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

The BudgetRoutine Proceedings

12:30 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Oh, oh.

The BudgetRoutine Proceedings

12:30 p.m.

Liberal

Eleni Bakopanos Liberal Saint-Denis, QC

It is true. But I have another question for my colleague. As I said before, what does the provincial government intend to do to balance its books? Taxes cannot absorb everything. I pay a lot of income tax in Quebec.

The BudgetRoutine Proceedings

12:35 p.m.

Bloc

Richard Bélisle Bloc La Prairie, QC

Mr. Speaker, I want to thank the hon. member for Saint-Denis for her question.

Speaking of propaganda, I hardly think we can criticize the Government of Quebec, when we consider the 23 million flags distributed by the Minister of Canadian Heritage.

The hon. member for Saint-Denis asked me how the Quebec government will balance its books at the end of the current fiscal year and in the years to come, to help the disadvantaged. Well, it will not be easy. The Quebec cabinet is involved in a series of complex accounting exercises. They may have to renegotiate collective agreements with unions in the public and parapublic sector, and that will not be easy.

Now, if the federal government were to send, as soon as possible, a first instalment on the $1.9 billion the federal government owes to Quebec for harmonizing the GST with its provincial sales tax, that would be a good start.

If the federal government then sent another cheque as a first instalment on the $2 billion in transfer payments that were cut in the case of Quebec, over the past few years, we would be well on our way to balancing the budget, and we could go ahead and give people additional protection.

As I said before, historically, the percentage of disadvantaged people and poor people has always been higher in Quebec, because the federal government never did the kind of strategic spending it did in Ontario and the other provinces.

What Quebecers want is research and development and investment in technology.

The BudgetRoutine Proceedings

12:35 p.m.

Liberal

Eleni Bakopanos Liberal Saint-Denis, QC

They want political stability too.

The BudgetRoutine Proceedings

12:35 p.m.

Bloc

Richard Bélisle Bloc La Prairie, QC

We have had more than enough welfare, social assistance and unemployment.

The BudgetRoutine Proceedings

12:35 p.m.

Liberal

Eleni Bakopanos Liberal Saint-Denis, QC

Mr. Speaker, I am very proud I was elected in Quebec. I am a Quebecer and a Canadian. I want to say this because some hon. members do not believe me, but the Liberals also defend the interests of Quebecers.

The hon. member said it was always the federal government's fault. Another myth that our separatist friends have perpetuated.

By the way, he did not answer to my question. "It is the federal government's fault again", is something we have heard in Quebec for years. I want my provincial government to take steps to ensure that with the co-operation of the federal government we can improve the lives of all people, especially the people in the riding of Saint-Denis, and we do that by providing political stability.

The BudgetRoutine Proceedings

12:35 p.m.

Bloc

Richard Bélisle Bloc La Prairie, QC

Mr. Speaker, I have the following comment for the hon. member for Saint-Denis. Will the hon. member promise, on behalf of her government, that the federal government will stop reducing transfer payments once and for all? Could she promise, on behalf of her government, that these cuts will be stopped once and for all?

The government is trying to balance its public finances, and this is not easy. I think it will manage. There is a budget plan. At the summit last year, there was an agreement with employer associations and unions in Quebec. There was a consensus to the effect that Quebec's budget would be balanced by March 31, 2000. I think we are on the right track.

However, if the federal government keeps reducing historic transfer payments to Quebec, it will be well high impossible.

The BudgetRoutine Proceedings

12:35 p.m.

Liberal

Glen McKinnon Liberal Brandon—Souris, MB

Mr. Speaker, I will be sharing my time with the member for Vancouver South.

It is a pleasure to rise today to speak in response to the budget speech. I would first like to congratulate the minister and all the assistants who laid the foundation for this budget. It was a job well done. I think it has been well received across the country.

When I consider all the nuances of the budget, it is the human component that to me is the most significant. Addressing child poverty, support for the disabled, youth employment initiatives, health care reform and pension adjustments are just a few. It is my wish today to discuss post secondary education as the focus of my comments.

We live in a world where knowledge and education are the keys to long term industrial success. They ensure that a country's industries can apply innovation to seize new opportunities in global markets and they provide workers with the skills employers need.

The number clearly indicate this. In Manitoba, my home province, in 1995 only 4..8 per cent of students who dropped out of high school have found jobs, compared to 71.9 per cent who stayed in school, graduated and found employment.

Post secondary graduates fared even better. About 80 per cent of Manitobans with a post-secondary certificate or diploma or university degree were actively involved in the labour force. This pattern is virtually the same across the country.

It is for this reason that the government has increased federal support for post-secondary education by $137 million in 1997, reaching $275 million annually when the changes have all matured.

This funding is targeted to provide assistance for students and their families, including workers upgrading their skills to help them cope with the rising costs of post-secondary education, students facing higher debt loads after graduation, and parents saving for their children's educational future.

I should note that these issues build on the $80 million increase in direct federal tax assistance for post-secondary education that was provided in the budget one year ago and they are complemented by the creation of the Canada Foundation for Innovation which will ensure that post-secondary students have access to better facilities and equipment to prepare for the knowledge based economy of the 21st century. For this the government is making up front investments of $800 million.

I will get to the foundation in a moment, but first let me discuss the government's plans to increase access to higher education.

Specifically, the budget proposes several measures. First, the amount used to establish the education credit will immediately rise to $150 per month from $100 and to $200 per month for 1998 and subsequent years.

As tuition fees increase, the amount of assistance provided by the tuition fee credit increases automatically. However, as a parent of three daughters who are all attending university, and as an aside all three were in university in one academic year, I know that students also have to pay a number of mandatory fees on top of their tuition. The budget proposes to extend the tuition tax credit to cover additional mandatory fees imposed by universities to cover these costs of higher education.

Second, students or their parents may not have enough tax payable in a given year to fully benefit from the tuition and education credits. To ensure that all students can use those credits fully, students will now be able to carry forward all unused portions of these credits and to be applied against any future income.

At a time when university and college classrooms are filled with more and more mature students, it is important to note that this measure will also benefit workers who have decided to return to school after a short period in the workforce.

To demonstrate the effect of these budget measures I will give a simple example. By 1998 a student in full time attendance at a post-secondary institution faced with tuition fees of $2,800 and an additional fee of $300 will receive over $1,200 in combined federal and provincial tax assistance per year. This is no small amount. In fact, it represents an increase of more than 30 per cent from the $900 of assistance available to the student in 1995.

The 1997 budget also announced an important change to the Canada student loans program. Students are expected to start repaying their loan six months after graduation. But students facing hardship are allowed to defer making payments on these loans for up to 18 months. The federal government pays the interest accruing on the student loan during this period.

Recently a coalition of groups representing the post-secondary educational community agreed that while this system provides considerable help, changes needed to be made and they issued a proposal which pointed out among other things that some students are unfortunately left unable to meet these obligations. I supported this coalition in their call for change, as did other members of Parliament.

It is clear today that our government listened to what Canadians were telling it and subsequently agreed. As a result, the budget proposed to extend to 30 months from 18 months the period of time during which students are allowed to defer making payments. Combined with the initial six months after graduation when no payments are required, this means that students will have up to three years to deal with their financial debt load. This measure will come into effect on August 1, 1997. It is projected that it will provide an additional $20 million a year in assistance to students.

In addition, the federal government is ready to pursue with interested provinces, lenders and other groups a new repayment option that would offer students another choice. Students would be able to choose between current repayment arrangements and an income contingent repayment schedule. By tailoring payments to individual circumstances, the debt would be made more manageable.

We are also acting to improve incentives for parents to save for their children's education. Parents with young children are increasingly worried about whether or not they will be able to afford the rising costs of their children's education.

Registered education savings plans, or RESPs, exist to provide parents with incentives to save for their children's education. The full benefits of these tax sheltered plans are reaped by parents who start saving when their children are quite young.

The budget proposes that annual contribution limits to RESPs be doubled to $4,000. This will assist parents who are not able to start saving for their children's education when they are young and therefore have fewer years to make contributions.

Under RESP provisions, all RESP income must go for educational purposes and the family loses the investment income in their plan if their child does not pursue post-secondary education. Since this can discourage parents from starting an RESP, two measures are proposed to address this problem.

Individuals winding up an RESP will now be allowed to transfer all or part of this deferred income to RRSPs, provided they still have room in their RRSP accounts. Alternatively, individuals without available RRSP room or who do not wish to make RRSP contributions will be allowed to receive investment income directly, subject to an appropriate charge. This charge will ensure that assistance is not provided to those who might use RESPs for tax

shelter purposes which are unrelated to either education or retirement savings.

The government is proposing the creation of the Canada foundation for innovation. I would suggest that this is perhaps the crown jewel in terms of educational opportunities in this country. This new independent body operating at arm's length from the government is designed to help renew facilities and equipment, research infrastructure if you will, at Canadian post-secondary institutions associated with research institutions and hospitals.

Through this foundation we are saying to our young students that we want them to pursue their research career here in Canada. It is important for us to have a workforce with the capacity to put new technologies into practice. People who understand developments in science and technology are indispensable.

The foundation will help support innovative capital projects in the areas of health, the environment, science and engineering. Funded through an up front investment of $800 million by the federal government, it will provide an annual average of $180 million over the next five years. It will operate on the basis of partnerships with the private sector, universities and colleges, volunteer organizations and provinces to the extent they wish to participate.

In closing, I quote the hon. Minister of Finance who in his speech said: "What government does with scarce resources shows what its values are-"

The BudgetRoutine Proceedings

12:45 p.m.

The Deputy Speaker

I am sorry to interrupt the hon. member but his time has expired. Questions or comments.

The BudgetRoutine Proceedings

February 20th, 1997 / 12:45 p.m.

NDP

Len Taylor NDP The Battlefords—Meadow Lake, SK

Mr. Speaker, I appreciate the words of the hon. member from Manitoba. I have enjoyed listening to him over the past three years. He has made great commitments on behalf of the people he represents. Therefore, I am a bit surprised that he has so gullibly jumped into the rhetoric of the finance minister on the budget.

The member comes from a constituency that relies on the rural sector for its own buoyant economy. This budget had very little to offer to people who live in rural Canada, particularly those areas that were affected by cutbacks to the western grain transportation program of previous budgets of this government.

In previous budgets there was $720 million a year cut from farmers' pockets for transporting grain to port so that Canada can sell it into the lucrative export market. In those previous budgets which took that $720 million from transportation and ultimately from farmers' pockets, we were told at the time that value added production would return benefits to rural Canada and would therefore create jobs.

Value added production since that time has not increased dramatically. While there have been some gains made in Winnipeg, Saskatoon and Regina, there have been virtually no gains made in small town western Canada. This budget should have acknowledged the greater need for value added production in rural Canada giving the opportunity for a number of the young unemployed individuals throughout Canada, many of whom the member talked about in his remarks, the opportunity to gain some income to proceed with their post-secondary education.

My question to the member for Brandon-Souris is quite simple: Will he work to assist young people in rural Canada to generate the type of economic activity that is necessary in the Cut Knifes, the North Battlefords, the Kindersleys and Brandons of the world and ensure that the government supports their efforts through a value added production type of programming?

The BudgetRoutine Proceedings

12:50 p.m.

Liberal

Glen McKinnon Liberal Brandon—Souris, MB

Mr. Speaker, I thank my colleague for his question. It is relevant to a member from southwestern Manitoba.

We have had a number of initiatives under way in Manitoba since the WGTA changes took place. We have probably had the most diversified investments occurring throughout the prairies in terms of our region and in terms of crop diversification.

We had numerous investments put in place of technologies that are going to lead to an increased economy. Working through our rural caucus colleagues here in Ottawa we have been able to spur debate, discussion and interest in investment. Might I comment that Manitoba has had more investment money coming in since the WGTA changes than any other region of the country. As it pertains to post-secondary education which was the essence of my discussion, it is going to allow more young Manitobans to stay in our region, live in our region, invest in our region and make a substantial contribution to the nation.

The BudgetRoutine Proceedings

12:50 p.m.

The Deputy Speaker

There is only 49 seconds left. Sharing 49 seconds gets a little difficult.

The BudgetRoutine Proceedings

12:50 p.m.

Liberal

Glen McKinnon Liberal Brandon—Souris, MB

I should have spoken a little longer.

The BudgetRoutine Proceedings

12:50 p.m.

Liberal

Herb Dhaliwal Liberal Vancouver South, BC

Mr. Speaker, I am very happy to speak on the budget today. It is an excellent budget. There are a couple of very important ingredients in the budget. Generally it is a balanced budget, it is a responsible budget and it is a compassionate budget. Let me state why those three things are very important for us on the government side.

The budget had to be balanced because we want to ensure that the actions we have taken on the deficit do not take away from the future. I know some people have said that they want to get rid of the deficit in three years but we have said right from the beginning that

our approach in dealing with the deficit would be balanced and reasonable and that we would deal with it in a compassionate and responsible way.

When we became the government there was a $42 billion deficit, a problem which many said was very difficult to deal with. During the first radio show I did after the election Bill Good asked me if my government was really going to deal with the deficit. I said that absolutely, we were going to deal with it because it was important for the future of the country, but that we were going to do it in a responsible way.

In the last election campaign we set specific targets and said that we were going to meet those targets. In the last four budgets we have met all the targets; in fact, we have done better than meeting the targets. It was very important to meet every one of our targets because it sent the very strong message to the international financial community that we were serious about dealing with the deficit.

Some of the Reform members are trying to take credit for our actions on the deficit but during election time we set specific targets, not because of the Reform Party but because we felt it was important to deal with it. Those targets have been met and as the minister stated in the last budget, we will be at least $5 billion below our target of $24 billion.

It was very important to meet our targets for a number of reasons. Because of the confidence we have established in the international community, our dollar has stabilized. Interest rates are unprecedented; I cannot remember the last time Canadian interest rates were below American interest rates. Our interest rates are presently more than two and a half per cent below the American interest rates. In the past it has always been the reverse, where the American interest rates were two to two and a half per cent below the Canadian interest rates.

This is what will create jobs. Opposition members have asked, what about jobs? Low interest rates create jobs, investment and confidence. Interest rates play a major role in the investment decisions of small and medium size businesses. If someone wants to construct a new building, for example, a new hotel or a new factory, interest rates will play a very important role in determining if that investment will go ahead. Canadians buying homes have to look at what the interest rates are. Interest rates can affect their choice of a home because of their influence on monthly mortgage payments. When Canadians buy cars, the interest rate is an important factor which determines whether or not they can afford to buy a car.

We have one of the lowest inflation rates of the G-7 countries. This will ensure the maintenance of our low interest rates.

All these things, dealing with the deficit, meeting our targets, having credibility in the financial markets, have led to lower interest rates, lower inflation rates and a greater confidence in the economy. It is so much so that economists are predicting Canada will have the best growth figures in the next medium term compared to other G-7 countries. It was not any easy task and all Canadians know that. It was a difficult task to achieve what we have today.

The attitude of this government and the finance minister was to look at government from the bottom up. We did not just say that to deal with the deficit we were going to cut everybody by a certain percentage. As a government we said that we wanted to review all programs starting from the bottom up. We said that we wanted to get rid of those programs that were no longer relevant to Canadians. We said that we wanted to get rid of those crown corporations that were no longer relevant to Canadians. We looked at how we could turn those services that could be provided more efficiently and effectively by private industry, municipal governments and provincial governments over to them.

Canadians have said to us that they want a government that is efficient, that they want less duplication and less waste. That is another area we looked at in terms of saving money and dealing with the deficit. We asked: Where is there waste in government? Where are there inefficiencies? How can we do it better? This was the basic view we took in trying to deal with the deficit and in trying to re-engineer government to meet the 21st century, to move forward into the next century where we could have a government structure that could be with us for a long time. It was not an easy task. It was a difficult task, but that is what we have done.

We also understood that there are investments to be made in this country so that we could be competitive in the rest of the world, that Canadian products could be sold. The reality is there is globalization. We have to compete on the international market. Canada is a trading nation.

We understood, for example, that infrastructure is very important to be competitive around the world. If we have road systems, ports, airports that are efficient we will be more competitive. If we have a communications system that is efficient and responsive we will be able to be more competitive in the rest of the world. If we have ports that can ship products very efficiently it helps the business community because it is more efficient and much more cost effective. We understood that. That is why we had an infrastructure program to ensure that we maintain the infrastructure and improve it for the coming century.

We also recognized that research and development is very important. Any country that does not do research and development falls behind. So in this budget we have said that there will be $800 million in the Canada Foundation for Innovation, $800 million

toward research and development which, by the way, will be administered by the private sector. It will determine where it is most advantageous for Canadians to spend that money.

We also understand how important trade is for Canada. That is why we have the Prime Minister's Team Canada missions where he has travelled to the Asia-Pacific, to South America and other regions to tell other countries that Canada is ready for business. Canada has the expertise. It has the skills. It has the products to deliver to people around the world.

I can say having the opportunity to travel and meet many leaders around the world that other countries want to do business with Canada. They know the type of products that we can provide. They know the skills, the efficiencies and the quality of the products which Canada provides in goods and services. They have all said "We want to see Canada at the table. We want them to be there because we are confident in the services and products they provide".

We understand how education is so very important for Canadians. That is why we have made it easier for students to pay back their loans, to give them more time and not to have to pay back their loans in the first six months but over 30 months to give students that leeway.

As well, we have said we want to encourage people to invest in education. That is why the registered education savings plan has been doubled from $2,000 a year to $4,000 a year to encourage Canadians to invest in education and invest in their children.

We recognize that truly children are our future. I am proud of this government's work on child poverty where we have invested in children. We are making sure that we help those children of the working poor. That is the recognition of a country with true compassion that cares for those people who are less fortunate.

The BudgetRoutine Proceedings

1 p.m.

Reform

Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, as you might know, I will not be seeking office in the upcoming election. Therefore today I am definitely giving my last speech as an MP in this House in reaction to a government budget.

Let me start my comments with a brief assessment of the budgetary policy of this government during the last three years.

The $42 billion deficit in 1993 required urgent and decisive action. This view was shared by most Canadians and it produced the historic electoral success of the Reform Party which ran on the platform of fiscal responsibility. There are a number of indications suggesting that in 1993 neither the Liberal Party nor the finance minister fully appreciated the severity of the country's fiscal crisis. For this reason the first budget in 1994 reflected the belief that Canada would grow out of the crisis if we just reined in the growth in spending.

The 1995 budget showed that reality had finally mugged the minister and his party. I take pride in my and my colleagues' contribution to driving home the fundamental truth about the effects of compounding interest and the risks associated with threats to the value of Canadian bonds caused by growing debt to GDP ratios.

Pressed in addition by high interest rates, warnings by Moody's about the downgrading of the debt and slow economic growth, the government bit the bullet and announced substantial cuts to program spending and some relatively small but still substantial tax increases.

The minister deserved the positive reaction to his historic budget given by the financial markets and the Canadian public. I praised the minister for having lowered program spending in absolute dollar values for the first time in post-war history.

I still believe that this praise was deserved. The 1996 budget contained no substantial further cuts or tax changes. All the politically difficult decisions had been made and embedded in the 1995 budget.

During the last two years, economic development largely outside the control of government favoured the Liberals and their budgetary goals. Economic growth remained moderately high simply because the country enjoyed a cyclical upturn.

The growth was driven largely by strong exports to the United States, which were fed in turn by a strong U.S. expansion and a low dollar. Most important, interest rates in the U.S. trended downward.

These fortunate exogenous developments produced better than expected increases in revenue, along with decreases in interest costs. As a result, the interest rate spread on short to medium term bonds between Canada and the United States moved in favour of Canada and resulted in even more moderate, positive effects on the fiscal balance.

In light of the much better than expected and very fortuitous improvements in the deficit, a large and vocal faction of the Liberal caucus began agitating for a resumption of the party's traditional policy of spending to buy votes for the next election, though of course they always describe these spending programs as providing compassionate aid to the unemployed and needy.

When the 1997 budget was revealed this week I, the financial community and in my view most Canadians were pleased to find out that the Minister of Finance increased spending and reduced taxes only by a relatively small $1 billion.

With most of the big increases coming a year or two in the future, he has stayed the course of fiscal restraint in this election year and stared down his spend thrift colleagues in the party.

Moreover, the spending increases he made were not of the traditional make work, pork barrel variety but, with some exception, involved projects that have a high probability of bringing good social and economic returns.

Ironically, the basic pattern of the Liberal budgetary policy is almost identical to what Reform had promised to do in its zero in three election platform in 1993. However, there are several major differences.

First, the cuts have not been fast and incisive enough. As a result, in the 1997-98 fiscal year the deficit will still be $16 billion or nearly $1.5 billion a month. This level of deficit may seem low by historic and some international standards but by any other standards it is still outrageously large. I repeat, we are adding to the debt $1.5 billion every month. Divide this by 30 and you get $50 million a day.

An important consequence of this continued deficit is that it exposes Canada to the risk of backslide should there be a turnaround in economic fortunes like a rise in interest rates and lower economic growth. Both these events are certain to take place in the future.

For the sake of Canadians, let us hope that the economic environment remains benign for several more years.

Also, because improvements in the fiscal balance have been so slow, the debt is well over $600 billion and there are no plans for paying it down. Very soon Canada's problem will not be the deficit but the debt, if it is not already so.

Interest payments on the debt of $46 billion nearly equal what the government spends on elderly benefits, OAS and others, employment insurance, formerly known as unemployment insurance, and social transfers to the provinces combined. Let me repeat this. The sins of the past decade, including the last three years, have resulted in an outcome whereby the cost of servicing the result of those sins takes up the same amount of money as our very generous and expensive program of old age security benefits, now called the elderly program, unemployment insurance and the social transfers for health, higher education and welfare. This is truly an astounding number.

When interest rates go up again, the problem will be even worse. Only debt repayment can end this regretful state of affairs.

The media has finally picked up on one of my main themes in past comments on the budget. Two-thirds of the improvement in the fiscal balance was achieved by increased tax revenues mostly through bracket creep, partly through tax rate increases and some through the growth of population and wealth. Only one-third of the fiscal improvement has been due to cuts in program spending.

Unfortunately half of these cuts involved downloading of the adjustment burden on the provinces which in turn have cut funds for health care, higher education and welfare. Only a meagre 35 per cent of the reduction on program spending involved cuts to the size of the federal government, the departments which provide subsidies to business, regions and special interest groups which offer services which duplicate and overlap those delivered by the provinces.

Finally, I was very disappointed that the budget did not start the most fundamental debate that Canadians will have to face in the future. Assuming that economic conditions continue favourably and that the deficit will be eliminated in the year 2000 or so, the debate will be over the use of future dividends.

Canada faces three choices. The fiscal dividend can be used to lower taxes and gradually produce a smaller government. Alternatively, it can be used to pay down the debt and start a virtuous cycle of growing fiscal surpluses which in turn can be used for further debt and tax reductions. The third possible use of the fiscal surplus is increased spending and a larger and more intrusive government.

The next election should involve the discussion of these different paths for the development of Canada. Any government elected in 1997 or 1998 will face the need to decide on this matter. There are obviously no best choices. Each of the three alternatives has advantages and disadvantages. However, in the light of post-war experiences, in my view bigger government does not appear to promise many benefits for society at large.

Surely there are always beneficiaries from government largesse and they always tell good stories on why they deserve the goodies from the state. However, as we look back on the decades since the 1960s it is difficult to find evidence that the massive expansion of governments has produced a significant improvement in the lot of the average Canadian above that due to general and largely exogenously determined economic growth.

If we believe the government's statistics and read the public opinion surveys, poverty, educational attainment, health care, crime and unemployment are worse than they were before the massive growth in spending after the 1960s. In my view it defies logic to argue that because past spending has produced the deterioration of these standards we therefore should have spent more.

I know I am running out of time but I have just one last page. I assure the House that I know the arguments on the other side. Some are good but most involve rhetoric and wishful thinking.

I admit that I may be wrong about the merit of large government. It is for this reason that I think we need a national debate on this issue. What a shame that the 1997 budget did not set the framework for such a debate during the upcoming election.

The BudgetRoutine Proceedings

1:10 p.m.

St. Paul's Ontario

Liberal

Barry Campbell LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I have worked with the member for Capilano-Howe Sound over three years now, as both of us are members of the finance committee. We may not agree on everything. However, the member for Capilano-Howe Sound always has been fair and always has been prepared to give credit where credit is due. He has done so consistently through the last three budgets, in which I know he took a great interest and. He spent a great deal of time sharing his views with us about what the government should do and responding to what it had done on each occasion.

His colleagues talk a great deal about doing politics differently. As he prepares to leave the House, on behalf of the Minister of Finance, myself and many of my colleagues, I want to say the member for Capilano-Howe Sound is truly one who has done politics differently in the House. I compliment him for it. He will be missed.

The BudgetRoutine Proceedings

1:15 p.m.

Reform

Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, the member is getting me into a lot of trouble with my party, which is not a very nice thing to do. However, you will have noticed that when I presented the summary of my experiences over the last four years I did come down very hard on the shortcomings of the policies. There is a clear difference in vision between the Liberal Party, the Reform Party and other parties on the right.

This should be emphasized and made clear in discussion and should be on the level of historic tax experience and not just hand waving.

The BudgetRoutine Proceedings

1:15 p.m.

NDP

Len Taylor NDP The Battlefords—Meadow Lake, SK

Mr. Speaker, I hate to get involved in this lovefest between the Liberals and the Reform Party. However, the parliamentary secretary is correct that the member for Capilano-Howe Sound has done things differently in the House and that is certainly to his credit.

One thing he said in his opening remarks bears repeating. I would ask him to shuffle his notes a little bit and share with us again his comments about how basically the Reform Party policy of a few years ago has been implemented by the government. It is worth noting from the point of view of most Canadians that the government is a party of the right and does share a number of the viewpoints of the Reform Party. It is incumbent on all of us to get it right.

If the member would care to share with us again his comment about the government implementing Reform policy, we would all appreciate it.

The BudgetRoutine Proceedings

1:15 p.m.

Reform

Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, I think the division was quite clear during the election campaign and the people spoke clearly. One party said that it could not go on adding to the debt the way it had happened in the preceding 15 years. Two governments and two different parties had engaged in this spendthrift policy. In effect, the government has cut program spending, as Reform had proposed. We had proposed reducing interprovincial transfers. Instead it cut transfers for health, education and welfare which we had not proposed.

There are a large number of parallels but also some significant differences. The point I am trying to emphasize, which came out clearly in the numbers I gave, is that the deficit had to be brought under control. That was done. The government should be given credit for it. It did not do it right and I outlined why it was not done right and what the consequences of it were.

I believe my statement is basically correct. I am proud that because we had this agenda, we have helped prepare the way for the Liberal government to do what is right for Canada.

The BudgetRoutine Proceedings

1:15 p.m.

Reform

Dick Harris Reform Prince George—Bulkley Valley, BC

Mr. Speaker, I am most anxious to participate in the debate on the Liberal budget.

I must say at the outset that the Liberal budget can best be described as an example of sleight of hand at its finest. The budget is sprinkled full of little goodies, but it is simply an attempt to conceal the Liberals' real record. And what a record it is.

Unemployment and bankruptcies are at record levels. Taxes are at record levels. Funding for health care and education has been slashed to record lows. We are approaching a record national debt level of $600 billion, with debt servicing costs reaching a record $50 billion a year.

The Liberals like to congratulate themselves on lowering the deficit, but it was done on the backs of Canadian taxpayers, students trying to get an education and Canadians who have suffered under health care cutbacks. That is the record of this Liberal government.

Let us not forget how Liberal taxation policies have affected the pensions of seniors and will continue to affect the retirement plans of seniors.

The Liberals have brought in 36 new tax measures and raised tax revenues by a record $24 billion. The deficit has fallen by $33 billion since 1993 and, therefore, a full 92 per cent of the reduction in the deficit is a result of Liberal higher taxation revenues. That is nothing to be proud of. Anyone can pull that golden handle and wrench more dollars out of Canadian taxpayers. Even this Liberal government can do that.

The government has not reduced its spending significantly. It has not made government more efficient, as the Reform Party has cited. It has battled the deficit by squeezing Canadian taxpayers.

This is not the only thing Liberals are good at. They are good at cutting transfer payments in support of health care and education to achieve a reduction in the deficit. That is not what the Reform Party wants to do. Reformers want to give Canadians a tax break. We want to restore funding to education and health care. At the same time, we want to cut $15 billion from the operation of government. That is where the big blood is.

The Liberals have battled the deficit by squeezing Canadian taxpayers. That is the only thing they are good at, shaking the money tree known as the Canadian taxpayer. The taxpayer is the Liberals' magic cash register. When they need more money for bigger government, bigger bureaucracy, bigger payments and bigger programs they dip into their cash register, the pockets of hard working Canadians.

The average Canadian family has seen its disposable household income shrink by $3,000 under the Liberal government. Every reputable economist in the country will testify to that, but the Liberals are in denial. Canadian families will testify that they have $3,000 less to spend to put food on the table, to put clothes on their kids' backs, to pay their medicare premiums and to provide the necessities of life. What kind of a record is that?

Do we know who does not have to worry about getting a job when the Liberals are in power? Liberal party fundraisers, former candidates, former Liberal provincial leaders and past party presidents. They do not have to worry about what the government is doing because they are getting jobs, while 1.5 million Canadians who do not hold Liberal memberships are looking for jobs.

The government has appointed hundreds of party faithful to various boards, agencies and commissions; appointments which come with obscene paycheques and obscene perks. That is being done despite the fact that the Liberal red ink book talks about making appointments based on merit. It seems that the only merit which is required is the $10 for a Liberal membership.

Why am I even referring to this flawed Liberal election document? Nobody believes it any more, not even the Liberals. They have stopped quoting from it because they were caught so badly in the big GST lie. There are so many broken promises in it they do not even dare use it any more. It is too bad, I would love to see the Liberals bring that out when they go to the election that is coming soon. They can bring out that red book and talk about all the promises they have kept and we will talk about the promises they have not kept.

The Liberals red book has proved one thing only. It is not worth the paper it is written on. This red book will continue to give the Liberals headaches in the 1997 election as they twist, turn, flip and flop their policies when the policy winds change. And, Mr. Speaker, in case you did not know, Liberal philosophy and policy do change. They say "these are my policies, if you don't like them give me a little while and I'll come up with some new ones".

I would like to return to the chronic problem of the 1.5 million Canadians who are unemployed. The Liberals do not believe us when we say tax cuts create jobs. Maybe they will believe evidence from some non-partisan sources. The Cato Institute in Washington studied 10 tax cutting states and 10 tax hiking states between 1990 and 1995. These are figures that they will not want to listen to but, Mr. Speaker, I know you will want to hear this.

This study discovered that the tax cutting states created nearly two million net new jobs. The 10 tax hiking states created zero net new jobs. Furthermore, the economies of the tax cutting states grew 22 per cent faster than those of states which continued to raise taxes. Michigan was one of the states in that study that cut taxes-maybe the Liberals should know this-15 times since 1991 and brought the state back from economic ruin. Now it has an unemployment rate that is at its lowest since the 1960s.

In the Reform's fresh start program we argue that taxes kill jobs. We argue that tax relief creates jobs. Every single economic think tank in the country, perhaps in the world, knows and agrees that taxes kill jobs. Taxation kills jobs.

Yet this government has just imposed a $10 billion payroll tax on Canadian businesses and Canadian workers. That defies logic. When every economic think tank in the country agrees that taxes kill jobs except for the socialist economic think tanks that the Liberals call on from time to time for their policies, and the NDP as well. And every same thinking economic think tank knows and confirms that taxes kill jobs.

It is because of these taxation policies that we have 1.5 million people unemployed. It has killed the jobs and it has ripped the heart out of our social programs of which these Liberals are so proud. They have cut $7.5 billion from health care and education. No matter what little crumbs they through out in this budget, let us not forget that they are the ones who have cut the $7.5 billion from health care and education.

Reform Party policies in the fresh start program make sense to Canadians because they come from Canadians. We listen to Canadians, not like the Liberals who listen to their well-heeled back room advisers. This budget is smoke and mirrors. It is sleight

of hand at its finest. There is no way that our party and average Canadians will accept it.

The BudgetRoutine Proceedings

1:25 p.m.

Kenora—Rainy River Ontario

Liberal

Bob Nault LiberalParliamentary Secretary to Minister of Human Resources Development

Mr. Speaker, I would like to enter into the debate on what the individual who has just spoken and represents the third party said.

In the next election there is going to be a significant amount of discussion as to what we do as country in the new millennium. Part of that discussion is factually correct, as the previous speaker from the Reform Party suggested, as to what we do with this major surplus that will be achieved because of the good fiscal management of the government.

In that discussion there are going to be a number of items. One is Reformers in their platform have suggested that they are going to make government smaller. They are suggesting some $15 billion in cuts to the present government apparatus. My understanding in that scenario is the Reform Party will have to cut some 80,000 to 85,000 public service jobs in order to achieve what it perceives as small, efficient government.

We all know and the polls have showed continuously that Canadians feel very strongly about their social programs, feel very strongly about the ability to deliver those programs. I would like to ask the member if he would comment on that particular item, and while he is at it I would like to have him answer this for me.

Does the hon. member believe it is good economics for governments to give across the board tax cuts, like Ontario has, to the tune of so far 15 per cent in personal income tax, going up to 30 per cent of income tax reduction, which is a reduction in revenue of $4.9 billion when they are running a $10 billion deficit? That analysis is pretty easy if we picture the fact that this year they have had to cut $6 billion worth of services in Ontario. That is $6 billion of services that relate to education, relate to health, relate to transfers to municipalities, which of course have turned things upside down in the province of Ontario.

Would the member explain to me the whole issue of tax cuts when we need those revenues and when we still have a major deficit and whether he agrees or disagrees, and with his numbers as they relate to the 80,000 cuts.

The BudgetRoutine Proceedings

1:30 p.m.

Reform

Dick Harris Reform Prince George—Bulkley Valley, BC

Mr. Speaker, I think it would be hard to get the message on tax cuts across to this Liberal member in the next five minutes. They have not learned anything in three and a half years from us, so five minutes is not going to solve that problem.

The hon. member did talk about cutting the size of government. The Liberals of course believe that big is better. There is no doubt about that. They have displayed that.

Reformers, on the other hand, would prefer to work with a lean and mean government, no waste. The problem with this Liberal Party is it believes in this big bureaucracy. We want to be lean.

The fact is we want to cut spending. We want to cut the government waste. There is about $15 billion a year in government waste because of this big government policy that the Liberals are so proud of.

The hon. member did not read our fresh start. We are going to put $4 billion back into health care and education. The Liberals ripped the heart out of those programs to the tune of $7.5 billion.

How could the hon. member have the audacity to stand up and say that it is the Reformers who are going to hurt health care and education when his very government has ripped $7.5 billion out of health care and education? How does he explain that to people in my town who go to the hospital and find a third of the beds closed and line-ups for operations? How does he explain that to students who cannot afford tuitions because of the cutbacks that this Liberal government has made in education?

That is hypocritical. That is hypocrisy at its finest, absolute hypocrisy.

The BudgetRoutine Proceedings

1:30 p.m.

Liberal

Brenda Chamberlain Liberal Guelph—Wellington, ON

Mr. Speaker, I am pleased to speak to this motion and in support of the 1997-98 federal budget. This budget continues the course set on October 25, 1993 when Canadians voted for change in the last federal election. It provides the tools necessary to help keep Canada the best country in the world.

When the Liberal government was elected in 1993 we had three choices. Two were easy. The third was difficult.

The first choice we had was to continue spending without any concern for the future, as the past Conservative government did. In nine years the Conservatives nearly tripled the debt and left us with a deficit of nearly $45 billion.

It would have been easy in the short term to give everyone all they wanted, to add to the deficit and debt and to let someone else deal with the problem, just as the Reform Party now is proposing on the CPP issue. That would have been irresponsible and it would have placed Canada's future and our sovereignty at risk.

The second easy choice would have been to make deficit elimination our only goal, as it used to be the Reform Party's. In doing so we could have easily abandoned the sick, the elderly, those most vulnerable and possibly eliminated the deficit much faster.

It would have also been irresponsible because it would have caused pain by ignoring the millions of Canadians who rely on the federal government for their pensions, for health care, for post-sec-

ondary education and for the countless government services provided each and every day.

Instead, Liberals opted for a third choice, one that was challenging, difficult and required imagination, innovation and responsibility. This third choice was to reduce the deficit while preserving social programs.

We know that the efforts initiated by the Liberal government have been difficult. They have meant fewer public servant positions. They have required new ways of doing business in government and they have called for sacrifice.

In doing so, we are admired around the world for the way we have turned our federal budget around and for ensuring that those most vulnerable are cared for which is, after all, the reason we are the best country in the world.

The finance minister visited Guelph on November 12, 1996. In doing so, he participated in a call-in program on our local radio station, CJOY. He met with reporters from the Guelph Mercury and the Guelph Tribune and his visit to Guelph must have had enormous impact on him because this is truly a Guelph-Wellington budget.

When the minister announced $800 million for the new Canada Foundation for Innovation, he was speaking directly to the researchers and administration of the University of Guelph.

He spoke directly to President Mordechai Rozanski, Larry Milligan and others who asked me to help them in their work. Our commitment to fund research infrastructure will ensure that the place of the University of Guelph as the finest post-secondary education facility in Canada will not be challenged.

When the budget promotes donations to charitable organizations it speaks directly to Morris Twist of the United Way social planning council, to Lindsay Kennedy of the Wellington County literacy council and to Jassy Narayan of Onward Willow.

It encourages the thousands of volunteers who help make Guelph-Wellington the best community in Canada and it makes the responsibility of the professionals who run social service agencies, clubs and foundations a little easier.

When the budget provides more funding for infrastructure, it responds to a resolution passed on February 3, 1997 by Guelph city council asking for the continuation of this important initiative.

In providing more assistance for people with disabilities, it is in direct response to the recommendations and suggestions offered by groups and individuals in Guelph-Wellington to the task force chaired by our colleague from Fredericton-York-Sunbury.

In promoting trade, this federal budget has said to business leaders in Guelph-Wellinton like James Watson of Armtec, Wolf Haessler of Skyjack and Hock Choong of Semex that others will be allowed to benefit from Team Canada as they have.

I have been allowed a number of opportunities, especially as chair of the national Liberal caucus committee on economic development, to speak to the finance minister on priorities for the people of Guelph-Wellington.

In response to a survey I sent out in December 1994, my constituents identified three areas of importance for federal spending: health, social services and youth. When the finance minister presented his budget on February 18 he spoke to those priorities.

We have encouraged our young people through initiatives like the youth employment strategy and in helping parents and students to cope with the rising costs of post-secondary education to obtain the experience and education necessary in today's changing workforce. By assisting young people to obtain a post-secondary degree we are also helping the people of Guelph-Wellington whose jobs are dependent upon a growing student population.

In providing $300 million over three years to assist efforts to find new and better ways to meet Canada's health care needs we are acknowledging the many people in Guelph-Wellington who have asked us to make health care a priority. I am pleased that a health transition fund will provide funding for projects that could include home care services. If this fund means that people can stay in their homes longer then it will mean much for the elderly and the sick in Guelph-Wellington and all across Canada.

In developing the new Canada child tax benefit, we are not abandoning the social safety net for those children and their parents who need our help the most. These are exactly the kinds of federal spending priorities that have been demanded by the people of Guelph-Wellington; all of this while never wavering from our deficit reduction targets.

There are those who are critical of this budget. They spoke earlier. Let them come to Guelph-Wellington to address our university researchers and tell them that they are opposed to the Canada Foundation for Innovation. Let them visit our charities and tell our volunteers that they are opposed to support for charitable giving and let them respond to the thousands of Guelph-Wellington residents who told me that health care is important. Let them say to those people that they are opposed to improving Canada's health care system. Let them meet our students and their parents and say that they are opposed to investing in post secondary education, and let them tell our citizens with disabilities that they are opposed to our help.

This budget does stay the course. In doing so it says that the hard work, the sacrifices and the reductions that Canadians have made since October 1993 were not lost. In fact, this is a budget of hope and it is a budget for a stronger and brighter future.

The BudgetRoutine Proceedings

1:40 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I accept the invitation of my colleague for Guelph-Wellington.

If she really wants us to, we will go to her riding to meet the people, the researchers, the people affected by poverty or unemployment, and we will explain to them as follows: in the past three years and a half, the Liberal government has cut $4.5 billion in transfer payments to the provinces to assist with their welfare, education and health programs. Her government has also jeopardized the income security system in Canada, the health system, and part of the research activities.

Yes, we accept her invitation, and we will go and tell her constituents in Guelph-Wellington the truth, no offence meant to my colleague, as I do respect her abilities.

I would also like to challenge what she has said about the $800 million foundation. Let them stop treating us like imbeciles. The $800 million is $800 million for the foundation, but new R & D investments represent $180 million yearly, and $180 million is very little in damage control by the federal government, after it has made hundreds of millions of dollars in cuts, $500 million in R & D alone. Part of the $4.5 billion in the Canada social transfer went for funding research activities and infrastructures.

They have made cuts here, and now they are offering a little treat, a little band-aid, a little ointment on the huge gaping wound they themselves have caused. And they are patting themselves on the back for it.

Yes, we will go to your riding to explain that to your fellow citizens, as we have been explaining it ever since you brought down this clown's budget.

The BudgetRoutine Proceedings

1:45 p.m.

Liberal

Brenda Chamberlain Liberal Guelph—Wellington, ON

Mr. Speaker, I am so pleased to have the opportunity to respond.

I will welcome my colleague into my riding. He needs to come to my riding to tell the people of Guelph-Wellington and the rest of Canada why he as a Bloc member wants to break up Canada. He needs to explain why he has plunged Quebec into instability. He needs to tell the people of Guelph-Wellington why we have lost jobs in Canada. It is because of the instability and fear the Bloc has put into the Canadian and Quebec people.

I would welcome this member into my area, let me tell you, Mr. Speaker. Furthermore when his past leader, Mr. Bouchard, travelled on taxpayers' money to promote separatism, my community of Guelph-Wellington wrote petitions and stopped Mr. Bouchard from travelling on taxpayers' money.