House of Commons Hansard #172 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was children.


FinanceGovernment Orders

7:35 p.m.

Progressive Conservative

Jim Jones Progressive Conservative Markham, ON

Mr. Speaker, for every one person who comes back we have seven highly skilled people leaving. They are leaving because of the high taxes in this country. The proof is in the history of Ontario, that tax cuts do create jobs. Is it not ironic that it is a province with a little over a third of the population? Since September 1995, 487,000 new private sector jobs have been created in the province of Ontario. In the five year period of 1990 to 1995 we lost 500,000 jobs in the province of Ontario because of the policies of Bob Rae. For 1998 as a whole, Ontario job growth averaged a record 200,000 net new jobs, almost double the 101,000 annual pace for 1997.

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7:35 p.m.


Sophia Leung Liberal Vancouver Kingsway, BC

Mr. Speaker, I will be splitting my time. I am pleased to speak today in the prebudget debate. As a member of the finance committee and an MP from western Canada, I have heard from many individuals and groups. It has become clear that Canadians want tax cuts and more health care funding. There are three main areas I would like to talk about, tax relief, health care and more funding for research and development.

A reduction in the tax rate will benefit Canadians. Our committee considered the level of reduction and how reduction should be distributed. We believe government priorities should be as follows. First, target tax relief to those most in need, including students, charitable organizations, children and Canadians with disabilities. Second, general tax relief starting with low and modest income Canadians. Third, increase general tax relief over time.

Based on recommendations from the finance committee last year the basic personal amount and the spousal amounts were increased for low income taxpayers. As well, the 3% general surtax was eliminated for many individuals. In combination those new measures reduced significantly the tax burden of the low and middle income taxpayer.

Now we can better afford additional tax reductions. Now that the tax measures aimed at the low and middle income Canadians have been introduced, the committee believes the government must begin to offer broad based tax relief.

It is only because the government acted responsibly in recent years and because Canadians from coast to coast have made substantial sacrifices that we should be in a position to implement tax reduction measures which will benefit all Canadians.

Our committee recommends that the next budget introduce personal income tax reductions for all Canadians. Further, we recommend that the government commit itself to future tax reductions by presenting a three year tax reduction plan.

We suggest that a temporary 3% surtax be completely eliminated in the next budget. The 5% surtax on high income earners should be eliminated gradually.

We believe the increase in the basic personal and spousal amounts in last year's budget should be extended to all Canadian taxpayers, not just those with low incomes.

The second area I would like to talk about is health care spending. We all agree more government resources should be devoted to health care. It should be the number one priority for government. Many individuals and groups expressed concern that the system may no longer be funded adequately. They argued that the federal and provincial governments should work together to ensure this.

The federal government should use some of the budgetary surplus to restore some of the cuts. We recommend a review of transfers to the provinces. Investing part of the surplus in improvements in medicare would demonstrate to Canadians the federal government's commitment to the medicare system and the principles of the Canada Health Act.

When cuts were made to the transfer payments many provinces simply made across the board spending cuts. We need strategies that ensure efficient and effective services are not eliminated. Increases should be justified by efficiency assessments of health care spending.

The committee is aware that as Canadian demographics change and the population ages, it is inevitable that health care costs will rise. We are concerned that the quality of health services could be undermined if funding is not increased. Increased investment could be used to improve service delivery, investment in new technology and to reduce waiting lists.

The third area I would like to address is that we need more funding for research and development. We recommend an increase in funding for new research initiatives. Innovative ideas are essential to maintaining a successful and competitive economy. Research and development can ensure the highest quality of health care for Canadians. We need research projects to demonstrate better ways to provide home and community services and a drug delivery program.

At the same time as the population ages, innovative technology becomes more and more sophisticated and expensive. We must find ways to ensure that Canadians have access to the best medical treatment possible. Medical innovation is a way to do that. On a per capita basis, direct federal funding for health research and development is five times as high in the United States as it is in Canada.

In France spending on medical research has also increased much more rapidly than in Canada. Therefore the committee recommends that more resources be allocated to research and development.

In conclusion, Canadians recognize that the federal government has a role to play in making Canada prosperous. It must also be responsible for both fiscal and social policies. As the report demonstrates, tax reductions and health care spending are priorities for Canadians.

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7:45 p.m.


Carolyn Bennett Liberal St. Paul's, ON

Mr. Speaker, it is a pleasure to speak in three ways this evening, first as the member of parliament for St. Paul's, second as a member of the finance committee and third as someone who has fought hard for the protection of the Canadian health care system and who feels deeply that the confidence that Canadians have in that system is the most serious protection we have against the slippery slope to a two tiered system.

In St. Paul's we had a prebudget consultation of some of the opinion leaders and it was clear that they too felt there were three main things that we should be focusing on. They felt that debt reduction was imperative. It was clearly the priority of those people who were in attendance. The talk of debt reduction focused on how much should be spent on that and many mentioned how debt reduction would have a positive impact in a number of ways.

Almost everyone in attendance at the meeting spoke about social spending. While most discussed their priorities for the 1999 budget in terms of health care, medical research or employment spending, many cautioned that the instability of our economy in a volatile global environment necessitated prudence in any spending measures. They also felt that we should be cautious about raising spending expectations.

With respect to health spending, many of those in attendance expressed concerns about the growing gap between the rich and the poor, which we have heard a lot about. They expressed a desire to see the 1999 budget address the connection between poverty and health and preventive care. National standards were also mentioned as being health priorities. Health spending topped the social spending agenda for the people in attendance.

The other area was in research spending. While discussing social spending many mentioned the need to increase spending on scientific research and that this would be a very concrete investment that would have high returns. In fact some of them were specific in that 1% of public health dollars should be the target perhaps over a three or five year period.

Tax reduction was also a priority for some of the people in St. Paul's and some felt that it should be a major priority. Like debt reduction, many saw that the benefit of tax reduction would translate into improvements in other areas. The number one priority was to decrease personal taxes, especially for those who live in poverty. Some felt quite strongly that paying slightly higher taxes than some other nations, notably the one to the south, was part of living in a just and civil society. They placed tax relief after the spending initiatives.

In the finance committee we found that there were many, many thoughtful presentations. People talked about the brain drain, about the need for health care and research. There was a rather interesting presentation on the progress indicators as they change from the GDP. In fact in St. Paul's we had a town hall meeting on that subject in the past month, looking at some of the work of Marilyn Waring. We are very proud that as Canadians it is the first time StatsCan has been able to actually put the unpaid work of women into our census.

There were many external factors which those of us on the finance committee felt. Obviously there was the change in terms of the OECD warning us about debt reduction, as well as its admonition with respect to the necessary tax cuts.

Members felt that the rising tax burden of Canadians and the lack of disposable income was a problem, as we have seen disposable income, personal after tax income, fall steadily since 1990.

People were concerned about the UN, although we still are number one in human development. We felt the fact that we are 10th in human poverty was something we should look at. Obviously, we considered the conference board's concern regarding our standard of living and, again, the fact that our best and brightest are leaving to go to other countries.

We felt clearly that an increase in the personal tax exemption would be a good thing for almost all Canadians. This would take a certain percentage of Canadians right off the tax rolls. It would be of specific help for the working poor in terms of their disposable income.

There was one night in St. Paul's when we had a town hall meeting on bank mergers where there was one very vocal person who said “Don't give the provinces any more money for health care”. This was unlike the hon. member for Markham, in that they felt that they could not be trusted in terms of what they would do with it.

That has been the major debate in this country regarding what we actually do about the CHST. I would like to remind the hon. member for Markham that in the Progressive Conservative election platform they were actually going to reduce the cash transfer to zero. I do not think that then they would feel that the federal government was giving zero to health care. We have to continue to remember that there is only one taxpayer. We have to figure out what it is that Canadians need in order to feel confident about the quality of health care in their country.

There are four things that are most important when dealing with health care and how important it is to Canadians. We must remind ourselves that unfortunately when the Canada Health Act was written the word quality was nowhere to be seen.

Although the five tenets of the Canada Health Act presumed high quality care, I do not think it could have presumed the sort of bargain basement care that has come about since people have not actually been accountable for how the money is spent.

The trends from hospitals to community care, doctor to multidisciplinary and a kind of evidence-based, best practices kind of care have not been dealt with appropriately in the follow-up to the Canada Health Act.

First, we have to recommit to the Canada Health Act. Second, we must begin to measure what the outcomes actually are in terms of the waiting lists and in terms of a real commitment to the information technology that is required to do that.

Michael Decter, who is head of Canadian Health Information, said in Maclean's in June that Canada had badly underinvested in health information and that we spend only 2% of our total health care budget on health information. He said that we would get much better value for our total health dollar if we increased this vital investment to 4%.

We have to know what we are doing. One of my concerns has been that when the Canadian Medical Association or anybody else continues their chant about underfunding we do not actually know where that money is going. People are continually concerned about unnecessary surgery, antibiotics for virile infections and many other things.

In 1995 there was a paper called “Sustainable Health Care for Canada” done by Angus, Auer, Cloutier and Albert. It was very clear about what we have to be doing. We have to be dealing with the fiscal pressures on government, the lack of knowledge about the links between health care and help, the ethical dilemmas involved in rationing health care services and contradictory incentives built into the rules and regulations governing health care. They felt that those tensions were not new, but that we could not keep throwing money at the problem.

They felt that if we actually moved to best practices there would be $7 billion worth of savings every year. In those days 15% of the public health care costs could be saved.

We should actually move to a more accountable system. Money will not be the problem. We need to have some sort of accountability, as we said, in terms of the Ontario Hospital Association saying this was really about mismanagement and not necessarily just about money.

We have informal standards in this country. When the B.C. cancer outcome rates are much better than the rest of the country we sort of see that as an informal standard. When Quebec's home care system is better than the rest of the country, viewed by experts, we see that as an informal standard that all Canadians expect.

We now have to find a way to have all three levels of government report to Canadians on a regular basis. It is not big brother checking up on the provinces. It must be, as the Minister of Health has said, a way for all levels of government to be accountable to Canadians about how their health care dollars are being spent, their tax dollars.

The fourth area has to be in research. As some of the people in St. Paul's have said, the idea of moving to a target of 1% of public health dollars for health care is a target that we should be shooting for.

The proposal for the Canadian institutes of health research is a good one and I am thrilled that we are starting to see things like population health, clinical and evaluative sciences, and primary prevention, as well as our amazing track record in the medical model of research.

I am hugely optimistic as we move into this next budget. It is a thrilling problem to have a surplus. I think that all Canadians thank the government for what it has done in a prudent fashion and I look forward to the budget.

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7:55 p.m.


Ken Epp Reform Elk Island, AB

Mr. Speaker, it was a delight to serve with this member on the finance committee. Dare I say it, we spent some numbers of hours together listening to witnesses, albeit on opposite sides of the table.

I was very interested in the member's comments. We heard the same things from the witnesses, that health care is indeed a very big concern among those people at least who came to our committee. Of course we are also hearing it in our ridings. I often get testimonials from people whose loved ones had to go to the hospital. They say “Hey, we do not know what the hullabaloo is all about because we had really good care”. It is good to hear those stories on the other side.

I have a very fundamental philosophical question that I would like to ask the member who just spoke since she is a medical doctor and very interested in health care. She mentioned a deterioration of health care into a two tier system. I wonder how she would answer this question.

There are right now a fair number of Canadians who, because of their accumulation of wealth, are able to go to that part of the world where the best health care is available. I had a person in my riding not very long ago who fiddled around with Canada's health care system and finally went to the Mayo Clinic where he received a proper diagnosis of what his problems were. He had to pay for it of course, and fortunately he had the financial wherewithal to do it.

What should we really be doing so that we prevent this move to a two tier system? Should we legislate at the border? A person may not cross if their purpose of going into the U.S. is to look for health care in order to equalize it for everyone here? I think she would reject that. I certainly would.

I think if a person has the money and chooses so to spend it, that should be their choice, provided of course that they have earned the money by legal means. But we need to do something in this country so that people would not even want to go elsewhere. Under the present system that does not seem to be happening. It is getting worse and worse.

The federal government used to fund 50% of health care and used to have a really good insertion of funds for medical research, which is very good for medical services. That has deteriorated.

One of the things we heard over and over was about the exodus of our brightest people into the United States because of the research facilities that are available.

I would like a comment on the two tier system because I am very interested in it.

FinanceGovernment Orders

February 2nd, 1999 / 8 p.m.


Carolyn Bennett Liberal St. Paul's, ON

Mr. Speaker, people have always gone to the Mayo Clinic when there has been a conundrum up here and I think we will never stop that. It is important in terms of the choice of Canadians.

The hon. member must remind himself that sometimes we see specialized care from watching ER or other American television. Specialist driven care is not the best health care, as the member mentioned. We actually know in terms of research that we have good care in Canada where 50% of medical practitioners are family doctors and are good case managers. People do not end up with unnecessary tests. People end up being counselled in terms of prevention and stress.

We actually have a great system. We need to begin to look at accountability. We need to take time with Canadians to explain the options. We need affluent Canadians to stick up for our system. If we lose the confidence of the affluent people to speak up for our publicly funded system, we actually lose our best allies.

I would counsel anyone to have a look at the outcomes of some of the specialist driven things that have come from Harley Street. Going from specialist to specialist to specialist is not good care. We have a great system. Our family doctors are platinum trained. They are being recruited to the United States which ends up with a cost effective care that is actually managed care, not the kind of managed costs that is a concern in the HMO and managed care system in the United States.

I am hugely optimistic that we know how to do it here and that it is actually better care.

FinanceGovernment Orders

8 p.m.


Ken Epp Reform Elk Island, AB

Mr. Speaker, I was going to ask another question but I guess the time has elapsed so I will move right into the most important speech I have ever given. I had better not say that because maybe it would reduce the value of previous speeches.

I have many things to talk about. I travelled with the committee. We heard different witnesses. I took the occasion when we were in different towns to walk up and down the streets and talk to people instead of shopping.

I remember I talked to one man on the street in Saskatoon about what he thought was important in the budget. He happened to be a retired person. He said the thing that was killing him was taxes. He had put money away in RRSPs and was basically living in poverty because when he took some money from his RRSPs his expenses were very low and he had no deductions. He ended up having to pay $2,000 a year in taxes and was hardly able to pay his bills. For him tax reduction was very important.

I heard mechanics who said their priority was to stop forcing them to use after tax dollars to buy their mechanic's tools. That seemed very reasonable to me. Every lawyer and every doctor in the country who sets up office, shop, lab or whatever uses the tools of their trade as an expense in setting up business. Yet the poor mechanic has to pay for his tools and equipment with after tax dollars. That was a priority.

I could go on and on, but I have chosen today to speak about debt. I talked a bit about it with the NDP member from British Columbia a little earlier. I heard two distinct messages in the committee from different people which underlined to me that we adopt the thinking of the people to whom we speak.

We heard from certain people, mostly labour groups and so on, who suggested that we should not be paying off the debt. I find this very curious. It is as a result of what I will very carefully call fuzzy thinking. I think it is the fuzzy thinking of the NDP that somehow if the debt is paid off all we are doing is giving money to rich people because they are the ones who own the debt. That is how some of those people think. I strongly disagree with that.

I am surprised the NDP would not be pushing for debt reduction to the maximum as has happened with some fiscally responsible governments like the one in Saskatchewan. Although I hate to endorse the NDP in Saskatchewan, it has certainly been more fiscally responsible than some of the previous governments in that province. Let us take the label away and look at what happens to debt management and with the money.

I am in such a good mood today that I find it difficult to contain myself. I just gave a reluctant compliment to the NDP and now I will give a reluctant compliment to the Liberal government. Because the government could have increased the debt much more than it did, I will compliment it on reducing its spending by $2 billion, increasing tax revenue by $40 billion and resisting the temptation to spend the difference.

I congratulate the government because I know the Liberal way is to think of how to spend. When the next election rolls around I am sure we will see that particular characteristic of the Liberal creature come to the fore again. It is always nice at election time to roll out the goodies and buy the votes with taxpayers dollars.

This afternoon I hauled out a file on my computer. In 1996 I looked at the deficit, the amount by which we were overspending and adding to the debt. When I first came here the debt was $420 billion. We had that infamous first year where the deficit was $45 billion. After the Liberals took office they found that the bookkeeping of the previous Conservative government had given them the world record in having the largest deficit ever of $45 billion. In one year the debt shot up to $465 billion, the last legacy of what we had from the Conservative government.

Then under the federal government the Liberals reduced the amount of the deficit and bragged a lot about it. It simply meant that they were borrowing at a lower rate, that they were not borrowing quite as much. In 1996 I projected what would happen if the Liberals kept adding 3% to the debt every year. If they would have followed that pattern, according to my numbers the debt would now be about $641 billion. We know that it is around $580 billion. The fact that the Liberals resisted spending all this additional revenue deserves a compliment.

I give them that commendation, but that is the very last one. They did that mostly on the backs of the provinces and on the backs of the taxpayers. As I have already indicated, tax revenue has gone up fantastically. They are looking at a projected increase in tax revenue of around $40 billion a year over what it was in 1993 when they first took office. There is a tremendous sucking sound when $40 billion is taken out of the Canadian economy.

The federal government has reduced its own departmental spending by very little. It has done this on the backs of the taxpayers by taking increased tax revenue and on the backs of transfers to provinces. We all know that has been a huge item of debate and is really called downloading. It really has not done a very good job.

What is the impact of debt? Had we not stopped the 3% increase in debt per year, by the year 2010, which is no longer very far into the future, the debt would have grown to over a trillion dollars. That is something we cannot sustain if we want to provide services for our people, the whole purpose of government. People pay taxes in order to get services from government.

We are presently spending a tremendous amount on interest. It is our largest single expenditure item. Interest is due only to debt. There are two things that affect interest payments. One is the principal amount of the debt. The other is the interest rate.

The Liberals won the lottery. They happened to be in power during the years when world-wide interest rates were relatively low. I sometimes smile and snicker to myself when the Prime Minister particularly and the finance minister like to brag about low interest rates. Very frankly it has very little to do with them. They just happened to be at the right place at the right time.

If the interest rates increase, the interest payments on our debt increase dramatically. The fact that we now have a $580 billion debt is something that I do not believe we should take lightly. We should look at paying it off.

We speak of a surplus. It is projected to be $11 billion. Lately they have been cranking it down to get it to around $7 billion. If we wanted to pay off that debt like a mortgage, in 30 years, the year I will turn 90, we would be out of debt if the following happened, if we posted a surplus of $50 billion per year for 30 years against the debt retirement fund. That happens to be around $3,500 per taxpayer per year.

When I ask taxpayers if they are content with the federal government borrowing so much money on their behalf that each month they have to pay $300 in interest, they are not very happy. Yet that is the fact. I would love for the government to reduce its indebtedness in order to reduce tax payments.

The Reform has a very distinct plan on how to achieve this. We propose that the surpluses be applied toward the debt. As that happens, we can pay the debt at an increasing rate because as we reduce the principal the interest payments go down. It also insulates us against the danger of escalating interest rates.

I am very sorry that my time has elapsed. It is hard to believe. I barely got my introduction finished. Hopefully there will be some discussion.

FinanceGovernment Orders

8:10 p.m.


Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, I was interested in listening to the member. He previously asked questions of the Liberal member opposite. He outlined a philosophical difference which gives rise to the policy choices that are made. The choices that governments make eventually either hurt the population or free the population for prosperity.

Certainly we can see the disparity within Canada is not necessarily related to geography, resources and so on. A lot of the economic disparity between the regions of Canada has historically been related to the kind of provincial governments and the economic choices and incentives or disincentives that have existed.

Would the member further expand on his proposals, outlining from his philosophical view how Canadians would be more prosperous?

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8:10 p.m.


Ken Epp Reform Elk Island, AB

Mr. Speaker, I subscribe primarily to this philosophical premise, and I admit it is a premise that is debated by economists who are much wiser than I am. We ship trainloads of money to Ottawa so that the politicians and the bureaucrats can turn around and distribute it. The premise I believe in because it makes sense to me is that instead of funnelling almost 50% of our gross domestic product, in other words the collective earnings of all of us, into government we would be better off leaving it in the hands of the people, of the families, of the businesses.

That would have a much greater impact on our economy. That money spread throughout the economy would produce jobs, demand for goods and services, and give all individuals more money than they have now.

I remember many years ago looking at my tax bill. At that time my tax bill was only about $600 or $700 a month. I was thinking of what I could do with $700 a month. In the Reform plan we want to arrange government priorities and reduce wasteful spending so we can give that tax cut to businesses and individuals, so we can leave that money out there. That is the root of prosperity.

We will have greater prosperity if we stop robbing the people of the money they have earned. Let them spend it, let them build industries and businesses, let them hire people. This is even for people who are not in business, for ordinary families. If I offered a mom or a dad $300 a month in reduced taxes, that is like earning $600. Now you would have to earn an additional $600 to have $300 in your pocket. They say no when I ask them if they would decline that offer and they ask if I am paying off the debt. They are concerned about the debt and the interest payments we are making.

FinanceGovernment Orders

8:15 p.m.


Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, I will continue on this theme. Canadians rightly look to government to provide peace and order and to do the collective things in society that we as individuals cannot do for ourselves. It is also accepted that government itself must be a strong and fair referee in the economic game. The difference between richer and poorer nations arises from the kinds of government they have. Politics matters. Governments can bring health or harm, prosperity or despair. It is all in the policy choices they make.

That is why I speak out on behalf of my community against many of the unwise choices that have been made by this government since 1993. Most important, I speak for the positive things that Canada could achieve if we had a more accountable, competent government. I speak of the need for tax relief in this context, especially when the Prime Minister this week agreed with Brian Mulroney about the wisdom of high taxes.

Canada's story is one of not fulfilling our potential when we have every basic advantage. Because we have had abundant natural resources and access to capital to develop infrastructure, we have been able to participate in the various technological revolutions. We have had some measure of success since Confederation despite our poor governments and their many misguided policies.

Successive Liberal and Conservative governments through ignorance and/or perverseness and by being wrongly cheered on by the NDP have left Canada in a plight far below what we are capable of in terms of caring for our people and bringing prosperity and freedom to all rather than just maybe most.

Governments set the climate for the economy and the right mix of policies over time can be very beneficial. But governments can quickly cut down years of steady progress by favouring their friends, violating the basic laws of commerce and unreasonably promoting a party reputation over needed national policy. So it can be said that the Liberals have shown themselves time and again not to be wise managers of the public trust. They continue to mistakenly act as if they can tax and spend Canada into prosperity.

A better mix is needed between those who create and those who reallocate, between those who earn and those who burn the people's money. It could be said that at some point taxation even has a moral component of how right it is for a government to tax and control the financial affairs of Canadians. Although economic considerations can be complex, in our present situation it is all too obvious that Canada now needs significant tax relief.

The current arrangement needlessly hurts Canadians. It is obvious to any worker who knows what the government has done by seeing the deductions on his paycheque or the job that has been lost.

It is time that the average Canadian received a raise in pay this year, not by confiscating as much revenue from the economy and from paycheques. The Reform plan would give all workers in Canada a raise in take home pay this year.

The Liberals have hurt Canadians through unprecedented high tax levels instead of a better mix of spending control on government and a resolve to end economic discrimination. They also unreasonably cut health care instead of other things. We were then able to slowly stumble toward a fiscal surplus. Now we watch as the personal sacrifices that Canadian workers have made, who have spawned the surplus, evaporate under old style Liberal-nomics.

This year's Liberal surprise appears to be the changing in questionable size of the surplus. According to the Department of Finance's most recent pronouncement something unforeseen is occurring that has our $10 billion to $12 billion projected surplus shrinking to $7 billion or less. What they are really trying to tell Canadians in the lead-up to the budget is that most of the money that was promised for tax reliefs in the upcoming budget has vanished from the government books. Over the past two years at the time in the business cycle when government spending historically should be restrained, this government still succumbed to blowing by its spending budget a cost overrun which also the usual habit of the NDP in my province.

The facts are clear. Any further delays in large scale tax relief in the upcoming budget will only be because this government refuses to stop its wasteful spending. The government keeps telling us how great things are while the standard of living continues to fall. An unwise high tax policy is strangling the economy.

The deficit has been reduced by hiking taxes and slashing health care while the government's spending levels remain the same or in some cases rise. An eight cent drop in the value in our dollar is somehow deemed good for business. The auditor general refuses to sign off on the books of Canada for the third year in a row because he believes the government's accounting numbers do not meet required accounting practice. A $16.5 billion cumulative slashing of health and social transfers is called “saving and protecting health care”. The head of government says “it is not the right thing to do in a society like Canada to call for across the board tax cuts”. That was a recent published quote from the Prime Minister.

Under the Liberals Canadians pay personal income taxes 56% higher than the seven leading countries and economies. In 1996 under the Liberals the average Canadian family paid a total tax bill of $21,242 more than it paid for food, shelter and clothing combined. It pays even more now. Since the Liberals came to power in 1993 they have taxed back 155% of average wage increases. Under the Liberal government's watch this collective wealth of our nation has been devalued as our dollar sank to historic lows against the American currency. This result is the international judgment about the government's handling of our economy. Our $580 billion net public debt costs us some $40 billion a year to service and represents enough money to finance current health care payments for about 46 years. Yet this Liberal government still refuses to implement a serious schedule for debt repayment.

I am only allowed two or three minutes to summarize some of the proposals put forth by the official opposition in our 1999 prebudget submission to the Minister of Finance. I am saying that Canadians need tax relief this year. A wise mix of policies is needed that is more just and fair. Canadians need comprehensive tax reform beginning with a $26 billion in total tax relief phased in over three years. We need to continue the simplification of the tax system and reduce the overall burden of taxation on Canadians by eliminating the temporary deficit reduction surtaxes. The 3% and 5% surtaxes were introduced to balance the budget. Now that the budget is balanced they must be phased out.

We should reduce the burden of taxation on low income and elderly Canadians by immediately increasing the tax free threshold basic exemption to $7,900. Forcing low income Canadians to pay taxes and then transferring that money back in programs is really not wise. Leave more money in the hands of low income and elderly Canadians. Begin reducing high marginal tax rates and flattening the personal income tax system. Canadians pay a very high marginal tax rate at relatively low levels of income. We propose to fold the top two marginal rates into a single rate of 24% of income above $29,000.

The reduction makes incentives to earn and invest. We must end bracket creep. Also we must remove the marriage and child care penalties in the tax system.

Currently Canadian families that choose to provide child care in their own home are penalized by a tax system that does not recognize the value of parent provided child care.

We propose to reduce the marriage penalty by increasing the value of the marriage equivalent amount to $7,900. Further we propose the introduction of a refundable child care expense credit to replace the existing child care expense deduction. The credit would be available to all parents, not just those who choose to have their children cared for outside of their own home. It is about ending discrimination.

In the medium term we propose to undertake fundamental tax reform with an objective of moving toward a flatter tax system. However, these changes would require major consultation with Canadians and would be subject to new realities.

Nevertheless we need such long term visions to begin to see what could be done to make economic breakthroughs for the country. We need to introduce a comprehensive debt repayment schedule that would reduce debt by $19 billion over the next three years and by $240 billion over the next 20 years.

The Liberals continue to pursue an ad hoc policy of reducing the debt with whatever happens to be left over at the end of year. This policy does not promote international confidence in the government's commitment to debt reduction.

We propose to introduce legislation that sets a fixed percentage of each year's surplus toward debt reduction with periodic deposits made to a national debt retirement fund.

The government should demonstrate restraint in federal spending by instituting a three year spending freeze in most discretionary spending. It would promote value for dollar audits.

These are some of the measures that would provide predictability for private sector business planning and be a massive stimulus to the economy. There is so much more but I have limited my comments to tax reduction, the economic sense of it and also that it is a moral imperative.

FinanceGovernment Orders

8:25 p.m.


Ken Epp Reform Elk Island, AB

Mr. Speaker, it is interesting that it is the Reformers who are debating with each other but I certainly like to talk about these things.

What a delight it is to see a party that actually has a plan. In a previous intervention we talked a bit about the necessity of having a plan. The federal Liberal government since 1993 has really not had a plan at all. It had rolling targets which basically said they would hit whatever they shot at. Point the gun anywhere and whatever we hit was what we were shooting at. This is no way to run a country.

One of the witnesses to our finance committee hearings made that as a very special point. It was mentioned to us that it would engender a great deal of economic optimism in our country if the federal government would set some realistic goals, state them and achieve them. That is much more encouraging to the economy than saying we will do the best we can and meanwhile build up a slush fund for an impossible election coming up.

I would like to have the member comment on one of the things he mentioned regarding accountability and spending money properly. One of the problems we have had is that the auditor general has not been willing to sign off on the books of the federal government because of some accounting practices that are not in keeping with those of the Chartered Accountants Institute of Canada and other authoritative accounting methods.

I would like to have the member's comments not only on what things are happening there but why that is wrong and why it is discouraging to Canadian people.

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8:25 p.m.


Paul Forseth Reform New Westminster—Coquitlam—Burnaby, BC

Mr. Speaker, typically governments when managing financial affairs would certainly like to minimize the public input so it increases their own discretionary decision power as to the regional grants they want to pursue.

One of the ways of reporting was to cover up their excessive spending in the accounting procedures, backloading so that money spent now really does not appear on the books until later.

When we have had the situation reversed and now have a bit of a surplus, the government to increase its own options has a tendency to backload things so that programs that are not yet spent are already charged against the books for this year. That is a typical government habit when it does not have a philosophical approach basically to have honesty in reporting and accountability to the community about the finances of the country.

One of the other interesting points that the auditor general has criticized the government for is the operational side of government departments. They still do not have modern accounting practices, what is called full cost accounting. Anyone in the private sector certainly tries to develop a business plan according to those modern standards. Governments are still in an old fashioned way reporting and developing their budgets in perhaps an unwise way that from year to year does not really represent the true costs of a particular activity.

Therefore it is very difficult for the average citizen or even an expert in the field to begin to analyse the question of what kind of value we are getting for the dollar spent. Would it have been better that we just not do that activity, contract some of it out, or develop a partnership with the private sector? It has a lot to do with managing vectors as to the efficacy of particular government activity and whether it is wisely spent.

Someone this month said that if regional giveaways and a government trying to pump up a region were possible and if that philosophy worked, and historically we can look at Atlantic Canada, then Atlantic Canada would perhaps be the wealthiest, richest and most prosperous area on the earth because since confederation Atlantic Canada has received many subsidies. But that philosophy does not work.

We must have a position of truth in reporting and proper financial accounting practices. Certainly the Reform plan is prepared to do that.

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8:30 p.m.


Ted McWhinney Liberal Vancouver Quadra, BC

Mr. Speaker, I will be sharing my time with my colleague, the member for Winnipeg North—St. Paul.

The preceding two speakers have conducted a dialogue which was interesting and amusing in some ways. I do not say that in any derogatory sense, but it seemed to be a philosophical discussion. I heard references to a moral imperative. I heard echoes of Max Weber and Tawney, but it reminded me of earlier views of economics and finance that they followed God given laws, a sort of theocratic conception.

I would suggest that the rules of economics are man made rules, or let us say person made rules in the age of political correctness, and they are developed and confirmed experientially. As William James or Dewey would say, truth is something that happens to an idea. It is confirmed operationally. That is the pragmatic definition of truth.

To get us further into this philosophical discussion I would have thought we were dealing with a paradigm shift, to use the trendy words of current commentators. We are moving from one era of economic thinking to another. Somebody said the end of history; I would have said the end of Keynesian economics.

The great charm of our finance minister is that he has presided over the ending at least for the time being, the death blow, of Keynesian economics, the concept that governments would throw away money, deficit spend and somehow the economy would come into healthy being. This may have been true in the 1930s and 1940s when Keynes was at his height but it is an error to take any thinker out of its particular space time dimension.

To his credit, the Minister of Finance has refused to become a prisoner of the past. It is not the end of history. It is the end in our time era of the concept that governments spend. We have leaner and trimmer governments. It is shown in the fact that when this government came to power in 1993 it inherited a $42.8 billion annual deficit budget. We set as an objective to achieve budget integrity, a balanced budget by the year 2000. As we all know, the 1998 budget was balanced. What about 1999?

Our Prime Minister is fond of repeating a conversation he had with the prime minister of Norway at one of these economic meetings. He said to the prime minister of Norway, “We are going to be balancing our budget”, and the prime minister of Norway said, “Good Heavens, I am sorry for you. Your problems will begin. The moment you have a surplus, everybody wants to spend it and you make a lot of enemies who find it difficult to resist”.

I think the key note of our present budgetary policy, what I would call the present conception of economic truth, is that fiscal integrity is the requisite of a sane society. We have gotten down our budget deficits to zero, we have a surplus and we must continue with responsible economics.

The recommendation that my constituents have made and which has been echoed by many of my colleagues is that the surplus in being used responsibly should be earmarked 50% for reducing taxation and amortizing the accumulated national debt, the suggestion is a 50:50 balance, and 50% for creative social programs. Putting money back into taxpayers' hands is a way of getting taxpayers to invest in the future, to invest in new industries.

In British Columbia I think the dramatic impact on the economy has been the creation of the new industries, space technology, informatics, these areas. They are interesting because they reflect the contribution of science and technology and pure research.

I used the metaphor in earlier discussions in caucus in previous years of the economic miracle in Germany and Japan, the countries whose economies were shattered by defeat. Their industries were bombed out but they invested their first moneys in research on the basis that fundamental research does not yield rewards tomorrow but the day after tomorrow it may. Five or ten years down the road is when we become the leaders in the areas in which we have invested in pure research. The correlation between pure research and practical application in industry is there.

I think this is the explanation of the German and Japanese miracles. It is one of the things we have been able to sell to the finance minister: invest in research because that is where the jobs will come in the future and that is how to keep our best talent.

All of us I think are alarmed by the brain drain. We are losing our best and our brightest to the United States, to Germany and to other countries because taxes are too high. We have not spent enough on research facilities. We do not offer the stimulating research environment which for many people is better than take home pay.

Let us look at the problem of repaying student loans of $50,000 or $60,000. For a graduate student in one of the professional disciplines it may take a number of years to repay that in Canada but in the United States that sort of thing is repaid in a year or two with the salaries the graduates are getting.

I mentioned the correlation between fiscal integrity, balancing the budget, reducing taxation and spending money on research. I will utter another connection here, another link which takes us back to the earlier concept of economics as political economy. We cannot separate economics from government. We have tended to forget it. We do not need a leaner, more modern system of government.

The pre-emptive concern with Quebec, which I do not criticize as a concern because it is all with us, but at the expense of other issues has prevented us from examining the rationalization of parliamentary and governmental processes. Too much antiquity is present in this chamber. One can worship tradition as an end in itself but tradition is simply a way of recording customs useful and productive in the particular time era. The dynamic of a tradition is adjusting it, upgrading it to new, changed social conditions.

Some of the more interesting developments that are occurring now are in a way a repeat of Prime Minister Pearson's co-operative federalism. The new term social union comes from another more dynamic federal system which is very modern.

It sometimes helps to have lost a war. You have to start from scratch. You build a new governmental system. The German federal system is much more modern than ours. The social union is basically an attempt to readjust federal, provincial and municipal relations, new approaches to tax power and its allocation. But here you get the issues. If you followed the European Union principle of principe de subsidiarité you would allocate to governments the things they do best.

I think in the new approach to the new post-Keynesian budget we will be concerned with modernizing the system of government, getting the provinces to co-operate. If they do, not though, the commitment is there. The federal government must spend money on research, must invest in our young people. It goes hand in hand with this business of lowering taxes, getting money back into the hands of productive and useful people so they will invest in creating the jobs and the infrastructure necessary to carry our economy safely into the new century.

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8:40 p.m.


Rey D. Pagtakhan Liberal Winnipeg North—St. Paul, MB

Mr. Speaker, this is the time of year when what is in the federal budget becomes the focus of attention of most Canadians. They would like to know whether the national government will have addressed their priorities in the budget. They would like to know whether it will make a difference in their lives. It is in this context that tonight I bring to this House the interests and anticipation of my constituents who join other Canadians in their expectation that the 1999 budget, likely to be announced within weeks or days, will reflect their vision of this country as we head into the new millennium.

In the decade that it has been my privileged duty to serve in this House on behalf of the people of the former riding of Winnipeg North and now the riding of Winnipeg North—St. Paul and of other fellow Canadians across the country, I boldly say the forthcoming budget will be the best of them all. We can set new goals for the kind of society we want. We know we now have an even greater capacity to achieve them. Indeed, we can look forward with confidence and greater optimism as we begin the last year of this decade.

That was not the case at the beginning of this decade. It was certainly not the case in October 1993 when Canadians decided they needed a new government to successfully confront the economic and social crises our nation faced.

There was the massive federal deficit of $42 billion, escalating national debt, a double digit unemployment rate of 11.4% and economic stagnation in the country. Canada's social programs, including our most valued medicare and Canada pension plan, were on shaky ground.

Our future at that time was not something many would want to imagine. Understandably Canadians were worried, but they were equally determined to change things for the better. They elected a new government, a Liberal government. They supported the tough decisions that had to be made to bring back our future.

It was not an easy task, nor a task without pain. But working together with their new government, the Canadian people were resolved to succeed, and succeed they did. Hence they renewed their trust in this government in 1997. Today the national deficit is history. The public debt has been reduced for the first time since 1970 and low interest rates have been sustained for the longest period in three decades.

Canada's economy has been revived, creating 1.5 million new jobs since 1993. Canada is expected to lead the G-7 nations in economic growth throughout this year. The unemployment rate of 8% is at its lowest point this decade.

By 1997 the government was capable to commit $12.5 billion as cashflow for the Canada health and social transfer, echoing the key recommendation of the national forum on health.

Not only was the government able to deliver on this commitment, it was able to increase last year's budget for the Medical Research Council to $271.5 million and to announce new health care initiatives. I shall mention only two, $150 million for the health transition fund and $50 million for the Canada health information system.

The government has dedicated $1.7 billion for the national child tax benefit program, $2.5 billion for the Canada millennium scholarship fund and $465 million over the next three years for the youth employment strategy. These are some of the initiatives that speak of the government's record to date, achieved in just over five years.

For my home province of Manitoba, this record of achievement on the part of the federal government translates to 5.9% unemployment rate and $5.3 million invested in the province through the Canada jobs fund between 1996 and 1998, and $2 million more for this year and next.

Eighty-two million dollars have been transferred to Manitoba via the Canada-Manitoba infrastructure works program, $2 million through technology partnership Canada, $17 million through the western economic development program and $24 million more via the Winnipeg development agreement.

Team Canada brought over $3 million worth of contracts to Manitoba businesses, and the province received $144.5 million of federal transfers through the Canada-Manitoba labour market agreement.

For social programs, $260 million will have been transferred to Manitoba via the Canada health and social transfer by the end of the fifth year, starting 1997, not to mention the increasing amount received by the provincial government through tax points and additional amounts received by way of equalization payments.

Through the Medical Research Council's regional partnership program, the University of Manitoba alone as an example received over $4.6 million in addition to 19 Manitoba projects whose funding will be finalized in the coming months.

Forty million dollars have been transferred directly to Manitoba children and low income families through the national child benefit program.

These are some of the joint federal-provincial partnership programs and new federal initiatives that have directly benefited Manitoba.

The Government of Canada has also allocated $185 million for financial assistance relief for victims of the Red River flood and another $15 million for flood prevention in the future.

What I have outlined as the federal government's record reflects our commitment as Canadians for one another's well-being, a true measure of Canadian citizenship.

We come to the help of our neighbours during emergencies, but we do not wait for calamities to show that we really do care for our fellow citizens.

This is precisely what the federal government has championed when it champions the need for a working federation, for the renewal and strengthening of our social union.

It is only when we speak of values such as are reflected in the record of this government that we can truly speak of Canada as a nation.

Canadians can anticipate that budget 1999 will be a budget that will focus on the health of our health care system, the crown jewel of our social programs. The Prime Minister has already made this assurance on record on more than one occasion. Budget 1999 will be more than about medicare only, critical and most valued as it is. The budget is about the entirety of Canada and the many government programs that touch the lives of all Canadians.

Therefore as a prebudget submission I would like to indicate to the House and to the government that my constituents would like the government to continue on its commitment to sustain a balanced budget, and reduce further the national debt and taxes.

This is premised on the belief that sustaining the fiscal house in order ensures the sustainability of our many valued social programs. Indeed this member is confident that the government is resolved to continue delivering the economic conditions necessary to secure and enhance our quality of life.

We have made great progress since 1993 when the government first received its mandate. We have continued on that great progress since 1997 when this mandate was renewed. We need to stay focused on what we can achieve together that matters to all of us and what we have achieved.

Indeed I am privileged to be part of the Liberal team whose government is resolved not to bring back the past now that we have again a secure hold on the future. This we must pledge for the future of our people, for the future of our country.

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8:50 p.m.


Odina Desrochers Bloc Lotbinière, QC

Mr. Speaker, I am very pleased to speak today in the debate concerning the prebudget consultation report, perhaps I should add as part of the new economic statement in December by the Minister of Finance to members of the Liberal Party of Canada on the Standing Committee on Finance.

The extensive cross-country consultations from Vancouver to Halifax, in which the committee heard from economic corporations, associations, unions and individuals who came to denounce government decisions, was no more than a tidy marketing operation conducted by the Minister of Finance's hacks to mask the truth about what was really going on in Quebec and in the rest of Canada. With the help of his Liberal accomplices, he preferred to write his own conclusions in an economic plan that will be part of his next budget, a sort of productivity covenant.

Like my colleague, the member for Saint-Hyacinthe—Bagot, I followed the consultations throughout the country and I never heard anything about this new “martinist” definition, which is very simplistic, another centralizing move by federal Liberals whose sole goal is to meddle even more in the affairs of Quebec and of other provinces.

In recent months, the Liberal government has stepped up its political action, its partisan politics, acting out of arrogance and lack of compassion.

What are we to think of a government which is prepared to loosen its purse strings for the hockey millionaires, a government which is still refusing to compensate all Hepatitis C victims, a government which no longer respects its own constitution, but interferes increasingly in areas of provincial jurisdiction, a government which obstinately insists on making workers suffer, by maintaining an employment insurance program which now excludes 60% of those in our society who are unemployed?

What are we to think of such a government? It is a government that is totally disconnected from the economic realities of Canada and of Quebec, one that is headed by a Prime Minister more concerned with personal popularity than with governing the country, one who backs up his ministers of finance and human resources development, who thumb their noses at the workers by cutting employment insurance contributions by a mere 15 cents per $100. There have been no major changes to the employment insurance program, nor do I expect to see the Minister of Finance offering any gifts in that area in his next budget.

In my area, in the Chaudière-Appalaches region, in Lotbinière, we still have to deal with two regional rates which do not reflect the socio-economic profile of the region. Lotbinière, the region I represent, is still subject to two regional rates which create wide differences when newly unemployed workers apply to the Department of Human Resources Development.

Allow me to demonstrate once again how flawed this system is. There are two unemployed people living in two municipalities only a few kilometres apart. Their applications for unemployment are not handled in the same way. One is entitled to 22 weeks, while the other is entitled to only 14.

Despite repeated pressure from the Mouvement des sans-emploi de Lotbinière, and other groups concerned with the rights of the unemployed, the Minister of Human Resources Development continues to tolerate this geographical and technocratic fiddling by a government which uses every means of manipulating public opinion.

Here is another example. Despite the repeated promises of the chair of the Standing Committee on Finance, who was to do everything to stop leaks to the media, we saw what happened last month. A few hours before the report on pre-budget consultations was to be tabled, large extracts of this working document appeared on Radio-Canada's Téléjournal at 10 p.m. However, at 9 p.m. on RDI, Radio-Canada broadcast a report explaining how the Liberal government went about accumulating the employment insurance surpluses.

The message from the press conference, chaired by the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, the Bloc critic for human resources development, caused the Liberals considerable embarrassment. But, surprise, at 10 p.m., the Bloc Quebecois press conference had been cut from the Téléjournal and replaced with an outline of the Minister of Finance's policy.

The federal Liberals became, in the month of December, experts in report leaks and figure and media tampering. The report on the unfortunate state of our hockey millionaires was leaked. The report on the results of the selection for the city to host the 2010 winter Olympics in Canada is another example, and there are many others. The Liberals' conduct in this House flew in the face of democratic principles and made a mockery of the rules on how committees should operate.

The Liberal government, which only holds power because of the majority in Ontario, is definitely becoming increasingly arrogant. We can never say it often enough. This government is arrogant, heartless and a threat to the social security of the most disadvantaged, those who got stuck with the bill for the government's drastic cuts in transfer payments for health, education and social programs.

Once again, the Liberals have taken the prebudget consultations and turned them into a partisan activity to promote their own election platform, instead of an exercise that honestly reflects the comments made at these public hearings.

But we knew this was what the Liberals would do. So, this year, the Bloc Quebecois did something new and travelled throughout Quebec to ask Quebeckers how they thought the Minister of Finance's budget surplus should be used. The leader of the Bloc Quebecois and his colleague, the member for Saint-Hyacinthe—Bagot, conducted a democratic exercise and tabled a report consisting of briefs from 26 members of our party. In this report, Quebeckers' demands focussed on the following: reimburse Quebec and the other provinces for health, education and social programs; substantially reduce individual income taxes, but target these reductions; improve the EI regime. The consensus of Quebeckers mirrored that of the majority of opinions expressed by stakeholders in other Canadian provinces.

What did the Minister of Finance do with these recommendations? He rejected them out of hand. The Liberals, who show no shame in diverting funds from the employment insurance fund, are trying to convince the public that doing so is a democratic and transparent act.

Since last December 2, every dollar contributed to the employment insurance fund goes to pad the Minister of Finance's surplus, and not to provide the unemployed with reasonable benefits. Today, February 2, 1999, the surplus in the employment insurance fund, accumulating at the rate of $59 million a day, or $2.5 million an hour, $48,850 a minute, has already reached the level of $3,658 million plus several hundred thousands. That is the truth.

In conclusion, the surplus in the federal budget will in actual fact be some $12 to $15 billion, regardless of what the Minister of Finance says.

Credible economists, for instance those at Mouvement Desjardins, agree with the Bloc Quebecois forecasts.

I speak for the people of Lotbinière and of Quebec in calling for the Liberal government to at last respond to the many social and economic expectations of the people of Quebec. I fear, however, that the Minister of Finance, with his usual arrogance, will once again hit the sick, youth, women, the unemployed, and the middle class with his next budget.

Such is the tragedy of Canadian federalism at the present time.

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9 p.m.


Stéphane Bergeron Bloc Verchères, QC

Mr. Speaker, I rise not to make a comment but to raise a point of order. Had I wanted to comment, I would have expressed my total support for the remarks by my colleague.

I would simply like to point out to you, as you have no doubt noticed, that the members of the Bloc Quebecois will divide their presentations. My colleague from Lotbinière will be followed by our colleague from Sherbrooke after the period for questions and comments, no doubt to the great delight of our colleagues.

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9 p.m.


Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, I am pleased to speak to the House today on the report by the Liberal majority on the Standing Committee on Finance. This report was reviewed and corrected by the Minister of Finance himself. It proposes a number of avenues for the upcoming budget.

The use of federal government surpluses has been a current topic for a number of months and will remain so for a number more, but for the first time in 30 years, the federal government has begun to have budget surpluses. This year's surplus will be considerable. It is still reasonable to say it will be somewhere around $12 billion.

This considerable surplus belongs to taxpayers, and this is why the Bloc Quebecois thought it vital to consult as many people as possible and let them give their opinions on the subject, especially since the government's consultation in Quebec was definitely limited.

Thus the process of consultation began with an information session by the leader of the Bloc Quebecois and the finance critic, the member for Saint-Hyacinthe—Bagot. Through August and September, the Bloc Quebecois criss-crossed Quebec.

These quality consultations revealed three points of clear and specific consensus: first, the urgency for reinvestment in health care, education and social assistance; second, a reduction in the tax burden of individuals, specifically those in the low and middle income bracket; and, third, an improved employment insurance plan.

During the Bloc Quebecois' prebudget consultation, I was in the middle of an election campaign in my riding of Sherbrooke. I therefore conducted the best kind of consultation of all, which is the door-to-door kind, at the same time. I met with ordinary people, and I also saw real tragedies, people with health problems and people living in poverty because taxes were depriving them of the basic necessities.

They were having problems with EI because of lower benefits and because of reduced accessibility as well. They were also dealing with the impact of federal government cuts in welfare. Employment insurance has become surplus insurance for the government and poverty insurance for those who pay premiums.

The federal government has room to manoeuvre, but the situation continues to deteriorate. All the finance ministers before the one we now have faced difficult situations, and several of them, despite their best intentions, had nowhere left to turn and had to make difficult choices that had a negative impact on the public.

Today, in view of the Minister of Finance's lack of compassion, I can only conclude that he is heartless and insensitive to people's needs.

As I said earlier, I sensed those needs, I saw them and was aware of them during the election campaign. To show that people think along the same lines as the Bloc Quebecois, on September 14, I was elected as a Bloc member because of what was being said about how the surpluses ought to be used.

The federal government cut $6.3 billion from transfer payments. It now says we must look to the future. But cuts to education are cuts to the future. And cuts to health are cuts to the future. Cuts to social assistance are also cuts to the future, as are cuts to employment insurance.

In my riding of Sherbrooke, there are three colleges and universities. Need I say what impact cuts to education have had? There is also a university health centre that is facing a $15 million deficit this year. There are also the 55% of unemployed who are ineligible for employment insurance benefits, which means a shortfall of $23 million for families each year.

The Minister of Finance feels no remorse when he impoverishes people and regions. He wants to use all the money he grabs from the most disadvantaged to intrude into areas under provincial jurisdiction. We know about the millenium scholarships; we know what is being planned in the area of health.

Let us look at health. The Prime Minister said that the one who collects taxes should be able to tell taxpayers what is being done with their money. Why is he saying that when this is an area under exclusive provincial jurisdiction? Do we know where the money spent by the federal government for the CIO, for federal grants or for renovations on the Hill—estimated at $423 million but likely to reach $1.4 billion—is going? Do we know what is happening with the hundreds of millions spent on accounting and computer systems? Is the government saying where this money is really going?

I sit on the Standing Committee on Public Accounts. Since September, I have read horror stories in two reports by the auditor general. If the federal government acted responsibly and cleaned up its management, there could be several billions in savings.

This is why the Bloc Quebecois is asking the federal government to give back to Quebec and the provinces what it has taken from them in transfer payments, to substantially lower taxes for real low income people—not for millionaires and ministers—and to improve employment insurance by increasing benefits and accessibility, because the employment insurance surpluses belong to those who have paid into the system.

I ask the Minister of Finance to show more compassion for the most disadvantaged and to reinvest in our social programs.

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9:05 p.m.


Ken Epp Reform Elk Island, AB

Madam Speaker, I listened with some interest to the member for Sherbrooke. We know that he is more recently elected than some of us, so he is moving into the scene of looking at what the Liberals are doing with the finances.

I have a question that is really quite different. He made mention of the transfer payments and claims there were transfer payments to which they were entitled that they did not get.

Does the member have any comprehension of how large those transfer payments were and what would happen if they got their way and left the country? I am sure he has heard this question many times, but I think it is one of the larger reasons why they should consider abandoning their plan of taking a big chain saw and floating themselves out into the Atlantic Ocean.

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9:10 p.m.


Serge Cardin Bloc Sherbrooke, QC

Madam Speaker, I did not grasp the meaning of the whole question, but I did get the gist of it.

There are transfer payments from the federal government to Quebec and to the other provinces, of course. The amounts are quite substantial and have an impact across Canada.

What I was saying just now, of course, addressed all of the provinces, and Quebec, but given the need to find the essential elements to demonstrate the human suffering which can result from such dramatic cuts, I did of course take my riding of Sherbrooke in particular as my reference, and the people of Quebec in general.

Now, Quebec contributes a great deal to the financing of the federal government, totalling about $32 billion yearly. It is normal for Quebec and the other provinces to get back the transfer payments cut from them by the federal government, so that everywhere across Canada, obviously, they can reinvest in health, social programs and education. That is vital.

Those three elements are what will allow Canada and Quebec to develop in an increasingly happy future for everyone.

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9:10 p.m.


Ken Epp Reform Elk Island, AB

Madam Speaker, I will be very explicit. I come from a province which has never received a penny in equalization payments. We have always paid in at the same rate as the Quebec people and maybe even a little higher. Yet they are great recipients of equalization payments. They are net gainers of anything between $8 billion and $10 billion a year.

I just wondered if the member would respond to that. Is he willing to say goodbye to that?

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9:10 p.m.


Serge Cardin Bloc Sherbrooke, QC

Madam Speaker, as far as I know, transfer payments and equalization payments are two different things. There will be a debate, moreover, on equalization payments in the coming days or weeks. Transfer payments are one thing, and equalization payments another. At present, my first concern is the transfer payments. In this regard, as far as I know, all of the provinces have been contributing since September 14.

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9:10 p.m.

Parry Sound—Muskoka Ontario


Andy Mitchell LiberalSecretary of State (Parks)

Madam Speaker, I am pleased to have an opportunity to take part in the prebudget debate. This is the fourth consecutive opportunity I have had since 1993 to participate in this debate and to have an opportunity to talk a bit about what my constituents have been saying through the prebudget consultation as well as about what I believe Canadians in general have been saying.

I begin my comments by congratulating the Standing Committee on Finance—and I see the parliamentary secretary is in the Chamber—for the job it did in travelling from coast to coast to obtain from Canadians their opinions about the upcoming budget.

As I am sure the people in the Chamber know and Canadians in general know, in 1993 the Liberal government under the directions of the finance minister took what was essentially a very closed process, a very non-transparent process in terms of budget consultation, and turned it into a very open process, one that begins with the finance minister's financial statement going through the process of finance committee examination across the country and then the debate we are having this evening. This is a very new process, a very sound process, and one that serves Canadians very well.

Like many of my colleagues in the Chamber, I have taken the process one step further and have had a prebudget consultation within my riding. In fact I held two particular sessions on November 27, 1998. The first took place at the council chamber in Bracebridge and the second took place later that day at the West Parry Sound Museum. I had the opportunity at the beginning of the prebudget consultation to send a survey out to every household in my riding. I wanted to give constituents who were unable to attend the forum the opportunity to provide input. Hundreds of my constituents took the opportunity to provide that input to me. I thank all those individuals and those who were able to come in person to the forums to provide their input and to be part of the prebudget consultations.

Constituents in my riding of Parry Sound—Muskoka established three specific priorities. They indicated a desire to see tax relief and reductions in the upcoming budget. They made note of the fact that there had been some $7 billion worth of tax relief in the previous budgets over the past three years but they indicated the need to move further in that area. They specifically targeted the need to see those reductions as a priority in the area of income tax reductions. They talked about that reduction happening for lower and middle income taxpayers.

My constituents talked about the second priority of the need to reinvest in health care. When they talked about health care they talked about the need to ensure that when that was done through the process of transfers to the provinces there could be an assurance that those dollars would be used for health care and not for other purposes. They expressed a strong belief in the Canadian health care system, in a system that is publicly funded and universally accessible. They believe this has proven to be a very positive thing for Canadians over the last 30 some years. They want to see this continue and they clearly want reinvestment in health care.

My constituents talked loud and clear in both the consultations and the surveys about the third priority that we must never allow ourselves as a nation to go back to that situation we found ourselves in over the past 30 years. We must never go back to a situation of constantly spending more than we were taking in and constantly running deficits and building up the debt. They said that whatever policy we undertake in this and future budgets we should not return to that type of scenario. They saw that in the long run as we provided prudent fiscal management that we would be able to pay down the accumulated debt both in real terms and in terms of a percentage of our gross domestic product.

Besides the specific recommendations we also discussed the fact that budget decisions are not made in isolation. They must be based on principles that guide how we govern this nation. I believe we have identified three primary principles which should govern the budget decisions the government is about to make.

As the first principle the federal government has as its responsibility the necessity to exercise sound and prudent fiscal management. It is a responsibility and a principle of government that we establish an economic environment that allows individual Canadians to pursue their own objectives and their own dreams. If we look back at the government over the past five years we will see that prudent management has allowed for Canadians to do that.

We have seen the lowest inflation rate that has existed in this country for generations and low interest rates. These types of economic indicators and achievements allow Canadians through lower mortgages and through protection of fixed incomes the ability to pursue their dreams and their financial objectives. It is government's role as a first principle to establish the economic environment that will allow Canadians to do that.

The second principle under which we must govern and make our budget decisions is we need to protect the Canadian social safety net. Canadians both in my riding and across the country have clearly established as one of our governing principles the need for a strong social safety net in Canada.

We believe in helping those who need help the most and we believe this responsibility should be shared by all Canadians. As Canadians we have collectively agreed that below a certain level we will not allow individual Canadians to fall. That is why we have a medicare system that helps Canadians who are sick. That is why we provide an income security system for those Canadians who have come to retirement age. It is why we provide assistance to ensure that Canadians can find food and shelter when they are in trouble.

When we look at the record of the government, whether it be the establishment of $1.7 billion into a new child tax credit or our reform of the CPP to ensure it is there for future generations, these are the types of programs helping to ensure a strong social safety net.

The third principle on which our budget decisions need to be made is one of ensuring there is equality of opportunity. Regardless of where we live in Canada, whether we come from urban or rural Canada, whether we are wealthy, whether we are able bodied or disabled, all Canadians should have an equal opportunity to their citizenship rights that come as being a citizen of this great country.

The people of my riding have established three specific priorities that they would like to see in this budget which are income tax reduction at the lower and middle income level, a reinvestment in health care, and an assurance that we will continue with the strong and prudent fiscal management and that we will not return to an era of deficit financing.

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9:20 p.m.


Jim Hart Reform Okanagan—Coquihalla, BC

Madam Speaker, I listened with interest to the member opposite and was very interested in his comments, particularly that he also has relayed the desire of his constituents to see comprehensive tax reforms through income tax reductions, something we support on this side of the House, and also a reinvestment for health care. Making health care a priority is on the minds of all Canadians.

I ask the member to comment on one other important part of the budget we face this time. I will address this issue later, but I would like the member to give his thoughts on the Canadian forces. The Canadian forces have severe quality of life problems with very low pay. We have been putting them under extra demands by sending them on a number of missions over the last six years. These missions have been on an increase while the resources have been on a steady decline.

Could the member comment on what the government can do to improve the quality of life to give the Canadian forces the equipment they require to carry out their missions and to increase their quality of life?

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9:20 p.m.


Andy Mitchell Liberal Parry Sound—Muskoka, ON

Madam Speaker, in terms of government and as an individual member, there is great pride taken in the efforts, energy and the accomplishments of the men and women who serve in our forces.

The member addresses that one of our responsibilities as parliamentarians is to ensure that the men and women of our forces have the necessary equipment and resources to carry out their missions. That is absolutely essential. We have seen the minister of defence act in that respect in terms of trying to ensure we have the necessary search and rescue helicopters to allow the forces to carry out those missions.

We have seen him move in terms of attempting to obtain the submarines that will provide some of the equipment they need to do their mission. There is also the quality of life issues that the member talked about. There has been a parliamentary committee that dealt with that issue and made some strong recommendations in that respect. Obviously in the mix of establishing what our financial priorities are, dealing with those issues in our armed forces has to be given active consideration.

That is a large part of what the prebudget debate is about. It is an opportunity for parliamentarians and for Canadians across the country to discuss those types of things they see as priorities. It supplements some of the other work that has been done in looking at the quality of life issues through the parliamentary process. I say how proud I am as a citizen and as a member of the House and as a member of the government of the work of the men and women who serve in the forces. There is an absolute need to provide them with the resources they need to carry out their mission.

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9:25 p.m.


Bryon Wilfert Liberal Oak Ridges, ON

Madam Speaker, it gives me great pleasure this evening to speak in the prebudget debate. I will reflect my concerns and the concerns of my constituents in Oak Ridges.

Governing means that one has to make choices. Canadians have indicated consistently that they want to see additional dollars for health care. They want to see further tax reductions. They want to see further debt reduction.

The government under the leadership of the Prime Minister and the Minister of Finance has responded effectively to the economic situation in Canada. When the government was elected in 1993 we had a $42 billion deficit. Through strong fiscal management, leadership and determination we now have balanced books, renewed economic consumer confidence and a strong growth rate. Success in eliminating the deficit has given us the financial ability to deal with other key issues.

Like many Canadians, I am concerned about future of medicare. This government is unequivocally committed to preserving Canada's publicly funded health care system. I support the recommendation of the Standing Committee on Finance that the federal government strengthen its involvement in the health care system by further increasing the cashflow by $1 billion starting in 1999-2000. If the cashflow is raised by $1 billion dollars the 1999-2000 total entitlements will increase by $6.3%. As a result when compared to 1998-99 we will have $27.6 billion compared to $25.7 billion. Provinces will have received $4 billion extra by 2002-03. The total CHST entitlement will reach $29.5 billion in 2002-03. I support additional funding for the proposed Canadian institute of health research. I support doubling research for health in Canada.

However, Canadians want accountability. Transferring millions of dollars to the provinces without some form of accountability and the ability to measure the quality of care needs to be part of the formula. Canadians want to know where those dollars are going. This is something we as a federal government should be committed to.

Canadians want further tax reductions. The government responded in the 1998 budget with a $7 billion tax cut over three years to low and middle income families. I support the elimination of the temporary 3% surtax. I also believe it is time to announce a timetable for the elimination of the 5% surtax starting with a 1% decrease this year.

The finance committee recommends and I support the 1998 budget measures that increase the personal and spousal amount by $500 for low income taxpayers. I think it should be increased a further $200, bringing to $700 the amount of additional income that can be earned tax free. I support the view that this $700 increase of the basic personal spousal amount be available to all.

I have had many calls and letters regarding the 20% foreign property rule. Canadian taxpayers want, and I believe should have, an increase by 2% increments to 30% over a five year period. I think this is the right thing to do. It will allow Canadians to achieve higher returns on their retirement savings and reduce their exposure to risk, which I believe will benefit all Canadians when they decide to retire.

Debt reduction is the third area that Canadians have signalled their support for. I have spoken many times about debt reduction in the House and I believe the government has a firm commitment to debt reduction and has a debt reduction plan in place. The government has made significant strides in debt reduction and this year the debt to GDP ratio was projected to be reduced slightly below 63% from almost 72% in 1995-96.

Leadership and commitment to Canadian values, governing with a social conscience and providing leadership on tough economic issues has been the hallmark of this government, whether the issue is homelessness, infrastructure or health care.

I believe that the government should continue the Canada infrastructure works program that was launched in 1994. We have a $40 billion deficit in infrastructure. In Canada roads, bridges, sewer and water systems need to be addressed, in spite of the federal-provincial-municipal cost shared program which generated investments exceeding $8 billion, with federal contributions of $2.4 billion. It supported over 16,000 infrastructure projects. It created 125,000 short term and 10,000 long term jobs across this country. It is an excellent example of governments and the private sector working hand in hand. That is what Canadians want. That is what Canadians expect and that is what the government delivered.

The program assisted municipal governments in upgrading Canada's physical infrastructure and it promoted rapid job creation to accelerate the economic recovery.

I believe that this program was a good unifying model. It demonstrated a shared purpose and accomplishment among all orders of government. Sixty-three per cent of all projected funds were for physical infrastructure, at 31% for water and sewer works and 32% for roads and bridges.

The program addressed environmental, economic competitiveness and job creation issues. The Silverman report, the finance department's evaluation and the auditor general's evaluation all indicated that it was a great success.

I believe that we need to develop a five year minimum strategy to national infrastructure and continue to work with our partners to eliminate this infrastructure deficit.

I also urge the Minister of Finance to consider making employer provided transit passes an income tax exempt benefit, similar to what already exists in the United States and western Europe. I believe this would eliminate as many as 300 million kilometres annually of urban automobile traffic within 10 years. It is also expected to reduce by 35% the expected growth in peak period travel in our major urban areas, as indicated both by the Federation of Canadian Municipalities and the Canadian Urban Transit Association. It will also help to achieve our Kyoto commitments.

Another area that I believe should be addressed is providing targeted tax relief for those Canadians who must bear large expenses as a condition of employment. Such is the case of mechanic's tools.

I know that the Minister of Finance must respond to many demands and many needs. This government has a five year mandate. Not everything was done last year. But we are going in the right direction. We are committed to keeping Canada's finances in the black, providing sound fiscal management that all Canadians can be proud of. The pace may not be as fast as some may like in some areas, but the goal is shared by all. The direction is clear and I believe that this budget will certainly address many of those key issues that Canadians have been calling for.

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9:35 p.m.


Jim Hart Reform Okanagan—Coquihalla, BC

Madam Speaker, I appreciated the speech of the Liberal member opposite. I am again very pleased to hear that there is another member in the House who believes very strongly that there should be comprehensive tax reform and that there should be more of an effort put toward health care in this country to revive our health care system. Debt reduction was another area that the member mentioned, as well as the social union. All of these are very important issues facing the government in this budget.

I am not trying to throw the member off his train of thought, but I would like to ask his opinion and get his comments on the Canadian Armed Forces. Over the past six years we have seen a decline in the Canadian Armed Forces. We have also seen an increase in commitments. Right now the forces are faced with a number of issues.

The defence minister has said that he has been trying in cabinet to get $700 million to meet the quality of life issues that are facing members of the Canadian Armed Forces. As I see it, the problem is that the $700 million, if he is successful in getting it, does not even meet the requirement of the $750 million shortfall which the Department of National Defence already has in its budget. Really the $700 million, if he gets it, is a moot point.

I have an idea. That is what debates are about, sharing ideas. I would like to get the hon. member's opinion on this idea. To meet the quality of life issues facing the Canadian Armed Forces there should be a Canadian Armed Forces service exemption. This exemption would be a graduated exemption, but it would give members of the Canadian Armed Forces an additional $5,000 deduction from their income tax. They would pay tax on $5,000 less per year, depending on their rank. The most benefit would go to the junior ranks of the Canadian Armed Forces, the privates, the corporals, the lieutenants and the captains.

If this was accomplished we would protect the integrity of the defence budget so we could continue with the much needed purchases of helicopters, armoured personnel vehicles, helmets, boots, clothing items and other equipment. We would also be able to deal with giving the Canadian Armed Forces personnel more expendable income through this creative and innovative way of dealing with the problem.

I was wondering if the member could comment on that. I know it is just a brief thumbnail sketch, but could the member consider supporting something like that?