House of Commons Hansard #134 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

Committees Of The HouseRoutine Proceedings

3:25 p.m.

Fundy Royal New Brunswick

Liberal

Paul Zed LiberalParliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I believe there would be unanimous consent for the following motion. I move:

That the Standing Committee on Agriculture and Agri-Food be authorized to travel to Winnipeg, Regina, Saskatoon, Calgary and Grand Prairie from March 17 to March 21, 1997 in relation to its examination of Bill C-72, an act to amend the Canadian Wheat Board Act, and that the necessary staff accompany the committee.

(Motion agreed to.)

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

The BudgetRoutine Proceedings

February 20th, 1997 / 3:30 p.m.

St. Paul's Ontario

Liberal

Barry Campbell LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I listened with interest to the hon.

member opposite. Yes, we have talked a great deal about the G-7 in comparisons with Canada but not just on deficit reduction.

She conveniently left out these comparisons. According to the OECD, according to the IMF, Canada in the year that is beginning April 1 will lead the G-7 in growth. Canada will lead the G-7 in job creation. According to an IMF report reported widely in the press yesterday, Canada is well ahead of other nations in the G-7, indeed throughout the OECD, in dealing with the problems of an aging population. Does she want to comment on that?

Second, in her focus on merely $50 million for children, she is leaving out for some reason the budget announcement of over $600 million in new money available for children, une prestation fiscale pour enfants bonifier.

It is going to raise the amount of support that the federal government provides to children under the child tax system as it currently is moving to a new system from $5.1 billion to $6 billion. She leaves that out for some reason and talks only about $50 million. It will be $850 million added to the existing program, $600 million of which is new money.

For some reason she leaves out entirely le Programme visant à améliorer la santé de nos enfants, an extra $100 million for prenatal nutrition and for the vital CAPC program. Is she aware of that or has she just forgotten?

The BudgetRoutine Proceedings

3:30 p.m.

Bloc

Francine Lalonde Bloc Mercier, QC

Mr. Speaker, the parliamentary secretary certainly knows that I am usually very well informed and that I have not forgotten that. I would like to remind him that the OECD statistics to which I was referring have to do with social policies.

It is predicted that Canada will be the leader in growth, in jobs, just as you said, and in dealing with the problems of an aging population.

In the area of jobs, changes that are occurring on the labour market have to be taken into account. Some people are saying that not much is being done. Last year, 125,000 of the 170,000 net jobs that were created were independent jobs. The only longitudinal studies available on this subject show that independent jobs, a number of which were probably created by public service employees who have received their separation incentive and have decided to start a small business of some sort-

The BudgetRoutine Proceedings

3:30 p.m.

Liberal

Barry Campbell Liberal St. Paul's, ON

Is it not a good thing?

The BudgetRoutine Proceedings

3:30 p.m.

Bloc

Francine Lalonde Bloc Mercier, QC

I am not saying that it is not a good thing. Mr. Speaker, you should tell him to address the Chair and to stop provoking me.

Independent jobs are interesting for those who hold them. However, when almost all net jobs created in a country are independent jobs, it is a sign that a revolution is taking place on the labour market. All our social programs, all our systems are not designed to meet that need. Definitely not. For example, the unemployment insurance program is not designed for those people. These jobs are far from being permanent, and they often generate less revenue. This issue needs to be given serious consideration.

As for growth, you are well aware that growth may not mean much sharing. Growth and improving the lot of the average citizen are two separate things. What I was talking about was improving the lot of the average citizen.

I would like the secretary of state to listen to me when he suggests that I omitted, for a reason he no doubt finds suspect, the $600 million the government has promised for the child tax benefit. I did not omit this amount. I said that the government had set aside only $50 million this year. I am not entitled to table a book. There will be $470 million after the election and the figure will not reach $600 million until 1999-2000.

I would ask the hon. secretary of state to consult his own papers, or I will provide him with copies.

So, what people will have before them during the election will be $50 million. The rest will come after the election. Last time, during the election, $720 million was promised for a national child care system. We never saw a cent. So, before I believe there will be $470 million for the child tax benefit the following year and $600 million the year after that, I will have to wait for the bill. Before then, there will be an election and another opportunity for the government to do what it wants.

Finally, there is health. As far as health is concerned, in Quebec anyway, the federal government has outdone itself: It has cut social transfers, it has cut assistance for health and, here, the government, using part of this money, instead of giving it to the province that has come up with a drug insurance plan, will provide $150 million in assistance to provinces for drug insurance plans. Maybe Quebec has a good idea. Let us help the others. Quebec did not ask for subsidies to implement its plan. It did it despite the cuts, without seeking any assistance. In its generosity, the federal government is going to look after research projects to be developed in other provinces.

The federal government will develop a health information system. The provinces are unable to exchange such information. And this brings me to the third point, the best of all. This too goes back to 1993. In Quebec we have a special program. This program was developed by a community group which found that underweight and disadvantaged women gave birth to small babies with all sorts of health problems. Gradually, those groups convinced CLSCs and others to give those women who claimed unemployment insurance benefits one egg, milk and an orange every day. The program yielded tremendous results.

I can still remember an major television program in which the Liberals promised to take care of small babies. This was in 1993. Now I know how the last $100 million will be used: a Canadian prenatal nutrition program will be established. Just imagine. The government will send civil servants all across Canada to help community groups to distribute one egg, milk and oranges to babies who are still in their mother's womb and who will not have much hope in life.

I hope the parliamentary secretary realizes there are major flaws in his minister's budget.

The BudgetRoutine Proceedings

3:35 p.m.

Liberal

Barry Campbell Liberal St. Paul's, ON

Mr. Speaker, this temporary change will add $195 million in July 1997 to the budget for the working income supplement, which means $70 million more than the increase proposed on the same date in the 1996 budget.

And the other $600 million will come in by July 1998. So that is real, new money.

The BudgetRoutine Proceedings

3:35 p.m.

Bloc

Francine Lalonde Bloc Mercier, QC

Mr. Speaker, in the budget it was $250 million, announced last year. So honestly-

The BudgetRoutine Proceedings

3:35 p.m.

St. Paul's Ontario

Liberal

Barry Campbell LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I want to take this opportunity before speaking to the budget to respond to some of the things that have been said by some members opposite.

The Reform Party has been critical of a number of things. First is the child tax benefit which will raise federal spending for children once fully implemented to $6 billion a year. Incredibly, the leader of the Reform Party or, as someone referred to him yesterday, the leader who aspires to be the leader of the fifth party in this House, said yesterday that commitment is totally negated by the cuts in transfers since 1993. That is an incredible statement from the Reform Party, the party that wants to cut faster, including transfers, so that it can give a tax break to its friends. It is really astounding. Its budget plan would decimate education and health.

Reformers cannot have it both ways. They cannot criticize us for not doing enough out of one side of their mouth and out of the other side of their mouth say "but if it were our way, we would cut faster". When it comes to protecting medicare, education and children, Canadians do not look to the members opposite but to this side of the House.

Then incredibly Reformers in their debate over the last days have been critical of deficit reduction, arguing that some of the relief comes from growth in the economy. I will just stop there. What are they saying? Are they against growth in the economy? They are right, the economy is growing because of the steps we have taken in our three prior budgets. Corporate profits are up, tax revenues are up as a result of that and somehow that is a bad thing. It is really quite something to behold and extremely difficult to understand.

Then there is the Bloc, members of the official opposition.

Last night, I read the speech made yesterday by the hon. member for St. Hyacinthe-Bagot regarding the budget. Unfortunately, it was pretty confused and his logic was way off.

On taxes they attack us on a lack of action. They allege we are lazy. I would say that if anyone is lazy in this debate it is the members of the official opposition because they did not read the document entitled "L'équité fiscale", one of the budget documents.

If they had read it, they would have found examples of measures adopted since 1993 to enhance tax fairness.

I could cite from that just three examples of steps we have taken to address the very concern they raise.

For example: eliminating the $100,000 lifetime capital gains exemption, extending the base for the alternative minimum tax, eliminating tax advantages available through trusts, restricting the use of tax shelters.

The opposition is opposed to all those measures. They voted against our budget.

They were opposed to these measures and yet they stand here and say that we have not done anything in the tax fairness area. We have done it but we have done it without their help.

Again on the point of a total lack of logic in the speeches by the members from the official opposition, incredibly they allege that the deficit has come down because tax revenues have gone up. Then a page later, in the speech I read last night, the member for Saint-Hyacinthe-Bagot said that it was because of cuts. Which is it?

One cannot talk from both sides of one's mouth at the same time.

Let me turn to the budget itself. When we came to office in the fall of 1993 our country faced a number of daunting political policy challenges about the economic and fiscal fronts. We were not

alone. Indeed our problems were shared by most industrialized countries.

Where Canada is unique perhaps is in the straight ahead approach we have taken to implement lasting structural reforms. We went beyond hopeful talk to hard action and tough choices and that is delivering accelerating results and growing benefits to Canadians. The evidence is clear and concrete. The opposition merely has to put aside their partisan glasses and read this year's budget with open eyes. That is what financial markets have done; that is what Canadians have done.

I need not remind this House why we took these vigourous and disciplined measures to put our financial house in order. Large deficits and a huge public sector debt made interest rates soar, undermined confidence, drained domestic savings and caused a considerable increase in the country's foreign debt.

That illustrates our philosophy in financial matters. Dealing with the problem of public finances is not go a goal in itself-we see the reform of public finances as a prerequisite for national growth, job creation, security and economic and social independence. We are starting to see the results.

In the economic arena, forecasters concur. As I said earlier, Canada will be a growth and job creation leader in the G-7 this year. One of the key engines for this growth is interest rates. Currently short term rates are near a 35-year low. In fact, they are lower than comparable U.S. rates for maturities of up to 10 years. That is no accident. Our fiscal plan combined with our commitment to low inflation has created the conditions and the credibility needed to bring down interest rates.

In today's debate I want to continue to focus on our fiscal record. That is not to ignore important investments that the budget announced in job creation and in vital social action for low income children, for health care, for the disabled and to assist charities. This is in the historic tradition of nation building and support for those in need that has been the heart blood of our party and distinguishes us from others in this House.

These investments would not have been possible without jeopardizing jobs and growth, without our sustained progress in deficit reduction. It is jobs and economic growth that are themselves key components in helping eliminate poverty and hardship.

The budget announced this week shows that our consistent cohesive fiscal plan is working. It confirms that our federal deficit this year will be no higher than $19 billion. I want to highlight some points about that.

First, that result is over $5 billion below the target we set out. This is the third year in a row that we have bettered our targets.

Second, when we took office the deficit that year, 1993-94, was $42 billion or 5.9 per cent of GDP. This year as I said the deficit will be under $20 billion, closer to $19 billion or lower, or less than 3 per cent of GDP. We have cut the deficit in half in three years.

Third, our 1996-97 results will also be more than $9.5 billion below our deficit a year ago. That is the largest year over year decline ever in the history of this country.

Fourth, how we are achieving this dramatic progress is just as important as the results themselves. The vast bulk of our fiscal action has been on the expenditure side, cutting spending rather than raising taxes. In fact this is also our third budget in a row with no increase in personal income tax rates.

There are a number of factors contributing to the success of Canada's deficit diet.

First, our budget planning was based on cautious economic assumptions. These included the assumption that the interest rates would be higher than what all of the forecasters in the private sector had predicted. However, interest rates were lower than forecast, because of the credibility we re-established on the financial level. Lower rates meant lower costs of servicing a much smaller public debt.

Then there was the contingency fund, included in our plan in order to prevent our finances from going off course, in the event we ended up with a crisis like that of the Mexican peso and the volatility it caused in the international markets and in interest rates.

However, we also made it very clear, from the outset, that, if this reserve were not needed it would not be spent, it would go directly to reducing the deficit. And this is what happened again this year.

But budgets are about tomorrow, not just today. Here again our fiscal story is a good one and I am afraid it drives the members opposite nuts.

The 1997 budget reaffirms that we are clearly on track to meet our deficit targets of 2 per cent of GDP in 1997-98 and 1 per cent in 1998-99. That 1 per cent mark will represent a historic turning point for our country. It is a point where our financial requirements, that is, the need to borrow net new money on financial markets to pay for our programs and debt charges, will be eliminated.

While there will still be a deficit, it will be managed through the federal government's own internal resources. That means that 1998 will mark the first time in 28 years we will not have to go to the

markets for new money. It will put the Canadian federal government in an enviable position internationally.

Financial requirements of course is the way most other major countries measure their deficits. By eliminating them in 1998, Canada will have the best financial record of any G-7 country based on current national budget plans.

It must be clear that the turnaround of Canada's public finances is not the work of the federal government alone-it is a national accomplishment. The provinces and territories significantly improved their financial situation too and continue to do so. This is why the total deficit in the government sector should improve considerably in Canada, compared to the other countries in the G7.

I want to return to a key point. Our federal deficit improvement has been overwhelmingly achieved through cuts in program spending instead of boosting the tax burden.

The BudgetRoutine Proceedings

3:50 p.m.

An hon. member

Higher taxes.

The BudgetRoutine Proceedings

3:50 p.m.

Liberal

Barry Campbell Liberal St. Paul's, ON

The member opposite talks about higher revenues. He is against a growing economy.

In 1998-99, federal program spending will have fallen for six consecutive years in absolute terms. Look at the figures. As a percentage of GDP, government revenues have been outstripped by cuts in spending by government. In fact in 1998-99, federal program spending will have fallen for six consecutive years in absolute terms and it will be almost 14 per cent below its level in 1993-94.

This progress on the deficit front has a vital carryover to our federal debt. It will translate into the first significant decline in the federal debt to GDP ratio since the mid-1970s by over three full percentage points over the next two years.

This is being achieved by cuts that are reasonable, that the Canadian people are able to absorb and that they are supportive of. They are cuts that are not gutting the vital social programs of this country and they are not gutting this country in the process. Our approach has emphasized action inside government. There were no increases in personal income tax rates. In the 1997 budget there are no tax increases whatsoever.

There is another way to underscore this point. Of the cumulative fiscal actions we will have taken in the last three years, almost 90 per cent have been expenditure savings.

The bottom line is that we have reformed the entire structure of program spending. Our approach has been balanced and one that recognizes two critical interrelated goals. It is not good enough just to get our fiscal house in order in a way that is sustainable. We also have to make sure that our approach advances our economic growth and job creation objectives and strengthens social well-being.

As the Minister of Finance said in his budget speech: "The responsibility of government is to do more than just balance the books". That is why, in line with our financial improvement, the 1997 budget announced targeted initiatives to further advance our economic and social priorities.

In economic terms, we are investing in tourism, small business and rural development. Each of these sectors offers significant job creation possibilities.

In a world where economic and technological change moves exponentially, we must build the foundations of tomorrow's jobs and competitive advantages. This is why we are also investing in higher education and innovation-through a foundation with $800 million in funding to support projects in the areas of the science, engineering, health and the environment.

Further, our government remains committed to the fact that a strong economy is built on a strong society and a strong society is one that cares for those in need. Surely this is a fundamental raison d'être for government itself.

Our deficit reduction plan has not been a smoke screen for government withdrawing but for continuing to be able to stand alongside Canadians. We are providing new support to strengthen the health care system. We are moving with the provinces toward a more effective national system of assistance to low income families with children. We want to put an end to the welfare trap where families can end up worse off by returning to work.

These investments have been carefully designed so that our fiscal targets are not in any jeopardy. Nearly 80 per cent of these initiatives take the form of targeted tax relief rather than increased spending.

Even with our new measures, the level of program spending in 1997-98 and 1998-99 will still be lower than what was projected in last year's budget. The members opposite must be sitting there asking: "How do they do it?" We do it with reasoned and prudent action in the interests of Canadians.

I focused most of my remarks on our fiscal success. Let me repeat that financial turnaround is itself an investment in some-

thing bigger: the economic future of our country and its ability to provide Canadians with jobs and growth and preserve valuable social assistance.

Because time is short, I am going to conclude. There has been a repetitive mantra through my remarks, that results are or will be the best ever. That only reflects the magnitude of the fiscal and economic turnaround that hard work by Canadians and tough choices by government has won us.

It is easy to forget how dismal the prospects were when we came to office in the fall of 1993 and how concerned all members of the House were about where we would be three years hence. The economic challenges were formidable, but our resolve has been firm, our plan consistent and concrete. As a result our economic and fiscal fundamentals are strong and are improving. We will not let that progress falter because it has not been a goal in itself but a means to ensure that Canadians have a strong and vibrant economy that provides long term jobs and a society we can be proud of because it does not deliberately leave anyone behind.

The BudgetRoutine Proceedings

3:55 p.m.

Reform

Philip Mayfield Reform Cariboo—Chilcotin, BC

Mr. Speaker, I am dismayed to hear the parliamentary secretary speak about a government budget defended by building strawmen to hack down. Is that all this budget is about?

He talks about what Reform has done. It is the Liberals who have hacked billions out of our social programs, out of our health care system and then before an election gives back a few thousand. That is the nature of this budget and that is why we are so disappointed.

In terms of health care there is not going to be any improvement from this budget in the six hospitals in my constituency nor in the hospitals in the outlying areas. This is a shadow budget.

The parliamentary secretary spoke about the friends of Reform and that Reformers want to reduce spending for their friends. That is true. But let me tell the House who our friends are.

Our friends are the ordinary Canadian people who want jobs, who want medical care when they need it, who want the freedom and opportunity to earn their living and to enjoy the fruits of their labour. Our friends are the Canadian people who reject the Liberal determination that the government can care for them, can take care of capable people better than those same capable people can take care of themselves. These are our friends. It is true that we want to reduce spending on their behalf.

Why does the government continue to promote the philosophical idea with the budget that Canadians must continually sacrifice and serve the needs of government when what they need is a government that will simply and unobtrusively serve the Canadian people?

The BudgetRoutine Proceedings

4 p.m.

Liberal

Barry Campbell Liberal St. Paul's, ON

Mr. Speaker, talk about rhetoric. It is really incredible. My copy of the taxpayers' budget in brief is getting sort of dog eared. It is interesting reading. When I look through it, it is really incredible.

Reformers suggest they have a better way. Let me explain their better way. Their better way has been called slash and burn. Their better way would gut the very programs we are saving and preserving for Canadians, for instance the CPP, support for seniors, the employment insurance program. Their broad and dramatic cuts would have kicked in by now if their budget had governed the country over the last three years. Instead we have had a reasoned, prudent and balanced approach and this country has survived enormous sacrifices.

I would like the member opposite to come to my riding and talk to people who have shared the pain with other Canadians of the cuts we have made and tell them that they should be cut deeper and longer to make the same achievement faster than we are making prudently in a reasoned and measured way which Canadians support because it supports their values.

The BudgetRoutine Proceedings

4 p.m.

Reform

John Williams Reform St. Albert, AB

Mr. Speaker, I enjoy debating the budget with my colleagues from the other side. There seems to be a great deal of misconception by them about what they are actually saying and about what Canadians actually want to hear.

The member talked about how we would gut programs. But look at the estimates that were tabled this morning. This very morning we learned that the Liberal plan for the Canada health and social transfer to the provinces involves a decline from $14.9 billion to $12.5 billion, a reduction of $2.4 billion. That is about 18 per cent that they will gut out of health care. They will throw a few peanuts back and think they are doing everybody a service.

We listened to the parliamentary secretary tell us about his deficit targets: 2 per cent this year, 1 per cent next year, zero per cent the following year. When I take a look at "Getting Government Right: A Progress Report", page four, table one, they are talking about a balanced budget next year. Mr. Speaker, I know you are rather sensitive about these comparisons but there is a clear contradiction between what the parliamentary secretary is saying and what their publication from this morning is saying.

I can hear it now. At election time they are going to say: "Hallelujah brother, we've got a balanced budget coming down the pipe. Vote for us". The smoke and mirrors and the spin doctors are at it already.

Let us find out how they are gutting business. Their figures from the estimates tabled this morning show a surplus of $6 billion in the employment insurance fund last year. The projected surplus next year is $5.6 billion.

The infrastructure program, which was going to create all those jobs, jobs, jobs was a $6 billion municipal infrastructure program

that put new canopies on town halls and built boccie courts and so on. They have quietly sucked out of business-that great sucking noise of jobs disappearing down the drain-$5 billion next year and $6 billion last year. That is gutting business.

I have a final point on the hypocrisy of this government. I remember December 11, 1995 when the Prime Minister stood up in the House and said that we are going to pass a motion in this House that says that "we recognize that Quebec's distinct society includes its French-speaking majority, unique culture and civil law traditions, and we undertake to be guided by this reality. We encourage all components of the legislative branches to take note and be guided in their conduct accordingly".

My question for the parliamentary secretary is this. Can he tell us how the motion passed by an order of the House is reflected in the budget and in the estimates tabled this morning?

The BudgetRoutine Proceedings

4:05 p.m.

Liberal

Barry Campbell Liberal St. Paul's, ON

Mr. Speaker, let me take the last part first because it is easy. The hon. member opposite asks about the motion. This budget is in the interest of all Canadians.

Let me come to the substance of what he was saying. I have many numbers in front of me from their budget which, not surprisingly, do not add up.

I guess I cannot comment on who is here and who is not, but I wish the member could hear this. On March 1, 1995, the member who just spoke but who is not here to listen supported a subamendment to the budget that asked that the budget be defeated because it failed to eliminate the deficit quickly and decisively enough.

The BudgetRoutine Proceedings

4:05 p.m.

Reform

John Williams Reform St. Albert, AB

Mr. Speaker, I rise on a point of order. We have a rule in this House that says that members cannot note the absence or presence of others. The parliamentary secretary made reference to my not being here. I am here.

The BudgetRoutine Proceedings

4:05 p.m.

Some hon. members

You weren't here.

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4:05 p.m.

The Deputy Speaker

The member will know that the Speaker and I were discussing something very important no doubt. I did not realize that the member was not here. I would ask members not to refer to the absence of any other of their colleagues.

The BudgetRoutine Proceedings

4:05 p.m.

Liberal

Barry Campbell Liberal St. Paul's, ON

Mr. Speaker, where I come from we have a courtesy that we do not turn our backs on each other when we have asked somebody a question. On March 1, 1995, the member opposite voted in support of a subamendment on the budget saying that it should be defeated for its failure to eliminate the deficit quickly and decisively. In other words, more cuts, deeper cuts than the ones he is criticizing right now.

The BudgetRoutine Proceedings

4:05 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Mr. Speaker, I rise today to speak on Tuesday's budget. I rate the finance minister's performance an F.

The BudgetRoutine Proceedings

4:05 p.m.

Some hon. members

Oh, oh.

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4:05 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Yes, an F, not for everything that is in the budget but more for what is not in the budget. Some of the members opposite will chuckle and laugh at this but yes, he rates an F. I know he thinks the whole world is in love with him and he can walk on water but he only deserves an F.

He gets an F for failing to recognize the real problem: the debt and the interest costs to service that debt. We are headed in the right direction by reducing the deficit but the finance minister gets an F for the inconsistent application of fundamentals, for not acting quicker on spending cuts like doing them in his first year, and for not making spending cuts in other areas, not just in the Canada health and social transfer and defence.

He took $7.5 billion out of direct aid to health, education and welfare. Yet he brags about the Liberals' philosophy of caring and sharing with Canadian society is the be all and the end all to the Canadian public. Only Liberals know how to serve the Canadian public. None of the opposition parties know. The Liberals have knifed, slashed, scorched, burned $7.5 billion out of health, education and welfare. That is too much.

We say in our fresh start program that we need to reinfuse, reinject $4 billion into health and education. Where do we get this money? We get it from reallocation of the existing budget and by reducing spending in the area of direct grants and subsidies to business by $2 billion. The elimination of regional development grants are close to a billion dollars. Also, savings through priorization could generate another billion dollars.

Do we really need another infrastructure program? All provinces, including our so-called ideological cousins of Alberta and Ontario, the Conservatives, have been duped. I say to Mr. Klein and to Mr. Harris: "Wake up". What the infrastructure development is all about is fighting over budgets: one-third, one-third, one-third. The federal government has convinced the provinces that they are paying for one-third and that the other levels of government get two-thirds leverage. Whichever they are, the other two levels pay the two-thirds.

The premiers should wake up. They are forgetting there is only one taxpayer, whose high level of taxation will remain high if politicians keep spending on untimely and unnecessary projects.

I am not against infrastructure. It is important. That is why taxes are paid. Alberta has a surplus. It should apply the surplus to the infrastructure and the social services that are needed without adding to the debt, without borrowing from the federal government, which in turn borrows from taxpayers, which keeps our taxes too high.

The federal government is simply buying votes and the premiers and mayors of the country who participate are willing accomplices.

This good but not great finance minister has raised tax revenues by $24 billion. He has not done that by raising the personal tax rate but by broadening the personal and corporate tax base and not lowering the rate. Yes, he gets an F for not coming clean with the Canadian public. He has raised tax revenues. He gets an F for saying he has not raised taxes.

He has reduced overall spending by $14.2 billion. By next year it will be $16.5 billion. However, he has increased spending by adding $100 billion to the debt, thereby adding an extra $8 billion per year to the annual interest cost to service the debt which will now stand at $46 billion. The government came in four years ago at $38 billion. The finance minister gets an F for not telling Canadians that this interest cost could jeopardize their future needs.

The interest cost is the cancer that is killing and shrinking the money which is available for our social safety net. The finance minister gets an F in finance for misdirecting, for three years, the public's attention solely to the deficit and creating the very false illusion or impression that once the deficit is under control we will have greater flexibility and prosperity will be around the corner. For heaven's sake, the finance minister has concentrated on the deficit for too long and used strong rhetoric for so long that the editorial board of the Toronto Star , that wonderful paper, asked: ``What is the finance minister going to do with this windfall of $7 billion that he is ahead on his deficit target?'' They want him to spend that $7 billion.

This government came in with a $38 billion deficit, inflated it to $42 billion, blamed the Conservatives, and has now reduced it to $19 billion. A $42 billion deficit is awful. It is bad. But a $19 billion deficit is awful. It is just as bad. The whole point of the matter is that we have to start to create a surplus.

If we do not reduce the debt, what will happen? What if the interest rate was 9 per cent today instead of the 4.5 to 5 per cent we are paying? What would our interest payment be? I shudder to think of it. That interest payment would be much higher than $46 billion. It would force Canadians to sacrifice much more than they are now. The finance minister gets an F for not sharing these possibilities with Canadians.

The debt to GDP ratio is important. It is more important than the deficit, yet we have spent four years arguing about the size of the deficit. What a shame.

If the debt is not reduced, interest costs could skyrocket and really blow a hole in our economy. So we continue to live in fear and uncertainty, which is why our economy stumbles along at a 1.5 per cent to 2.5 per cent growth rate per year. Now the Liberals are trying to tell Canadians that is a great growth rate, it is fantastic.

If we created surpluses in the budget we could service some of the debt, the economy could grow at 4 per cent or 5 per cent. That is growth. That is when opportunities would create jobs.

He gets an F because he has not created or developed a business plan like the province of Alberta. That business plan should be published with the budget estimates, which would justify each and every program expenditure. It would not just say, "here is what we spent". It would be a business plan which justifies why the government is spending on infrastructure, why it is spending so much on health, why it is spending so much on agriculture, and for what purpose, and why it is supporting the wheat board and what the wheat board is doing. It would be a business plan.

Then we will find out that maybe we should not be involved in these areas and leave it to the provinces. Then the provinces can do the same thing. Maybe they should not be involved. They can leave it to municipalities and stay out of those jurisdictions. That is another big, huge saving.

He gets an F for not apply this financial acumen to his budget. He gets a huge F for his failure to recognize that if on the one hand we cannot lower personal tax rates during a deficit period, even though he claims to have broken the back of the deficit, how is it that we can increase spending, as he just did in Tuesday's budget by a couple of billion dollars? How is that? Are they not one and the same? One is when we spend there is a possibility of a return that would flow through the economy, but so does a tax break.

Finally, he gets an F for the contradictions and inconsistencies in applying his financial values. CPP has problems. CPP has to be corrected. There is no question. But he has changed it, he has panicked, he has over reacted. A 70 per cent increase is too much. There is a $39 billion surplus in that fund and yes, we take out more than we bring in on a pay as you go basis, but there are some other solutions.

He has an EI surplus of $5 billion, soon to be $9 billion, which belongs to the provinces, but the government only pays the provinces once a year. On the backs of the unemployed he is lowering that deficit and that is not right. He gets an F .

There is another F for going against generally accepted accounting principles. He did it last year with that billion dollar bribe-I am sorry, Mr. Speaker, with that billion dollar payment to the provinces on a plan for the harmonization which comes into effect April 1 of this year. There was only a letter of intent signed prior to March 31 of this past year. According to the auditor general that

was borderline. This year he is doing it again on investing in the Canada Foundation for Innovation.

He is charging off $800 million to year ending 1997. Is their a contract? Did the provinces sign? Do they know how to spend the money? Who gets the money? How can he do that? Against generally accepted accounting principles he is setting a bad precedent. He is playing "Monopoly" with the accounts of this nation and it is not right. He gets an F for going against generally accepted accounting principles.

He says he did a great job of cutting. Of the $14 billion to date he gets an F because over half of it has just been downloading on the provinces and he has not looked at his own programs.

The department of defence has been the best run department. It has done the best job of analysing, doing a business plan, making the cuts, privatizing and then what is left is to serve the Canadian public. Why can we not do that in Revenue Canada, that over bloated, over intrusive department of $2.2 billion in costs and 40,000 plus civil servants? It is away too big. Why can we not cut that down? But no. The finance minister gets an F on this budget.

The BudgetRoutine Proceedings

4:15 p.m.

Liberal

Andrew Telegdi Liberal Waterloo, ON

Mr. Speaker, I welcome this opportunity to make comments on my friend's comments. I remember one of the first times I stood in this House I was sitting in the rump. I said to the hon. member that it seems like some of the most reasonable people come from Calgary. Of course, I excluded from those comments the leader of the third party. It seems to me when we get to the next election-

The BudgetRoutine Proceedings

4:15 p.m.

The Deputy Speaker

On a point of order, the member for St. Albert.

The BudgetRoutine Proceedings

4:15 p.m.

Reform

John Williams Reform St. Albert, AB

Mr. Speaker, I think the hon. member is making disparaging remarks against the leader of the Reform Party and I would ask him to withdraw.