Debates of May 27th, 1998

Budget Implementation Act, 1998

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

Mr. Speaker, Bill C-36 is a comprehensive bill incorporating a diverse number of measures that relate to the 1997 and 1998 budgets. Each however is important to building a strong economy and a secure society, two goals our government has pursued since coming to office in 1993.

For example, the government believes there is no better investment in the future than investments in education, knowledge and innovation. The establishment of the Canada millennium scholarship foundation in Bill C-36 is proof of this commitment. This is the single largest investment ever made by a federal government to support access to post-secondary education for all Canadians.

Elements of the Canadian opportunities strategy, which is designed to provide Canadians with greater access to the knowledge and skills needed for jobs and opportunities in the 21st century, are included in this bill.

The government also believes that equality of opportunity means a good start in life. This is why the national child benefit system, which was developed to provide better support for low income families with children, is also part of this bill.

Other measures in Bill C-36 include changes to old age security, increased excise taxes on tobacco products, air transportation tax reductions, tax arrangements with aboriginal governments, and measures dealing with Canada's international obligations and the Hibernia oil project.

Since debate has already taken place at second reading and in committee, I will limit my remarks to a brief overview of this bill.

I will begin with the Canadian opportunities strategy. The aim of the strategy is to help ensure that all Canadians, especially those with low and middle incomes, have equal opportunity to participate in the changing labour market. This means reducing the financial barriers and other obstacles to acquiring skills and knowledge. I will take a moment to talk about some of the specific measures of the Canadian opportunities strategy.

Bill C-36 establishes the Canada millennium scholarship foundation which will provide scholarships to students in financial need and who demonstrate merit. The scholarships will improve access to post-secondary education for low and middle income students. The foundation will operate at arm's length from government and, in consultation with provincial governments and the post-secondary education community, will decide how the scholarships are designed and delivered.

The government's initial endowment of $2.5 billion will provide more than 100,000 scholarships annually for 10 years to both full and part time students, beginning in the year 2000. Full time students will be eligible for an average of $3,000 a year with individuals potentially receiving up to $15,000 over four years. This could reduce student debt load by over half. On a related issue, Bill C-36 amends the Canada Student Financial Assistance Act, the Canada Student Loans Act and the Bankruptcy and Insolvency Act.

Agreement was reached last December at the first ministers meeting that the 1998 budget had to include measures to reduce the financial burden on students. The 1998 budget followed up on this commitment and several of those measures are contained in Bill C-36.

First, interest relief will be extended to more graduates. Second, the repayment period will be extended for those who need it. Third, for borrowers who remain in financial difficulty, there will be an extended interest relief period. Fourth, for individuals still in financial difficulty after these relief measures, the loan principal will be reduced. These measures together will help up to 100,000 additional borrowers.

Bill C-36 also legislates the Canada education savings grant, another important component of the Canadian opportunities strategy. This grant will make registered education savings plans one of the most attractive savings vehicles for parents to save for their children's education. It will provide for a 20% grant on the first $2,000 in annual RESP contributions made after 1997. It will provide that grant for children up to the age of 17.

Bill C-36 addresses the problem of youth unemployment by giving an EI premium holiday to employers who hire additional young Canadians between the ages of 18 and 24 in the years 1999 and 2000. This measure will increase youth employment opportunities and reduce payroll costs for employers by about $100 million a year in 1999 and 2000.

Bill C-36 also deals with a new Canada child tax benefit. Hon. members will recall the government's commitment to the national child benefit system which was announced in the 1997 budget. Under the new system, the federal government provides an enriched Canada child tax benefit while the provinces and territories redirect some money into better services and benefits for low income families, especially the working poor.

The government proposed a two step process in the 1997 budget whereby the current $5.1 billion child tax benefit would be enriched by $850 million to create a new Canada child tax benefit by July of this year.

Beginning last July the working income supplement was increased by $195 million. Working income supplement benefits are now provided per child instead of per family. This coming July over 1.4 million Canadian families with 2.5 million children will see an increase in their child benefits. Families earning up to about $21,000 will receive Canada child tax benefits of $1,625 for the first child and $1,425 for each additional child.

Once discussions have taken place with the provinces, territories and Canadians, the Canada child tax benefit will be enriched by an additional $850 million, a commitment made in the 1998 budget.

I would like to turn now to some changes in this legislation which relate to seniors. The government remains committed to providing a secure retirement income for its senior citizens. Starting in 1999 the payment year for both the guaranteed income supplement and the spouse's allowance will move to July from April. This will give GIS recipients three additional months to file their income statements with the government and reduce the possibility of underpayments. The payment period for war veterans allowance will also change from July in one year to June of the next. These changes will improve services to low income seniors, eliminate government duplication and increase fairness.

Another component of Bill C-36 addresses the issue of First Nations taxation. The Kamloops Indian band will now have the authority to levy a 7% value added tax on all fuel, alcoholic beverages and tobacco products sold on its reserves. The Westbank First Nation will be able to impose a similar 7% tax on all alcoholic beverage sales on its reserves. It already has the authority to tax tobacco products.

In addition, with the approval of the governor in council, the Minister of Finance or the Minister of National Revenue will be able to enter into tax administration agreements with aboriginal governments that want to tax.

I want to mention the two amendments to the Excise Tax Act contained in this legislation.

First Bill C-36 increases federal excise taxes on tobacco products which will add an extra $70 million annually to federal revenues and will help to discourage Canadians, particularly youth, from smoking.

The second amendment reduces the air transportation tax and clarifies the rules relating to the elimination of the tax later this year. This measure is part of the government's program to commercialize air navigation services in Canada.

On the international front, the recent Asian crisis reinforced how crucial it is that the International Monetary Fund be able to support a stable international financial system. It also reinforced the importance of our government having the ability to participate in internationally co-ordinated efforts to resolve short term liquidity crises.

As a result this legislation amends the Bretton Woods act to ensure adequate resources for the IMF to fulfil its mandate of preserving monetary stability. The amendments also give the government additional means to participate in co-operative financing arrangements with other countries to supplement IMF led assistance packages.

At the same time consultations between the Minister of Foreign Affairs and the Minister of Finance will be mandatory prior to Canada providing any financial assistance to institutions covered under the International Development Assistance Act. Consultation with the Minister of Finance will improve control over the growth of contingent liabilities associated with Canada's participation in these institutions.

Action taken through international institutions is critical if we are to benefit from a stable global financial system. That is why in addition to the action we can take at home, such as that found in Bill C-36, our government is working in concert with other governments around the world to address economic stability issues.

Sparked by lessons from the financial crisis in Asia, the Minister of Finance has proposed that a global banking supervisory body be set up to monitor the stability of financial institutions around the world. This idea has received considerable interest and support with the latest endorsement coming from last weekend's meeting of the APEC finance ministers in Kananaskis, Alberta. Turning to other aspects found within Bill C-36, there are provisions to allow the Canada Development Investment Corporation to sell the government 8.5% interest in the Hibernia oil project when market conditions are favourable.

In addition, the bill provides the authority to wind up CDIC following the sale of its remaining principal asset, the Canadian Hibernia Holding Corporation.

These are highlights of Bill C-36. As I stated at the beginning, each is key to help build a strong economy and a secure society, goals the government has pursued since 1993. These are goals the government will continue to pursue as we complete this mandate.

Many Canadians are waiting to benefit from these measures. I urge my hon. colleagues to pass the legislation without delay.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I begin by seeking unanimous consent to split my time with the member for Calgary Southeast.

[The Deputy Speaker]

Is that agreed?

[Some hon. members]

Agreed.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I appreciate that. Now that my colleagues across the way have agreed to that I am afraid I am going to have to be less than charitable about why we need to do that.

Bill C-36 is about a number of things. It is the budget implementation act. It is about things like the millennium fund and all kinds of measures the government discussed in the budget.

The first issue I want to talk about is that the government has moved closure on this bill. Therefore my colleagues and I are forced to split our time so that we can speak at least twice on the third reading of Bill C-36. Otherwise we simply would not have the chance to do that.

When these government members were in opposition they routinely chided the Conservative government of the day for the times it moved closure. But now the Liberal government has actually exceeded the former Mulroney government in the number of times it has moved closure. I think it is 41 times since it came to power just over four years ago.

The hon. House leader for the government said when he was in opposition “I am shocked. This is just terrible. This time we are talking about a major piece of legislation. Shame on those Tories across the way”.

A member from Kingston said “What we have here is an absolute scandal in terms of the government's unwillingness to listen to the representatives of the people in the House. Never before have we had a government so reluctant to engage in public discussion on the bills brought before the House”.

We throw that back at the government and say when in opposition this was completely unacceptable. As members pointed out, on major pieces of legislation there should never be closure. We should be allowed to debate these things.

We are now talking about the budget. We believe that citizens, through their representatives, should have the ability to call the government to account for some of the things it has decided. We are talking about decisions to spend hundreds of billions of dollars. To move closure so that we have a scant two hours to debate the budget implementation act at third reading is unbelievable and completely anti-democratic. The government should be ashamed.

In order to talk about the millennium fund, I am afraid I have to go back in history a few years. When the government was running to be the government in the 1993 election, the current Prime Minister, then the leader of the Liberal Party, said in the leaders debate that he would not cut transfers to the provinces for health care and higher education. He told the leader of the Reform Party that if it were up to him he would raise the transfers to the provinces.

History shows that not only did the government not raise transfers to the provinces, it cut them by $7.5 billion, a 40% cut for health care and higher education. The impact of that was devastating. We saw people in the provinces rebel. The were extraordinarily upset. We saw people picketing and marching on provincial legislatures.

I think the people were misguided. They should have been on the lawn of Parliament Hill because when the provinces are faced with cuts of $7.5 billion they have no choice but to make cuts themselves in health care and higher education.

Unfortunately the government blatantly broke a major election promise and now it has chosen to introduce the millennium scholarship fund in the vain attempt to convince people across the country that it somehow cares about higher education.

When Canadians start to look at the details of the millennium scholarship fund they will be extraordinarily disappointed. They will find it helps precisely 7% of all students today trying to upgrade their skills so they can get a job in the modern workforce. But the government has carried on as though this is going to help everybody.

It could have helped everybody if it allowed the provinces to keep these transfers and the provinces could have given them to everybody in the form of lower tuition costs, and that truly would have helped everybody.

Now we have the government saying it is going to help 7% of the students who return to school. Granted, a lot of those students are part time but nevertheless they need skills upgrading to get a better job.

The government's argument is that this will help 100,000 people through scholarships to individuals. That is only 25% of the full time students, leaving 75% to be completely excluded.

This huge memorial fund to the Prime Minister is really going to help very few of the people who should be helped and could have been helped had the government allowed the money to stay in the pockets of the provinces and be used to reduce overall tuition costs.

The Reform Party and colleagues in the Conservative Party, the Bloc and the NDP brought forward a number of serious proposals to hold the government accountable on how the millennium scholarship fund would be used. Unfortunately when we brought these forward at report stage the government moved closure, cut off debate and these very serious helpful proposals never had a chance to be discussed.

Unfortunately again the democratic will of parliament was thwarted. I believe the democratic rights of Canadians to have these things discussed by their representatives were thwarted. We are in situation now where the government will completely ignore all the suggestions that came forward from the various opposition parties via the witnesses who will be most affected by changes brought about by the millennium scholarship fund. They will never find their way into legislation.

The moves to hold the fund more accountable will not be discussed. They will not be looked at by the government. The suggestion that the auditor general be the auditor in charge of the fund may not ever be accepted by the government. The suggestion that the millennium fund be subject to access to information will be completely ignored by the government.

That is what happens when a government moves closure on an important piece of legislation like a budget. It is absolutely ridiculous and it is an affront to people who believe in the idea of democracy. We are extraordinarily disappointed in how the government has dealt with this whole issue. But it even goes beyond that. Not only did the provinces take the heat when the government cut transfers back in 1995, all the heat for what the federal government had done, now the government is going to end up letting down all Canadians once again. I would argue it is going to let down many of the very students it proposes to help.

What students are going to find out when they graduate from universities, after having taken advantage of the millennium scholarship fund, is that many of the jobs they have been trained for simply do not exist in Canada, which is why we have a massive problem with brain drain today.

My colleagues in the Reform Party have spoken on this issue many times in the past. I know my colleague from Calgary Southeast has talked on this before. Many of their own family members have had to go across the border to the United States most often, also around the world, to apply the skills they have received because of the generosity of taxpayers in this country. These students take this subsidized education and go across the border. One of the best examples is the university class at the University of Western Ontario where I think it was one-third of the entire graduating class in computer sciences was scooped up by Microsoft.

Canadian taxpayers via the millennium scholarship fund end up subsidizing the richest man in the world, Bill Gates, because he is the one who benefits by all these people who earn their education at taxpayer expense. How much sense does that make? What point is there in putting together a millennium scholarship fund if we are only going to graduate students to send them south of the border and never have the ability to take advantage of all those skills within Canada and all the benefits that would bring to the economy? What is the point of that? I do not think it makes any sense.

The government has failed utterly and completely to deal with the demand side of the equation. It is taking faulty steps in dealing with the supply side by providing these funds, but it has done absolutely nothing on the demand side. These highly skilled people, doctors, lawyers, computer scientists, nurses, engineers, technicians, our brightest and best, are being driven out of this country by an economic regime and a tax regime that is simply too difficult to live with. Why would they try?

I received an E-mail from a young man, 23 years old. He has a wife and child. He at the age of 19 went to the United States to apply his tremendous skills as a computer technician at various companies. He worked in silicone valley in California, got tired of that and wanted to come home. He ended up taking a job for less money than he was making in the U.S. He was making $75,000 U.S. in silicone valley. He came to Toronto to accept a position for $65,000 Canadian.

He sent me the E-mail when he received his first paycheque and had a look at the government tax bite. That is the problem this government has consistently failed to address. Now this young man with his tremendous skills is considering whether he really does have a future in Canada after all. He is considering taking his family and his tremendous skills and all the benefits that will reap for the economy and moving back to the United States. I think that is a terrible indictment of this government and this government's failure to deal with the huge economic problems that people in this country have to face every day.

That young man is extraordinarily lucky. He has these abilities and these skills and he has I gather a tremendous natural talent. He is able to parlay that into all kinds of job offers. But not everybody has that. So we have a different set of problems for people who do not have those skills and do not have those abilities, who have not had the chance perhaps to get an education. Those people are in a situation that is far worse than my friend the computer programmer.

They are in a situation where they are competing with hundreds of thousands of other people who do not have very many skills for jobs.

We have an unemployment rate of 8.4%. Today in question period I heard the finance minister boasting about the 8.4% unemployment rate. I would not boast if I were him because we simply need to look across the border to the United States to see that it has an unemployment rate about half what ours is, 4.3%. Here we are, economies that share a tremendous amount of trade, very similar economies, except its economy is far more efficient than ours. Its puts hundreds of thousands of people to work whereas hundreds of thousands of our people have to sit on unemployment insurance and welfare. That is a human tragedy of tremendous scope.

When a budget is brought down, one of the first things to be done should be to address issues like unemployment and high taxes that cause unemployment. I know what my friends opposite will say. They will say they did bring in tax relief. They will point to the cuts they made to the surtaxes.

What they fail to point out is that according to their own budget papers, the cut in income taxes through the reduction of surtaxes in this budget year will be more than erased by the phenomenon of bracket creep.

Right away taxpayers are still worse off this year. In other words, taxes are still going up this year compared to last year. That does not even take into account the whole issue of Canada pension plan premiums which are marching inexorably upwards 73% over the next six years, the largest tax hike in Canadian history. Where does that leave workers? It leaves them looking for jobs on the unemployment line. That simply is not acceptable.

I turn now to the issue raised today not only by members of the opposition but by the premier of Ontario and by Statistics Canada, the EI surplus.

I point out to my friends opposite that the employment insurance fund is there to ensure that in the event of a downturn there are adequate funds set aside so that the fund can provide benefits to unemployed workers. That fund is now at about $15 billion, way more than is necessary to take workers through even the toughest recession. In the next several months that fund will continue to grow.

The government does not actually have that money sitting in an account. It has essentially spent it, so there is an IOU. In other words, if there is a downturn in the economy they will have to borrow $15 billion. We should be very clear about that. This is another example of the government's so-called prudence.

The government is now using the overage, the extra premiums, coming in not for unemployment insurance, not for benefits, not to give back to the workers who are supplying it, including the small business people, the very people who create jobs. It is keeping it. What will it do with it? It is putting it away to use it for its election slush fund down the road. I think that is completely unacceptable. That is a breach of the deal that was made implicitly between governments and workers.

The deal was that money should be returned to them in the form of lower premiums so that they can keep it in their pockets, so they can use that money for the things they want to use it for, things like providing for their education, providing for their retirement. Unfortunately the government thinks it knows better.

We are in a situation today where the finance minister could not bring himself to say that we are going to start to reduce payroll premiums in a serious way so that workers are not so heavily burdened.

I also point out the impact that high payroll taxes have on business. The Canadian Federation of Independent Business points out regularly that payroll premiums are a job killer. It points to the government's finance department economists who say that payroll taxes like EI premiums are a job killer. Joe Italiano is one of the people I will point to. We qutote him in our document which we have made widely available to the public. My friends across the way laugh when I say that but it is a fact. When we have 8.4% unemployment we should have the government taking steps to deal with those sorts of issues.

This government has failed completely to deal with the issues that are the most important to Canadians. It has failed to deal with the issue of taxes and debt. It has done nothing about the debt issue. Instead it has tried to blind people and mislead them with all this talk about the millennium scholarship fund. I do not think Canadians are buying it. I encourage my friends around the House to vote against Bill C-36.

[Jason Kenney, Reform, Calgary Southeast, AB]

Madam Speaker, I thank my hon. colleagues for allowing me to split the time with my colleague for Medicine Hat.

I begin by condemning this government for allowing itself to trample on democracy and democratic deliberation by invoking closure and time allocation on Bill C-36. This evening we will be gathered in this place to vote on a bill that is not just any normal bill. It is not some kind of housekeeping amendment. It is not some kind of technical legislation. This is legislation that authorizes the expenditure of billions and billions of dollars earned not by the government, not by the members opposite, but by Canadians.

We are authorizing the government in this bill this evening to use the coercive power of the state to take away the fruits of those people's labours. If there is one founding principle of liberal democracy, it is the principle of no taxation without representation. That is what they said when the entire concept of liberal democracy came about in the late 18th century.

But this government has a different idea of what liberal democracy is. Now that it is Liberal democracy, they think democracy means the government will authorize, without adequate debate, without proper procedure of deliberation in parliament, the taking and spending of billions and billions of dollars from taxpayers who now come home with less than they did 15 years ago because of the tax burden imposed by this and previous governments.

Do not take my word for it or our word for it when we inveigh against the undemocratic invocation of closure 41 times since this government took power. I ask my colleagues opposite to reference what their caucus colleague said when they were in opposition. They were principled when they were in opposition. They spoke out against the invocation of closure and time allocation.

My hon. colleague quoted from certain statements made by the current government House leader when he was in opposition and by the hon. member for Kingston and the Islands. The member for Kingston and the Islands said in debate in this place on February 19, 1993: “I suggest that the government's approach to legislating through closure is frankly a disgrace. It cuts back the time that the House is available to sit and then it applies closure to cut off the debate”. He called it a disgrace. He was right then and we are right now by using the same word. He also said on April 23, 1993: “This is not the way to run a parliament. This is an abuse of the process of the House”. That was a Liberal then, a Liberal today.

The current minister of external affairs said in 1993 that the government's invocation of closure displays the utter disdain with which the government treats the Canadian people. I stand here and echo the words of the minister of external affairs six years ago. It does demonstrate a disdain for the Canadian people.

On Monday night of this week we voted on dozens of amendments that had been rushed through the report stage of debate in this place, serious, substantive amendments that elected representatives of taxpayers had spent time constructing to try to hold the government more accountable and to make the operation of government more efficient. Only one member of each party had an opportunity to speak on dozens of amendments. They were not allowed to address each amendment but just groupings of those amendments. That is not the democratic process properly conceived or executed.

Not only is the government invoking closure undemocratically, it is invoking closure on a bill which gets a failing grade from the auditor general of this parliament. I am not talking about a member of the opposition or about some columnist or critic. I am talking about the man charged by all members and all parties of this place to monitor the books of the government to ensure they comply with generally accepted public sector accounting principles. The auditor general, a man of integrity, has said the section of Bill C-36 authorizing the creation of the millennium scholarship fund does not comply with but rather contravenes the most basic principles of public accounting.

Some will say who cares about how you account for the numbers, which year you put it in, where it appears in the public accounts. Some people will say it is a technical argument, that the opposition does not have anything else to talk about.

There is a very important principle here. Parliament is an institution which goes back hundreds of years in history and essentially is an institution which was created as part of an effort by the commoners to have a real check and balance on the executive power, the power of the crown, to expend public funds without public scrutiny. Our job is to ensure that the bills we authorize are conducted with proper accounting principles, with full transparency so the public can see and know how its money is being spent with confidence. The auditor general has said we cannot have confidence in how Bill C-36 and the budget of this year construe the millennium scholarship fund.

“I believe believe that the accounting change for the millennium scholarship fund will open the door for governments to influence reported results by simply announcing intentions in their budgets and then deciding what to include in the deficit or surplus after the end of the year once preliminary numbers are known”. What he was saying was that by authorizing the expenditure now and booking it in the current fiscal year 1998-99 but not expending it until the fiscal year 2000, we are playing a shell game with the public finances. That too is a disgrace.

Without even getting to the substance of the bill, which is bad enough, the government is closing down debate to rush through a bill the auditor general will not permit. I dare say that if the previous government, the Mulroney government, had made a similar effort the Liberal Party and all Canadians would have risen up in contempt.

My hon. colleague from Medicine Hat discussed at some length the provisions of the bill as they relate to payroll taxes, so I will not reiterate his eloquent remarks. However, let me focus on another part of this bill and the budget which it implements.

The debt projected for the current fiscal year by this enormously fiscally responsible government is $583.2 billion. The finance minister talks a great deal about how we are going into debt reduction. However, when I look at the budget I see that in the next fiscal year, 1999-2000, the debt is $583.2 billion. Then I look in his budget at fiscal year 2000 and guess what? He has brought the debt all the way down to $583.2 billion.

It is amazing that this man of fiscal rectitude, this champion of debt reduction has scheduled in the fourth fiscal year through his projections that the debt will come plummeting down to $583.2 billion. What does that mean? It means we will continue to spend $45 billion a year in debt interest costs, money that comes from taxpayers that does not finance one single worthy social program or contribute to education, training or infrastructure investment. The $45 billion which this budget and this bill authorize for the current fiscal year does the following.

Madam Speaker, I believe you will find consent for the following motion:

That for the remainder of this session motions pursuant to Standing Orders 57 and 78(3) shall not be receivable by the Chair.

[The Acting Speaker (Ms. Thibeault)]

Is there unanimous consent to present the motion?

[An hon. member]

No.

[The Acting Speaker (Ms. Thibeault)]

There is not consent.

[Jason Kenney, Reform, Calgary Southeast, AB]

Madam Speaker, I am delighted now that we have made a motion that at least one Liberal has decided to appear and to listen to the rest of the debate on the budget.

As I was saying before I was so rudely interrupted by the absence of members opposite, those debt interest costs will be $45 billion in tax dollars for this year, next year, the year after, and the year after that. That amounts to two full years of CPP benefits for every pension beneficiary in the country. Just the interest this year amounts to two and half years of GST revenues.

Seventy-one per cent of all personal income tax revenues paid this year will go just to finance the interest on the debt. All that we spend in benefits for old age security, the Canada health and social transfer for education and health care and employment insurance, the three big social programs administered by the federal government, are the amount equivalent to what we will spend on debt interest because of this budget and this bill.

The debt interest costs are equivalent to the entire annual budgets of British Columbia, Alberta, Saskatchewan and Manitoba. The debt interest this year alone is equivalent to the entire net debts of all provinces, except for the three largest provinces.

The $45 billion interest bill is enough to pay for all Canadian hospitals, all physician charges and all drug and pharmaceutical costs for an entire year.

That is how much this government has chosen to spend on debt interest because it has not made the right and difficult choice to reduce the debt and to prioritize spending.

What we spend on debt interest through this budget would be enough to cut taxes on an average of $3,200 a year per taxpayer, not per household. It is closer to $6,000 a year per household. It is enough to provide for a $30,000 a year endowment for every poor child in Canada.

The Liberals talk about their millennium prime ministerial endowment fund, heritage fund, or I do not know what spin name they have given it. If they had started earlier in the 1980s when they were in power to make the difficult choices and if they had continued on today, we would not be spending $45 billion a year in interest. Then families could keep $6,000 a year in their pockets, or we could set up an endowment of $30,000 for every poor child in the country.

If we were to convert the annual interest bill into $100 bills and we stacked them up one on one, the pile would be 118 kilometres high. The pile would be 214 times higher than the CN Tower.

That is the status quo which we are going to let sit there, that huge debt which is festering. This government and its spin machine talk at great length about prosperity in the Canadian economy and growth of jobs and so on but they have fallen prey to the very same fatal hubris of the Mulroney government. The Liberals believe arrogantly that they have managed to defeat something called the business cycle, the notion that in a market economy or any economy there are ups and downs.

Unfortunately there will be a downturn sometime in this economy. The finance minister speaks as though he is a Pollyanna. He speaks about a new golden age where this country will have 20 or 30 years of uninterrupted growth. I am an optimist and I wish the minister were right but any rational, objective reading of economic history in this or any modern country will indicate that it simply will not happen.

There will be a downturn in our economy at some point, a recession at some point. Government revenues will drop at some point and social expenditures will increase at some point. Should that happen while we are still sitting on a $583.2 billion debt with $45 billion in interest payments and the highest income tax burden in the G-7, it will be too late.

We have not solved the problem, the problem that Reformers came here to solve in 1993, the problem of overspending, the problem of overtaxation and the problem of too much debt.

We say here today as this government rams this bill through this parliament that it is time to stop and get our heads out of the sand. We have to realize the Mulroney government made precisely the same mistake in 1988 when it thought it was facing a decade of future growth. That government decided to let it go easy on the spending side. It decided to let up on the fiscal reins as this government is doing in this bill and this budget today. We are paying the price today with a $600 billion debt and $45 billion in interest payments.

It is time for us to remember the fundamental principle of the terrible lesson we have learned with the fiscal history of this country in the past two decades. We have not yet solved the problem. That problem is still very much the $583 billion debt which the government leaves completely untouched, an act of fiscal irresponsibility which is almost unparalleled in the history of this country.

What have the Liberals done on the tax side? They talk about tax relief. Whenever we ask the finance minister he stands up and blathers about how he has given the child tax credit and all this stuff but most of what they call tax cuts are in fact tax expenditures. They are government cheques that are being cut. That is the Liberal accounting.

If we account for the $10 billion annual increase in CPP premiums and the enormous effect of bracket creep which sucks up $2 billion to $3 billion a year out of the pockets of taxpayers just through inflation, what we find is that this is actually a tax increase budget. When we calculate the total net effect of the CPP payroll tax, the EI tax, the bracket creep higher income tax revenues and everything else and what they call their tax cuts, when we add it all up what we end up with is this budget being a tax increase budget. It is the fifth consecutive tax increase budget from a government that promised in the 1993 and 1997 elections not to raise taxes. Another promise broken. Another trust betrayed.

Since 1993 the government has taken a cumulative $49.1 billion from the pockets of taxpayers amounting to an average of $3,500 per taxpayer. That is more than was being taken. That is an increase over the enormously high tax burden of this government's predecessor.

When we take into account this budget and the future years projected in the budget documents, the government, when it closes its books in the fiscal year after the next one, will have raised taxes by a cumulative total of nearly $80 billion. That is $80 billion, or $5,700 per year for the average taxpayer. Compare that to what we have proposed in the official opposition which is to cut personal income taxes by $12 billion a year, or $2,000 for the average family by the year 2000.

Another little feature, or technical flaw as we might say, in the budget bill is the change being made to what is called the child care tax deduction. The government has decided to raise by $2,000 the amount parents can deduct in the cost of paying a third party to care for their children. That is fine. We respect the choices of people who decide to do that.

There are millions of Canadian families and parents who make the sacrifice to stay at home and raise their children to do what they believe in their conscience is best for their children. Do they get the benefit of the $2,000 additional deduction or even the $5,000 deduction that is there now? They do not get one red cent of it. They are told if they give up the second income they get no consideration under the tax code. It is a two tier tax code, one for the daycare choices the government supports and the other for families who want to make choices for themselves.

This bill is a disgrace. Closure is a disgrace. The lack of disclosure is a disgrace. The public accounting principles that are manipulated here are a disgrace. The unfairness for families is a disgrace. The $583 billion the government is passing on to future generations is a disgrace. That is why I and my colleagues will be voting against it.

[The Acting Speaker (Ms. Thibeault)]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Huron—Bruce, Fisheries; the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, Employment insurance; the hon. member for Waterloo—Wellington, Nuclear waste.

Message From The Senate

[The Acting Speaker (Ms. Thibeault)]

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed a bill to which the concurrence of this House is desired:

The House resumed consideration of the motion that Bill C-36, an act to implement certain provisions of the budget tabled in parliament on February 24, 1998, be read the third time and passed.

Budget Implementation Act, 1998

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Madam Speaker, I was in a good mood when I got up this morning, but this is a sad day, almost a day of mourning, for Quebec in this parliament today. Anger is brewing.

We are at third reading of a bill that will violate Quebec's jurisdiction over education. To make its centralizing vision clear and show how it totally disregards Quebec's provincial jurisdiction in this area, the government has decided to wrap up third reading in two hours. In practical terms, this means walking over the consensus, which is unanimous in Quebec.

Representatives of every student federation, deans of universities, people involved in all the various areas of education, came to tell us the same thing about this bill.

I will attempt to demonstrate to this House today why this is such a sad day for Quebec. In so doing, I will be sharing my time with the member for Saint-Hyacinthe—Bagot. I seek the unanimous consent of the House to do so.

[The Acting Speaker (Ms. Thibeault)]

Does the hon. member have the unanimous consent of the House to share his time?

[Some hon. members]

Agreed.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Madam Speaker, I would like to use certain facts and certain references to illustrate the importance of what the federal government is doing today.

At the 1964 federal-provincial conference, Quebec's position with respect to the federal student loan and bursary program was made known. According to the Premier of Quebec of the day, Jean Lesage, “Under the circumstances, in order to resolve the problem posed by the federal student loan policy, Quebec demands that the Government of Canada hand over to it, in the form of tax equivalencies, those amounts it would have reimbursed in interest payments on loans to Quebec students. We would accept as the basis for determining this equivalent amount the relative proportion of the population of Quebec”.

On leaving the conference, Premier Lesage declared “We most certainly cannot accept that the federal administration would err, regardless of whether or not it was in good faith, by invading an area that is indisputably under our jurisdiction and one which, what is more, we have been handling for the past three years. There is only one solution which would avoid the conflict which both sides most certainly wish to avoid, and that is tax compensation according to the Diefenbaker-Sauvé formula, which was used not long ago to resolve a similar problem to the real advantage of both governments. This is a solution that can be applied immediately, to spare us the complications and even serious disputes which would otherwise inevitably arise”.

This warning by Mr. Lesage, as he left the federal-provincial conference, was heard by the Canadian Prime Minister Lester B. Pearson.

In a telegram, Mr. Pearson said to Mr. Lesage “The federal government hopes to introduce shortly legislation to extend family allowance benefits to children aged 16 and 17 who are dependent either because they are unable to work for physical reasons or because they are still in school. In addition, the federal government intends to propose arrangements to permit university students in each province to obtain guaranteed bank loans up to the amount approved for a given student by the authorized provincial body”. The key sentence in the telegram reads “Any province preferring to confine itself to its own loans program may receive equivalent compensation”.

Since 1964, Quebec has developed the best student financial aid program. This has been confirmed by all those involved, from both inside the province and from the other provinces in Canada: “We want a loans and bursaries program. We want scholarships because our students have an average debt of $25,000 when they finish their studies, whereas in Quebec, the average debt is $11,000”.

They reported a succession of debates in Quebec. Students have demonstrated several times to make sure that the plan they end up with will suit their needs. Over the past 35 years, we have developed a plan that is based on students' financial needs. In Quebec, no one ever tried to include the notion of merit in it.

Today, the federal government wants us to pass a bill that will create the millennium scholarship foundation. These scholarships will include the notion of merit and will be distributed by a foundation that will reach agreement with certain provinces.

Why do you think the government chose this course of action rather than simply changing its student loan program into a loan and scholarship program and allowing Quebec to continue to exercise its right to opt out with full compensation? Why did it take this approach? Because the government wanted to be visible. The only valid reason was to ensure its visibility.

The Quebec government decided to show magnanimity. It said “we will give you that visibility”. During the negotiations, Mr. Bouchard told the Prime Minister “we will appoint negotiators if this is what you want. They will look at how this can be achieved and then we will propose concrete solutions to meet your visibility criterion”.

During the negotiations, Quebec said “if it means putting the Canadian flag on a cheque, so be it”. But this was still not good enough. Why? Because throughout the negotiation process, the Minister of Human Resources Development had no mandate to amend the act in any way, shape or form.

During clause by clause review of the bill, we debated for a whole day and said “Before reviewing this bill, should we not wait for the outcome of the negotiations with Quebec, to see what amendments may be made to the legislation?” The Liberals did not propose any amendments.

This is a perfect bill, one that requires no amendment at all. Yet, the members of the majority who sat with us in committee did see that there was indeed unanimity, but on the Quebec side. We are fully aware that this bill is designed to prevent Quebec from opting out with full compensation, and that Ottawa wants to achieve visibility at the expense of the needs everyone in Quebec agrees on.

Moreover, this will really hurt students, because it will again create dissension. We will end up with a dual system. Students are going to be applying for $3,000 federal government scholarships on the basis of financial need, but also on the basis of their marks and their merit. We do not know how merit will be defined. When these people apply for the $3,000 in Quebec, how will they be treated?

The situation is unacceptable. The government is not thinking about changing a program that does not work; it is thinking about changing, replacing and upsetting the best system in Canada. This is completely unacceptable.

The proof is that, this afternoon, I received a release from the Fédération étudiante universitaire et collégiale du Québec, signed by its president, Nikolas Ducharme. It reads as follows:

In its handling of the millennium scholarships issue, just as in its handling of the hepatitis C affair, the federal government must be the envy of certain authoritarian regimes. We are deeply disappointed with the attitude of the Prime Minister of Canada. Quebec students view democracy as coming from the people. When the people make a request, when citizens speak, when those they represent are critical, elected officials must listen.

The Fédération étudiante universitaire du Québec, the Fédération étudiante collégiale du Québec, the Coalition de l'éducation, the business community, the Parti Quebecois, the Liberal Party of Quebec, Action démocratique du Québec, and the National Assembly of Quebec have all spoken out against Bill C-36, and the Prime Minister has not listened.

And here is what students are asking the Prime Minister:

How can the Prime Minister of Canada have so little respect for democracy?

When we see the anger of students, we realize that it is because they are the ones, ultimately, who will have to apply for these scholarships. They will be in the situation of having to apply to two different governments for the same thing. I do not know whether all members have seen what a loan and scholarship application looks like. Each educational institution has to have someone to help the students. There are student loans and financial assistance advisors performing this function in cegeps and universities.

They are now going to have the pleasure of dealing with two forms, rather than just one, with two governments, and wondering whether they have the right to forward personal information to this private foundation. How are they going to deal with all this?

The situation is completely unacceptable. It is too bad that the government has taken this attitude, because we would have liked the negotiations to have produced essentially the same results as in 1964, when the federal government finally listened to what Quebec wanted. It took the same kind of pressure.

I quoted Mr. Lesage's statement a few moments ago. He even mentioned the possibility of legal proceedings. Well, this time, the Premier of Quebec opened the door to the Prime Minister of Canada, on May 15, 1998, by sending him a letter in which he explained to him exactly what was going on. He even proposed an amendment that would allow Quebec to withdraw with full compensation and to assume its responsibilities in this area.

As I was saying earlier, Quebec's position is not only that of the provincial government, but also that of the National Assembly. Here is the motion passed by the National Assembly:

That, for the benefit of Quebec students, the National Assembly urgently ask the Federal Government and the Quebec Government to resume the negotiations regarding the millennium scholarship in order that an agreement on legislative amendments respecting the following principles may be reached:

(a) The part granted each year to Quebec students is determined by means of a formula based on demographic parameters;

(b) Quebec selects the students who shall receive a scholarship;

(c) The scholarships are forwarded to the recipients in such manner so as to avoid all duplication and to ensure the necessary visibility to the Federal Government.

Furthermore, the National Assembly acknowledges the Quebec Government's intention to allocate the amounts thus saved in its scholarship programme to the funding of colleges and universities.

I think the message is very clear. There is a consensus. I could make an interesting comparison and point out to the Liberal majority that this consensus is even stronger than the one that existed regarding school boards. There are no opponents in Quebec in this case. The Liberal majority could not find a single witness that would come and tell the committee that this is a good idea.

A few years ago, after the referendum, this House adopted a motion on distinct society. If the federal government really wanted to show its good faith regarding the distinct society issue, it would not go any further with this bill. It would say “We have to resume negotiations with Quebec. We have to accept the amendment with the right to compensation. It would be the first time in several years that we can show our willingness to use a different approach with Quebec”.

I think it would be important for the Liberals to think about that. They may wonder why they have so much trouble getting members elected. It might be because they are losing touch with the grassroots. It is hard to get the whole picture from only part of the National Assembly, from the other side or from a party with only a handful of members, but in this case we have a unanimous motion passed by the National Assembly, a unanimous position taken by the Quebec education coalition, led by the president of McGill University.

This is not a debate between the sovereignists and the federalists, but between those who want the current Constitution to be respected and those who want it to be violated. This is the situation we find ourselves in.

English Canada does not understand that, when Quebec joined Confederation, jurisdiction over education was something to be cherished, something nobody could touch, then or in the future, as it is directly linked to the notion of a people. No nation in this world would entrust the education of its people to some entity other than the government in which it has a majority. Quebeckers will never accept that.

Now, the federal government had decided to bulldoze the Quebec government and the people of Quebec. It wants to impose its will, but it is actually shooting in its own net. I pledge to systematically remind everybody in Quebec that the federal government, in this debate, chose to ignore the unanimous consensus reached by all Quebeckers.

It took 35 years to build that consensus. It was not built in the last year, or over the past five years. It has been building since 1964, since Quebec and Canada reached a consensus on the advisability for Quebec to have an independent financial assistance system. That was 34 years ago.

Today, this consensus is being cast aside. This is it. Through the Liberal majority, the Canadian government has decided to impose its approach on Quebec in the area of education. This action will have far-reaching consequences. This is a historic moment, a grave moment that Quebeckers are not about to forget.

In the years to come, we will be able to tell all Quebeckers “This government in which you do not even have a majority voice has decided to step into what you felt is the most important area and, while this fundamental jurisdiction is covered by the Confederation pact, to disregard this pact”.

This is turning out to be a money issue. The federal government has the power to spend and it spends whichever way it pleases. We have seen what this attitude has led to in recent years.

The millennium scholarship foundation may be a suitable concept for the other provinces of Canada, but it is not for Quebec, where it has been unanimously rejected. That is why I move the following amendment:

That the motion be amended by deleting all the words after the word “That” and substituting the following:

“Bill C-36, An Act to implement certain provisions of the budget tabled in Parliament on February 24, 1998, be not now read a third time but be referred back to the Standing Committee on Finance for the purpose of reconsidering Clauses 2 to 46 creating the Canada Millennium Scholarship Foundation.”

[The Acting Speaker (Ms. Thibeault)]

The motion is taken under advisement and a decision will be announced as soon as possible.

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

Madam Speaker, I would like to take this opportunity to congratulate my colleague from Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques for his excellent work on the issue of employment insurance for the benefit of the unemployed in Quebec and in the rest of Canada.

When a situation as dramatic as this one arises, it takes people like my esteemed colleague to document the issue fully, to ask pertinent questions of the minister responsible, and to demand equally pertinent replies.

Employment insurance is a very serious matter, and one that is well documented. I am sure that, some day, logic will win out and the minister will make decisions accordingly.

As my colleague from Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques said, we are starting another black chapter in the history of Canadian federalism.

It is rather surprising, when one thinks of the business of the millennium scholarships, that there is one man, and one man alone, who has been a character in all of these black chapters in the history of federalism: the present Prime Minister of Canada.

He was there for the night of the long knives, he was there when the Constitution was patriated to the detriment of Quebec. He was there, floating about in the back hallways and everywhere else with his cell phone and pager during the debate on Meech Lake, and he had a hand in its failure. The present Prime Minister was a presence throughout.

Today, with a major and fundamental intrusion into an area of jurisdiction that is exclusive to Quebec, once again we find the Prime Minister of Canada, the hon. member for Saint-Maurice, right in the middle of things, as the main booster of the millennium scholarships.

It is most unfortunate that a single man can do so much harm to the people of Quebec and to the history of the long battle by the people of Quebec to make the federal government mind its own business. It is, moreover, virtually unprecedented in the history of Canadian federalism for the very essence of the Constitution, the British North America Act which gave exclusive jurisdiction over education to the provinces, and to Quebec in particular, to be trampled underfoot with such arrogance and cynicism.

We have just finished a three week stint with the Standing Committee on Finance, during which we heard testimony from people speaking on behalf of others. The 14 Quebec witnesses represented no less than 1.2 million people in business and education. In fact they represented everything that moves and has an interest in education.

For three weeks, these 14 organizations and others from across Canada came to say that supporting a scheme such the millennium scholarships was out of the question. These organizations, including some Canadian ones and some illustrious Canadian university professors, came to say that if the millennium scholarships were good for Canada, they were bad for Quebec. Now, this is something.

Even after three weeks of such intense work, the Liberals did not even move one single amendment, even though there is unanimous opposition to this in Quebec. Every single witness told the federal government to mind its own business.

Essentially, the witnesses had four messages. First, the millennium scholarship scheme reveals a deep lack of understanding of Quebec reality. I would like to quote from the FTQ's brief; it said that “as it stands now, Bill C-36 shows a lack of understanding on the part of the Canadian government of Quebec loans and grants system and Quebec's priorities in education”.

This is an understatement. Year in and year out, student loans in Quebec alone amount to approximately $500 million. On top of that, the Quebec government pays out grants to students to the tune of $253 million.

The system has been in place for over 30 years. And now we have a bill that ignores this reality, Quebec expertise and the extraordinary results, which in the opinion of the Canadians testifying before the Standing Committee on Finance, tops those of all the other provinces. The government is dismissing all that.

The second problem is the duplication. Quebec has had an administrative structure for loans and grants for over 30 years. There are educational and administrative experts in a whole network of loans and bursaries, who are among the world's most specialized. Now the system is being top loaded, as we say in good French. The federal government is introducing a new parallel structure, federal this time, to administer a $2.5 billion fund.

Do you know what it will cost to administer this millennium fund? It will amount to 5%. Five per cent of the total budget of the fund will go to administer this new federal program in a sector that is Quebec's exclusive jurisdiction. That figure represents twice the cost of administering the Quebec system of loans and bursaries, and they talk about effective management of federal funds.

Another major problem haunted the deliberations of the finance committee, and it is that the millennium scholarships bear no relation to the needs of students in Quebec and even less to the needs of the education system.

If the Liberals really wanted to help students cope with their debt load and gain easier access to education generally, the intelligent approach would have been to limit cuts.

For the past four years and until 2003, the Minister of Finance, who continues shamelessly to collect a surplus of up to $20 billion in the employment insurance fund, has been and will be stealing money from students and the entire Quebec and Canadian educational system, for by then he will have cut $10 billion from higher education.

The best way to help students and ensure their access to education is for the government to return to the system what it took from the provinces. This would have been an intelligent way to intervene in the sector, while maintaining provincial jurisdiction in the educational sector.

There is another problem with this fund. In recent years, the Minister of Finance has got us used to figure juggling. He has us used to being given figures that have nothing to do with reality or the government's annual financial statements. It is the third time that he cooks up figures in such a shameful way.

Each time, the auditor general gave him a stern warning, but cynicism and arrogance are contagious. Indeed, the cynicism and arrogance displayed by the Prime Minister have now spread to the Minister of Finance and the whole cabinet. The Minister of Finance ignores the criticisms of the Canadian Institute of Chartered Accountants and those made by the auditor general on three occasions for basically the same reasons.

The Minister of Finance posted to his 1997-98 budget—which ended on March 31—all the funds, a total of $2.5 billion, earmarked for the millennium scholarships. He led us to believe that they would start spending this money immediately. The fact is that the foundation will only start awarding these scholarships in the year 2000. So, an expenditure that would be made only two and a half years later was charged to the 1997-98 federal budget.

This is not standard procedure. Financial statements no longer mean anything. We can read them, but we cannot really find out about the government's revenues and expenditures, because the minister cooks up the figures. This is the third time.

He did so when the maritime provinces harmonized the GST with their own sales taxes. The minister was to give $800 million to the maritime provinces the following year, because they had agreed to harmonize the GST with their own sales taxes, but he had already charged the whole $800 million to the budget of the previous fiscal year. He did the same thing with the innovation fund.

At some point, he will have to stop cooking the books. The truth will have to come out, because this is complete nonsense. Neither the financial statements nor the estimates make sense any longer. And I am not the only one to think so.

After the Minister of Finance brought down his last budget, all the editors said that it made no sense to forecast, year after year, no surplus in government operations, when we know the surplus will keep increasing, starting this year with a $4 billion surplus in the federal budget. It does not make any sense to put “zero, zero, and zero” in the estimates for the next three years. Will he stop laughing at the taxpayers some day?

He does it again with the millennium scholarships; he cooks the books and hides the real budget surplus and all the drastic cuts to education. He keeps doing it and still maintains that he has to fight the deficit, when in fact, since the last fiscal year, we have a surplus that will increase in the future.

Not every day do we—

[Some hon. members]

Oh, oh.

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

Madam Speaker, maybe you could ask the members who want to have a meeting to hold it in the lobby. It would be better for everyone.

[The Acting Speaker (Ms. Thibeault)]

I would ask hon. members to hold their meetings outside the House so we can hear the member who is speaking.

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

Madam Speaker, I was saying that a new chapter has been written in the dark history of the federal system, as illustrated by all the arguments I and every other speaker from Quebec have submitted. They have also unanimously rejected the proposed millennium scholarship fund.

It is not every day that the Premier of Quebec and his education minister lead a delegation to come to meet with the Prime Minister of Canada here, in Ottawa, to see if they could agree on a mutually acceptable position, which would at the same time satisfy the federal government's need for visibility. That is all there is to it: the federal government wants to be visible in what it does for students in the hope of winning them over to the cause of Canadian federalism.

What are they taking students for? Students can see that behind this need for visibility there are measures which have been penalizing them big time for the past four years.

The premier and the minister of education of Quebec came here to meet with the Prime Minister of Canada. They tried to smooth things over and made several concessions. They also put on the table proposals that would respect Quebec's jurisdiction while giving the federal government the visibility it desired. That is all it is after. It does not care about efficiency or helping students. Just the same, a negotiating committee was set up. Week after week, the lead negotiator on this committee did not show any real desire to define a mutually acceptable position.

In the end, little fed up with all the fine talk, and a little fed up that things are not moving ahead, the minister of education has decided that enough is enough, that the federal Liberals do not really want to work out any new arrangements.

As my colleague mentioned just now, the National Assembly even passed a unanimous motion that allowed the federal government its visibility but that also ensured some respect for the Government of Quebec's jurisdiction, ensured that it was Quebec that was responsible for the administration, as well as providing the lists of millennium scholarship fund recipients. We also had a share, based on the demographic figures, of the $2.5 billion that would have gone to Quebec. This was passed unanimously by all parties present in the National Assembly.

Once again, this is an indication of the consensus that was clearly evident during the discussions of the Standing Committee on Finance, when witnesses from Quebec appeared before the committee.

There are even Canadian supporters, as I mentioned earlier. John Trent of the University of Ottawa, for instance, who is a vocal opponent of the sovereignists, who is certainly no friend of the Bloc Quebecois, said, and I quote “The fund will inevitably lead to federal-provincial duplication and overlap with existing programs. It is in direct competition with Quebec's loans and scholarships program, which many consider superior”.

When people like him speak in our favour, speak in favour of Quebec, and add their voices to the consensus in Quebec, that says it all. The government is demonstrating unprecedented arrogance and cynicism.

As my colleague mentioned earlier, there have been several attempts by the federal government in the past to interfere in the field of education, which comes under the exclusive jurisdiction of Quebec. Every time, the federal government understood. The federal leaders, who were less arrogant and less cynical than our leaders today, understood in the past that education was sacred to Quebec, that we would not allow the federal government to interfere in this sector.

One of the most important federal conferences in the history of Canadian federalism was held in Quebec City in 1964, on March 31 to be exact.

I remember that it was given front page coverage by the Globe and Mail on that date, because it considered this an historic event on a number of levels, including the fact that it marked the discussion of new arrangements between the federal government and the provinces, Quebec in particular, with respect to taxation, the establishment of a new order if you will, in federal-provincial relations and the respect of jurisdictions such as education.

At that time, Messrs. Pearson and Lesage, two intelligent men who were willing to talk to each other, exchanged views during this federal-provincial conference because, in 1964, the federal government wanted to inaugurate a federal program of student loans and bursaries.

I was surprised to find, in rereading the opening remarks by the Hon. Jean Lesage, the Premier of Quebec at the time, that they could have been made today.

If I may, I will quote a few passages from those opening remarks by Mr. Lesage.

The fact that the federal government offers only student loans, not bursaries and loans as seems to have been the case at one point, may at first appear to be an attempt to avoid the constitutional problem bursaries would have presented. In fact, because supply falls within its jurisdiction, the federal government can give the impression that it is remaining within its jurisdiction by giving loans rather than bursaries.

We do not believe this gets around the constitutional problem. The students themselves have felt this, because they have openly opposed the new federal policy.

The millennium scholarship project has also been opposed recently by students.

I will now continue.

The difficulty arises, not from the fact that there are loans, but that they are interest-free loans for students. These loans will be made by financial institutions—

For these two reasons, the Government of Quebec cannot accept application of the federal program as it is proposed at present.

We have, moreover, already set up a student aid service involving sizeable amounts of bursaries and loans to students every year. We are therefore already making a particularly significant effort in this area, not to mention the huge sums of money we devote to other sectors of education every year.

Under the circumstances, in order to resolve the problem posed by the federal student loan policy, Quebec demands that the Government of Canada hand over to it, in the form of tax equivalencies, those amounts it would have reimbursed in interest payments on loans to Quebec students. We would accept as the basis for determining this equivalent amount the relative proportion of the population of Quebec.

From that conference on, therefore—

[The Acting Speaker (Ms. Thibeault)]

I would point out to the hon. member that he has only one minute remaining.

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

Madam Speaker, at this conference the then Quebec premier was very reluctant as is the current Quebec premier.

But Mr. Pearson understood. As a result of their discussions, barely two weeks after the end of this important federal provincial conference, Mr. Pearson sent a telegram to Mr. Lesage allowing Quebec to withdraw, with full compensation, from a program in an area under provincial jurisdiction.

We are still hoping that the current Prime Minister will stop being so obtuse, cynical and arrogant and lend a favorable ear to the consensus in Quebec, to allow, as was the case at the Quebec conference when Mr. Pearson and Mr. Lesage—