Debates of Feb. 2nd, 1999

Finance

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Madam Speaker, I thank my colleague across the aisle for his comments and his question.

With regard to my hon. colleague's question with respect to the armed forces, I am intrigued by his suggestion. Yes, it was a thumbnail sketch. Yes, I would be interested in further elaboration on anything we can do to assist the Canadian Armed Forces, given the fact that some of the residential conditions that our armed forces live in are not acceptable.

The minister of defence has clearly indicated, both in caucus and I assume at the cabinet table, that we have to address this very important issue with regard to the living conditions of our armed forces.

We are asking our armed forces to do more. I do not believe that in this case we can do more with less. We have to provide the physical tools to do the job.

I believe that my hon. colleague's suggestion is worth further discussion. I would be interested in talking with him.

We need to look at innovative ways to make sure that if we are asking Canadian forces personnel to serve in dangerous fields abroad they will know that at home their families have proper shelter and that they have the quality of life we would expect for our own families. Therefore I welcome the member's suggestion.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Madam Speaker, I appreciate the opportunity to speak in the prebudget debate. There are a few points that I would like to bring to the attention of the House.

I would like to begin by saying that there are a number of voices across Canada that are calling for fair family taxation and these voices continue to increase every year. Meanwhile, we see a finance minister who has continued to ignore the voices of these families. In fact the changes he has proposed have actually made the situation worse.

Reformers have called for fairer tax treatment for families right from the beginning. I want to add to our voice the voices of many current think tanks and study groups that have reported on the impact of the current government's taxation policies on the family.

Let us consider what two recent independent studies discovered.

A recent 1998 Compas poll commissioned by Southam News and the National Foundation for Family Research and Education found that 90% of respondents felt that taxes being too high for parents with children is a more serious stress now than a generation ago; 82% of Canadians felt it should be a priority for the government to change the tax law to make it easier for parents with young children to afford to have one parent at home; and 78% felt that not enough respect for the efforts parents put into raising children is now more serious than a decade ago. Those are high percentages.

Even the December report from the Canadian Council on Social Development, which was titled The Progress of Canada's Children: 1998 Highlights called for reform of the tax system to make it more equitable for low and moderate family income earners.

There is another unique group of voices that is coming together to raise the volume on the call to fairness and family taxation. This new group, The Family Tax Coalition, is made up of 10 national family organizations, academics and financial experts.

Let me read their recommendations. These are national groups with tens of thousands of members right across Canada. This is their very simple set of recommendations that they have lobbied for independently for years, but have now come together as the family tax coalition. They state:

Tax concessions for the care of dependent children should be distributed equitably to all Canadian families.... Given this discrimination, most dual-income families with dependent children share common ground with single-income families. Tax fairness for all families must include these measures:

1. Base taxation on family income, through either income splitting or joint filing;

2. Convert the child care expense deduction into a refundable child tax credit for all children;

3. Make the spousal exemption equal to the existing personal exemption;

4. Give homemakers access to an independent RRSP.

Those were their four recommendations.

I would like to speak about the first one. One of their key recommendations for fair family taxation is the conversion of the child care expense deduction that we currently have into a refundable, and I emphasize the word refundable, child tax credit for all children.

Let me explain the refundable child tax credit option that Reform has long endorsed and championed. What this means is that when income tax is calculated there is a certain amount of tax payable. The refundable tax credit would be subtracted directly from the tax payable so that the hard dollars taken out of pockets would be decreased. This would be a direct advantage in hard dollars to every person who is paying tax.

What about the person who is not paying tax or has no taxable income? Because it is a refundable tax credit—and this is an important concept for people to grasp—it would be paid to the family that did not have any taxable income. In that way, it is equitable to all families. All families are given the credit. In certain cases where there is no tax payable, they would receive the refund.

Then the parents can determine what is the best option for the rearing of their children, whether it be institutionalized daycare or a grandparent or one parent staying at home. It recognizes that parents are the best ones to make the decision for their children rather than being biased in one direction or another by discriminatory tax policies.

All the voices of this coalition are consistent with that of Reform. The Reform Party has called for the current child care expense deduction program which rewards only third party child care to be replaced with the child care expense credit I have spoken about. It would provide a consistent benefit to all parents regardless of the type of child care chosen.

The key here is to let the parents decide. Leave the money with the taxpayer and let the parents decide. Reform has called for this for many years. Why? Because it is fair and it is what families want. The volume is getting louder.

Based on last year, the finance minister is determined not to listen. What did he do in the last budget? He increased the tax deduction incentive for receipted third party daycare. Again, he told those who care for their own children in their own home or with the help of an extended family member that there is no value in that. This is very troubling at a time when people are becoming increasingly aware of how valuable family health is and the parental attachment to society's health.

The family tax coalition also called for the spousal exemption to be equal to the personal exemption. Today it is not. The spousal exemption is substantially lower. The current tax treatment sends a message that a stay at home spouse is less than a whole person.

This is why Reform has long called for equalization of the spousal exemption to the same level as the personal exemption. Year after year the call has fallen on the seemingly deaf ears of the finance minister. Will he continue to treat single income earner families unfairly and knowingly endorse a system that has the single income family paying almost a third more in income tax?

Unfortunately, it seems to me that this government is more inclined to fund child advocates who, after receiving funding for their programs, seldom seem to recognize that children live within families and that helping families through tax relief and equitable tax treatment helps the children.

In a recent Compas poll 92% of the respondents said that families with children today are under more stress than families of 50 years ago and 89% felt that divorce and family breakdown is now more serious.

Stress on families is high. Often financial stress is a key factor in family breakdown. What is the biggest budget item for the Canadian family? You guessed it, Madam Speaker. Taxation is the biggest item in the family budget. According to Statistics Canada, personal taxes make up the largest share of the household budget. It is greater than shelter. It is greater than transportation. It is far greater than food.

The C.D. Howe Institute report “Giving Mom and Dad a Break: Returning fairness to families in Canada's tax and transfer system” of November 1988 points out another way the finance minister ensures that he gets the most from families who pay the least.

Allow me to quote from the institute's report. “The take portion of Canada's tax system, the revenue raising part, assesses tax on an individual basis, while the give portion, the many spending programs associated with the income tax, calculates benefits on a family basis. Is this inconsistency defensible?”

The point here is that this government and the finance minister are determined to maximize taxes from families and minimize benefits.

I will wrap up with a few final comments.

The tax policy sends a message about what the government thinks is important. It is long overdue for the tax policy of this government to serve to strengthen families rather than to undermine them. In order to achieve fairer family taxation within Canada's tax system, the government must make these changes in the next budget.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, I really appreciate this speech and the approach that this particular party is taking, the party to which the member belongs. It is very refreshing to have a party that says let us do something that is financially sustainable and that is financially advantageous to those families who choose to care for their own children. That is just delightful. I have talked to a number of people who feel that this is the direction in which we should travel.

I would like the member to respond to one of the criticisms which we sometimes get on this, which is that we are trying to use a tax measure in order to direct and social engineer things the way we want them instead of letting the Liberal government social engineer the way it wants. I would like him to respond to that. I do not think it is an easy question but it is one which we often hear.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Madam Speaker, I would be glad to respond to that question. Probably one of the best ways to respond to that question is to refer to a recent report by the Fraser Forum which states that this study reveals that fully 48% of the yearly income of the average Canadian family is consumed by taxes visible and hidden. Canada's various levels of government claim to spend their tax revenues for the good of Canadian families but ultimately that revenue comes from families.

I would suggest to the member, in response to his question, that it is not social engineering. Families know their own needs much better than the government does and their administrative costs are much smaller. We would be far wiser to leave the money in their hands.

[Jim Hart, Reform, Okanagan—Coquihalla, BC]

Madam Speaker, I rise on behalf of the people of Okanagan—Coquihalla to participate in this prebudget debate. Many of my colleagues have touched on the important issues of health care funding and taxation which face the Canadian public.

Of course we have spent a considerable amount of time on this side of the House explaining the Reform Party's proposals to the government which include comprehensive tax reform, making health care a priority for Canadians and for the government, by reinvesting the dollars it has taken away over the years, and debt reduction.

The area which I have chosen to speak on tonight is the fourth one the Reform Party has put forward, which is reinvesting dollars in the Department of National Defence. I would like to focus my comments on the Liberal government's reduction of the Canadian armed forces over the past five-plus years.

The Canadian armed forces have gone through decades of decline and are now at a crossroads. The Canadian government can choose one of two paths for our once proud forces. The first of course would be to continue the budget cuts and personnel reductions leaving Canada's armed forces with little more than a constabulary force. The second path would be to take a road that has yet been travelled by Canadian governments by giving the Canadian armed forces the resources and funding they require to meet the challenges of a modern armed forces in the 21st century.

Before we get too far on this I would like to cover some of the history since the 1993 election of the Liberal government when it comes to defence policy. In 1994 shortly after its election the government set up the Special Joint Committee on Canada's Defence Policy, the first comprehensive parliamentary review of Canada's defence policy.

The special joint committee, which I was a member of, was an all-party committee. Members from every party in this House took part as well as the Senate. We were tasked with answering the following question: What principles, purposes and objectives should guide our government in setting Canada's defence policy in a rapidly changing world?

At that time defence spending was at $11.6 billion and it supported 73,200 regular force personnel. The government was facing a further $7 billion in spending reductions in the 1994 budget. In light of that the special joint committee made a number of important recommendations to the government.

First, the special joint committee recommended that the Canadian armed forces should not be reduced below 66,700 personnel and that they must maintain a core budget of at least $10.5 billion in 1994-95 dollars. That was inclusive to fiscal year 1998-99.

Second, the committee stated unequivocally that any cuts below the recommended minimum would mean less equipment or less capable equipment, delays in purchasing of necessary equipment, and this one is very important, the inability to fulfil policy objectives of the federal government including the defence of Canada, less training for personnel and too few personnel.

The Liberal government's response to the special joint committee was the Minister of National Defence's 1994 white paper on defence. Within the white paper the government admitted that Canada's defence policy commitments and national interests could only be fulfilled through the maintenance of multipurpose combat capable forces that are able to fight alongside the best and against the best. While making this admission, the government failed and continues to fail to give the Canadian armed forces the necessary number of personnel and material resources to fulfil the white paper commitments.

The government reduced the size of the regular force to 60,000 personnel. That is 6,700 less than the 66,700 recommended as a bare minimum by the special joint committee. The defence budget was also reduced from $10.5 billion to $9 billion, a serious reduction in purchasing power for badly needed new equipment. One might ask what is the result.

This year chief of defence staff General Baril said: “We possess a limited capability for deploying our forces often on short notice to meet international crises. The limitations are in the areas of troop movement and lift capability, intelligence gathering and the ability to effectively lead or co-ordinate multinational operations”.

I would like to stress that. Canadians really have to hear that and let it sink in because the chief of defence staff, the top general in the Canadian armed forces is saying that our armed forces have limitations in troop movement, getting them to an area where they are needed and also getting them back from an area where they were needed. Our armed forces have limitations when it comes to intelligence gathering which is a very important aspect for military operations. The chief also says that we have limitations in the ability to effectively lead or co-ordinate multinational operations.

That is very serious stuff facing the Canadian armed forces. And it is not because our troops are not well qualified. They are. It is because the resources of the Government of Canada have not been put into this very important area. All of this is at a time when our Prime Minister boldly committed what little armed forces we have left to military combat in Kosovo just the other day.

As obsolete equipment is not replaced, the problem of rust out of equipment occurs. In April 1998 the Auditor General of Canada reported to the House on the state of the Canadian armed forces equipment. He expressed grave concern that the deterioration of equipment was preventing the Canadian armed forces from fulfilling Canada's defence policy, the same defence policy that was written just a few years ago in 1994 by the Liberal government.

In terms of the army the auditor general pointed out that operationally it had not kept pace with technology to modernize its equipment, leaving it vulnerable to threats of low level and mid level operations. Its infantry and armour could be detected, engaged and defeated long before it was known that the enemy was even present. The auditor general unequivocally stated that the money for capital funding would decrease even further due to the high maintenance and operating costs of servicing aging equipment.

Here is the question. What should the Liberal government do to reverse the decline in the Canadian Armed Forces? I have some suggestions and some advice for the government this evening. First and foremost it must tackle the serious quality of life issues plaguing the forces and its personnel.

Since the Department of National Defence is facing a $750 million shortfall this year, the defence minister's much publicized attempts to acquire $700 million in funding is a moot point. What we need are creative solutions.

I propose that the Government of Canada create a Canadian Armed Forces service exemption of $5,000. The service exemption would be a graduated income tax exemption with the greatest benefit in favour of the lower ranks, the lowest paid members of the Canadian Armed Forces. The service exemption would increase spendable income for our troops. It would give them more money in their pockets without cutting into the defence budget and would protect capital projects and personnel levels in the Canadian Armed Forces.

Then the Liberal government must inject at least another $1 billion into defence spending so it approaches the $10.5 billion recommended by the special joint committee. This additional funding should be used to purchase badly needed equipment including ship borne helicopters. In the long term DND should be provided with stable funding so that defence planners can plan an attainable force structure.

Our forces play a meaningful role in world affairs. They must have air and sea lift capabilities and be prepared to acquire integrated battlefield technologies demanded by the high tech revolution in military affairs. If the government continues to cut defence spending or refuses to allocate more resources to defence in the future, it must revise its defence policy so it is consistent with the reduced capabilities of the Canadian Armed Forces.

Committing our forces to sovereignty protection, collective defence within NATO and international peacekeeping-peace enforcing without adequate resources is not only bad policy but is unfair to the proud men and women serving our country in Her Majesty's Canadian Armed Forces.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Madam Speaker, I appreciated the comments of my hon. colleague. I am not an expert in this area but I have high regard for our military and the great men and women who serve our country so admirably. It is a point of pride for all Canadians but particularly Canadian men and women on the frontlines in the armed forces.

The hon. member did not touch on one area. I wonder if he would be willing to comment on it. We often see our military called into service and action on the national scene in natural disasters such as the recent snowstorm in Toronto. There is even reference now to the Y2K issues and leaves being cancelled. Everybody appreciates their efforts and there are all kinds of accolades when it is over for the photo ops.

I am concerned about what the member revealed today on the treatment of these honoured individuals when it comes to pay, compensation and respect for the service they give and what will happen if we jeopardize the service these people provide to Canadians at home when we are facing natural disasters. I wonder if he could comment on that.

[Jim Hart, Reform, Okanagan—Coquihalla, BC]

Madam Speaker, I thank the member for his question. The defence budget is allocated for training personnel to make them effective. We had them in my area of the Okanagan fighting forest fires. We have seen them in action during the floods. Even the mayor of Toronto called on the Canadian Armed Forces for snow shovel activities this winter. Our Canadian Armed Forces should be in the public eye. They should be able to respond to disaster situations at home.

I encourage the member to continue to talk about that very important subject. We do not see enough of our Canadian Armed Forces personnel from coast to coast to coast because of base closures, militia reductions across the country and reservists who are no longer there. The latest numbers show that we probably have more young people in Canada's cadet activity with some 70,000 than we have regular force members serving the important needs of Canadians. That is a disaster and I would like to reverse that trend.

I strongly urge the government to look at increasing the budget and at creative solutions like the Canadian Armed Forces service exemption so Canadians can be proud of members of the air force, the navy and the army at home and abroad.

I urge all members of the House to urge the government, as I will be doing and have done over the past five years, to look at that issue very seriously. Once the military is gone we will not be able to replace it. It is something we have now that we can be proud of. It is an institution like the RCMP which encourages national unity. We are proud of the work our men and women do. I want to make sure we do not take a step back too far and lose what we once had as a proud tradition of the country.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, since the Liberal members are not getting into the debate I find it is my prerogative to ask questions on their behalf.

This is a question I think one of the government members would probably ask the member. If he is so eager to increase the basic exemption for members of the armed forces, because presumably their salaries are so low that they cannot make ends meet, why not extend it to everybody as the Reform Party is proposing?

[Jim Hart, Reform, Okanagan—Coquihalla, BC]

Madam Speaker, I believe all Canadians across the board should receive a tax break on their income tax. I will focus in on it for a minute because it is very important.

People within the Canadian Armed Forces have unique careers. Eleven people died in Bosnia and helicopters have gone down. It seems like a couple of times a year we hear about deaths in the Canadian Armed Forces. That is very sad indeed. It is the only type of career I can think of where people actually sign a contract and say that they are willing to lay down their lives for their country.

A service exemption would recognize the fact that people are expected to lay down their lives if required. Although Canadians should all enjoy an exemption, special recognition should be given to the proud men and women serving our country.

[John Williams, Reform, St. Albert, AB]

Madam Speaker, I am also glad to participate in the prebudget debate. The Minister of Finance will be bringing down a budget in a few short weeks. We will find out what the news is and this time we expect it will be a fair amount of good news. We can somewhat predict what the minister will say.

We anticipate a surplus for the year ending March 31, 1999. For the first time in many years we will see the cumulative debt Canadians have hanging around their necks, courtesy of the Liberal and Tory governments over the past 30 years, being reduced albeit by a small amount.

We can anticipate some new and long overdue investment into health care, something the Reform Party has called for on many occasions. We can also anticipate some tax cuts by the Minister of Finance when he introduces the budget in a couple of weeks.

These three things all sound great, but let us look at the history of how we got here. We will enjoy the rhetoric of the Minister of Finance on budget day and the great plaudits and accolades he will receive for these great announcements.

The debt currently stands at $580 billion that we have accumulated over the last 30-odd years. It may come down by $10 billion or $15 billion for the year ending March 31, 1999, a small amount. While the debt is coming down, and fortunately interest rates are now low, one-third of the taxes we as Canadians pay the federal government go to pay the interest on the debt. In many ways that is why we feel we are overtaxed. For every dollar we pay the federal government, we are only getting 67 cents back in services. We are being short-changed. We feel we are being ripped off because we are not getting value for our money.

How many people go into a store, for example, and voluntarily pay $10 for something that is only worth $6.67? They would say “That is too expensive. I do not want that. It is a rip-off”. So it is with federal taxation. For every $10 that we pay in taxes we only get $6.67 back. That is why we feel overtaxed and ripped off.

I know we have accumulated this debt, but it was accumulated through mismanagement and promises that governments were prepared to deliver services to Canadians without raising taxes at the appropriate time. I remember the famous words of former Prime Minister Trudeau who said “Don't worry about the debt. We owe it to ourselves”. We owe $580 billion and the interest cost is $40 billion or more a year. That is just to pay the interest. That is over $1,000 per year in federal taxes for every man, woman and child to pay the interest on the debt. That is why we feel we are not getting value for our money.

Let us bear that in mind when the Minister of Finance stands to take great credit for paying down the debt that started back in a previous Liberal administration when the prime minister said “Don't worry. We owe it to ourselves”.

The minister will take great pride in the fact that he will start putting some new investment into health care. We say it is long overdue. Not only is it long overdue. Let us remember that this government consistently cut its commitment to health care in the years since it was elected in 1993. It has hung on to the five principles it keeps ranting and raving about including public administration of health care but at the same time has refused to put in the investment required to sustain the health care Canadians want and Canadians demand.

When health care was first introduced the federal government said it would pay 50% of health care costs. This was laudable. Everybody thought the government would live up to its commitment. Then we found that the 50% became 40% and the 40% became 30% and the 30% became 20%. Some 20% of health care costs are now being paid by the federal government.

Now that the tide is likely to turn the Minister of Finance will make a new contribution to health care. Then everybody will sing his praise about what a wonderful job he is doing. Surely let us recognize that he is only undoing the damage he has done over the last number of years by cutting health care.

Waiting lines are getting longer. Research is underfunded. The list goes on and on. Let us also remember that when the Minister of Health says more money for health care it is not more money. He is putting back a small fraction of what he took out in the past.

Then of course we will see tax cuts too. Tax cuts are laudable. Everybody thinks tax cuts are great. I would just ask the Minister of Finance to think about the relationship of the debt to the GDP. It is much like a mortgage to a person's income. If the mortgage comes down and the payments come down accordingly, one feels a bit better off. If one's salary and income go up and the mortgage stays the same, one also feel a bit better off. As far as the federal government is concerned the mortgage is our total federal accumulated debt and our income is the gross domestic product of the nation. If we can raise the gross domestic product of the nation and keep the debt the same, we will feel a bit better off.

I would ask the minister of finance to think about that when he is talking about tax cuts. The tax cuts focus on improving the productivity of this nation. The productivity of our workers is falling behind the rest of the OECD countries. If we can raise the productivity of our nation we as individuals will then feel more affluent and better off and our standard of living will improve.

Therefore I would hope the minister of finance when he is thinking tax cuts focuses on productivity growth. While that gives tax relief to Canadians it also gives us more affluence and the opportunity to earn a higher income. Surely that is what we want as Canadians.

We also want to think about job creation. While the government talks about the great achievement of bringing unemployment down to 8%, we think of our neighbours to the south where it is 5%. Surely if we are talking tax cuts we should be talking job creation. Job creation is not just a simple number of 11%, 8% or 5%. We are talking about people's lives. We are talking about people's futures. We are talking about their hopes, their dreams, their aspirations to buy a house and pay the mortgage, their aspirations to start a family and to take their place in society. We are talking about our young people who find they have Mcjobs rather than real jobs and give them the opportunity for a real career for prosperity and for something that they can look forward to and say “it is great to be a Canadian because I have a future”. Many young people today do not have that.

I would hope the minister of finance would think about that when he is talking about tax cuts. The tax hikes that we have had over the last number of years have strangled that opportunity for our young people. They have destroyed their opportunity.

When I advertised for people to work for me in my parliamentary offices I was shocked to find that many people with one and two university degrees who have been in the workforce for a number of years have restaurant jobs, low paying jobs, not career jobs because they cannot get a start. When they cannot get a start they suffer, their families suffer, Canada suffers, our economy suffers, our tax revenues suffer and the whole cycle gets into a negative spin.

Surely the minister of finance knows that tax hikes over the past years have killed the future for many people and I would hope he would start to undo that in some small way.

The debt has to remain the same and if we can grow the GDP by giving opportunity and hope for our young people in real jobs, then we will feel more in control and the ratio of the debt to our income will start to drop and things will start to improve.

These are the types of things that we are going to see in the speech, but it is not just all good news. As I pointed out, the mess we are in has to be undone slowly.

There is one other thing that we will not find in the budget. It is unfortunate that we will not find it in the budget, but it is also the waste and the mismanagement of government that soaks millions of dollars out of taxpayer pockets for zero return.

Recently in the public accounts committee which I chair we dealt with social insurance numbers. Social insurance numbers are a small thing. Everybody has one. The vast majority use it to file their tax return and give it to their bank so they can report their T-5. But the auditor general pointed out that millions of dollars of fraudulent activity is being done through the use of the social insurance numbers because no one has bothered to update the security of social insurances for 35 years.

The auditor general pointed out that one person who had 72 social insurance numbers was collecting child tax credits by the hundred, all because the government did not think that social insurance numbers are no longer a way to identify who you are when you pay taxes but now a methodology of identifying who you are so you can collect all kinds of benefits from the government. It is a ripoff in the millions of dollars, waste, mismanagement and unaccountability.

We heard a speaker talk about the military and how underfunded it is. We had the chief of defence staff before our committee again because the auditor general pointed out that the military was buying helicopters that did not meet the simple specifications of what it wanted. They had to lift a certain amount of weight such as artillery and move it to the front in the case of a battle and they were not capable of lifting what they were designed to lift. They could not get off the ground, yet we were spending millions of dollars buying helicopters that could not do the job they would be required to do. Bad decision making by the bureaucrats and by the government is no excuse for wasting taxpayer money.

National defence is involved in technology in a big way. The assistant auditor general said a couple of years ago that it was not at the leading edge of technology but at the bleeding edge of technology. We were paying hundreds of millions of dollars to fill up this highly sophisticated equipment. Now we find that the military is at the bottom of the heap when it comes to Y2K preparedness. No doubt we have been spending all this money developing all these systems and forgetting the Y2K computer problem and the year 2000 is approaching, so let us make sure that it is Y2K compliant. These types of things are inexcusable.

With regard to Indian and northern affairs, a consultant said it would take $26,000 to fix the problem that a reserve had with its water supply. This is not a large amount of money as far as the government coffers are concerned but we have now spent $2.3 million, not $26,000, and we still have not provided a new water supply rather than fixing the old one which is perfectly capable of being fixed. For $2.3 million we still do not have enough water and we do not have the quality of what it was when we started to fix the problem. It may cost a few more million rather than getting the consultant to fix it for $26,000.

I shake my head at that kind of waste, mismanagement and unaccountability. Unfortunately we will not hear that in the budget speech. We will not hear the minister talk about it, yet the public accounts committee finds that waste, mismanagement and unaccountability are endemic through the government. Millions or perhaps billions could be saved. Taxpayers could be better off if we had good management in the federal government. The answer lies there and I would hope the Minister of Finance would take these issues seriously and deliver not just lower taxes but good government to Canadians because they deserve no less.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, it is a pleasure to share the floor with my hon. colleague from St. Albert.

He has done a great job in highlighting government waste. Instead of asking him a question I will simply congratulate him for his very hard work and dedicated efforts toward the task. I am sure there are over 1 million people watching this on CPAC. We really appreciate CPAC and the work it does in helping communicate important things from the House of Commons to the people of the country. I would encourage everyone to go to the website of the hon. member for St. Albert. They can enter www.reform.ca and then click on “Go to Members”, find that member and go to the home page. The member has an excellent home page on his website highlighting all the different ways in which we as elected officials have the responsibility to keep accountability on behalf the taxpayers.

I often think of this when I have to spend money in my office budget as a member of parliament. I never want to lose sight of this thought in my head when I am authorizing an expenditure. That is, this represents a taxpayer's hard work and the taxes they have to pay for say, a whole week or whatever it is, however much money I am spending.

I wish we could develop that kind of thinking in all the people who work on behalf of the taxpayers, not only elected officials but all the civil servants.

Certainly our friend, our colleague from St. Albert, is making such a tremendous contribution in this regard. I simply want to commend him. I probably embarrassed him by saying this.

[John Williams, Reform, St. Albert, AB]

I would just like to acknowledge the compliment, Madam Speaker, from my colleague and good friend from Elk Island for his very kind words indeed.

I think he speaks on behalf of all Reform Party members, indeed all the opposition members. Our role as opposition is to hold the government accountable.

Sometimes a partisan debate gets a little heated at times but our constitutional role is to hold the government accountable. We on this side have a responsibility to ensure that the people on that side are governing this nation to the best of their ability. I hope I also in a small way have made a contribution to this great country of ours.

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

Mr. Speaker, I begin by thanking the members who contributed to this debate. It is certainly a great opportunity for members to reflect what constituents are thinking in their ridings. Collectively it really reflects what Canadian priorities are in varying degrees.

I want to spend a few moments and point out what I consider to be the obvious. Canadians who are watching this program might not realize that the budget process itself under the Minister of Finance has been very open and transparent. It is really an exercise that some years ago was conducted behind closed doors with a lot of secrecy.

Now we have a process where we are engaging Canadians in the debate. Members of parliament are going back to their ridings and holding town halls on what should be the budget priorities for the government.

It is by encouraging and engaging members and Canadians that the whole budget process has certainly become a much more effective one.

Tonight's debate reflects many different views. Some members in this House talked about what their constituents have been saying to them. Some of them said that the government now needs to invest in program spending substantially.

Other members have said freeze program spending at its current level. Other members have said to cut taxes substantially right across the board. Others have suggested that any tax cuts remain something that is targeted, more moderate, focusing on lower and middle income Canadians.

Others have said to cut EI premiums more substantially and members again have said we need to reinvest more money into the employment insurance program. Others have said to pay down debt substantially and other members have said we need to pay down debt but we need to be quite cautious and we should not be too aggressive. There are other priorities.

Economists from right across this country have provided forecasts and some insight into where the Canadian economy is going. They have rarely developed any sort of consensus. There is as much disagreement among the economists themselves, again depending on the model they use.

I think it is important to note that this debate is possible because as a country we finally managed to turn the corner. We have turned the corner from an era of deficits to an era of surpluses. We have turned the corner from a time when we were continually increasing the debt to a time where we are now decreasing the debt; a time where program spending was being cut to a time where we are now talking about reinvestment in Canadian priorities, reinvestment in health care and reinvestment in education.

The last number of speakers talked about reinvestment in the military and the importance of supporting our Canadian armed forces. There is agreement that there is a need to look at the quality of life that members of the Canadian armed forces are experiencing.

The focus is now on how we allocate this fiscal dividend. What do we do with the money that we have? Estimates have varied. I would like to make a few points about the actual amount. Economists have come forward and I have heard over the last couple of days figures ranging from a $6 billion, $7 billion to a $15 billion to $20 billion surplus per year.

It is important that I comment on the accusation that the $9.7 billion surplus recorded in the first eight months of 1998-99 points to a very large surplus at year end. That is not exactly true.

The surplus is expected to increase in December. That is when revenues are typically strong. But a simple extrapolation of the remaining months of the fiscal year would be highly misleading. We know that monthly deficits are expected in the final quarter of this fiscal year. Why? Because we know that the recently announced reductions in the employment insurance premium are effective January 1. That will have an impact on the final surplus number.

Revenues are typically depressed in January due to the payment of GST low income credits and refunds. We know that corporate income tax returns are expected to be down significantly in the February-March settlement period. Exchange funds earnings which are reported in March will also be significantly lower. Personal income tax refunds pertaining to the processing of the 1998 tax returns will further depress revenues in March 1999.

The income tax relief measures that were announced in the 1998 budget will take effect. These measures will cut personal income taxes as well, so we have a reduction in government revenues again.

These factors will all serve to bring the underlying surplus for 1998-99 below that recorded in 1997-98. It is important that Canadians realize and understand this and that members of parliament also understand that we cannot simply extrapolate a surplus of one month and take it throughout the entire year. Like businesses, we do have a cash flow and we have a cycle throughout the year so that revenues go up and revenues go down. In the end we will have to wait for that final number. There are additional pressures in this final quarter that will impact on the final number. While the surplus may be less than that recorded in 1997-98, this government will continue to build on past successes.

I have heard from members of the Reform Party, members of the Bloc, members of the NDP and from members of the Conservative Party that we need to focus on Canadian priorities. The Standing Committee on Finance toured the country asking Canadians what they would like to see in the upcoming budget. I believe the government will reflect what those Canadian priorities are because we know that budgets are much more than balancing numbers. Budgets are about people.

We will continue to reflect those Canadian priorities. We will continue to maintain a balanced approach. We will continue to follow through on the plan that we have adopted since coming to office. I know that the members of the NDP throughout the debate this evening commented on the fact that there is no plan that this government is following.

I want to reiterate that since coming to office there has been a plan, there continues to be a plan and what we are seeing is the successes of that plan. We now have a balanced budget. We are going into a surplus. We are reinvesting in Canadian priorities. We are providing tax relief. We are paying down the debt.

We are certainly doing that prudently. We are ensuring that we do not jeopardize the successes Canadians have experienced. We want to do more. We would certainly like to do everything we can, but we do not want to jeopardize this and neither do Canadians want to jeopardize our success and be too extravagant. We have lived for some 30-odd years with continued deficits and continued increase in debt.

We are committed. We have faced many challenges before. We have had to make tough choices. Government is about making choices. I think that the budget will certainly reflects choices that Canadians can agree with and certainly support.

I reiterate that this particular exercise is certainly a very useful one. I thank members who participated in this prebudget debate in ensuring that the government and the Minister of the Finance had the opportunity to hear their input. I certainly welcome any questions that may be addressed to me.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, I have one quick question for the parliamentary secretary. Obviously, because he is in the inner group I am sure he has much better information than we do. I wish he would enlighten not only me but other members of my party, other members of the House and perhaps the Canadian public.

When the finance department of the Government of Canada does its projections, surely it is aware of these different aberrations that occur every year. He mentioned a list of things, income tax refunds, the reduction in the EI premiums and so on. He did not say anything about the increase in the CPP premiums. He forgot that one but I will just add that on his behalf.

When the finance department with all the brilliant minds in the world and all the Y2K ready computers does its fiscal projections, surely it must take all that into account. Can he enlighten us on that, please?

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, I will address the CPP point first. The reason I did not address the CPP premium increase was because the CPP premiums do not flow to government revenues. They flow outside of government revenues, whereas EI contributions do flow to the bottom line of government. Any time we make any sort of change on EI premiums, it does impact on the bottom line. That would reinforce the point the hon. member made that Canada pension plan premiums do not flow to government revenues. That is why I did not make reference to that.

When the finance department works out its numbers, it does take into consideration the things I mentioned. I was addressing the number of individuals out there who were extrapolating a surplus of one month throughout the whole year without taking into consideration the reduction in revenues that flow into governments in the last quarter of the fiscal year.

It is important to note that any time there is an initiative on the part of the government, a reduction in EI premiums or the fact that corporate earnings are going to be less than they were the year before and when the corporations file in the last quarter of the fiscal year, the revenues flowing to government are less. All of these adjustments in the final quarter need to be factored in to what will be the underlying surplus.

What we were hearing through to the end of 1998 was that because the federal government was running a $9.7 billion surplus over eight months of the year that the final surplus should be extrapolated to be $18 billion or $20 billion because of the $9.7 billion figure. However, when one takes into consideration what in fact happens in the last quarter, that $9.7 billion goes down rather than increases.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I would like to commend the parliamentary secretary for being the last dog here as it were on the government side. He is a very lonely advocate of the government's policy this evening but a persistent one nevertheless.

I have a question for the member for Stoney Creek. When he speaks about the government's purported success in balancing the fiscal budget, I think all Canadians will admit, as do I partisanship notwithstanding, that some credit is due this government, but I say only some credit.

Would the member not admit that about three-quarters of the deficit reduction to date is attributable directly to higher revenues, a large portion of which is attributable to higher tax rates partly through bracket creep, partly through the CPP payroll tax and other things such as the capital taxes on businesses.

Would he not furthermore admit that the percentage of cuts in the CHST for health care to the provinces was far higher than were the actual cuts to the government's own operating budgets for its departments?

Would he not fairly admit that revenue increases were the principal source of deficit reduction and that the government for whatever reason chose to cut health care transfers to the provinces to a far greater degree than it cut its own program spending here in Ottawa?

[Tony Valeri, Liberal, Stoney Creek, ON]

Mr. Speaker, again I will address the CPP question. Because CPP does not flow to government revenues, when references are made to the CPP payroll tax, it is actually an inaccurate statement. Those revenues do not flow to the consolidated revenue fund.

With respect to the increase in revenues, certainly the vast majority of the increase in revenues is as a result of increased economic activity. Certainly it is the same experience I often hear the members opposite talk about, of how the increase in revenues of the Ontario government comes from increased economic activity. It is the same logic.

It has often been said that we need to address the personal income tax challenges we face in the country, that personal income tax is uncompetitive when we compare it to other G-7 countries. We have started to make progress in that area. We have made a commitment to continue in that area to make it more competitive and deal with the issue of bracket creep by increasing the basic exemption. Certainly we realize that and want to ensure we can do that in a very sustainable fashion.

We do not as a government want to make any commitment with respect to tax reductions where we would find ourselves two, three or four years down the road having to reverse a tax decision because the government found itself without enough revenue and had to go back into a deficit. That certainly is not a policy of this government. We want to make sure that anything we do on the tax side is sustainable.

With respect to the reduction in the CHST, certainly the members opposite when they do make reference to the reduction in the CHST, they always make reference to the cash portion of the transfer. They should also make reference to the tax points which continue to grow in transfers to the provincial governments.

We can talk about where we have been but the impact of this debate is really to be focused on where we are going. It is only because of the hard work of Canadians and the commitment of Canadians in supporting the government in making the decisions it has had to make that we are now talking about what should be done and how the government should allocate a surplus.

[Suzanne Tremblay, Bloc, Rimouski—Mitis, QC]

Mr. Speaker, despite the late hour, I am happy to have the opportunity to intervene in the debate on the pre-budget consultations.

There are three parts to my intervention. First, a review of the main Bloc Quebecois demands, then, an overview of the ad hoc consultations in my riding last September and, finally, an outline of the funds needed to meet the most pressing needs in the area of Canadian heritage.

Over the fall, the Bloc Quebecois responded to the government's call and carried out wide ranging consultations in the ridings it represents to find out people's budget priorities. Then the Standing Committee on Finance visited Canada to find out people's wish list. Then the Liberals released a report that disappointed us a lot because it did not reflect people's expectations.

I would therefore like to review the main priorities of the Bloc Quebecois, which are the priorities it heard from its own audiences.

In the area of health care, the federal government must return the billions of dollars it cut. By doing so it made it extremely difficult if not impossible for the provincial authorities to manage health care, which is under their jurisdiction. The Minister of Intergovernmental Affairs says the government respects the Constitution. Let us see that in action.

In the matter of employment insurance, I believe that everyone is aware of the drama being played out from coast to coast. The last to recognize and sense the misery and poverty all around us appear to be sitting opposite. The Minister of Finance must realize that the employment insurance reform has gone too far and created perverse effects.

They must review the rules for eligibility. For example, a young student in police science leaves his job because he has to do a stint at the police institute in order to graduate. He has no choice as to when his placement there will start, because the institute calls the young Cegep graduates.

At the end of it, while he is waiting to find a job, he is denied employment insurance benefits because he is alleged to have left his job voluntarily. This is a flagrant injustice that must be corrected.

Benefits must be reviewed. The government has come up with a system—no doubt the target it hit was not the one it had in mind—but it wants to penalize seasonal workers such as those in our region who naturally fish only during the periods they are authorized to do so by the government. They are not even free to take their boats out when they wish. This is partly due to nature, of course, but also to the regulations of the Department of Fisheries and Oceans, which tells them when they must fish.

It is therefore wrong to penalize these workers year after year, by depriving them of 5% of their income over a maximum of five years. Statistics Canada tells us that, in the Lower St. Lawrence region right now, 68% of unemployed workers are receiving benefits of this type, which are reduced year after year, and this number will rise to 80% next year.

If the minister was laid off every summer when the House rose and saw his income drop every year, he would undoubtedly be the first to want to review his own punitive policy, which is merely driving the poor deeper into poverty.

EI premiums must also be cut. At least, that is the conclusion reached by anyone who gives thought to how the EI fund can best be used. There is too much money in the fund.

Right now, the government is accumulating surpluses and seems to be unaware that these surpluses do not belong to it. Moreover, the government has a duty to use them solely for the purpose for which they were collected. What is the point of the government's continuing to accumulate money when the people are in desperate straits?

As well, the conditions for maternity leave need to be re-examined, for these have changed a great deal recently, and in a way are impacting on the birth rate in Canada.

If the Minister of Finance were to announce a tax cut, he would also have to raise the basic personal exemption, index the tax tables, and lower taxes for the low and middle income groups.

The second point in my speech is an overview of the ad hoc consultations carried out last September in my riding.

The people of Rimouski—Mitis were no exception to the rule as far as the key priorities are concerned. They want the federal government to return the money to Quebec so that it may be reinvested in health and education. They are also calling upon the federal government to cut personal taxes.

Another important point they raised was their concerns about the realities of the employment situation in the region, which continues to be a problem, and they want to see the budget surplus used to help create jobs.

The public is keenly aware of the social problems needing attention in the region, and calls for greater social justice between individuals and between regions. Perhaps unemployment has decreased everywhere in Canada, but not in the lower St. Lawrence region where my riding is located. Over the past five years, the unemployed have seen $83 million less in employment insurance. It will be understood that, under these circumstances, when that much money disappears from the pockets of those who could be spending it, this is anything but good for the regional economy. In fact, it is very harmful.

I then took the time to look at what could happen to us, and what we needed from Heritage Canada, the area I am mandated to monitor the most.

Here I will set out a principle to which the Bloc Quebecois attaches much importance: public administration and accountability of all funds devoted to the arts.

Recently, a task force proposed the creation of a film fund. It was obvious that one of the key elements in this planned creation of a fund was a kind of robbing Peter to pay Paul. We will go nowhere in the arts if we deprive the NFB and Telefilm Canada of the means to operate properly in this area.

If the Minister of Canadian Heritage wants to take the lead and create a fund for films, the government must, in the upcoming budget, put out the same financial effort it did when it created the television fund by becoming a major financial partner in creating and renewing cable companies' funds.

The government must act the same way and invest new money in this area. It should not ask the organizations it funds to give up part of their budgets to create this fund, since organizations such as Telefilm Canada or the National Film Board would have a hard time recovering from more cuts.

The Minister of Finance must pay serious attention to the complaints made year after year by artists and consider the major problems it must resolve in the area of taxation.

In this next budget in particular, the minister must finally provide a clear and definite response to a request the Bloc Quebecois considers legitimate, namely, that of spreading artists' income over a number of years so the rich ones compensate for the lean ones, because most of our artists earn less than people who live below the poverty line.

The government must also re-establish some justice for the francophone and Acadian communities. This is the year of the Francophonie. The rate of assimilation across Canada is 40%. The government must put words into action by assuming its moral obligation to return budgets for francophones to their 1993 levels at least.

In closing, I remind the government that it must listen to the people, hear the distress calls from all over and meet the expectations expressed instead of trying to sell the people on the Liberal program, which is long out of date.

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Mr. Speaker, it is with a surplus of energy that I wanted to wind up the day by adding my comments to those of my Bloc Quebecois colleague, and especially to speak about the main challenge for members of this Parliament, which is the fight against poverty.

Members would have to agree that this government has little to say, little to offer and little to suggest when it comes to the fight against poverty. And yet what a paradox that is. Back around 1968, Pierre Elliott Trudeau, a Liberal, urged Quebeckers to continue the Quiet Revolution in Ottawa; his goal was to build a just society.

Forty years later, we can only observe that there have never been so many poor Canadians as there are today. Of course, it could be said that poverty is a question of adjusting the available manpower to the manpower required. This would be to ignore the fact that we are faced with a government that is deliberately setting out, through its policies, to create poverty. There is not a single parliamentarian of any experience who will not admit that the government has created poverty with its EI reform.

It takes some nerve. Despite all the imperfections of the labour market when left to its own devices, and not content with destroying the social safety net, the government decided to deliberately create poverty and exclude people from the social safety net by means of EI reform.

This calls for two comments. How is it that Canada is allowed to be one of the only OECD countries that does not contribute to its public EI scheme? By what principle should the Canadian government, in contrast to workers and representatives of employers' associations, be exempted from contributing to the EI regime?

What is most tragic about all this is that we have never seen a weaker ministerial deputation. We have never seen a ministerial deputation as lacking in ambition and as spineless as this bunch, for whom anything is fine as long as the party line prevails.

I think it must be made very clear: there is a deliberate desire on the part of this government to create poverty. If ten unemployed people were collected at random from here and there in Canada, it would be found that barely four of that ten could qualify for what is supposed to be a protection for workers.

Were there any voices raised by the government majority calling upon the Minister of Human Resources Development to improve his reform? This is a man of letters, a man who writes, who publishes, a wise and knowing man. The problem is, he is not a man who listens. He is a man lacking in sensitivity, one who is unable to stand up to his public servants in order to finally propose some corrective measures to improve a reform which has, and I say it again, deliberately created poverty.

I would like to share with you my feelings of outrage when I saw and heard the minister responsible for Human Resources Development, I shall not say his name, on RDI last Monday.

He was plugging his book, which had just been released. It is called “Pour une politique de confiance”. Confidence—I would like to see the minister come down to the lower St. Lawrence region, to Hochelaga—Maisonneuve, to Gaspé, to central Quebec, and tell the unemployed, whom he has deliberately excluded from his policy of social protection, that they must have faith in the future.

The biggest paradox is that there was the minister on television with his stylish suit, telling RDI viewers that there was something worse in society that exploitation: exclusion. As a Liberal minister, he is suddenly aware that this is a society which excludes some of its members.

He should have realized that before and not contributed himself, through the policies he proposed as a member of this government, to the exclusion of people. This is my first example of someone speaking from both sides of his mouth.

The second subject I wanted to raise is the problem of unsuitable housing, which is of concern to those facing financial difficulties. To all intents and purposes, the various governments that have succeeded each other since 1992, both the Conservative and the Liberal one in place, got totally out of public housing.

According to the evaluation by FRAPRU—a very credible activist group in Quebec that has developed expertise in government policy and especially in analyzing social housing issues—and according to the latest census, more than 1,670,700 households in Canada spend over 30% of their income on rental accommodation.

There is a problem because the definition that should be applied to poverty ought to take into account the portion of a person's budget that goes to housing. It is generally agreed that an individual spending over 30% of income on rent is likely to be in the disadvantaged class, spending a disproportionate amount of his income on public housing.

Has this government been sensitive to this since 1993? Has it proposed measures to help these people with housing problems? Absolutely not. Not only did it follow the example of the Conservative government, but it is now negotiating—and I say negotiating, although it is not really negotiating—so it can transfer $1.9 million to the provinces to manage the rental housing stock.

Negotiations are under way, but the approach is ill-conceived, to say the least, because not only does the government want to transfer a responsibility that it should never have had, but the rental housing it wants to transfer will need major repairs in the years to come. So the government does not want to transfer to the provinces the equivalent funds that would enable the provinces to look after social housing, which is their constitutional responsibility, as they see fit.

Historically, because it has always resisted, as it should, the federal government's invasive policies, Quebec has received on average 19% of the available funds since it has taken part in the social housing shared cost program. Quebec, however, has 29% of the people who need such housing. Quebec is responsible for 25%—its demographic weight—of the federal government's revenues.

This represents a distortion that provincial negotiators tried to get the federal government to understand, but in vain, because the federal government was not interested.

This brings me to the conclusion—because I think that is where I should be headed—that we need anti-poverty legislation. I repeat that there are two broad categories of people still being discriminated against in our society: homosexuals and those with low incomes.

You can count on the Bloc Quebecois, on the Bloc Quebecois whip and on the member for Hochelaga-Maisonneuve, to make a suggestion in the House in the near future for anti-poverty legislation that we hope will meet with the favour of the members across the way.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am pleased to rise in the House tonight to speak to the prebudget debate.

I would like to echo the comments made by my colleague from the Bloc who talked about the need to have an anti-poverty law in Canada. I think that is something that should be a real priority for this government.

The Liberal government loves to boast about its fiscal record on battling the deficit, but the government is much less comfortable talking about the social deficit it has created in the process.

Today Canada stands accused in the court of world opinion of fighting the deficit on the backs of the poor. In its report on Canada the United Nations committee on economic, social and cultural rights expressed its deep and grave concern on 25 issues relating to Canada's treatment of its most disadvantaged citizens.

In the words of the committee chair:

I would not be surprised to hear about these things from a developing country. But, in a very well developed country like Canada, with so many resources—the degree of homelessness and poverty is really quite shocking.

It needs to be pointed out that Canada was a signatory to the UN covenant on economic, social and cultural rights which lays out the basic foundation for equality and rights, and which should be the law that my colleague just spoke about, the basis on which we could eliminate poverty in this country.

If we were to read the finance committee's majority report on its prebudget consultations we would wonder if it was talking about the same country.

The Liberals claim in their majority report that “As its finances have improved over the past five years, the government has introduced several new programs designed to help build a strong and compassionate society”.

That sounds very wonderful. In fact the Liberal members on the finance committee think that Canada is in such good shape that the best thing the finance minister could do in his upcoming budget is to give huge tax breaks to Canada's upper income earners.

Is this the same country that the UN committee condemned for exacerbating poverty and homelessness during the time of strong economic growth and increasing influence? Yes, it is.

Last year, with a balanced budget in sight, we were supposedly on the cusp of a golden age. After years of budget cutting and zero inflation policies, the big question before the committee was how to spend the fiscal dividend. In fact the finance minister was delighted to announce a new fiscal milestone every time he stood up. As it turns out, the fundamentals are weaker than they have been since the 1930s, and the 1990s are shaping up to be a lost decade.

In fact per capita GDP has not risen through the decade. Real living standards have declined for a majority of Canadians and are at desperation levels for the growing numbers of poor.

While governments retreat behind slogans about market discipline and fiscal responsibility, the reality is that in our local communities health care bleeds to death from a thousand cuts.

More than half a million more children have fallen into poverty and students seeking education are pushed into a lifelong debt, if they can afford it.

The training system in the country is awash in chaos and confusion.

The majority of the unemployed are denied benefits, while a surplus of $20 billion accumulates in the government accounts.

Canadian farmers are killing their livestock rather than facing complete ruin trying to market them.

On the streets of our largest cities homelessness has been declared a national disaster. That is the reality that is facing a growing number of Canadians today.

Meanwhile, out in the market economy, the top 10% of income earners have increased their share of national income by a factor of 15. Today those folks earn 314 times the income of the bottom 10% of Canadians, up from 21 times in 1973.

It is in this climate that the Business Council on National Issues urged the finance minister to make the courageous choice and support major tax cuts for those earning up to $150,000 a year. It is in this climate that the Liberal majority on this committee is now pushing tax cuts for upper income Canadians as the number one priority for government spending.

Last year one of the finance minister's proudest boasts was that he had cut government spending back to 1949 levels. The impact of this year's recommendations will be to lock in downsized government, to promote private wealth while the public sector deteriorates, and to ignore the genuine needs of Canada's poor and unemployed whose lost benefits have paid for the finance minister's budget. It is my constituents in Vancouver East and in other low income communities who have paid the price for the government's attack on low income Canadians.

Last December the finance minister called child poverty a national disgrace. He said that the elimination of child poverty should be a great national objective. That is very worthy. He said it should be on the scale of the battle to reduce the deficit. But to date there is no indication that the federal government plans to do anything to ease the financial burden on poor people.

Later in 1998 two major reports condemned the federal government for its record on child poverty. The Canadian Council on Social Development noted that the number of food banks operating in Canada had doubled in the 1990s. The National Council on Welfare reported that only 17% of single parent families, the poorest of the poor, will get the so-called child tax benefit. Overall only 36% of poor families will get any benefit from this much wanted government solution to child poverty.

Despite the finance minister's supposed concern and the fact that our justice minister calls poverty our most glaring human rights problem, the new government approach to child poverty has done absolutely nothing. What the government really wants to do is define poverty out of existence.

According to StatsCan we have 1.5 million children and some 3.8 million adults living in poverty under what we call the low income cut off, which is the commonly understood poverty line in Canada. By changing the definition, essentially dropping the income floor by about 20%, governments could remove 1.8 million people with the stroke of a pen, including 500,000 children, from the nation's poverty rolls.

The government likes to say that the child tax benefit—and we have heard this so many times—is designed to improve benefits for low income families with children, to reduce the depths of child poverty and to promote attachment to the workforce. What the government does not say is that the poorest of the poor are denied the benefits, those on welfare. The government does not say that because of clawbacks the child tax benefit effectively denies benefits to roughly half a million poor families on welfare.

It does not say that parents unfortunate enough to lose their jobs will be made poorer by cuts to employment insurance benefits and will likely be denied benefits in training. It does not say that its newest approach to reducing the depth of poverty for families might be to drop the floor by over $6,000, handily reducing the depth of poverty by two-thirds.

What is needed is not a new definition, but a real commitment by this government in this budget to set targets to reduce unemployment and to set targets to reduce poverty for all Canadians living below the StatsCan unofficial poverty line.

If the Liberal government had a shred of sincerity about addressing poverty it should expand the program, end all the clawbacks and index the benefits to the cost of living.

A week or so ago I concluded a national tour across Canada on homelessness in this country. One of the things I learned from housing activists and anti-poverty activist in places like Toronto, Moncton, Winnipeg, northern Manitoba, New Brunswick and in my riding of Vancouver is that more and more people are feeling the impact of the abandonment of the national housing program by the federal Liberals since 1993.

This is one of the true tragedies in this country. One of the real causes of growing inequality and poverty is the lack of housing and increasing homelessness. The government must take real measures on this in the budget. We have seen this situation in Toronto. Although there are many Liberals from Ontario who are hearing a lot about what is going on in Toronto, we have a national disaster on our hands when it comes to homeless and lack of adequate housing.

In this budget we expect and demand to see an investment by the federal government to get back into the provision on the supply side of housing and work with the provinces to ensure that there is indeed a national housing plan. Canada is the only industrialized country that does not have a national housing plan.

I would just like to say a few words about health care because that too, like homelessness, is a growing crisis. The crisis in health care is evident in the growing numbers of Canadians who are losing confidence in the system. In May 1991 over 60% of Canadians rated the system as excellent or very good. By 1998 less than 30% of the population could support that claim.

Canadians are growing skeptical because they look around and experience a system in crisis. They know there are longer waiting lists and delays in treatment, crowded emergency rooms, lack of beds, nursing shortages, diminishing access to care, higher drug costs and the list goes on and on.

On a cumulative basis $15.5 billion in federal cash transfers have been withdrawn from the system since 1995-96. Privatization is increasing as well. For example, essential tests such as the MRIs in Ontario are increasingly being made available to the well who can pay for them rather than the sick who need them.

The New Democratic Party believes that health care has to be a number one priority. Our prescription for health care is to reinvest $2.5 billion into health care in the upcoming budget, to restore funding to the health protection branch, to conduct an independent audit, to stop the slide toward private for profit health care by reinforcing and enforcing the principles of the Canada Health Act and to convene a national summit on health.

I would like to move now to another key issue before us in terms of this budget debate, the EI fund. This year the government expects to bring in $7 billion more in EI premiums than it pays out in benefits. On a cumulative basis we know this now has resulted in a $20 billion surplus while over 900,000 unemployed Canadians have no income support, no access to training and very little prospect of finding new jobs as the economy contracts.

It is clear that government raided the funds to pay down the deficit and that it apparently intends to continue to do so. Meanwhile, less than 40% of the unemployed are receiving benefits today, only 31% of unemployed women and only 15% of unemployed youth.

As part of my tour across Canada on homelessness I talked to unemployed workers who were living in shelters. I remember one young man who gave me his last EI slip for $121. When I told him about the $20 billion surplus and how that really belonged to the workers of Canada, he asked me why he could not get access to that fund for training, to find work and to get help because he did not want to be in an emergency shelter.

What right does the government have to take that money from unemployed workers in Canada? Those funds should be used for retraining, to expand the benefits and to help the unemployed.

But apparently the Liberals see nothing illegitimate about taking that money and using it to subsidize debt repayment, nothing corrupt about seizing it to fund a tax break geared to upper income Canadians. It is precisely because the government cannot be trusted to manage the fund that New Democrats, along with other opposition parties, called for the UI premium account to be separated from overall government revenues as of April 1, 1999 with an independent commission made up of worker and employer representatives.

Theft and misuse of EI funds must be stopped. There is no question about that.

Pumping millions of dollars of spending power back into the hands of Canadians through the EI fund by expanding the benefits and the coverage in some of our poorest communities and regions would strengthen local demand, assist provincial governments coping with increasing welfare caseloads and, more important, would put food back on the tables of the jobless, restore their dignity and bring new integrity to the government's fiscal accounting.

That is what the Liberals and the finance committee should be fighting for. Instead, the central message of the Liberal majority report spending proposals is “the time has come for personal tax reductions directed at middle and higher income Canadians”. Their report calls for a flattening of the progressive income tax by presenting a three year tax reduction plan at a cost of tens of billions of dollars. They call for the elimination of the 3% surtax on incomes over $65,000. The cost, $1.05 billion.

They call for a timetable for eliminating the 5% surtax that applies only to the very high earners. The cost, $650 million. The list goes on and on.

The above plan amounts to tens of billions of dollars of tax cuts depending on how phase-ins are structured and a strong reduction of the tax burden on those who clearly can afford to pay.

Clearly the committee is not interested in the glaring fact that after tax inequalities are increasing in this country or that the poor are falling further and further behind.

New Democrats are concerned about the vast number of Canadians who are being excluded from the Liberal's frame of reference. Do these people even exist anymore to the Liberal government?

Our approach would be to rebuild our deteriorating social infrastructure with health care at the top of the list; restore the unemployment insurance program to the working people of this country; address the glaring issues of inequity around us by addressing the shocking levels of poverty and the widening gap between rich and poor and growing discrimination against the unemployed; to provide proper and timely relief to Canadian farmers devastated by the drop in commodity prices; and to introduce tax relief for all Canadians, as finances permit, with an increase in the GST credit and a 1% tax reduction rate to generate new jobs.

As the Canadian government brings down its last budget before the millennium and as the world celebrates the 50th anniversary of the international declaration of human rights, December 10, 1998, a fitting tribute to the occasion would be a recommitment from this government and from all parties to the standards and rights that we pledged for all our citizens and a budget that starts to address the serious lapses that are a major blot on this country's reputation in the world community.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I thank my colleague for Vancouver East for her remarks. She articulates a very serious concern about poverty, child poverty and its social consequences. Whether she believes it or not, all members of the House share her concern. We may disagree on the remedy but we all share the concern.

However, one often hears from this hon. member and members of her party statistics and figures about 1 in 4 Canadian children living in poverty and a huge percentage of the adult population living in poverty. She went on to suggest that the government somewhat cynically could change these numbers by redefining poverty.

I would like the member to comment on this issue because I think it is not a flippant one, it is a serious one. If we want to solve the problem, we need to know what the problem is. We need to define it. We need to know what we are dealing with and that means getting a proper and accurate measure of poverty in Canada.

My understanding, and the member could correct me if I am mistaken, is that the poverty measure to which she refers is actually not the poverty measurement at all but is rather the low income cut off measure of Statistics Canada, LICO.

I am sure she could confirm for me that the low income cutoff is calculated as a relative percentage of family expenditures on necessities such as food, shelter and clothing. This is calculated as a percentage of the average family expenditure on these items.

In other words, would she not agree that as a relative measure it would be literally and mathematically impossible to ever eliminate poverty or substantially decrease poverty in Canada as long as there is any degree of income disparity? Would she not therefore agree that absolute poverty as it is understood in common language and common parlance by common folks is not measured by the LICO? Would she agree that it might be helpful to come up with a fair definition of what the basic necessities of life are while understanding there are contingencies, differences by region et cetera?

Would she agree that the case she and other social advocates make would be stronger, more compelling and convincing if Canadians could really define the number of folks who really do go without the basic necessities of life, if we could get beyond a relative measure of poverty which is a permanent measure because it will always exist as long as there is even an infinitesimal income inequality?

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I thank the hon. member for his very serious question. To have a fair definition is something advocates and anti-poverty activists would agree with. The UN report, in addressing its comment to Canada on its performance under the UN covenant on social, economic and cultural rights, actually raised this question and challenged the government to work with anti-poverty organizations to ensure there is an accepted and fair definition around poverty measures in Canada.

It is true that the LICO has been used by Stats Canada as an unofficial poverty measure in Canada for decades. The danger here is that there is a very high level of cynicism in the population that the purpose of this exercise is not to help people who are living in poverty. It is to simply politically recast the question, redefine what we mean by poverty so we can attempt to somehow eliminate what is a growing political problem.

I work with anti-poverty activists in my own community and across Canada. There is great fear and skepticism that is what this exercise is about. The exercise is being led by the Fraser Institute, which wants to move us to a kind of criterion and measure that would see a huge drop in how we would define the number of people living below the poverty line. It is called the absolute poverty measure.

The reality is there are people paying 40% to 60% of their incomes in rent. No matter how we define it, they are living in poverty. They are living in a homeless kind of environment. Single parents making minimum wage, parents trying to survive on EI payments or parents whose EI payments have run out are living in poverty.

At some point it gets to be a very academic exercise. To be optimistic, if there were a genuine effort by the government to work with people who know what poverty is about and to have an inclusionary process then there would be some discussion. There is so much skepticism and fear about what the government is attempting to do through this exercise that we will see a lot of people resisting any attempts to change the LICO.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, in this prebudget debate we have heard every aspect of fiscal policy conceivable addressed. Many of my colleagues have quite adequately spoken to our critique of the government's misplaced fiscal priorities with respect to taxes, health care and debt reduction. We have also articulated our view about different priorities to place greater emphasis on health care, tax relief and debt reduction.

While I recognize the Reform Party is fallible, nevertheless we have worked hard as an opposition party, harder than any other opposition party that I am aware of in my political experience to present constructive details on substantive alternatives to the government on fiscal policy.

In that respect we have released a lengthy paper “Taxes and Health Care: A Critical Prebudget Submission of the Official Opposition”, of some 60 pages, that complements the paper we released last year “Beyond a Balanced Budget” which analyses in some detail the fallacious claims of the government to fiscal prudence. It goes into some detail into offering the kinds of tax relief we would like to see, ideas like legislated debt reduction, legislated balanced budgets and an increase in health care funding by reallocating spending from lower priority areas. I encourage people interested in these issues to give us a call and receive a copy of this paper.

The government has claimed that it is about to provide tax relief to Canadians in the upcoming budget. I am more than a little skeptical when I hear the comments of the Right Hon. Prime Minister who in 1996 said in response to a question on whether he preferred across the board tax cuts: “I do not think it is the right thing to do in a society like Canada”. He did not believe it was right to provide Canadians with tax relief in a society like Canada.

I do not know what he meant by that, but perhaps we got further clarification last week when the Prime Minister was at the economic summit in Switzerland and said that he agreed with the previous Conservative government's policy of steeply raising taxes in the midst of the 1991-92 recession.

This was the same Prime Minister who as Liberal leader castigated the then Conservative government for having raised taxes, for having deindexed the tax system and putting into play the vicious logic of bracket creep. He criticized that same Conservative government for having introduced the goods and services tax and for having raised taxes on corporations, businesses and individuals through the various 3% and 5% so-called high income surtaxes. That very same Liberal leader who six or seven years ago went across the country criticizing the then government for raising taxes, we now discover, secretly admired the deadly tax and fiscal policies of the then government.

It does not surprise us when we look at the record of his own government, a government which is rhetorically committed to the notion of tax relief but has committed itself to a policy of tax increases. We know, as the hon. parliamentary secretary admitted in questioning earlier this evening, that about three-quarters of the fiscal progress, the deficit reduction achieved in the government's mandate is attributed to revenue increases.

A fair chunk of that is attributable to higher tax rates through the pernicious, invidious tax of bracket creep which sucks about a billion additional dollars out of the pockets of middle income Canadians every year; through the $10 billion 72% increase in CPP payroll taxes, the single largest tax increase in Canadian history; and through some 36 other tax increases levied by the government on individuals and businesses. Yet the government still claims that it is committed to tax relief.

The government has perpetuated in Canada a shrinking standard of living, a shrinking level of disposable income. Never before in Canadian history have individuals worked harder and longer. Never before have we had more families with both parents earning two or more incomes. Never before have we had individuals, according to Statistics Canada, working longer hours and longer work weeks under greater pressure reflected in many of the social problems we are experiencing. Never before have we had Canadian families earning more in gross pre-tax dollars.

Yet, while people are working harder to get ahead, they are falling behind, not because of their own lack of effort and diligence and fortitude, but because federal tax policy keeps taking more of what they earn. We now have the atrocious situation where Canadian middle class families have seen their after tax disposable incomes on the decline for over 15 years, working harder year after year to try to get by economically and falling further and further behind. They are powerless to change it because only the government has the ability to undo the damage.

That is why the OECD says that Canada has the worst record among its 26 member nations with respect to per capita GDP growth, the worst record in terms of standard of living. Imagine that a country that ought to be the most prosperous, the most productive nation in the world given our enormous resources, human and natural, finds itself falling further and further behind. Relative to our G-7 partners, the personal income tax burden in Canada is a full 56% above the average. The corporate income tax burden in Canada is 9% higher than the average of our G-7 partners.

If we were to roll back the personal income tax burden to the level where it was when the government took office in 1993, it would require an $8 billion reduction in federal income taxes. Canada has the highest property tax burden in the OECD. We have the highest total tax burden in the G-7 when we remove social security taxes, with a total tax burden 28% higher than the average of our major six economic partners, a whopping 48% higher than our single major competitor, the United States, where we conduct 85% of our trade.

In 1996 the average Canadian family paid a total tax bill of $21,242 or 46% of income. The average family was paying 46%, not the high income families. It was more than they paid for food, shelter and clothing combined. However in 1981, in constant dollars, the same family paid only $11,000 and change in taxes.

In the first six months of 1997, just a couple of years ago, governments in Canada took 67% of the increase in the personal income of Canadians. Of every $3 in additional income received by Canadians that year, governments took $2, leaving one for the individual who earned them. Since the government took office the average Canadian has lost 155% of the increase in real income to taxes.

These may sound like just figures and statistics to you, Mr. Speaker, but I know you have a heart and understand the very real frustration many people feel because they work harder and yet fall further behind and the government takes two and a half times the actual increase in their real income.

The top marginal tax rate in Canada kicks in at about $60,000 Canadian, whereas in the U.S. the top tax rate kicks in at about $420,000 Canadian. This is an enormous discrepancy. When the Americans tax the rich they are taxing people who earn over $420,000 Canadian. When we tax the rich we hit middle class people who earn over $60,000, and hence such an enormous drain of human capital from our country in the brain drain. As I mentioned the CPP is going up, consuming any relief we see on employment insurance premiums and then quite a lot again. That is why we are proposing an ambitious program of tax relief which would provide an average taxpayer with an annual $1,300 pay raise and more than $2,500 for a one income family of four.

I would like to focus for a moment on a particular issue that is of increasing concern to me. That is the question of the inherent unfairness in the tax system for families who make the choice to raise their children at home. I cannot understand for the life of me why the government would adopt such a policy. It is not a partisan matter as the government is continuing the policy of the previous Conservative government. It is a policy which says that if Canadian families decide to make an economic sacrifice to forgo a second income and have one of the two parents stay at home most of the time or all of the time to raise young preschool children, they will be penalized. On the other hand, if they decide to raise their children in part through third party institutional day care and go off to earn the second income or extra income, they will receive a benefit from the federal government.

This is an absolutely perverse social and fiscal policy. It gets Canadian families all wrong because the vast majority of Canadian families want to have the option to stay at home and raise young children.

I know some members from other parties will say that this view is just some antiquated neanderthal view of Reformers who do not understand that the state of the family has changed and so on and so forth. I would submit that it is those folks who do not understand the nature, the desires, the longings and the dreams of Canadian families.

I refer to public opinion research recently undertaken on the issue. Compas Research recently did a poll indicating that 92% of respondents say that families with children today are under more stress than families 50 years ago. Most Canadians attribute this increase in the level of stress to economic pressure and consequently the impact the stress has on family breakups, rates of domestic violence, divorce, child abuse, et cetera. Many of the social pathologies with which we attempt to deal in our criminal justice system and our social programs are caused by economic stress in families.

What about the family tax burden? Eighty-two per cent of Canadians, not Reform Party members, felt it should be a priority for the government to change the tax law to make it easier for parents with young children to afford to have one parent at home. Eighty-two per cent is about as close as we get to unanimity in public opinion polling. Seventy-nine per cent felt it should be a priority to allow couples with children to pay lower taxes by filing joint income tax returns. Nearly eight out of ten Canadians say “Let us file our taxes jointly so that we are not discriminated against if we are a single earner in our family”. Eighty-one per cent felt it should be a priority to change the tax law to make it easier for families to take in and care for elderly parents.

To quote the pollster, he summarized it by saying that by an overwhelming margin Canadians wanted governments to slash the tax burden on families. They call for more favourable tax treatment of families supporting the elderly, joint tax returns and especially adequate cuts in family tax burdens to allow one parent to stay home with the children.

It is not the only interesting finding. We have seen that other polls have reached similar conclusions. Ninety per cent in a Compas poll indicated that a family setting was preferable to day care when raising a preschool child. Again it was not some crazy ideological agenda but the near unanimous majority of the Canadian people.

A 1991 poll conducted by Decima Research of working women indicated similar findings: 70% said that if they had the choice they would stay at home to raise their children as opposed to 27% who said they would rather work outside the home.

By a margin of seven to three Canadian professional working women say they would rather have the choice if they could afford it to stay at home and raise their preschool children.

What happens when these very same families look at the tax code? What do they see? They see that if they give up that second income and the father or mother decides to stay home with two or three young children and raise those kids at home, they will be forgoing the child care tax deduction. That deduction is available to people who take their kids out to third party institutional day care. The government increased it in the last budget. I think it amounts to $7,000 per preschool child. That is a huge subsidy that family is giving up. At the same time it is giving up the second income.

Similarly, if that father stays home while the mother is working, he will only be able to claim a spousal tax deduction as opposed to the full personal amount. The spousal amount is $2,000 less than the full personal amount.

If the same family were to divorce and reconstitute itself as a common law couple, then both parents could claim the full personal amount. That is a penalty against marriage, while the child care deduction is a penalty against rearing children at home, which 90% of Canadians and 70% of professional women would like to do. It makes no sense. It really is bizarre.

All sorts of credible organizations have spoken to this issue. The National Foundation for Family Research and Education, an organization on whose board I once served, has publicized the results of some very interesting academic research. After having conducted a lengthy meta analysis of child rearing researchers Violato and Russell in their 1994 paper on the effects of non-maternal care in child development concluded that non-parental care for more than 20 hours per week has a negative effect in three areas of social pathology, social-emotional development, behavioural adjustment and bonding. Furthermore, 20 hours per week of non-parental care such as institutional daycare has a minor negative influence on the cognitive realm, learning. These are significant findings.

They are telling us that the explosion we have seen in our society in the past three decades in youth and teen suicide, the second highest level per capita in the developed world, the explosion in youth violent crime which has increased by 150% since 1986, all the related pathologies and social problems can at least partly be traced to the increase in non-parental care which this parliament chooses to subsidize through the child care deduction and other similar inequities in the tax system.

These subsidies add up. Let us imagine a scenario where a married couple has two wage earners. The husband earns $40,000 and the wife earns $20,000 per year and they have a relative who takes care of the kids. They pay a combined total of over $6,000 in federal income tax.

A similar couple across the street with one income earner bringing in $60,000 will pay $10,000 in income tax. That is $4,000 more than the two income family. That is a significant difference.

Finally, a two income couple earning $60,000 and paying for third party care outside the home will have to pay $10,000 less in federal taxes than the single income family raising their children at home.

In effect, couples who choose to marry legally and raise their children at home seem to be signing a guarantee of tax discrimination when they put their names on their marriage certificate.

What then is the solution? The solution is very simple. The solution is for parliament to decide to allow the practice known as joint filing of tax returns so that single income families can split right down the middle the income of the one main earner, thereby moving their total taxes into a much lower marginal rate and allowing them both to claim the full personal exemption.

This would make an enormous difference in the taxes paid by single income families. Another major change would be to create equity in the child care system by converting the current deduction into a refundable credit which would be very progressive. It would be available to all families, regardless of how they choose to raise their kids, whether at home or through institutional care, and regardless of their income.

I close by inviting the government to look much more closely at the need for family tax fairness. I know that in the last parliament the member for Mississauga South had Motion No. 30 passed which called for the same kind of tax treatment that I am proposing. It was actually passed in this House by a majority of members.

There is a consensus in this parliament and a consensus in this country. There is no good reason to continue to discriminate against Canadian families working so hard to do best by their children.

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

Mr. Speaker, I think it is only proper that I take the opportunity to comment on what my hon. colleague has said.

I really want to focus on the budget plan. The member made reference to it in his opening remarks. The opposition party has gone to great lengths to provide an alternative to the upcoming budget. I really want to focus on that area.

When I reviewed the plan that was released, essentially what I found was that a lot of the promises were really based on some widely optimistic revenue assumptions.

When one combines the optimistic revenue and naive expenditure assumptions, it really results in a very unrealistic picture of future budgetary surplus. If one were to look at a three year period and go out to 2001-2002, they are actually predicting surpluses of about $30 billion to $35 billion.

That is actually much more optimistic than the private sector forecasters which is what the government uses in order to build its budgets. We go to the private sector. The private sector provides a consensus of what these forecasts should be and that is what we build into the actual budget.

The Reform plan assumes a revenue growth on average of 5.5% for the next three years. It is almost two times the private sector consensus. It also ignores the cost of maintaining existing programs like old age security and equalization.

There are other incremental costs of maintaining other existing programs. The member has not in any way included economic prudence in the revenue forecasts. That means that if the economy turns out ever so slightly worse than what was predicted, the plan is derailed.

The question is how to deal with the impact of a slower economy based on these overly optimistic assumptions. Either programs have to be cut or taxes have to be increased. Which is it?

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I can understand why the member would regard the assumptions we have made as being unrealistically optimistic given that his government has followed a deliberate policy of under projecting growth in order to politically manage the political aspects of the surplus problem.

Clearly the Minister of Finance does not want his spendthrift Liberal colleagues such as the distinguished lady who manages the heritage department grappling for dollars in a pinata contest for the next Liberal leadership.

I am sure he has a hard time getting to sleep imagining what would happen if he were to tell his cabinet colleagues the real truth about the surplus.

We know from his treatment over the last two or three years that the government has overshot its surplus projections by an enormous amount. I do not think it is an entirely bad thing. I think it is good that the government has used very conservative projections.

I think that for political purposes it has been a prudent approach generally. I also think it is good to include a contingency amount, as this government has done, of $3 billion a year.

In constructing our own projections we consulted with all the private sector forecasters and indeed the government's own forecasts and we chose assumptions for future growth which is slightly less than the average projection among private sector economists.

Furthermore, we did include a contingency provision. I am trying to find the precise amount. I will have to take that under advisement and get back to the hon. member. However, we did include a contingency amount and we did try to select projections for growth, inflation, employment and revenue growth which were reasonable and prudent.

The point is well taken. We can have an argument I suppose about whose projections are more prudent but I think frankly ours are more accurate. In the last two or three years the projections that Reform has made have been closer to the actual outcome than those made by the government in its own budget documents.