Debates of March 2nd, 1999

The Budget

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Mr. Speaker, I want to commend my colleague from Broadview—Greenwood who has been a seatmate of mine for 11 years now. Since we entered this debate some 11 years ago a lot of changes have occurred.

I know that the member for Calgary Southeast is quite new to this place, so he may have forgotten who he used to vote for before the Reform Party came along. I am sure he would like to tell us sometime who he used to vote for before he decided to create his own party. Now he is going to try to create another one because he is not happy with the one he has.

I am a little disturbed that he cannot seem to get his parties right, but he does know that the party he voted for when I was in opposition with my colleagues here on that side was a government that racked up a huge deficit.

When we first got to this place some 11 years ago, as the member for Broadview—Greenwood said, Canadians had absolutely no hope. Everywhere I went in Kenora—Rainy River, one of the largest rural ridings in Canada, probably one of the largest pieces of geography for one member to represent in all of North America, everyone was very down and out and very depressed about where we were going as a country. I can understand why because there were no choices, no options.

Last year was the first time in my voting life that I voted for a government that had a balanced budget. Imagine that. I am not exactly a young man, but the fact remains that I have never voted for a government that had a balanced budget.

What did the pundits say last year? Not much. They had a real tough time saying congratulations to the Canadian government for starting to get its fiscal house in order and starting to show some understanding of how the country should be run.

This year we had a second balanced budget. Of course the right wing pundits were out there saying “That is not good enough. You have got two balanced budgets for the first time in 50 years, but you have got to start getting your act together. The country is going to fall apart because you did not cut enough, you did not do enough in debt reduction and you are starting to spend money”.

Here are the criticisms that I have heard so far about the budget. This is a very telling tale. The criticism of this budget is that we did not spend enough on health care, we did not cut taxes enough and we did not reduce the debt enough. That is the kind of criticism that I think is exceptionally well placed because when I first got here these debates did not occur. We were so confused as a country, wondering whether we were ever going to get out of the quagmire we were in, that we could not even criticize how much debt we paid down or how big a tax cut we would have. We were wondering whether we were going to be a third world country soon because of what we were doing.

Now we are at the point where we can see some hope. Canadians are showing that. We are having debates now, serious debates about where we are going. The fact is that we have balanced budgets.

We now have a discussion about the fact that unemployment has gone from 11.4% to 7.8%. When we first got here, if unemployment had been at 7.8%, we would have been dancing in the streets. Now we are being criticized that that is not good enough because the Americans have 4.5% unemployment.

I think that is a great debate because my riding is a big rural riding. I wish my friend from Prince George—Bulkley Valley was here because, quite frankly, I am quite concerned about this whole debate of tax cuts, tax cuts, tax cuts over there from rural members of the Reform.

One of the parts that interests me about the budget is the flexibility to build a nation. Where I come from building a nation means building infrastructure. Without government there would be no infrastructure. We can bet in Kenora—Rainy River, where three-quarters of my riding has absolutely no roads, no infrastructure at all, that that is a great potential for the future of our young generation. If we keep talking only about how much tax we have, are we ever going to get to building a nation? That is what I want to do in rural parts of Canada.

I would like to spend billions of dollars on a national highway program, a national infrastructure program part two, so that we can start putting money where it really belongs so our kids will have a future.

If I had my way I would rather pay the debt down than make tax cuts because I have no sense of urgency to help Conrad Black who is one of the people responsible for the big taxes and the big debt we have in this country. It was his newspapers that were all supporting of Mulroney and his crew when they kept racking it up and up.

I understand why members of the Reform Party jumped ship. I would have jumped ship too if I had to sit there every day and try to explain as a right winger why somebody who was supposedly right wing could not get their fiscal house in order.

The next issue really is the future. We have been through the past as opposition members. We have now seen our government, since 1993, go from a $42 billion deficit down to balanced budgets, with a commitment for two more. We are now entering into a very key time in our country's development.

As I said to the electorate of Kenora—Rainy River in 1993 when I ran for the second time, I see this as a ten year program. It is going to take us one term to clean up the mess. It is going to take us another term to start to build a nation. We are now doing that. We are basically going on our seventh year. I think it is important now that the debate start to get away from the nonsense of whether there is a little scandal here in the shower or whether there is APEC or whether there is this or that. I think we need to start talking about where we want this country to go.

Let me give members an example of what I mean. One of the issues that I have discussed with the Minister of Health is the issue of rural health. Some people in this place talk about lineups. Some people talk about emergency procedures. Where I come from we have neither. We do not have lineups because we do not have hospitals. We do not have emergency procedures because we do not have doctors. This is not about rich and poor, this is about rural and urban. We need a national rural health care plan in Canada. The $50 million that the minister put in was all based on rural caucus asking this government to start recognizing the needs of rural Canada and ways that we could treat rural Canada differently because of the geography that we live in.

I was quite amazed that my colleague from Prince George—Peace River would even suggest that his main priority as a rural Canadian is to have tax cuts. I was in his riding two years ago. His infrastucture needs and his abilities to create an economy are the same as mine. He is a long way from getting where he wants to go.

Let us start talking about hope. Hope is the ability of governments to have flexibility. It is the ability of governments to decide what their priorities are.

We know where the Reform Party is at. It is at the point where it says it needs to recreate itself because it is not getting to where Canadians want it to be as a good alterative because it does not reflect the values of Canadians. Perhaps Reform members should think twice about why there are certain little areas that they are plugging into and start thinking about the huge picture, the vision of the nation as a whole. Then they would become a good alternative to this government if it got off track. But so far it has been on track.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Never an alternative.

[Bob Nault, Liberal, Kenora—Rainy River, ON]

The lone Tory who is here says never. I am not too worried about that, quite frankly. But I really think that the government itself needs to be pushed on the vision of what Canada should look like.

We are having to do it ourselves internally because Reform members spend their time trying to figure out: “Here is one couple, they get this. Here is another couple, they get that”. Can we imagine what the people at home are thinking? They just do not get it.

Let us get real. Let us get serious about why they are in opposition. I really would like to see them focus on the issues that Canadians put them there for.

The thing that is important to me is the vision of the Liberal Party. I have urged the ministers involved, now that we have our fiscal house in order, to put together the vision for the new millennium. Our vision is going to carry us for about 50 years if it is a good vision, as the visions of past generations have done.

I think the Minister of Finance has done an excellent job of starting that process, of putting us in line to have this great debate. I look forward to the debate. I look forward to the different visions because in the end Canadians will decide. So far they have bought the Liberal Party's vision and have said to the other parties “No thanks. We don't agree with you. We think you are way off base”.

Let us get into the next phase. The next few budgets will really define where we go as Canadians.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, this member says that Canadians have bought into this government's vision. Let me remind him of one thing. This government won 100% of the power in the last election with 38% of the vote. The lowest plurality in Canadian history resulted in a majority government. It lost the election in eight of the ten provinces and it won 101 of the 103 seats in Ontario with less than half of the vote. If that is Canadians buying into this vision, then I would like to see what he really means.

The member suggested that I was voting for the Tory government before I became a Reform MP. I can advise him that I was on the national policy committee of the Liberal Party of Canada as a supporter of John Turner because I was disgusted with the fiscal irresponsibility of the then Tory government. I became equally disgusted with the fiscal irresponsibility of this Liberal government. That is why I came to Reform.

This member then tells us that Conrad Black is to blame for the deficit. He did not own any Canadian papers back in those days. I wish he—

[The Acting Speaker (Mr. McClelland)]

The hon. member for Kenora—Rainy River.

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Mr. Speaker, I was not blaming Conrad Black. I was just suggesting to the folks who are writing the articles in the National Post that they should be a little more in depth.

One of the people I like is an editorial writer by the name of Mr. Fisher. Everybody knows that when we read the columns by the dean of the writers around this place, there is some research to them. But when we read the National Post we get the sense that if we just cut taxes, everything would be happy around here.

I only wanted to make it clear to the member that I understand he had to jump parties in order to get elected. God bless him, he is here. But I do not think he has made much of a difference or a dint so far. Do not blame Ontario, which is a large portion of the Canadian population, that they voted for one party massively because they could not buy into the nonsense of the Reform Party.

[Yvan Bernier, Bloc, Bonaventure—Gaspé—Îles-De-La-Madeleine—Pabok, QC]

Mr. Speaker, I find it kind of funny that the two members opposite would talk about a common theme, namely hope. These are two government members who have contributed to killing hope.

The first one, the member for Broadview—Greenwood, said there were few separatists left in Quebec. I would like to reassure him. Perhaps he did not go to the right places. I will introduce him to some. I can also assure him that we can manage our own affairs and chew gum at the same time.

I have a question for the last member who spoke, because he played a role in the employment insurance reform. If the government wants to give people hope, it ought to see to it that they have food on the table, as the hon. member for Beauséjour—Petitcodiac often points out.

You should look at what your government is doing in its budget to restore hope in the fisheries, which comes under its jurisdiction, particularly as regards the issue of catches. Instead of interfereing in a jurisdiction that is not yours, namely health, what did you do?

And what do we have in answer to the fishermen from Newfoundland now? What can we do for them? What kind of hope can they have? If the member can answer that, the fishermen in Gaspé will understand.

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Mr. Speaker, yes I did speak of hope and I am a supporter of the EI reforms that were made and this is why. There was a necessity in this country to deal with behavioural change. I do not for a minute think it is acceptable for members of parliament to suggest to their electorate that it is okay to be on unemployment insurance, that it is a good thing to be on unemployment insurance, that people can work for two or three months a year in the fishery and then spend the rest of the year on EI and say that that is good enough.

The whole objective of EI reform was to bring in behavioural change so people would say to themselves “Maybe now that my children are growing up I may not be able to do anything about it but maybe I can move them into industries where there is more potential”. We will be proactive enough. That is why we have the regional development programs in Quebec, ACOA in Atlantic Canada, WED in the west, FedNor in Ontario. The whole objective is to help people. That is what this is all about.

Let me remind the member that the federation has given Quebec $8 billion to $10 billion more than it gives back to the federation. This country is working because it is sharing its resources to help have not regions. I do not think the separatists are going to get away with this continued—

[The Acting Speaker (Mr. McClelland)]

The member for Brandon—Souris has 30 seconds with a 30 second response.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, it takes me longer than that to clear my throat.

I was all caught up in this visionary concept that the member for Rainy River and the Liberal Party bring to this country. However, I was not quite that caught up with it because one of the parts of their vision was to rip up the free trade deal that was put in place by a previous government. A part of their vision obviously is to put health care back to 1995 levels. Is that the part of the vision the member from the Liberal Party embraces, to scrap the free trade agreement and bring health care back to the 1995 level where we should be well ahead of it in the year 2003?

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Mr. Speaker, in 1993 we did not run to scrap the free trade agreement; it was the election before that. I know the member was probably busy running Brandon so he did not have time to keep an eye on it. In 1993 we ran on the fact that we needed to make some improvements to the free trade agreement and that is exactly what we did. But let me tell the member very quickly that $42 billion are 42 billion reasons why there are very few of those members left on that side.

I sat over there when the Tories sat over here. Day after day we tried to warn them about what was going on in the countryside. Day after day they kept increasing this front bench. There were over 40 cabinet members all looking for cash. No wonder we were in such big trouble. That is the kind—

[The Acting Speaker (Mr. McClelland)]

Questions and comments, the hon. member for Wild Rose, 30 seconds.

[Myron Thompson, Reform, Wild Rose, AB]

Mr. Speaker, when the hon. member talks about 7.5% unemployment, why does he never talk about the 70%, 80% and 90% unemployment in the aboriginal communities? Why do the Liberals not mention that?

Why do the Liberals not talk about the poverty of children? There were a million children in poverty when this government came to power and now there are a million and a half. Why do the Liberals not do something about that? They should sell their Challenger jets and give the money to the Children's Aid Society.

Quit giving away free flags. The Liberals should start thinking about the dumb things they are doing with money. They never talk about the dumb things they do. They should start mentioning a few of those things. Look at the public accounts.

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Mr. Speaker, let me make it very clear to the member, I represent 51 first nations so I do not need a lecture from him on the needs of aboriginal people. I have forgotten more about aboriginal policy and politics than he will ever know.

If the member really cared about aboriginal people, he would start by supporting C-49. C-49 which we voted on yesterday is a good move for economic development to get people out of poverty in those first nations. What does he do? He plays the game of oh, there are a couple of women who are going to be upset about this, or they might have some rights that the municipalities or provinces already take for granted so we cannot do that because natives are not capable of looking after themselves.

From my experience with the first nations communities that I represent, if we keep on the track that this government has set out to build a partnership, we will see the unemployment rates in those communities go down. If they take on the municipal vision of the Reform Party, they will go backward. That is why there is not one aboriginal in my region who will ever vote Reform as long as the party is around.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, it is with pleasure and a great deal of interest to be sure that I rise today to participate in the budget debate in this House.

True to form, the Liberal government has once again tried to convince the public that it is the grand champion as far as money management is concerned. I have some doubts about this, and I would like to demonstrate that this is, in fact, a vast coverup operation to justify the directions being taken by a government that never stops meddling in areas that do not belong to it.

First of all, the ones really responsible for balancing the budget, the ones that merit congratulation, are the people of Canada. The Minister of Finance may well take advantage of any and all opportunities to tell people that he has worked miracles with Canada's finances, but we are nobody's fool. Everyone knows very well that it is the middle class taxpayers and the unemployed who have done the job, the people who keep seeing a bigger and bigger chunk of their paycheques disappear, not the Minister of Finance.

On a first examination of this year's budget, it would be easy to buy into the minister's announcement that he will be reducing the cuts by $9 billion over the next three years, to $33 billion rather than $42 billion. Nevertheless, these are still cuts imposed on the provinces, and there is no cause for celebration.

However, things are not all that rosy, for roses have thorns. The Liberal government is taking advantage of the awkward situation in which it has placed the provinces to force a whole new round of interference on them in exchange for a certain increase in transfers. After depriving the provinces of billions of dollars for health care, the Liberals want to spend hundreds of millions in statistics and on paper.

This Minister of Finance has nothing to crow about because, as the auditor general pointed out in his report last April, he does not meet accounting standards and juggles financial statements to achieve his ends.

Since 1994, the Liberal government has been making bigger and bigger mistakes in its deficit and surplus forecasts. In the 1999 budget, the Minister of Finance continues his juggling, despite the warnings of the auditor general.

We in the Bloc Quebecois have revealed the real figures. While the Minister of Finance is predicting no surpluses for the next three fiscal years, we can say that the reality of the matter will be quite different. For 1999-2000, surpluses should be on the order of $15 billion, whereas for 2000-01, they will be around $20 billion.

That having been said, although the Minister of Finance had ample funds to introduce intelligent measures in response to the terrible job, health and poverty problems, he chose not to.

Since 1994, there is no doubt that the public has paid dearly for the terrible cuts in health, education and social assistance. Unemployed workers saw their EI benefits drop or disappear entirely because of tighter eligibility criteria. And I will not mention the recovery quotas imposed by the Minister of Human Resources Development on his employees.

All these sacrifices generated several billions of dollars for the EI fund and it is these surpluses in part that were used to lower the deficit. When we know that the government has not put one red cent into the EI fund since 1990, that the fund is growing at the astonishing rate of $2.5 million an hour, and that six persons in ten do not qualify for benefits, it is simply scandalous to see the Minister of Finance dipping into the fund whenever he wants.

The economy in the Sherbrooke region is down $23 million since the reform. Another thing to consider when looking for who is really behind the reduced deficit is the increase in government revenues. It is the taxpayers who, since 1994, have enabled the government to increase its revenues by contributing 56% of the increase in tax revenues and 14% through the GST, which, by the way, the Liberals promised to scrap in 1993.

At the end of 1993-94, when the Liberal government took office, Quebeckers and Canadians paid $51.4 billion in personal income taxes. By the end of the year 1999-2000, they will be paying $75 billion per year. This is an increase of $24 billion or 46%, and it amounts to $654 per capita.

The budget did not change anything. Quebeckers and Canadians are always paying more for less. Once again, the government is collecting money from ordinary people. Even if salares increase from year to year, the mere fact that the government has not indexed tax rates and tax credits since 1986 means that people have less money in their pockets.

Take the case of a person who, in 1986, had two children and was earning $25,800. Because of the cost of living increase, that person's salary was $35,400 in 1996. However, this does not mean that person is earning more. First, the fact that the tax on the additional income was not indexed means that the person now has $3,790 less in disposable income than in 1986. Also, since the GST credit was not indexed, another $944 is gone. Then, because the federal family allowance was not indexed, another $544 has disappeared. Non-indexation of the child tax benefit means an additional shortfall of $602. Finally, we must take into account the child benefit, which still existed in 1986 and which represents a further drop of $1,157.

I did the calculations and a person who earned $25,800 in 1986 and who is now making $35,400 has $7,047 less than in 1986. So, under this federal system, a middle class worker must constantly pay but is always getting less for his money.

We would have expected the minister to use the surpluses to tackle urgent issues, such as job creation, the fight against poverty and the funding of social programs, which he, along with his colleagues, dismantled. But no. True to himself, the Minister of Finance chose instead to help the wealthiest people in our society.

Furthermore, the government is wasting billions of dollars in inadequate and mismanaged programs. We need only think of the grants and contributions it makes through various departments such as Industry Canada or Heritage Canada, without any follow-up to show that our friends opposite are incapable of properly managing public funds.

Another example of the Liberal government's laxness are the renovations to the buildings on Parliament Hill, which will cost Quebec and Canadian taxpayers $1.4 billion. A fine priority when we consider all the problems in society.

I could go on at length about the irregularities the Liberal government allows to go on, but the list is too long. I will have the opportunity to come back to it and unmask the guilty. And I will do just that.

I will return to those that the millionaire Minister of Finance has looked after in his budget, that is, society's most well off. The minister, in his magnanimity, has chosen to eliminate the 3% surtax on those with incomes over $60,000. This means that someone earning $250,000 will be entitled to $3,800 in tax savings this year. People earning $120,000 will get about $700, whereas taxpayers with an average income of $50,000 will save only $350.

The majority of people, who earn on average only $30,000, will save a meagre $90. The minister is far from fair.

This sixth budget of the Minister of Finance will go down in history, because the people of Quebec will long remember the bitter taste it left them. This year's budget is an insult to the people of Quebec.

All the Minister of Finance has accomplished with his many cavalier measures is to show the public what really lies behind the masks of the Liberal cabinet members from Quebec.

How can these federal ministers from Quebec claim to represent their constituents? I wonder, because what they have allowed to happen is unacceptable. Why did these people stand by while Quebec was once again given the short end?

The infamous social union agreement that the Prime Minister and his sidekick the Minister of Intergovernmental Affairs tried to get the Government of Quebec to endorse is completely ridiculous. Although Quebec did not sign the agreement, the Minister of Finance used this piece of paper to amend the already tenuous balance of the social transfer formula as he wished and with no advance warning.

This government decided unilaterally that it would change the rules of the game this year. In the past, federal transfer payments for health were based on a traditional formula, but now, without warning, it has been decided that population will be the criterion.

Not surprisingly, the result of these changes is that the richest provinces will now suddenly get the biggest slice of the federal transfer pie. No wonder the Premier of Quebec found himself on his own at the February 4 first ministers meeting. The government had just negotiated an agreement, to his detriment, with Ontario, British Columbia and Alberta that would mean a big pay-off for them.

It is clearer now why these three provinces were such staunch defenders of the social union. For the upcoming fiscal year, Ontario will get $1 billion of the CHST, British Columbia $400 million and Albert $300 million. What will Quebec get? A paltry $150 million. It is ridiculous.

The Minister of Finance would have us believe that Quebec is benefiting from the federal government's generosity through equalization. I remind the minister that the equalization program has been in place for a long time and that its purpose is to give provincial governments adequate revenues to enable them to provide public services at reasonably comparable quality and tax levels.

The $1.4 billion that the federal government is sending to Quebec was owed to us, because the calculations for previous years were erroneous. The federal government is sending $1.4 billion after depriving us of $6.5 billion since 1994. I say the minister could have done better, much better. And members should not try to tell me that we are getting more than our fair share. Since 1994, 39% of the cuts made by the Minister of Finance to social transfers have affected Quebec, compared to only 32% in the case of Ontario. Once again, the Minister of Finance does not seem very fair.

But the real issue is why these equalization payments are made to us, and not to other provinces, such as Ontario. The answer is simple: it is because Quebec's economy is weaker than the economy in Ontario, which has always enjoyed preferential treatment on the part of the federal government. If Quebec got its fair share of federal investments, it would more than likely not receive equalization payments.

As we know, Quebec is only getting 20% of the federal government's current spending in goods and services, only 18% of the federal funding to businesses, and only 14% of the federal money invested in research and development. I would be remiss if I did not also mention the $2 billion the federal government owes to Quebec for harmonizing the GST. Members can imagine the difference all these billions could make in Quebec.

The reason I said this budget would go down in history is simple: this budget is the last straw when it comes to the arrogance displayed by the federal government toward Quebec. After intruding in education last year with its millennium scholarships, this government is doing the same thing again this year in health.

Ottawa will therefore be injecting $1.4 billion into health, although this is still a provincial jurisdiction. What conclusion can one come to about such measures, which do nothing but duplicate services Quebec is already offering to the population? What a fine waste of time, money and energy.

Having cut billions of dollars from transfer payments, having smothered the provinces, which were already busy tidying up their own finances. and did not need any additional burden, and having provoked an unprecedented crisis in the health field, the Minister of Finance and his colleague the Minister of Health have piled arrogance on top of arrogance, by imposing their views upon the health sector.

This budget contains in particular $328 million for health information systems. However, I would like to know how such a measure will make it possible to shorten the waiting time in our constantly overburdened emergency departments.

Creation of the national health surveillance network with its budget of $190 million over the next three years, is another example of inappropriate and pointless spending, for such a network dealing with the detection of serious illnesses and the electronic linking of Canadian laboratories will not respond to the real and crying needs of the health care system in Quebec.

Creation of the Canada health network, telehealth and telehomecare are other measures dreamed up by the federal government to create still more administrative structures it can control from Ottawa. People will understand that this is obviously part of the Liberal plan to satisfy their unquenchable thirst for visibility.

The Canadian institute for health information is another institution that will receive funds to report periodically on the health of Canadians and their health system, specifically on waiting lists, and the doctors and specialist assignments and the most effective courses of treatment.

According to the federal government, this funding will promote a better accounting of health care. While all the provinces rejected the annual health care report card, the government is doing indirectly what it cannot do directly under the Constitution.

Another example of what the federal government has come up with to waste public money, and we know it does not lack for ideas in this area, is the famous research and evaluation fund for nursing staff, which will conduct research in the amount of $25 million over the next ten years to, among other things, come up with solutions to the challenges to nursing staff in the coming decade. But what exactly does this have to do with the federal government, I wonder?

Finally, we can add to this dismal list of federal interference the amount of $75 million to be spent over the next three years on prenatal nutrition programs, and the $50 million, again over the next three years, to find ways to attract doctors to rural areas.

After thoroughly reviewing the budget, it is clear to me that the Minister of Finance is trying to make us believe that this is a budget that is fair to all Quebeckers and Canadians. However, this is not the case.

This budget is a gift to the privileged in our society, whether they are individuals or rich provinces, at the expense of the unemployed and the poor. Moreover, as members will have noticed, the Liberal government is doing something with this budget that it has no right to do, that is to ignore the Constitution and once again get involved in areas of provincial jurisdiction.

Quebeckers are no fools. Our determination to take control our own destiny is strengthened when we see the real nature of the federal government.

Earlier, the member for Broadview—Greenwood said he did not think there were many separatists in Quebec any more. He is right. There are not many separatists in Quebec, but there are more and more sovereignists, particularly as a result of the Liberal government's budget.

[The Acting Speaker (Mr. McClelland)]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Acadie—Bathurst, Employment; the hon. member for Delta—South Richmond, Fisheries; the hon. member for Winnipeg North Centre, National Defence.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I thank my colleague from the Bloc for his speech and have a question that has to do with the social union.

Actually it has to do with the health care expenditures the government made in the budget which were nowhere near what it took out. Nevertheless it did put some back in. It also has to do with the fact that Quebec did not sign the social union. I think the reason it refused to sign the social union was a good one. The reason it refused to sign was that the federal government refused to give up any of its authority which under the Constitution does not really belong to it.

The federal government keeps asserting its spending power and in so doing effectively blackmails the provinces into accepting money that initially comes from people in the provinces. If a province did not accept the money it would simply go to another province. We are in a situation where effectively the provinces have to accept the rules of the federal government or they will be denied money and will not be doing the job that they should be doing for their constituents.

Would my colleague from the Bloc agree with that analysis and that it is time for a more co-operative approach to dealing with programs like health care that fall into provincial jurisdiction?

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, indeed the Government of Quebec, which did not sign the social union agreement along with the other provinces, was soundly punished for this. According to the federal budget, social transfers are made on a per capita basis, but if one looks at the reality, there is $150 million for Quebec and about $900 million for Ontario.

Doing the math, this must mean Ontario has a population of some 42 million, since Quebec has approximately 7 million. So it can already been seen that, where the social transfer is concerned, and they speak of payments according to population, the figures do not balance out.

Health is a provincial area of jurisdiction. It is one Quebec is capable of managing properly. While Quebec, and a number of other provinces, were concluding that health reform was necessary, the federal government was brutally slashing health funding, which pretty well hamstrung all the efforts the provinces and Quebec were putting into health.

Now, with all these surpluses in its coffers, the federal government is trying to interfere in all manner of areas in which it has no business, seeking any excuse, seeking to justify its existence. As far as I am concerned, however, the federal government no longer has any reason to exist.

[John Manley, Liberal, Minister of Industry]

Mr. Speaker, I am very happy to rise to take part in this budget debate, however sad that example of the Reform from Alberta cozying up to the separatists may have made me. It is surprising that the comparison the Bloc did not make was to the fair share that Alberta received in this budget as well which was so warmly received by Mr. Klein.

Under the leadership of our Prime Minister, the federal government has now created conditions where Canadians can be optimistic about the future. After years of difficult choices, the finances of the nation are now solid and the government can act on those things that matter to Canadians.

By far the greatest priority for Canadians is the strength of our public health care system. Over the next five years, an additional $11.5 billion will be transferred to the provinces to be used in meeting the health care standards that Canadians have a right to expect. In my own province of Ontario, an increase of almost $4.4 billion will go into health care.

Health care is an obvious element of our quality of life and our quality of life is clearly dependent on our standard of living. The question is how can we maintain or, better still, how can we improve our living standards in Canada?

Since 1987 we have done okay. Our standard of living has grown by 7%. However, when we look at our American neighbours we see that in the same time they have increased their standard of living by 17%.

To understand why this has happened we need to look at the productivity growth rates that we have realized in Canada over that period of time. Productivity, the measure of the efficiency with which people, capital, resources and ideas are combined, is the most important determinant of our standard of living.

Unfortunately over the last 25 years Canada has had the lowest rate of productivity growth in the G-7.

If productivity in Canada had grown by 1.2% per year faster, which is the gap between the average U.S. and Canadian growth rates, our per capita income would have been $7,000 per year higher than it is.

It is no wonder that last fall the finance committee of this House warned that the slower rate of productivity growth is a cause for real concern for Canadians.

According to an Ekos survey, 82% of Canadians believe that increasing Canada's economic productivity is essential to improving our standard of living. Canadians understand the challenge. With time and a concerted effort, the government and the private sector acting in partnership can make sure that all Canadians see an increase in their wealth.

We have a strong foundation from which we can work. The broad economic conditions of the country are coming together. Last year this government recorded the first budgetary surplus in 28 years. Our inflation rate has been the lowest in more than a generation and interest rates are low.

And on the employment front, Canada is creating jobs at a rate unequalled in the G-7.

Canadians have demonstrated that when they put their minds to a task, as they did to eliminating the deficit, they can achieve their goals. This aptitude will stand us in good stead for the productivity challenge to which we must now turn our minds.

In terms of the nation's accumulated debt, first of all, the government acknowledges that debt is simply too large. The Minister of Finance has confirmed that we will make greater and greater inroads on the debt and in this fiscal year alone the debt to GDP ratio should drop to 65.3%. In the last two years we have seen the retirement of $20 billion of market debt.

Second, Canada's overall tax burden ranks about the average among the G-7, but the reality is that it is higher than that in the United States which is our major competitor. In the budget the government set out its plan for tax relief, that it needs to be fair, it needs to be focused on the individual and it needs to be sustainable or permanent. Taken together, the 1998 and 1999 budgets provide tax relief totalling $16.5 billion over three years.

Third, stronger productivity growth will require stronger business investment in technology, machinery and equipment.

Four, we need more foreign investment in Canada because it can bring new technology and ideas.

Fifth, Canadians must take more chances, innovate more often and bring our ideas to market. The government's decision to invest an additional $50 million in technology partnerships Canada signals that we understand innovation is a strong determinant of productivity growth.

Still though, Canada's private sector spends less on research and development as a share of its GDP, despite our more generous R&D tax incentives. Fewer than 1% of Canadian firms perform any R&D. Moreover, not enough Canadian ideas are commercialized in Canada.

Sixth, while the World Economic Forum ranks Canada first in knowledge workers, we are not following through with on the job training.

Seventh, our exports are concentrated in too few firms.

Taken together, training, trade and R&D, the World Economic Forum ranks Canadian businesses as 15th in terms of company operations and strategy. And that ranking is dependent on too few firms.

The government started down the productivity path with a program called “Building a More Innovative Economy” in 1994 and has broadened its strategy with the last federal budget.

In 1997, the Canada Foundation for Innovation was created with an $800 million dollar investment from the federal government. The foundation's mandate is to fund new and modernized research infrastructure. This budget will increase that investment by an additional $200 million.

To ensure that our research infrastructure is fully utilized by the brightest minds in the country the government has further increased its total support to the research granting councils and to the National Research Council by more than $120 million. We are accelerating our efforts to disseminate knowledge. The budget will broaden access to the information highway with $60 million for the smart communities demonstration projects. Our networks of centres of excellence have brought together the best of our brains in a uniquely Canadians way that creates ideas like sparks off a flint. I want to see those sparks ignite and blaze in as many productive paths as possible.

That is why the government has invested an additional $90 million in the networks of centres of excellence. Moreover, by investing an additional $430 million over the next three years in the Canadian Space Agency and thereafter stabilizing its annual budget of $300 million, the government has determined that Canadians will participate in exploring the space frontier.

When Canadians compete with the best in the world we can win. We can come out ahead. It happened in the automotive sector, the pharmaceutical sector, the aerospace and biotechnology sectors. Our investments in education, training and technology pay important dividends in jobs and growth.

As we look to the 21st century we can pull that same resolve together as a nation to address the productivity challenges that are core to high quality accessible health care, a strong educational system, second to none, a society that provides real opportunities for youth and security for their parents and grandparents.

This budget is a further step in implementing the long term plan that we began to set out in 1994. Success is a journey, not a destination. With this budget, we continue our progress on the road of success.

[The Acting Speaker (Mr. McClelland)]

There is a lot of interest so we will ask everyone to keep their questions and comments to one minute.

[Maud Debien, Bloc, Laval East, QC]

Mr. Speaker, the minister quoted all sorts of figures the budget has miraculously put at the service of the general public for industry, research and technology. However, I would like to tell him about other figures.

In 1992, there were 1,218,000 Canadian children living in poverty. By 1996, that number had climbed to 1,481,000, an increase of 263,000 since this government came to office.

In 1992, 564,000 people over 65 were living in poverty, compared to 655,000 in 1996, that is 91,000 more.

In 1992, there were 991,000 families living in poverty, compared to 1,230,000 in 1996, an increase of 239,000 since this government took office. These figures are from the National Council of Welfare, which is the government's advisory council.

The government may say that $300 million will be given through the child tax benefit—

[The Acting Speaker (Mr. McClelland)]

I am sorry to interrupt, but the hon. member's time has expired.

[John Manley, Liberal, Ottawa South, ON]

Mr. Speaker, clearly, the hon. member is ignoring the fact that we created over one and a half million jobs since we were elected in 1993.

She is also ignoring, and this is part of the Bloc Quebecois' philosophy, the creation of wealth. She is ignoring the challenges of productivity. She thinks we can find solutions to the problems by handing money around everywhere.

We must find the solution to creating wealth here in Canada. This is how we intend to proceed, to create jobs, to achieve success.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, the minister went on and on about how productivity is a problem in Canada. He is right. We do have a problem with being productive and keeping up with the Americans.

The minister pointed out there has been job growth. He failed to mention that it is part time job growth, the self-employed. The Americans have produced all kinds of full time jobs but Canada has not.

He went on and on about all the programs that he had initiated and about all the spending they were going to do. Noticeably absent from his speech was any emphasis at all on our record high taxes.

Does the minister make the connection between record high taxes and our lack of productivity? Does he still believe that high taxes actually increase productivity like he said just before Christmas?

[John Manley, Liberal, Ottawa South, ON]

Mr. Speaker, it is wonderful to hear the errors of statement coming from the member for Medicine Hat.

Number one, of course I spoke about taxes. Perhaps he missed that point of my speech. I said that they were higher than in the United States. If taxes are the only issue with respect to productivity, perhaps the hon. member for Medicine Hat can explain why, with higher tax rates, countries like France and Germany have achieved higher levels of productivity growth. Goodness, that is hard to understand.

Second, what I do not understand about Reformers is that we hear them every day saying they want more spending on health care, more spending on crime control, more spending on defence. They have a bigger list of more spending items than you can shake a stick at.

At the same time, somehow or other they think we will pay down the debt and lower taxes as well. I understand why they need to start a new party. The arithmetic in their old party just does not add up.