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.