Debates of March 15th, 1999

Supply

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, I listened with interest to the debate. I find it a fascinating discussion so far. I cannot help but think about what this place would look like if we were filled with political eunuchs.

We have seen many times in the past legislation passed that makes this place irrelevant. To call us a palace of eunuchs makes me nervous. I cannot help but think about this when I listen to my friends in the Bloc. In my judgment they seem to be advocating some sort of Quebec as a banana republic, with no control over its monetary policy, no control over the value of its currency and abandoning decisions on these crucial matters to others.

Are members of the Bloc Quebecois prepared to give up any sense of sovereignty over currency? Is this an extension of their zealous approach to NAFTA and all of the other implications of a free trade agreement?

[Richard Marceau, Bloc, Charlesbourg, QC]

Madam Speaker, I am a little bit disappointed by the question asked by my colleague from the NDP for two reasons. First of all, as I mentioned in my speech, right now Canada does not have an independent monetary policy. We could study the issue in committee and I think we would come to the conclusion that our monetary policy is not independent and we would have to take it from there.

Second, I do not see why such proud countries as France, Germany with its Deutschmark, Belgium, Italy and Spain, old countries that were built on a very strong brand of nationalism, would be willing not to give up their monetary sovereignty, but rather to pool it. Maybe the notion of sovereignty in the 21st century is more like a pooling of individual sovereignties.

Here is an example. The Eurocoin, the new European currency, is France's idea. The franc was very closely linked to the Deutschmark, Germany's currency. France saw it had no influence on German monetary policy. It had no representative in the Bundesbank. What did it do? It proposed the adoption of a common currency. As a matter of fact, France was behind the adoption of the Maastricht treaty.

What happened? France now has a representative in the European Central Bank, whereas previously it did not have any control over European monetary policy, which, for all intents and purposes, was Germany's monetary policy. France did not lose any sovereignty; it gained some.

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

Mr. Speaker, I listened with great interest to what my colleague from the Bloc said. He has been quoting these examples from Europe.

It seems to me that on this side of the Atlantic the better example at the moment for the extension of the U.S. currency is the commonwealth of Puerto Rico. For 107 years Puerto Rico has had the U.S. dollar but nothing else. It is simply a source of cheap labour and occasionally a source of ball players for the United States.

In the western hemisphere, has my colleague studied the case of Puerto Rico in the last 100 years?

[Richard Marceau, Bloc, Charlesbourg, QC]

Madam Speaker, I am pleased to note the tone the Liberals will be adopting in this debate. It is rather distressing.

They are comparing apples and oranges. This is the first time I have heard the Liberals comparing Canada to Puerto Rico. This gives us some idea of how low they can stoop.

Canada is G7 country. Its economy ranks 7th in the world. They are trying to compare Puerto Rico, which is a political dependency of the United States, with Canada, which is not, and where we could have a say on the North American and pan-American monetary policy. This is an opportunity we must not let slip through our fingers.

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

Mr. Speaker, I am pleased to lead off the government's response to the Bloc's motion on the pan-American monetary union.

I am sure that the blatant irony of this motion is clear to most hon. members. We have a party that is dedicated to breaking up one of the world's truly blessed unions, Canada, and at the same time asks us to jump into bed with American monetary policy.

If we look at the real question and issues at stake here it quickly becomes clear why this motion deserves to be rejected. Would a monetary union with the United States or the rest of the hemisphere give us a better monetary policy? Would it be good for Canadian firms? Would it lead to higher living standards for Canadians? The answer to these questions is absolutely not.

Remember when in the 1960s Canada had a system of fixed exchange rates. However, this did not eliminate speculation against the value of the Canadian dollar. In fact, it in some cases led to currency misalignment. Eventually the fixed exchange rate regime was abandoned in the 1970s.

Many other countries adopted a system of fixed exchange rates after World War II. Like Canada, some of them chose to move to flexible exchange rates while others moved to make adjustments to their currency.

Today there is the Euro. That is the basis of this whole motion. The move of 11 European countries toward monetary union might seem applicable to this hemisphere but this is the sort of false apples and oranges comparison, or maybe I should say tourtiere and strudel, that falls apart the minute we look at it intelligently.

Consider the facts. The European project involves several countries with key members of a similar economic size and at a similar level of development. These countries have adopted a common currency administered by a common central bank with a board of 11 national directors.

In contrast, a pan-American monetary union would be dominated by one mega country, the United States. There would be the influence from another group of countries with records of sometime high cosmic inflation.

The bottom line is clear. In such a union, even if it were put into practice, it is doubtful that Canada would have a significant role to play in the formulation of North American or pan-American monetary policy.

This takes me to the underlying point. No matter how members try to phrase or disguise it, a monetary union actually amounts to fixed exchange rates which eliminate forever Canada's ability to conduct a flexible and independent monetary policy. This is no small or abstract sacrifice.

A flexible exchange rate regime has served Canada very well over the years, helping our economy adjust to important economic shocks and allowing our country to conduct an independent monetary policy.

Some might ask about the recent movements in the Canadian dollar. Do these movements not show that we would have been better off with a fixed exchange rate and a monetary policy under the control of others? Absolutely, definitely not.

These movements represent the natural response to international shocks. In fact, it is the currency fluctuation that has actually helped us to adjust to these shocks.

As Bank of Canada Governor Gordon Thiessen has explained on a number of occasions, the dollar weakened last year because Canada was being sideswiped by events beyond our borders. Foremost among these have been the Asian financial crises and more recently the development in Russia and Latin America.

Let us put this into context. Canada was certainly not the only country to be affected by these recent developments. Since the Asian crises began the currencies of other major commodity exporters such as Australia and New Zealand were affected even more.

Although Canada's dependence on commodity based exports has steadily declined, Canada remains a net exporter of primary commodities. Accordingly, the movements in commodity prices have had a significant impact on the Canadian economy. The U.S. on the other hand is a net importer of primary commodities. As a result Canada suffers income losses when commodity prices fall while the U.S. economy benefits. This is an important difference between Canada and the U.S.

The world prices of primary commodities have a major influence on the value of the Canadian dollar because the exchange rate adjusts to balance trade and capital flows in a flexible exchange rate system. When world commodity prices fall the Canadian dollar tends to depreciate against the U.S. dollar. This is truer of our relationship with the U.S. than other G-7 countries.

Over the past two years the ratio of export to import prices in Canada and the United States has moved in opposite directions. Our terms of trade declined by 6% while the U.S. terms of trade rose by 5%. In other words, we are receiving less attractive prices for the goods we sell abroad compared with the prices we pay for products we import while the U.S. enjoys the opposite situation.

There is an important corollary that we must remember. Canada's exchange rate flexibility has helped buffer the Canadian resource centre by limiting the damage from plunging global commodity prices. It has helped up to continue to sell goods around the world, especially in the U.S. market. The flexibility has helped more than hurt the aluminium industry in Quebec, Ontario metal mines, Alberta oil and B.C. forest companies. These industries would have suffered severely and more so if we had a fixed exchange rate, virtually pricing us out of any global sales at all.

The basic fact is flexible exchange rate arrangements are more suitable when countries tend to have different monetary policy objectives, different industrial structures and face different economic shocks. It is not the situation Canada faces as anyone who can look beyond their narrow provincial borders can say.

Let me again emphasize that a flexible exchange rate allows Canada to conduct independent monetary policy that puts Canada and Canadians first. The benefits of the greater monetary policy autonomy and macroeconomic stabilization made possible by flexible exchange rates are large. On the other hand, a fixed exchange rate would significantly curtail the autonomy of Canadian monetary authorities.

The main objective of monetary police with respect to the domestic economy is to preserve the value of money, to achieve and preserve a low and stable inflation rate. Anyone who remembers Canada of the mid-1970s and beyond understands that a high and variable inflation rate can be very costly for the economy and that aiming at low and stable inflation is the best contribution that monetary policy can make for the achievement of economic well-being.

A flexible exchange rate plays a crucial role in the operation of monetary policy in an open economy like Canada. We know that capital is highly mobile between Canada and the U.S. and it would be impossible for Canada to set an independent and effective monetary policy under a fixed exchange rate.

Independent monetary policy also allows us to better absorb what are called macroeconomic shocks. We are seeing right now that we have been able to escape the worst of last year's Asian crises. Although both the Canadian and the U.S. monetary authorities are currently dedicated to maintaining low inflation in their respective countries, it is a recognized fact that Canada has recently made more progress in this regard and we have been able to do so more explicitly about our longer term objective.

The record of many other countries in the hemisphere is by no means as good as Canada's. Would we want our monetary policy to be dictated by a board of governors that would include representatives who had run hyper inflations in the past? Fixing the exchange rate also sacrifices our ability to use monetary policy for short term economic stabilization. For Canada and the United States to be an optimum currency area they would have to face very similar economic shocks and be very integrated in terms of the movement of workers.

Here is something for the hon. member of the Bloc to think about. Although Canada and the United States are bound together in many ways, we actually face very different economic shocks. Some would argue that a fixed exchange rate would reduce transaction costs in international trade and capital flows. We have evidence that shows the opposite, that in fact the costs are very small compared to the benefits.

If the costs of currency volatility were so high, why has there been such a drastic jump in two way trade and direct investment between our two countries?

I do not think any of these attributes can be found in today's motion or in the political game playing that is going on here. If we pursued the suggestion of the Bloc, we would end up trying to tread water in tough seas, having thrown away the life preserver of our sovereign, independent, made in Canada monetary policy. It is not an option the government will ever accept on behalf of a vast majority of Canadians.

I encourage all members of the House to vote against the opposition motion.

[The Acting Speaker (Ms. Thibeault)]

In light of the interest being shown in this matter, I am going to ask hon. members to kindly limit their questions to one minute.

[Richard Marceau, Bloc, Charlesbourg, QC]

Madam Speaker, I was interested to hear what my colleague from the Liberal Party had to say. Some of his points merit more thorough study.

That is precisely what the purpose of the Bloc Quebecois motion of today is: to look at both sides of the issue. There are arguments both for and against.

My colleague has decided to vote against the motion presented by the Bloc Quebecois. Is this not missing an opportunity to look at such an important issue in greater depth, instead of being restricted to a single day as is the case today?

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, I thought I indicated quite clearly that I would be voting against the motion by the Bloc. In the remarks I made I thought it was very clear the government has as its objective to ensure that we put Canada and Canadians first.

The motion is essentially saying to the House and to Canadians that they would like to go back to a fixed exchange rate system. When they draw comparison between the North American hemisphere and the European Union, members of the Bloc fail to recognize that within the European Union are countries of similar size and economic power. There are countries that want to integrate their economies. There is a free flow of labour mobility in the European Union which forms part of its agreement.

Does the hon. member who asked the question think that it would not be in the best interest of Canada and Canadians to ensure that we direct our own monetary policy? We have seen the impact of that. As we experience what goes on around the world, we must have as a country the flexibility to ensure that we can respond and continue to grow our domestic economy in spite of what goes on globally.

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

Madam Speaker, I listened with great interest to the remarks of my colleague. I understand his points about the differences between the European Union and the scale of our economies and the differences in the western hemisphere.

I mentioned before the case of Puerto Rico. It seems to me the debate is about extending the U.S. dollar. It was extended to Puerto Rico well over 100 years ago, which has simply resulted in the slowing of the economy of Puerto Rico. By the way, there are no increased ties between Puerto Rico and the United States.

We were speaking about the western hemisphere and I would like to ask my colleague about the U.S. dollar being extended to Liberia. I am not sure if it is still true, but it may well be that for many years Liberia has used the U.S. dollar at par. The country of Liberia is in the eastern hemisphere and its economy is very weak. Would my colleague care to comment on these two examples? Has Puerto Rico been a success? Has Liberia been a success by extending the U.S. dollar?

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, one just has look at what most economists are saying. It is very clear that the argument against any sort of monetary union with the United States far outweighs any of the benefits.

The two examples brought to my attention by the hon. member for Peterborough have to be looked at, but when we look at what Canada has done in the past and what Canada intends to do in the future, our economy is not completely and directly synchronized with the economy of the United States. Canada needs to have the flexibility to respond to what goes on around the world. Just extending the U.S. dollar does not in any way solve the challenges that any country faces.

The two examples the hon. member has drawn upon speak for themselves. The arguments are there. The support of Canadians is in tact. We will continue with our own monetary policy to ensure the domestic economy continues to prosper.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, this is one of those motions where one cannot help but think that those people to our left, the members of the Bloc who put forward a motion like this one, are playing a game of chess. They are not thinking about the current move but about the next move or maybe the one after. We ought to give them a reluctant commendation for at least thinking ahead.

The level of our currency is a measure of our economic health. When we look at Canada's present economic health we get a 6.5 on a scale from 1 to 10. Compared with the American dollar we have a 65-cent dollar.

They are asking us to strike a committee to debate the issue. I am certainly in favour of debate. I might even be persuaded to vote in favour of a motion to strike a committee because perhaps this ought to be dealt with in considerably greater depth than we can do here. Perhaps we ought to listen to expert witnesses which a committee could do and which unfortunately we do not often get to do here because not many members are economic experts.

My initial reaction is that perhaps we ought to enter into the debate in such as way as to say yes, let us enlarge the debate. However, the underlying reason for this committee and for this study is intriguing. It has to do with the use of currency and the proposal behind the one we are debating.

We are debating a proposal to strike a parliamentary committee, but the idea behind it is to have a common pan-American currency so we will not have to do all the conversions and somehow, I suppose, hide the red faces of the Liberals for its economic policies which have brought us into such dire straits in this country. Our dollar's value on the world scene and particularly as it is pegged against the American dollar is at an abysmal low rate.

An analogy might be appropriate. I do not know if members have ever seen a house going down the road. I have seen this in Saskatchewan and Alberta. Quite frequently they move buildings down the road on many wheels. It could be 20 wheels or 24 wheels set underneath the building. It is intriguing. For a number of years a friend of mine was in the business of doing this and among other things used to haul huge grain elevators that go 100 feet into the sky.

The analogy I want to draw is how those wheels were constructed. If a large building is being moved along the road and goes into a hole, if there is not some sort of equalization between all the axles one axle stops carrying its load. Two things can happen. Additional weight transferred to adjacent wheels can blow the tires on that wheel, causing instability and if an elevator is being hauled it could tip. As a matter of fact my friend tipped one of his elevators because the technicians were not paying particular attention.

I was intrigued when I looked at the mechanism. Every one of the axles is tied together with hydraulic hoses and hydraulic rams so that when one wheel goes into a hole the pressure is immediately reduced, but as the other wheels pick up the load the pressure is transferred back to the wheel during the time it is in the hole. It is never relieved of carrying its share of the load.

Conversely, if one of the wheels were to go over a rock or a high spot on the road, again it could cause the structure to tip. It could result in the tires on that one axle exploding immediately because of the additional pressure from all the weight of the building being on one set of wheels when it is meant to be distributed.

As the pressure increased, the pressure on the rams was transmitted via the hoses to the other wheels supporting the structure. Two things happened. It prevented any one of the wheels from exploding because of increased pressure on it and it kept stability to the whole structure so it could go straight along. There was an additional mechanism available to raise one side to keep it straight if the road was uneven, but that has nothing to do with what we are talking about here.

What happens if we have a larger currency? It has been suggested that we should protect the Canadian currency by tying it to the American currency. A constituent in my riding, if he happens to be watching CPAC this morning, which I know he does from time to time because he is a retired person and has time for it, will be pleased to know I am now presenting his case. He strongly said we should tie the Canadian currency to the American currency, just do it arbitrarily and say this is what it is. My constituent suggested a time line. Perhaps it could be one cent per month over 30 months which would bring our currency back up to par with that of the Americans so there would not be a sudden change.

There is merit in that suggestion. When our economy has a fluctuation, when it goes down the tube, because we are in the larger package they pick up the slack for us and we do not feel an immediate hit in that situation. Eventually we would anyway, I believe.

The general principle of broadening the currency is to give strength to all countries that participate based on the overall average instead of on the vagaries of an individual partner.

One needs to be very practical when one thinks about and does any reading at all on the European Union, the new Euro coin and the Euro currency that is under way. As an aside, Westaim in my riding is a coin plating plant which, among other things, is providing blanks for the new Euro coin. I thought I would throw in that free commercial. That is proceeding.

Why would we not want to do this? I think there are a couple of reasons. I seriously question it. There are some countries in our hemisphere that are not carrying their load. They are inefficient, perhaps worse than Canada. They are very highly taxed as is every Canadian citizen. As a result, our overall economic efficiency is too low.

One really wants to ask the question: Why does the separatist party from Quebec put forward this motion today? I think perhaps, as I said in my introduction, it is thinking a move or two ahead in what it expects will happen, that Quebec will eventually separate. I suppose what we are hearing today is a tacit admission that when that happens the currency and the economic well-being of that province will be seriously threatened. I think that is a political reality.

Members of the Bloc are hedging against the future and hoping they can tie themselves to a larger currency so that the weight of that very uneconomic decision would be distributed over and carried by Canada, the United States and the other countries in the union.

I believe that in the move to do this the separatists better have a good share of realism. There are a number of countries which are being denied entry to the European Union because their economy is not strong. The European Union is working to make sure that its currency is strong, viable and very stable. The European Union literally is not permitting some countries to join because of their economic stability. Economic stability correlates very closely to political stability.

I would give advice to my separatist partners, whom I wish would simply stay in Canada. Let us work together and let us motor on. If they are going to go down this route, they should recognize realistically that there is a possibility that they would not even be permitted in because they would not be meeting the criteria for membership.

[Richard Marceau, Bloc, Charlesbourg, QC]

Madam Speaker, I was fascinated by the remarks of my Reform colleague, especially his explanation as physics professor of the mechanics of moving buildings and grain elevators across the prairies.

The Reform Party boasts of being a party that encourages debate, is opposed to secretive meetings behind closed doors and is desirous of bringing all Canadians from across the country into the debate. In this vein, will it support the motion by the Bloc Quebecois, that is, open doors and windows and ask everyone to express their opinion—experts, lobby groups, unions, management and so on. Let us have a debate in society rather than a closed debate as some, unfortunately, would like.

So, will he support this motion in agreement with the principles he claims to support?

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, the answer is maybe, and that is final.

I will give the hon. member a reason for this. Over and over we see the Liberals on the other side not having debates. In fact on Friday they used a short day to engage in a so-called debate on a bill on which they had imposed closure.

The member is absolutely right. I like debate. We need to debate, not only in this place, but with Canadians across the country on these issues.

In that sense, I would support a wider debate and I would support this motion. However, in the interest of that I intend to sit here all day today to listen to this debate. I have to tell the member that at this stage I literally have not made up my mind whether I am going to support this motion or not. I am going to decide that after listening to more debate and more thinking. At the end of the day I am going to decide whether or not to support this motion. My present inclination is about 52 to 48 to vote for it.

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

Madam Speaker, I am sure the hon. member knows that when we spend our time in the finance committee we do have some constructive debate. There are members on all sides of this House who certainly enjoy debate.

The hon. member talked about the economic health of the country of Canada. I believe he ranked it at about 6.5 out of 10 in his opening remarks. He made reference only to the exchange rate. What about inflation rates in Canada, the growth of the GDP and the unemployment rate declining?

He talks about fixing the currency to the U.S. dollar. He has a constituent who has put forward that proposal. I ask the hon. member whether he thinks that the B.C. forest industry could survive a fixed exchange rate with the U.S. dollar. Does he have constituents in business who would feel when they are exporting that in fact taking away Canada's ability to buffer what goes on around the world with flexible exchange rates would not help companies to export? By fixing it what we have is just one unitary exchange rate and our cycles are different than those of the United States.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, the parliamentary secretary has gone on to stage two. If we have this committee these are the things we are going to have to talk about. I agree, there are many, many measures of economic health. The value of one currency against the American currency is only one of them.

However, the truth of the matter is that we export a great deal to the United States. That means that every prairie farmer, every British Columbia lumberman, everybody who produces something and exports it to the United States now gets paid 65 cents on the dollar because those things are measured in American dollars. Whether we do that conversion using a calculator to multiply by .65 or whether we have a common currency, it means that every worker now, instead of getting $10 an hour, would get $6.50 an hour.

If we want to be competitive at our present rate of inefficiency and with our high level of taxation, especially employer taxation, if we take all of those things into account, I think the bottom line is yes, the currency can act as a little bit of a buffer locally. However, it in no way solves the final problem and that is that we have policies in this country that just do not permit us to be as efficient as we ought to be.

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, I say first of all that I love debate and I like to talk about any topic, and will debate and discuss almost any topic at any time. However, we only have a certain amount of time.

The hon. member for Lac-Saint-Jean brought forward the suggestion today that we strike a committee to look into the widening gap between haves and have nots and the growing gap between the rich and the poor in the country, in the world and in our communities. That is a laudable suggestion.

The motion put forward by the Bloc today has me puzzled. I wonder why the Bloc Quebecois would put forward a motion to at least consider seriously a Pan-American currency. Then I thought of one idea. If I was a separatist in Quebec and I was successful in separating, and then I had to have the Canadian dollar as my currency and the Bank of Canada setting monetary policy for an independent Quebec, this would be somewhat embarrassing. What else could be done? If we had a North American currency we could avoid this little dilemma and we could avoid this discussion in the whole debate around separation.

I now understand at least why we are having this discussion today. It is part of getting the fundamentals in place for a move toward another vote on separation. I will set that aside. That is the motivation. I think it is a useful discussion for us to have in the House today because I hope we can set this thing aside once and for all.

I must say that from time to time I feel a bit like a political eunuch. We pass legislation in the House and then the United States says it does not like the legislation and we yank it off the table. We saw that with the MMT legislation. The House of Commons passed legislation to protect the health of Canadians and then an American company said “Hold it. That is not right. We do not like that legislation”, and the government bent over, said it was sorry and backed off.

Now we have Bill C-55, the split-run magazine legislation. The Americans say they do not like it, so the government is saying it will see if it can come up with another deal. It goes on and on. We are losing our sovereignty.

We have seen imposed on us a form of economic feudalism. Our country was founded by people who fled feudalism. They fled those regimes around the world where they had no say, their voice was unheard. They had no power. They were unable to have elected representation. If we agree with the thrust of this motion, that is were we will move on monetary policy.

Let us face it, our economy with the United States is very much integrated. Eighty per cent of our trade is with one trading partner. There is not a single country in the world, other than a banana republic, that would even come close to that. To suggest that we now use the Yankee dollar as our currency, so that when we go to buy CDs or to the movies we reach into our pocket and bring out Uncle Sam's currency, that is not the Canada that Canadians want for the future.

If members went out on the streets and asked Canadians “Do you really want to have American dollars as your currency?”, they would think we were nuts. They would say “Of course not. We are proud to be Canadians. We are proud of our currency. We are proud to have a separate currency from that of the United States”.

I am having trouble with this debate. I am a bit critical about monetary policy. I think we are too integrated with our monetary policy as it is. It should be much more independent.

I am not saying that our monetary policy and our central bank do a great job. They do a good job, but they could be doing a much better job in terms of fighting issues like high levels of unemployment.

Let us acknowledge those who argue “Look what Europe has done”. I listened to my friend and I respect him. He said that we are seeing the French franc go out the door. We are seeing the German mark go out the door. It is quite a different situation in Europe where they have 11 economies which are relatively the same size. There are certainly four economies that are almost identical in size, influence and power. Here it is us against the U.S.A. I never slept with a mad grizzly bear or an elephant, but I can imagine what it must be like. I would not want to move. I would sit there paralyzed.

The point is that for us to be up against the U.S.A. on an equal basis is, first, laughable. I do not have to go any further than to look at today's La Presse . In La Presse the American government is pointing out that in the discussion of a North American currency it should not be suggested for a moment that it is interested in modifying any of its policies to correspond with problems in Mexico, Canada, Guatemala, Chile or wherever. It is an independent country. It has an independent monetary policy. It is basically saying to hell with anybody else. That is the American way.

The American government has made its views very clear about any form of Pan-America currency. We are not talking about the North American loonie or the North American dollar; we are talking about the American dollar, the American currency. In other words, everybody else in the Americas would join in on some aspect of the American currency. That is not on.

Let us look at an example of what is happening in Europe. After the Maastricht Treaty of 1992 and the Treaty of Amsterdam in 1997, the European Council of Prime Ministers was set up. It has an incredible amount of power. I know there is a European parliament and other assemblies, but the real thrust comes from the European commission. It has the power. It is fair to say that when it decides on a particular course of action other governments have to abide by that decision. It can overrule legislation in other countries to fit in with the monetary union in Europe and so on. What Europeans have done is to say that they are going to give up some of their sovereignty to be part of that great economic union. That is what it is.

My friends previously talked about the mobility of workers between countries and so on. My friend in the Conservative Party reminded us that it took 40 years to develop a very integrated approach in Europe, and not simply on monetary policy. Here we are talking about monetary policy.

Let us face it, in Europe when it comes to economic issues and currency issues, the decisions are not made by those who are elected and representing the people, they are made by 20,000 faceless bureaucrats in secret. That is the way that system is operated. We have too much of that now. We have decisions about the trade between our countries being made in secret. We almost had the MAI imposed on us. We found out about it at the last minute. Again, negotiations were basically held in secret, behind closed doors. That is not what Canadians want.

Canadians have this sinking feeling that their voices are not being heard. They have a sinking feeling that they are alienated from the political process. There is a good reason for that feeling, because they are. The voices of Canadians are not being listened to.

To suggest that we will now integrate our currency with the United States is absolute folly. I feel a little reluctant to say that we will vote against this motion because debate is often helpful and useful, but if we totally disagree with the premise of the reason for having the debate and completely disagree with the reason to proceed with even considering a North American currency, why would we?

If my friends in the Bloc Quebecois are successful in proceeding with this, they are articulating a call to be a banana republic. They want Quebec to be a banana republic.

What is a banana republic? A banana republic is a country that has no voice over its monetary policy, no voice over fiscal policy. It just goes along with the dictating country, in this case the United States. Some of the representatives from Quebec may want this as an option. I do not think Canadians do generally and quite frankly I do not think Quebeckers do. The idea of turning Canada even more so into a banana republic, kowtowing to the United States, to adapt this version of economic feudalism is absolute folly.

Everyone has probably got the impression that we in the New Democratic Party are not that keen on the suggestion of currency integration. We have all kinds of other reasons to set out why this is not a good idea.

The chairman of the European Central Bank, Wim Duisenberg, who now is sort of king of the European Euro said the other day that unions no longer have a part to play in the new Euro Europe. I wonder if the people of Quebec know that this is what is being said about the Euro, and that the Quebec unions would have no role to play in a future Quebec based on a single currency for North America. That is what the chairman of the European Central Bank is saying about the new Euro.

I believe that when we revisit this issue in a few months or perhaps even in a few years, the reality of the Euro dollar will be in disrepair. Countries in Europe will realize the folly of continuing with this and those countries that have not opted into this situation will be doing much better.

In the end, later today we will not be supporting this motion.

[Richard Marceau, Bloc, Charlesbourg, QC]

Madam Speaker, it was in 1988 that I voted for the first time in my life, and the main election issue was free trade.

I have the impression I could take any speech the NDP made at the time and I would find the same arguments, the same facts, the same fears and the same anxieties.

That said, my question is very simple. My colleague, whose oratory skills I highly respect, said “Voices of Canadians are not listened to”. That is what he said.

Let us give Canadians the opportunity to express their point of view. Let us vote in favour of the motion. Let us give unions, management groups, student groups, all Canadians throughout Canada and Quebeckers the opportunity to say what they think on this issue.

If he really wants the voices of Canadians to be heard, let him give them the opportunity. A vote against this motion is not the way to let Canadians say what they think.

What does the hon. member think of that?

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, this hon. member does not think much of that suggestion.

Behind the initiative of a North American currency is corporate America. The BCNI headed up by our friend Thomas D'Aquino said that the best thing for Canada to make us highly productive was to privatize, to adopt free trade, to deregulate, to balance the budget, to impose the GST, to cut social programs, which would make us more like the United States and that would boost our productivity.

We have done all those things. We as a country followed the advice of the BCNI. We followed the agenda of the corporate voices of Canada, which are the voices behind the Euro and the voices behind this call now for a North American or Pan-American currency.

The problem, as we read in the papers today, is that we are not that productive. Having taken all of these steps, Canada has not increased its productivity. What is absent from this discussion is the high level of unemployment and underemployment and the relatively low wages people are being paid and therefore the relative lack of purchasing power. Those are some of the reasons we have to discuss.

Rather than discuss a North American currency, I would go along with my friend's partner, the hon. member for Lac-Saint-Jean, and talk about the growing gap between the rich and the poor in Canada, the growing gap between the rich nations and poor nations. That kind of discussion would have much more merit than talking about integrating Canada's currency with that of the United States of America.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, I too have a question for the NDP finance critic. He is a man of considerable insight in a lot of things.

How do I put this without insulting him after what I just said? Does he really understand what the measure of currency is versus the wealth of the country? I can buy a piece of equipment and pay $1 Canadian for it or I can buy the same thing for 65 cents American. It is the same item and has the same value, it is just in a different measure. We have different ways of measuring things. We used to measure things in inches and now we measure in centimetres.

To what degree is his understanding that all we are talking about here is the debate on which measure of our economic health we are going to use?

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, as usual my hon. friend has a thoughtful question so I will respond in kind.

It is fair to say that the value of our currency is a reflection of what international financiers feel is the health of the Canadian economy.

My friend will be well aware that in terms of our commodity exports, the present value of our currency is certainly helpful during these difficult economic times. We would agree that major changes are required to the economy of the country in order to make us more productive in a positive sense, meaning better, more secure and better paid jobs for men and women and higher productivity meaning a more appropriate knowledge based economy of the 21st century. We might have different views on how to get to that point, I would suspect, but nevertheless we might agree on the end run.

In terms of the one sector of the economy that is experiencing incredibly hard times because of international markets, the commodity sector, it is being assisted by our relatively low currency vis-à-vis the United States dollar. I would also agree that it is a reflection of what others feel is the health of our economy. They are not always accurate. I think some of them are evaluating in old fashioned ways and are not appreciating some of the—

[The Acting Speaker (Ms. Thibeault)]

I must interrupt the hon. member as his time is over.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Madam Speaker, I would like to thank the Bloc Quebecois for bringing this important issue to the House of Commons for debate.

It is extremely important that as members of parliament we take time to debate not only the important issues facing us today but the important issues that will face Canadians in the future. We in this place can play a significant role in preparing Canadians for the risks and opportunities of the future. That is what this motion is all about.

The leader of the Bloc Quebecois spoke earlier today. I guess he previously had some ties to the Marxist-Leninist Party. Perhaps he was so disappointed that Marx was proven wrong about communism that he was anxious for an opportunity to prove that maybe Marx was right about capitalism. I can say that I am not in favour of a common currency for the Americas certainly at this time.

The European comparison and the Euro comparisons that have been made are highly specious. The European Union was a very intentional political union first which evolved over a 40 year period. It was focused on defence related issues and ultimately evolved into an economic union, particularly in the post cold war environment.

The 1992 Maastricht Treaty was reached after a considerable amount of debate and discussion. Ultimately a lot of sacrifice and work went into ensuring the countries that eventually signed on to the Euro complied with the Maastricht criteria.

This is a very complicated issue. I would hope that the Bloc Quebecois is not supporting some race to a common currency in the short term because clearly Canada is not ready for it.

If we were to look at the weakness of the Canadian dollar and the secular decline in the Canadian dollar over the past 30 years, our Canadian dollar would now be at record lows. It would be extremely inadvisable for Canada to entertain participating in a common currency now when we would not be negotiating from a position of strength. To permanently entrench that position of weakness would be inadvisable.

If we were to try to strengthen our currency in the short term with interest rate policies, the Canadian economy simply could not stand the increase in interest rates necessary to strengthen the Canadian dollar to be in a strong negotiating position in a common currency for the Americas.

It was interesting last summer to see the Prime Minister's approach to the Canadian dollar. At one point he even had the audacity or economic naiveté to say that the lower Canadian dollar was actually good for tourism.

I think most members in this House would agree that a nation cannot devalue its way to prosperity. In fact, the logical corollary of the Prime Minister's arguments last summer would be that if we reduced our dollar to zero and gave away all our merchandise, we would be the greatest trading nation in the world. The fact is that we would not be getting any money for those goods. A country cannot devalue its way to prosperity and it is naive to assume that a country can.

A secular decline in the Canadian dollar has occurred, a significant amount of which has been due to the secular decline in Canada's productivity. Productivity in Canada needs to be addressed with taxation issues, the differences in the Canadian tax system, our levels of taxation and the structure of our tax code relative to our trading partners. Those issues need to be addressed. Interprovincial trade barriers, our regulatory burden, all these issues need to be addressed. It is going to take a long time to strengthen our Canadian currency through that type of systemic, holistic approach to very complicated issues.

Some proponents of a common currency say the positive of a common currency would be that it would take the power away from the government to make bad economic decisions. I have more faith in parliamentarians, in this House, in the ability for a sovereign country to make the right types of decisions for the future than those who would advance that type of argument. That is a very perverse argument to make, that to make the types of decisions necessary for Canadians in the future, we somehow have to rip more power away from this sovereign parliament and away from our sovereign Canadian institutions in terms of the Bank of Canada.

Without the exchange rate mechanism which currently compensates for the disparity between our productivity and that of the U.S. for instance, our unemployment rates would become the operative mechanism. The leader of the Bloc Quebecois concurred with me this morning that in fact in the short term this would be a major issue.

I do not believe that Canadians want to see as part of any step toward a common currency an increase in unemployment rates. I do not believe Canadians can afford an increase in our unemployment rates, particularly in the riding I represent in Atlantic Canada which has seen insufferably high unemployment rates. In the process of embracing this common currency or further globalization and emasculation of our national institutions, a higher unemployment rate as a cost or a casualty of that is not acceptable.

In the long term, many of us will recognize trends toward global integration, in some cases political and in some cases economic. As the party that introduced and supported free trade, we recognize and continue to believe that free trade and the free trade agreements have led to increased opportunities for Canadians. We believe there are opportunities in globalization. We also believe that Canadians have to be prepared to embark on that journey. That takes certain types of economic policy.

For instance, the replacement of the manufacturers sales tax with the GST was one of the domestic changes necessary to embrace freer trade. It ensured Canadians had an opportunity to participate in freer trade and had an opportunity to prosper as a result of freer trade and Canadians have. We believe all Canadians need to be positioned to prosper in a more global environment.

To relentlessly pursue one element of globalization, a common North American currency, without dealing head on with the issues that have consistently hurt our Canadian dollar, productivity issues such as taxation, interprovincial trade barriers and the regulatory burden in Canada, would be naive.

I have a great deal of respect for my colleagues in the Bloc Quebecois. I am sure they would understand my position as a Canadian and my value of Canadian sovereignty. They would understand the importance of our defending the sovereignty of our nation and preparing Canadians to participate in any global opportunity and challenge in the future.

I would hope this is not an issue being advanced by the Bloc Quebecois in some way to further reduce Canadian sovereignty with the hope somehow that it would increase Quebec's sovereignty. As a Canadian I believe that the recognition of Quebec as an inextricable part of Canada is fundamental. I believe very strongly that the distinctiveness of Quebec is extremely important and I defend that, as does my party as a national party in the House of Commons. I would certainly hope that reciprocally members of the Bloc Quebecois would not be advancing this argument to somehow reduce the sovereignty of our country. I would not be so cynical as to assume they would be advancing this as a uni-dimensional attack on Canadian sovereignty.

Sovereignty is a very important issue. While the U.K. has for a significant time, since Mrs. Thatcher, implemented types of changes necessary in the U.K. to prepare the British for the opportunities of the future and to undo a lot of the damages the Labour Party had inflicted on the English prior to her election, U.K. arguments against the common currency in Europe have not been economic arguments solely. They have been arguments on the sovereign right of a nation to determine its own future.

I believe parliament and Canadian institutions have the authority and can make the right decisions. I do not believe we need to remove power from Canadian institutions to somehow ensure Canadians become competitive.

[Richard Marceau, Bloc, Charlesbourg, QC]

Madam Speaker, I find it rather intimidating to rise after such an eloquent speech by my colleague from the Progressive Conservative Party.

My first comment will deal with the notion of loss of sovereignty which underlies the whole of his argument. There is no perfect example, but a moment ago I gave the example of France which, before the Euro was introduced, had no say over its monetary policy because the French central bank was linked to or influenced by the Deutschmark. The bank had no say over the European monetary policy, which was, for all intent and purposes, the German monetary policy.

With the introduction of the Euro, France now has its say. For countries like France and other European nations it does not mean a loss of sovereignty, but an increase in sovereignty.

My question is simple. I heard all the arguments, and some deserve more in depth consideration. Will the Progressive Conservative Party support this motion which is aimed at exploring further all the issues raised by my colleague? These important issues transcend party lines.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Madam Speaker, I thank the hon. member for his question.

The Conservative Party will be supporting this motion this evening. We believe it is fundamental for this parliament to discuss and explore these types of alternatives with debate that is respectful of the issues and respectful of other members of parliament.

However, I continue to have significant concerns about a common currency. It will be up to those proponents to debate their side of the argument and up to people like me to offer our views on the common currency. Where there is significant common ground on this issue is the recognition of some of the structural issues that need to be addressed in the Canadian economy either way.

One thing I failed to mention during my discourse is that if we were to have a common currency the U.S. could use the Canadian toonie for its new one dollar coin. We need to address this issue seriously and with a great deal of debate that will occur over a long period of time.

[Ken Epp, Reform, Elk Island, AB]

Madam Speaker, I listened intently to the hon. member. I have a problem with his approach. He wants to get this on the table and he said he will vote for the motion. I wonder whether he actually thinks we should be letting the Liberals off to basically provide them such a cushion to defend their totally inadequate policies which have brought us the 65 cent dollar. It is simply true that if there is a unified currency all the countries act as a shock absorber for the other mistakes.