hear about any systematic objective measure being put forward for the workers who are complaining about this regressive job-killing tax. When is the government going back to the system that existed since the inception of the unemployment insurance system, namely, that the premiums would be lowered in order to limit the accumulation of funds. How big exactly does the minister think this fund should be allowed to grow?
Doug Peters Liberal Scarborough East, ON
Mr. Chairman, the fund grows for two reasons. First, there are fewer payouts of the fund. In other words unemployment is down.
Second, it grows through contributions. The contribution rate is set each fall in conjunction with the Minister of Finance and with the Minister of Human Resources Development. It will be set this fall so I cannot tell the member how big the fund will be in the future without knowing how many payments out there are going to be.
I do know that we need a substantial cushion because last time premium rates had to be raised in the middle of a recession. That is the wrong thing to do and that must be prevented in the future.
Herb Grubel Reform Capilano—Howe Sound, BC
Mr. Chairman, it is just nonsense when the minister says that he does not know what the income and outgo will be because the best he can make is in the budget. The best guess is that by the end of this budget cycle there will be a cumulative surplus of $25 billion. I am not be right on $25 billion. Maybe it is only $15 billion.
I ask the minister again, will it be $15 billion? Will it be $20 billion? Will it be $50 billion? At what point will the government go back to the tradition of the past and say the accumulation is large enough and lower the contribution rate? What criteria is the minister offering? What hope can he hold out to employers and highly taxed workers? When can we expect this cash cow to stop being used for reducing the general deficit?
Doug Peters Liberal Scarborough East, ON
Mr. Chairman, that is interesting. We have lowered the premium rates twice now. Just for planning assumptions there is a premium rate in that number and that is a lower premium rate than there is now.
The cumulative surplus in the unemployment insurance fund will only be about $10 billion by the end of 1997. That number is subject to change because a different premium rate could be agreed on than the one that was used for planning assumptions in the budget. If the planning assumptions unfold that is the number that will be affected.
Herb Grubel Reform Capilano—Howe Sound, BC
Mr. Chairman, I give up. I am obviously not going to get an answer that I think the workers and employers of Canada want to know. What will be a target for the accumulation of those funds? I never get an answer to that question.
I would like to turn to another one. Between 1993-94 and 1997-98 the deficit in Canada will have gone down by exactly $25 billion. I congratulate the government for this achievement. However, I find when I look at the extent to which revenues increased in Canada, including those coming somewhat questionably from the unemployment insurance fund, revenues during this period will have also increased $25 billion. Part of that increase has been taking place as a result of 22 separate and different tax increases.
In other words, the government over its mandate is planning to reduce the deficit by an amount exactly equal to the amount of increased taxes extracted from the people of Canada.
Whenever I tell this to Canadians they say that they are horrified. They say: "What happened to all the spending cuts that the government has undertaken that are hurting me so badly?" I say: "I looked in the budget. There were $14 billion worth of spending cuts". They say: "I don't understand this. What happened to those spending cuts? How come they did not result in a lowering of the deficit? Where did it all go?"
Please answer to Canadians what happened.