Mr. Speaker, I am pleased to rise in this debate on the latest federal budget, which smells suspiciously like an election budget, because the measures it contains are not particularly heavy or harsh. We could even say the budget was a sort of pacifier for Canadians, except perhaps for the cuts to the dairy subsidies-a flagrant injustice to Quebecers and milk producers.
Apart from this injustice, the latest budget could be called an electoral budget to mollify Canadians, in preparation for elections this fall or next spring perhaps. The most difficult measures have already been put into effect, in the previous two budgets. When the Liberal government was elected three years ago, the government was widely known to have a big problem, that of the debt and the deficit. They have reached $550 billion and have even been predicted by department and government statistics to go over $600 billion by the year 2000.
It is a huge problem. It is Canada's major problem, which the Liberal government undertook to resolve. It is so serious that Canada has the highest debt in the world in terms of its gross domestic product apart from Italy. Canada has already been warned of the precariousness of its position by the International Monetary Fund. There are leaks everywhere. Technically, we could even say that Canada is bankrupt, so to speak.
This is all to say that the problem of the deficit and the debt is extremely complex, severe and serious. What have the Liberal members done since their election three years ago? Not much. They could have done a lot. They could, for example, have reduced the number of senior officials, because there are a lot of them and their salaries are very high and their expense accounts substantial. There is a lot of waste here.
The government has decided to reduce the number of public servants by 45,000, mostly at the lower and middle levels. Normally, some 15,000 public servants retire every year. This certainly does not qualify as a major effort to reduce the size of the public service. The federal government could have cut its spending or at least contained its losses.
As a former member of the public works committee, I know that there are many loopholes for federal funds to slip through, contracts being one of them. Some $10 billion a year is spent on contracts. There is a great deal of abuse and waste in this area. So far, the government has not done much to close these loopholes.
Even the auditor general's numerous recommendations were not taken into consideration in the government's previous budget measures. Senate spending was not cut. Senators' pay could have been reduced to $1 a year rather than the thousands of dollars they receive for doing nothing. The Senate costs Canadians $50 million. This is a rather shameless waste of Canadian taxpayers' money.
The government could have made significant cuts to its defence spending. DND's budget exceeds $12 billion a year. The Somalia affair and other recent events clearly show that DND is not the most effective of federal government departments. Had the Liberal government been seriously committed to reducing the federal debt and deficit, it could certainly have cut the defence budget by several billions of dollars.
It could have tightened up tax measures for corporations. As we know, tax evasion in Canada represents between $3 billion and $4 billion. Corporations shelter their profits in countries like the Caribbean islands to avoid paying taxes. Canada's losses due to tax evasion are estimated at $3 billion to $4 billion. The federal government did not act in this area either.
Another option would have been for the government to crack down harder on the banks. Last year alone, banks made $5.2 billion in profits, record profits, but this government, the Liberal government, collected from the six chartered banks something like $100 million over two years, which represents less than one per cent of their net profits.
The government could also have imposed restrictions or made other changes to family trusts. Again, this is an especially interesting case, in that family trusts benefit the wealthy, Canadian families which are fabulously rich. The Minister of Finance himself is one of the fabulously rich Canadians who can invest their net profits in family trusts to avoid paying taxes for generations and generations. Because of such trusts Canada's wealthiest families avoid paying taxes altogether.
It is estimated that taxation is avoided on nearly $100 billion through family trusts. The federal government could have collected taxes on family trusts to help resolve its very serious debt and deficit problem.
I have just listed nine measures this government could have taken to reduce its debt, but it did not see fit to act in those areas. Instead, the government decided to act in two well-known areas. It is worth repeating because it reflects the basic thinking of this Liberal government. It very clearly shows that, in Canada, the rich, the wealthy are spared while the most vulnerable are hard hit.
The only two measures taken by this government to reduce its deficit and its debt were to cut transfer payments to the provinces by a few billion dollars, some $7 billion, by the year 2000. As we know, these transfer cuts will affect education by reducing funds available for education purposes. This means that Canadian youth are directly affected. Health transfers are cut, which means that the sick will be affected.
The other measure soon to be announced concerns changes, cuts to old age pensions, which, as we already know, will affect mostly senior women. Cutting transfers to the provinces is a measure designed to leave the provinces holding the baby by giving the impression that they are the ones making cuts.
The measure to be taken in another area, namely unemployment insurance, is perhaps the most outrageous measure this government has ever taken. It is actually asking the unemployed to contribute to the debt reduction effort. Nothing less. Since 1990, the federal government has not contributed a single dollar to the UI fund. The money comes from the contributions of workers and employers. The federal government does not contribute one penny to the fund.
Last year, the federal government took out about $5 billion from the UI fund. It will do the same this year and next year. Over that three-year period, $15 billion will have been taken out of the UI fund and used to reduce the federal government's debt.
This is a disgrace because it is basically a misappropriation of funds. The money in the UI fund should be used to provide training programs for the jobless, but the government has other ideas. This Liberal government is dishonest to the point of reducing the amount that the unemployed can receive, setting tougher eligibility criteria so that fewer people will qualify for UI benefits and, in addition to that, misappropriating money from the UI fund and using it to reduce the debt.
This is a dishonest and unfair measure which is tantamount to a fraud. The government is defrauding those who contributed to the fund, namely workers and employers. It is purely and simply a fraud. That money was to be used for the benefit of the unemployed and to provide training for workers. Instead, this government is using it to reduce its debt.
Of all the initiatives that it could have taken to reduce its debt and its deficit, the government opted for two measures which mainly seek to get money from the most vulnerable members of our society, namely the unemployed, the sick, young people and women, while protecting rich people, family trusts, banks and corporations.
In conclusion, this series of measures spread over a three-year period clearly show the spirit of that Liberal government, which seeks to spare the rich and to hit the most vulnerable ones in our society.