Debates of April 15th, 1996

The House resumed from March 18 consideration of the motion that this House approves in general the budgetary policy of the government and of the amendment.

The Budget

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, I will be dividing my time with the hon. member for Lanark-Carleton. It is a privilege for me to speak to the 1996-1997 budget. If I can make some small contribution to the debate-

[An hon. member]

It will be small.

[Julian Reed, Liberal, Halton—Peel, ON]

My hon. friend from the Reform Party is alluding to the fact that my contribution will be small, and I agree, but it will be a contribution of some use.

I will dwell a little in the history of where we were, how we got to be the way we are and where we may be going. It is necessary to put this budget and previous budgets into of context to address the financial situation of the country.

In my previous incarnation as a member of the provincial legislative assembly in Ontario, I remember deficit budgeting in its infancy. Every province was guilty of deficit budgeting, as was the national government and virtually all governments in the western world.

One of our senators has described that era as one of mutual seduction, when it was a very popular thing to believe that money came from government; that somehow or another there was an infinite well which could do almost anything.

The political stripe of the government of the day really did not matter. As was described, it was simply a case of mutual seduction.

By the time the government changed in 1984 the national debt had risen to $166 billion, over a period of 14 or 15 years. Then in the following eight years the national debt climbed from approximately $166 billion to $400 billion.

There was a realization during those years that this could not go on indefinitely, that a halt had to be called, and yet there seemed to be an absence of political courage to do something until we were on the edge of precipitous financial situation not only in the country itself but in each province. Every province has gone through the same experience, as my colleagues will remember.

In 1993, when the Liberals came to power, there was a feeling of frustration, a feeling of anger among the voting population and a feeling that government was somehow incapable of getting hold of the finances of the country. Expectations were low. It was a case of whether this ship could be steered through rough waters to safe harbour.

We were very fortunate to have the gentleman who is the finance minister at the present time appointed to that position. I think it was a cup that he might rather have passed by because the position of finance minister in this country is very often the kiss of death politically.

He set out on a course and he stated his course clearly at the beginning. He would take the economy in two year short term projections with a goal ultimately of getting rid of the deficit, paying down the debt, and certainly beginning with that portion which is held offshore.

It was a recipe that some people felt could not be achieved because previous finance ministers had continuously failed to achieve the targets they had set out. My honourable friends will recall previous finance ministers as much as $10 billion off their targets.

When our finance minister began this quest there was a lot of scepticism that he would achieve it, but achieve it he did and exceed it he did. Then he brought in the next budget, and achieve it he did and exceed it he did.

Today we thankfully head down that path of reduced deficits. I am not prone to quote other people's writings when addressing the House but I think an article in the Ottawa Citizen from April 13 is worth noting: ``The federal government appears to be sitting pretty

on its deficit target for the fiscal year just ended. The finance department said Friday the deficit for the first 11 months of the year was $23.2 billion, down $4.6 billion from the same period in the previous year. The finance minister set a deficit target of $32.7 billion for the year ending March 31, 1996".

I know some of my friends in the Reform Party feel this target or this goal is spread out too far. I can tell my hon. friends that had we not done that, had we took the slash and burn direction the Reform Party wanted we could have precipitated a recession of disastrous proportions. It was a matter of walking the tightrope and balancing the situation, moving toward the targets but at the same time not throwing out the baby with the bath water.

What has that accomplished? There is a renewed confidence from the international community in Canada today. Canada is now poised for the greatest growth of all the G-7 countries. Sometimes we tend to look inward too much and we do not look out to see ourselves as other countries see us. It is useful to do that from time to time. Then we can get a picture of where we stand in relation to the people we trade with, to the people we compete with, to the people who pay their taxes in their country, and so on.

In terms of taxation I know we all feel we are taxed excessively in Canada. If we compare ourselves to other members of the G-7 it is not exactly so. There are countries whose levels of taxation, especially income tax, are even higher than those in Canada.

I would be the last person to suggest we should keep a high tax regime and I will be one of the first people to recommend to the hon. Minister of Finance that once the targets of zero deficit are achieved and we begin to pay down the national debt that it reflect in a sharing of that good fortune with the shrinking of taxation. The freeing up of money will be one of the essentials for our future.

Now that we are at the point of a deficit of 3 per cent of the gross domestic product, beginning with 5.7, it now means we are approaching that point at which our growth rate is greater than our deficit. That means the deficit can be paid down more quickly now than it could initially. That ratio is very important. However, it is important to remember that what we have tried to do is have a fair and balanced approach to what we are doing, and I am sure we have succeeded in the minds of most Canadians, although not in the minds of everyone.

We have deliberately tried not to leave segments of society out in the cold but we have tried at the same time to impose a balanced responsibility on every citizen so that we are all sharing the load. After all, we all created the load in the first place. For those of my colleagues who are probably young enough to benefit from certain kinds of government largess, we are now in a position where we have to make it right.

[Jack Ramsay, Reform, Crowfoot, AB]

Mr. Speaker, I appreciate the spirit in which my hon. colleague has couched his remarks. He is a fine gentleman but I surely take issue with some of his comments.

The member talked about the seduction of governments which led us to this debt. To me that is absolute nonsense. Every family, every organizational group whether it be a church or community organization and every business in this country knows that we have to live within our means. They have done that for the last 25 years while this and previous governments have sunk this country into an enormous debt hole.

We talk about seduction. I think it is clear in the minds of millions of Canadians that it was a simple buying of the Canadian vote in election after election. That was the difficulty they had in pulling away from that kind of overspending and government waste.

We look at whether or not this government could have reached a balanced budget far earlier but in fact it has not even set a date for that. All we have to do is look at the provinces the hon. member referred to. All have placed themselves on track for a balanced budget. Provinces such as Alberta, Saskatchewan and Manitoba have reached the point where they are now in a position to debate what they are to do with the surplus. They are deciding whether to reduce taxes or to plug some leaks in some of their programs through further expenditure of money and so on.

We are now approaching a debt of $600 billion. At the present interest rate, it appears that our interest payment on that debt is going to be somewhere near $50 billion a year.

I would like my hon. friend to address that issue. Can we deal with a $50 billion interest payment per year and still protect our social programs including our transfer payments to other provinces?

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, I would first like to respond to the question of seduction since we are both here seducing each other. I want to reinforce the fact that it was an era of mutual seduction. It worked both ways. I will leave a little story with my hon. friend to show an example of that.

In 1977 I ran in an election in Ontario. One of the issues my party brought to the fore in no uncertain terms was the deficit in Ontario at that time by the Tory government. We made speeches in the House prior to the election being called on the subject of government waste, excessive government spending, the largesse that was going on hither and yon which was piling up and accumulating the debt.

When we got into the election my leader hammered this message out for the first couple of weeks until the premier was asked about

the comments that were being made. He answered the reporters with two words: "Dr. No". That was the end of it.

[The Deputy Speaker]

I am sorry to interrupt my friend. Time has expired.

Unfortunately, there is no time left for the hon. member for Bourassa to ask his question. Resuming debate.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, it is a pleasure to make some comments on the March 6 budget of the government.

As I enter the House each day I like to look at some of the Canadians who come to this place. I wonder what they are thinking about when they come here. I wonder if they are as much in awe of this place as I was when I came to the House, to think of the things that happen in this place. I see young people, grade school children who have come for a visit. I see some older children, parents and grandparents. They are Canadians.

Like every member of Parliament I would like to be sure when I speak in this place, that no matter what the age might be of Canadians who are listening to the speech in the gallery, they will think that something good, productive or constructive was said. From time to time statements are made in this place which are more or less one sided. It makes me think of the cliché that if one is not part of the solution, one must be part of the problem.

During the debate we have had on the budget there has been a lot of talk about Canada's national debt which is about $600 billion. It is not an amount which people are insensitive to. No one in this place is insensitive to it. This amount was accumulated over the last 25 years. It reflects the amount of money Canadians took out of the system more than they put in. It is the amount of money we contributed to improve the health care plan and social programs in this country. In that accumulated sum, $350 billion of that is benefits to Canadians.

Governments do not have money. Governments manage the money of Canadians. That $350 billion has grown as a result of interest and compound interest. The balance of that $550 billion to $600 billion of national debt represents interest.

It is in our best interest-excuse the pun-to look at ways we can get our fiscal house in order to not only bring the deficit down but to eliminate it, the shortfall of revenue over expense every year. We have to get to the position where we are creating a surplus so that the surplus can be used to discharge that long term debt.

If Canada had a balance sheet in which all its assets and liabilities were disclosed, we know the liability would be a long term debt of some $600 billion. However, the Fraser Institute and the United Nations have said that Canada is the second wealthiest country in the world on a per capita basis. The reason they can say that is that Canada has a wealth of assets.

According to the Fraser Institute, with our resources excluding land value, Canada is worth about $3 trillion. There really is a dowry or an equity in this country. The money we owe to foreigners and other Canadians for the national debt is not just money that was given away. It was invested in this country. It was invested in our people, our youth, our health.

I see the health minister. I know Canada's health program is the strongest element within Canadian society which holds the country together. It creates the unity within this country and will keep the country united. We have a strong health care system which we are committed to. In good times as well as bad we will not compromise the five principles of the Canada Health Act.

Confidence and stability are the principles which must be reflected in budgets. I hope the people who come here and who listen will feel that in recent years Canada has demonstrated a stability within its affairs, that government has generated a level of confidence, that the right things are happening.

When this government came to office the amount of deficit represented something like 6 per cent of our GDP. The finance minister in his first budget brought it down to 5 per cent of GDP. In the next budget he brought it down to 4 per cent. In the current fiscal year which ends on March 31, 1997, it will be down to 3 per cent. The last time the finance minister addressed the issue of the long term outlook for the deficit he said that in the subsequent year it would be down to 2 per cent.

We are so very very close to delivering a balanced budget. It is something we want to do and I do not think there is disagreement on that. The only disagreement is over the velocity at which it happens.

Some would suggest we have to balance the budget at all costs regardless of the impact on seniors, regardless of the impact on health care, regardless of the impact on jobs and youth. I do not agree. Our budget has to be a compassionate budget. It has to be responsive to the important needs of Canadians, and it has to be done in a fair and equitable way. Are there spending mismanagement or problems in a corporation? Of course there are. In a government? Of course there are. There are always things we can improve upon. We have to look for the things we have improved upon.

I want to talk a little about the national debt because it is not in isolation. There are assets and good things in this country which we have not invested in. They will be with us and are for our children in the long term.

I say to all the young people: Canada is the best country in the world, one of the richest countries in the world and it is going to stay that way. Canadians have demonstrated that we have the know how, that we can operate in a global economy, that we can act responsibly and that we can work together in a proud, generous, tolerant and prosperous nation. This is what makes the United Nations look at Canada and say that is why we are the best country in the world.

Seniors are a tremendous asset to Canada. They led us in bad times through the depression. They led us through the war times. They led us at times when we needed the help. The Prime Minister has said on many occasions that we will never, never abandon Canada's seniors.

In his speech on March 6 the finance minister said: "We believe that the right to a secure retirement should be available to all and not become the preserve only of those who are well off". That is an important commitment.

The seniors are affected in this budget by the creation of what is called a seniors benefit. It is a replacement for the current benefits for seniors, including old age security, the guaranteed income supplement and the age and pension income credits. It is a single tax free benefit to begin in the year 2001.

Some of my constituents have asked why 2001. The important aspect of that is it is going to take time to phase in and allow people to arrange and manage their affairs so that when they do retire they have had an adequate opportunity to make provisions for all their needs.

The Prime Minister committed not to reduce the pensions of today's seniors. The plan we have honours that commitment and goes well beyond it. Canadians who were 60 years of age and over on December 31, 1995 and their spouses whatever their age are guaranteed to receive pensions amounting to no less than previous entitlements. That means they are going to have an opportunity to either stay under the existing plan or go under the new seniors benefits. That is being sensitive to seniors. Many will receive more under the new plan. GIS recipients will receive $120 more a year and seniors will be able to choose the benefit that maximizes their pension.

Most future seniors will also be better off because the new system targets higher benefits for those with lower incomes. Seventy-five per cent of single seniors and couples will receive the same or higher benefits and nine out of ten single senior women will be better off.

The seniors benefits will be fully indexed to inflation and will treat senior couples equally through separate equal cheques for each spouse.

There are so many good things about the budget I would like to talk about but my time is coming to a close. To finish, I would like to say a little word to the family. I spoke on Bill C-10 not too long ago. During that speech I said that if the family is strong, the deficit will be gone. I urge my colleagues to work with me to consider ways in which we can improve the tax status of families that stay together and stop worrying about the tax benefits for those who decide not to stay together.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, both my hon. colleague and the speaker before him have stated that eliminating the deficit is one of this government's priorities. I agree. But I cannot, unfortunately, agree with the procedure, the mechanisms and the means used to accomplish this.

To me, the social costs of eliminating the deficit are unacceptable: 45,000 public servants laid off, cuts made to social programs, including health and pensions. Having said earlier that you believed that seniors represented an important segment of our society, why are you making more cuts?

The most unacceptable are the cuts to unemployment insurance. There is a $5 billion surplus, and this is not tax money, but contributions by workers and employers. How can there be any justification for using this money, which belongs to businesses and their workers, to eliminate the deficit? Does this not pose a problem of ethics and legitimacy? Does this not represent a misappropriation of funds which have been put in place by legislation not to solve a deficit problem but to provide benefits to the unemployed? That is my question.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I understand the member's comments and his preamble. He really got down to employment insurance reforms.

The word insurance has not been operative in the past. It is an insurance plan. That means premiums should be paid into the program by all who participate in the plan and be sufficient to cover the benefits paid out. It has not happened in the past. It is not sustainable for the future. Change is necessary.

The member is part of the problem, not part of the solution. I would like to hear from him how the system might be improved so that it will be an insurance system which is not a burden on Canadians who do not draw on the plan. We all participate and support the plan. My wish is that the one million unemployed Canadians will get jobs and never, ever have to use employment insurance benefits.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, appreciate the awe that the member and all Canadians feel for this place. However, what governments have done and the irresponsibility they have shown in handling taxpayers' money causes me to feel disdain for this place.

Governments have been totally irresponsible. Finance ministers since the early 1970s have said that they realized that the deficit must be dealt with. John Turner in 1975 said: "I come now to specific measures. None is more important than the control of public expenditures".

When the Prime Minister was finance minister in 1978 he said: "Significant reductions in deficits can be expected". They did not happen. Many previous finance ministers promised to deal with the problem of overspending. It did not happened. Canadians cannot feel awe for this place with these kinds of actions on the part of governments when dealing with taxpayers' money.

The member also spoke about the trillions of dollars in assets that Canada has. That kind of thinking is terribly upsetting to me. In Mexico assets meant very little when it did not deal with its overspending problem. The United States took over its oil reserves for the next number of years because Mexico needed the money. The United States along with other countries through the International Monetary Fund provided the money.

This finance minister, with the ever growing interest payments on the debt increasing to $50 billion, has not dealt with the problem.

[The Deputy Speaker]

I think the member has received a question. Briefly please, he has about one minute.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I repeat, there are people who are part of the solution and people who are part of the problem.

We can spend all day long talking about history. We are here to talk about the future of these young people, the future of the working people today and the future of our seniors. We have to take positive steps. Now is the time to start. I ask the member to join the rest of the members in this place to start looking toward the future rather than lamenting the past.

[Benoît Sauvageau, Bloc, Terrebonne, QC]

Mr. Speaker, I will be speaking today on the budget, if my Liberal colleagues will give me the chance. There is a place where people may discuss respectfully.

Therefore, with the opportunity afforded me, I would like to show that the 1996 budget does not represent, as they like to say, any additional savings, that it really does not add anything new and that it represents the end of the plan to put the country's finances in order. In this budget, the minister is not cutting expenditures and this year's deficit at all. On the contrary, there is in fact an increase in expenditures of $104 million.

The Minister of Finance is demonstrating the government's indifference. It is as if there was no waste, no duplication and no tax inequity. It is all forgotten; out of sight out of mind.

The government is dumping $7 billion of its 1996-97 and 1997-98 deficit on the provinces. Furthermore, it artificially reduced the deficit by taking the $5 billion surplus from the unemployment insurance account, which is funded entirely by contributions from companies and individuals. It is unacceptable to see the burden of the social programs left to the provinces and to those who forced to depend on them. In matters of employment, the government is deceiving the people, and particularly young people. It claims to be creating jobs and improving the economy, but clearly its measures are either inadequate or totally ineffective.

The Minister of Finance cut funding to student job programs by $26 million over the past two years. And then, all of a sudden, perhaps because of an election year or an election on the horizon, he changes direction. He doubles to $120 million the amount of aid to student programs-an increase of $60 million. Nevertheless, the government is hitting young people by cutting funding to post-secondary education.

The government will reduce funding by $150 million in 1996-97 and by between $400 million and $500 million in 1997-98. This will inevitably lead to an increase in education costs, hence the demonstrations by young people and university students in recent months and years against these draconian cuts. In the end, the students will be the ones paying.

For more than two years now, the Bloc has been calling for an investment fund to promote defence conversion. The Liberals promised $200 million per year over five years starting with 1994, for a total of $1 billion. They made this commitment in the red book and during the election campaign. As is too often the case, this promise was then forgotten. The Minister of Finance is proposing $150 million in 1996-97 and maybe $200 million in 1997-98. We would not be surprised if the $200 million figure was revised downward, as is too often the case.

Furthermore, for two years, the Bloc Quebecois has been calling for a major reform of the business tax system. The government has come forward with the proposal to set up a committee made of tax experts, several of whom would come from businesses already benefiting from tax shelters. We, in the Bloc Quebecois, joked that this was like choosing members of the Hell's Angels because they know how organized crime operates.

It seems obvious that the only purpose of such a committee is to ward off criticism and to pretend to examine the issue. We can already anticipate the conclusions of this committee. They will not contribute anything new. In any case, the members of this inner circle are both judges and judged. We, in the Bloc Quebecois, want fair and equitable reform. To this end, we have been asking since we came to Ottawa for a parliamentary committee to analyze federal policies concerning business taxation.

Regarding these same subsidies to businesses, last year the government substantially reduced assistance to the dairy industry, which is mainly concentrated in Quebec. This year, it is simply abolishing it altogether.

Is the Minister of Finance really aware of the negative impact this measure would have on Quebec agricultural and dairy producers? We already know the answer is no. Does he know that these cuts are excessively dangerous, that Quebec is still the federal government's poor relation? Recently, civil servants who had nothing better to do got this great idea, they would go after raw milk cheese. They had a brainstorm over the Easter break. It would give them something to do. They said to themselves: Let us throw another monkey wrench in there. More often than not, the agricultural sector is the one that has to pay.

The Bloc Quebecois demands that the government get its fiscal house in order by seing to it that those who do not pay their fair share do so.

Mr. Speaker, I must ask you if this is a questions and comments period. If not, I would ask my colleague to please be patient a few minutes before making his clever comments.

When will the government act in a real fair and responsible manner? We have now been waiting for two and a half years.

Last year, unpaid taxes amounted to $6 billion and the government was not even able to do better than the year before. There are lots of funds that the government could recover. But because of its ineptitude, its incompetence, the government too often does nothing at all.

The last estimate of the finance department shows that, as far as business taxes are concerned, the government forgoes nearly $10 billion. When will members of Parliament undertake a thorough review of business taxation? Before anything else, the government must put an end to that type of evasion, that tax dodging.

Part of the deficit reduction is due to the country's economic situation, which is relatively good, not because of the Liberals, but because all G-7 countries are currently enjoying a good situation.

Undeniably, the government is making political hay with this. It is true that exportations are high, interest rates are low and unemployment insurance premiums are higher than payments. However, if the economic context was to change, either because of higher interest rates or a stronger pressure on the unemployment insurance system, the impact would be immediate and catastrophic for public finances. I am convinced we would then see a major change in the Liberal government's attitude.

I am a member of the Standing Committee on Foreign Affairs and International Trade. As such, I would like to stress that we will have to examine what seems to be the main problem of new exporters, that is financing, whether it is easy to obtain financing. Above all, we will have to establish parameters in order to facilitate access to foreign markets for small and medium size businesses.

According to what he said on page 78 of his Budget Plan, the finance minister seems to be aware of that problem. I would like to know how much of the $50 million injected into the Business Development Bank and the $50 million added to the working capital of the EDC, will go directly and through concrete measures to small and medium size enterprises trying to export?

Government must recognize that Canada is made up of regional markets: atlantic, Quebec, Ontario, the prairies and British Columbia, which are separately integrated into larger trade and economic continental entities. For British Columbia, the northwest United States and the Asia-Pacific area are natural markets.

For Quebec it is another matter altogether. Its favoured markets are North America, 80 per cent of its exports, and Europe, 12 per cent. We should note that for Quebec European markets are three times as important as Asian markets. It is up to individual companies, and not the federal government, to determine, on the basis of their strengths and the nature of their productions, what their export targets should be.

The federal government should limit itself to providing support. Again the priority in the area of assistance to exporting companies should be a better access to financing.

I would like to stress that we believe Quebec and Canada have lost something when they renegotiated the agreement on lumber with the United States. The fact that we agreed to reopen an agreement already in force will probably serve as a precedent for the United States, which will demand the same in other disputes with Canada.

To conclude, I would like to quote an article by Jean-Robert Sansfaçon, published in Le Devoir on Thursday, March 7: ``While Ottawa continues to pretend that it reduced the deficit by cutting expenditures from $120 billion in 1993-94 to $106 billion in 1997-98, a more thorough analysis shows that at least 5 of these $14 billion come from a normal reduction in the number of unemployment recipients due to economic growth, and another $6 billion come from cuts in transfers to the provinces for health, social assistance and post-secondary education. We know that a new recession would make the unemployment insurance fund surplus melt like new snow and, therefore, increase the budget deficit of the government. Like last year, the victims of this budget are the provinces, especially provinces like Quebec''.

This is the reality: The federal government is not assuming its responsibilities, it is transferring to the provinces the burden of making most of the cuts called for in this budget.

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

Mr. Speaker, I listened carefully to the speech of my colleague. I wanted to make two or three brief comments and ask a question.

After this budget was brought down, I looked carefully at the comments made by influential people within the country, that is, business people, men and women who work within the major unions and journalists. The great majority of them had positive comments to make. I am extremely surprised that my colleague was unable, unless I misunderstood him, to put greater emphasis on a number of things that are well accepted, well thought of and that are helping. I believe he mostly emphasized what he thought were the negative aspects.

Perhaps my colleague would be willing to respond to this. Why did he not mention any positive aspects in his speech, when we consider all the positive comments that were made?

[Benoît Sauvageau, Bloc, Terrebonne, QC]

Mr. Speaker, I am pleased to respond to the comments made by my hon. colleague. Simply because it is difficult. Regarding the quality of the French used in the budget, the nice rhetoric used to hide the drastic cuts imposed on the people of Quebec and Canada, I could indeed admit that it is well written. It is written so that transfer payments to the provinces can be cut by $7 billion. At first glance, it almost appears to be well written and appealing.

However, if we look at it more closely, as Jean-Robert Sansfaçon did in the March 7 edition of Le Devoir and as several other analysts and columnists did as well, if we look at the figures instead of the quality of the French used in the budget, how can I praise the government for cutting transfer payments to the provinces by $7 billion over two years? How can I praise the potential increase in tuition fees for students in Quebec and the rest of Canada? How can I praise the government for cutting transfer payments while maintaining national standards? How can I praise the government for cutting transfer payments for health care? How can I praise the government for practically robbing the UI fund of $5 billion?

That is why I would rather comment on cuts, on the government's inaction, instead of praising the quality of the French used to try to hide cuts from the people of Canada and Quebec.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I congratulate the speaker on his comments concerning the fact that this Liberal government is passing the spending cuts on to the provinces.

All the cuts that the finance minister has passed on to the provinces still are not enough. Would the member comment on why he might think that the Liberals have not done the job in terms of cutting spending?

[Benoît Sauvageau, Bloc, Terrebonne, QC]

Mr. Speaker, I am pleased to answer the question put by the hon. member from the Reform Party. In my opinion, the Liberals have not done their job as far as cuts are concerned, they dumped it all on the provinces because it always looks better to have cuts done by a neighbour rather than doing them yourself.

The Liberals were also negligent because, if I am not mistaken, they were offered the possibility of a parliamentary committee to determine priorities regarding corporate tax cuts-you did so yourself.

But they simply refused because it was easier to say: "We will keep our money, but we will impose cuts on those who put money in our wallet, namely the provinces with their taxes". Why did the Liberals neglect their job? Simply because they wanted to make the provinces responsible for the cuts and make them out to be the bad guys. It is as simple as that.

[The Deputy Speaker]

The hon. member for Lac-Saint-Jean.

[Claude Bachand, Bloc, Saint-Jean, QC]

Saint-Jean, Mr. Speaker, not Lac-Saint-Jean. The hon. member for Lac-Saint-Jean will be joining us at 2 p.m. this afternoon, and we are very proud that he is doing so.

First of all I would like to reassure our friends opposite by saying that, while the budget may contain very few good news, and there is no doubt that there are few, they must not forget either that it is the role of the opposition to assess the budgets brought down by government.

Very seldom does a budget earn government praise for the outstanding job it has done in preparing the budget. In my opinion, it would not exactly be the place of the opposition to say so. We are here, in this democratic system, to point out those budget items that we totally disagree with and to suggest amendments, so that democracy can prevail.

I think that, should this House become Liberal through and through, Canada would be next to impossible to live in. It seemed noteworthy to me. In fact, I have a few points to raise, which are not exactly positive either. I think that raising negative points in assessing a budget is good for democracy and something that must be done.

The budget can be considered from two points of view. There is what I call the macroeconomic view and the microeconomic view. I often look at what impact the budget will have on the people of my riding. That is what I would like to share with you today. I will not be telling you anything you do not know already by saying that the riding of Saint-Jean has always been, in my words, a disaster area. We will recall that, with its very first budget, this government closed down the Collège militaire in Saint-Jean. This keeps going on. The hon. member for Terrebonne mentioned a few similar points.

Let me tell you about the issue of milk subsidies, which is very important in my riding, where there are many milk producers. These people will be faced with a 15 per cent cut in their subsidy. This amounts to an annual dead loss of about $1 million for the riding of Saint-Jean. There will be $1 million less in Saint-Jean's economy, in addition to the $32 million loss suffered with the closure of the military college. And all this will keep going on, because the milk subsidy reduction is not just a one time cut: it will be implemented over a number of years until there is no subsidy left.

Therefore, the riding of Saint-Jean will not just lose $1 million this year: it will lose $1 million this year, next year, the year after, and so on until there is no subsidy left. This will result in a $4 to $5 million cut for the riding of Saint-Jean, without compensation. Once again, there is a double standard.

The government says that it will put an end to the Crow benefit in western Canada. Of course, this measure will have an impact on producers, who are told that they will get $2 billion to make the necessary transition, diversify their economy, etc. However, no such assistance is provided in the riding of Saint-Jean and in Quebec, among others, who is the primary milk producer in Canada with 40 per cent of the country's milk production. Once again, Quebec is being targeted and more specifically the riding of Saint-Jean.

The military college is not the only institution to be closed. This year, it was announced that Saint-Jean's employment centre would also be closed. Thirty second and third line employees from the employment centre are to be redeployed throughout the Montérégie region and will have to move. These people are wondering whether they will follow their jobs. They are wondering whether they will move to Saint-Hubert or Longueuil.

In the meantime, industries and the jobless go to the Saint-Jean employment centre where there is only first line staff to take note of their plight and concerns. However, when the time comes to follow up on these cases, the employees are no longer there.

The second and third lines of service have gone somewhere else in the Montérégie area. This is utterly deplorable. We could understand it if the unemployment insurance account were in deficit. We could understand even more if the government were contributing to the unemployment insurance account, but this is not the case, in either instance. The government is not contributing to the account, and the account is showing a $5 billion surplus every year. Not only was there a $5 billion surplus this year, there will be one next year also with the new proposed measures. They want to dip even deeper into that account, not to take care of the unemployed but to help wipe out the government deficit.

In Saint-Jean, an area still facing closures, it is hard to accept-and this is an acid criticism levelled at the government-that it could say: "Listen, we have to cut unemployment insurance; we know that you need it, but unemployed people will get better benefits". Yet, just the opposite is happening.

The customs office in Saint-Jean is closing down. There were two customs officers. The Saint-Jean office was the oldest inland customs office in Canada, but it just closed down. The industries in Saint-Jean that are experiencing difficulties in matters of customs clearance have been told: "Listen, we will do it by computer. Also, you will send your files to the officers in the Lacolle customs office, who will come if there are are problems".

In that regard, I can tell you that all the industries in the riding of Saint-Jean are opposing this measure. The area is like a sieve, in any case. The Richelieu River flows by the city of Saint-Jean. In Notre-Dame-du-Mont-Carmel, we have a customs office on a wharf that extends 300 or 400 feet into the river, which is about one mile wide. I am convinced smugglers go by on the other side of the river. All the customs officer can do is call in the RCMP. But the RCMP has not been spared by the cuts, and it takes a few hours before it starts going after the smugglers. So, anybody can go through. The government loses large amounts of money customs could collect. That is just another disaster for Saint-Jean. Saint-Jean is once again under fire, and the customs office there was closed down.

The Fonds de solidarité and the CSN Fondaction, which is just starting out, are also under attack. The minister told us these funds have proved their value, and they no longer need the same level of incentive. Let me remind the minister that the CSN Fondaction is just starting out and that the Fonds de solidarité is the pride not only of Saint-Jean, but of Quebec as a whole.

The Fonds de solidarité, the CSN Fondaction, and the Caisse de dépôt are all part of the distinctiveness of the Quebec society. That is what the distinct society is all about. We should not keep trying to water down its meaning, and try to replace it with the concept of principal homeland of the French language, which is the new buzzword.

I am sorry, but the distinct society has always been a reality, and it means what it says. Concerning these funds, I feel it is important to point out that they are a feature of the distinct society. They are a way to handle the economy in Quebec which is clearly distinct and different from what is going on in the rest of Canada. It thought it was important to mention it in passing because it was sheer nonsense for the Quebec Liberal Party to say, during the week-end:

"We will no longer talk about a distinct society". For now, we will talk about a cultural homeland and, next year, if English Canada still has a problem with that, we will just use the expression homeland. And then, we will water it down until there is nothing left. Let me say that the Bloc Quebecois will closely watch how things evolve on this issue and will oppose any such proposal.

On the last point, Mr. Speaker, I beg your indulgence.

Mr. Speaker, I will speak to you in English because I am taking some courses in English at the language school base militaire in Saint-Jean. They say my English has improved. I have a very nice teacher, Brenda Hunter. She told me that if I want to follow these courses next year I had better say a few words in English in the House, not reading but expressing myself without any notes.

I decided that for the last part I would denounce the measures in the budget concerning the language school in Saint-Jean. Earlier there were almost 150 teachers in Saint-Jean and nowadays there are around 75. The numbers are falling. The Department of National Defence is trying to extinguish the language school in Saint-Jean and we do not know why.

Why are more people not coming to Saint-Jean to take these courses? We have a most modern laboratory and some very competent and knowledgeable teachers who do a great job. That is why I have to say once again that it is a scandal to try and close down a very important and very effective institution like the one in Saint-Jean.

Mr. Speaker, I think you will agree that my first words of English in the House were not too bad.

Finally, we consider this budget to be totally unacceptable. I feel that I have been fully mandated by the constituents from Saint-Jean to vote against this budget, but my colleagues across the way need not be afraid since we have come up with some positive amendments. That is what I call democracy.

I will, of course, be very pleased to vote in favour of the amendment put forward by the Bloc Quebecois in order to make the changes needed in the budget. I hope my colleagues opposite will support this very important amendment. If not, they will have to understand that the constituents in my riding have mandated me to vote against this year's Liberal budget.

[Rose-Marie Ur, Liberal, Lambton—Middlesex, ON]

Mr. Speaker, I will be sharing my time with my hon. colleague from Winnipeg North.

I am pleased to take part in the debate on the government's third budget, one which gives credence to the three main goals of the agenda since it was elected: job creation, economic growth and deficit reduction.

First, I would like to commend the Minister of Finance for respecting the will of the voters which was clearly expressed regarding taxation. Canadians did not want a tax hike because they believe they are already paying their fair share of taxes.

Given the delicate state of the Canadian economy at the present time, the federal government could have opted for harsher measures. In fact, some provincial governments such as the present Ontario government have chosen this path which I believe does nothing but increase the economic problems we face.

The Liberal government rejects any solutions based on narrow minded ideologies. Instead, the guiding principle to making the changes that have to be made are based on pragmatism and fairness to all levels of society. As an example, the Canadian health and social transfer will be characterized by secure and stable funding over the next five years.

It is important to remember that the government will legislate a floor to provide a sound guarantee that cash transfers will never fall below the $11 billion mark at any time during the five-year period. This guarantee demonstrates the Liberal government's strong commitment to secure Canada's health system, social safety net and to build a renewed social and economic union.

The government recognizes that Canada is a rich country, rich in natural resources and its people. It also recognizes that it is the government's responsibility to create opportunities for present and future Canadians and that is what it has done. The challenges that face our youth are clear. The youth unemployment rate is roughly double the national average. Approximately 45 per cent of the new jobs created between the years 1990 and the year 2000 will require more than 16 years of training and education.

This budget provides an additional $165 million over three years to help students and their families deal with the increased costs of education. This will be done through increased education tax credits and an increased limit on parents' contributions through their children's registered education savings plan. Eligibility for the child care expense allowance has been broadened to help more parents undertake education or retraining.

Funding for summer student jobs has been doubled. An additional $315 million over three years will be provided in addition to the

existing fund to create new youth employment opportunities. We are committed to a new domestic Team Canada style partnership between businesses and governments to create entry level jobs for Canada's youth.

Canadians know direct job creation must come from the private sector, but it is incumbent on the government to make sure the economic context is the best possible and favours the continuous economic growth necessary for job creation.

Deficit control requires, among other things, that inflation is kept low. This contributes to reducing pressures on interest rates and helps control the other costs of doing business. It makes Canada more competitive in foreign markets.

We can also see dividends from the ability to control the deficit and inflation. Short term interest rates have diminished by three percentage points since last year's budget. This means a saving of $2,400 a year on $100,000 mortgage. Increased competitiveness means a strong increase in exports with a record export surplus of $28 billion.

Canada's trade performance in recent years has been remarkable. Exports have soared. The Team Canada approach has proven to be a major success with $20 billion in new business deals resulting from three major trade missions led by the Prime Minister to Asia and Latin America. We all know exports are vital to job creation in Canada. Every billion dollars in exports sustains 11,000 to 12,000 new jobs. Continued progress begins with further fiscal improvement and the 1996 budget delivers.

The steps proposed in the March 6 budget consolidate and extend the first two budgets and further contribute to the economic and financial objectives. The government is maintaining its focus on reducing program spending because the debt is a problem created by government and the solution has to focus primarily in our own backyard. That is why of the fiscal actions taken from 1994-95 to 1998-99, a full 87 per cent have been through expenditure savings. Together the three budgets will contribute $26.1 billion in savings for 1997-98.

However, the 1996 budget goes beyond the bottom line calculations. As Liberals we know that financial reform must never be an end in itself. The steps taken to get our fiscal House in order are a means to an end. What is the end? It is lower interest rates, better job growth and the maintenance of cherished social programs. These steps are a means to ensure the Canada that all Canadians want can be preserved.

Many seniors have asked us to address their concerns about security for their grandchildren and security for themselves. I am pleased to see a new tax free benefit for seniors that will replace the old OAS and the GIS benefits and will ensure the long term stability and sustainability for seniors' pensions. These proposed improvements to seniors' benefits reflect what the great majority of my constituents in Lambton-Middlesex have been asking for, as indicated in a survey I conducted last November.

The seniors benefits will help those who need it most while streamlining the program. It will make the system fair. It will guarantee that all current seniors, in fact those who are 60 years of age now, and their spouses will receive no less than the current pension benefits. Most seniors will receive the same or more money under the proposed new system.

I am very pleased the Minister of Finance made a decision not to allow charter banks to sell insurance from branches. This issue was a major concern to my constituents. Keeping the status quo means that Canadians will continue to have many choices depending on where they live and what their particular needs are.

As the member for Lambton-Middlesex, I look forward to working with my colleagues to help implement the government's commitment to bettering the lives of rural Canadians, a commitment that was renewed in the February 27 throne speech. This year's budget will build on this foundation through a number of initiatives to provide for economic growth and new opportunities for the agri-food sector.

For example, the government will create a single food inspection agency to be responsible for all federally mandated quarantine and inspection services. This initiative will reduce overlap and duplication by consolidating resources now in the three federal departments of agriculture and agri-food, health and fisheries and oceans, and will lead to an annual savings of approximately $44 million starting in 1998-99.

While phasing out the remaining dairy subsidies starting August 1, 1997, the government has made a commitment to supply management as part of a long term dairy policy intended to maintain a strong and viable Canadian dairy industry. This will include a strong defence of Canada's position in the NAFTA dispute settlement process. We are also committed to finalizing arrangements with the provinces for cost shared safety nets, including a whole farm income stabilization program, currently NISA, crop insurance and province specific companion programs.

Another major announcement of the March 1996 budget was the decision by the government to sell its fleet of 13,000 grain hopper cars. It is extremely important that the terms and conditions of the sale are established for the maximum benefit of Canada's farming community. As stated in the budget, the federal government will consider all proposals put forward for the acquisition of the cars.

In a country as diverse as ours, it is a real privilege for all of us to be able to be part of a team that sets objectives and goals, and meets them. We do not just talk about them. We meet them. We have set the challenges for the years to come. Through the Minister of Finance and all who are involved in the process, we will continue to meet each and every one of these challenges.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, I have a short question. The member for Lambton-Middlesex talked about the sale of 13,000 hopper cars, which is an extremely important issue in my riding and in my area.

Most of the time, when one wants to buy a used product such as a car, one goes to the lot and asks the sales person what the price is. He or she will say that the price of the car is $5,000, $3,000 or $10,000.

In the case of the producer coalition which wants to buy the 13,000 hopper cars, the Minister of Finance or Treasury Board or the Minister of Transport or whoever is responsible will not tell the farmers what is the asking price for the cars.

Does she really think it is fair to ask producers to come up with a proposal to buy the cars when they are not told what is the asking price for those cars? They have not been given the details of how those cars will be administered and allocated after they have been purchased.

[Rose-Marie Ur, Liberal, Lambton—Middlesex, ON]

Mr. Speaker, I appreciate the question. This is certainly a concern that was expressed to me in my riding while we were home for the Easter break.

The government is proposing to meet with all concerned parties. We have to understand that these hopper cars were bought by taxpayers' money Canada-wide. It is very important how the consultation process goes with the producers as well as with the Minister of Finance, with the minister of agriculture. It is not just the west but it is the east as well that has to share in the burden of this.

I have seen allocations that perhaps the cars are worth $300,000 or $400,000. In due time when these people sit down and negotiate terms of where the hopper cars are going to be sold, it will solve itself.

It is all well and good for farmers or commodity groups to bid on these. We have to work collectively on this. There is not much point in owning hopper cars if we are not compatible with the railway system.

[Rey D. Pagtakhan, Liberal, Parliamentary Secretary to Prime Minister]

Mr. Speaker, I am pleased to speak today on the 1996 budget which was tabled in Parliament March 6.

It reflects the priorities of the government. It ensures that the need to be more frugal will never come before the need to be more compassionate and fair. It strikes a delicate balance between fiscal reality and social responsibility.

The government has met its deficit reduction targets and is on its way to surpassing them without raising taxes. At the same time, it is protecting and preserving our valued social programs like medicare and pension programs for seniors.

These twin goals have been achieved through good governance. The response from the Canadian public has been positive. The day after the budget was delivered last month, newspapers across the country carried headlines expressing optimism and support.

In my home town, the Winnipeg Free Press gave the finance minister high marks for meeting his deficit projections. ``Too many finance ministers before him have promised honey and delivered vinegar''.

This achievement in fiscal responsibility and stability has contributed to Canada's strong economic performance and therefore job creation. Since 1993, when the Liberals took office, nearly 600,000 jobs have been created nationwide.

In addition, the merchandise trade surplus has increased and short term interest rates have decreased, decreasing the amount of mortgage payments which citizens have to pay. Inflation has fallen sharply. All of these have boosted investor confidence in Canada.

The deficit targets of 3 per cent of GDP for 1996-97 and 2 per cent for 1997-98 will be achieved. In 1997-98 the financial requirements of government will fall to $6 billion or about 0.7 per cent of GDP, making it the lowest since 1969 and the lowest of any central government in the G-7 countries.

All of these achievements will translate into job creation, which remains the number one priority of the government. I am pleased that we have created over half a million jobs since 1993. However, we know this is not enough and that is why our efforts of job creation remain our overwhelming commitment.

Budgeting is more than putting our fiscal house in order and more than deficit reduction. It is more than balancing our revenues and expenditures. Financial stewardship is only a tool to the primary purpose of government which is to serve citizens.

Canadians value our nation's social programs. We worry when we hear of hospital closures, cuts to education funding and reductions to social assistance for the less fortunate in society. Canadians wonder how universal medicare, access to post-secondary education and social assistance can be sustained given all the pressures on our system.

Therefore in order to ease the mind of citizens and to reaffirm the government's commitment to health, education and social assistance, the 1996 budget provides the stability and subsequent growth to its transfers to the provinces by legislating a new

five-year funding arrangement for the Canada health and social transfer program beginning in 1998-99.

Entitlements over this period will grow from $25.1 billion to approximately $27.4 billion. More important, there will be a new cash floor for transfers of at least $11.1 billion in all years thereafter. This will give the federal government the leverage to maintain our valued social programs.

For the province of Manitoba, where I come from, the major transfers in terms of the Canada health and social transfer and the equalization payments which later on will replace the established programs financing will exceed $2 billion in 1996-97 and are expected to total roughly $1,875 per person in 1995-96, about 48 per cent of the national average. We see there is a significant transfer of money from the federal government to the province of Manitoba.

Just for comparison, per capita Manitoba will be getting less than Newfoundland, P.E.I., Nova Scotia and New Brunswick but it will be getting more than Quebec, Ontario, Saskatchewan, Alberta and B.C.

That defines for us the character of our nation: those who have more share with those who have less. It also defines our Canadian identity.

Secure and growing funding for our transfer program will ensure the federal government's capacity to uphold the five principles of medicare: universality, portability, accessibility, non-private, public administration, and comprehensiveness; as well, the principle that no residency requirement can be imposed on social assistance recipients who move from one province to another.

These measures will enable the government to keep its deficit reduction targets while protecting the future of our social programs. This type of balanced approach tells us how the government is very fiscally realistic and at the same time very socially responsible.

Canada currently spends approximately 10 per cent of GDP on health care. Other nations spend more but do not provide universal access to their citizens. Indeed we are fortunate in Canada. We enjoy universal access. It is one of the most envied health care systems in the world. However, we realize we must do all we can to protect our system. We must ensure that each and every health care dollars is spent wisely.

To this end we would like to know in which new technologies and techniques to invest, which old ones to retain or abandon and how to organize health services to get the maximum benefit from available resources. This is our commitment. Because of this the budget has allocated health services research funds to the tune of $65 million.

As well, the budget has increased assistance to those in need with the new child support taxation measures to benefit our children, the future of our nation. We have not forgotten our seniors. We are committed to introducing a new seniors benefit program that will ensure sustainability by targeting those who need assistance most without affecting the benefits received by current seniors.

The government cannot do it alone. That is why the government has challenged the private sector. We know that a measure of success in any country is when citizens try their own initiatives and at the same time commit and challenge themselves in the service of the country.

Imagine a country that is number one in which to live, according to the United Nations. Imagine a country where interest rates have decreased over 300 bases points since early 1995, a country where deficit targets have consistently decreased from 6 per cent, to 5 per cent, to 3 per cent and to 2 per cent until the budget is balanced. Imagine a country where financial requirements will fall to $6 billion or .7 per cent of the GDP from $30 billion or 4.2 per cent in 1993-94, the lowest since 1969 and the lowest in any central government of the G-7 countries. Imagine when the drop in program spending has been dramatic, from 16.8 per cent to 12 per cent. That country is Canada and budget '96 reflects the soul of this country.

[Osvaldo Nunez, Bloc, Bourassa, QC]

Mr. Speaker, my hon. colleague mentioned that job creation is a priority for this government. I think that this government has failed miserably as far as job creation is concerned.

These last few weeks, I have worked on the issue of the closing, in Sainte-Thérèse, Quebec, of the plant operated by Kenworth, an American firm. More than 800 workers stand to lose their jobs and more than 800 Sainte-Thérèse families will be affected. This is utterly tragic for these families which are faced with a very limited future.

I say to my hon. colleague that, true, jobs have been created, but tens and hundreds of thousands of others have been lost. The jobs that are created are precarious, temporary and poorly paid. These days, business executives specialize in laying off their employees. The more they lay off, the more efficient they are.

In the federal Department of Citizenship and Immigration, immigrants complain that they can no longer meet a public servant or talk with one on the telelphone, that their calls are always answered by machines. They do not get answers to their problems.

I would like to ask my colleague what concrete job creation initiatives are found in this budget, apart from the creation of a few summer jobs for students?