Debates of Feb. 15th, 1999

Federal-Provincial Fiscal Arrangements Act

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

Call in the members.

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

Division No. 316

[The Speaker]

I declare the motion carried and well done Marie-Andrée Lajoie on your first time around.

The House resumed from February 8 consideration of the motion that Bill C-65, an act to amend the Federal-Provincial Fiscal Arrangements Act, be read the second time and referred to a committee.

[The Deputy Speaker]

When this bill was last under consideration in the House, the hon. member for Mississauga South had the floor. He has six minutes remaining for his remarks.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, in my previous comments I outlined a number of points with regard to the overall equalization program. I thought it might be helpful to the House simply to review some of those basic facts.

First of all, the equalization program is one of the cornerstones of our country and has played a major role in defining the Canadian federation. Equalization ensures that all provinces have the resources they need to provide reasonably comparable services to Canadians no matter where they live without having to resort to higher levels of taxation in other provinces. That point particularly should be noted for Canadians with regard to the mobility rights that Canadians all enjoy as citizens of this country.

Equalization is also an unconditional federal payment and the provinces can use it as they wish.

There are seven provinces that receive equalization payments, Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan. The proposed legislation before the House would renew the equalization program for a five year period, from April 1, 1999 to March 31, 2004, and the basic structure of the equalization program would remain the same

I repeat, the purpose of this bill is to renew the equalization program, and the fundamental program as we know it today would remain the same.

The bill does include some changes to the program to ensure that it continues to measure the ability of provinces to raise revenues as accurately as possible. These improvements will increase the cost of the equalization program by an estimated $242 million. The changes will be phased in over the course of a five year renewal period.

The bill also includes changes to the ceiling and floor provisions of the equalization program which protect against unusually large fluctuations in equalization transfers. The proposed amendments are the results of two years of extensive consultations and review of the equalization program by the federal and provincial governments.

I think members will remember from the debate that was held in the House when we last dealt with this bill that there was much concern about the disincentive for provinces that receive equalization to pursue economic growth and job creation because it would reduce the equalization payments they were otherwise entitled to. I think many hon. members would like to speak to the issue with regard to disincentive of equalization payments.

At the time of the 1998 budget it was projected that the equalization in 1998-99 would amount to $8.5 billion. The last official estimates released in October show an increase to $8.8 billion. The new estimates of equalization will be provided in the 1999 budget tomorrow evening.

The bill would also renew the provincial personal income tax revenue guarantee program for the same five year period. This program protects those provinces participating in the tax collection agreements from any major revenue reductions that may be caused during the course of a year by changed in federal tax policy.

By way of summary, these are some of the principal elements in Bill C-65. In my view one of the important elements raised in debate was whether there was a disincentive to provinces that received equalization. I thought there was also some interesting commentary with regard to the distribution of equalization to certain provinces.

In that debate with regard to the significant amount of moneys transferred to Quebec, there was an awful lot of suspicion raised that somehow this was improper or incorrect. When I gave my initial speech on this subject, I laid out substantive reasons to point out to the opposition that it is not enough simply to identify the numbers of differences between how much one provinces gets compared to another. The important question is to ask why do those numbers differ and is it fair and equitable.

After two years of consultation between the provinces, the territories and the federal government those people have determined that indeed the equalization program as it exists and as it is proposed to be extended is fair and equitable.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

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.

[John O'Reilly, Liberal, Victoria—Haliburton, ON]

Double dipping.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Pardon me? Did the hon. member say double dipping? No, I am not one of the individuals who double dip. I can say to the member that I am not one of them.

I served for about 14 years as a member of the Newfoundland House of Assembly. In that period of time I served during the administration of the PCs and of the Liberals. I remember both those governments making the case year after year after year to the federal government for a change in the way the equalization formula was written so that the province could have an opportunity to catch up to other provinces in Canada. I believe that was brought into focus by the massive Hibernia oil development on the Grand Banks of Newfoundland. When the particular resource was discovered back in 1979 Newfoundland held a promise of jobs and revenues for its beleaguered provincial economy.

In the early eighties oil prices were high and the prospect of annual oil revenues were not out of the realm of reaching billions of dollars. Given that fact, overcoming the equalization hump was at least a possibility for the province of Newfoundland and Labrador. It would lose probably the first billion but we would keep subsequent billions and millions of dollars as the case may be.

It proved impossible for the government of the day to negotiate an offshore oil deal with the Trudeau administration when oil prices were very high. An agreement had to be held up until the PC government came in power under Brian Mulroney and there was a decent offshore contract negotiated with his government. By that time oil prices had fallen dramatically. There was not any possibility of a multibillion dollar oil revenue, so we could see all oil revenues simply going to replace equalization payments.

At about that time the government of the day negotiated with the federal government a change in equalization entitlements as they applied to the Hibernia resource development. Instead of having the dollar for dollar clawback it was negotiated that the federal government would only take 70 cents. Some recognition was given to the fact that oil prices were low at the time and Newfoundland would not be receiving all that much revenue from resource development in that project. That could be easily done again for other developments in Atlantic Canada like Sable Island, Voisey's Bay and other developments in general.

We are quite pleased to have an equalization program that keeps us from economic disaster, but we are not at all pleased it is the formula that keeps the receiving province from getting ahead. How can we ever catch up if every new dollar we earn is subtracted from our equalization payments? We have to catch up.

For as long as I have been in public life in Newfoundland the unemployment rate has been double the national rate. During that same time the federal government has cut transfers to the provinces by 35%. Not only do we have to use our equalization payments to help the province get ahead. We also have to use them to make up for the fact that the federal government has cut transfers to the provinces by 35%.

When that was done, in Newfoundland's case thousands of provincial public servants were laid off. The public services are now under a great deal of strain especially in rural Newfoundland. The federal government has cut the federal public service in the province by a full 30% as compared with 15% nationally. It is hard to believe but the province with double the national unemployment rate was saddled with double the rate of federal job cuts.

Because the public service in general plays a larger than usual role in Newfoundland's economy, the cumulative effect of these cuts has been very devastating upon the province and probably more devastating on Newfoundland than it has been on other provinces in Canada.

We need a new deal. Atlantic Canada generally needs a new deal in Confederation. If we are to move out of park and into high gear, the federal government needs to recognize we are a have not province which needs a greater say over the resource revenues that come into our province. We need revenues that would more than merely replace equalization. We need revenues to augment our economic situation, to catch up and to make progress. That will never happen unless the federal government is willing to recognize the plight of Atlantic Canadians generally.

To sum up, we need economic development and jobs. We need to maximize the impact of any resource development on our economy and the provincial treasury. The federal government has not helped today by invoking closure on the bill.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Mr. Speaker, near as I can gather from the member's remarks, he is saying the equalization payments which are designed to bring all the provinces up to the same sort of minimum national standards and opportunities should continue to be paid even when a province on its own back can raise the money through its own resources.

In other words, what he is saying is that if a worker is on employment insurance, for example, he should be entitled to get a job as well with which he doubles his income, one from the government and one from the job. Or that a person on welfare should be able to get the social assistance and also get the money from a job or any other resources. What he is saying if I gather correctly is that rather than the people of Newfoundland wanting to earn their own way from their own resources, they should continue to tap the governments, the federal resources, federal social assistance.

I submit this is indeed the type of agenda, the type of pattern that we saw in the Conservatives of the past. I do not believe it speaks actually to the other parties in Newfoundland, the Liberals perhaps or the NDP. I think it is a Conservative philosophy where not only do we get as much money as we can from our own resources but we get as much money as we can from the central government.

I submit that is not what produces independence, that is not what produces dignity among people. I suggest the Conservatives should understand that people now have to get off the gravy train unless they need help. If they need help, yes.

The member suggested that closure has somehow been something that is interfering with the ability of Newfoundlanders and other people in the have-not provinces getting these equalization payments. Rhetoric is not what these people need right now. What they need is this legislation to go through as fast as possible.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, I thank the hon. member for his rhetoric. That is all it was, rhetoric. As I suspected, he was not listening to a thing I had to say on this very important bill. He was talking to his colleague all the while I was speaking and he never gave me a moment of thought nor listened to a word I said.

I am not saying we should put in place a new equalization formula for ever and a day. What I am saying is that we need to work out some kind of an arrangement for have-not provinces that will see the resource revenues they generate clawed back on a more gradual basis than dollar for dollar.

As I said a moment ago, Newfoundland receives about $1 billion in equalization payments. If the Hibernia development for instance were to bring in $900 million in the run of a year, we would be only $100 million better off. Is this not what we need, an opportunity to catch up to the other provinces in Canada? Put in place a formula that will see a more gradual claw back, a 15% claw back for Voisey's Bay, a 50% claw back for Sable Island gas development that will see the province given an opportunity to become equal with the other provinces. It will see that province given an opportunity to improve its quality of life and to raise its employment opportunities and then let that province make the contribution that it should be making to the country. That is all we ask, a new arrangement that would see claw backs made on a more gradual basis.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member has raised an issue which has been raised by the Premier of Newfoundland with regard to resource revenues.

I want to ask the member whether he has actually considered whether the impact of the resources revenue and the additional taxation from those additional resource revenues is only a dollar for dollar reduction of the equalization payment.

I wonder if he has considered the new economic development and that those additional jobs created from that have very substantial benefits over and above simply the direct taxation revenues, the fact that there are substantial benefits for employing people and getting them off welfare, off social assistance and off other program grants like the TAGS program or the ACOA program.

There seems to be much more at stake here than simply dollar for dollar on equalization. The point is that Newfoundland is poised to take a more substantive role in the economy of Canada.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, we are well aware of the fact that we are poised to take a more substantive role in the economy of our country. Again I have to remind the hon. member that what we are talking about here is a province moving ahead and a province being given the opportunity to become equal to other provinces in Canada. Simply put, what we need is economic development and jobs. We need to maximize the impact of our resources and resource development. We cannot do that with the current equalization formula the federal government has in place.

We have lost so much wealth in our economy due to federal government cuts in programs and the fact that the federal government has cut our health care system to such a great extent over the last five year period, a 35% cut in transfers to the provinces. We have use our equalization payments to make up for the cuts the federal government has inflicted on us in the past.

What I have been talking about here is an opportunity for not only Newfoundlanders but for Atlantic Canadians generally and provinces that receive equalization payments to have some sort of renegotiation of that formula to reflect the fact that they are have not provinces and that they should be given the opportunity to become equal, to catch up and to raise the standard of living in their province and increase the employment rate as well.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I wonder if the hon. member would clarify briefly why Newfoundland should have a separate side agreement in terms of equalization and revenues that would handle the natural resource revenues differently in Newfoundland than it would say for the province of Alberta. Why should Newfoundland, for example, have only 70% of its revenues counted for equalization purposes when in Alberta it is 100%?

Could he explain exactly how that would work and whether he would be in support of having the same kind of treatment across Canada and have it done through equalization rather than to have some separate side agreements that really change the whole equalization formula?

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, I am not talking about Newfoundland alone here. I am not talking about a separate side agreement for Newfoundland. I am talking about a separate agreement that would apply to seven provinces, not including Alberta, Ontario and B.C. Alberta, Ontario and B.C., by virtue of their geographic locations, in some respects have been able to move ahead because of their prosperous economies. We thank these provinces for being able to share their wealth with the rest of Canada.

What we simply want to do is make our contribution to the rest of Canada as well. I believe in order to do that we need the federal government to look closely at this bill, to think about the have not provinces and to come up with some kind of formula that will enable less clawback on their resources until they reach a point comparable to Ontario, Alberta and British Columbia.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I thank you for this opportunity to rise on this debate and to discuss the equalization transfers.

Prior to the previous speaker, I was wondering who was the biggest whiner in Confederation, Mr. Bouchard or Mr. Harris. Having listened to the previous member I am inclined to think that the Progressive Conservative Party is the biggest whiner in Confederation. I cannot quite fathom how we should take $1 billion worth of transfer moneys given to the Government of Newfoundland and then heaven forbid they should actually raise their own funds, not call on the federal transfer and still complain. That strikes me as a perverse effect of equalization and one which I hope this bill in some measure addresses. We are all moving I hope toward self-sufficiency.

However, I do want to go back to the two people I consider to be the biggest whiners in Confederation, Mr. Bouchard and Mr. Harris. Each receives about $10 billion from the federal treasury. Both complain bitterly about running the independent little fiefdoms and both say they do not have enough money to live on. It reminds me of certain people who will remain unmentioned.

One hesitates to interject fact into the rhetoric that has been going on on the opposite side of the House, but the federal government raises about $150 billion to $160 billion a year. To most ears that sounds like a lot of money. But the first call on the money is by the provinces. The provinces suck up about $25 billion to $26 billion right out of the pot immediately. Then we add on to that number a further $9 billion approximately that goes into equalization. Before the federal government even starts to enter into any debt repayment, any programs or anything of that nature, 23% of its revenues are already transferred to the provinces to frankly spend as they see fit.

If I may be permitted a speculation, I am assuming that a bit more money in the next budget will be available for the provinces to spend as they see fit. I dare say there will be no correlation between whining and transfers of money.

These moneys are gone. They are virtually without strings. In some provinces they account for upwards of 40% of their gross revenues. In my province it is around 20%, in some provinces as little as 15%.

Ontario has about 40% of the population. I has about 45% to 50% of the gross domestic product. Ontario raises the revenue it gives in the form of tax revenues to the federal government which in turn redistributes it through the CHST and equalization. If one were totally parochial about this matter one would complain. But this is in fact the essence of being Canadian. This has been true since Confederation and I dare say will continue to be true for the foreseeable future.

This is called equalization which is in our country really a form of redistribution of wealth. I will address the House's attention to the actual money transferred. It totals something in the order of $8.750 billion, of which quite clearly Quebec receives the lion's share, $3.9 billion, just under $4 billion. The next largest recipient is Nova Scotia and, as the previous member alluded to, Newfoundland receives about $947 million, just under $1 billion. That is a great deal of money.

The formula by which transfers are made have become quite complex. I address the House's attention to the bill summary which purports to phase in the tax changes over the period from April 1, 1999 through to March 31, 2004. This is the reason for bringing some closure to this debate. These arrangements have to be made by the end of this fiscal year so that transfers between provinces are calculated on a formula which gives certainty to budgeting processes.

There is also a provision that adjusts the definitions of revenue source and revenue to be equalized. There has been some discussions in the House about gambling and how to treat gambling revenues as revenues being raised. Not all provinces are able to raise those kinds of revenues. There is also a change to the minimum and maximum provisions. Those are the three essential points of the bill, namely a change to the minimum and maximum payment provisions; a redefinition of revenue source and revenue to be equalized; and the phasing in from April 1, 1999 through to March 31, 2004.

In renewing the federal government commitments we are starting to look more carefully at the revenue raising ability of each province. Not all provinces are created equal. The bottom line is that at the end of the day the provinces that receive equalization will receive about $242 million additional over a period of five years.

Fortunately for both sides of the equation the provinces can now expect that their floor revenues will not be altered. Similarly, the federal government can reasonably expect that the equalization transfers will not go above $10 billion. This brings some fiscal certainty to the entire process which necessarily needs to be done so that all finance ministers in the country can plan appropriately.

The hon. Leader of the Opposition heaped abuse and scorn on the equalization process and said that it was essentially just so much politics. I remind the hon. member that this House talks about values. This talks about the values we are as Canadians. If there is a significant value after universal medical health insurance, it is equalization. Equalization is the transfer of moneys among provinces so that all Canadians are treated equitably. Arguably it is a hallmark of a civilized society.

I would like to quote the Minister of Finance on the very point of equalization:

Equalization is a cornerstone of our country—a program that we can all be proud of. It ensures that all provinces have the resources they need to provide reasonably comparable services to Canadians no matter where they live. This legislation will ensure that the equalization program remain up to date and continues to provide dependable federal support to the qualifying provinces.

That is a hallmark of our Canadian civilization. We as Canadians redistribute wealth so that all Canadians have a reasonable access to government services throughout the country. No person in Canada should be limited by his or her ability to access basic services simply because of geography. Geography should not be in question. It is a statement of a civilization and indeed of a civilized society.

In Quebec the total government transfers are $1,414 per person. In Ontario similar transfers are $824 per person. The average for all of the provinces is $1,150 per person. What disturbs me is in that process we do not seem to have a similar recognition of the role of the federal government in the lives of its citizenry. We transfer to Quebec something in the order of $932 per person on CHST and $536 per person on equalization for a total of $1,414 per person. Ontario receives only $824 per person on the CHST. Newfoundland, which is the province of origin of the previous speaker, receives a total of $2,495 per person, almost $2,500 as a point of equalization.

I do not know where the cutoff number is. Maybe we should ratchet it up to $3,000, maybe even to $4,000. Or why not just simply collect all the money, put it in one pot and divide by $30 million. There are points at which this is a rough form of justice but I would submit that it is a form on which all Canadians can count and all Canadians can expect that these numbers will be there for them over the course of time.

The average CHST per person is $853. The average of all the transfers is $1,150. Quebec does quite a bit better than the average on both numbers, namely the CHST number and the equalization number.

If Messrs. Harris and Bouchard had their way, as they pocketed their cheques—which I would submit are rather substantial cheques—they would simply say thank you very much—and I am not sure we would get that—apply for a seat at the UN and say it is all over, we are now 10 independent little countries.

I respectfully submit there is no sense of nationhood or nation building out of these moneys. We have 10 little emperors. Each has his hands on ridiculous amounts of money. They erect trade barriers which interfere with each Canadian's ability to move from province to province and to practise his or her trade. Then they wonder why Canadian productivity lags. I would submit that one of the most significant reasons Canadian productivity lags is the interprovincial trade barriers.

My son is planning on attending university next year. If my son applies to go to Queen's University, which is a university both you and I share, Mr. Speaker, he will pay a tuition rate which is a rate substantially less than he would pay to go to McGill. At McGill he would pay something in terms of double or triple the amount of tuition that he would otherwise pay at Queen's. Comparable universities; comparable education; comparable job prospects at the end of a degree. Yet the real cost for him, merely because he lives in Toronto, will be in excess of two to three times, residency costs aside. This is all because he happens to live in Ontario as opposed to Quebec.

This is unacceptable. This is an interprovincial trade barrier which needs to be addressed and has to be addressed. These are the kinds of things that kill our productivity and send us toward this model of 10 little fiefdoms with one tax collecting authority.

If I had any impact on the finance ministers of Canada, and that is somewhat dubious, I might ask some rather fundamental questions. How do these equalization transfers help build Canada? How is Canada better off at the end of the day once these transfers are done? How will Canadians know that their money is well spent? Strange question. How about a little accountability? Where is the transparency? Why are kids who go to university in one province having to pay two or three times more than other people in the same dorm? Is this on the social union talks agenda and if so, where is it going? Are we asking these rather fundamental questions as to what we are as a nation and how we back that up with money?

At one level this bill is about money pure and simple: $8.5 billion, write the cheques. End of story. At another level, this is about something far more profound. It is about our values and who we are as Canadians.

I like the value of equalization. It does however disturb me greatly that once we send the money off to the provincial treasuries, it seems to end up in this little fiefdom concept. The next stage presumably is the issuance of a passport.

The opposition said that we would put part of the money to the vision. I argue with great respect to the Leader of the Opposition that he and I have a very different vision of what this country is all about. I am not prepared to simply let the have not provinces slide off the table. I do not think that is what he is talking about. On the other hand I am not prepared to let the have not provinces continue on forever and a day not trying to husband their own resources so that they can be kept outside of this equalization formula. As I said, God forbid that the money should actually return to the treasury of the federal government.

I would urge members to support this bill and to demonstrate that this is a matter of values. I would urge members to articulate to themselves what this actually means in terms of equity among provinces. It is a hallmark of our Canadian civilization that we treat each other with civility and dignity. In my view this is a bill that goes a long way toward that.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I found what we just heard to be a most enlightening discourse. It was absolutely amazing. What this man has been able to put together as a Liberal backbencher absolutely astounds me. He is asking the ministers of finance to be transparent and accountable. He is asking the provinces to be accountable. He is asking for things to happen. He is asking the finance minister to explain to Canadians how the equalization program actually develops the economy of Canada.

This gentleman represents a riding on behalf of the Liberal Party. Here he is talking as a Liberal but as if he had read and understood very clearly and completely the position of the Reform Party presented by the Leader of the Opposition a couple of days ago. I congratulate him for listening so well. I congratulate him for his ability to understand and to expound so clearly and so carefully what it is he heard here last week. It is tremendous.

He did qualify it a little and said “Well I do not really agree with that, I do take a different view of Canada than the Leader of the Opposition does”. But what he said before that was a total contradiction. I think it is absolutely fantastic. I commend the gentleman for saying that we need to examine our values, that we need to consider accountability and that we need to make this formula transparent.

I suggest that he tell this House exactly how he would make this formula simpler and a little more transparent, and how he would introduce accountability into it.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I am touched to the core by the hon. member's acute observations on the parsement of the speech. I asked some fairly simple and fundamental questions which for the Reform Party is somewhat more of a challenge than it can usually meet.

The issue of transparency is something of extreme urgency in my province. The argument that has been going on in our caucus is that all we do is backfill stupid ideas on the part of the premier of the province.

I am absolutely confident the hon. member is aware of many of the dumb ideas that come out of the premier's office with respect to tax cuts as a priority in excess of all other tax cuts. We have tax cuts that impede our ability to deliver health care. We have tax cuts that impede our ability to deliver quality education. I could not drive to the airport this morning without dodging holes on the 401 because the road repair is so pathetic.

We are asking for transparency and accountability. When we deliver the money, which is all we are doing here with our transfer of $35 billion, there should be something coming back to the federal government that says how the money was spent. I do not see what the issue is. That has always been a Liberal value.

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, like my colleague, I also enjoyed the speech.

I particularly enjoyed the part where he was pointing out that the equalization program, the topic for today, is only one aspect of the way this wonderful country runs. I could not help but pick up his point about Queen's University and McGill. I can well understand that there are students in Ontario who might want to go to Queen's. The member mentioned that the cost of tuition was higher at McGill and he was concerned about that. Unless I am very much mistaken that is not the case.

The situation is that the province of Quebec, like the province of British Columbia, has kept its tuition fees down. I do not compliment either of those two governments very often but I compliment them both for doing that. It is a matter of decision of how we encourage young people to go to college or university. Tuition fees are only one device for doing that but I compliment them on that aspect of it.

In the case of Quebec and McGill or Laval, my understanding is that a student comes from out of the province and the university charges them the average of the fees elsewhere in the country. Because the fees in Ontario have been raised to an inordinately high level, the tuition fees in Ontario are higher than the national average. Unless I am mistaken, and I would like the member to comment on this, as a result of that his son's fees at Queen's will be higher than the fees at McGill even with the additional levies the province of Quebec requires.

I believe in mobility of students across the country. We have to ask should a province like Quebec suffer because it has decided to keep the cost of education low for its own students. I believe that is a decision for the province of Quebec. I suggest to the member that even though McGill is much superior to Queen's, the fees there are somewhat lower than the fees at Queen's.

[The Deputy Speaker]

The hon. parliamentary secretary is treading on dangerous ground here.