Debates of Feb. 2nd, 1998

Income Tax Amendments Act, 1997

[Rey D. Pagtakhan, Liberal, Parliamentary Secretary to Prime Minister]

Mr. Speaker, I would like to thank the member for Mississauga West for the eloquent speech he just gave.

My question is specific. For greater clarity and assurance to Canadians, with a floor of $12.5 billion now for cash transfers for health, and in light of the fact that the transfers also include the tax points with an increase in the economy and the increased transfers as a consequence of that, can the member elucidate that the cash transfer floor will continue to remain constant and therefore the total transfers will increase.

[Steve Mahoney, Liberal, Mississauga West, ON]

That is right, Mr. Speaker. If you look at the statistics, the total transfers will be in the neighbourhood of $25 billion. The province of Ontario will benefit over the period that this bill encompasses by some $2.5 billion in increased transfer funds.

I think it is an excellent point that should be brought out. It just shows that we are prepared to set a floor, as I said in my remarks earlier. We are prepared to say to Ontario and to everywhere else in this country that it will never fall below that level under the terms of the agreement that we are entering into through this bill. There will be increased funding as well in the bill.

[The Acting Speaker (Mr. McClelland)]

The hon. member for Lakeland, 60 seconds for the question and 60 seconds for the response.

[Leon Benoit, Reform, Lakeland, AB]

Mr. Speaker, I have one point of clarification for the member opposite and for the member from the New Democratic Party who said that the Reform's position on health care is unclear.

It is very clear. We made it clear in the 1993 election campaign that we would make no cuts to health spending. In the last campaign we made it clear that we would add $4 billion in transfers to the provinces for health care and education. That is clear and that is our position.

I realize the member may not have been a member of Parliament in the last parliament, but did he support his government's cuts of 35% in transfers for health care? Yes or no.

[The Acting Speaker (Mr. McClelland)]

I ask all hon. members to address each other through the Chair.

[Steve Mahoney, Liberal, Mississauga West, ON]

Mr. Speaker, I do not have to dance around it at all. When the government was elected in 1993 it inherited a $42 billion deficit. I said in my remarks, and the hon. member can look it up if he wants to, that changes absolutely had to be made in the transfer payments and they were made. There is no argument about that.

This is about restoring it to the level we are committed to, a level that it will never fall below. You understand that you cannot simply continue to spend money you do not have. It is a philosophy of the government. It is the leadership shown by the finance minister and the prime minister. It is turning things around but the job is not done. There is a long way to go.

I am convinced that with this next budget and with bills like Bill C-28 we will save our health care system, restore the confidence of the Canadian people in our education including post-secondary education, and build a great nation.

[The Acting Speaker (Mr. McClelland)]

Before we go on to next intervener, I remind all hon. members that we refer to each other either by our ridings or by our portfolios.

[Odina Desrochers, Bloc, Lotbinière, QC]

Mr. Speaker, first of all, before voicing my opinion on the numerous provisions contained in Bill C-28, I would like to congratulate and thank all my fellow citizens of the riding of Lotbinière, who rallied to the support of the regions of Quebec that were hard hit by the ice storm, and Montérégie and the central region in particular.

I was deeply touched by the generosity of the people of Lotbinière, be it in collecting firewood and foodstuffs or responding to the many calls made by the Red Cross and Quebec's emergency preparedness organization. These actions reflected the great values of mutual help, sharing and solidarity by which the Quebec society lives, values that show how much solidarity Quebecers are capable of when the need arises to meet major challenges for the Quebec community.

Now, coming back to Bill C-28, the federal government marks its return by putting up for discussion a bill to amend several umbrella acts, which could have significant implications in major sectors of the Quebec economy.

Going over the list of acts affected by Bill C-28, I note the Income Tax Act, the Children's Special Allowances Act, the Employment Insurance Act, the Federal-Provincial Fiscal Arrangements Act, the Old Age Security Act.

Once again, we can see the central government's strategy to amend a number of laws closely related to our economy. However, the real political issues are not those targeted by such omnibus legislation, but the way the government administers public finances and the partisan approach and propaganda used by an increasingly centralizing government.

Since the opening of the 36th Parliament, the Minister of Finance has been boasting that his government would have budget surpluses. It is said that these surpluses could reach $8 billion. According to the Speech from the Throne, these surpluses will be used to make an unprecedented intrusion in areas of provincial jurisdiction, without giving back what the federal government has cut since 1993.

In recent years, the Liberal government has cut $42 billion in cash social transfers to the provinces. The purpose of these transfers is to fund hospitals, higher education and social assistance.

With the money saved, the federal government is playing saviour, while the provinces have the dirty job of implementing the cuts. I would remind you that when the Liberals formed the government in 1993, social transfers amounted to $18.8 billion annually. This year they will amount to only $12.5 billion and will drop to $11.1 billion in 1999-2000. However, seeing the dissatisfaction at the time of the elections, the Prime Minister decided to cancel the latest round of cuts.

We are even more familiar with the federal strategy on the subject of transfers to the provinces, especially Quebec, which is to discredit Quebec and the administration of Lucien Bouchard's government. The federalists are trying every means possible verging on political dishonesty to destabilize the government of Quebec. However, the Bloc will again be even more on guard against underhanded attacks by the federal government, especially in 1998. It will continue to defend the interests of Quebec, criticizing even more vigorously the unfairness of this ever more centralizing government.

Back to the surplus the Minister of Finance will be announcing shortly. Where is it coming from? It is very simple; it is mathematical. He will be dipping into the surplus of the employment insurance fund, which will amount to $12 billion and which is the contribution of employers and employees alone. The federal government puts no money into the employment insurance fund.

Let us talk about employment insurance. For us, employment insurance means ensured poverty, ensured suffering. Speaking of the Minister of Human Resources Development, let me say that this minister, who is always talking about humanity, is dehumanizing his department with his actions. One need only look at the way the minister has reacted to the people directly affected by the ice storm, the total confusion between his message, clearly seen and heard on national television, and his directives to the managers of his department.

On top of having to live through a veritable nightmare, concerned about their family's future, concerned about their property, the disaster victims have not even had the comfort of the people in charge of that department. With one hand they are promising something, while with the other they are taking it away. When it comes down to it, that approach is the trademark of this government.

The ice storm is one of the worst socio-economic disasters since the war, and the Minister of Human Resources Development is still hesitant about taking concrete humanitarian action. What is more, the minister is forgetting the thousands of businesses outside what they are calling the triangle of darkness which had to close down for a week, two weeks, or even three. These people are being punished for their gesture of solidarity. Most companies and businesses had to gear down activities in order to support Hydro-Quebec's efforts to keep the hydroelectric network up and running. In Lotbinière riding, for instance, particularly in the county municipality of l'Érable, of 300 businesses, 50% had to shut down for two weeks.

If the employment insurance fund were in a deficit position, or had only a slight surplus, I would understand if the government were hesitant, but we know its surplus is going to exceed $12 billion.

If the EI fund were administered by an independent body composed of representatives of businesses and workers, as the auditor general strongly recommended in his report, these people, who are much closer to economic reality, would already have taken significant action to help all those affected by the ice storm.

But it is the Minister of Finance who decides, and he is going to continue to dip into this surplus to lower his deficit, with complete disregard for the real needs of storm victims.

The Minister of Human Resources Development is increasingly dehumanizing his services. Now, EI claimants must dial a 1-800 number for information.

Several of my constituents have been in touch with my riding office to complain about the poor quality of this service provided by public servants who are all centralized in the Prime Minister's riding of Saint-Maurice.

Faced with this unfortunate situation, those dissatisfied with the service therefore go to the regional EI office, which, you will recall, is being reorganized and is completely overwhelmed. These offices have suffered deep staff cuts and want to serve their clients any way they can, because Human Resources Development employees are on the front line and know what is really going on.

One of the Human Resources Development offices located in Drummondville is getting ready to introduce a pilot project. Unemployed workers waiting to see an agent will be invited to view videocassettes. That is treating them like people.

I need hardly tell you that there are few things worse than losing one's job. With the many changes to EI, which are increasingly limiting eligibility, it is even more distressing for these people who are living in complete insecurity.

I do not blame this office for what it is doing, given the numerous staff cutbacks imposed by the federal government. It is trying to readjust its services and maintain good contact with its clients. We will keep an eye on how it is doing.

Let us now look at the federal tax. Now, that is something concrete. This morning, the hon. member for Saint-Hyacinthe—Bagot strongly criticized a provision of Bill C-28 and exposed a manoeuvre by the finance minister who, in addition to making political decisions that benefit the rich, is trying to protect his own personal interests with this legislation. But what action does the Minister of Finance take when it comes to individual or corporate taxes?

The finance minister's inaction regarding taxation perpetuates the unfairness of our tax system, which imposes a heavier tax burden on Quebec's low and middle income taxpayers.

The last major review of individual taxation was conducted by the Royal Commission on Taxation in the 1960s. This means that we now have tax provisions that are obsolete and ill-suited to the current economic context.

The Liberals should be aware of the unfairness of the current federal tax system. The Bloc Quebecois has spoken many times on tax issues. Ever since it first came to Ottawa, the Bloc has been asking for an in-depth review of individual taxes. Given the finance minister's inaction in this area, the Bloc Quebecois released a reform proposal aimed at finally putting an end to the undue privileges granted to the very rich, by advocating a tax system that is fairer to all taxpayers.

The federal corporate tax system is also ill-suited to the current economic context. Again, the Bloc Quebecois is asking for a review of the corporate tax system, so that employment will become the main objective of the new tax policies.

Again, the last major review of corporate taxation was conducted by the Royal Commission on Taxation in the 1960s. We get the impression that nothing has been done since. As a result, we still have tax measures that are outdated and ill-suited to our current economic situation. Yet, the Minister of Finance seems content with this system.

By contrast with the federal government's inaction, in the summer of 1996, the Government of Quebec established a public commission on taxation. The commission emphasized at the time the urgent need for action, while indicating that, in the present context, Quebec could not act alone without a review of the federal tax system. But this does not make these reforms any less necessary.

Let me give you a few examples of outdated or inefficient tax measures. The partial inclusion of capital gains, which means taxing benefits from capital gains at a lower rate. The eligibility rules for the research and development credit, which unduly penalize Quebec businesses as compared to Ontario businesses. At present, the federal government decreases the amount of assistance provided to businesses benefitting from a Quebec research and development credit but not to those benefitting from the major deduction granted by the Ontario government.

The Bloc Quebecois often raises tax issues. The Bloc Quebecois has been calling for an in-depth review of corporate taxation ever since it came to Ottawa.

Since the Minister of Finance has taken no action, the Bloc Quebecois made public a proposal for reform that would make the tax system equitable for businesses, while freeing up to $3 billion, which should be redirected towards the main goal: creation of full time, long term jobs.

In conclusion, I would like to say that it is time the federal government took action. It is time the federal government gave back to the provinces what it has cut in recent years. It is time it amended the Employment Insurance Act. It is time this budget surplus was used for concrete job creation measures.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Speaker, listening to my colleague, the member for Lotbinière, I had the impression he was on Sudafed, like the Team Canada hockey players. He was pumped. He should calm down.

I find it shocking that he would use a debate on C-28 to indulge in petty politics on the backs of storm victims. He tried to bash the Canadian government, which was present during this disaster and spared no effort to help victims. While the people of Lotbinière, Montérégie, and all over who suffered the effects of the storm appreciated the Canadian government's contribution, there is an attempt to play politics on the backs of the storm's victims.

I am extremely disappointed. I was familiar with the great decency and respect of the member for Lotbinière. Today, he has greatly disappointed me by saying that the Canadian government did not do its share. If the Canadian government had not done its share, if it had not contributed $9 out of every $10, if it had not sent the army, I do not know how serious this disaster could have become.

I ask the member for Lotbinière if he did not get carried away, and if he does not recognize that the Canadian government, through its Ministers of Agriculture, Human Resources Development and National Defence—and even his own leader, the Premier of Quebec, said so—demonstrated remarkable collaboration.

Why is the member for Lotbinière playing petty politics on the backs of storm victims, who are not interested in playing this game? Why has he gone so far as to use C-28 to criticize the Canadian government's response to the ice storm? He should be ashamed. He should apologize to all storm victims.

[Odina Desrochers, Bloc, Lotbinière, QC]

Mr. Speaker, I do not need any medicine in order to be calm. The hon. member is getting carried away.

All I have to say is that I congratulate all those who took the initiative, no matter where, municipalities, the province, the Canadian government, the Americans. This catastrophe has touched all of North America.

When the member over there accuses me of petty politics, I would like to remind him of this: at the present time his colleagues are distributing forms in order to find out what amount of money the federal government has really invested during this ice storm. That is really petty politicking.

There was solidarity among us. We worked hard, and that is how we will finally win out, and Quebec will become sovereign. We have had an example of how people can join forces. We have had an example of the pride of the people of Quebec. You can be sure that we have come out even stronger as a result of this experience and that, in the next referendum, the pride of Quebecers will be up front and we will get our country, our Quebec.

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

Mr. Speaker, I would simply ask the hon. member if Quebec in fact is a net gainer under equalization and the CHST. If it is, how would the hon. member demonstrate how Quebec would continue to pay for these things if he achieves his goal of separating Quebec from Canada?

[Odina Desrochers, Bloc, Lotbinière, QC]

Mr. Speaker, the situation of health, education, social assistance in Quebec, all of these difficult situations have been caused precisely by the drastic cuts made by the federal government.

The government of Lucien Bouchard has succeeded in doing truly amazing things despite the drastic federal cuts. All that we are asking is to get back what has been cut since 1993. It is simple: the federal government cuts, yet it maintains standards. If it cut money, but allowed us freedom, we could manage but, on top of the cuts, it established standards we have to meet.

I say that if it pays back the amounts it has cut since 1993, health, education and social assistance will be in far better shape in Quebec.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I go back to the comments made earlier today. We took office with a $42 billion deficit. Had we not done the things we did when we did them, we might be in front of this House today asking for further cuts instead of asking this House to approve a reinvestment into a Canadian priority.

The hon. member mentioned that Quebec cutbacks were a result of the federal government cutting back in all these other various tax measures. I say quite clearly that post Bill C-28 the province of Quebec will continue to receive additional moneys each and every year when we add together the tax points, the cash transfers and the equalization payments. The federal government is contributing to the province of Quebec and ensuring that the province is able to deliver the health care that Quebeckers and Canadians expect.

When a province decides to cut back in the area of health care it is because the province has taken that decision. This government has been fair and will continue to be fair and equitable in its approach. I challenge the member from the Bloc Quebecois to rationalize and give us a reason. In fact those payments are going up and not down.

[Odina Desrochers, Bloc, Lotbinière, QC]

Mr. Speaker, it is very easy to get into a war of figures. We were using the figure of $42 billion. That is something specific.

All we ask of the government opposite, given that it will be announcing a surplus in a few weeks, is that it be logical and honest and give back to the provinces, especially Quebec, what it has cut since 1993.

We will see, as health is a matter of exclusive provincial jurisdiction, when we get this money, the money coming back to us, we will provide better health care in Quebec.

[Guy St-Julien, Liberal, Abitibi, QC]

Mr. Speaker, I listened to what the member for Lotbinière had to say about federal transfers.

According to an October 4, 1997 article written by Claude Picher federal transfers are not determined by the size of provincial budgets, but by the size of the individual provincial economies, which indicates that federal transfers have grown rather than shrunk.

And yet the same figures and the same amounts are involved. How can that be explained? I would like the member opposite to explain. And yet when we talk about federal transfers, the figures are the same right now, the amount is essentially the same. Provincial government expenditures increased much faster than federal transfers until 1990. I will give you an example in closing: in Quebec, the figure was 3% in 1965; today it is 5%. Why?

[Odina Desrochers, Bloc, Lotbinière, QC]

Mr. Speaker, 3% or 5%, what counts is the amounts of money cut. We know that it was $42 billion.

It is easy to talk statistics and try to prove that the government is good. I think we have the figures. We have them in hand. We can see for a fact in Quebec what happened. Give us back what you owe us. We will be very happy and so will the people of Quebec.

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I am pleased to take part in this debate concerning Bill C-28 and to support the government's decision to increase cash funding to the provinces under the Canada health and social transfer.

The measure of real leadership is where government places its priorities. The priorities of this government in this case are clear and concrete.

Health and education are issues that affect every Canadian in every region. They are truly national concerns. It is proper that as our federal financial situation improves, the government has given first place to investing in health and education through boosting provincial funding for these vital purposes. This is the type of investment all Canadians can appreciate. This is the sort of support for federal-provincial partnerships that all Canadians should endorse.

Under this legislation federal cash funding to the provinces under the CHST will be guaranteed at $12.5 billion annually for the next five years. That is a $1.5 billion increase over the previously legislated cash floor.

It is important to remember that the cash portion of the CHST is only part of the total value of our federal support for provinces in the areas of health, education and social assistance. When tax points are included, the total funding to provinces provided under the CHST will exceed $25 billion. That will grow to over $28 billion in the years ahead.

There are some critics unfortunately who try to dismiss or minimize the issue of tax points. They try to ignore the fact that these federal tax points once transferred to the provinces are not only a gift that keeps on giving, but a gift that keeps on growing year after year. Tax points. I know that sounds abstract, arcane and perhaps bureaucratic, but Canadians owe it to themselves and to our national policy debates to understand the issues involved, especially if they are to appreciate the legislation before us.

Over the years as federal-provincial social programs have been developed the federal contribution has taken two forms. One is a commitment of direct cash contributions. But as of 1977, we also agreed to provide the provinces with tax points.

What is a tax point transfer? It simply means that the provinces can collect a portion of the taxes that would otherwise go to the federal government. In other words it means that provincial tax revenues increase, federal revenues decrease and the national taxpayer still pays the same rate. There was good reason for the provinces to accept these tax points. As the economy grows so does the value of those points. While there have been economic ups and downs, each of those tax points is worth much more today than when the programs they fund were introduced.

Consider for a second the tax points transferred to the provinces in 1977 to support health and social programs. In 1977 those tax points amounted to some $3 billion worth of revenues. Today they are worth about $12 billion. In other words if the federal government had not transferred those tax points to the provinces, today we would have some $12 billion more a year in our coffers.

Some of that money could have gone to accelerate the deficit reduction but I firmly believe and I am sure hon. members in government believe it belongs where it is doing the work it does. That means providing a national health care system that is the envy of our American neighbours. It means support for post-secondary education that makes attending a Canadian university much more affordable and accessible than is generally the case in the United States of America.

To me the bottom line is clear. Federal support for health care and education, two of the most important concerns within our society, is real and reliable. As our economy grows and our financial situation improves it is support that is again growing.

I am not trying to hide the fact that to get Canada's deficit down transfers did have to be cut. The cash portion of federal funding for provinces represents about $1 in every $5 of federal program spending. We simply could not get the deficit down without including transfers in the fiscal restraint effort of our first mandate.

A number of points should be considered in judging our federal performance on trimming transfers. First, our original cuts to cash transfers represented about 3% of total provincial revenues. In other words 3 cents of every provincial spending dollar. I hardly think there are too many Canadians who would describe that as an excessive or exorbitant contribution to resolving a national debt problem that was hurting us all.

Second, we have always shared the concern Canadians were feeling about the future of social programs, especially health care. Because of our better than expected fiscal progress we are now able to reduce the size of our planned transfer cuts with Bill C-28 restoring up to $1.5 billion of federal revenues a year to provincial coffers. This means our transfer cuts will end up equalling only about 2.5% of provincial revenues.

Third and most important, let us recognize these transfers cuts brought real bottom line benefits to the provinces not just losses. That may sound contradictory but it is again the truth. We should not forget that our federal deficit reduction program has played a crucial role in allowing Canadian interest rates to fall to their lowest sustained level in some 40 years. While international pressures have seen rates move up somewhat, they are still well below the levels we can all remember from the 1980s.

It is not just individual Canadians and corporations that have benefited from these lower rates. The provinces have also been winners.

First, the lower interest rates made possible by our fiscal restraint have meant lower provincial debt servicing costs. In fact we have estimated that the drop in rates provided the provinces with a $1.8 billion dividend between January 1995 and December 1996. That saving has continued to grow.

Second, the provincial gains go beyond lower interest charges. Canada's low interest rates are the reasons why growth and job creation have accelerated significantly in recent months. Our growth rate is one of the best in the world and our unemployment rate in December was the lowest in seven years.

That makes the provinces winners as well, providing them with higher tax revenues through more working Canadians and healthier companies, not to mention reduced welfare costs. In other words, the success of our deficit battle has improved the ability of provinces to invest in health care and education.

Personally I have no patience for those who try to argue that the government has supposedly acted unfairly and offloaded our deficit on to the provinces. I see it differently. Yes, we imposed cuts but as carefully and as fairly as we could. Provinces, in fact all Canadians, are sharing in the very real rewards those federal cuts have bought and paid for.

I have raised these points because they serve as a useful context for the legislation we are now considering. Before concluding I must make a couple of further points about the government's commitment to health care and education. The enrichment of the CHST under Bill C-28 may be the most dramatic evidence of our commitment but is not the only proof of our continuing expanding support for these vital social and economic activities.

For example, also in Bill C-28 we are taking an important step to help Canadian parents save for their children's education. The legislation will expand the limit on the amount that may be invested in a registered education savings plan for a youngster from the current $2,000 to $4,000 a year. This brings the limit for such savings—where the income is tax sheltered until used to pay school costs—more in line with the growth in tuition and other school expenses.

Our action on health care also extends well beyond the funding under the CHST. For example, in last year's budget our government announced that we would provide $150 million over three years to help provinces put in place such pilot projects as new approaches to home care and drug coverage that will enable them to test new ways to improve our health care system.

In the 1997 budget we also committed $50 million over the next three years to allow both levels of government, federal and provincial, to put in place a co-ordinated national system of health data. This will ensure that health care providers, planners and individuals across our country have the right health information at the right time, including the most up to date knowledge possible concerning the treatments available.

I know my remarks have gone beyond the specific legislation before us, but no act of government stands in isolation from the overall directions it has established and commitments it has made. That is why I welcomed the opportunity to speak today in support of Bill C-28. It demonstrates the government's commitment to the critical issues of health care and education. It proves that the direction it has set is one of continuing partnerships and support for the provinces.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I listened carefully to the comments made by the hon. member opposite. He used several terms which, I must admit, shocked me and probably shocked our constituents and listeners.

Among other things, the hon. member said that tax points are a gift from the federal government to the provinces. Unless I am mistaken, tax points are given to a province when it withdraws from a program that is otherwise administered by the federal government. The province then has a duty to administer the program itself.

Therefore, as the federal government does not have to spend the money, it only makes sense that it would hand over the tax points relating to the program. But why does a province—Quebec among others—find itself in this situation; why does Quebec prefer to administer a number of programs itself and be compensated with tax points? Simply because it can do so better and more cheaply than the federal government.

People at home will certainly agree that, all too often, the money taken from their pockets is wasted here by the federal system, in which we happen to be members of Parliament. We deplore this situation in every possible way, and I join those who said so before me, because it is important to say so.

Let us not forget that when transfer payments are made to a province, it is because that province needs additional revenues to meet its commitments. So, the question is: why does a province lack revenues? Why are there provinces that are richer and others that are poorer?

As I recall, when he was asked why certain contracts did not go to certain provinces, the Prime Minister answered something like this: “Well, see, we have called for bids and the lowest bidder won.” You will agree with me that, when bids are called for furniture here, in Ottawa, it is not likely that a company from the maritimes will be able to bid the same way a company located nearby could.

In a nutshell, what is happening in this federation is that some regions are made to grow poorer because our tax money is concentrated in other regions. Then, out of kindness, certain amounts are transferred to the provinces adversely affected. This money does not create jobs. It is hidden social assistance for these governments. No province deserves to be treated this way, starting with Quebec. Why not let Quebec keep the tax money it collects and assume full responsibility for the provision of services? Why not have 100% of tax points at the level at which services can be provided at a much better price?

I will conclude by asking the hon. member opposite this question: Why not simply admit that the federal system is a huge waste of resources, that it has done its time and that it should just disappear?

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I am often struck by the pessimism that exists on the other side when we as a country are enjoying an excellent standard of living. There are areas which need improvement. I mentioned, for example, the issue of youth unemployment. That is a concern for many Canadians from coast to coast. I am surprised the hon. member does not recognize the government has governed well.

We can look to the headway we made on the deficit. It was $42 billion when we took power. That was not long ago. It was back in 1993. When I was sitting where the hon. member is sitting now I remember how badly we felt as a nation. We were carrying a high deficit. Interest rates went through the roof. More important, we saw a truly demoralized nation, a nation which was running just to stand still. People's incomes were dropping. People had lost their hope to purchase a home. Bankruptcies were going through the roof. People's hopes were dim.

The government cannot take all the credit. Indeed Canadians rolled up their sleeves and said that we needed to tackle the deficit. Now they want to tackle the debt. We need to make strategic investments in areas that count like education and health.

During the election campaign the increase in cash flow of approximately $1.5 billion was welcomed by people from coast to coast to coast. They felt we were investing in the right things: health and education.

The hon. member mentioned something which struck me as being odd. He said that this is just money that goes to social spending and it has nothing to do with jobs. I submit to him that he is absolutely wrong. The investment we make in education is perhaps the number one way of ensuring that young people have the skills and the education required to get the new jobs that exist in the new economy.

It is the way in which we can respond to the changing dynamics of marketplace where, as members know, the old rules simply do not apply.

I think that is the big difference that exists from the member's attitude and my own. I truly believe that we can equip the people of Canada with the proper skills. I believe that this country has great potential for growth.

I believe there are signals given by the marketplace and given by people's attitude that tomorrow can be better than today provided we pool our common resources, provided we find the inner strength to look to the 21st century with the type of optimism that we have the right to.

If anybody is asked, any economist throughout the world, what would be the perfect conditions for economic growth in an industrialized society, what they will say is that human resources need to be invested in as we have done. The burden of deficits needs to be eliminated. Interest rates need to be low. Inflation needs to be low. These are the fundamentals that generate economic growth.

I simply do not understand why the hon. member cannot take pride in the fact that Canadians from coast to coast have sacrificed to reach these objectives, that Canadians from coast to coast have said to the Government of Canada defeat the deficit. We will sacrifice ourselves for whom? For our children, whether they come from Quebec, British Columbia, Ontario or anywhere else in this country.

The hon. member gets up in his seat and somehow tells the people who are watching this debate that things in Canada are terrible, that it does not matter that because of low interest rates we have seen immense growth in the small business sector, that it does not matter that over a million jobs have been created, that it does not matter that because of the almost elimination of our deficit that we are able now to invest in the social and economic needs of Canadians, particularly health care and education, that does not really matter, those are not achievements, the fact that the unemployment rate is below double digit. When former Conservative governments were saying that it would take until the year 2000, that is not worth celebrating.

To diminish the efforts of Canada, that is what the hon. member is saying. All the work that the Canadian people have participated diligently in, you are saying that is worth nothing. I say to you that you are wrong and we—

[The Deputy Speaker]

Order. The hon. member knows that he must address his remarks to the Chair. I have tried to caution him on this point.

The time for questions and comments has now expired. Resuming debate.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I too would like to join members in this House in wishing you a happy new year and to convey my experiences over this past month in my workings in the constituency and hearing the concerns of Canadians.

As my colleagues in the New Democratic Party said earlier today, the experiences we heard about in our constituencies are certainly not in keeping with many of the statements and priorities raised today in this House of Commons.

We are in the middle of a serious discussion of a major piece of legislation, Bill C-28, which deals with many aspects of the realities of people's daily lives. Yet many of the comments and statements today have hardly touched on those realities.

I pointed out before the failure for members on the Liberal side and among the Reformers to seriously deal with the bank issue, to seriously address this monster merger and talk about it in terms of the impact of such a development on the lives of families in our communities. Why the silence or, even more significant, why the support for such a devastating development in our society today?

More specifically, we have just heard a number of responses to a very important part of this bill pertaining to the Canada health and social transfer. I am pleased to have a few moments to address what many would consider to be the most regressive social policy in the history of this country, to talk about a Liberal policy that many in our communities would suggest is more destructive of Canadian unity then any other development we have seen in recent times.

Members of the Liberal Party would suggest that anyone who raises concerns about the Canada health and social transfer are just nay sayers and talking without facts. I would suggest that if members of the Liberal party have trouble hearing the concerns that we raise on this side of the House then perhaps they should listen to the words of reputable members and activists in their midst, people associated with the Liberal party. I suggest they take a very serious look at the speech made recently by Tom Kent entitled medicare, how to keep and improve it, especially for children.

Tom Kent says: “For this medicare we owe no thanks to the present generation of federal politicians. It survives despite them. Though they pose because of its popularity as the defenders of medicare, in fact they have destroyed the financial basis on which their predecessors created it. That political betrayal is the root cause of the tension that, despite the public will, now pervades medicare”.

The bill today or that part of bill today which deals with the Canada health and social transfer allows the Liberal party to live up to its astonishing claim, its astonishing commitment to put back into the health care system what it has not yet taken out. It allows this government to create an illusion of being concerned about health care, standing up for medicare, all the while taking the heart and soul out of this most important national institution.

This is really a bill of tricks to try to convince Canadians that the government is deeply concerned about medicare while cutting deeply into the system and causing the very things it says it is opposed to, privatization, two tier health care, user fees, people's loss of confidence in our health care system. It is this government's policies starting with the CHST that have done more to erode medicare than anything else we have seen in the history of this country.

In the last election we heard from all parties on this issue. The Liberals claim to have seen the light, to recognize the errors of their ways and are investing new money into health care. We saw that promise reconfigured in an announcement last month by the Minister of Health and the Minister of Finance suggesting that this new investment was happening and $1.5 billion, as we heard today from members opposite, was suddenly going to appear on the table and be reinvested in health care.

Let us be clear that is absolute rubbish and nonsense and an absolute misrepresentation of the facts. In no uncertain terms, this government is not putting any new money into health care; it is simply announcing that it will not proceed with the cuts that were going to happen next year.

What kind of hypocrisy is this? How can people have faith in a political system when those kinds of untruths are spread across this country? The fact is this government in 1993 was handed a $19 billion investment in health, post-secondary education and social assistance and proceeded to take $6.8 billion out of the system.

We know what that has done from coast to coast to coast in this country. You cannot just take that kind of money out of the system and pretend that everything is rosy. You cannot now say that you are putting money in that you are not putting in. You cannot do that to the Canadian people.

Let me say while I am on this topic that the Reform Party has no business suggesting it is the defender of medicare by claiming to put $4 billion back into health care. We heard it in the election. What did we hear? The Reform Party was putting an extra $4 billion into health care. What Reformers did not say was that they were planning to cut $3.5 billion from welfare spending. What does that mean? They were planning a $500 million investment in terms of federal social transfers.

Let us put it into today's context. Today they say they are putting $4 billion into health care. In the same speech and in the same breath they are going to eliminate equalization. By today's figures that is $8 billion.

How can Canadians believe that Reformers or Liberals in this House are standing up for medicare when in fact their real agenda is to destroy medicare, to move us to the Americanized model of health care where the rich get access and the poor are denied any hope of quality health care?

The Conservatives started the erosion in the whole transfer system through their series of legislative amendments changing the rate by which money would flow to the provinces so that in fact cash would eventually run out, destroying any hope of enforcing the principles under medicare. What did the Conservatives turn around and promise in 1997? To increase health care spending by 30%. What they failed to mention is they were basically offering to transfer federal taxing power to the provinces—no cash.

That brings us to the current issue today. Never mind that this is not real money we are talking about, the government is suggesting it has put all this money into cash points, missing the whole point that the future of medicare depends on stable, significant, realistic cash funding for health care, without which there is no hope, no possibility of ensuring that all provinces and territories live up to the standards under the Canada Health Act.

In my last minute may I suggest four recommendations to the government that will help us preserve medicare, put medicare on a solid footing so it is there for the youth and the children of this country. Let me suggest first that this government stop its agenda of deregulation and privatization, beginning with its own health protection branch.

Second, try for goodness sake to rethink its position on patent protection. It makes no sense to talk about preserving medicare when it is allowing patent protection for big brand name drug companies to go on for 22 years adding enormous cost to our health care system.

Third, begin to restore the federal cash transfer payments and ensure that money is used to mould and improve our system so that it is truly a community based preventive health care model which will endure for years to come.

Finally, I suggest this government actually look seriously at consulting all these organizations which are deeply concerned about the future of health care and have an open ear and an open mind to some very positive constructive suggestions and start to truly invest in health care. Work with those communities, with the provinces and the territories to ensure that we have a medicare system that is on a sure footing but prepared to take on the challenges of the millennium.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr Speaker, I would like to thank the hon. member and concur with her comments about the hypocrisy of this Liberal government in claiming to be the great defenders of transfers to the provinces for health care just after having slashed several billions of dollars in such transfers. I think she made the point eloquently, a point with which we agree. I would however like to correct the record on a couple of points.

The hon. member suggested in her remarks that the Reform Party proposes to eliminate the equalization program and payments. That is inaccurate. We have proposed to reduce those payments by some 12% which is hardly the 100% she suggests. It is 12% because we believe that in one of the wealthiest countries in the world there really are not seven legitimate have not provinces. We believe those benefits would be better focused on the very poorest provinces as opposed to taking from two or three provinces and spreading them among seven or eight.

The hon. member also suggested that the Reform Party proposes the adoption of a free market American style health care system. That as well is inaccurate. First of all, roughly half of the American health care spending is funded by the public sector through medicaid, medicare and other programs.

That aside, the Reform Party supports a universal publicly accessible health care system. But we support a system which provides quality care, accessible to all, unlike the kind of care provided today in the socialist utopias of Saskatchewan and British Columbia where waiting lists continue to grow, where rationing is increasingly a problem, where expensive diagnostic infrastructure is less and less available to the people who need it and where specialists continue to leave for more hospitable health care systems.

The hon. member being from the NDP hardly has a clean record in her own party's management of the health care system. Therefore I think she ought to be somewhat tempered in her remarks.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, this begs a lot of questions about Reform policy when it comes to cash transfer payments from the federal government to the provincial and territorial governments for health, education and social services. Looking at the Reform Party's promise in the last election, it was very clear about yes, spending an extra $4 billion a year on health care but in fact cutting $3.5 billion from welfare spending and therefore only promising to add $500 million to the federal social transfers. In other words it was going to restore about 9% of what the Liberals had cut.

Today we are hearing about its promises to cut either totally or in part equalization payments. We have to look at equalization and transfer payments for health, education and social assistance as a package. We are talking about means by which we try to equalize conditions in this country so that everyone regardless of region, regardless of sex and regardless of income has access to quality health care services, to public education and to assistance in times of need.

We have not heard a peep out of the Reform Party about the fact that the CHST really took 40% out of the transfer payment system which put a lot of people into precarious situations and drove more people into poverty. It is not prepared to stand up and talk about transfer payments as a goal to meet the values of this country which stand for equality, dignity and respect for everyone.

My comment is simply to call on the Reform Party to be up front, honest and open about where it stands on this whole issue of transfer payments and to tell us exactly what it means about a universal health care system. What we have to go on is the Reform Party standing up and opposing any attempt to put in place a universal pension system, any kind of a national income retirement system in this country.

On every front when it comes to those programs which reflect the values of Canadians and which have helped shape this country, the Reform Party has backed off and has in fact played a leading role in eroding those programs. We have no confidence and have seen no evidence from the Reform Party about how it will ensure universal health care in this country.

It needs to start by addressing the question of patent protection for multinational drug companies, something on which we have heard nothing but silence. In fact that goes to the very heart of the matter when it comes to ensuring that medicare is on a strong, stable footing.

What is the Reform position on 22 year patent protection for multinational drug companies? What is the Reform position on the deregulation of the health protection branch? Where is Reform's emphasis in terms of a universal health care system and a government that plays a role in terms of ensuring that people are protected from the vagaries of the marketplace and where government plays a role in terms of equalizing conditions from one end of the country to the other?

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, once again we are listening to the NDP rhetoric. If I could go back to the comments made this morning, the member for Kamloops painted a picture that the economy was going down the drain, that there has been no progress made in this country at all since 1993. Clearly that is wrong, but of course the NDP needs to focus on that rhetoric in order to deliver its message.

The member started her comments by asking why there is silence on the bank issue. What does Bill C-28 have to do with the bank issue? We are talking about an increase in the stabilization of a cash floor in the CHST plus some other tax measures.

The finance minister and the prime minister have stated quite clearly that when it comes to the bank merger, which she made reference to, there is a process in place. This government will continue with that process. There will not be a knee-jerk reaction to this announcement of a merger by the banks. The minister has clearly said that once that information is brought forward, it will be looked at in consultation with Canadians and if that merger is not in the best interests of Canadians, it will not happen. I do not know why the comment was made other than that it is NDP rhetoric.

With respect to her comments on this bill, she made a comment that we are supporting a two tier system, that we support user fees in this country. When the province of Alberta attempted to set up private clinics and put forward user fees, it was this government that withheld and was willing to withhold transfers to that province in order to ensure we maintained the level of health care that Canadians expect. We are ensuring that we will support the principles of the Canada Health Act.

The member went on to say that this bill does nothing to put money back into the social transfers. Let us not be ridiculous. This bill reflects a changing fiscal reality. We now have dollars to reinvest in the priorities of Canadians. In 1998-99 the pre Bill C-28 cash transfer would be $11.6 billion while the post Bill C-28 cash transfer would be $12.5 billion. In 1999-2000 the pre Bill C-28 cash transfer would be $11 billion while the post Bill C-28 cash transfer would be $12.5 billion. That is real cash that is going to the provinces in the form of a transfer. What we have post Bill C-28 is a 2.5% increase in the transfers to the provinces.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, again what we have from the Liberals is a promise to put back into the health care system what they have not yet taken out. They will not deal with the fact that they took the biggest bite out of financing for health care in this country in the history of medicare. They took out $6.8 million which is what has put medicare on such a precarious footing and has opened the door to developments such as what we saw in Alberta with the for profit hospital springing up, with other clinics that are involved in offering services to those patients with the money. That is the kind of situation we have as a result of Liberal policy and this bill does not address the facts.

The member asked a question about what the banks have to do with anything. They have everything to do with finances, with fiscal policy, with income tax. As my colleagues mentioned earlier today, it is precisely that we have a government that expresses outrage at something while it signs an agreement and then uses an excuse—