Debates of April 25th, 1996

Budget Implementation Act, 1996

[Jim Silye, Reform, Calgary Centre, AB]

Madam Speaker, I rise today to address Bill C-31. I will touch on some elements in the bill. I will talk about how sometimes an opposition party that becomes government looks at things and operates. Specifically, I will talk a little about the Prime Minister and his philosophy. Then I will go on to aspects of the bill and the part in question which is the harmonization with compensation.

In reading the autobiography Straight from the Heart by the Prime Minister, I found a couple of quotes, which in my opinion explain to Canadians the type of thinking our Prime Minister uses. One is: ``In politics, perception is everything''. Another is:

A successful politician must not only be able to read the mood of the public, he must have the skill to get the public on his side. The public is moved by mood more than logic, by instinct more than reason, and that is something that every politician must make use of or guard against.

Interesting, is it not? A third quote is:

I learned early that business is business and politics is politics. The proof is how few important businessmen have made good politicians. They make think they are very smart about everything because they made millions of dollars by digging a hole in the ground and finding oil, but the talent and luck needed to become rich are not the same talent and luck needed to succeed on Parliament Hill-.Most businessmen have very limited, specialized knowledge which often gives them a narrow view.

As a businessman, the kind of person he is talking about, I do not believe my view is narrow enough to mislead and distort the Canadian public. The fourth quote I would like to put into context is: "If businessmen want to make the decisions, the solution is simple: they should get themselves elected to Parliament". Well I did. I am here and I am going to try to do my best to point out the hypocrisy, duplicity and failure of this Liberal government to keep their election promise.

I refer specifically to that part of Bill C-31 which appropriates $961 million-let us round that out to $1 billion because it rhymes with bribe-from the consolidated revenue fund to pay off or bribe as most people are saying. It is not just the Reform Party, the premier of British Columbia has called it a bribe. The provincial elected officials in Ontario have called it a bribe. A lot of people are calling this a bribe to the three Atlantic provinces which have agreed to harmonize the PST with the GST but only if they are compensated for revenue shortfalls.

I would like to review, analyse and comment on the Liberal promise, not the one to kill, abolish, scrap the GST. We have gone through that and the Liberals have admitted they broke that promise. They have admitted that they failed to deliver on that promise. That is fine. But what about the promise they put in writing, the one the Prime Minister brags about, to replace it, as per page 22 of their now dead and embarrassing red book? In that red book the Liberals promised to the Canadian public that they would replace the GST with a system that generated equivalent revenues. That is not so. They are not equivalent revenues.

The harmonization in the Atlantic provinces represents a shortfall over three years of $1 billion and in order to induce, encourage and bribe those provinces to get on board, the government is going to pay for that shortfall. They are not equivalent revenues. The Liberals failed on that part of their promise in the red book. It does not generate equal revenues. Basically it is a tax cut for the three provinces at the expense of all Canadians. Wait until the consumers in those three provinces find out how much more they will be paying for the promises of their three Liberal premiers to the Liberal Prime Minister.

Page 22 says that this replacement tax will be fairer to consumers and to small business. I will agree it is fairer to small business. It does improve the situation for small businesses. They will have one tax to collect and one tax to remit. They will have a choice on how they can do it. There is no question that it does streamline it for the businesses. However, it will not be fair to the consumers. The consumers will be the ones who will be paying a greater portion of the tax in those provinces.

If we look at what goods and services the retail sales taxes are applied to or exempted from in New Brunswick, Newfoundland and Nova Scotia, we will find many that are exempt from the PST but will now be taxed with this new 15 per cent GST. Although the provincial rates go down on the PST, the combined rate will increase taxes on a lot of items that are in the service industry.

Work done by construction companies will now be taxed. Certain footwear, children's clothing, hair cuts. All these items will now be taxed. Funerals, pharmaceutical and medical supplies, mobile homes, utilities such as water and heating oil in the province of New Brunswick. Most of the lists are the same. Children's car seats, postage stamps and coins. We read about that in the paper today. The revenue minister did not even know there was a tax on stamps. Many labour charges, wood burning stoves, wood splitters, hand crafted products. These are all things on which people have not had to pay PST but will now have to pay tax. This is where it is an 8 per cent tax increase to the consumers in those three provinces who have allowed their premiers and their governments to harmonize with compensation.

The harmonization we support and we say works is one that is revenue neutral. It combines the two rates into a single rate and is applied to all things so there is the lowest possible rate. However the government did not do that. It chose to do it another way. The government chose to do it so that no revenues are lost on the GST portion. The premiers of those three provinces can promise their people a tax cut which will be subsidized by all Canadians. It is distorting the economy and creating unfair competition. That is not the kind of harmonization our party supports.

When the Prime Minister says that the Reform Party supports that kind of harmonization by quoting the minority report of the Reform Party, he is once again distorting and stretching the reality of what we said in that paper. He is taking it out of context and I take exception to that.

That is why I quoted the Prime Minister. It is not reason or logic that matters. What matters in his own words is the mood, and make sure that programs are matched to the mood of the people, and instinct. Whatever you can get away with, do it when you can. It will only be a short term hit. It will only be criticized for a while and then away we go, we are off to the races. That is why the quotes in my opening comments are very, very important.

In a speech at the University of Prince Edward Island in October 1993 the Deputy Prime Minister had the following to say about the GST: "Food is not subject to GST because it is a necessity. So are books. They are needed for young minds to grow". If she still believes what she said during the last election campaign, then why has her government not only not removed the GST from reading materials but in harmonizing the tax systems in Newfoundland, Nova Scotia and New Brunswick has effectively doubled the tax on reading materials?

Also, the current chairman of the Standing Committee on Finance, the hon. member for Willowdale, had this to say about the tax on reading materials, a tax his government has now doubled: "The government is proposing to add to its GST by taxing the printed word. It strikes a blow at learning, the transfer of information". That is what the hon. member said in the House. What does he say now about increasing the tax on reading material to 15 per cent from 7 per cent?

There is more. The Minister of Health urged the government to "axe the tax and prevent the GST from being presented on books and literature". Believe me, there is more.

I ask the Deputy Prime Minister, does she now support a tax on reading, a tax that will now double which will make it even more difficult to deal with Canada's literacy problem? This is a tax she promised to scrap, not to double, as her government is doing now. Going for mood and instinct rather than logic and reason is not the way to govern a country.

We go back to the promise on page 22 of the red book. We have analysed whether it generates equivalent revenues. Not so. Fair to consumers and small business is only 50 per cent true. It is fairer and simpler to business but unfair to consumers and wait until they find out.

I am only talking about page 22. The Liberals promised to replace, not scrap, not abolish, not kill, simply to replace. That is all. Have they met their promise as the Prime Minister claimed yesterday? That is all I am trying to establish here today. I am laying evidence and putting forward the argument that the government has failed to do so.

The third element is "promotes federal-provincial fiscal co-operation and harmonization". I submit it is not so. What kind of fiscal co-operation is it with three provinces out of 10? The province of Quebec is angry and Alberta is saying: "We share. We contribute $2 billion to the GST. Where is our share of that subsidy?" Is Ontario happy about it? No. That is not fiscal co-operation. It is fiscal disharmony, not harmony.

Who asked for this? Did those three provinces in Atlantic Canada ask for this? The answer is no. None of the provinces across Canada asked for it. I was on the standing committee when this was reviewed. I listened to the witnesses in the spring of 1994. I was a co-author of our minority report on the GST replacement. Nobody in the provinces asked for it.

From the witnesses and the discussion of the MPs around that table, we knew it would have to be a federal initiative. The government would have to go to the provinces, lay out the advantages and do the sales job. None bit until the word compensation came in and until the government lowered the rates in those three Atlantic provinces to 15 per cent combined instead of the 19 per cent they have now.

That is when this took on some life and when the son of GST, which is being nurtured in the three Atlantic provinces, comes to life. Only when the government subsidized a tax cut did these three provinces even agree to go further.

As the chief finance critic for the Bloc Quebecois has mentioned, this is a politically motivated agreement. This has nothing to do with economics. This increases the tax burden on consumers in those provinces. This is uneconomical and inefficient for consumers. It is will cost more to their pocketbooks.

In opposition the current finance minister said: "If you ever merge the federal sales tax, the GST, with provincial sales tax, the PST, it will be very difficult to get rid of the GST". Now that he is the finance minister what has he done? If it was bad in opposition three or four years ago, why is not bad now? When a person promises to get rid of something why does he go about entrenching

it? That is exactly what the finance minister has done. It will be very difficult to ever separate the two.

Those three premiers, to brag about a tax cut, have now lost their autonomy over their own rates. How in heaven's name will those three premiers argue with the federal government when they are a little short on revenue and want to raise their share of the PST or the GST? The federal government will say "no, it is the GST. We collect it, we set the rate and it is staying at 15 per cent. Tough. Do it through the income tax".

One of the three provinces is already presenting legislation in its legislature to increase personal taxes. The price that one of these provinces has to pay will be enormous. This does not create federal-provincial fiscal co-operation and harmonization. It is exactly the opposite.

The finance minister has now basically entrenched the GST in the lives of those three provinces. In an effort to sell it everywhere else, we are talking about words like mood and instinct: "this is the time to do it, we have the majority, we will force it down their throats". People did not forget Brian Mulroney after forcing the GST down their throats. People will not forget what the Liberal government is doing.

What a joke, closure on a debate as important as this. We are talking about a billion dollars and the advantages or disadvantages thereof and the government has introduced closure. It wants to limit debate on this because it wants to get going. It brought it in really fast under ways and means. A hundred changes, all the little things we could all be contributing toward making it better; but no, it wants to go ahead and do it without all that. That is not democracy.

In opposition the Liberals cried, bellyached and whined every time the Conservatives introduced closure. Now they have done it more times in two and a half years than the Conservatives did it in their whole term.

The Liberals are looking for and promoting support everywhere. They are begging for people to show the advantages of it. When the Canadian Federation of Independent Business supports it, they are talking about only a narrow sector. It is a special interest group, a small business. However, they do not talk about the consumers who buy the products of those business and how much more they will have to pay.

I would like to ask the president of the CFIB what the answer to that is, transferring the tax from businesses on to the consumers of their products. I hope they are proud of that. When they get one accounting firm out of the millions across Canada to support their proposal they get the media to put it on the front page and support it. This does not make economic sense overall.

Bits and pieces of it make good sense and are positive. There are things that can be done constructively to make things better if we

really want to do it the right way. However, I do not believe the government has the interest to do that.

The Liberals even claim the Reform Party supports harmonization. I state unequivocally right now in the House, the Reform Party is against and does not support harmonization with compensation. Do members know what will happen a week or two from now? The Liberals will take what I said today, because they go by mood and instinct rather than by logic and reason, and say "he said something, let us use it against him". They will say "that member stood in the House and said he was against harmonization, and now he is flip-flopping".

They forget I said "with compensation". A single tax instead of two only makes sense. A single tax instead of two is better in terms of efficiency and simplicity, but we never said anything about driving somebody if there is a shortfall. If the combined rate still takes the same money out of our pockets, why bother?

They have not given the transition cost alone of doing this in those three provinces. All they talk about are the lost revenues. The complications of a value added tax system that exist for a lot of people will still be there. It does not eliminate all the exemptions, the zero rated, the tax exempt and all of those complicated rules.

I put on record that the Reform Party was against the GST replacement proposal of the Standing Committee on Finance, and it said so. Reformers then complimented the Liberals on their efforts in reviewing harmonization. They spent a lot of time, as did we all, exploring that. However, in the final analysis we said we could not concur because the way to do it is to first get their fiscal house in order and establish a balanced budget. After they do that they can introduce a more simple and visible form of taxation along the lines of a proportional flat tax. That is what we recommended. They dismissed that.

There is another distortion. The finance minister stood in the House and said they had explored all of the alternatives. That is not so. The one that was not reviewed, the one that was not looked into, was the one from the hon. member for Broadview-Greenwood. He, along with a number of members from the greater Toronto area, with the support of about 20, 30 or 40 Liberals, suggested a flat tax to simplify the tax system and then get rid of the GST altogether. It would save the country $2 billion, $3 billion, $4 billion, $5 billion-up to $10 billion. Get rid of it and use a simplified tax system.

The chairman of the Standing Committee on Finance said: "Given the time constraints we have, we cannot explore this. It is too massive a change and we cannot explore this alternative". Therefore it was dismissed. It was not reviewed. It was not considered. The minister stood in front of Canadians and said they

looked at them all, 20 different proposals. This is not so. There is one they did not review, one which our party will pursue.

I move:

That all the words after the word "That" be deleted and the following substituted therefor:

this House declines to give second reading to Bill C-31, an act to implement certain provisions of the budget tabled in Parliament on March 6, 1996, since the principle of the bill does not seek to abolish the goods and services tax.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

The Chair will deliberate on the proposed amendment and will return to the hon. member.

[Barry Campbell, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, it is interesting to sit here over time, as the hon. member and I have. We were both rookies in 1993. I am truly saddened to listen to his diatribe this morning with its misinformation and distortions.

The Reform Party arrived here supposedly speaking for business, big and small, and yet when things are done by the government which are applauded by business or by the Fraser Institute, which it used to quote all the time, it suddenly does not mention them any more. The Fraser Institute applauded the budget, the subject of this implementation bill.

Suddenly Reformers are not the friends of business. The other day we heard them attack profits. Today we have heard an attack on small business, the Canadian Federation of Independent Business. They threw the gauntlet down and said "how dare you tell us this will be good for business". In their opinion-it is always their opinion and no one else is right-this cannot be good for business and this cannot be good for Canada.

I am glad the hon. member opposite admitted he was a member of the finance committee at the time we brought out our report on the GST. He signed a minority report. I believe he was still a member if he was not being disciplined by his party for disagreeing with it on this or other things. Reformers supported harmonization on the broadest possible base; food, medical devices, everything. They wanted it because as they said in their minority report it would effect the lowest possible rate.

It is nonsense to suggest they thought a flat tax would replace the GST. He is quite correct to say flat tax was a huge undertaking that would require enormous study and had the purpose of a complete revamping of the entire tax system, not a replacement for the GST.

As for compensation, it is incredible that now the member opposite qualifies his support for harmonization by saying "of course, we never thought about adjustment".

I ask him, as I have asked him before, to comment on whether it is inappropriate for one region of the country to offer adjustment assistance to another region of the country for structural change. In particular, could he comment on the state of the wheat industry, the wheat sector, wheat farmers and the compensation they are receiving as a result of budgetary structural change over the last few years. Could he elaborate again, if he dare, on his suggestion we are somehow stifling debate.

We have moved on the issue of the length of this debate only when it became apparent from the member opposite and his colleagues they had no intention of discussing anything in this bill other than one segment. There are many pages to this legislation. They have not yet commented on the CHST, on UI, on seniors. He says all they are talking about and all that is worth talking about is this issue.

I wonder if he would acknowledge, and I would be happy to retract and say I am wrong, that we have been debating more than the GST here. It would be wonderful to hear more from the member's party and the official opposition on many of the other important things in the budget.

[Jim Silye, Reform, Calgary Centre, AB]

Madam Speaker, I have worked with the hon. member on the Standing Committee on Finance and I still do. I respect all the people who try to give their best efforts here.

I am sorry if he is saddened, but it is pathetic to listen to his diatribe. It is totally pathetic to stand up and say to Canadians that all we have talked about is this portion.

I talked only about this portion because we were told only an hour before proceedings yesterday that the government had a deal with those three provinces. That is how much notice the finance minister gave the opposition parties that the deal was in place. We are supposed to get our act together and find out what is good about it and bad about it an hour before, listen to the whole diatribe and then go through it?

The member for Capilano-Howe Sound gave a complete dissertation on UI and the problems with UI and how the government is using that as a way to fund the deficit; $18 billion in revenues, expenses have dropped from $17 billion down to $12 billion, and it is putting that $5 billion away into its cash flow and using it to meet its deficit targets.

If the government only had a ceiling on UI, a $2 billion ceiling, capped it and then lowered the rates for business and lowered the rates for employees, it would be a tax cut. A tax cut would help consumers and businesses and would stimulate the economy.

No, the government is not doing that. It will save that $5 billion and apply it to the deficit. If the government did it the way it should the deficit targets the finance minister has set out would not have been reached.

We have spoken about more than one thing. I am sorry about losing my cool a little.

On harmonization and subsidies, what is being subsidized is not grain. What is being subsidized is not unemployed people. What is being subsidized is not giving money to the needy. It is subsidizing a tax cut to three provincial premiers who will brag that they brought in tax cuts.

When in heaven's name did we ever start subsidizing tax cuts across the country? That is all this is. It is not a disruption mechanism. The rate in the province dropped from 19 per cent down to 12 per cent. In one province that is a 7 per cent drop. It is a loss of revenue and the government is subsidizing it, plain and simple.

With respect to the Fraser Institute, I am sure Mr. Michael Walker just had a weak moment in praising the Liberal budget. If he reviews his comments about the $111 billion which the government will have added to the debt when it exits, I would think the Fraser Institute will change its tune pretty darn quickly.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

After consideration, the Chair will accept the proposed amendment.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, after listening to the member for Calgary Centre I have decided to change my speech somewhat to include a discussion of consumption taxes.

I also served on the committee that travelled across the country. We talked to not just every day Canadians, but businesses and people in policy administration.

It was interesting when we got to the maritime provinces. I discovered the problems those governments were having in dealing with the revenues that were being generated through their provincial sales tax systems and what they were doing with them. When we talk about money being transferred through taxation systems it is important to not only consider taxation itself, but to also consider the other side, what does it do?

In Newfoundland much of that money went toward supporting its health care system. In your province of New Brunswick, Madam Speaker, the health care system and the educational system are among the systems for which province uses the money.

Industrialization has brought a changes over the years, indeed some will say over the centuries. The maritime provinces have seen a reduction in their industrial base. This has put great strains on their financial resources to maintain services which are similar to those in the rest of Canada.

The change in rates from 19 per cent to 12 or 13 per cent in some provinces is positive in a number of aspects. We must consider that through the process of equalization payments the wealthier provinces are already transferring moneys to poorer provinces. Whether they are given a subsidy or an implementation or a structural change which allows those provinces to change those rates for a brief period of time or whether it is transferred by way of equalization payments, it is all the same.

This is a better system. It allows those provinces to reduce the retail sales tax. It also allows them to move toward a more efficient tax. What do I mean by that? A retail sales tax by its very nature taxes business inputs. To put it simply, in my own riding, General Motors is a big manufacturer. The automotive sector accounts for approximately 6 per cent of our GDP. Because the province of Ontario levies a retail sales tax, General Motors will pay that tax on some of its input costs. For example, if it buys stationery and adding machines for its offices, it is paying retail sales tax as it is an end user.

As businesses are not social institutions, they transfer those costs on to consumers. The people who buy automobiles manufactured in the province of Ontario pay retail sales tax. They are paying a portion of that retail sales tax when they buy the automobile.

The province of Quebec has already harmonized its retail sales tax system. It does not have a retail sales tax, it has a value added tax, the GST. Through the administration of that tax, those companies which export their products worldwide are able to take the tax off those products. To show how ridiculous it is, within Canada there are nine retail sales taxes and one federal sales tax.

In the province of Quebec, General Motors in its plant at Sainte-Thérèse is able to take the retail sales tax out of that product. In other words, it can ship cars from Sainte-Thérèse, Quebec into the American market cheaper than a similar plant in Oshawa if only the retail sales tax is considered. Therefore, retail sales taxes have a very negative effect on exports. The export sector accounts for something like 30 per cent of Canada's GDP.

The government's move to harmonize taxes is very positive. A plethora of people are in the tax collection business. There is tremendous duplication. The governments in Fredericton and Charlottetown, and others, collect their own retail sales taxes. Some are having great difficulty. The administration of the retail sales taxes in those provinces has great inefficiencies in collecting taxes. Some fully admit that a lot people in those provinces have been able to escape the retail sales tax system.

It is very easy to escape the retail sales tax because it is a single stage tax. If you do not pay it once you sneak away from it entirely. The value added tax is a lot more difficult to escape simply because every stage of production adds a tax. If I buy something from one person I get a credit for the GST that has to be paid if I use it in my business. This is not so in the retail sales tax area. A lot of those provinces have had difficulty in the simple administration of the

tax. There is no question the retail sales tax, compared to a value added tax, is a lot less efficient tax.

What I really want to discuss today is the whole area of consumption. That is what this budget implementation bill is really all about. Everyone is very concerned to make the Canadian economy more efficient and to create a degree of harmonization across Canada.

Next Tuesday is the deadline for people to file their income tax returns. If there is one thing that unites us as a nation, although we might have a common dislike of the event, is the once a year requirement to file a federal income tax return. Generally speaking, the rules and regulations in the Income Tax Act are the same whether you live in British Columbia, the Yukon, Quebec or in Prince Edward Island. It is a commonality that happens across the country.

I have encouraged the Minister of Finance and I believe he has taken it somewhat to heart that what has to be achieved through the harmonization process is a consistent rate across Canada of the GST. Why would I say that? When I was in Newfoundland I was surprised and shocked to discover that there is a tremendous business in mail order sales. People buy things through the mail from Ontario rather than going to downtown St. John's or Cornerbrook to buy from a local retailer because the retail sales tax in Ontario is 3 or 4 percentage points lower than in Newfoundland.

In other words it was a negative for the people in Newfoundland. People were not buying their products from the local retailers but from Ontario solely because Ontario had a lower retail sales tax. The province of Alberta would gain the most because it has no retail sales tax.

It shows how the country gets into these ridiculous economic situations. It should be the end objective of the GST legislation that all provinces come onside so the rates are the same across the country. Then there will not be the problem of products moving between jurisdictions or how the rates are adjusted. This is just a ridiculous situation. People say a consumption tax is a lot fairer tax.

I heard the member for Calgary Centre talk about how we should have a flat tax. I say that a flat tax is not an efficient or fair tax. With a flat tax interest would not be taxable. The banks of the country must really embrace the Reform Party because any interest earned on revenues under a flat tax system would not taxable.

A flat tax would take the tax burden from the wealthiest and shift it to the middle income earner, those people making $65,000 or $70,000. In the Reform Party's magical world those people would be paying more taxes than wealthy people.

The President of the United States said: "I do not understand a flat tax. Everybody over $200,000 is going to be paying less taxes and those people in the middle income brackets will be paying significantly more". That says a lot about the Reform Party and who it represents.

As members will recall, Steve Forbes advocated a flat tax when he ran for the Republic nomination for president. I read an interesting comment which I will paraphrase because I do not have the article in front of me. It pertains to Steve Forbes.

The magazine said that the companies that Mr. Forbes owns, Forbes magazine and others, stood to gain $3 billion from the implementation of a flat tax. The magazine went on to say that it is not a fair tax and is not something America wants. I was not reading a leftist magazine. It was called Money magazine.

People who deal in this area know that the flat tax is not a fair tax. I can only suggest that the Reform Party is representing those who are not the common people of the country.

A lot of people think a consumption tax is a fair tax. It is a discretionary tax. If we do not buy that new car, we do not pay the tax.

The reason I want to talk about it is because I am personally very concerned about the level of consumer credit in the country. The government is also concerned about it. If we look at the budget and the dedication to reducing the debt and deficit, it is part of the process of getting the economy back on its feet again.

There has been an alarming growth in consumer credit. I talk about disposable incomes. Ninety-two per cent of disposable income in the country is now committed to fixed debt payments. That is the cheque taken home every week. In looking at the financial statements of the banks it does not take long to realize how that has changed. There has been a tremendous growth in consumer debt with our financial institutions.

Is that healthy for our country? There are some other interesting statistics coming from Stats Canada telling us that personal bankruptcies are at an all time high in the country. The banks will tell us that the reason they have to keep credit card interest rates so high, 18 per cent when interest rates have been declining, is because of personal bankruptcies.

Which is the cause and which is the effect? Are there personal bankruptcies because the banks have loaned all these people money to finance personal consumption? Or is it the other way around? I suggest that we have an alarming problem in the growth of consumer debt.

It is not unusual for the banks to send out credit cards to all university students, people who do not have a way to pay them. They are getting into debt at very early stages of their lives. I was alarmed the other day when I saw an ad which read: "Go to Costa

Rica for $85 a month". That was the end of the message. For $85 a month, someone can go to Costa Rica and have a good time on the beach. That is $85 a month for another year of their life. Many people are susceptible to that. A lot of people who are under stress and strain today are susceptible to such escape mechanisms.

What we are doing is compounding people's debt problems and they will never get out of these situations. Many of our young people think they are never going to be able to own a home because they are entrapped with consumer debt.

Governments try to help people such as ours has done with RRSPs in the last budget. We have recognized that a lot of people are not able to utilize those RRSPs. In their younger years they may be doing other things and are not able to save that money. We allow them to transfer those credits and eligibility for RRSP deductions. We allow them a second crack at it.

When I talked about 92 per cent of disposable income going into supporting fixed debt repayments, that is across this country. If we look at it intergenerationally and at people under 45 years of age, we will find they actually have negative consumer income.

Why is this a bad thing? It is bad because most recoveries in the economy have been driven to some degree by a prior mandate of savings. In other words, people save money to buy big ticket items, such as a car or refrigerator. We have allowed our financial institutions to so eradicate the concept of savings that people can no longer afford to buy anything.

I was interested to hear some of the statements of one of the manufacturers in my riding, General Motors. It said that in Canada the actual sales of automobiles is declining. The types of sales that are occurring are for smaller vehicles which cost less money.

People are holding on to their cars much longer than they have ever done before. The average age of a car is something like eight years now because people do not have any money. They have spent not only all the money they had but they also went into debt to financial institutions to finance an automobile, a house and now consumption.

How many times have we gone to a liquor store and watched somebody slip a card through the credit machine? In Canada, the average debt held on a credit card is something like $1,500. Think about that when we say 25 per cent of the people pay it off every month. The real average of those people who do not pay off their cards is astronomical.

We have developed a whole culture of debt. That has not happened before in Canada. These are alarming figures. I had an opportunity to discuss this with the Governor of the Bank of Canada. He too questioned whether these were not alarming statistics.

I am bringing it here to the House of Commons because I would like to alert parliamentarians of the real concern that not only I but many other people are starting to have about the growth of credit in this country. We should think about curtailing it. How do we curtail it?

Financial institutions are regulated through the Bank Act. We have had discussions about whether they should be selling insurance. Now they tell us they want to lease cars. Do we want our financial institutions to have such a hold on our economy that we cannot create growth?

People do not have the savings in order to gain stability, and stability is another big feature of this. People do not feel stable any more in their own environments. They are not even sure whether they will have their jobs next week. That is compounded by the huge debts they have built up.

Watching the bankruptcy statistics will only give further proof that we are pushing a lot of people into financial situations they cannot handle. Governments have problems with debts and deficits. An important thing we are forgetting is that generally people also have significant debt and deficit problems.

In conclusion, I am very supportive of the budget implementation legislation. I am very supportive of what we are doing here in Ottawa to get the government's fiscal and financial house in order. I believe as our debt and deficit come down, disposable income will start to rise. Hopefully in three or four years we will start to see reductions in tax rates occur in this country to free up more disposable income for the average Canadian. Then not only will Canadians be able to save for their future but they will also be able to invest in items to support our manufacturing sector.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Madam Speaker, in his speech the hon. member talked about many things and nothing at all. He forgot to tell us that the federal government was having all Canadians and all Quebecers pay for harmonizing the GST with the maritime provinces. We will have to pay almost $1 billion for this harmonization. I repeat that Quebec, when it harmonized, did not get any compensation.

Another thing he could have talked about, because we did not learn anything, is that by harmonizing the GST the federal government is interfering directly with the provinces' autonomy since they will lose full control over the taxation rate and the tax base.

In preliminary discussions, the Bloc Quebecois had suggested to the government that it could solve two problems at once in this area. First, abolish the GST and give the whole field of indirect

taxation to the provinces, and then obtain some form of compensation for the federal government's losses. The federal's compensation could have taken the form of reduced cash transfers to provinces.

In this way, the federal government could have maintained its financial balance and the provinces would have regained control of their fields of taxation, therefore their autonomy. Then, we could have done away with the Canada social transfer and each of the provinces would have had the right and the power to manage, and manage completely, the areas of health, education and social assistance.

I would like my colleague to answer the following question: Why have they brushed aside this solution which would have been much more equitable for all Canadians and all Quebecers?

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, I have heard the Bloc Quebecois members mention many times the necessity of creating a Canadian common market. Even in their strange world of a separate country they see the need for a common market. The European Union has been wrestling for decades to harmonize consumption taxes within its jurisdictions.

The member mentions that they need their independence because they want to create new and wonderful bridges and walls. We are spending time here on another piece of legislation, the agreement on internal trade, which attempts to reduce barriers between the provinces. Why? To support commerce. Why? Because the erection of artificial barriers is inefficient. The bottom line is that everybody pays for that because we do not get the best and most excellent in our economy.

It is in the best interests of all Canadians, Quebecers included, that we have a harmonized rate system on our consumption taxes. We are not going to tell the province of Quebec how to spend it. That is Quebec's choice. That is how we respect constitutionality under federalism. To say that we want a 25 per cent rate in the province of Newfoundland instead of 10 per cent, the bottom line is that we cannot conduct commerce in this country, we create artificial barriers to carrying on business in this country which is not in the best interests of developing a unified common market.

To answer the member's question, he cannot have it both ways. He cannot argue at one point that he wants a common market and then turn around and say they want to fix their tax rates differently from everybody else. It just will not work.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Madam Speaker, I would like to verify something with my distinguished colleague, who sat on the finance committee.

There are two points that disturb me in Bill C-31 regarding the harmonization of the GST with provincial sales taxes in the three famous provinces with which the finance minister has cooked up an agreement. The first one is the 15 per cent rate. Does the hon. member feel that the finance minister woke up one morning and said to his wife: "All right, it will be 15 per cent"?

At the present time, two provinces are paying almost 19 per cent altogether in GST and PST, and Newfoundland is paying almost 20 per cent. People of these provinces are already paying these rates. Our good finance minister probably woke up one morning and said: "It will be 15 per cent". To make the medicine easier to take, he added: "I will give you $1 billion over four years and in cash, immediately. That will help you pay for kleenex to forget the money not collected, 4 or 5 per cent, as the case may be". I would like the hon. member to give me his views on that, since he sat on the finance committee. Why 15 and not 16 or 12 per cent?

Second, when that party was sitting here on the so-called official opposition benches, it fought against a hidden GST and convinced Mr. Mulroney not to hide it in 1990. At the time, you said it would be increased, just as you are increasing taxes on gasoline, tobacco and alcohol.

Today, you are hiding it. Of course, you will tell me: "We will have the sales slip". Who looks at the sales slip? You? No, I do not think so. I, for one, never check it. What counts is how much I pay and how much change I get back.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, why is it 15 per cent was the question. Studies have been done on tax policy throughout the world and I will refer to the European Union; we do not want to use the Canadian example. Studies will tell us that consumption tax rates in excess of 15 per cent are almost impossible to collect. I suggest that the province of Newfoundland was probably having a considerable amount of difficulty collecting the 20 per cent tax.

If the tax is reduced to 15 per cent, and it will also be in a value added tax system, more revenue will actually be collected. I suspect the tremendous amount of efficiencies in doing a rate reduction will actually expand the tax revenue in those provinces. In fact the exposure to the federal government will be even less than has been suggested.

The second matter the member spoke about was the concept of a hidden tax. I for one have always thought it was important to have

the tax visible. When I served on the committee and went across the country, I listened to Canadians. They told me over and over again that they do not want to see it. The bottom line is we have turned the country into a nation of bookkeepers and accountants.

If we go to Chicoutimi and there is a dress on a rack which is $100, we cannot figure out how much it cost when we leave the store. People do not to deal with it.

If we want to make it a visible tax, we should make it visible here. If we want to change that 15 per cent to 16 per cent, we should do it in this forum so that everyone can know the rate is changing.

When we go to a gas station, we do not get out of our car to check the metre to see how much tax was added. Maybe we should. The bottom line is most people do not want to do it.

We are doing what people have asked us to do. That is the democratic process.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Madam Speaker, I rise today to speak to Bill C-31 introduced by the Minister of Finance. This bill makes me somewhat uncomfortable in light of our basic duty, namely debating issues in the public interest and trying to meet as adequately as possible the real needs and basic concerns of those who elected us, without being gagged as is now the case.

In a way, I feel bad about having to speak to such a pernicious and insidious bill. I deplore our having to debate such a bill, which results from a long and laborious plot orchestrated by the hon. member for LaSalle-Émard and supported by the Right Hon. Prime Minister and member for Saint-Maurice, who both represent Quebec ridings.

I must tell you, however, that the support I received from those around me and from many of my constituents have made this a memorable moment in my life as a member of Parliament: acting as the spokesman for an entire community for whom the minister is nothing more than some sort of abstract entity.

When a family man, who turns out to be one of the many victims of the axe wielded by this federal Liberal government, comes to my office to ask for my help in finding work, I feel proud of what I am doing now in condemning this insidious bill as vigorously as possible.

The hon. minister has probably never experienced a situation like that of the family man I just mentioned, at least not personally. Yet, his bill directly affects hundreds of thousands of people who are not necessarily among the disadvantaged or the poor, far from it. This bill, a hodgepodge of tax provisions contained in the last budget, concretely affects the middle class commonly and bluntly described as overtaxed.

While government members applauded the minister's cosmetic budget on March 6, we warned the people against the negative, hidden impact of that statement, whose only purpose was to win votes. Well, here we are. We must now discuss the absurdity and emptiness left behind by the March 6 budget.

The bill in question stems from the same logic that has dictated the government's actions ever since October 1993, and it was acting in good faith-I repeat, in good faith. In fact, the government is enacting a whole series of legislative measures that are so underhanded that it is actually pulling a fast one on the public.

Watching the minister struggle with the media these past few days, I came to the realization, with some astonishment, that all the government is trying to do is to lull the public, deliberately playing with abstract concepts, to make almost everyone lose interest in the process. Who are the big losers in all this? All politicians. Such strategies, understandably, shatter the public's confidence in its politicians.

I have been repeatedly calling the House's attention to a recent opinion poll in which, out of a sample of approximately 40 professions, people were asked which professionals they felt they could trust the most, the least and not at all. You will be surprised to hear that barely four per cent of Canadians trusted their politicians. Although, when we see the Prime Minister, during oral question period, arguing high and low that he did not say that the government would abolish the GST he had condemned so strongly and taking his red book out-which is against the rules-to read a little excerpt that comes in real handy to get him out of this mess, it is understandable that the percentage is not any higher.

It is a good thing that modern technology enables us to produce videos of the 1993 election campaign, in which the Prime Minister and member for Saint-Maurice, in Quebec, can be heard saying, in his very colourful words: "We hate the GST and we will kill it. We will scrap it". This is a strange way to scrap it. Today, he is proposing to hide it, through harmonization, at Canadian taxpayers' expense. We will have to pay the tidy sum of $1 billion to try to hide the mistake he made during the 1993 election campaign and the Liberals' mandate in the opposition, when their friends filibustered in the other place.

Now in power, these same politicians are gagging us. The two young Quebec scholars who recently joined the Liberal team must not be too proud to see the government act against their principles of justice and respect for the people. This is tantamount to saying "we love you", but not showing it. And it is because of prime ministers and members like these that barely four per cent of the population trusts politicians. Our sholarly friends were better off in

their universities; indeed, the confidence rate in universities is significantly higher.

I am not trying to criticize the government's goals to reduce the deficit and to improve the state of public finances, quite the contrary; these are very noble and praiseworthy objectives.

However, I strongly condemn the method used by the government to reach its goals. I am merely trying to show this House the true colours of this government formed by the Liberal Party, the party of forgotten promises, the party that has become a master at promising changes without ever doing anything.

As you know, these blunders cannot be attributed to the government's good faith. I often use the expression "good faith", because the Minister of Finance seemingly made an honest mistake. An honest mistake, can you believe it?

Abolishing the GST was the Liberals' favourite theme during the October 1993 election campaign. Today, in all good faith, they decide to keep this tax and to hide it, as is the case with the taxes on gasoline, tobacco and alcohol products. I challenge members opposite to tell me that, when they last filled their tank, bought a pack of cigarettes, or got a bottle of alcohol or a case of beer, they inquired about the amount of money they were paying in federal or provincial taxes.

Mr. Speaker, I am sure that even you did not check that. Yet, it would be a good thing to do.

This government, and more specifically the Minister of Finance, will hide the GST in at least three provinces. This takes some nerve. While they sat in opposition, the Liberals were opposed to hiding that tax because, they said, the government would gradually increase it. Yet, these same Liberals will turn the GST into a hidden tax.

This really contradicts what the Liberal Party said in its red book. But this does not seem to affect the logic of the members opposite. Even individual promises are not being fulfilled. Indeed, as we are speaking, the Prime Minister should normally be in the process of replacing the Deputy Prime Minister, since she had pledged to resign. She made that promise. Remember, you were there. If such is the governing authority in our political system, let me tell you that I prefer, by far, my status as a member of the opposition to being associated with and sitting behind this Prime Minister and this Deputy Prime Minister.

Government members should show more judgment when developing their election promises instead of having to eat humble pie, as the finance minister did, in shouldering the full weight of the Liberal pipe dream when he admitted several times that he had made an honest mistake.

Ultimately, knowing what the Liberal Party is capable of, we could very well have accepted the notion of harmonization of the GST and PST, had it not been for these concepts of compensation. Unfortunately, the government only succeeded in jeopardizing once again the fairness and the balance in this country's tax system. When Quebec harmonized its sales tax with the GST in 1991 under the Conservative government of Brian Mulroney, it did not demand compensation.

Five years later, Liberals have the gall to pick the pockets of all consumers and voters to the tune of $1 billion for three provinces, to get them to come on board and get out of a mess they got themselves into, in the first place.

I figure that we, in Quebec, will fork out close to $250 million that will be paid to these three Maritime provinces led by Liberal friends, including Brian Tobin, a former member of the rat pack who sat in opposition with our Prime Minister and who went on to become the premier of Newfoundland. Quebecers will pay $250 million to these Liberal friends literally to buy off these provinces, namely Nova Scotia, New Brunswick and Newfoundland. It seems that the net result of this operation will have to be figured in votes and not in terms of economic recovery. A provincial election is expected in Prince Edward Island very shortly and then it will only be a matter of days or months before a fourth province joins the process.

In the end, the Minister of Finance will have bought the support of four provinces for only $1.2 billion. That is $1.2 billion of your money, Mr. Speaker, and the money of the new minister, who is considered an intellectual in Quebec, by the way, as well as my money and the money of all the people who have elected us to represent them in this House. The worst thing of all is that the Prime Minister is heartily approving the poor performance of his government since the beginning of the 35th Parliament.

This is what the Liberal government of Canada stated: "This government has consistently acted on the principle that the state and the people need to be able to see structural change coming and to adjust to them". Right now, Canadians are trying to adjust to the broken promises of the Liberals. Many arguments are used to try to relate all this to current events, but that usually puts the government on the spot. It is obviously some kind of strategy.

Now for justice and fairness. This great principle does not seem to have been included in the honour code of the Liberal Party currently in power, at least not as far as the distribution of adjustment assistance is concerned. As an example, a reminder, here is one of the many erroneous, if I may so express myself in this House, statements that were made: "We have provided resources to ease the adjustment in response to the elimination of the Crow rate, $1 billion". You are signalling me that my time is almost up, Mr. Speaker, but I would like to tell members what a number of my constituents said to me last week about the finance minister. A group of citizens pointed out that the most influential

shareholder in Canada Steamship Lines, our very own finance minister, registers several of his ships in the Bahamas. Dominique Joly, Hélène, Josée and Vincent told me that the finance minister registered a number of his ships in the Bahamas, apparently to save on taxes. As they told me: "If that is a good finance minister, then Heaven help us". They also told me that he often bought his ships and had them refitted in Asia, because it seems that it costs less there.

This is a fine sort of government. When the Minister of Finance goes all the way to Asia to buy things, when we have, right here, factories that can build very good ships, ships that Canadians would be proud to build. In fact, there is a great factory in Saint John that could build the ships needed by the finance minister.

In closing, I wonder if the Liberal MPs are proud of their government. I can tell you that the day after that party turfed out one of its members, with my name bearing as you know such a close resemblance to that of the Prime Minister, I received seven calls in the space of an hour and a half-Patrick Saint-Jacques can confirm this-from citizens in the Ottawa area who were telephoning my office here, in the belief that it was the Prime Minister's office, to speak out against the way the member from the Toronto area was treated.

[Pierre Pettigrew, Liberal, Minister for International Cooperation and Minister responsible for Francophonie]

Mr. Speaker, I would like to start by thanking my hon. colleague for acknowledging my intellectual capacities that are recognized all over Quebec. These are very necessary for understanding issues in depth, and yet they have not prevented me from spending the past twelve years in the business world, creating jobs on the international level for Canadian companies that are open to the world.

I would also like to say that I am extremely proud to have been elected to the Liberal team this past March 25, although I am being told I ought to be ashamed of it. I would like to point out to him that I won with 60 per cent of the total vote, whereas in 1993 we got 52 per cent. That means that, even without talking about the GST, we have improved our performance at the polls, while the Bloc has dropped from 39 per cent to 34. I would therefore ask the hon. member to be a little more restrained in his statements.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

He is off the topic. We were not referring to results at the polls.

[Pierre Pettigrew, Liberal, Papineau—Saint-Michel, QC]

Absolutely.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Come on now, this is not about election results. Get back to C-31.

[Pierre Pettigrew, Liberal, Papineau—Saint-Michel, QC]

Well now, I would just like to reassure my fellow Quebecers on the adjustment formula and to explain to them most clearly that their acceptance of harmonization of the tax in 1990 was extremely fortunate for the Quebec economy. We were extremely happy to have that harmonization, and the adjustment formula implemented by the Minister of Finance does not penalize Quebec in any way. It does not penalize Quebec in any way because only provinces losing 5 per cent of their tax revenues are affected by that measure. We in Quebec, on the contrary, had additional revenues after we had harmonized the tax in 1990. The formula does not, therefore, penalize Quebec in the least, the opposite in fact. Whether it was done in 1990 or in 1996, Quebec has benefited from being the first to harmonize the taxes.

On the other hand, I wonder if my hon. colleague is aware that yesterday the Quebec Minister of Finance, Bernard Landry, said the following about the GST: "Strictly from the taxation point of view, this is good news, for more provinces will have a VAT from now on". Mr. Landry, the Quebec finance minister, thinks this is a very good thing, and I quote him again word for word: "This is a very good thing, having a VAT in the other provinces around us, for the fact that ours in Quebec is lower will be to our advantage. It places us in a competitive position; this is good for trade and harmonizes our economic space". That was the position of the Quebec Minister of Finance. I can tell you that I am most pleased that the Quebec finance minister is supporting our efforts toward an economy that is more competitive, more open to the world.

[The Deputy Speaker]

The hon. member for Frontenac has the floor for five minutes.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Oh, that is wonderful. You are fair, Mr. Speaker, a rarity these days in this party.

I am grateful for the question raised by my colleague in this House, who was elected with a 60 per cent majority. I might remind him that a kid was elected in Lac-Saint-Jean with a 76 per cent majority, and you in the Liberal Party poured everything-

[Pierre Pettigrew, Liberal, Papineau—Saint-Michel, QC]

He is not a kid; he is a member.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

It is an expression from Lac-Saint-Jean, I will have you know.

[Pierre Pettigrew, Liberal, Papineau—Saint-Michel, QC]

Oh, is it?

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

It is. If you got out of Montreal, you would learn some regional expressions.

I wonder if the minister would not be more proud of his Minister of Finance if he bought his ships at home. He would create jobs and if he registered them here, he would pay taxes here.

On the subject of compensation to the three maritime provinces that signed on, and that were penalized because they lowered their

sales tax by five per cent, why do you not leave them where they are at right now? They are already paying 19 or 20 per cent. You are making them a gift; they will be paying less tax. I am the one who is going to compensate their governments, innocent that I am.

The governments of the maritime provinces would rather have a big provincial sales tax and less income tax. That is their choice. It is not up to us to meddle in the way a province is administered, as my colleague for Chicoutimi pointed out. He talked of respect for provinces and jurisdictions. We will respect them.

In 1991, when Quebec harmonized its sales tax, the QST, with the GST, you did not give us one red cent. We do the collecting and we split the cost fifty-fifty. It costs you $88 million a year.

In the maritimes, Ottawa will pay the whole shot. Strange idea of fairness in this party and this government. What did you do when dairy subsidies were cut over five years? It will mean an average of $8,000 per farm. You, a fine representative of Quebec-

[The Deputy Speaker]

I am sorry. I would ask both member to address their remarks to the Chair. The member has three minutes left.

[Jean-Guy Chrétien, Bloc, Frontenac, QC]

Mr. Speaker, could you tell him he has done nothing to protect dairy producers? Of course, he is going to answer: "I am from Montreal, there are no farmers in my riding". He should tell his constituents that there are many consumers among them and that they will have to pay more for their butter and cheese. Cheese will be around 50 cents more a kilo and butter 28 cents more a pound; but he will not say a thing. His constituents mentioned it, he will not be seen anymore. They saw him during the campaign, but they will not see him any longer.

Of course, Bernard Landry, now a Quebec minister, was one of those who supported harmonization back then. He was not sitting in the National Assembly at the time, but he agreed with Robert Bourassa that harmonization was the way to go. It is a lot more convenient. I was one of those who had to fill in the infernal GST-QST forms every month. It was very costly and time consuming, and the amount of tax was very little since my business was not international.

This being said, when we harmonized, did Ottawa give us $1 billion? Certainly not. Quebec could get carried away and say: "Let us raise the sales tax, the QST, to 19 or 20 per cent as in Newfoundland" and then several months later, it would decide to harmonize. It seems that this would cost Quebec $1.2 billion. The province could then tell the rest of Canada: "Give us $1.2. billion". This is the way it works.

Essentially, what the finance minister did is use taxpayers' money to buy three provinces to start with. Prince Edward Island should follow in a few months. This will bring the number to four, but there are many other provinces missing. In Alberta there is no sales tax.

Alberta will most certainly not come on board, neither will British Columbia, or Quebec; Ontario is not interested. In Ontario, they do not want to increase taxes, they want to lower them. These four provinces account for close to 80 per cent of the total population, or at least 75 per cent. This is a strange way to fe fair.

To conclude, I will remind the House that to be accepted, a tax must be fair and simple. What the finance minister is doing is neither fair nor simple. It is far from being fair.

The international cooperation minister did not tell me if he checked how much taxes he paid last time he filled up his car, how much taxes he paid when he bought a quart of liquor or a case of beer, how much taxes there is on cigarettes. This government is being hypocritical in attempting to hide the GST it criticized so vehemently when it was in opposition.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, it is my pleasure and honour to address the House of Commons today during this debate on the budget implementation bill.

During the recent byelection in Etobicoke North I became very aware of the value of the legacy of the members of Parliament who served so capably in the riding in the years before me.

In particular, former Minister for International Trade Roy MacLaren, the incoming High Commissioner to Great Britain, served the constituents of Etobicoke North with great distinction for four terms, beginning in 1979. I rediscovered during the election campaign the value of hard work and integrity in representing riding constituents because I heard so many positive comments about Roy MacLaren as I canvassed from door to door.

I had the good fortune to work with Roy MacLaren in the riding for five years before the byelection and it was with great pride that I discussed with constituents his successes and the many ways Roy MacLaren and his gracious wife, Lee, so positively impacted people in the riding over the years.

My constituents have also talked to me about other great Canadians who represented with distinction in this House the people of York West, a riding whose boundaries were redrawn and which was renamed Etobicoke North in 1976. Red Kelly, Robert Winters and Alastair Gillespie are names that came back often, but I should also mention Jim Flemming, Philip Givens and Bob Pennock.

I follow in the footsteps of so many great Canadians who have made such a significant contribution to public policy and to public life in Canada. It is a daunting thought and a challenge that I will fully devote myself to. I too aspire to earn the respect and support the constituents of Etobicoke North have reserved for the members who have preceded me.

I thank the constituents of Etobicoke North for placing their confidence in me. As well, I thank the many volunteers who helped me during the election campaign. Without their support I would not be here.

As we all know, winning an election requires the commitment of many people in canvassing, office work, installing signs, writing and distributing brochures, fund raising and a host of other tasks. I was very fortunate to have had a very talented and dedicated team working with me.

Our election victory in Etobicoke North was very much a team effort and I am very grateful to those who worked so effectively on our campaign team.

As I canvassed door to door, I met many voters who recognized the importance of concluding the debate on national unity. I look forward to contributing to these discussions. The people of my riding want the matter to be settled so that we can go on to other things.

One of the few obstacles to investment in Canada and Quebec is the political uncertainty in Quebec. As a former Quebecer from Montreal, I am very troubled to see that businesses and jobs continue to flee that province.

As Minister for International Trade, Roy MacLaren worked very hard with the Prime Minister and Team Canada to develop our export trade potential. Missions to South Africa, South America and Asia were orchestrated under his leadership and under the leadership of the Prime Minister. These missions resulted in billions of dollars in trade deals over the short period of one and a half years.

Given my experience in international business, I know many of these agreements moved from the concept stage to the contract signing stage as a result of these missions. These deals resulted in and will continue to provide thousands of jobs for Canadians.

Equally important, the way has been paved for more business in the future. Canada's business community is to be congratulated for its leadership and performance in export trade, one of the real success stories of our economy.

In Etobicoke North I plan to build on the Team Canada concept of building export trade and, equally important, working with all stakeholders in the community to build more jobs and a healthy economy. This means building partnerships with industry and labour as well as the Etobicoke city council and the provincial government.

The constituents of Etobicoke North expect all their politicians, irrespective of political stripe or political agenda, to work together to improve the lives of residents of Etobicoke North. Citizens in the riding deserve this. I am encouraged by early signs which indicate that all stakeholders will be able to work together in a very constructive way.

I invite the participation of all constituents in my riding to contribute ideas on how we can create more jobs and a healthy economy in Etobicoke North. Some individuals have already come forward with some very excellent ideas.

I hope the Ontario government will seize the moment and harmonize the provincial sales tax with the federal GST. No province will benefit more from harmonization than Ontario. Ontario could harmonize at a rate of 14 per cent and reduce the sales tax by 1 per cent without losing any revenue. More economic potential in the province and in my riding could be unleashed and our businesses would be more competitive, which would mean more jobs. In my opinion jobs are the best social program.

I realize the task at hand is not an easy one. In Canada, thanks to the hard work of the finance minister, our economic fundamentals are coming together in a very positive way. We are getting the deficit under control, interest rates are low and short term interest rates in Canada today are lower than those in the United States. This trend is also apparent with long term interest rates. These factors create an unprecedented opportunity for investment flowing into the country.

In Etobicoke North we have some incredible strengths which we can build on. We have Pearson International Airport nearby. We have the 401 highway which runs through the riding. We have quality industrial land, a qualified workforce and a number of high technology companies.

We know from the extensive work done in the area of international competitiveness that those jurisdictions which have the most qualified and knowledgeable workforces will attract the industries of the future, which will provide permanent high paying jobs. In Etobicoke North we already have a head start with an abundance of companies and workers on the leading edge of various technologies like aerospace, advanced engineering and health and life sciences, to name a few.

The government in the recent throne speech and budget recognized the value of innovation. We have committed ourselves to supporting industrial innovation and research and development. In

addition to setting a positive business climate, this is a very legitimate and necessary role for government to play.

We need only look at international competition to realize governments around the world support and encourage their high technology industries. We must do the same in Canada if we are to compete internationally. I am very pleased we are actively and aggressively doing so.

Herein lies the opportunity for Etobicoke North. By supporting industrial innovation in my riding we can continue to develop our leading edge companies. I have already launched such an initiative. I am very confident that in my riding by working together and by working hard we can collectively build a stronger economy and create more jobs.

I also realize the importance of the many other businesses, both small and large, in Etobicoke North that are not necessarily high tech companies. I pledge to work closely with them also. Given the rapidly changing international marketplace, some of these companies are adjusting to these new realities and face difficult challenges also.

The initiative I have put in motion in Etobicoke North involves bringing industry leaders in the riding together to assess our strengths and identify areas in which we can improve. We will assess what impediments or constraints there are to economic growth in our riding.

We will look at so-called industrial clusters in Etobicoke North. The Quebec government, among others, has greatly benefited from this economic development tool, which led to the emergence of Silicon Valley in California.

The city of Ottawa is a role model for all of us. For decades, it was little more than a government town. There were other industries, but the pillar of the economy was the federal government.

Look at all that has been achieved since then. We have become Silicon Valley North. A booming industrial cluster grew up around computer hardware and software and telecommunications, right here in Ottawa.

We can produce the same results in Etobicoke North, not necessarily computer hardware or software, but perhaps in other clusters such as engineering, biotechnology, life sciences or other service sectors.

The recently concluded open skies agreement between Canada and the United States could open many economic doors for us in our ridings if we have the courage and the goodwill to work together.

We seem to have a structural unemployment problem in Canada and throughout the world. Countries like France, Germany and Italy are facing the same challenge. We need to reflect on what is causing this. While I do not pretend to be a labour market expert or an industrial economics expert, I have reached some conclusions of my own.

We know technology is having an impact on unemployment levels. We cannot fight this. In an ironic sense we need to encourage it. As someone who supports the need for our natural resource industries to add more value in Canada, I am continually amazed by those who will not acknowledge that many value added initiatives reduce job levels because they are capital intensive. Often value added initiatives replace labour with advanced technology, replacing people with machines, but pursue value added we must because this strategy produces more wealth for all Canadians.

Labour is priced like any other good or service, and if labour is too expensive business shifts its emphasis to other alternatives. In the early 1990s in Canada our productivity was low. We were losing our international competitiveness. Since that time our productivity has improved considerably to a point where this is no longer an issue. Economists today are focusing on total factor productivity, not just labour productivity, because to be competitive business must optimize its uses of all the factors of production, labour, plants and equipment, technology and financial capital.

We are doing well in this regard and labour productivity is very much a part of this improved performance, but these developments do not necessarily produce jobs. In addition to technological influences on the job market there are many other subtle changes occurring that impact on this; for example, the growth in the services sector and more part time work of all descriptions.

I believe the real impediment for job growth at this time in Canada is a lack of consumer confidence. Consumers are not spending. Our export growth has been phenomenal thanks to the efforts of Team Canada, but consumer confidence is lacking. When consumers do not spend, factories do not expand, new factories do not get built and the service economy suffers also. Why are consumers not spending?

I think the reason why consumers are not spending is because they are unemployed or unsure they will be able to keep their jobs. Similar factors are at work around the world. What can we do? I think we must show the way. Our economy is not big enough to exert much influence on that of other countries, but we can improve the situation here at home. How can we do so?

I will be concentrating my efforts in Etobicoke North. If all members did the same in their ridings, the cumulative effect would be substantial. What role can the federal government or an individual member of Parliament play? Cynics would say there is no role for us. I say the opposite. I would not have sought public office if I did not believe I could make a difference. The same can be said for all of us, I am sure.

Am I talking about a large interventionist role for the federal government? Definitely not. I believe in the wisdom of the markets but I also know that from time to time markets can fail. As a member of Parliament I will play the role of a catalyst to bring industry, labour and governments together in Etobicoke North. I will make businesses in the riding aware of the support the federal government can offer in the areas of technology and innovation.

I will also be working closely with the schools in my riding and other excellent educational institutions in Etobicoke North such as Humber College. Through this work I hope to support education and skills development for young Canadians and youth employment. Young Canadians in Etobicoke North and throughout Canada need hope for the future. I commit myself to work with them.

Last week I had the honour to present the Prime Minister's award recognizing teacher excellence in mathematics, technology and science to Mr. Larry Tracey at the Elms junior middle school in Etobicoke North. These pockets of excellence need to be replicated and recognized across Canada because students are our leaders of tomorrow.

What role can industry play to address the structural unemployment we are now facing? As I said earlier, I believe the federal government can create the policy and business environment that is conducive to business investment activity. This I believe we are doing.

By 1997-98 our government will have achieved the initial deficit target of 2 per cent of GDP, one of the lowest if not the lowest of all industrialized nations. We are going about this task in a determined and responsible way. I can say from my experience in management and government that the pace with which we are proceeding reflects an understanding that when we deal with budget reductions of this magnitude, what we are really doing is reinventing government. Reinventing government if it is to be done in a responsible and caring way, cannot be done in one or two years.

The federal government can also assist business in areas such as technology and innovation as I said earlier. Governments alone cannot create lasting jobs. Only the private sector can do that. I am very proud to have worked in the private sector and I believe I understand the demands on business and the competitive environment in which they operate.

Business acknowledged in the 1960s and 1970s that it also had a social responsibility. These responsibilities first manifested themselves in areas such as corporate philanthropy, investment in human resources training and development, environmental protection, information disclosure and other areas such as those.

Canadian business has responded so well to the new realities in the past. I would ask business leaders in Canada: Are we focused exclusively on the pursuit of shareholder value and enhanced share prices to the exclusion of some other very important corporate responsibilities, such as the responsibility to people and communities? How many more times do we need to hear about a company that has downsized, right sized, re-engineered or restructured with resulting massive layoffs or job cuts all at a time of record corporate profits?

How many executives today remember that when they were at university an undergraduate degree paved the way to a job in corporate Canada? For the younger executives the requirement may have ratcheted up to a masters degree. Today there are countless young Canadians who have more formal education than that, yet they cannot find jobs.

I ask executives in Etobicoke North, and throughout Canada for that matter, to consider the following questions: How rational and balanced are your corporate human resource policies through the medium and long term? How could you productively put people to work to grow your business? As a member of your community, could your company be doing more to give people a chance to demonstrate their value to your business?

All of us in the House understand the business imperative of the bottom line. I recognize that industry is not one big social program. Many companies however are re-examining their staff cutback policies and are looking at ways to develop and grow their businesses. A number of business analysts have concluded that large wholesale staff reductions have generally not produced the winning results that companies may have expected.

The industry I am very familiar with for example, the forest products industry, through the Forest Sector Advisory Council is working closely with the federal government exploring ways in which even more jobs can be created in this industry. It is encouraging to learn also that a major Canadian bank has recently launched a program designed to provide mentoring, business support and loans to young Canadian entrepreneurs.

I am confident that businesses will rise up to the challenges we all face as Canadians and that, like Team Canada, we can all work together to build the future. Like public authorities, unions,

interest groups and citizens, businesses must help in tackling the task ahead.

For these reasons I will support and I urge all members in the House to support the budget implementation bill before us. Implementing the budget will allow the federal government to play its rightful role in the jobs and growth agenda, building quality and permanent jobs for all Canadians now and for the future.