Debates of Feb. 19th, 1997

The Budget

[The Deputy Speaker]

I have the honour to inform the House that a communication has been received as follows:

Government House Ottawa

February 19, 1997

Mr. Speaker,

I have the honour to inform you that the Right Hon. Antonio Lamer, Chief Justice of the Supreme Court of Canada, in his capacity as Deputy Governor General, will proceed to the Senate Chamber today, the 19th day of February, 1997 at 5.00 p.m., for the purpose of giving royal assent to certain bills.

Yours sincerely,

Secretary to the Governor General Judith LaRocque

[The Deputy Speaker]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Waterloo-Canadian Securities Commission; the hon. member for Rosedale-Exports.

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

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, we are here to discuss the federal budget. The Liberals say it is a good budget. What is more important is what Canadians are saying about it. In our view Canadians will say: If this is such a good budget, why don't I see the benefits. Where are the jobs? Where are the health care and pensions that I can count on? Where is the tax relief? Why is it that federal government revenues go up by 20 per cent and family incomes go down by 10 per cent?

The good news is that the majority of the provinces have already balanced their budgets and the benefits are starting to flow. It is Ottawa and the federal Liberals that are furthest behind and most off track. The big task facing Canadians in 1997, in a federal election year, is to get the federal government on track with respect to job creation and tax relief.

There are two options before Canadians. Reform offers its fresh start platform designed to balance the federal budget now, and then leave more dollars in the pockets of Canadians through broad based tax relief. Notice the order: balance first, tax relief second. The Liberals offer this tax and spend budget designed to get more tax dollars into the hands of the federal government and then further spending.

The options are Reform's fresh start tax relief versus the Liberal tax and spend budget. These are the principal fiscal options facing Canadians in an election year at the federal level and should be the focus of both public debate and this budget debate.

If we are going to have any kind of debate, one of the prerequisites is to establish the facts and to separate myth from reality. I would like to spend a little time on that because the budget is loaded with myths. Budget myth number one is that federal finances are finally under control. What is the reality? The federal deficit is still at $19 billion. The debt will pass the $600 billion mark this spring. The federal government will spend $46 billion per year on debt service, more by far than it spends on social programs. This is represented as prudent fiscal management. Only in Ottawa would that be believed.

Budget myth number two is that the federal government has reduced the deficit by controlling its spending. What is the reality? Almost the opposite. Eighty-four per cent of deficit reduction has been achieved by increasing tax revenues. Two-thirds of the remainder of deficit reduction has been accomplished by offloading on the provinces and through defence cuts. Only 6 per cent has been achieved by reducing the federal government's direct spending on other programs.

I noticed that at the beginning of the minister's budget speech, he thanked everyone and his dog for contributing to this speech. The people he did not thank were the Canadian taxpayers who are responsible for 84 per cent of the reduction of the deficit.

Budget myth number three, Liberals are the great defenders of medicare. The reality is that they have cut medicare by 40 per cent, closing hospitals across the country and increasing waiting lines in every province, but leaving others in local and provincial governments to take the blame. This pretence of defending medicare while gutting it is the ultimate hypocrisy.

Budget myth number four, Liberals are attacking child poverty. The reality is that their new $600 million child benefit is completely negated by the $7 billion federal cut in health, education and social spending since 1993.

If one thinks about it, Canadians are a kind, caring and compassionate people. If the average Canadian were willing to spend $1,000 on helping a poor family or a poor child how would they do it? They might make a direct contribution to that family or that child, or they might make a contribution to a local agency or church that was in the business of helping those people. They might even be persuaded to pay $1,000 in taxes to their local government or the provincial government which has services offered at the community level.

However, I doubt if there is one Canadian in 1,000 who honestly and sincerely wanted to help a poor family or a poor child who would think that the best way to do it was to write a $1,000 cheque to Revenue Canada because they know what would happen.

The $1,000 would go to the minister of revenue who would take a bite out of it for administration and then pass it over to the Treasury Board. The Treasury Board would take a bite out of it for allocation and then pass it on to the human resources minister. The human resources minister would take a bite out of it by having a conference with all of his provincial colleagues and a bunch of experts to decide what to do and then he would pass it on to his provincial colleague who would take a further bite out of it and then pass it on to some agency. Out of the $1,000 that went in at one end of the pipe, we would be lucky if a loonie got out the other end.

Canadians know a better way. Canadians know that if Liberals and Tories were so concerned about the poor and the children of the poor then why are these people paying taxes in the first place? Why is a single mother with one child making $2,000 a month paying federal income taxes at all, let alone $1,300 a year? It is because government after government made them pay taxes and offered no tax relief.

Of course the greatest thing one can do for the working poor is to get more jobs, which brings me to budget myth number five, jobs, jobs, jobs. The reality is 1.5 million Canadians unemployed, 2 million to 3 million underemployed, 700,000 having two jobs to try to make ends meet, 17 per cent unemployment among young people, 1 out of 4 workers afraid of losing their jobs, and the worst string of unemployment numbers since the depression, 76 consecutive months with unemployment rates over 9 per cent.

Some day the finance minister's picture will hang in the hallowed halls of Parliament. At the rate he is going, I suspect they will hang it next to the picture of the finance minister in R.B. Bennett's government, the only other government that ran up unemployment numbers like we are experiencing today.

The Liberal budget is accompanied by a booklet called the government's job strategy, but it contains no reference to tax relief. A job strategy without tax relief is like a beaver without teeth. It is like a truck with no wheels. We can rev the engine, flick the lights and honk the horn but it is not going anywhere, which is precisely the Liberal record on jobs.

That brings me to the biggest myth of all. The finance minister would have Canadians believe that he has not raised taxes. That is a big whopper. The reality is that since the Liberals came to power in 1993, the GST revenues, the hated GST, are up by $2 billion, corporate income taxes are up by $6.8 billion, personal income taxes are up by $15 billion, and other taxes are up $500 million. That is a $24 billion increase in tax revenues over what they were on the day the Liberals took office.

Just last week, in the biggest tax grab of them all, there was a 70 per cent increase in Canada pension plan contributions. It is the government's Achilles' heel, the tax grab that will be to the Liberal's what the GST was to the Mulroney Conservatives. It is the tax increase that brings to 36 the total number of tax increases introduced by the Liberal government.

Enough of these myths. Enough of the fudge-it budget. There has to be a better way and there is a better way. It is described in the platform which Reform has put forward under the heading of a fresh start for Canada.

I suggest that the next election will be a contest between two very different visions of the country, and the vision that captures the hearts of Canadians will be the vision that shapes the Canada of the 21st century.

One vision held by the government and by the Conservatives before them revolves around big government and the high taxes that go with it. It is based on the belief that the Canadian economy, Canadian social services and Canadian unity all need aggressive intervention and management by a big spending federal government. It is the vision of Ottawa and the politicians who control it as the centre of the universe.

This is a vision which has Canadians working more than half a year just to pay taxes. It is a vision that promises job creation and social justice and has delivered chronic unemployment and chronic poverty. It is a vision which trivializes Canadians' sense of themselves by implying that only through government programs, government spending, government initiatives and government propaganda can the country be held together.

The other vision, the one offered by Reform, is of a Canada defined and built by its citizens rather than by the government. The citizen, not the government, is at its centre. It is a vision in which strong families and communities and local governments, not more federal programs, are the principal pillars of social security. It is a vision of a country where tax freedom day occurs in April instead of in July. It is a vision of a country in which the unemployment rate is 5 per cent or lower instead of 10 per cent, thanks to initiative and entrepreneurship, innovation and hard work. It is a vision of a smaller government and lower taxes. It is a vision based on the proposition that a dollar left in the pocket of a consumer or a taxpayer or a lender or an entrepreneur will create more jobs and economic and social security than that dollar in the hands of a federal bureaucrat or a politician.

We are talking about the budget, so I want to conclude with the fiscal plan that makes that vision of a new and better Canada a reality. Our fiscal plan calls for balancing the federal budget by 1998-99 at a level of expenditure lower than that proposed by the finance minister, and then running surpluses thereafter.

Note that what we are proposing is balancing the budget first and tax relief after. Many members opposite seem to think we are trying to do the two things at once. We have made this abundantly clear; balance first, tax relief after.

We then get to surpluses and these surpluses are the real light at the end of the tunnel, the beginning of the hope for the future. We propose to apply those surpluses as follows. A $5 billion down payment on debt reduction by the year 2001, with a fixed proportion of future surpluses being dedicated to debt reduction. In other words, the federal debt would be set up like a mortgage and the first payment made every month is a payment on the mortgage.

Second, $4 billion per year transfer for health and education purposes to the provinces to repair the damage done by the Minister of Finance.

Most important of all, broad based tax relief which follows, not precedes, balancing the budget. Seven tax relief measures to deliver $1 billion per year in tax relief to the people of Atlantic Canada; $3.2 billion per year in tax relief to the long suffering people of Quebec, the most highly taxed jurisdiction perhaps in North America; $5.4 billion per year in tax relief to the people of Ontario; $2.3 billion per year in tax relief to the people of the prairies and $1.8 billion per year in tax relief to the people of British Columbia.

Put another way, it is $2,000 in tax relief per average family by the year 2000 or tax relief that lifts 1.2 million lower and middle income Canadians off the federal tax rolls altogether.

To put this into perspective, Reform proposes a trimmer, more focused $94 billion a year federal government. We can get a lot of government services for $94 billion. This compares with a bloated, unfocused $109 billion a year federal government from the federal Liberals and Tories. The difference between the two is about $15 billion per year. The number one question to be decided in the next federal election is whether Canadians should allow that $15 billion to be collected by the federal tax man and spent by Ottawa or whether that $15 billion should be left in the hands of the Canadian consumer and business community.

Reform believes that a fresh start for Canadians lies in the direction of leaving that $15 billion in the hands of the people to whom it belongs.

I therefore move:

That the amendment be amended by inserting after the words "health and social assistance" the following words: "a measure which is not the answer to stronger sustainable social programs";

and by inserting after the words "proposes no tangible job creation measures" the following words: "such as lower taxes to create long term jobs";

and by inserting after the words "electoral gifts around Quebec and Canada" the following words: "which, among other things, hampers the government's ability to balance the budget".

[The Deputy Speaker]

The amendment made by the hon. member for Saint-Hyacinthe-Bagot is acceptable. The subamendment by the hon. leader of the Reform Party would appear to be acceptable, but again, as with the Bloc, I would ask permission to give it a formal ruling as quickly as can be done.

Questions and comments.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I have a question for the member for Calgary Southwest.

In the House today and over the last couple of days the Reform Party has criticized the government for its approach to the Canada pension plan. I think when an opposition party comes to Ottawa it has an obligation not just to criticize but also to offer an alternative.

I wonder if the member for Calgary Southwest, the leader of the Reform Party, would care to inform the House and Canadians what exactly is the plan of the Reform Party with respect to reforming the Canada pension plan.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, I thank the member for his question because a lot of confusion has been spread, mainly by the Minister of Finance, on what Reform's position is.

First of all, Reform's position is broader than that of the government. Our aim is to get more retirement income for seniors at lower cost through both pension reform and tax reform. That is a broader objective than just rescuing CPP. It includes rescuing CPP but it is a broader goal.

We propose three measures to accomplish this objective. First, we propose to guarantee existing seniors that they will receive all the benefits they are entitled to under CPP. We propose a modification to CPP designed to achieve that guarantee.

Second, we propose to shift middle aged and younger workers on to an expanded RRSP program. The RRSP program gives higher benefits per dollar spent than CPP. And so our modified CPP plus our expanded RRSP program give pensions at a lower cost than the Liberal approach which is focused mainly on rescuing CPP.

The third thing we add is Reform's tax relief program. By lifting 1.2 million Canadians off of the federal income tax rolls altogether, including many seniors, it helps seniors further, whereas the Liberals have been increasing the burden on seniors on every front by clawing back the seniors benefit, by gouging the contributors to CPP and by restricting the use of RRSPs rather than expanding them.

Reform's aim is to get more retirement for seniors at lower cost through pension and tax reform. Our proposal rests on three pillars, not one: a modified CPP; an expanded RRSP; and tax relief including tax relief for seniors.

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

Mr. Speaker, I would like the hon. member to provide some clarification on the Canada pension plan.

There have been numerous statements made that the Canada pension plan is a tax and not a pension. In my opinion when I pay my taxes I do not expect any funds back over x number of years. Presently as the CPP sits it is a pension and in due time whether it be through disability or retirement people expect to have a return for their funds invested.

Could the hon. member clarify his position that it is a tax and not a pension?

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, what Reform has said is not that the pension is a tax but that the premium paid is a payroll tax. This is not just Reform's opinion.

The Minister of Finance has in his department the economic analysis and forecasting division which did a lot of work on this budget. Joe Italiano who is with that division put out a paper on April 25, 1995 called "Growth in CPP/QPP Contributions". In it he defines CPP contributions as a payroll tax. Incidentally he goes on to analyse the impact of increasing those payroll taxes from 1986 to 1993 and concludes that they killed 26,000 jobs. This is not me speaking; this is the finance minister's own department defining CPP premiums as a payroll tax.

The government gets a lot of statistics from Statistics Canada. A number of officials in Statistics Canada put out a paper in the Canada Tax Journal a short while ago. They identified payroll taxes and listed what they were and the list included CPP and QPP contributions.

Last night Judith Andrew of the Canadian Federation of Independent Business was discussing the minister's budget. She referred to the hike in the CPP premiums as a payroll tax. If there is any group in the country that would know a payroll tax when they see it, it would be the CFIB because of course these are the people who are actually paying it.

Reform says it would be very appropriate for the minister, since his department acknowledges it, Statistics Canada acknowledges it, economists acknowledge it and business people acknowledge it, to acknowledge that the CPP premium is a payroll tax. When it is increased by 70 per cent, that has extremely negative effects on employment.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, it appears to me that the leader of the third party is engaging in a semantic exercise in using the term payroll tax.

The premiums deducted for the Canada pension plan at source are paired equally, one to one with an employer contribution and paid over into the Canada pension plan. The identical thing happens with the employer's pension plan. The employee is deducted an amount of money at source. It is paired with dollar for dollar by the employer; the identical sum the employee puts in, the employer puts in. It is the same as with the Canada pension plan. Those funds are turned over and paid into the employer's pension plan.

Does the leader of the third party agree that there is a pension plan in both cases? In both cases it is mandatory that the employees contribute. The contributions end up in pension plans and ultimately the party making the contribution, the pensioner, will draw the benefits from the plan.

Why does he insist on referring to one of those two options as a tax when it is not?

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, first of all most employer pension plans work the way the member describes, except one, namely the one that the members in this House voted for themselves. In that one the public puts in six times what the member puts in. That is why it is unfair.

Second, one of the principal differences in what we are talking about here is that the CPP contributions are a legislated mandatory compulsory contribution whereas participation in employer-employee pension plans are usually voluntary.

The third point and the most important one is that the finance department itself defines CPP contributions as a payroll tax. This is not the Reform Party; it is a division of the minister's own department.

That is the explanation.

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

Mr. Speaker, whenever I present the arguments the leader just developed, audiences tend to react by saying: "You will never be able to deliver on this". I wonder what kind of an answer the leader would give to people who make this argument.

[Preston Manning, Reform, Calgary Southwest, AB]

Mr. Speaker, the way to deliver on all of these commitments is first to get a mandate from the Canadian people to do so.

The public are aware that their retirement income is insecure under CPP. They are afraid that the minister is casting a lecherous and covetous eye on their RRSP payments.

The way to get this secured and the way to get a mandate from the public is the way we endeavour to get a mandate for virtually everything that is done in this House, to go to the public with an explanation of the program. If the public supports it, then there is the authority to proceed with these types of reforms.

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, I am pleased to participate in this debate and to speak about the benefits the 1997 budget will bring for the businesses and citizens of Etobicoke-Lakeshore. I will be sharing my time with my colleague from Kenora-Rainy River.

The measures outlined by the finance minister in his speech yesterday will improve the lives of young people, of families and of seniors. Our measures for small and medium size businesses will help Etobicoke businesses thrive, grow and create jobs.

In my speech today I will focus on the specific measures that will benefit the people of my riding and then explain why the path this government has chosen is the best one for Etobians.

First, the budget will invest in our most important asset, young Canadians. Our youth employment strategy is good news for the students of Lakeshore Collegiate, Father Redmond, Etobicoke School of the Arts, Bishop Allen Academy, Humber College Lakeshore Campus, as well as university students in my riding.

Our strategy will support Canadian students with 120,000 career summer job opportunities and over 19,000 internship placements in the research, private and non-profit sectors. These crucial first opportunities will give young Canadians the chance to break the no experience, no job and no job, no experience cycle.

We are also continuing the successful youth service program. In Etobicoke-Lakeshore the program was instrumental in developing a youth and crime prevention initiative in one of our most troubled communities.

In addition, this government will assist young Canadians by helping them and their families to afford training and education. We are doing this by raising the per month education tax credit from $100 to $200 in the next two years and enabling students to apply it to more expenses and apply unused portions to future tax credits. For example, a college or university student with tuition of $2,800 and additional fees of $300 would receive $1,200 in combined federal and provincial tax assistance per year.

Moreover this government is extending the pay back period for student loans and offering an additional $20 million a year for student assistance. That is more good news for young Etobians worried about the cost of education.

We are also enabling parents with young children to save early to help pay for their children's education or make up for a contribution missed when their children were younger. Families in Etobicoke will be happy to hear that annual contributions to registered education savings plans are being doubled from $2,000 to $4,000. We are also relaxing the requirement that in the event the

child does not pursue post-secondary education, parents can transfer the RESP to their RRSP or receive the investment income directly.

Low income families in Etobicoke will be happy to hear that our government will enrich the Canada child tax credit by over $600 million. This combined with a $250 million working income supplement means an $850 million increase in annual benefits.

Our government will continue to work with the provinces and territories to design the complementary changes that will reduce child poverty and barriers to work.

Our efforts for health care in Canada are solid. We remain committed to the values of the Canadian system and we will enforce them through the Canada Health Act.

Etobians of all ages will be happy to hear that we have stabilized the Canada health and social transfer to the provinces at $25 billion annually and we anticipate growth in transfers at the turn of the century. We are committing $300 million more over the next three years for new health initiatives. Every dollar of the new money will be devoted toward the delivery of better health services to Canadians.

Seniors in Etobicoke-Lakeshore will be pleased to hear that we are devoting $150 million over the next three years to help the provinces put in place new projects, such as new approaches to home care, drug coverage and other innovations, that will enable us to test ways in which we can make our system more efficient.

There will also be $100 million for the community action program for children and the Canada prenatal nutrition programs designed to prevent health problems in our children.

This is more good news for groups like the Stonegate Community Centre, the Association of Ontario Health Centres, the Stothers Centre for Children and Families and the Welcome Baby Support Network for Teenage Mothers. All of these organizations will benefit from these new initiatives.

There is no question that our publicly funded system is one of Canada's greatest achievements and there is no doubt that this government will fight to keep it.

Our government is investing in helping the disabled achieve the equality to which they are entitled. As a member of the human rights and the status of persons with disabilities committee, I am especially pleased by the announcement of $100 million worth of additional support each year to disabled Canadians. Using tax credits, financial incentives, training and opportunities funds, the government will put Canadians with disabilities in balance with other Canadians, allowing them to realize the same opportunities.

In a similar way we are giving the people of Etobicoke-Lakeshore the chance to give more to charitable causes. The charitable sector is playing an increasingly important role in meeting the needs of Canadians. The government recognizes the importance of giving charities the tools they need to accomplish their important work.

Although tax assistance for charitable giving entails a cost for governments, it is plainly a much lower cost than providing full support directly through public funds. The 1997 budget levels the playing field between the crown and other kinds of charities, making it easier for organizations to raise funds and donors to receive larger tax credits.

The budget contains $95 million annually of new tax assistance to the charitable sector. This will give charities, like the Etobicoke Cancer Society, Goodwill, St. Vincent de Paul, Reach the Rainbow, the YM-YWCA, the Children's Aid Society and the Etobicoke chapter of the Heart and Stroke Foundation, the framework they need to accomplish their work and help Canadians whom these charities serve.

Now that I have mentioned some of the ways in which we are assisting individuals, I will speak about our strategy for a vibrant economy. The government has always maintained that good fiscal management is the route to investor confidence. In the time since we took office we have witnessed a monumental turn around in the fortunes of Canada. Remember, in the late 1980s, year after year of Conservative finance ministers preaching restraint, and then year after year of record deficits?

It was the Liberal government and the Minister of Finance that turned Canada from the worst debtor nation in the G7 to a deficit to GDP ratio of 2 per cent. In 1998, the government anticipates breaking its dependency on borrowing new money. This means that 1998 will mark the first time in 28 years that it will not have to go to the markets to borrow new money. It will put the Canadian government in an enviable position internationally. Canada will have the best financial record of any G7 government. In 1997, it is expected to be the growth and job creation leader of all G7 countries.

If the government were to offer the Canadian public, as the Reformers and the Ontario finance minister suggest, a broad based tax cut, not only will we lose the war on the deficit but we will surely lose the vital social programs we have been fighting to protect. This is not a fresh start for Canada but a full stop for Canada and a future for Canada.

Members will be happy to know that we are not gambling all our chips on the tax cut number like our opponents would. Instead, we are building on the cornerstone of responsible fiscal management, a strong health care system, a prosperous export strategy and an innovative research and development program. This is the best approach for Canada and for Etobicoke.

[Nic Leblanc, Bloc, Longueuil, QC]

Mr. Speaker, I would like the hon. member to comment on the request made by the Government of Quebec to receive the same compensation as the maritimes for harmonizing the GST with the provincial sales tax. We all know that the maritimes received a gift of approximately $1 billion in compensation from the federal government.

Since the share of federal expenditures borne by the Government and the people of Quebec amounts to about 27 per cent, this means that Quebec is giving approximately $300 million to the maritimes, which I feel is totally unfair. To claim that the federal government did not reward them is inaccurate. Because in some of the maritime provinces the provincial sales tax was relatively high-9, 10, 11 or 12 per cent-the federal government said: "Set the harmonized sales tax at approximately 15 per cent and we will make up the difference". If that is not a gift, what is?

It was said also that the maritimes did not have the funds required to make up the difference, while all they had to do was increase other sources of revenue, income tax for instance.

I would like the hon. government member to tell me if, in her opinion, it is fair and equitable to have the Government of Quebec pay, through the federal government, $300,000 per year as a gift to the maritimes, when New Brunswick Premier McKenna is setting up an office in Montreal and using money Quebecers paid to Ottawa, which Ottawa in turn gave to the maritimes, to lure Quebec businesses to his province.

That is right, with our own money, Quebec's money, the Government of New Brunswick is stealing our businesses away. Does that seem fair and equitable to her?

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, it seems strange that I have to address the whole question of fairness. We in the House and the government have indicated in many ways that this federation works because we all co-operate. Many of us speak on a daily basis on the unity, harmony and co-operation that is needed to ensure that every part of the federation works.

In addressing the budget presented by the Minister of Finance yesterday, the question of fairness and of provincial responsibility and the question of who is taking jobs from whom, I am not sure was addressed.

On the question of co-operation and harmonization of the GST, the provinces have to work with us. The tax is an administratively bad tax. We are doing what is necessary to provide the best approach for the country. I am not going to address what provincial premier is doing what in any part of the country.

I would ask my colleague to co-operate with us to address the issue of Canadian unity.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, the hon. member reiterated in her presentation what the finance minister said this morning in a CBC television interview.

He said that we are going to focus spending on things that really count to Canadians. Our values are health care, education, children and job creation. But when we look at the record, the government has cut $7 billion a year from health and education funding. That is a 40 per cent reduction. So the actions are quite different from the words.

The government's record on jobs is not good. The unemployment rate is about the same as it was when it came into office.

I would like to ask the member to tell me how the words that the finance minister presents and those that the member presents are so much different from what the record really demonstrates in these areas?

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, we stand on our record. That is the short answer. We have created jobs. We have provided an environment in which jobs can be created. We have reaffirmed our commitment to the Canada Health Act. We have provided money for youth and youth programs. We have set a course for the future that will definitely take us to where we ought to be. The hon. member's fresh start myths will not get us where we want to be.

[Bob Nault, Liberal, Parliamentary Secretary to Minister of Human Resources Development]

Mr. Speaker, it is my pleasure to enter the budget debate.

First, I would like to congratulate the Minister of Finance on a job well done. I would like to say to my constituents, welcome to the greatest nation on earth. It is easy for me to say that, simply because we have fulfilled the commitments we made in 1993. At that time we campaigned on restoring fiscal sanity and created a climate of opportunity. When I talk to people across the nation, to consumers, to people in the construction industry, to homeowners, to people who are buying their first car or their first home, they tell me that we have done just that.

We have to continue through a number of other budgets to reduce the deficit to a point where, at least in the next millennium, we will not have to continue to deal with deficits even when there is a downturn in our economy. That is what the finance minister means when he talks about our values. Because of our values we have made tough decisions.

I was here a number of years ago when the Tory government was in power, when the finances of the nation and the government were in rough shape-

[The Acting Speaker (Mr. Milliken)]

Order.

A message was delivered by the Gentleman Usher of the Black Rod as follows:

Mr. Speaker,

The Honourable Deputy to the Governor General desires the immediate attendance of this honourable House in the chamber of the honourable the Senate.

Accordingly, the Speaker with the House went up to the Senate chamber. And being returned :

[The Acting Speaker (Mr. Milliken)]

I have the honour to inform the House that when the House did attend His Honour the Deputy to His Excellency the Governor General in the Senate chamber, His Honour was pleased to give in Her Majesty's name the royal assent to the following bills:

Bill C-41, an act to amend the Divorce Act, the Family Orders and Agreements Enforcement Assistance Act, the Garnishment, Attachment and Pension Diversion Act and the Canada Shipping Act-Chapter 1.

Bill C-53, an act to amend the Prisons and Reformatories Act-Chapter 2.

Bill C-57, an act to amend the Bell Canada Act-Chapter 3.

Bill C-202, an act respecting a National Organ Donor Week in Canada-Chapter 4.

Bill C-270, an act to amend the Financial Administration Act (session of Parliament)-Chapter 5.

The House resumed consideration of the motion that this House approves in general the budgetary policy of the government.

[Bob Nault, Liberal, Parliamentary Secretary to Minister of Human Resources Development]

Mr. Speaker, as I was saying, our efforts in the last almost four years clearly show that by 1998 and 1999 net borrowing requirements will be zero.

That is how most countries define a balanced budget. So what we can now say is that we have the deficit under control. As well, the debt is starting to fall as a portion of GDP. In only four years we have been able to clean up the mess left behind by nine years of Tory incompetence and mismanagement.

What are the results of all this hard work by this government and quite frankly by Canadians as it relates to some of the pain that Canadians have had to go through in order to deal with the Conservatives and their rule and of course some of the people on the right wing who have suggested that they have all the answers?

We have the lowest inflation in a very long time. We have interest rates at their lowest level in almost 40 years. We have massive savings for home owners and consumers and economic growth is strong. In fact, we have led the G-7.

Of particular interest, because of course this is an election year and everybody likes to make predictions, the private sector forecasters predict we will continue to have the strongest economy in the industrialized world.

Since our election more than 715,000 new jobs have been created. As has been said in this place by the Prime Minister on a number of occasions, that is more than Italy, France, Germany, Japan and Britain all put together. That may not seem like a lot to some members but in fact based on the mess that we inherited from the right wingers in this particular scenario that I mentioned, I think it is a job well done indeed. I suspect that some forecasters like John McCallum from the Royal Bank are predicting we will even better that this year with the creation of up to 350,000 more jobs.

That is on the fiscal side. Those of us who were here under the Mulroney rule have to remember that now we have the little brother of the Conservative Party called the Reform Party whose members were so embarrassed about their leader under the Conservative Party they decided to start their own.

None of us is fooled by that. It is the same right wing Tory ideology. That is why we see the lack of interest by the voting public in supporting the Reform Party, which is no different than when it supported the Mulroney years because of the tax policies, the vision and the values it holds for Canadians and which the majority of Canadians do not support.

I want to talk a bit about those particular values. Before I do that, I want to lay a few issues on the table for the public watching today. The opposition and certain parties in the provincial jurisdictions are suggesting that we in the federal government have been able to clean up our finances by downloading to the provinces.

I want to talk a bit about Ontario because I am an MP from north western Ontario. What we are living through is almost identical to what I would envision under a Reform government if it were ever to occur in this land. We are seeing a slash and burn policy. We should look at the facts in Ontario to give us a sort of preview and a picture of the future if another right wing party like the ones in this House would form the government.

Because of Mike Harris' irresponsible tax cuts he has had to cut $1.3 billion out of hospitals, $.5 billion from roads, $400 million from post-secondary education, $2 billion from social assistance and I understand $1.3 billion from municipalities, and that is just the tip of the iceberg.

I want to give people some information this afternoon that may bring to light just why it is difficult for federal members of Parliament to accept where Mike Harris is going and that he is in fact trying to blame the federal government for the slash and burn and all the different headaches that he is causing people from northwestern Ontario and Ontario as a whole.

Payments to Ontario's government will drop from $10.3 billion in 1993-94 to $9.1 billion in 1998-99, a decline of $1.2 billion or 11.4 per cent. This represents at most 2.5 per cent of Ontario's revenues. We cannot, after the list I have just read, suggest that this cut made to transfer payments to the Ontario government and the Ontario people is the reason why Mike Harris and his Tories are cutting all the services in Ontario.

Let me give the real reason why. It relates to the opposition, especially the right wing opposition parties, both the Tories' and Reforms' interest in across the board personal income tax cut. In Ontario this particular government has suggested that it would cut 30 per cent out of our personal income tax. That works out to $4.9 billion per year by 1999. That is the reason we are closing hospitals, why we are reducing payments to school boards and why we are increasing the size of our classrooms and why we have to reduce transfer payments to the municipalities.

Anyone who has spent any time looking at what is going on in Ontario would know that it is not the transfer payments from the federal government to the provincial government, but it is the silliness of having a tax cut across the board when there is still a major deficit to deal with and in fact you cannot afford to do without those revenues. For the life of me I cannot understand why this blind right wing ideology is even being considered by Canadians and Ontarians when in fact those of us in this place know that we cannot do without that revenue until we balance our books.

I am proud to be a Liberal for a number of reasons. Even though we have had to make some tough decisions on the deficit we continue to maintain our values of looking after our social programs, putting them on a good footing. The agreement that we signed with the provincial governments on CPP is a perfect example of that. Putting money toward health care, putting money toward youth, putting money toward innovation and technology, that is what Liberalism is all about. That is why this government is popular in the polls. It is not because some of the members opposite say that we have played some number game.

People are more intelligent than that. They know we have made tough decisions but we have been fair and equitable. That is the reason why when we go to the people with this particular budget and our record they will agree with us that we have gone a long way down the road to improving our chances in the next millennium.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, the member just described what Liberalism is all about. He said virtually the same thing as the finance minister said this morning on CBC television, which was that they are going to focus their spending on the things that really count to Canadians. He said that their values are health care, education, children and job creation. Those are the same things which the hon. member said.

Those are the words, but I want to ask the hon. member about the actions and contrast them to the words.

When we look at the action on health care, in fact federal spending has been reduced by 40 per cent. That is a fact. That is reality.

Unemployment has remained above 9 per cent for many months. The unemployment rate is almost as high as it was when the government took office in 1993. Not only are there 1.5 million people unemployed, there are another two million to three million who are underemployed, and fully a quarter of the workforce is afraid of losing their jobs. More important than the actual unemployment rates, bad as they are, is the fact that Canadians are having to worker harder than ever just to make ends meet. That is

making their lives very difficult. It is creating child poverty and problems within families.

Education funding has also been cut by the federal government by 40 per cent. That was the action. That is a fact.

The government shows its concern for children by reducing the average family income by $3,000. I am talking about take home pay. That is the pay which families have available to look after their kids. That has been reduced by $3,000 since the government took power. That is how the government shows care for children.

I would ask the hon. member to respond to the clear difference between the words that he and the finance minister speak and their actions over the last three years.

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Mr. Speaker, I find it so humorous that I could almost laugh.

All of a sudden that right wing party is talking about jobs, health care and the plight of the poor. It is talking about those issues because it cannot deal with the only issue that it ran on in the last election, which was cleaning up the finances of the nation by slashing and cutting everything that was not nailed down. Now that the Liberal government has done what no government has been able to do for the last 20 years, all of a sudden that party has recognized that there is something else.

Let me deal with the issue of 42 per cent. When the finance minister for Ontario presented the Ontario budget, on page 9 he said that Ontario will experience federal cuts of some 42.4 per cent.

That is the reason I brought up these numbers and that is the spin the member opposite is putting on this debate.