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.
Questions On The Order PaperRoutine Proceedings
The Deputy Speaker
I wish to inform the House that because of the ministerial statement, Government Orders will be extended by 37 minutes.
The House resumed from February 19 consideration of the motion that this House approves in general the budgetary policy of the government; the amendment, and the amendment to the amendment.
Monte Solberg Reform Medicine Hat, AB
Mr. Speaker, it is a pleasure to respond to the budget presented by the finance minister earlier this week.
I want to begin by pointing out that a budget can never be looked at in isolation from what is going on in the country. It can never be looked at in isolation from the government's history, nor from what is going on in the current economic and social climate.
Frankly, that is the great weakness of the government's budget. It wanted to give the impression that this was a budget about which Canadians should feel very good, that all the problems of the past were behind us and now we can look forward to a bright future.
When the government presents a budget that implicitly says that, it ignores what is going on in the real world.
The fact is many Canadians today are asking "If this is such a good budget, why am I not seeing any of the benefits? Why am I not, for instance, able to find a job? Why can I not rely on the health care system? What about the pension system"? Those are the kinds of questions people in the real world are asking today. I did not see any of that reflected the budget we heard just two days ago.
Some have referred to this budget as the fudge-it budget. I think that is a good name because this budget is remarkable not for what is in it but for what is not in it. A budget should take into account all the big issues that are out there today, particularly economic issues. The budget sets the agenda for the government for the entire year. However, if it does not address the issues that Canadians are concerned about, to that degree it has no relevancy to what is going on in the real world. Obviously if the government is going to show leadership, be responsible and accountable to Canadians then the budget should be relevant to the situation of Canadians today. But I do not think the budget is. I think the budget completely missed the point on some very important issues.
I mentioned a minute ago that people today are concerned about jobs. I was astounded when I read the budget document and the booklet dedicated to the issue of employment that there was not one reference to the fact that taxes kill jobs. I heard the minister say in this place that taxes, payroll taxes, are a cancer on job creation. Many people in this place have said the same thing. But in that whole document there was nary a reference to the fact that payroll taxes kill jobs.
It would be bad enough at any time, but coming five days after the finance minister announced a 70 per cent in payroll taxes for the Canada pension plan is absolutely astounding. How could he not know that Canadians were going to be outraged by a tremendous increase in taxes, the largest tax increase in the history of the country? There was no reference to the impact it would have on job creation.
When the government thinks it is going in its favour and announces a 10 cent or a 30 cent decrease in UI premiums, it crows about how many jobs that will create. It alleges that a 30 cent decrease in UI premiums will create 40,000 jobs. But on a huge 70 per cent increase in CPP premiums, there is not a word on how many jobs it will kill. There is not one word in the budget. Nowhere is it seen.
To bring forward a budget five days after it announced that CPP premiums were going to go up a whopping 70 per cent and to not even mention it is simply outrageous, neglectful of the responsibilities of the finance minister. Frankly, it proves beyond a shadow of a doubt how out of touch the government is with the concerns of ordinary Canadians.
During the last election campaign the government ran on the issue of jobs, jobs, jobs. When I went through the jobs document I did not see a single reference to the 9.7 per cent unemployment rate. It was nowhere to be found in the document. There were some words in the budget speech about how we should be concerned about joblessness. However, in the jobs booklet, an appendage to the budget document, under the section of economic indicators one would think that somewhere in there would be a mention of the 9.7 per cent unemployment rate. Somewhere it would mention that we have 1.5 million unemployed Canadians.
Hon. member across the way will correct me if I am wrong, but I believe that going into the last election we also had 1.5 million unemployed Canadians and he government ran on the promise of jobs, jobs, jobs.
We had 1.5 million unemployed Canadians at that point. Three and a half years later we present a budget with no mention of the fact that we still have 1.5 million unemployed Canadians. If the Liberals ran on that promise I would suggest, in the strongest possible language, that they have completely failed to keep that promise. The promise was a sham, it has not been fulfilled and Canadians have been let down, including the millions of Canadians who voted for the Liberals based on the promise that they would soon find employment. It simply did not happen.
One of the things that was not mentioned in the budget document, even though the Liberals had to put some numbers in but was not remarked on in any significant way is the fact that revenues have gone up dramatically under the Liberal government. Tax revenues have gone up dramatically. If we look at the five year mandate of the government, according to its own numbers going from 1993, including its projections for next year, its total tax revenues will go up about $30 billion. That means a 30 per cent increase.
However, if we look at what has happened to the incomes of ordinary Canadians, I would argue that in a direct comparison ordinary Canadians have fared very poorly. Their incomes have gone down 10 per cent. The government's income has gone up 30 per cent. There was no recognition of that in the budget.
Again, I think the budget should be relevant to Canadians. It should reflect what is going on in the real world. It is fine for the finance minister to speak from the Ottawa bubble and suggest that things are going well, but it ain't necessarily so back in the real world.
Taxes not only kill jobs but they make it impossible for people to fulfil their dreams. We should remember that the whole point of having a budget and of having a government is to serve the people. That is why we are here, we are public servants. However, I do not believe that has been reflected at all in this budget document either.
I would argue that what we find when we read the budget are a lot of self-congratulations and an attempt by the government to put the best possible face on a very bad situation.
I mentioned a minute ago that people are not able to fulfil their dreams because of the staggering level of taxes. However, that is probably the best case scenario for some people. For many people who went bankrupt, including all those people who went bankrupt last year as result of this government's high tax policy, it has been a complete and utter disaster. In 1996 in this country we faced record bankruptcies. That is not a surprise because, after all, we had record high levels of taxation. We had record high levels of personal indebtedness. We saw disposable incomes fall by $3,000 from the time the government came to power in 1993. Again, that was nowhere reflected in the budget documents. I believe it again reflects a disconnectedness with where Canadians are at today.
There are other reasons why I think we need to refer to this document as a fudge-it budget that does not give the whole story.
One of the things that the government and the minister crowed about was the new spending initiatives that he introduced in the budget, about $1 billion a year over two years.
However, what he did not say, and we should always point this out when we have a debt approaching $600 billion, is that this reinvestment was with borrowed money. That is the first thing we need to point out.
The second thing we need to point out when the government is proposing to spend new money on areas that it asserts are important to Canadians, and I believe it is right when it says that, is that when it spends a billion dollars in areas like research and development or health care initiatives it should, to be fair, point out that it also cut $7.5 billion from the Canada health and social transfer and it has made cuts to research and development in the past.
The impact of those cuts is far greater than the benefits of the money that it is proposing to put in. This year alone it is another $2.8 billion in cuts to the Canada health and social transfer, and it is crowing about $300 million that it is going to put into health care over a three year period.
Let us put things in perspective. For every $1 the government is putting back in this year it is going to take $10 out. I do not think that is much of a help to ordinary Canadians.
A lot of ordinary Canadians are going to say this is nothing but pre-election flimflammery. They have every right to be cynical about what the government is doing and they really wonder what the exercise or what the purpose of a budget is. If it is not to tell the complete story then what exactly is the government doing? Obviously it is trying to put the best possible face on a very bad situation.
One of the concerns I have is that over the three and a half years we have been here our party has railed away day after day on the problem of the deficit. I want to give the government some credit here. The government is finally taking the deficit situation seriously. After nine years that we have pounded away about the deficit, it has become an issue. I would like to suggest that perhaps the Reform Party can take a bit of credit for raising that issue and making it a big issue. I applaud the government for finally recognizing that it is important. It has taken a while but the message has gone through.
Where we disagree completely with the government on its approach to the deficit is in how it has lowered it. The government has taken a completely different approach than our party would have taken. I want to expand on that for a moment.
The government has raised revenues. It has raised taxes, raised revenues, and it has used that money in a couple of different ways. It has used it partially to reduce the deficit and it has used it partially to maintain a government that is far too big, far too wasteful, far to inefficient; a government that still has all kinds of pools of money to give out to special interests, to business groups and to many big businesses like Bombardier. The government has used the money to curry favour with regional interests. It has used it in a number of ways that are not very efficient and do not contribute to the overall betterment of the Canadian people and the Canadian economy.
That is one of the big differences between what the government does and how the Reform Party would handle this situation. The government says that it thinks it is okay to gradually reduce its spending until it has a government of around $107 billion or somewhere around there. We say it is much better to reduce the size of government down to about $94 billion and to turn the savings back to Canadians. In other words, the government has continuously raised revenues up, and that has come from only one place, from the pockets of ordinary Canadians. Meanwhile Canadians' incomes have fallen.
We say it is time to reverse that trend. We would make government smaller and give the benefits back to ordinary Canadians in the form of a $15 billion tax relief package. It would amount to $2,000 for the average family of four by the year 2000. I will go into that in more detail in a moment.
However, there is another area where we are critical of the government. We are critical of the government in so far as when it has reduced spending it has reduced it by cutting transfers to the provinces.
We came here three and a half years ago, coming out of an election campaign where the Reform Party proposed to balance the budget over a three year period. We called it zero in three. In that package we outlined a number of spending reductions. We said because Canadians have made it very clear that health care is a priority for them, we would preserve health care spending and higher education spending, but that just about everything else would have to be looked at. In that plan we were able to come up with enough cuts that we would be able to balance the budget over a three year period.
When we were proposing those things the government members across the way at that time during the election campaign pilloried the Reform Party despite the fact that we were going to save health care and save higher education. What did they turn around and do? They proceeded to cut health care far more dramatically than anything anybody in the provinces ever proposed. We proposed to save it; they cut it by billions and billions of dollars. There are hospitals closed around the country today due to what the Liberals did after they said they would not do it.
In the election campaign they went around the country telling people they were going to be the defenders of medicare. I do not think there is anybody who would buy that line today. The finance minister has served as the Dr. Kevorkian of health care in this country. He has pulled the plug on health care in many, many regions of the country. I hope the Liberals will pay the price for that.
Cutting transfers to the provinces is the wrong way to cut spending. We say that it is much better to look at your own house first. When you do that then you have the moral authority, you have exercised leadership and people are much more willing to accept cuts at their level if you have already demonstrated that you are willing to accept cuts at your own level.
In order to get its spending in line the government cut defence. It has cut that department by about $3 billion since it has been in power. Defence has been the whipping boy of successive governments for a long time and the cuts have to stop.
When we add up the cuts the government has made to transfers to the provinces which amount to about $7.5 billion, and the cuts which it has made to defence which are about $3 billion, it amounts to $10.5 billion. It has only cut $17 billion in total. The other $6.5 billion has come from cuts to its own administration.
If we add that to the increase in revenues which the government has brought in, which amount to about $28 billion and which include user fees and other revenues, this indicates that only about 5 per cent of the overall improvement in the bottom line is due to cuts in its own backyard. It has only cut itself by 5 per cent. Taxpayers have taken a major hit. Their pocketbooks are empty because of what the government has done. The provinces have taken a major hit. The people in defence have taken a major hit. But only 5 per cent of the improvement in the bottom line is due to cuts that the Liberals over there have taken.
One of the most egregious examples is the cementing in place of the MP pension plan that Liberal members were thrilled to engage in about two years ago. Now they turn around and say: "We are going to go after seniors and all the rest of the people who are coming up through the ranks and paying into the Canada pension plan by raising their premiums by 70 per cent".
It is typical of what has happened in this budget. It is typical of what has happened in the past. Liberal members pad their own pockets first and then ensure that their way is paid for by higher premiums and higher taxes from ordinary hard working Canadians.
This budget is a fudge it budget. It has not told the complete story about what is going on in the country. The government has proven that it is disconnected from what is going on in the country. The government has proven it does not understand the pain which ordinary Canadians are feeling. The government has completely broken its promise on jobs. It has left the young people of the country out in the cold. Youth unemployment stands at 17 per cent.
There is a better way. The Reform Party will provide people with a better way through lower taxes, smaller government and a reinvestment in social programs. I hope that Canadians punish the government in the next election for what it has done.
Paul Szabo Liberal Mississauga South, ON
Mr. Speaker, the Reform Party continues to talk about how Canadians feel.
I wonder if the Reform Party has considered how the disabled feel about this budget. Their benefits have been enhanced. I wonder if it has thought about how students feel about the expanded tuition credits and deductions they are going to get. I wonder if it has thought about how seniors feel now that there is in place a seniors benefit program and amendments to the CPP which will guarantee pensions and disability benefits. I wonder if it has thought about how Canadian parents feel about the enriched child tax benefit.
Has Reform thought of how the Canadian tourist industry feels about the significant injection of funds, or about how the technological industry in Canada feels? How about the agricultural sector? How about the youth strategy, the jobs and opportunities? These are also Canadians and they understand that the government has delivered a budget of hope.
The member spent a lot of time dealing with health care and how awful it is. Let me talk about what has happened with health care in my province of Ontario. The CHST was decreased by two and half per cent of provincial revenues which is far less than what we cut our own spending by. What happened is that the Ontario government then proceeded with a 30 per cent tax increase. The National Forum on Health has stated that the problem with our health system is not money itself but how the money is spent.
My question has to do with the Canada pension plan. I would like the member to answer some questions for the House and Canadians. Do the Canada pension plan collections received by the government reduce the deficit? Do individuals, corporations and self-employed people pay less tax because they are paying a little more in CPP?
If the answers to those questions are what they should be, then the member will also agree that the government deficit increases as a result of the CPP increase in premiums because of lower tax revenue from individuals, corporations and self-employed people. The Reform Party has said that CPP increases are a tax grab, but
they are actually reducing the government's revenues and increasing the deficit.
Monte Solberg Reform Medicine Hat, AB
Mr. Speaker, there are a lot of different issues there. I hope the hon. member will forgive me if I do not get to all of them.
He touched on students. I will try to answer the member's questions about what this budget does for students. As I said before, this budget is not remarkable only for what is in it but also for what is not in it. The hon. member forgot to mention that the government has already cut seven and a half billion dollars in the health and social transfer. Transfers for education have been dramatically reduced by this government. When the hon. member says that the government has thrown a bone to students, he has forgotten to say that it already took about 10 bones away. He should mention that in fairness.
The same thing applies to the disabled. There have been billions of dollars in cuts to health care. The disabled more than any other group rely on health care. In fairness he should point that out. We do not have a problem with the government contributing more money toward the disabled; that is not a problem. But he should in fairness point out that the government has dramatically reduced transfers to the disabled.
With respect to the child tax credit, we have no problem with money going into programs for poor people in this country. That is a good idea. We have no problem with that. Our point is that if you keep raising taxes and hurting people, poor people in particular who have the least income and cannot afford tax increases, then you are undoing any good you could possibly do by giving them more money through a program to alleviate child poverty.
With respect to technology, if you raise taxes through the roof, which is what this government has done, and then you throw people a bone in a pre-election budget, that is superficial. People understand exactly what the government has done in the past. Those cuts are still hitting home today. So let us not be misled.
What was in the budget with respect to agriculture? I did not hear anything. Was there anything? There was nothing in there, despite the fact that we have tremendous transportation problems in the west and we have a wheat board which many people would argue is completely dysfunctional. So let us not suggest there was something in there when there was not.
With respect to youth, I simply must say when the member talks about a youth strategy, what people really want are jobs. This country has a 17 per cent youth unemployment rate. It is horrendous especially considering the government ran on a promise of jobs, jobs, jobs. We do not need more programs, what we need are more jobs.
Finally with respect to CPP-
John O'Reilly Liberal Victoria—Haliburton, ON
Mr. Speaker, on a point of order.
I respect the views of the hon. member for Medicine Hat but that is the third time he has used the term "jobs, jobs, jobs" which was Mr. Mulroney's statement.
The BudgetRoutine Proceedings
The Deputy Speaker
That will not come out of the time of the hon. member for Medicine Hat.
Monte Solberg Reform Medicine Hat, AB
Mr. Speaker, Liberal, Tory, same old story.
With respect to the CPP, I simply must point out that the finance department itself has called the premiums on CPP a payroll tax. Therefore it is a payroll tax and we must not mislead Canadians by suggesting that somehow this is an investment which is what I think my friend across the way wants people to believe.
In fact if it were an investment, it would be the worst possible investment I have ever heard of in my life: premiums go up 70 per cent and there is a 10 per cent decrease in the pension. How in the world can members across the way call that an investment? If it is an investment, it is a Liberal investment and the worst possible one I have ever heard of.
Len Taylor NDP The Battlefords—Meadow Lake, SK
Mr. Speaker, I have a comment and a question for the member for Medicine Hat generally on the debate yesterday and today.
I see a tremendous circus spectacle being undertaken here. Jugglers from all sides of the House are throwing brightly coloured balls into the air, diverting the attention of Canadians from what is really happening behind them. The political agenda of both the government and the Reform Party is being ignored while the public watches all these coloured balls but Canadians see through this. They are not watching the balls in the air any more. They are concerned about what is happening behind the jugglers.
We see today in particular the Reform Party's finance critic talking about jobs and what would happen under the budget. I have to accept all of the critical words the member for Medicine Hat has put out with regard to the government's record on jobs. The government's record is abysmal in this regard and the government knows it.
The member for Medicine Hat also knows that the program which created no job creation in this country is the same type of program he would advocate were he the finance minister. There would be additional cutbacks in the public service and tax breaks to the large corporations which have not produced any additional jobs in this country.
I would like the member for Medicine Hat, who is Reform's finance critic, to comment on some of the numbers that have come out of the budget, in particular one set of numbers. In 1993, the last year of the Mulroney government, 5,250 taxpayers earning over
$70,000 a year paid no taxes. Under the current government there has been a 400 per cent increase in that 21,270 Canadians who earn $70,000 a year or more paid no taxes. There are more Canadians paying less taxes or no taxes-
The BudgetRoutine Proceedings
The Deputy Speaker
The hon. member's time will be up in one minute and eleven seconds.
Monte Solberg Reform Medicine Hat, AB
Mr. Speaker, I have the same response to my hon. friend. The Reform Party is an advocate of a much simpler taxation system that ensures everybody pays taxes. In fact we have been at the forefront of the debate in advocating a flat tax system and would certainly invite my hon. friend and others to contribute to that debate. It is wrong for people to escape paying taxes in this country if indeed they have an income, or in the case of corporations if they are making a profit. That would be the short answer.
The other point I would make to my hon. friend is we believe that subsidizing businesses by giving them taxpayers' money is equally wrong. That is something my friends across the way in the Liberal Party have been guilty of for a long time.
The most blatant example of that was recently when they gave their friends at Bombardier hundreds of millions of dollars in subsidies. I note in the budget that another $250 million has been set aside for precisely that. They should be ashamed of that approach to job creation because it only creates jobs for their corporate buddies in corporate Canada.
Geoff Regan Liberal Halifax West, NS
Mr. Speaker, I am splitting my time with the hon. member for Saint-Denis.
With this, our fourth budget, we begin to build the future while recognizing we are still constrained by the past. As we head into the new millennium, we are continuing to restore Canada's fiscal health. We are continuing to invest in immediate jobs and growth. We are continuing to invest in job creation and growth in the long run and we are continuing to invest in a stronger society.
From the beginning our government has struggled under the weight of massive debt; like a $500 billion ball and chain, the debt prevented us from going where we wanted.
Today we are by no means unchained. The only thing we spend more on than interest is transfers. We spend more on interest on the debt than on everything else combined, excluding transfers. So debt remains a problem. Even when the annual deficit has gone down to zero the ball and chain of debt will remain until we pay off our enormous loan.
As the economy grows and the debt declines we will be able to move more and more freely. So no, we are not unchained but our deficit is lower than it has been in 15 years. We have restored international confidence in our fiscal management of the country. We have restored our fiscal sovereignty. We have restored interest rate sanity and our load is beginning to lighten. We can now begin to move beyond securing, stabilizing and sustaining, toward striving for a stronger society, toward seizing our destiny in the 21st century.
There are those who say this is simply an election budget, that we are not showing our true colours, that our new spendings on jobs, health care and poor children are just short term election ploys. To them I say look at the numbers. They all add up and we are still ahead of our fiscal targets. If we could not sustain these programs and this new spending, would that be so? To them I say look at the markets. Our interest rates are a full two and a quarter percentage points below the U.S. and the dollar is staying strong. When did that last happen? If we could not sustain this spending, would that be so?
As we begin to shed the mantle of heavy debt, our true colours are beginning to shine through. But let us not forget that for the parties of the right, not just the Reform Party but also the Conservative Party, we have not cut quickly enough. The Conservative leader demanded that we clean up the mess his government left behind. He wanted us to cut deeper. He wanted us to cut faster. But our government has taken a more balanced approach.
From the beginning, even as we cut many areas of government to meet our deficit targets, we invested what we could in key Canadian priorities. We cut our own government the most and we cut our transfers for social programs the least. As we gain greater fiscal freedom we are continuing to invest in those priorities.
With this, our fourth budget, we are continuing to invest in immediate jobs and growth. Jobs and growth have been our number one priority from the start; 790,000 new jobs since we started is nothing to sneeze at but it is not nearly enough.
We are extending the Canadian infrastructure works program which has created jobs for 100,000 Canadians.
We increased funding for youth employment, including doubling assistance for summer jobs. We are investing $15 million per year more on promoting tourism. That is an investment that will help to draw people to the rugged rocks of Peggy's Cove and the beautiful beaches of Queensland and Hubbards.
We are continuing to invest in job creation and growth in the long run. We are establishing the Canada Foundation for Innovation, an $800 million foundation to support research infrastructure especially in health, environment, science and engineering.
In the short run, this means jobs for those who will design and build these new and expanding research facilities. It also means more jobs at universities and hospitals in places like Halifax. In the long run, the research this money supports is key to competing in the global race for jobs in the 21st century.
As we all know, a better education means a better job. We are helping students and their parents cope with the rising cost of education. We are improving the student loan system and enhancing the education credit. We are continuing to invest in a stronger society.
When we began, our indebtedness was threatening the very future of our social programs. Now we are investing $300 million over the next three years to support key recommendations of the national forum on health. Now we are allocating $600 million in new funds for the child tax benefit to reduce child poverty. Now we are allocating $230 million over 3 years to assist Canadian with disabilities.
When we began, Canadians had to marshal a great national will to keep Canada from going broke, to secure our social programs and to make them sustainable. Now we need to begin to marshal that same will to build a Canada that works for everyone. Now we need to strengthen our society to make sure Canada can stride unshackled toward its destiny in the 21st century.
With this budget we turn the page. With this budget we take the first steps together on a great new journey.
Len Taylor NDP The Battlefords—Meadow Lake, SK
Mr. Speaker, I have a couple of questions for the member from Nova Scotia. He has accepted the premise of the budget about improving the economy and moving us forward. In particular, I want to talk about the children of the working poor, many of whom I know live in Nova Scotia and for whom Nova Scotians are looking to the member for representation.
This morning in a news conference in Ottawa on Parliament Hill, the federal New Democratic Party leader Alexa McDonough urged the federal government to reverse plans hidden in the budget from Tuesday that will cut benefits for some 288,000 children of working poor in this country.
She released some evidence, including copies of newspaper clippings from Toronto yesterday, that women living in the Toronto area were shocked to find out that they will get less money under the new program once it is brought into place than they were getting to date.
It is noted that the combined working income supplement and the child tax benefit for families with one child will be $1,625 under the new proposal instead of the $1,770 that they are getting today. This represents a 20 per cent cut in benefits for roughly 40 per cent of those estimated to be Canada's working poor families.
I want to ask the member whether he believes that this information is correct. If it is, would he work to help change the direction that is being taken by the government with regard to this part of the budget?
My second question deals with the lack of attention that the budget paid to the goods and services tax. The House had a major debate here over the harmonization of the GST for three of the four Atlantic provinces. I was not present to hear comments from the hon. member from the Halifax area with regard to the harmonization of the GST.
I see that the Senate is about to hold hearings in Atlantic Canada, something the House of Commons and the government chose not to do. Therefore I am wondering if the member would appear before the Senate committee touring Atlantic Canada and what he would say.
Geoff Regan Liberal Halifax West, NS
Mr. Speaker, I want to thank the member for The Battlefords-Meadow Lake for his question. I always enjoy hearing questions from this hon. member because he holds the seat that my grandfather, Jack Harrison, held many years ago and we have once in a while had exchanges in the House and it has always been a pleasure to discuss important issues with him.
Since I came to this House in 1993 I have worked, as have many of my colleagues, on issues relating to child poverty. It has been an issue of priority for me for many years, long before I came to this House, as some members will know.
When I hear the hon. member say that this is going to make people worse off, we have had a look at the numbers. The fact is no one will be worse off than they are under the present system. Here are the numbers, here are the facts. The maximum benefit will be increased from $500 per family to $605 for the first child, $405 for the second child and $330 for each additional child. Benefits will continue to be phased in based on family earned income over $3,750, not a very high threshold, and reduced as family income exceeds $20,921.
This is a very important measure in the right direction. We have to go on. I do not say this is enough. I do not begin to say that we are investing in this budget all that we need to do in the long run to solve the problem long term of child poverty, but we are beginning to see the light at the end of the tunnel. We are beginning to make a very important investment. We are showing that this is the direction we want to take on this important national challenge of fighting child poverty.
The member raised the question of the GST and the HST. The changes to the GST and HST in Nova Scotia are very important and very valuable in many ways. They are not perfect. I have never seen a change in taxation that was, unless it is actually eliminated.
We would love to be able to do that. However, when we are paying $42 billion-
The BudgetRoutine Proceedings
The Deputy Speaker
I am sorry, but the hon. member's time has expired.
Eleni Bakopanos Liberal Saint-Denis, QC
Mr. Speaker, what is a budget, we may ask. It is a blueprint for action.
Over the past three years our budgets have served as a road map for Canadians, telling them what lies ahead and forging a path to the 21st century.
When we first received our map over three years ago the roads had been washed out in my opinion. We were heading down the road of economic destruction and social inequity. Nine years of failing to meet the targets by the Conservatives had taken their toll.
In 1993 Canadians gave this government their overwhelming support to draft a new economic road map. We set about restoring public confidence by providing good government and creating a climate for putting more Canadians back to work.
Our fourth budget is our latest contribution to turn around the nightmarish economic and fiscal situation inherited from the previous administration. In January 1994, the deficit was $42 billion, and our debt load had jeopardized the future of our social measures. It is no wonder that so many Canadians lost hope. But four Liberal budgets have put us back on track.
We have made progress. Our fiscal policy of restraint in government spending and program review over three previous budgets is today showing tangible results.
Let us make no mistake. Jobs and growth as well as preserving our health and social programs have been a priority of this government from the very beginning.
Since coming into office, we have initiated a series of actions to stimulate immediate job creation. We have worked in collaboration with municipal and provincial governments, even Quebec, in an effort to improve the well-being of all Canadians. We took immediate action. We introduced the infrastructure program which was a success from coast to coast and, for that reason, we have decided to reintroduce it.
In my riding of Saint-Denis, one of the biggest infrastructure programs was launched to renovate Jarry Tennis Stadium and thereby ensure that the international tennis tournament remains in Montreal. In the case of my riding, I have seen tangible evidence of Canadian tax dollars working to improve the well-being of my constituents.
In 1996 alone, more than $3.5 million has been invested in the riding of Saint-Denis by various ministers and state secretariats. With these subsidies, organizations were able to carry out many projects, bettering the lives of our fellow citizens and creating more than 50 permanent jobs and nearly 80 summer jobs.
Several non-governmental organizations, including La Jarnigoine literacy centre in Villeray and the recreational and educational and heritage activities association, have received federal subsidies. Moisson Montréal, and its affiliate Renaissance Montréal, were also able to further their objectives in providing the most disadvantaged with either food or clothing at a very low cost.
One of the priorities I set for myself when I ran in the last election was to ensure a better future for young people in Saint-Denis.
I agree wholeheartedly with the Minister of Finance who said in his budget speech this week: "Let us recognize that Canada's greatest natural resources do not lie buried deep in the ground but in the skills and talents of those who walk on it".
The youth employment strategy announced last week by the Minister of Human Resources Development will help young people achieve their goals by providing them with the necessary tools.
Some $60 million of the amount earmarked in the 1996 budget was used to double the number of student summer jobs, which climbed to 60,000 in the summer of 1996.
New internship programs in partnership with the private sector will be put in place to allow young Canadians to gain work experience, a first job. How many times have we heard frustrated graduates say: "I have the degree, now if I could only get some job experience". We have given them that opportunity.
Total federal spending on youth employment programs, including Youth Services Canada, Youth Internship Canada and Student Connections, over three years, 1996 to 1999, will be about $1 billion, a substantial commitment to Canada's future leaders.
Several organizations in the riding of Saint-Denis have already been able to hire under the summer career placement program, including the Coopérative fédérée du Québec, the Copains de Saint-Simon, Résidence Louvain and Cap du College de Bois-de-Boulogne.
In addition, we have carried out in Saint-Denis four Youth Service Canada projects, providing employment for 63 young people.
I will mention two examples today, the first one is the Octave Cremazie project. Fifteen young people who had never had any opportunities are now working in cleaning the environment in one sector of my riding. The other example is the Park Extension Youth Organization. We gave these kids their first opportunity to work and have some experience in working with a team. It was the first time that it had ever been done in one of the poorest districts in all of Canada.
The Liberal government's fourth budget will also help students and their parents deal with the increased cost of higher education, through three important measures: the amount on which the education tax credit is based will be doubled, the student loans program will be improved by providing a longer payment period for students, and the ceiling on annual contributions to an educational savings plan will be doubled. Once all these measures are in place, they will increase by $275 million per year tax assistance to students and their families.
I think this is good news to the students of Collège de Bois-de-Boulogne and throughout the province of Quebec. At a time when the unemployment rate for young people is close to 20 per cent in Quebec, it is inappropriate for provincial authorities to criticize any attempt by the federal government to improve the situation.
Small and medium size businesses with fewer than 15 employees account for approximately 42 per cent of all private sector employment. They have generated between 70 per cent and 80 per cent of all new jobs in Canada over the past three years. In Saint-Denis, small and medium size businesses dominate the industrial sector.
Last month I organized an information seminar for these entrepreneurs. Despite the snowstorm, nearly 100 business people were present. Many were impressed with the gamut of services which have been introduced by the Minister of Industry and by the Secretary of State for the Federal Office of Regional Development.
We often hear those same entrepreneurs complaining about the amount of paperwork they have to complete. The 1997 budget, along with the Minister of National Revenue, addressed these concerns. For example, the requirement to file monthly payroll deductions will be eliminated for small businesses with a perfect compliance record. They will now be permitted to file quarterly. This measure has the potential of benefiting up to 650,000 small businesses.
In addition, the budget proposes to raise the ceiling on the Small Business Loans Act from $12 billion to $14 billion, providing additional borrowing assistance for fixed assets. Budgets are not just numbers. They speak of people's futures, their economic, social and mental well-being.
To illustrate the important role of government in people's lives I wish to quote a great Canadian born economist, John Kenneth Galbraith. He said: "There must be, most of all, an effective safety net-individual and family support-for those who live on the lower edges of the system or below. This is humanely essential. This is also necessary for human freedom. Nothing sets such stern limits on the liberty of the citizen as the total absence of money".
Let us not forget that 1997 is the international year for the eradication of poverty. We have made a commitment to that effect to the poor children and families of the country. The measures introduced in the budget are important steps toward this goal. But that is only the beginning. We must do more. We are now at the crossroads of our road map.
As of July 1998, the federal contribution for children will go up from $5.1 billion to $6 billion. The Canada child tax benefit will provide increased support to one million Canadian families, and their children.
The two levels of governments made a commitment to create a new national child tax benefit program, which would be based on the Canada child tax benefit.
We did our share and I hope the provinces, including the separatist government in Quebec, will do theirs, so that as much money as possible is available to reduce child poverty.
The road has been a difficult one. We can all attest to that. All members of the House, on both sides, felt the suffering and loss of hope which many families and young people have endured these past few years. We have made many difficult decisions in the past three years, but we had few choices. Thus we have strived once again with this budget to provide a road map which will better the quality of life of all Canadians as we approach a new millennium; a map which will lead us to eliminate social and economic inequalities, a map that guarantees educational and work opportunities for our youth-
The BudgetRoutine Proceedings
The Deputy Speaker
I am sorry to interrupt the hon. member but her time has expired.
Ray Speaker ReformLethbridge
Mr. Speaker, thank you for the opportunity to make a comment and also to put a question to the hon. member for Saint-Denis.
She stated that measures in the budget are important. I certainly understand that comment and the arguments she has made to support that position.
The question I would like to ask the hon. member relates to a motion which was passed in the House of Commons on December 11, 1995, which gave some direction to the House. Has the government or she as a member of the Liberal government taken that motion into consideration in terms of support for the measures that are strong in this budget.
Just to remind the House, the wording of the resolution was:
Whereas the people of Quebec have expressed the desire for recognition of Quebec's distinct society:
(2) the House recognize that Quebec's distinct society includes its French-speaking majority, unique culture and civil law traditions;
(3) the House undertake to be guided by this reality;
That is the operative part and the direction to this House and the item I would like the hon. member to comment on.
Third, I would like her to comment on this portion as well:
-the House encourage all components of the legislative-branches of government to take note of this recognition and be guided in their conduct accordingly.
Are we being guided?
The Prime Minister reinforced the direction to this House by saying: "Once it is passed this resolution will have an impact on how legislation is passed in the House of Commons". I would think that should apply to budgets as well. "I remind Canadians that the legislative branch will be bound by this resolution, as will be the executive branch. This is a real dynamic recognition recorded in the very heart of our country's government".
Today in an earlier ruling by the Speaker it was felt that this procedure did not have significance.
There was a directive of the House. We are talking about the budget of the country which is the framework on which many other decisions are made. Does the motion we passed, supported wholeheartedly by the government, have any affect on the budget?
Eleni Bakopanos Liberal Saint-Denis, QC
Mr. Speaker, I thank the hon. member for his question. On this side of the House we make no distinction between different parts of the country. As far as we are concerned the budget is for all Canadians. The same measures apply across the country.
As I said at the end of my speech, we want to ensure that all Canadians are treated equally by the government. Throughout our three-year mandate we have addressed areas where there are inequities.
Len Taylor NDP The Battlefords—Meadow Lake, SK
Mr. Speaker, this question is a follow-up to my question to the member from Halifax. It is with regard to the working income supplement and the child tax benefit for families. I believe the member who just spoke heard what I had to say on that issue.
The National Council of Welfare has concluded that the child tax benefit will actually cost tens of thousands of families with one child more than $500 over two years. Yesterday the finance minister told the Toronto Star that families with one child will receive less money from Ottawa, and the member for Elgin-Norfolk also told the Toronto Star yesterday that he is not happy with this situation and that he would try to get it fixed.
Last year the budget set out a scheme for providing additional funds to families of the working poor. This budget has changed that formula dramatically and has cancelled the increase for families from last year. Because it is now child based rather than family based, it will result in a 20 per cent cut in benefits to 288,000 poor children or roughly 40 per cent of the poor living in Canada.
Will the member for Saint-Denis also work to correct this deficiency in the system?
Eleni Bakopanos Liberal Saint-Denis, QC
Mr. Speaker, I thank the hon. member for his question but I will repeat what other hon. members have said.
These budget measures will result in all children being better off than they were three years ago. I find it kind of unusual that the hon. member is not applauding some of the efforts outlined in the budget.
The NDP should be applauding some of the measures that have been introduced. They are measures to ensure a better future for Canada's children.
Richard Bélisle Bloc La Prairie, QC
Mr. Speaker, this fourth budget brought down last Tuesday in the House by the Minister of Finance is election minded and centralist.
It is centralist because the areas it addresses are all, without exception, provincial in jurisdiction: literacy, tax benefits for children, tourism, higher eduction, students, the disabled, health and medical expenses.
It is election minded because it consists of a scattering of timid measures and a few million dollars tossed out to attract groups that are generally anti-Liberal.
Let us take the example of tourism, in which they will invest $15 million annually. As Alain Dubuc pointed out yesterday morning in the editorial in La Presse , the interest alone on the federal debt is over $125 million daily.
Seventy million dollars will be spent this year on the child tax benefit, less than the cost of servicing the debt for 17 hours, corresponding to 53 cents per child per week. There will be a 10 cent reduction in UI premiums for every $100 of insurable earnings.
In addition, the Farm Credit Corporation will receive $50 million to support diversification in rural Canada, and $10 million in funding will be provided to help connect rural areas to the new information highway.
You will observe that all these areas come under provincial jurisdiction or are areas in which Quebec has been trying to defend its jurisdiction for years, with no success, given Liberal policy.
The Liberals' strategy could not be clearer. After cutting transfers to the provinces by several billion dollars and forcing them to struggle with increased deficits and, in the case of Quebec, to manage downsizing in education and health, with all that that represents in terms of management of collective agreements and workforce reduction, the federal government is tossing a few scraps the way of the provinces to increase its visibility in the months leading up to the election.
This budget is Machiavellian, because it leaves the dirty work of cutting back program spending to the provinces. Because, year after year, the federal government has dipped into the $5 billion surplus in the unemployment insurance fund, deficit reduction is also supported by employers, for whom it is a sort of payroll tax in disguise, and by the workers, for whom it represents a hindrance to employment. The unemployed who are still searching for employment are 1.5 million strong, and there are another 1.5 million who are no longer in the unemployment statistics, having given up hope of finding a job.
The tax burden has increased by $22 billion in four years. Over that time, expenditures have decreased by $14 billion, over half of that the result of decreased transfer payments to the provinces.
The Minister of Finance is concealing his true margin of manoeuvrability from us. It is impossible for his deficit to decrease by only $2 billion next year, when it has already gone down close to $10 billion this year. The minister is hiding several billion dollars up his sleeve, just for the purpose of justifying his approach to cutting the deficit.
There is nothing for employment, nothing for the battle against poverty. The government will earmark $800 million for the creation of a Canadian foundation for innovation. As if by chance, this amount of $800 million comes from transfer payments to the provinces, which are precisely $800 million less than what was forecast for 1997-98 in the 1996 budget, essentially due to an improved economic situation.
This foundation duplicates services already provided by the provinces. Creating a new foundation instead of reinforcing existing research bodies would give the Liberals a chance to put in their own people, people who will act as a kind of liaison in connection with future appointments and fundraising for the Liberal campaign, now the election is only months away.
There is no provision for compensating the Quebec government for harmonizing the GST in 1991, while the maritimes will be entitled to $1 billion in return for doing what Quebec did six years ago, without any compensation at all.
The minister is reactivating some good news that was announced a few months ago, and prefers to remains silent on the cuts that will kick in this year and were included in last year's budget.
Instead of reducing duplication and overlap, the federal government increases these as well as the inefficiencies for which it has been criticized by the Bloc Quebecois for the past four years. However, there may well be no more duplication and overlap in the future.
As transfers to the provinces are reduced, the provinces will have to hand over entire components of their mission to the federal government. That is not how the provinces and Quebec taxpayers would like to see duplication and overlap eliminated.
The 1997 budget elbows the provinces aside even more, so there will be more programs flaunting the maple leaf. What matters most to the government on the eve of an election is the visibility of the maple leaf on printed matter sent to Quebec and Canadian households between now and June 9, and the government is even happier if this mailing perhaps includes a cheque.
Notwithstanding the increase in tax revenues over the past four years, the reduction in transfer payments to the provinces and the appropriation of the unemployment insurance fund, the minister does not expect his deficit to drop by more than $2 billion next year. The minister therefore retains considerable flexibility, and the measures to deal with unemployment and poverty are minimal, compared with the actual spending capacity of the federal treasury. They could even forecast a zero deficit for the year 2000 or even 1999.
The Bloc Quebecois estimates that today, the Minister of Finance has about $8 billion to use as he sees fit. The minister is a year ahead of schedule in his fight against the deficit. If he refuses to disclose the real numbers, it is because he wants to prevent any action by the provinces, community groups and unions which would certainly ask him to refinance social transfers to the provinces.
If we look at how the budget has changed in the past four years, we see that 52 per cent of the $14.2 billion reduction in federal government spending involves transfers to other levels of government, primarily the provinces. Only 21.1 per cent, or one dollar in
every five, of this reduction comes from direct government expenditures.
The Minister of Finance says he did not raise taxes in his 1997 budget. Since the Liberals have been in power, personal income taxes have continued to increase and at a rate greater than the GDP year in and year out. This increase in the personal tax burden especially on the middle class is not the result of a review of the tax system aimed at improving tax equity. Not at all. It is the result of several subtle increases, such as the non indexation of the tax and tax credit tables, causing individual income tax to rise every year in Canada.
The minister talks of an improvement in the child tax benefit, which will not have a real impact until 1998, thus after the election. Will the Liberals give the child tax benefit the same treatment they gave the promises on the national child care system they promised in the last election?
After impoverishing their parents through massive cuts to social transfers and unemployment insurance, will the Liberal government in a gesture of cynicism ease the lives of the children of these families?
Family policy and the fight against poverty are provincial matters. The continued and even expanded federal intrusion into areas of provincial jurisdiction is not acceptable and hampers the implementation of coherent policy in Quebec. While ministers Harel and Marois in Quebec are struggling to find the millions required to help children, families and the jobless, the federal finance minister is trying to develop a family policy, an area that does not come under the responsibility of the federal government and for which it does not have the necessary expertise, since this has traditionally been a provincial jurisdiction, in Quebec and in the other provinces.
Looking at this cynical and centralizing budget, one stops wondering why a majority of Quebecers long for a sovereign Quebec. It is to finally be free from this perpetual state of confusion where the level of government that controls the purse strings does not know what the needs are and does not have the human resources to serve a public which is, at any rate, far away.
Leading anti-poverty organizations estimate that at least $2 billion more would be required every year to put up a serious fight against poverty. But starting in 1998, the government will be spending only $850 million per year on the fight against poverty. This is therefore not nearly enough, especially since the federal government has considerably impoverished the provinces.
It has been announced that unemployment insurance premiums will be reduced by 10 cents starting January 1, 1998. This is an announcement that is normally made in November. Knowing him as we do, we can expect the Minister of Finance to announce this good news twice. In addition, this reduction is much smaller than what employers' associations have asked for and what it should have been, given the huge surpluses in the unemployment insurance fund.
The Bloc Quebecois asks that the government substantially reduce UI premium rates and improve the employment insurance program, which has become too restrictive and is, unfortunately, forcing onto welfare people who, as job seekers, should continue to receive benefits.
The accumulated surplus is large enough to allow eligibility rules to be relaxed and the premium rates to be reduced even further. Any annual surplus is a hidden tax paid by employers and employees. A 10 cent reduction of the 1998 premium amounts to $700 million. With a $5 billion surplus forecast for 1998, it should be possible to reduce the premium rate by 70 cents. The $15 billion surplus accumulated by the end of 1998 should even translate into a tax break, since it is in fact an employment tax of $2.10 for one year.
One can see the feeble attempt made by the Minister of Finance to help job creation. The minister claims that serious studies estimate at somewhere between $10 billion and $15 billion the reserve required to prevent another recession. Just look at what will happen when the next recession occurs. Since the reserve is already being used to reduce the deficit, the minister will suddenly and drastically increase the premium rate, because the reserve will have disappeared.
In November, the Bloc Quebecois released a comprehensive study on corporate taxation, so as to make an honest and objective contribution to the debate and to provide suggestions to the minister, who is often bereft of ideas.
Today, it is obvious that the 1997 Estimates include no changes to corporate taxes. There is no tax measure to promote job creation. The minister is clearly showing that he did not want to change the corporate tax system to promote employment. The minister's inaction regarding the corporate tax issue reflects his inability to adjust to the current economic context and to make job creation his top priority.
In conclusion, I feel the minister has turned a deaf ear to the Bloc Quebecois' recommendations regarding obsolete tax deductions for business. Obsolete tax shelters and deductions should be replaced by a tax system designed to promote employment. But nothing of the sort was done. The Bloc Quebecois suggested using up to $3 billion in ineffective tax deductions to create jobs instead.
Given the current economic context, job creation should be the main thrust of the corporate tax policy. However, under the budget,
corporate tax revenues will only fluctuate by $205 million, of which $175 million is the result of a mere accounting exercise.
The only other measure affecting corporate taxation is the decision to extend the temporary tax on large deposit taking institutions. This represents $25 million. Given the sky-high profits made by Canada's major banks, it is a very small contribution on their part to the community's well-being.
Eleni Bakopanos Liberal Saint-Denis, QC
Mr. Speaker, we, in this House, have spent the last three years listening to myths being spread by Bloc Quebecois members and their PQ friends in Quebec. The first such myth is that Quebec is not getting its fair share from the Canadian government. This is a myth which Bloc members continue to spread, with the help of their friends.
The facts are undeniable: year after year, Quebecers receive more than they contribute in federal taxes. As for equalization payments, they receive 42 per cent of the total amount. I hope that some day Quebecers will be told the truth.
My question to the Bloc member is this: Why is the Quebec government, which is also my government, unable to balance its debts or, to be more specific, unable to reduce its deficit, like other provincial governments have done? Indeed, other provincial governments have implemented changes. Mr. Klein even announced a surplus.
I find it sad that the object of the hon. member's whole speech is to blame the federal government. These are myths, and we must say so. We have a responsibility to Canadians and to Quebecers, but so does the provincial government. We have taken action because the Quebec government did not act to eliminate poverty among Quebec children, women and families.
I would like to know what the Bloc has done to help the provincial government achieve its goals.
Richard Bélisle Bloc La Prairie, QC
Mr. Speaker, I thank the member for Saint-Denis for her question. My colleague spoke of myths. She said we were perpetuating myths. I would like to tell her that the biggest myth circulating in Quebec and in Canada is the one about centralizing federalism as practised in Canada for the last 30 years, during 20 of which the Liberals were in power. That is the biggest myth.
The Government of Quebec is having difficulties because the federal government is offloading its deficit onto the backs of the provinces.
Let us take the example of research and development. Over the last ten years or so, Quebec has received approximately 17 per cent of federal research and development grants, while the neighbouring province of Ontario has received 50 per cent. Historically, the federal government has always put less money into economy building measures.
What Quebecers want is not just transfer payments to help subsidize welfare and assistance to the less fortunate members of society. What they want from the federal government is spending that will have an impact on the economy, such as Ontario has seen for ten years or so. Historically, Quebec has never received its fair share.
When there are massive cuts by the federal government in transfer payments, such as we are now experiencing, Quebec is more severely affected than Ontario or other provinces. The federal government has not put money where it would have allowed Quebec to have proportionately fewer people living in poverty. When this kind of spending is cut, people are hard hit.
Finally, the flexible federalism, the decentralized federalism we keep hearing about from the Prime Minister and the federal government is always based on a double standard. If this is the kind of distinct society the Liberal government wants to talk to us about, we are not interested.
Take the case of the GST. The maritimes received $1 billion in compensation for harmonizing with the GST. Quebec did the same thing in 1991 without a cent of compensation, when it should have received approximately $1.9 billion. If that is what they mean by distinct society, treating Quebec differently where taxes are involved, I can understand that Quebecers are increasingly considering sovereignty.
I would also like to tell the member for Saint-Denis that what the Bloc Quebecois most dislikes about the Minister of Finance's budget is its scattershot approach. The amounts involved are small, a few million dollars, and they have been ladled out all over the place. Rather than watering down the impact of the $1 billion available in the 1997 budget, why did they not target one or two specific areas in order to produce a bigger bang in terms of jobs and wealth?
Eleni Bakopanos Liberal Saint-Denis, QC
Mr. Speaker, as I said before, there are myths and myths. When a government spends taxpayers' money on political propaganda, there is less money left to invest in helping young people and the poor.