Mr. Speaker, I am very pleased today to have the opportunity to say a couple of words on this bill. It is a bill that is evidently very important to at least seven provinces, the seven provinces that receive equalization payments.
I was taken aback a moment ago by the member for Mississauga South who mentioned that this bill is a major cornerstone of Confederation.
He can make that statement but five minutes ago his government invoked one of the most hideous procedures available to government today, closure, on one of the major cornerstones of Confederation. The hon. member's words are not consistent with what the government did a moment ago.
This is a very important bill to the provinces that receive equalization payments. It is very important to Atlantic Canadians. It is very important to Newfoundland. It is very important to Nova Scotia. It is very important to New Brunswick. It is very important not only to Atlantic Canadians but to western Canadians. It is very important to Manitoba. It is very important to Saskatchewan. It is very important to Quebec. It is very important to Prince Edward Island. But today the government, in spite of the importance we attach to Bill C-65, has decided to cut off debate. It has decided to invoke closure. It has decided to stifle, to muzzle the opposition from making the comments it wants to make on this bill.
This bill is very important to all members of the PC caucus. It is very important to Manitoba, to Saskatchewan, to Newfoundland, to Nova Scotia and to Quebec. But these provinces are highly dependent on equalization payments to better their economic situation. It is even more important to have this bill fully debated by all members to make the federal government fully aware of the impact that equalization payments have on at least seven provinces in Canada. Obviously we will not have that opportunity to make the federal government aware of the impact these payments have on Atlantic Canadians in particular because it has brought in closure today.
I was told that before this bill came to the House of Commons the province of Newfoundland requested some significant changes to the way the formula treats offshore resources, offshore oil and gas. The government has rejected the request of the province of Newfoundland and Labrador. Instead it is only going to make some very minor housekeeping changes to this bill, completely ignoring the request of Premier Tobin and the province of Newfoundland that Canada's poorest province should not be penalized because of the current equalization formula before it is given a chance to catch up and become equal to the rest of Canadians.
There cannot be any chance for catch-up for Atlantic Canadians or for that matter western Canadians in provinces like Manitoba and Saskatchewan who receive equalization payments. There cannot be any opportunity given to these provinces to catch up. There cannot be a chance of equality of provinces unless there is some recognition given to the fact that the very pool of money that keeps a particular province from falling into economic despair and economic disaster is the same pool of money that will keep that province permanently poor.
That is the unfairness and injustice associated with the way this formula is written. There will never be an opportunity for the provinces that receive these equalization payments to be brought up the same quality of life and the same standard of living that other Canadians enjoy.
I am not saying we should put in place a new formula for ever and a day. What I am saying is that there should be an arrangement worked out for the have not provinces which will see resource revenues clawed back on a more gradual basis.
For example, a Voisey's Bay development in Newfoundland could have its resource revenues clawed back not dollar for dollar but on a 50% basis. The Sable Island gas find could be clawed back on a 50% basis. In that way there is an opportunity to bring some fairness to the equalization formula and to bring the unemployment rate and the quality of life for the receiving provinces to some kind of acceptable standard.
I do not expect the government will make any changes in the equalization formula today. Obviously it will not. It has invoked closure on one of the most important bills ever to come before parliament in quite some time. I am not expecting the government to make any kind of substantive changes.
A few months ago I had a private member's bill on Newfoundland's unemployment problem selected and debated before the House. In my final remarks I made the point that if we had a fairer equalization formula applied to Newfoundland as it relates to our resource based revenues, not only would the province of Newfoundland be a lot better off but the federal government would be a lot better off as well. Eventually the province would become less dependent upon federal resources to keep it going.
In the long run there is every reason for the federal government to want these provinces that receive equalization payments to be brought up to an acceptable standard so that the federal government will not have to inject funds into the poorer receiving provinces.
As we are all very much aware the Canadian equalization program redistributes throughout the nation. Last year the province of Newfoundland received roughly $996 million in equalization payments. That is quite a great deal of money. In this fiscal year we are expected to receive roughly $925 million. There will be a reduction.
That number can be greatly affected by the overall wealth of the nation, the overall wealth of the economy. If the economy is good in any one particular year, the provinces receiving equalization payments will obviously see their payments go up. If the economy of the nation declines in any given year the provinces will expect to receive less.
One thing that determines how much equalization a province will get is the population of the receiving province. The population of Newfoundland has gone down significantly over the last number of years. I believe over the last six or seven years in particular the province's population has gone down by 7,000 or 10,000 people per year. That is quite a decrease in population for a small province like Newfoundland.
If Ontario, for instance, were to have a decline of 10,000 people per year it would not matter a great deal. When a province like Newfoundland with a population of half a million people loses 10,000 people per year it is very serious. Because of that our equalization payments go down as well. Over the last six or seven years Newfoundland has lost in the neighbourhood of 70,000 people. As a result its equalization payments have gone down dramatically.
While the out-migration factor is very important to a province like Newfoundland, the main variable I would be concerned about is the fact that with any new influx of resource revenues, revenues are deducted dollar for dollar over time from the equalization payments.
To make it a bit clearer, if a province has taken in a billion dollars in additional resource revenues in the 1997-98 fiscal year, it would have only $4 million in equalization payments because $996 million of the revenues would have gone to replace equalization payments over time. It may not happen in any one given year but over time the entire amount would be clawed back by the federal government.
There are not many incentives for a province to want to develop major resource developments. There is not much of an opportunity for a province that receives equalization payments to boost its standard of living comparable to a province that does not receive equalization.
I served as a member of the Newfoundland House of Assembly for about a 14 year period.