Debates of Feb. 25th, 1998

The Budget

[Some hon. members]

Agreed.

[An hon. member]

No.

[Bonnie Brown, Liberal, Oakville, ON]

Madam Speaker, I find this post-budget debate rather amusing.

We find that the party of the right, the Reform Party, is emphasizing the reduction of debt and lower taxes, which one expects. We find the party of the left, the NDP, wants us to spend more on programs. That is understandable also. But at least these two parties are clear where they stand.

We find the leader of the PC party still on the horns of the same dilemma he faced in the election campaign, finding most of his support in the maritimes, which usually want more spending, and yet still trying to pretend to be a party of fiscal responsibility. He suggested that the minister should have a red face. It is my contention that the Tory leader should have a red face for even pretending to comment on this budget after the mess the last PC government left this country in.

He suggested that we embrace the policies of the PC government. While it is true that the PC government articulated some of the policies which we have embraced and we have implemented, the problem for it was that it did not have the courage to implement any of those policies. That is why we were left 10 years later with a Canada pension plan that had not been revised. We are the party that had the courage to set the fiscal house in order.

The Liberals, they say, abandoned the policy of projecting UI figures. Of course we abandoned the policy of long term projections because Canadians had totally lost faith in long term projections after years of the Tories missing every projection they ever made. Our two year rolling targets are far more realistic because we have hit our targets and indeed have exceeded our targets.

He comments on the cost of Pearson airport. The Canadian people are happy to have Pearson airport now in the hands of a non-profit local airport authority where the profits are poured back into the public facility as opposed to lining the pockets of friends of the former government.

He suggested certain provincial finance ministers are condemning the budget. But we expect that because provincial finance ministers always want more money and more power. What we have to point out to the Canadian people is this. Yes, we did reduce the transfers to the provincial governments but by a percentage that was less than what we cut our own program spending by.

If the people, for example, in the province of Ontario are noticing a difference in health and education programming they might look to their own premier who cut that spending by five times the amount that we cut our transfers by. So they will be smart enough to lay the blame where it belongs, at the desk of the provincial premier.

However, my question for the leader of the Progressive Conservatives is this. When are we and his supporters, who are few but there in the west of Canada, in Ontario, indeed in my riding, going to find out whether he really stands for keeping the fiscal house in order and cutting spending or whether he stands for all the money to reducing the debt, or whether he stands for, as the people in Nova Scotia want, lots and lots of spending?

When is he going to be clear and honest with the Canadian people as to where his party sits on the political spectrum so that they can decide whether they support him?

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Madam Speaker, I would be happy to table in the House immediately a document entitled “A Plan for Growth”. It spells out in great detail exactly where we stand on all these issues.

All members of the House of Commons can read it. So I ask for consent to table this document immediately.

[The Acting Speaker (Ms. Thibeault)]

Does the member have the unanimous consent of the House to table the document?

[Some hon. members]

Agreed.

[An hon. member]

No.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Madam Speaker, I ask you to rule on what I have just asked, the consent of the House to table the document. I cannot believe Liberal members would refuse after the question by the hon. member for Oakville. Surely they would not have the gall. I want to table what our position is. I want to do it for the record in the House and I think it should be published in Hansard so that all Canadians will have a look at it.

Madam Speaker, I am asking you to put the question to the House. I would be curious to find out which Liberal member would want to get himself on the record at this point saying no. Let us hear them.

[The Acting Speaker (Ms. Thibeault)]

I again ask the House if it gives the hon. member its unanimous consent to table a document at this point.

[Some hon. members]

Agreed.

[An hon. member]

No.

[The Acting Speaker (Ms. Thibeault)]

There is no consent.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Madam Speaker, the parliamentary secretary to the House leader of the Liberal Party said no and I want the record to show that. It demonstrates the hypocrisy of the Liberals who have now embarrassed the member for Oakville. The Reform Party members did not say no. Why would they object? If they asked the same thing I would not object. Nor did the NDP or the Bloc. That demonstrates the hypocrisy of the Liberal Party. I am sorry that she has been embarrassed.

I am surprised that the member would actually want to rise and say that our positions are not known or that they just continued to have the courage to pursue the policies that we had brought forward but did not have the courage to implement. Does the member mean like the GST, the Pearson airport, the free trade agreement or the targets for inflation? What about when the leader of the Liberal Party of Canada guaranteed funding for health care and education in 1993?

When the member for Oakville said they reduced their program spending more than they cut the provinces, I am very sorry, but whether it is in percentages or in raw numbers, she had better check her facts. Maybe the parliamentary secretary would have the courage to get up and correct her, since he is now bent on correcting her today, and tell the truth to Canadians.

What is the truth? The government gutted health care and education after cynically promising that it would not touch it, that it would be guaranteed.

The last comment I want to make is that it is very imprudent for someone from Oakville to actually criticize the people of Nova Scotia, which she has done today. I would say to the member for Oakville that she would be wiser to let the people in Nova Scotia make up their own minds on their future and not sermonize them from the House of Commons. Their health care and education have been cut and they have a right to services also. They have a right to receive services from this government and from governments in the province of Nova Scotia. We will see how they speak in the next provincial election.

[Myron Thompson, Reform, Wild Rose, AB]

Madam Speaker, to make more time for my colleagues I would just like to ask a quick question. I know the hon. member who talked about the debt realizes that this big debt is a dark cloud hanging over this country, holding down unemployment and keeping taxes up high. This huge debt has put us in a desperate situation.

I remember back in early 1990 when the member's government was in control it brought in the famous GST. There was a big debate nationwide on that and I think about 90% of the people did not want it, I suggest, based on petitions and all that. One of the members who used to be in this party now sits across the House because of that situation.

I remember distinctly, loudly and clearly, a person by the name of Michael Wilson saying—being an old Conservative I was very interested in what he had to say—every penny from the GST will go to tear down the debt.

All I have to ask this member is what in the world happened? It went up faster and greater than ever.

[Jean Charest, Progressive Conservative, Sherbrooke, QC]

Madam Speaker, actually I appreciate the opportunity to engage my colleague from Wild Rose on this issue because there is a lot of rhetoric around. Let me try to present the facts in as straightforward a manner as I can.

When this government was elected in 1984 it faced a very serious problem of high deficits and debt. In fact, the deficit relative to GDP, the size of the economy, was about 8%. We then engaged in the process of reducing spending because average Liberal government program spending, which the member from Edmonton will know, in the last 10 years before the election of the Progressive Conservative government in 1984 increased 14% a year. Guess who was minister of finance?

We engaged in the process of turning the ship around. I am sure the member for Wild Rose will appreciate that does not happen overnight. Let me set down for him some markers that indicated real progress. The federal government started to balance its operating budget as of 1987.

What is the operating budget? I will take a second. It is the amount that comes in in revenue and what we spend on programs and excludes interest on the debt. From there on what we dealt with was the leftover debt, mostly of Liberal governments.

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

Madam Speaker, I am certainly very proud to rise on behalf of the government in this debate to highlight our dramatic, in fact historic, balanced budget and our budget of balance.

Up until yesterday one in every three Canadians, everyone under 27, had never seen their federal government deficit free. As this House will see, the era of credit card governance is over. One would have to be almost 50 to remember when Canada was deficit free for three consecutive years. We are changing that too.

Starting now and with the 1998 budget, we announced our commitment to balance the books this year and continue to balance the books for each of the next two years. In other words, Canada will enter a new millennium with the type of positive financial performance we have not seen in a half century. That is a milestone, a new beginning and it is worth celebrating.

It is no surprise that the official opposition and other opposition parties are standing in their place today ranting and raving that we have not gone far enough or fast enough, whether it is cutting debt or cutting taxes. Let me refer to a word that the leader of the official opposition has never heard of, let alone understands its meaning, balance. That is a word they do not like, it appears.

I remember how members opposite consistently attacked our approach in each of our past budgets, an approach that combined real fiscal discipline with reasonable, responsible investments in areas of strategic economic benefit and for Canadians in jeopardy and in need.

It is no wonder that today's budget leaves a very bitter taste in their mouths, because the results of our approach are clear, concrete and convincing.

This government not only balanced the budget but took a balanced approach. Unlike the Reform Party which continues to put forward programs of extremes, this government has chosen to take a balanced plan for the future.

Today we heard the leader of the official opposition say that his party has a national job strategy. That is what he said. But we know what the name of this job strategy is, Reaganomics. It is called voodoo economics of the 1980s. It did not work then and it is not going to work now.

I think what we need to do is look at the facts of our balanced approach. These are the facts. Canada's pace of economic growth and job growth is positioning us as a world leader among the major industrial nations. Our deficit performance is absolutely the best of any G-7 nation. That is the benefit we get from a balanced approach.

It is an approach that the 1998 budget sustains. It combines continued fiscal progress through our debt repayment plan with a program of general tax relief and investments in learning and skills, in helping to manage student debt, in aiding children in need, in boosting research and in funding to provinces for health care and education.

What I want to focus on is our fiscal track record, because it is our success as financial managers that has made possible these tax cuts and strategic investments.

Achieving a balanced budget this year means that the deficit has in fact declined by $42 billion in just five years. This dramatic turnaround is the combined result of two factors. The first is the sharp drop in federal program spending due to our review of all federal programs. Program spending this year is estimated at $106 billion, down from $120 billion in 1993-94. That is real cuts in real dollars. Second, the deficit has been cut thanks to higher budgetary revenues, primarily from a growing economy.

Taken together, these factors highlight a dramatic transformation in Canada's economic and fiscal policy. In 1993-94, high deficits were pushing interest rates up and depressing economic activity.

This meant higher interest charges on the debt, fewer jobs for Canadians and, in turn, lower revenues for government, creating further deficit pressure. It was a vicious circle.

Today Canada enjoys the benefits of a virtuous circle with fiscal progress contributing to lower interest rates which in fact fuel economic growth and job creation, leading again to an ever improving fiscal situation.

As the minister told this House, while we have won a major battle, we understand full well that we have not yet won the war. Interest charges on our debt, the result of decades of deficits, will cost us $41.5 billion this year. That is money that cannot go to health care or further tax reduction or addition debt reduction.

For a strong economy and a secure society, this debt must be brought down. Our commitment is to make that happen, steadily and permanently. That is why we are instituting a two track strategy.

First, we will continue to follow policies that will pay off in better economic growth. Second, we will bring down the absolute level of debt itself through the debt repayment plan.

Under this plan we will continue to present two year fiscal plans based on prudent economic assumptions. Next, we will continue to build a buffer into our budgets. The $3 billion contingency reserve is there to make sure we meet our balanced budget targets despite any unforeseen pressures.

Finally, if the contingency reserve is not needed, just as it has not been needed in each of the last four budgets, thanks again to our prudent economic assumptions, it will go directly to pay down the debt.

Again, as the minister said, this is how since coming into office we have brought the deficit down year after year after year. This is how in the future we will bring the debt down year after year after year.

[An hon. member]

We heard that before.

[Tony Valeri, Liberal, Stoney Creek, ON]

The hon. member opposite says he heard it before. He is quite correct. He has heard it before because it is a program that was put in place to eliminate the deficit. That is in fact what has occurred.

Every day over the last number of years the opposition party would stand up and say that we would never accomplish the elimination of the deficit. Yesterday those members sat in their seats and listened to the Minister of Finance state unequivocally that the budget will be balanced this year, next year and the year after precisely because we put in place a strategy to eliminate the deficit in a very balanced fashion, not by the extreme programs that the opposition party is putting forward, tax cuts at any cost.

Although we do have to listen to the rhetoric, and I am attempting to lay down some facts, I hope the hon. members will stand in their places and say that the deficit strategy the government put in place was a successful one which has accomplished that objective one year ahead of schedule of what the Reform Party had actually indicated in its election platform.

In a very important way, the reduction of the debt has actually begun. In 1996-97 the combination of economic growth and fiscal restraint meant that the debt to GDP ratio, what we owe in relation to what we produce, fell significantly for the first time in more than 20 years.

We all agree in this House that level is still too high but everyone must admit in this House that the trend is going in the right direction. We will continue to bring down the debt to GDP ratio. This year it will drop even further. Over the next two years the improvement will continue, falling to about 63%.

I will return to the topic of debt but for the moment I want to step back to our current deficit success.

I think it is worth comparing our federal financial performance with how other major industrial countries are handling their fiscal challenges. In Canada we use the public accounts method of measuring public finances. It is one of the most rigorous in the world. It is rigorous because it includes all the liabilities which government incurs over the course of a year. Many other countries such as the U.S. and Japan use the financial requirements measure. This includes only the borrowings that the government makes in financial markets. According to this measure Canada is in the best fiscal health of the G-7.

It is worth repeating that when we use the financial requirements measure Canada is in the best fiscal health of the G-7. This means that by the time the federal government of the United States sees its first balanced budget we will be on our third. Meanwhile, all the other major industrial economies will still be running deficits.

This is a reflection of the sacrifices Canadians have made to support and ensure that we were able to get the deficit under control.

There is an even more important way in which our fiscal progress has real meaning and real benefit for Canadians. The improved position of governments, combined with the federal government's commitment to low inflation, has played a key role in allowing interest rates to drop to a near 30 year low. While international pressures have squeezed rates up somewhat, today they are still more than 3 percentage points below the level of early 1995.

This is a bottom line win for Canadians. It means that someone who is renewing a five year $100,000 mortgage today will save $3,000 a year compared to just three years ago.

There is one final area of strong performance I want to touch on. As I said earlier, an important element of our fiscal renewal has been our government's action to control program spending. Over the last three years it has dropped in absolute dollar terms, a discipline unprecedented in at least 30 years.

But the growth of Canada's economy, combined with the fiscal turnaround we have put in place, means that we can now afford to begin to make strategic investments such as the Canada millennium scholarship and to increase provincial transfers to the Canada health and social transfer.

Our commitment to restraint is strong and secure. The fact is program spending will continue to fall in relation to the size of the economy. It will continue to reflect the priorities of Canadians, continuing the process we started some five years ago.

At that time total program spending stood at almost 17% of Canada's GDP. This year we estimate that it will be down to 12.4% of economic activity. By the year 1999-2000 it should drop to 11.5% of the economic activity, the lowest level in 50 years.

We must remember that is the year when, based on our fiscal targets and prudent planning, Canadians will see their third balanced budget in a row. That has not happened in almost 50 years.

Four years ago we established a plan which is working. For the first time in 30 years the budget is balanced. For the first time in 50 years we will balance the budget for three consecutive years. This budget is simply the next stage in that plan and it continues the same balanced approach for the future which has worked over the past four budgets.

We will pay down the debt as we have paid down the deficit. We will invest in critical priority areas like education and health care. We will cut taxes, beginning with middle and low income Canadians.

There is no doubt about it, with this budget we have made choices. They are choices that reflect Canadian priorities and that reflect the same balanced approach that we have taken all along. This is a budget for the Canadian people. The days of overspending and overreaching are gone. We have brought the deficit down from $42 billion to zero and we will continue to live within our means.

The only reason we can realistically talk about tax cuts is we have managed to get the books balanced. The measures announced in the budget will affect 90% of Canadian taxpayers. Four hundred thousand low income Canadians will be removed from the tax rolls altogether and an additional thirteen million Canadians will see their federal taxes drop. All along, this government has not once raised personal income tax rates. Where we have raised taxes, we have been sure to do so in the interests of fairness as with the special surtax on the banks.

The Canadian opportunity strategy is a comprehensive strategy that focuses on expanding access to opportunities, to knowledge and skills that Canadians require to meet the challenges of the 21st century. For a student today hoping to enter post-secondary education, it is about the 100,000 millennium scholarships that will be awarded each year.

For more than one million Canadians paying off a student debt, it is about tax relief for the first time ever on the interest portion of their student loans. For adults who are hoping to return to school or acquire new skills, it is about tax free access to their RRSPs. For parents or grandparents, it is about the Canada education savings grant to help them save for the education of their children and their grandchildren.

The millennium scholarship fund will provide 100,000 scholarships a year to students in every province and every community, with up to $3,000 per year for full time and part time students, young Canadians and adults at universities, at community colleges, at technical schools and vocational institutes. It is all about increasing access to knowledge and skills. It is about preparing for the next millennium. It is about reflecting Canadian priorities.

The way we set up the millennium scholarship fund is a reflection of what we believe. It is something we felt was so important that it should be taken out of the hands of politics and put into the hands of experts. That is why we are setting up a private foundation to administer the scholarships. Over time we may attract private sector endowments so it can grow and help even more young people.

All governments have an obligation to provide better access to skills and knowledge. We are not about to stand aside and ignore that obligation. It is not about jurisdiction or turf. It is about our future.

What we have been able to achieve over the last four budgets is a result of the hard work of Canadians. Members in this House often make reference to the fact that this government boasts about its success. Government members on this side of House state unequivocally that our success in our war with the deficit is a result of the sacrifices Canadians have made, of the partnership Canadians have struck with this government, of the support Canadians have given this government over the last two elections to deal with the fiscal questions and challenges we have had to deal with.

This budget marks an historic moment. It makes possible what many thought was not possible. Most important, it is a budget that shows Canadians that their support for our deficit fight and their willingness to endorse and accept the tough decisions we had to make was not misplaced. This is their success and the rewards it produces will be theirs and their children's.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I listened carefully to the speech by my colleague, the Parliamentary Secretary to the Minister of Finance.

There were some things I found surprising. First he said: “My government accomplished this; my government accomplished that. We took priorities into account; we did a good job, and so forth”. He should perhaps quit reading the notes the Department of Finance gives him, just as he should perhaps quit taking his orders from the finance minister in committee.

He should perhaps actually take a look at the budget documents and do a little evaluation of what has gone on for the last four years and will continue to go on until 2003.

In 1995, his Minister of Finance introduced a plan of major cuts. Only once did he speak about it. Every year, another $6 billion is cut from social programs, university education and health care.

For the information of my colleague, who does not seem to be informed at all, or who tells us only half of what he knows, there are still $30 billion in cuts to be made by 2003, and they will be in those very sectors of university education, health and welfare.

If they are really concerned about education, as one of the keys to the future, the first thing the finance minister should have done, and did not do, was to give back what he cut in the university education sector. But no. They take this year's surplus, around $3 billion, put down $2.5 billion this year for the millennium fund scholarships, when these scholarships will not actually be given out for another two years, and the public is given to understand that they are concerned about student indebtedness.

All they are concerned about is their visibility as a federal government. During Oral Question Period, the Prime Minister made it clear. So did the Minister of Human Resources Development in the scrum.

The millennium fund, he said, was not about arguing, but about the future. How is it that the constitutional issue of Quebeckers' freedom of choice, a constitutional fact of Canadian life, has been referred to the supreme court, and our right to exercise this freedom under the Constitution is being questioned?

Does he think the Constitution need not be applied in the educational sector? They claim to be defending this Constitution and to be betrayed by our democratic right to choose our own future as Quebeckers. It is no big deal, but they refer it to the supreme court. That is my first question.

My second is as follows. Does he realize, on quick calculation, that, in the past four years, 52% of the cuts imposed by the Minister of Finance were absorbed by the provinces? They are the champions and the artisans of improved public finances. The taxpayers' contribution was 47%, through taxes, through the non indexing of tax tables, through the Minister of Finance's systematic robbery of the surplus in the unemployment insurance fund of between $6 billion and $7 billion a year.

In the end, his Minister of Finance, the good manager, cut 11% from federal government operations. Some manager. He should stop parroting the words and political lines of his minister and take his duty as a member of Parliament to heart.

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, we have started to hear the rhetoric heat up a bit. To address a couple of the points that were made, the budget yesterday reflected the balanced approach, the approach that worked for the government and worked for Canadians since 1993 in achieving our successes.

When it comes to the issue of the millennium scholarship fund and the issue of jurisdiction, the federal government has always had a role in access to education. It is a role that the government has continually stated, in fact with the announcement of the millennium scholarship fund, is not about jurisdiction or turf.

If the hon. member were to go to Quebec and speak to young students who are looking to gain access to university, he would know they are not concerned about jurisdiction or turf. They want solutions. They want to have some hope. They want to have some access to skills training because they know these are types of skills they will need to compete in the next millennium.

The government has responded to the priorities of Canadians. I think we would find across the country that the whole learning strategy, the opportunity strategy, is one that is well received by students, by Canadians interested in lifelong learning, by parents and grandparents who want to put money aside for their children.

Everyone realizes, regardless of what level of government, that we have to do our very best to ensure that each and every Canadian has equal opportunity to learning and skills training.

[Gordon Earle, NDP, Halifax West, NS]

Madam Speaker, the hon. member on the opposite side said that members on this side of the House should stand in our place and say that the deficit plan has been successful. I would say that whether or not we determine the deficit plan has been successful depends on how one measures success.

If we measure success by the high number of people who are unemployed, perhaps the plan has been successful. If we measure success by the large number of young people who need help and who will not be able to receive help under the budget, perhaps we can say it has been successful. If we measure success by the large number of people lining the corridors of hospitals trying to get proper health care, by the large number of people who are unable to afford pharmacare and proper medicines, or by the large number of seniors who are concerned about their future, perhaps we can say the budget has been successful. If we are looking at the large number of federal government employees who are still seeking pay equity, not being paid their rightful due, perhaps again the government has been successful. If we look at the large number of people working in shipyards who are not able to have a national shipbuilding policy that will address their concerns, perhaps the government has been successful.

When we look Atlantic Canada and Nova Scotia in particular the budget does very little to address the concerns of the people in that area. There is nothing concrete offered to ease the employment concerns of the fishers on the east coast. No substantial relief is offered to young people currently experiencing high student debt load.

We talk about the millennium fund which will not kick in until the year 2000 and then will only help about 7% of the students in the area. The budget has no new job creation strategies. It has no targets, as has been mentioned. There is no new investment in health care.

The government mentioned choices and talked about them being the choices of Canadians. We could look at the large number of Canadians who have not been consulted or dealt with in a real partnership. I am speaking about our aboriginal communities that year after year are refused admittance at the first ministers tables and constitutional talks. Yet we talk about working in partnership. Have those people been considered and have they been consulted in terms of priorities for people when we say that this is a budget for Canadian people?

We talk about priorities. Yet, when we talk about priorities, we are not really talking about priorities for people but we are talking about the priorities the government determined were its priorities in meeting the budget deficit. It has been done on the backs of the people. When we talk about how successful we are, let us think about those people who have to worry about where their next meal is coming from.

I see that my time is just about up. I throw those remarks out to have them on record for a response by the hon. member.

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, we do not have very much time to address the number of issues that were brought forward.

I would like to reiterate the fact that the government, despite what some members in the opposition continue to state, does and will continue to invest in Canadian priorities. Health care and education consistently rank among the priorities of Canadians. Certainly the debt and tax relief with respect to low income and middle income Canadians are issues. We have taken steps. The child tax credit is a commitment that we fulfilled in the past budget and one that we will continue to work on.

I assure the hon. member that back in 1993 the finance minister put in place a consultation process that was unprecedented in this place.

We travel across the country on the Standing Committee on Finance gaining information from Canadians on what in fact should be included in the budget. I would only offer an opportunity for the hon. member to perhaps travel with that committee to hear from Canadians themselves.

[Monte Solberg, Reform, Medicine Hat, AB]

Madam Speaker, it is a pleasure today to rise to debate the government's budget. It is an important day. I think we would be negligent if we did not point out that this is an important day for taxpayers who have done a tremendous amount to bring the budget into balance for the first time in 28 years.

I am glad to note, as we began the budget debate on this day, that the finance minister acknowledged the tremendous role that taxpayers have played in bringing the budget into balance.

I have been listening to my colleagues opposite and I have noticed that they have used a few words over and over again. They argue that they have taken the balanced approach to this balanced budget.

I want to scrutinize whether or not that is exactly the case by running through the three major aspects contained in the budget. The government talks about how it will deal with the issue of spending. It talks about how it will deal with the issue of taxes and the issue of debt.

Let us start with the spending side. That is where the government started. It is where its proclivities lie and it is probably one of the most interesting parts of the budget. The government is arguing that it is the balanced approach to increase spending overall in the budget by $11 billion. We have not seen an increase in spending like that in years and years and years.

I simply want to make the point right now that we think at a time when the government has balanced the budget for the first time it is missing a glorious opportunity to deal with the fundamental economic problems of the country in a way that will fix them once and forever. By increasing spending it has essentially blown that chance, an $11 billion spending increase.

I want to say a couple of words about how the government has spent that money. For weeks on end the government has been talking about the need to invest in education. It has been no secret that there would be increases in spending for education. Who can be against education?

We all agree that education is extraordinarily important, but I think a little history is in order here. I think we need to talk about just how much the federal government values education. We need to point out to taxpayers of Canada and to students that it was the federal government which took the broad axe to education funding in the first place.

I remember very well in the 1995 budget that the finance minister said they were to cut the size of government percentage-wise far more than they were to cut transfers to the provinces. He made a speech to the Kansas City Reserve Board saying that they were to make far deeper cuts to the size of government, trim fat, eliminate waste, before they would ever cut important things like health care and higher education.

It just wasn't so. Those were their words but their actions were completely different. The result was that health care and higher education suffered massive cuts, 35% cuts to the provinces to provide health care and higher education. This was completely unnecessary when there were all kinds of wasteful areas in government spending that they could have cut, things that are completely unnecessary.

It was bad enough that they did that two or three years ago. Now they want to be rewarded for riding to the rescue with a new education program. They want to be rewarded after the provinces have taken the hits. It has been the provinces that have had protesters on the lawns of their legislatures saying that they want to see more funding for health care, more funding for higher education. There were never any protests here. The federal government got away with it basically scot-free.

Today those members want to come waltzing in to provincial jurisdiction and say that they will restore a fraction of the funding and they expect to be rewarded for it.

I want to point out in talking about the particulars of the millennium scholarship fund, just where we think this fund goes absolutely wrong. The first point is that the millennium scholarship fund will focus spending on about 6% of the students, leaving 94% of the students out there still looking for a way to get to university. We argue that if the government had taken that money and given it to the provinces, they could have used it to reduce the tuition costs and that would have helped all the students.

We think the millennium scholarship fund misses the point also in a very fundamental way. The issue is not so much that students in Canada are not well trained. We know they are. In fact we have got one of the highest participation rates in university in the industrialized world. The problem is not on the supply side. The problem is on the demand side.

I was talking a few minutes ago on a cable TV show with the hon. member for Red Deer. He pointed out that his children all attended university in Canada but they are all working in other countries in the world right now. Three children, one in Norway, one in Holland and one at Princeton.

Let me talk about his son who is at Princeton. Here is a young man who is a Rhodes scholar but could not find work as a professor in Canada. Why? Of course because we saw the federal government cut transfers to the provinces for things like higher education, making it almost impossible.

The government did talk about other areas as well, or other ways to aid higher education. Let us talk a little bit more about access to higher education, an important subject.

Government members have talked about ways that they would use the registered retirement savings plans to benefit people who want to go back to school. That is entirely laudable. We agree with expanding the use of RRSPs. RRSPs are a good idea. But the problem is people do not have the disposable income.

The problem again is not that the programs are not adequate. The fact is people do not have the income to participate in them. Which is why we are making the argument that we need to have lower taxes in this country, far lower taxes than we have today and far more than the government was offering in its recent budget. The registered education savings plan is another savings plan for education. But again Canadians just do not have the income to participate. We make the argument that if this government really wants to help education in this country, it has to address both sides of the issue.

On the one side we need to ensure that Canadians have adequate incomes so that they can put money aside to get their children into university. We need to ensure that transfers to the provinces continue. But on the other side we also need to know that there are jobs for those people. We need to know that when they graduate from university they can find a job so they can start to pay back those student loans. Unfortunately in Canada today where we have a youth unemployment rate of 16.2%, it is very difficult for many students to find jobs.

A study by Nesbitt Burns points out the huge difference in the tax rates between Canada and the United States. As a result so many of our students whom we have just trained at great expense are disappearing from this country and are going to the United States. And it does not end with the United States. It points out that people who are involved in computer sciences and it talks about all kinds of professionals, doctors, nurses, teachers and engineers, are disappearing across the border. It would be bad enough if it was only an economic problem, but I argue it is also a social problem. We are seeing families split up and that is extraordinarily unfortunate.

It was not very long ago that Liberals in this place would stand up and rip the Conservative government because our sovereignty was being taken over by the Americans. Today the Liberals are allowing our brightest and our best to go to the United States because they will not deal with the taxation problem in this country.

I want to talk for a moment about the debt side of the budget. First let me explain the situation for people. In Canada today we have a debt of $583 billion. When my friends across the way came to power a few years ago they began the process of adding debt upon debt upon debt. They built the debt up by about $90 billion while they were in government.

We now have this debt of $583 billion. We pay $45 billion a year in interest on it, one-third of every tax dollar. The average family pays $6,000 a year in federal taxes just to pay the interest on the debt.

We have been coast to coast over the past several months talking to Canadians about how to deal with the problem of the country's finances. Without exception no matter what part of the country we go to people say with one voice “Please begin the process of paying down the debt”.

Sadly in Canada today the government is taking the approach that the debt is not an issue. The government said in its budget that in fact it will only deal with the problem of the debt in terms of paying it down if it has some money left over in its contingency fund. There are no targets set for debt reduction, absolutely no targets. The finance committee suggested that the government at least have a very lukewarm target of between 60% and 50% of GDP. It completely ignored that.

All the government has is this sort of halfhearted promise that if it can get to it, it will start to pay down money from the contingency fund toward the debt. That is simply not acceptable. Canadians today know that when we live in a global economy we cannot count on just being secure in our country when we know that an Asian crisis as there just was or a Mexican peso crisis can have a profound impact on us especially when our economy is teetering atop a $583 billion debt, one-quarter of which is owed to foreigners.

We must begin to deal with the problem of the debt. Do not take my word for it. Listen to what some of the commentators have been saying about the issue of the debt in the wake of yesterday's budget.

Here is what the Canadian Taxpayers Federation is saying. Everyone well knows that is a very credible institution. My friend from Calgary Southeast used to head the Canadian Taxpayers Federation. It is saying “The federal government has also chosen to ignore the national debt and instead grow its way out of our debt woes. Debt servicing charges are actually going to increase over the next three years from $41.5 billion to $45 billion”.

Andrew Pyle, chief strategist of ABN Amro Bank, is calling the government's debt reduction strategy lazy.

Finally listen to this quote “I think the market could be less than enthusiastic about a plan that puts less emphasis on paying down debt, particularly during a period of robust growth and low interest rates”, said Aron Gampel, deputy chief economist with Scotia Capital Markets.

There are real problems with the government's approach to dealing with the debt. That is one of the chief reasons why we saw the dollar fall like a stone by half a cent right after the budget came out. That is a tremendous shock for people who were expecting something a bit better from the government.

We also point out that the debt has a real impact on Canadians' lives, when the debt is as high as it is and Canadian families are paying $6,000 a year in taxes just to pay the interest on the debt. It hurts many innocent people. I point out again that it is Canadians who have balanced this budget and they are the ones who deserve to see some tax relief.

I want to address the final big aspect of the budget. That is of course taxes. I want to spend a bit more time on this issue than on some of the other issues.

Since the government has come to power we have seen the government introduce new tax increases 37 times. We now have a government that is going to be taking in approximately $48 billion more in revenues by the end of its mandate than when it came to power.

We have a situation where we are seeing Canadians' disposable income fall like a stone, $3,000 for the average family since the government came to power. This is added on top of 10 years of misery under the Conservative government where we saw 71 tax increases. There have been 108 tax increases in the last generation under Liberal and Tory governments. It even goes higher than that if we go back into the Trudeau era. It is an extraordinarily poor record on behalf of both Conservative and Liberal governments over the last many years.

Government members again are arguing that they are taking the balanced approach. They are saying “We are taking a balanced approach to spending” by driving spending up $11 billion. That is the biggest spending increase in a generation. They are taking a balanced approach in not dealing at all with the problem of the debt. That is their argument. They are saying “We do not have to deal with the debt”. That is the balanced approach.

Now they are saying that they are going to introduce $7 billion in tax relief over three years, but that will not come anywhere near offsetting the huge increase in CPP premiums which took effect January 1. It was a huge increase. We saw the largest tax hike in Canadian history come in on January 1 and they have the gall to suggest that they are somehow reducing taxes.

That is not the end of it. We also know—and my friends will not deny this—that built in to the tax system is the phenomenon of bracket creep, which allows the government every year to take another $900 million out of taxpayers' pockets. The taxation system is no longer indexed to inflation. Cost of living increases will push people into new tax brackets and the result is that they will pay new taxes. A lot of people do not even realize it is happening. The fact is, that alone will claw back about 50 cents of every dollar the government has offered in tax relief.

My point is simply that the government cannot argue that there is real tax relief in this budget. In fact the revenue which the government is collecting is going up and up on an ever climbing track. I would point out to my friends opposite that since the government took power in 1993, the year it promised to eliminate the GST, we are now seeing projections for GST revenue growth to be 46% higher than in 1993. That is extraordinary.

Due to bracket creep and increases in income tax, by redefining income in various ways, Canada now has some of the highest personal income taxes in the world. I pointed out earlier that we have personal income taxes that are 56% higher than the G-7 average, higher than those of our trading partners, higher than in Japan, the United States, the U.K., France, Italy and all the other countries. We are 25% higher than the OECD average.

We have seen incomes in Canada drop so dramatically that more and more families are having to have both parents in the workforce, one just to pay the taxes.

Our argument is that it is time for a change to the approach the government has brought to us. We do not think its approach is balanced at all. We think it punishes the very people who balanced the budget. We think it is time to give Canadians, if I dare say it, a fresh start. We think it is time to secure their future.

I am not going to ask my friends opposite to take my word for it. I want to quote from some letters which the Reform Party has received. This is a letter from someone who lives in Nova Scotia:

Dear Mr. Manning,

Recently I read about the help you gave Kim Hicks in Sackville, N.B. It is nice to see that you are listening and willing to help people in her situation. There are many people that need your help to influence the government to lower the tax burden on ordinary Canadians. Please find enclosed my documentation which says a great deal about how government taxation policy is hurting me and many others. If this information is useful to you, please use it.

He goes on to list his payroll stubs. The letter continues:

—note that my taxable earnings for 1996 and 1997 are nearly the same; a difference of $33.60 between the two years. The big difference is that in 1997 I paid $647.07 more taxes than in 1996 on gross income that is nearly the same.

Our point is simply this. Ordinary Canadians are paying an extraordinarily high price for the policies of the government. We think it is time to devote an equal balance between debt reduction and tax relief to help Canadians secure their futures and to give them the real hope that only the Reform Party can truly give them.

[The Deputy Speaker]

With the enthusiasm the hon. member has generated in his speech, there will be 10 minutes for questions and comments on this speech when the debate on the budget resumes. I believe that will be tomorrow morning at 8.30. I am sure the hon. member will want to be here for questions and comments.

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

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, my hon. colleague from Medicine Hat was speaking moments ago about the bracket creep which is a serious systemic flaw in our tax system.

I raised a question in this place on November 18 last year of the government about a revenue department report, which had been released the previous day, indicating income taxes paid by the average taxpayer went up by 10% largely because the government had kept in place Brian Mulroney's hidden tax grab called bracket creep which the OECD says is hammering our economy. I went on to say that if the finance minister will not commit to broad based tax relief, will he at least commit to stop raising taxes through the hidden tax grab called bracket creep.

I look forward to following up on that question today. As the hon. member mentioned, in the budget released yesterday there was a claim that there was tax relief for Canadians, particularly low and modest income Canadians. In fact, when one takes into account the effect of the deindexation of the tax brackets, this sneaky, back door, malicious tax increase imposed on Canadians by the Tory party in 1986, one will find more Canadians paying taxes next year than they did last year and more Canadians paying more taxes than they ever did before.

This is how bracket creep works. The basic exemptions in the tax system and the marginal rates are only indexed for inflation over 3%. We have had inflation, fortunately, under 3% thanks to the strict monetary policy of the Bank of Canada for several years now. This means that in all the natural wage raises that people get, they are getting bumped up into the tax brackets which they previously did not have to pay. This is why Canadians are now paying taxes on just $6,500 of income.

The leader of the opposition said in this place that these taxes are hidden and sneaky. You don not really notice them until you get the bill. They are practically invisible. However, the sneakiest tax increase of all was the deindexation of personal income tax. The minister keeps quiet about this. The finance minister did not even mention it in his budget this year. It is a very simple decision that will cost Canadians billions of dollars more annually but he kept quiet about it. Here again, low and middle income Canadians will carry the heaviest burden.

The leader of the opposition went on to say that such underhanded and clandestine deindexation represents the most massive and heavy tax increase in Canada's history. It will cost Canadians billions of dollars. Sneaky, hidden, silent and automatic.

That was not the current Leader of the Opposition. That was the Right Hon. John Turner in this place on February 20, 1987. That was the former leader of the Liberal Party of Canada.

Another Liberal member at the time said: “The finance minister told us there was no tax increases in this budget. That statement is false because taxes are going up in this country because of the deindexation of deductions which this government has done in its past budgets”.

Which Liberal member said that? It was the hon. member for Kingston and the Islands. I gather he is still a Liberal member. Mr. Speaker, I can share your outrage which is why I close with a request for the parliamentary secretary to justify why this government is taking billions more out of the pockets of Canadians, and I know you will join me today in that request as you did in 1987, Mr. Speaker.