Mr. Speaker, it is my pleasure to address Bill C-65.
Unfortunately the Reform Party cannot support this bill. As my colleague from Calgary Southeast said and earlier my leader from Calgary Southwest said today, Reform Party does support the concept of equalization but we do think that the program as it is structured now not only is wasteful, vague and ill-defined but actually does some damage. We would like to see a different approach taken.
Before I get into that I simply must respond to something my colleague across the way said. He said that we have one tier health care in Canada today.
Let me inform my friend across the way that about 30% of health care in Canada today is funded by private individuals. Maybe he did not know that. Maybe he did not know that only 9% is funded by the federal government now. It used to be 50%, but the federal government did its disappearing act which it chronically does when the going gets tough, and now the provinces have been left holding the bag.
Of course, the member and his government provided the latest example of that when they dumped about $20 billion in spending cuts on the provinces, including his own native Newfoundland which really could hardly afford to bear that kind of loss. My friend across the way should explain to his constituents if he cares so deeply for social programs, how it is that he let his own government eviscerate health care in Newfoundland like he did. I think he has a lot of explaining to do.
I will get into some of the specifics of this bill. The Reform Party has problems with Bill C-65 for a number of reasons. I should explain first of all what this is. This is an equalization bill that seeks to extend the current equalization agreement with some tinkering for another five years. It means about $8.5 billion in expenditures or somewhere in that range per year, in other words about $42 billion over the next five years.
That is a tremendous amount of money. It amounts to about 8% of the federal government's budget every single year. Yet are we having a major task force look into this? Are we having a big discussion about this? No. We had three days notice that we were going to debate it today. Probably not too many days beyond today it will be pushed through by this government because that is the way it does business.
I would suggest that this is one of the most important pieces of legislation that can be brought before this House. There is almost universal agreement that the legislation, and I guess it is in the Constitution now, the whole formula and idea of equalization needs radical reform. There is hardly an economist in the country who would argue that the current design is good.
I want to start by pointing out that it is fraught with opportunity for political manipulation. I will mention this to my friend who just spoke, because he comes from a riding that was formerly held by the current premier of Newfoundland.
Not very long ago in January the premier of Newfoundland announced to everybody that there was was going to be a $30 million deficit. This was a great disaster. Lo and behold two days later we found out that the federal government did some tinkering with the equalization payments. All of a sudden he has $30 million in excess of his budget. He will have a balanced budget. It shows us how open to political manipulation the current system is. He went ahead and called an election on the basis of his balanced budget. That is ridiculous. It is an insult to Canadians. We need to have a system that is a lot more transparent than that.
I point out that we have a Constitution that says that equalization should provide reasonably comparable levels of public services at reasonably comparable levels of taxation. That is about as clear as it is. In other words it is wide open to interpretation. However the current government in power wants to structure it, it will structure it. It does not need all the provinces to agree because the federal government, if it so deems, will go ahead and structure a side deal with one of the provinces. We have side deals now with Newfoundland and Nova Scotia that provide different set-ups.
One of the problems with the formula, which is the most confusing convoluted thing I have ever laid my eyes on, is when it talks about calculating revenues. For instance for forestry, it does not take into account the cost of production. When we go to the people's republic of British Columbia where it costs a fortune to cut a tree and compare it to what it costs to cut a tree in Alberta, there is a huge difference. That is not reflected in the formula. Some provinces are discriminated against because of the huge discrepancies in the cost of production. In my judgment we have another disaster there.
We also have problems with this piece of legislation because it does not take into account the other types of social spending that come from the federal government. I want to give some examples of that. In my judgment and in the judgment of people who have followed this for a lot longer than I have, we constantly see in Canada various programs that seem to be equalization programs of some sort.
Look at employment insurance which is structured on levels of unemployment in particular areas. People in Alberta have to wait half a year to get unemployment insurance benefits. People in Atlantic Canada where there are high levels of unemployment may have to wait 10 or 12 weeks. It is now on an hourly basis but it boils down to somewhere in that range. That becomes a big transfer, a big equalization program.
Look at something like the infrastructure program. A lot of people did not realize that in itself was also an equalization program. It was based on levels of unemployment. Again we see a whole bunch of money going from some provinces into other provinces.
Look at regional development which is heavily skewed toward certain provinces. Look at defence spending. There is a good example. All these military bases are being put in particular ridings not because it makes military sense, not for the nation's defence, but because the government wants to plough some money into it.
I would argue that we need transparency. I would argue that we need a system today where we take into account all of this spending. Then we ask whether or not it is an appropriate amount. Maybe there needs to be a more straightforward formula. My leader spoke of that earlier today.
I do not want to make that the central part of my speech today. I want to talk about how we create have provinces. My friend across the way talked about the need to have ways to bring provinces that are currently receiving equalization into the mainstream so that they do become have provinces. I agree with that. We all agree with that. We believe there should be ways to do that. But I can guarantee that having income tax top marginal rates of 69% like they have in Newfoundland is not the way to do it.
My friend across the way who embraces collectivism or spoke of collectivism in some warm way, and gave a speech about how Canada is one big social program, would be shocked to find out that many businesses do not want to set up shop in a province with marginal rates of 69%. They are scared away by high marginal tax rates. They find it passing strange that an equalization program that actually provides incentives to provinces to have high income tax rates, because that is how they receive equalization payments, actually exists.
I think he would be shocked to find that out. But I encourage my friend to consider that perhaps there is a better way to make Atlantic Canada work better. Maybe there is a way through lowering taxes to attract investment to Atlantic Canada. That is why last week the Reform Party spoke of a plan to give Canadians $26 billion in tax relief. My friend across the way will say “Oh, but you are going to cut social programs”. Not at all. In fact we would increase spending on social programs.
We would cut spending for some things that Canadians do not consider to be very important. We would cut spending for the CBC. We think that $800 million a year spent on CBC television is a horrible waste. We think that the money that currently goes into regional development has become a huge pork barrel industry.
My friends across the way will know that even in Atlantic Canada many people are extraordinarily cynical of ACOA. They see all the manipulation that goes on whereby government ministers reward their friends.
I point out the situation in the Prime Minister's riding where all kinds of chicanery is taking place. Somebody who bought a hotel from the Prime Minister has received a bunch of federal grants. That is a little bit ridiculous. I see my friend getting hot under collar, but sometimes the truth stinks.
We argue that those things need to be cut. We would like to see the CRTC cut. It is a terrible waste of money. We would like to see all kinds of money eliminated from the bureaucracy of different programs like Indian affairs. Every year the auditor general pillories the department of Indian affairs for its wasteful expenditure of Canadians' money. In his last report the auditor general chastised the department for spending $91 million to negotiate treaties, yet not a single treaty had been negotiated. That is what goes on in the Liberal government.
We argue that we need to cut spending, absolutely; not in the high priority areas, but in those wasteful areas to which I just referred. We are going to continue to push for that to happen.
I will speak a bit about the best way to help people across the country. It is not by giving them a program. It is not by becoming a huge welfare state. It is not by embracing big government welfare programs like my friend across the way would have us do. We think that is the wrong approach. In fact I would argue that has failed in every country where it has been attempted. Instead it is time to see reality and to understand that it is the private sector which will create the jobs. It is the private sector that will create prosperity for people.
The political allocation of scarce economic resources simply does not work. The definition of insanity is to keep doing the same thing over and over again and expect to get different results, yet that is exactly what this government does. Every year it thinks that if it just throws a little more money at the problem it will get better. So it throws more money at the problem, but it never gets fixed. It just keeps getting worse and the government cannot figure it out.
It is time that my friends across the way embraced a new approach. We offer them an idea whereby we take the money that they currently dole out to their friends and instead leave it in the hands of taxpayers, entrepreneurs, investors and homemakers, the people who know far better than the government how to use that money.
I would argue that Canadians after a generation of seeing taxes go ever upward really do deserve a tax break. It is time for tax relief.
The hon. finance minister spoke in the House today about how he wanted to give Canadians tax relief. His department has been floating for weeks the idea that it wants to give Canadians a $2 billion tax cut in the next budget. What a joke. What the minister does not mention is that this year the government is going to increase taxes by $2.4 billion.
CPP premiums are rising by about $1.4 billion. Bracket creep takes about a billion dollars out of people's pockets every year. What the government trumpets as a wonderful tax cut is actually a tax hike in disguise, and so it has been with this government for five years.
Every year the government says “We are going to provide targeted tax relief because we are Liberals and we care”. It is simply not so. In fact since this government came to power we have seen taxes go ever upward. We have seen disposable income fall like a stone. Canadians have to pay $38 billion in taxes this year that they did not have to pay in 1993.
I would argue that Canadians can ill afford that. It is interesting that as revenues for the government went up $38 billion we saw the savings rate drop $31 billion. Who really balanced the budget? Was it the finance minister?