House of Commons Hansard #158 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was program.

Topics

Canada Small Business Financing ActGovernment Orders

5:15 p.m.

Some hon. members

Nay.

Canada Small Business Financing ActGovernment Orders

5:15 p.m.

The Acting Speaker (Mr. McClelland)

In my opinion the yeas have it.

And more than five members having risen:

Canada Small Business Financing ActGovernment Orders

5:15 p.m.

The Acting Speaker (Mr. McClelland)

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 277Government Orders

5:40 p.m.

The Speaker

I declare the motion carried.

(Bill read the third time and passed)

Division No. 277Government Orders

5:40 p.m.

The Speaker

The House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

Balanced Budget ActPrivate Members' Business

5:45 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

moved that Bill C-375, the Balanced Budget Act, be read the second time and referred to a committee.

Mr. Speaker, I am pleased to address this bill from the Bloc Quebecois dealing with the issue of a balanced budget. This is more commonly referred to as an anti-deficit law.

Why should we, at this point in time, turn our attention to such a bill? Incidentally, I would have preferred that this bill be a votable item, since it deals, in my opinion, with a fundamental issue. I can tell you that I will continue to work in the coming months to have this bill put again in the Order Paper as a votable item.

Why a Balanced Budget Act at a time when we are increasingly talking about surpluses? In fact, for the last fiscal year, the surplus exceeded $5 billion. For the current fiscal year, we are talking about a real surplus, that is if you look at the actual figures, not if you talk to the Minister of Finance, who says all sorts of things. But if you look at the real figures, you will see that the surplus for the current fiscal year is between $12 billion and $15 billion.

Why introduce a balanced budget act, an act that would prevent the government from running deficits? Simply because we are not protected from what we have experienced in the past 25 years. In fact, it is a Liberal government that started running major deficits, and the first major deficit was incurred under the current Prime Minister of Canada, when he was Minister of Finance.

We are not protected from the old ways of the Liberals, and of other federalist parties. They kept running a deficit year after year, always thinking that it could be eliminated the following year, without taking their responsibilities, with the result that these cumulative deficits turned into a debt. We were paying interest on the debt and leaving that accumulated debt to future generations.

Old habits die hard. I remind members that several provincial governments in Canada, including Quebec, and several American states, passed similar legislation banning deficit or rather balanced budget legislation. These states and several Canadian provinces have now balanced their budgets and have surpluses.

However they passed this kind of legislation to protect themselves and future generations, who have and will have to carry the burden inherited from previous generations.

It is so easy for Liberals to slip back into their old habits as witness the initiatives put forward by the government in areas of provincial jurisdiction these past three years.

They have no qualms about creating new programs parallel to existing provincial programs, infringing on areas of provincial jurisdiction, wasting billions of dollars often for nothing.

Let us look at the millennium scholarships. This program is going to cost taxpayers $2.5 billion. We are not too sure how useful it is going to be. However there is one thing we are sure about, some provinces, including Quebec, already have their own scholarship programs which work very well and have low overhead costs. They have been in place for years.

The federal government prefers visibility to efficiency. When partisan politics and a need for high profile supersede efficiency, the result is perpetuation of the situation that began 25 years ago: no particular concern for a balanced budget, and recurring deficits.

If the Minister of Finance has a deficit of under $3 billion, the bill requires him to fully repay this deficit the following year, during the next fiscal year, and therefore to present a one-year budget forecast of a $3 billion surplus the following year, so as to recover the current year's shortfall. A basic deficit is forbidden, but if overshooting the budget leads to a deficit, the Minister of Finance must adjust his aim within a year.

The Balanced Budget Act also makes it possible, under certain circumstances, to go over budget, or even have a deficit, even a recurring deficit. For instance, if there is a natural disaster having a major impact on federal expenditures, large amounts over or under budget are allowed.

If there is a major deterioration in economic conditions requiring the federal government to intervene with social programs, the Minister of Finance is also allowed the flexibility to exceed his forecast and to end up with a deficit despite this Balanced Budget Act.

There is a similar exception if Canada is involved for example in a military conflict which would require federal government disbursements not forecast in the budget presented by the Minister of Finance.

In these three specific cases, when the federal government has a deficit, it must submit for each year of the deficit a reabsorption plan over six years. It must, over six years, repay all of the deficit it incurred in the current, subsequent and third year as well.

In the first three years of this six year plan, it must have repaid 75% of the deficit it incurred in the initial year, and in the remaining three years, it must repay the other 25%.

It must therefore table a specific plan in the House of Commons, a six year plan, and provide Parliament with a schedule for the repayment of the deficit it incurred in the current year over a six year period.

That is what spending and deficit controls involve. I repeat that, despite our being in a surplus period, we must not, especially for the sake of future generations, again find ourselves in a situation similar to what we went through over the past 25 years in which we accumulated deficits. These deficits have become a huge debt worth at the moment over $550 billion net.

It is therefore important to have a legislative framework to ensure that budget overruns, uncontrolled spending, visibility spending and partisan expenditures that could drive us into a budget cul-de-sac do not recur and that there are very restrictive provisions governing the Minister of Finance and forcing him to repay the entire deficit over six years.

There is a second very important aspect of this bill. It concerns the accountability of the Minister of Finance. As everyone here knows, even our colleagues across the way, since his appointment, the Minister of Finance has been telling us whatever he likes about the estimates, even about expenditures and how revenue is entered. Every year, he is way off in his estimates. But forecasting errors of 62% over six months concerning the deficit are more than just a wrong estimate.

We have said repeatedly, and so has the press, and the public is very much of the opinion that the Minister of Finance lacks transparency when it comes to the estimates. For four years now, he has been telling us just about whatever he likes about the deficit and, since last year, the same is true with respect to the surplus. He is in no way accountable to parliament for his estimates, for the figures he submits, for the overruns and for items that were not in the estimates.

The bill forces the Minister of Finance to be serious, transparent and honest in the estimates he tables and in his economic statement. His statements no longer bear any resemblance to reality.

I will give examples of things that this anti-deficit bill would help improve. In 1996-97, the Minister of Finance forecast a deficit of $24 billion. Mid-stream, he revised his forecast. He said the deficit would not exceed $19 billion. In fact, we had been telling him for a year that the deficit would never top $10 billion. In the end, the 1996-97 deficit was $9 billion.

The same thing occurred in 1997-98. Initial projections set the level of the deficit at $17 billion. At the time, with the figures we had on monthly revenues, it did not make any sense to forecast a $17 billion deficit in 1997-98. A surplus of over $2 billion was more likely. For a second time, the Bloc was right. The surplus was around $3.5 billion.

Initially, in 1998-99, the finance minister forecasted a $9 billion deficit. He recently revised his projections and is now talking about a tiny surplus. Once more, hard facts will confirm the Bloc projections, because we have always been right each and every year, because the finance minister is not transparent in his forecasts and because there is no mechanism to force him to make honest projections. He has no accountability, but the bill would provide for this.

This year, the minister is talking about a tiny surplus, but we are forecasting a surplus of $12 to $15 billion, even if the economy has slowed down because of the crisis in Southeast Asia, and the economic collapse of countries in the former Soviet Union, especially Russia.

The bill would require the finance minister to report to the House on his deficit or surplus projections, and his earlier projections, and to explain the discrepancy. In other words, when he makes certain projections in his budget and he realizes later on that the deficit or surplus will be different, he should he required to explain why.

There is no such requirement at this time. He tells us whatever he wants and, when the margin of error on his six month deficit or surplus forecast is 63%, the only opportunity we have to say anything to him about that, without him having to be accountable to parliament, is when he presents his economic statement to the finance committee. He tells us “Excuse me, our tax revenues were higher than expected so our forecast was off by 62%; things are better than we thought”.

An economist in the private sector who made the same kind of error the finance minister made in his forecast would certainly lose his job. He would be fired.

Under this bill, the minister would be required to table a report in the House of Commons. He would have to justify any error in his forecast. That would certainly be an improvement from what we have seen, from what the opposition parties have seen and from what Canadians have seen over the last five years. They are given wrong information, which is not democratic. Passing this bill would certainly be an improvement.

What is even more important, he would be required to inform the House of any changes to his accounting methods and to explain what impact these changes may have on his budget forecast or budget results.

The finance minister is the master of accounting tricks. He does not have his match anywhere, disregarding the practices and strict standards of accounting.

For instance, after signing an agreement with three Atlantic provinces to harmonize the GST with provincial taxes, he reported $941 million right away, in the 1995-96 fiscal year, as opposed to the year in which it would actually have been expended.

Recently, he did it again with the millennium fund. While the first millennium scholarships will not be handed out until the year 2000, the finance minister has already charged against the previous fiscal year an amount of $2.5 billion. He did the same thing with the innovation fund.

The minister was strongly criticized by the auditor general for taking such liberties with generally accepted accounting principles, which suddenly change when applied by the finance minister. He was strongly criticized by the Auditor General of Canada, who is the watchdog of public finances and is accountable only to parliament.

Do you know what the finance minister's response was? He said that they had been told by private corporations that it was all right. This is another affront to the institution of the auditor general.

The bill would require a stringent report by the Minister of Finance to the House of Commons, to parliament, on his changes in accounting, interpretations and justifications of the budget level.

I hope, therefore, that I will obtain the support of my colleagues, both those in opposition and those in government, and that bill will be votable next time.

Balanced Budget ActPrivate Members' Business

6 p.m.

Stoney Creek Ontario

Liberal

Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, besides the rhetoric I will actually speak on the bill before us. Essentially, beyond anything else the key to ensuring that the federal budget remains in balance is a strong political commitment to maintain fiscal health.

Past history and experience has shown that legislation itself is not sufficient to deliver balanced budgets. The previous government tried to follow that approach without success. The Spending Control Act, 1992, put legislated limits on total program spending with an end goal of eliminating the deficit. We all know how successful that approach was.

The government has balanced the budget as a result of the resolve of all Canadians to do so. In 1993-94 we were facing a difficult situation. The federal deficit stood at a record $42 billion. We said at that time that we would bring down the deficit steadily each and every year until it was eliminated, and we did. In 1997-98 Canada recorded a $3.5 billion surplus, the first surplus since 1969-70. It is an historic accomplishment for Canadians.

Balancing the budget required difficult decisions and many sacrifices but it is an achievement that all Canadians can be proud of and one that will have permanent benefits.

We did not need balanced budget legislation to do it. We accomplished it with a strategy that has worked. We set two year rolling fiscal targets and have consistently achieved and surpassed them. For budget making purposes we used economic assumptions that were less optimistic than the private sector and we built into our fiscal plans a $3 billion contingency reserve. It provides an extra measure of back up against adverse errors in the economic planning assumptions.

We will continue to use this approach. It worked so well in the past and it ensured that the budgets will remain in balance for the future.

Instead of debating legislation on how to ensure a balanced budget we prefer to focus the government's resources on the measures needed to strengthen Canada's economy and Canadian society.

The government has a balanced plan to address the challenges we will face in the future. Despite our fiscal success, the debt burden is still too high by historical and international standards and we need to reduce it.

We have a debt repayment plan. We are committed to ensuring that the debt to GDP ratio continues on a permanent downward track. In 1997-98 the debt to GDP ratio fell to 66.9% from 70.3% in 1996-97, a 3.4 percentage point decline.

It is the largest single year decline in the debt to GDP ratio since 1956-57.

As well, we continue to invest in the highest priorities of Canadians. Clearly health care is at the top of the list for all Canadians. The Prime Minister has said in the past that the government will invest more of our resources in the years ahead to reinforce our public health care system.

The final part of our plan involves tax reduction. Initially as it became affordable we were able to provide targeted tax relief where the need was the greatest, tax relief for students, for charities, for persons with disabilities and for children of working parents with low incomes.

In the 1998 budget we started a process of general tax relief, reducing tax rates for 90% of taxpayers and providing $7 billion in tax relief over three years.

We will build on these measures as we can afford to and we will continue to do so in a measured and responsible way.

Clearly there is no need for this bill. It would allow deficits and we know Canadians want governments to live within their means, just like they do. It is a bill that says to Canadians let's run a little deficit this year and we will make up for it later. I do not think so and Canadians do not think so.

The hon. member brought up the issue of credibility of the forecasts. Eight years ago Tory finance ministers were accused of using inflated economic predictions to mask huge deficits. Now we are being accused of being too cautious. I would rather be called too cautious rather than reckless if it meant we were protecting Canadians' victory over the deficit.

In 1998 the consensus forecast for GDP growth was 3.5% when the budget was introduced. Today the consensus as forecast has fallen to less than 3% and the outlook for next year has fallen from 2.9% to only 2%.

So while the hon. member argues about how the finance minister meets these targets and makes accusations that the finance minister is not being transparent, it is the first time in the history of Canadian governments that we have a budget building process like we have today.

On the average of Canadian economic forecasters with respect to the GDP, the average of what Canadian forecasters say the interest rates will be as we move forward, it is not government or the departments that are setting these forecasts but the private sector, and we are making use of all that expertise as we build these budgets.

For the first time we are saying governments should set a target and in setting that target it should be the very least we could do, always striving to do better.

Rather than debating an issue about legislation to balance budgets, I would submit to the hon. member that it is the political commitment that is required and that is very important. Past efforts have shown quite clearly this government is committed to balancing the budget. we are committed to no deficits. We are committed to keeping the debt to GDP ratio on a downward track. We are committed to continual investing in Canadian priorities.

The finance committee, as it travelled across the country on prebudget consultations, clearly heard that health care was at the top of the list of priorities. This government is committed to reducing income taxes for Canadians.

Balanced Budget ActPrivate Members' Business

6:05 p.m.

An hon. member

What about employment insurance?

Balanced Budget ActPrivate Members' Business

6:05 p.m.

Liberal

Tony Valeri Liberal Stoney Creek, ON

I have said often in the House that the debate about employment insurance is not whether to reduce employment insurance premiums but by how much. This government has clearly demonstrated over the years that there is a commitment to reduce employment insurance premiums.

While the hon. member continues to provide us with rhetoric what I am trying to do is lay out the facts for Canadians as they are.

The government has already pursued a deficit reduction strategy that was deliberate, responsible and successful. Now that the government's finances are on track we have entered a new era of fiscal responsibility that includes debt reduction.

Much like we eliminated the deficit, we have committed to continue to keep the debt to GDP ratio on a downward track. If Canadians look at our record and look at history, this government since 1993 when faced with a $42 billion deficit committed to eliminate it. We have.

We have committed now to keep paying down the debt and to ensure the debt to GDP ratio is on a downward track. We will continue to so and will not waver from this course.

Balanced Budget ActPrivate Members' Business

6:10 p.m.

Reform

Monte Solberg Reform Medicine Hat, AB

Mr. Speaker, it is my pleasure to speak on Bill C-375. It is a good bill and I think the Reform Party can support it.

I am very happy to see that my colleague, who calls himself a social democrat, can agree with somebody like me or I can agree with him as somebody who is a fiscal conservative on the need to have balanced budgets and to put some limits on government. Limited government is what we are talking about here.

My friend across the way spoke a minute ago about the government's great political commitment. Its political commitment had nothing to do with balancing the budget. The fact is government took the easy way out.

In the last five years this government has raised revenues by $37 billion. It dramatically cut transfers to the provinces by $7 billion. It is talking about its commitment to health care. There is no question this government has slashed health care more than any government in Canadian history.

To hear the rhetoric coming from the other side is pretty hard to take. I cannot believe the parliamentary secretary stood up with a straight face and shamelessly said his government has a deep commitment to health care. What a joke. It is unbelievable.

I want to talk specifically about my colleague's Bill C-375, a balanced budget act. There are some key points I want to touch on. Effectively the bill serves to prevent the government from producing budgetary deficits as of April 1, 1998. A deficit of less than $3 billion in one financial year must be followed by a surplus equal to that amount the following year. I think that is quite reasonable.

A deficit exceeding $3 billion may be occurred over more than one year but only in the event of a natural catastrophe, economic collapse or military conflict. All that is very reasonable.

Deficits for any financial year would have to be estimated during the debate on the budget. I think that makes a lot of sense. We need some frank talk about just how big deficits would be or even surpluses.

For deficits incurred under the provisions which are required to be made up over a maximum period of six years, I think the first 75% of that has to be made up in the first three years. There are other great points in this bill.

I think one of the most important points is the one that my friend from the Bloc alluded to near the end of his speech when he talked about the need to have a report from the minister to the House annually on the impact of changes to accounting. I completely support my colleague from the Bloc on this.

What has happened over the last several years is that the finance minister and the finance department have broken the generally accepted rules that have been laid down through consultation with the Canadian Institute of Chartered Accountants and the auditor general simply so that they can run surpluses they can use for their own political ends.

What we have here is the government in a fundamental conflict of interest position. It is time to end that. We need accounting rules that are binding on the government so that we do not have situations where the government uses the finances of the country for its own cynical, manipulative ends, and that is what is happening here.

My friend across the way was talking about the member criticizing the government for being too cautious. That is completely untrue. We are criticizing the government because it has been calculating and manipulative with the public's finances. We think that is completely unacceptable.

The Reform Party does have a long history of promoting this type of legislation. We do believe in limited government. We do believe there need to be restrictions on government. We do not have blind faith in the government. We know that governments of all kinds are typically stupid. The governments that are the most stupid are the ones that do not recognize how ignorant they really are. Therefore we feel we need some limits on what they do so they cannot go stumbling into areas where they do not belong. We do not want them to stumble into deficits. We do not want them to blow the public's money, which has been the situation for many years in this country.

My friends across the way talk about how they have been successful in balancing the budget. I remind them that they have done it by raising taxes and in doing so they have lowered disposable income for Canadians. We think that is the wrong way to handle it.

While we support this legislation coming from our colleague from the Bloc Quebecois, the Reform Party has called for another companion piece of legislation to go with this which would place a limit on expenditures. We do not want to see governments balancing the budget by continually raising taxes as this government has done. Taxes have gone up. Revenues have gone up by 32% since it came to power. They have gone up by some $37 billion. That is not growth in the economy. The economy has not grown by 37% over the last few years. Far from it. It has been very sluggish. But the revenues have been growing because they are coming out of taxpayers' pockets and that is not acceptable.

We would support companion legislation or an amendment to this legislation that would require the government to introduce legislation mandating government spending limits. That is from the Reform Party policy book, the point being that not all balanced budgets are equal. We believe that we must balance them not by forever increasing revenues through higher taxes, but by putting a limit on spending.

In the last parliament, in 1996, a very learned colleague of mine, Dr. Herb Grubel, who was the member of parliament for Capilano—Howe Sound, brought forward a private member's bill calling for a constitutional amendment that would have entrenched balanced budgets. There is a tremendous amount of merit in that idea. It is difficult to get any kind of constitutional agreement in this country, let alone on a piece of legislation like Dr. Grubel was proposing. But having said that, it is the right thing to do.

I want to touch on a couple of the points he made. He said that if we have a constitutional amendment it is more difficult for governments to tamper with it. Specifically, he called for the government to balance its budget every year. That is what he was proposing. His argument was that we could have a contingency reserve attached to that so that if there ever was a need to increase spending for some unforeseen reason we would be able to do that.

Second, the spending would be limited to today's levels and only increased to reflect population growth and inflation. That was the spending limit aspect of that legislation. It is a great idea. There is no need for spending to grow beyond population growth and inflation once we get to the point where we have the proper amount of spending.

The final point was that if either the budget is not balanced or spending limits are exceeded then those MPs who supported going beyond those spending limits, or supported spending us back into a deficit position, would be financially penalized. That makes a lot of sense. That is what they do in Manitoba. The entire cabinet faces financial penalties if the government runs a deficit. It is a wonderful idea.

We must remember that at the end of the day this is taxpayers' money we are spending. We cannot continue to tax people into poverty like we have done in this country over the last 20 years and especially over the last five years. It has to come to an end. We need to impose some real penalties to ensure that people do not continue to run deficits and that governments like the one across the way do not continue to raise taxes forever and ever.

The Reform Party also calls for a referendum on any tax increases. We are saying no more tax increases. If a government wants to increase taxes it should have to go to the public in the form of a referendum.

We support this private member's bill. We wish it was votable. We would go a step further in a couple of areas. But having said that, we find it eminently supportable. It is a real positive sign that members on all sides of the House understand the need to have balanced budgets and that balanced budgets should be entrenched in some kind of legislation. We have to place limits on government. Government is not all knowing. It is not omnicompetent. It is not always working in the best interests of the country. One way to ensure that we prevent the government from doing wrong is to put limits on it and this proposal would do just that.

Balanced Budget ActPrivate Members' Business

6:20 p.m.

NDP

Nelson Riis NDP Kamloops, BC

Mr. Speaker, first I want to congratulate my friend for bringing in Bill C-375. I will say from the very outset that I was pleased when I saw this bill on the order paper. I think it is indicative of the kind of debate we need to have in the House.

I have listened carefully to my colleagues. While I support the bill, I wish it was votable. I think it is an important gesture, but I do have some serious concerns. However, I support the bill in principle. I realize this is sort of an opening round of debate and I suspect that we will have this debate in the months ahead in a variety of venues.

First, in terms of the legislation itself, it talks about a balanced budget in any particular fiscal year, with some exceptions, and these exceptions are identified. I appreciate my friend in the Bloc saying that a national catastrophe having a major impact on revenues or expenses would be an exception. Unfortunately, we have seen that reality in the last while in Canada, in terms of the ice storm calamity, in terms of the floods, both in central Canada and in western Canada and—

Balanced Budget ActPrivate Members' Business

6:20 p.m.

An hon. member

The farm issue.

Balanced Budget ActPrivate Members' Business

6:20 p.m.

NDP

Nelson Riis NDP Kamloops, BC

I will come to the farm issue in a second, but in terms of natural disasters, some very serious expenditures were required. That is what our country is all about, so I think this is an important qualification to place.

The other qualification is the involvement of Canada in a military conflict, consequent to its international peacekeeping commitments or when some other crisis arises. When it comes to defending peace and security and our democratic traditions, of course, money ought to play no determining factor. In terms of our peacekeeping commitments, I do not expect that there is a single Canadian who would not say that this would be a legitimate expenditure in order to promote and keep global harmony and peace.

My concern lies with clause 6(b), “a major deterioration in economic conditions”, such as the farm crisis in Saskatchewan. My friend from Regina—Lumsden—Lake Centre earlier today, commenting to a very important committee, outlined a whole set of concerns as to why this is in fact an economic crisis, not only for the province of Saskatchewan, but for the prairie region and the country generally.

As a matter of fact, my colleague from Regina—Lumsden—Lake Centre has spoken at least eight times formally and has held 50 or 60 meetings to discuss the issue of the crisis in the farming community.

The collapse of incomes is placing farmers at the same depths or even below the depths of the deep recession and depression of the 1930s. This is indeed a crisis.

I also want to say that I am worried about the wording. We would all agree that this is an economic crisis in the farming community. We can also make the case for the fisheries on both the east and west coasts. Many communities have been completely devastated and will require assistance. I could go on to talk about other sectors as well. In some of the major resource communities of western Canada we have seen a collapse because of the Asian markets. Over-exploitation of some resources has resulted in economic calamity in some communities.

We are also talking about social calamity. For example, with the collapse of the prairie farm industry would come a whole social web of issues that would also be in crisis. I think there would be a major deterioration in economic and social conditions.

We could make the case, as others have, of the crisis in our health care system. I do not think we could find today a single Canadian citizen who would not agree that there is a financial crisis in our health care system. I would be surprised if we could find a single person who would say “No, our health care system is fine”.

In our pre-budget consultations, whether they were in a small community or in a large community, whether they were on the east coast, the west coast, the north coast or wherever, the message was always the same: health care funding ought to be a priority.

Education and training should be a priority. The sewing together of our ripped social safety net should be a priority now that we have a surplus in excess of $10 billion.

When we talk about economic and social issues that confront the country that have to be dealt with, may I suggest that there is no bigger issue than the calamity regarding poverty, especially child poverty, in our country.

I was moved, as I know many others were, when I listened to the the Conference of Catholic Bishops which said “A government that refuses to address the issue of child poverty is participating in a form of child abuse”. I think we all agree with that. It is a form of child abuse when we sit back and allow 1.5 million children day after day to live and grow in a life of poverty in what has to be the richest country in the world. It is the ultimate in neglect.

I was chagrined last Friday when I heard reports that our Minister of Finance said that poverty in our country is a national disgrace. I suspect that if we traced the roots to many of our problems in terms of creating poverty they would go right back to the seat of the Minister of Finance. After all, his programs resulted in the massive slashing to support programs for poor families across the country.

I am getting kind of worked up over this. We put a high priority on debt repayment to foreign bankers. We do not put much priority on the pay equity issue, particularly in terms of the women who are affected. We go on year after year ignoring child poverty.

I was here in 1989 when we passed a motion in this House, moved by Mr. Broadbent of the New Democratic Party and seconded by myself, to eradicate child poverty by the year 2000. We are almost there, but the situation has simply deteriorated year after year after year.

It is a national disgrace. It is an immoral act that we continue to simply ignore this blight in our country. It is a serious issue.

I am all in favour of balanced budgets. I am in favour of having as a goal a balanced budget, particularly over the life of a parliament. But when we have these glaring problems of the crisis in the farming community, when we have obscene levels of poverty, particularly with children in our country, when we have collapsing economies in the east coast and west coast fisheries, when we have a crisis in our health care system, when there is not a person in this country who would not say we need to invest in human resources through education and training, to say that we have to have a balanced budget as a matter of law I think is pushing the envelope.

I say to my friend in the Bloc, for whom I have a great deal of respect, the principle of this bill we support, but until we get our Canadian house in order, until we can say to Canadians that we have done what is necessary, particularly in terms of providing for those who need this help today, I think we can say that we will address the issue of balancing the budget on an annual basis at some time hopefully in the near future.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

Reform

Monte Solberg Reform Medicine Hat, AB

Mr. Speaker, I rise on a point of order. I would like to seek the unanimous consent of the House to make this a votable bill.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

The Acting Speaker (Mr. McClelland)

Is there unanimous consent to make this bill votable?

Balanced Budget ActPrivate Members' Business

6:25 p.m.

Some hon. members

Agreed.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

Some hon. members

No.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

NDP

John Solomon NDP Regina—Lumsden—Lake Centre, SK

Mr. Speaker, I rise on a point of order. I would ask for the unanimous consent of the House to have this motion referred to committee for further study.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

The Acting Speaker (Mr. McClelland)

Is there unanimous consent to have this motion referred to committee?

Balanced Budget ActPrivate Members' Business

6:25 p.m.

Some hon. members

Agreed.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

Some hon. members

No.

Balanced Budget ActPrivate Members' Business

6:25 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I am pleased to speak to Bill C-375 today, brought forward by my colleague from the Bloc. The effect of Bill C-375, if passed, would prevent governments from engaging in the types of fiscal profligacies that governments have participated in in the past. It would prevent governments from incurring deficits except under extraordinary circumstances. The Minister of Finance would be more accountable to parliament for his monetary management.

In the 1997 election the PC platform called for making a law that politicians would have to balance the budget on an annual basis, legislation that would force governments to meet their budgets except in cases of wartime or economic crisis, and called for legislation that would cut the pay of the prime minister and cabinet ministers if they were to break that ban.

In our current platform and rooted in principles that we espoused during the time of the election, we are calling for lowering the debt to GDP ratio from 73% to 50%; a continuing low interest rate policy; cutting $12 billion in identified unnecessary expenditures; and balancing the books but not necessarily at the expense of health care or by raising taxes, which has been the way the government has achieved some of its dubious successes in recent years.

While the legislation deserves support from members of the House, it does not recognize the fundamental problem that deficits can be reduced and eliminated sometimes by making the wrong choices. The Liberal government has made many wrong choices in reaching a point at which we have a balanced budget.

By slashing health care, as the member from the New Democrat Party referred to; by maintaining unnecessarily and damaging rates of taxation which pummel small businesses and individuals and destroy initiative across Canada; and by maintaining the highest taxes of any of the G-7 countries that put our Canadian businesses at a competitive disadvantage to their counterparts in others countries, the wrong choices are being made.

Members opposite in the Liberal government certainly have some experience with deficits. It was under Liberal leadership that deficits grew from zero to $38 billion. My party cannot claim such a stellar record in building deficits. We only took one from $38 billion to $42 billion, which does not seem like quite the level of accomplishment the Liberals were able to achieve under their period of unprecedented fiscal irresponsibility.

Under Conservative governments the deficits between 1984 and 1993 were reduced from 9% of our GDP to 4.8% of our GDP by the time we left office. That took considerably well planned policy decisions that were courageous and involved the types of structural changes to the Canadian economy which were necessary not only to achieve deficit reduction then but to achieve deficit reduction since. I am talking about policies like free trade, the GST, deregulation of financial services, and deregulation of transportation.

It is through those types of structural changes, those types of forward thinking initiatives, that we were able to contribute to the deficit reduction battle. However, since 1993 those efforts have been combined with the slashing of health care and with the maintenance of unnecessarily high taxes. The government has put itself in the black by putting Canadians at an unprecedented high rate in the red. Canadians have the highest personal debt, the highest rate of personal bankruptcy in the history of the country.

Let us look at what has happened to students. Average student debt has grown from $12,000 back in 1993 to about $25,000 per graduate of undergraduate programs. The pages in the House have some benefits. They are in an enviable position in being able to work in the House and contribute so gallantly, as they do every day, to our proceedings. I am sure they have many friends who will be graduating with egregiously high debt loads. They will be harnessed to those high debt loads and held back as we enter the 21st century.

Fiscal responsibility has shifted. The deficits that used to be incurred by government are now being incurred by students like the peers of these stellar young pages, the stellar young public servants in the House tonight.

There is no valour in reducing the public deficit if it is at the expense of the fiscal health of individuals. We must continue to make the right decisions. I have some concerns about balanced budget legislation because it has the potential to contribute further to the ongoing trend of emasculating political bodies like parliaments. Parliamentarians should be more empowered to make the right decisions and I fear any legislation that reduces that power. Over the past 30 years we have seen a secular decline in the power of parliamentarians.

There are things we could do to increase the role of parliamentarians and to increase the scrutiny of public expenditures by the House. It was once the case that individual members of parliament debated line by line the estimates of various departments. That would increase the role of members of parliament as it would increase the level of scrutiny of expenditures. That would be a good move.

We could have a regulatory budget in the House whereby we could take a look at all regulations that are being proposed on an ongoing basis by bureaucrats within the system without being evaluated for cost. Those costs are very complex. Those costs involve the cost of implementation and the cost of enforcement, both of which are government borne. Perhaps most deleterious to Canadians are the costs of compliance which we never take into account.

Those are some of things we need to consider before we make new regulations. Those are the types of things we can do to increase the role of parliamentarians and at the same time have a greater level of scrutiny of public expenditure.

The balanced budget legislation has been successful in provinces like New Brunswick. Quebec had a deficit elimination bill starting in 1996 as well as Alberta and Saskatchewan. Manitoba passed the balanced budget, debt repayment and taxpayer protection and consequential amendments act in 1995. The cabinet minister who introduced that bill was a recent candidate for the leadership of our party, Brian Pallister. His bill was a very forward piece of legislation. It indicates the type of positive steps many of our provinces have taken to do the right thing.

However, at the federal level fiscal policy is extraordinarily complicated and complex. We are combining fiscal policy but there is also a monetary policy responsibility at the federal level. It is much more difficult for balanced budget legislation to be enforceable or tenable at the federal level. That is one difficulty. The American model goes back to 1985 when the Gramm-Rudman-Hollings deficit reduction act established yearly deficit reduction targets.

All these things are very positive but nothing can replace leadership. Political leadership and political will can achieve far more than legislation that requires balanced budgets. We need to ensure we not only balance budgets in Canada but that we do so by making the right choices and the right decisions. We must ensure that as we enter the 21st century Canadians will not be encumbered by wasteful government but will be prepared to compete globally, to succeed globally and to put Canada at the cutting edge of an increasingly global market based society.

Balanced Budget ActPrivate Members' Business

6:35 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I would like to make several comments. I will start with what the Parliamentary Secretary to the Minister of Finance said in his critique of my bill.

He said it was not necessary, that transparency and clear objectives were far more important. He used the exact same words the Minister of Finance did on February 10, 1998 when the Bloc Quebecois members started to speak of a balanced budget act. He has said exactly the same thing, the Minister of Finance. He said that greater transparency and clear objectives were far more important. The parliamentary secretary has learned his lesson well, but he has contributed nothing to the debate.

What I have heard from the other side of the House is propaganda about the government's achievements, transparency and caution. However, the importance of a bill on a balanced budget transcends not only the performance of a government but also the present. We must think of the future. Anything can happen in the future.

The same mistake can be repeated. The error that led us to an accumulated debt of $550 billion, that is endless deficits over 25 years, can recur in the future. At the moment, it is perhaps less obvious on the government side, but we must think of future generations. My Conservative Party colleague rightly referred to the pages, who will be laden with a real tax burden in the future.

The parliamentary secretary mentioned that they are cautious. This is no longer about caution. When the figures presented are 100% at variance, between 62% and 100%, six months apart or at the most nine months apart, this is no longer a forecasting error. This is no longer a matter of caution. It is a lie. It is totally undemocratic.

The money we have handed over to the government is taxpayers' money. It does not belong to the Minister of Finance. What if you had an account with a bank or a credit union. You deposit your money, and the banker refuses to tell you exactly how much is in the account. What are you going to do? This is a terrible anachronism. And yet this is exactly what the Minister of Finance is doing. He does not give a true picture of the state of public finances. His forecasts do not make any sense. This is ridiculous and it does not help the legislator to make sound management decisions.

In addition to providing for some control over public finances, the bill on a balanced budget makes the Minister of Finance responsible and accountable to Parliament.

This being said, I am very favourable to the suggestions made by the opposition parties. The speeches made by members from the Reform Party, the NDP and the Progressive Conservative Party were constructive. Some interesting ideas were put forward and would deserve to be included in a new bill.

I will not stop with this attempt. I intend to table another bill which will take into account the suggestions made by the Reform Party, the NDP and the Progressive Conservative Party. I hope it will be a votable item, because this is an important issue.

I agree with the Reform member who said that, to achieve a balanced budget, the government can either reduce spending or increase revenues. I agree with him that some provisions should be included to control excessive spending, and particularly to deal with the fact that the government can impose any tax increase, year after year, as the Minister of Finance has been doing for the past four years, taking $37 billion from Canadian taxpayers.

I also listened to the suggestions of the NDP member with regard to his social concerns. I felt I had implicitly provided for these in my bill when I said there could be deficits if there were exceptional circumstances and a significant deterioration in economic conditions. As I see it, a deterioration in economic conditions would imply social deterioration, but I note his suggestions.

As for the suggestions of the Progressive Conservative Party, I will probably discuss them with my Progressive Conservative colleague privately because I was not very clear on the reasons for his reluctance to support the bill. He mentioned the role of parliamentarians.

The role of parliamentarians is strengthened by a bill of this sort because the Minister of Finance is forced to be accountable to parliament, and to us, for any budgetary overrun, deficit and accounting change that could alter the picture of public finances.

Monetary policy has nothing to do with it. An anti-deficit bill can apply to a federal government, just as it can apply anywhere in the world, and monetary policy makes no difference. The fact that the federal government must intervene with respect to monetary policy has nothing to do with its fiscal management.

So I will have a talk with him. I am sure my arguments will convince the Progressive Conservative Party to support this bill or another amended one in the near future.

Balanced Budget ActPrivate Members' Business

6:40 p.m.

The Acting Speaker (Mr. McClelland)

The time provided for the consideration of Private Members' Business has now expired and the order is dropped from the order paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

Balanced Budget ActAdjournment Proceedings

6:45 p.m.

NDP

Gordon Earle NDP Halifax West, NS

Mr. Speaker, I was astonished with the response by the Minister of Industry to my question of October 22, 1998.

My question addressed the government's involvement, or lack thereof, in finding solutions to the shutting down of the Bayer Lake Volvo assembly plant in my riding. The minister refused to address the issue of what the Liberal government would do to work toward saving jobs.

Volvo's abrupt announcement left 223 workers suddenly fearful for their futures and their families' futures. And abrupt it was. One Volvo worker was quoted as saying:

Few people saw it coming. Sales were up, and the quality of the product from this plant was among the best. That's what they kept telling us anyway. They all had efficiency engineers in watching us do our jobs. I guess that was so they would know what to do when they move our jobs to Mexico.

On September 29 I wrote the minister and included in my letter one suggestion for a manufacturer to replace Volvo, including an executive summary of the business plan of the company. The minister appeared to have better things to do than worry about the loss of a couple of hundred jobs in Nova Scotia.

What is unacceptable is not that the minister did not find the perfect solution but that apparently he had no interest in even trying. To make matters worse, the government shares some responsibility for the closure of the plant. The government planted the bomb, lit the fuse and walked away. It planted the bomb by deciding to lower auto tariffs, then lit the fuse with NAFTA and now it has walked away.

Thanks to NAFTA, Volvo may be producing in Mexico the same vehicles which are currently produced in Nova Scotia. I would like to read a quote from a letter I wrote to the president and chief executive officer of Volvo, Mr. Gord Sonnenberg:

I am deeply regretful of Volvo's decision to close the plant in my riding.

I certainly wish representatives from Volvo had made the effort and taken the time to work with myself, and representatives from other levels of government, our community and the employees to explore alternatives to shutting your plant down. My understanding is that your company was welcome in our community, and I know our taxation system is generous to the corporate sector.

Demonstrating the common decency of working with our community to find a solution would have been the better route.

I am painfully aware that such an increase of unemployment not only directly hurts those workers affected, but negatively impacts on us all.

I wish I could say that the Liberal government has acted better but I am afraid I cannot.

I do hope in response to my comments the government specifically addresses the issue of the closing of the Volvo plant. While the issues of auto tariffs and the impact of NAFTA are noteworthy, the real issue of substance here is this federal government's apparent disinterest in the economy of Nova Scotia.

Who knows if federal involvement may have assisted in finding a solution. But refusing to work with the community, the workers and business to find a solution can only lead to the conclusion that the government cares little for the futures of these workers and their families.

I close by sincerely offering any assistance I may be able to provide to the minister to facilitate the government involving itself in finding solutions.