Debates of Feb. 29th, 2000

The Budget

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

Mr. Speaker, I appreciate the hon. member's intervention. I believe the hon. member was elected in 1988 during a campaign in which he railed against free trade. As a member of parliament he has subsequently railed against the GST. He has railed against the deregulation of financial services, transportation and energy. He has fought all those structural changes that were implemented by the previous government. He fought against every single one of those cornerstones of the new economy.

There was an interesting article in The Economist magazine's 1998 preview. It said that credit for the deficit reduction in Canada belongs to the structural changes made in the Canadian economy by the previous government. It listed free trade. It listed the GST. It listed deregulation of financial services, transportation and energy. I would like to know why the hon. member when he was in opposition fought against all those changes and why now as a Liberal government member he is taking credit for the results.

The Liberal members are the patron saints of hypocrisy if they believe they can sit in the House today and attack the Conservative record. Those Conservative changes have enabled the present government to eliminate the deficit with the help of Canadians who have seen their taxes rise and their services slashed.

[Jean-Guy Chrétien, Bloc, Frontenac—Mégantic, QC]

Mr. Speaker, the late Quebec Premier Maurice Duplessis often said “Instruction is like alcohol, not everyone can handle it”.

For the party currently in power, the surpluses are a little like alcohol, they are having a hard time handling them.

I saw earlier the member for the City of Ottawa have a fit of a sort in the House. I would ask my colleague who represents a riding in Nova Scotia to explain what his electors said when the member and his minister announced they were prepared to give $100,000 to the Senators, millionaires who earn $1.2 million a year on average, whereas the ordinary folks have to struggle to bring in $30,000 or $40,000.

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

Mr. Speaker, the proposed hockey bailout was a significant indicator of the degree to which the government has lost touch with Canadians. At a time when Canadians have seen their take home pay drop by 8% in the 1990s and have seen Americans enjoy a 10% increase, $100 million for hockey was not the right step. There is a homeless crisis in Canada. Children are suffering. Child poverty is a very important issue that has not been addressed by the government in the budget.

It is appalling that the government wanted to spend $100 million on professional hockey. When we look at it, the hockey players and teams in Canada are like the canaries in the old coal mines. They would put canaries in the coal mines and if the gases became toxic or noxious, the canaries died. They would then know they would have to change the environment.

The tax system and the oppressiveness of our tax burden is killing Canadian industry. It is hurting the high tech sector and the hockey players. Instead of dramatically changing the environment in Canada, rather than this tax tinkering, the government is putting gas masks on the hockey players. The rest of us need to breathe and succeed in this country too. All Canadians need broad based tax relief and tax reform, not just hockey players.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I am especially pleased and honoured to participate in the debate on our government's first budget of the new millennium.

It is a budget that builds on the foundations we have put in place in past budgets. It also takes historic new action to turn our nation's better finances into better lives for Canadians. This budget makes use of hard won surpluses to raise the standard of living for all Canadians, to enhance their quality of life and to prepare our economy to succeed in the new century.

Each of the key measures we have taken directly relate to the needs and concerns reported to us by Canadians from across the country in the prebudget consultations.

They include of course a fourth consecutive increase in funds for health care and education, a $2.5 billion increase.

In addition, a five year tax reduction plan reintroducing indexing into the federal tax system reduces the intermediate tax rate and, overall, will cut taxes by at least $58 billion by 2004.

This will mean an annual tax saving of 15% on the average, and more for families with children: targeted spending to make our economy more innovative, and increase help for children and the environment.

While many of these measures speak clearly, confidently and concretely for themselves, some do not need further advocacy or explanation from me.

My colleagues will focus more fully on the benefits to Canadians of our five year tax reduction plan, including the reductions of the high tax burden at the middle income level and increased support for families and children.

Earlier the Leader of the Opposition cited a number of examples. Unfortunately I do not have enough information on some of the individuals he cited in terms of their marital status or whether they have children.

I would like to speak to Paul and Fran Darr of Calgary, Alberta. They are a retired couple with a total income of $28,000. I would like to tell them that with the measures we are putting in place in this budget their federal income taxes will be reduced by 45%. I am sure they will be pleased to hear that.

They need to check their facts with the Leader of the Opposition. I think they were living in the 1998-99 era and that some of the measures we put in place in 1998-99 were not even reflected in some of those figures. Canadians deserve the facts and those are the facts. Paul and Fran Darr will save 45% in federal income taxes by the year 2004.

Others in the House will elaborate on our targeted smart investments in health care, our knowledge and innovation and the environment. Others will elaborate on the fact that along with last year's budget we have fully restored Canada health and social transfers to the provinces which will reach a new peak of close to $31 billion in 2000-01.

However, there are a number of measures I want to highlight today. Some are major and some are less glamorous, but they all demonstrate how we are living up to our commitment to keep Canada as the best place in which to work, to live and to raise a family.

Let me begin with the budget's announcement that we are restoring full indexation to the tax system. I know this is not as glorious as the direct tax cut rates that we are delivering but it is vitally important. That is a fact. It is not just partisan politics. Just ask business groups and tax experts across the country. It is no accident or corporate conspiracy that they have universally and consistently called on the government to restore the protection against tax inflation that was virtually abandoned by the previous Tory government in 1986.

Last week, for example, the Canadian Institute of Chartered Accountants put reindexation at the top of its list of budget recommendations. As a chartered accountant myself, I can say that is right on.

In recent weeks just as many commentators and critics were warning that our government would not reindex the personal income tax system. They thought that because indexation can be more difficult to explain to the public than other types of tax relief and because once it is in place and there is no annual political bang for the buck, restoring it would not be in our best interest. Now there is political cynicism.

Maybe it was not the expedient thing to do but it was the right thing to do. That is why I want to especially congratulate our Prime Minister and the Minister of Finance for their courage. They have put the interests of Canadians, especially low income Canadians, such as seniors on fixed pensions, ahead of partisan political advantage. It is something every member of the House should be proud of.

Why is restoring indexation the right thing to do? It puts an end to bracket creep and gives people real and permanent tax relief. It protects taxpayers against hidden tax increases caused by inflation. Without indexation, if we were to receive a 2% pay raise it would just cover inflation. Our real income would not have grown at all. For many low income Canadians that unreal raise forces them onto the tax rolls while middle income earners find themselves pushed into a higher bracket. In other words, their incomes have not really gone up but their tax bite has. That is just not fair and that is why, now that the deficit is behind us, we are putting that protection back into the tax system and more money back into the pockets of Canadians.

Indexation will also stop the erosion of the value of benefits, such as the GST credit, the Canada child tax benefit and the old age credit. Without indexation, these credits, designed to help those in real need, are slowly eaten away by inflation year after year. Now these amounts will automatically increase to offset inflation keeping their real value and their ability to provide real help.

In the years ahead our decision to restore indexation will leave every Canadian better off. But the ultimate foundation for personal prosperity is a good job. To make sure those jobs are there for people we have to make sure that Canadian companies are internationally competitive. That is why our 2000 budget takes action to make the tax system more conducive to investment and innovation. For example, over the next five years the corporate tax rates that apply to the highest taxed sectors, such as high technology services, will be brought down to 21% from the current 28%. That means that all our different industrial sectors will share a level playing field.

The budget will also reduce the income inclusion rate for capital gains from three-quarters to two-thirds and will allow a $500,000 tax free rollover for qualifying investments in new small business ventures.

I realize this sounds very technical and complex. Let me just emphasize the goal here. A key to starting up new, innovative and high risk businesses is the availability of risk capital. The tax free rollover will give such businesses, especially high tech start-ups, greater access to capital from what are called angel investors.

Many employers share ownership plans and stock options to encourage employees to become participating owners of their businesses, most notably in the fast growing high technology industries. Tax rules that apply to stock options and employee share ownership plans have been under review to ensure that they remain appropriate as the economy evolves.

In this budget we announced that up to $100,000 in stock options granted annually by companies to employees will be taxed only when the shares are actually sold instead of when the options are exercised.

The objective here is a simple one that makes sense. Stock options are one way of encouraging employees to play a greater role in the development of the company in which they work. The high tech sector in particular will benefit from this measure, which will help it to attract the best innovators and entrepreneurs to Canada and keep them here, resulting in the creation of jobs for Canadians.

Another example of a budget measure that will make Canada more competitive is the new export distribution centre program. This will virtually eliminate the GST and the harmonized sales tax cashflow costs borne by export oriented businesses that add only limited value to products in Canada. These businesses will be able to import and buy inventory in this country without paying the GST or the HST. For these companies the new program will alleviate the cashflow burden because currently they have to pay the tax up front and then wait to claim it back when they file their sales tax returns.

Mr. Speaker, you can understand why, as an accountant and former corporate executive, I wanted to highlight some of the tax actions that would not normally grab the public eye or the ears of the opposition.

I now want to return to a broader issue and remind the House of the fiscal achievements that have made our budget 2000 action plan possible.

Just seven years ago, when we came to office, the yearly federal deficit was a huge $40 billion. We needed one-third of our annual revenues just to pay interest on the debt that two decades of deficits had built. Now financial results for the first nine months clearly indicate that a balanced budget or better will be recorded again this year, 1999-2000. That will mark our third consecutive balanced budget or better for the first time in nearly 50 years.

This underscores the soundness of the government's fiscal strategy using two year rolling budget plans that are based on prudent planning assumptions, backed by a contingency reserve, but also pursuing strategic investments to support economic growth and job creation.

Our bottom line is clear: The government is not prepared to risk a return to deficits. The benefits from maintaining sound public finances, sustained economic growth, more jobs and higher incomes for Canadians will not be put at risk. In fact, this year's budget commits the government to balanced budgets or better for the coming two years in the budget track, 2001 and 2002. This will mark five consecutive years of balanced budgets or surpluses.

Since Confederation there have been only two other occasions when the Government of Canada recorded balanced budgets for at least five consecutive years: in the 1920s and again in the later 1940s through to the early 1950s, the period of demobilization following World War II.

How does this fiscal progress stack up internationally?

According to the accounting standards used by our G-7 partners, this year, in 1999-2000, Canada will post its fourth budgetary surplus. No other G-7 nation, not even the United States, has accomplished such a turnaround between 1992 and 1999.

Let me say again that by the accounting standards used in most other countries, the federal government will post a financial surplus for the fourth consecutive year in 1999-2000. In fact, we are the only G-7 country to do so, including the United States.

Let me point out that this is not just a federal success story.

The financial situation of the provinces and territories will also have improved for the seventh year running in 1999-2000. As a result, the total deficit of the Canadian public sector will have dropped to its lowest level in over 20 years. This means that Canada is the G-7 country whose financial situation between 1992 and 1999 has improved the most.

It is this ability to turn around federal finances, thanks to the support of Canadians across the country, that now makes it possible for us to deliver dramatic new tax cuts and make key investments in health, education, children and the environment.

There is another benefit we are seizing; that is to make continuing progress on debt reduction. Under the debt repayment plan, we will again set aside a $3 billion contingency reserve each year to ensure that we continue to achieve balanced budgets even if economic problems arise. When the reserve is not needed it will automatically go to paying down the debt.

Through this approach, total public debt has declined by $6.4 billion over the last two years, producing a $300 million yearly saving in interest costs. Financial market debt will have fallen by almost $20 billion by this March 31.

More importantly, the federal debt to GDP ratio has declined each year since 1995-96. This ratio, which measures the size of debt in relation to the economy, is generally recognized as the most appropriate measure of the debt burden as it measures the ability of the government and the country's taxpayers to finance it.

In 1995-96 the debt to GDP ratio reached a post-war peak of 71.2%. By the end of this fiscal year it will have fallen to 61%. This ratio is expected to decline to 55% by 2001-02 and fall below 50% by 2004-05.

Achieving strong finances has not come easy. It has taken tough action, including careful control of program spending; that is all federal spending except debt interest charges. That is a commitment we will never abandon. The proof is in the budget figures.

Between 1997-98, when we first balanced the budget, and 2001-02, the increase in program spending should correspond to inflation combined with demographic growth. This is the standard used by most economic observers.

In fact, even allowing for the measures announced in today's budget, program spending next year will be $4 billion less than what it was when we took office. Expressed as a percentage of the economy, another key measure, federal program spending will continue to drop, reaching 11.6% in 2001-02, that is its lowest level in 50 years.

Since we have balanced the budget fully two-thirds of our new spending has been on priorities of Canadians such as health, higher education, access to skills and knowledge, and innovation. Having said that, there are areas where the government has responsibilities and obligations within Canada and outside its borders, responsibilities the official opposition party clearly shirks from. They include farmers, the homeless, the RCMP, the military, our national infrastructure, clean air and clean water, just to name a few.

The future of Canada and its people is looking brighter all the time. The deficit is eliminated. The debt burden is falling. Our unemployment rate is at the lowest level in more than 20 years and the disposable income of Canadians is on the rise. These favourable economic developments are setting the stage for a better quality of life for all Canadians. Balanced budgets have paved the way for tax cuts and increases in the Canada child tax benefit. They have made possible increased transfers to the provinces and territories for post-secondary education and health.

The measures in the 2000 budget will move Canada further along the path to greater prosperity, security and opportunity in the future. I ask all members of the House to put aside partisan rhetoric and look at the real results of this budget, at what it will deliver to Canadians, and support it wholeheartedly.

[René Laurin, Bloc, Joliette, QC]

Mr. Speaker, I would like the hon. member for Etobicoke North to explain what he means by a courageous movement to pay off the country's debt.

As we are speaking, the debt is $579 billion. For the last three years of the plan, it will remain at $576 billion. At a rate of $3 billion per year, supposing we apply the government's provisional reserve for the debt, it will take Canadians 192 years to eliminate the debt. The debt does not bother the federal government too much.

What really bothers the federal government is the assistance it could provide to the provinces to help them overcome the daily problems that confront them. All the provinces agreed that the priority was health care. All Canadians, including Quebecers of course, need additional resources to pay for health care. Everyone agrees that it is the top priority.

The federal government does not recognize that because, in order to carry out this priority, it would have to go through the provinces and give them more money to provide the services for which they are responsible.

Instead of meeting the essential needs of Quebecers and Canadians, instead of meeting them via the provinces, the federal government has opted for impoverishing the provinces still further by keeping them in a position of dependency, so that they will be increasingly unable to act, even in areas that are set out as their jurisdiction.

What then are the heroic gestures the federal government has taken to meet the essential needs of the people? Why does the federal government not allocate any significant amount to solving the problem of Canadians' health? Is that what the budget's generosity is all about?

If there had been no budget last evening, Canadians and Quebecers would not have gone all year without noticing, because the significant effects will not kick in for two, three and four years.

Where does the heroism of the government lie? Where is the government's sensitivity to the needs of taxpayers clamouring for health services, educational services, and more money for poor children? Where is the federal money for this year?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, in my opinion, we are talking about two contradictory things, because the Bloc Quebecois member is insisting that the government increase its transfers to the provinces.

At the same time they argue that we should be reducing the debt. I can tell the House that our government is balanced in its approach. With respect to the debt, I think something Canadians should understand is that we do have a significant amount of debt.

What the hon. member is forgetting is that when the economy improves so does the percentage of the debt in relation to the size of the economy.

Since we have been in government the debt in relation to the GDP has been reduced from 71% to 63%. It will go further down and it will reach 50% in the next three or four years.

I liken it to when people first purchase a house and take a mortgage, those of us who have been able to do so. In the first stages they look at the mortgage in relation to their income. As their income grows, in those cases where it does, they are able to carry a higher mortgage

Yes, we are concerned with the debt, but we are managing the debt in the context of a growing economy and the capacity of the economy to sustain that debt. If we suddenly paid down a huge amount on the debt it could actually have a dampening effect on the economy. We want to continue the sustained growth in the last quarter of 4.3% real growth in the economy of Canada.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, the Minister of Finance and further Liberal speakers have been trying to tell the House that this budget is a product of a broad consultation process, that they went around the country and listened to Canadians.

If that is true, they might have done a lot of consultation but they sure did not listen to Canadians because the overwhelming majority of Canadians said over and over and over again at every opportunity that they wanted the health care system fixed.

This should have been and could have been the health care budget that put the wheels back on our health care system, which everybody knows is ailing. We heard instead a paltry $2.5 billion over four years for health care, education and social assistance. In my home province of Manitoba this represents $20 million per year for health care, social assistance and post-secondary education.

How can Liberal members try to say that they have put money back into health care and they have done what is necessary to breathe new life into our ailing health care system with a paltry contribution like that? That is my comment.

Would the hon. member like to comment on the source of the surplus the Liberals are now spending in various ways? Would he not admit that much of the surplus is actually the EI surplus? We have a perverse form of Robin Hood where unemployed workers, who used to be able to enjoy the benefits of EI, are having their pockets picked so the Liberals can flip it back into tax cuts for corporations and capital gains tax cuts for the wealthy. Will the hon. member please try to defend that position?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, with respect to the budgeting process in Canada it is the most transparent and open process that exists. We implemented cross-country consultations where Canadians had the opportunity to come and present their views to the Standing Committee on Finance. The department and certainly this caucus reach out to talk to people. I do not know about members opposite.

Let me just give the House something that came out yesterday. This is a press release from the Canadian Taxpayers Federation which says that bracket creep is dead, taxes are coming down and the Minister of Finance listens to the people.

When the member opposite talks about transfers to the provinces and investments in health care, I do not know if he has forgotten already but he should recall that in the last budget the government made the largest single investment in health care that we have ever made of $11.5 billion. If we add the $2.5 billion in this year's budget, it fully restores and more the CHST levels from 1993 to an all time high of $30 billion. These are the facts. That includes tax points and cash. I would like the member to read the section on the transfers. It might inform him better.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, for the record, transfers are still way down at $400 per person compared to 1995.

The member stated that Canadians would receive $58 billion in tax relief. I would argue that those figures are wrong. Nevertheless, will he acknowledge that almost $30 billion of that tax relief will be effectively erased by the hike in Canada pension plan premiums, being mindful that what Canadians care about is their bottom line, their disposable income? Will he acknowledge that is exactly what will happen and on their paystubs Canadians will not see anywhere near the relief the government has promised?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, when Reform members talk about paystubs they should at least have the courtesy of bringing into the House paystubs that reflect today's reality. They bring in and talk about paystubs that do not even implement the measures we brought in in 1999.

With the measures this year, and we do not need to go over them all again, the tax reductions are significant. On average Canadians will receive a tax cut of 15% and if that is combined with the past budgets it is an average of 22%. Some Canadians will receive a tax cut of 45%.

The member talks about the Canada pension plan. With respect, he still does not get it. I have explained it to him before and he still does not get it, but I will explain it briefly for the House. The Canada pension plan is a funded pension plan with employer and employee contributions. Those funds go into a separate pension plan. They do not come near consolidated revenue. Last year we implemented the measures that will keep the Canada pension plan on a sound footing into the future. The member needs to distinguish between CPP and other tax reductions.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is my pleasure to rise today in reply to budget 2000. I start by taking issue with some of the things my hon. friend across the way has just said. It really goes to the point of what I wanted to say.

I simply have to point out that this budget is remarkable but not for good reasons. It is remarkable in two ways: one for what it says which simply is not true and in another sense for what it does not say but is critical to maintaining or increasing public confidence in government.

Just a minute ago we were having a discussion about the $58 billion tax cut. We all saw the headlines. The government deserves top marks for the PR it has generated in anticipation of the budget. It has been very good for it.

What will happen, and this is really where I want to go with this, is that in a year's time when Canadians sit down to take a look at their paystubs and figure out what the impact of these big tax cuts are on them, they will be very disappointed. One of the reasons they will be so disappointed is because of answers like the one we just got from my colleague across the way.

It was an empty answer. I asked him very clearly what would be the impact on people's disposable income when they have to pay out the CPP taxes against the alleged tax relief the government would deliver. He then went into a long dissertation about CPP being off budget, being different, and all that sort of thing. The people do not care. They are not interested in all those technical arguments, I say to my friend. They are interested in what will be the impact on their bottom line.

When we take a look at the $58 billion and start to break it down some interesting things happen. All of a sudden we find out that the $58 billion tax cut people are so eagerly anticipating is a chimera. It is not really there. It is a mirage. When we pull it apart, this is what we find. First, the $58 billion tax cut, all of a sudden, because of the increase in CPP premiums over the next five years, is reduced by about $30 billion. What was $58 billion is now down to about $28 billion. That is where we are now. The $58 billion in tax relief which the government promised really becomes $28 billion over five years when we factor in the $30 billion that we will have to pay in increased CPP taxes. We should remember that this is spread over five years.

Second, about $7.5 billion of that amount is not really a tax cut at all, it is a social program called the child tax benefit. The child tax benefit works the same way as all social programs. The government taxes everyone in the country, and it does that very effectively, and then it gives the money back to some people who have children. If that constitutes a tax cut, then I guess old age security is a tax cut. I guess the guaranteed income supplement is a tax cut. The fact is, it is not a tax cut. It was put in by the government to pad its numbers and to make its tax relief look a lot bigger than it really is. The definition of a real tax cut is when money is left in people's pockets.

The third point I want to make has to do with the issue of bracket creep. I applaud the government for following the lead of this party and other parties in this place which have urged that the government quit taxing people for inflation. That is something for which we have been arguing for a long time. Bracket creep is insidious. It has hurt people. It has hammered low income Canadians. There is no question of that. We know that is the case and we are glad it is gone.

It is important that the government be completely honest with people about the impact on the government's finances, and more to the point, the finances of individuals. Bracket creep is really a scheduled tax increase for the upcoming year. If the government cancels the scheduled tax increases through bracket creep over the next five years, is that really a tax cut? Do people have more money in their pockets? Of course not. It is a bit like the bully shaking down the grade 4 kid for his lunch money. When the teacher catches the kid and says he cannot do it any more, the bully turns around and says that he is responsible for putting even more money into the kid's pocket.

Canadians will not have more money because the government has ended bracket creep, they will just not face yearly tax increases because of it. If we take that out, that is $13.5 billion. When we look at the real tax relief that is being delivered, it is about $7.5 billion over a five-year period, or about $1.5 billion a year. It works out to $107 per taxpayer. That is not exactly a lot of money. It works out to about $2 per week. We might be able to buy ourselves a cup of coffee at Starbucks, but that is about all.

We must remember that this comes on top of massive tax increases which the government has brought forward over the last six and a half years since it has been in power. At the end of the day Canadians will be paying more in taxes than when the Liberals took power.

We would never know that from reading the headline “$58 billion in tax relief”. What is the net impact? Canadians will still be paying a lot more in taxes than when the government came to power, about $700 more per family. That is shameful. Congratulations to the government. It pulled the wool over a lot of people's eyes, including some of my friends in the media, I am sad to say.

The truth is that Canadians will still be paying taxes that are far too high. I think that many Canadians will see that in their paystubs as the year progresses and some of these changes are implemented.

We cannot put groceries on the table with headlines. We cannot put more money into people's jeans with headlines, and that is what Canadians really want. They want more money. They want more groceries. They might even want to buy a pair of jeans, but they will not be able to do that with this budget because it just does not leave them nearly enough money.

We argue that instead of giving Canadians a fake break we should give them a real break. I will say a little more about that later on when I explain solution 17, the Reform Party's proposal to dramatically lower taxes for all Canadians and to ensure that middle class Canadians, whom this government is targeting, end up with real disposable income in their pockets and not just a headline which does nothing for them.

I want to touch on something which I mentioned at the outset of my remarks. There is something glaring which the government absolutely forgot to mention in this budget. My leader mentioned it earlier today, but I would like to say a few more words about it.

I want to point out something that the finance minister said in his 1995 budget speech. He said that subsidies to business impede growth. I agree with that. I just do not understand why he, as the finance minister, continues to rubber stamp all kinds of subsidies to business.

Three weeks ago the finance minister gave an interview in Ottawa and he said that government cannot pick winners but losers can pick government. Truer words were never spoken. There have been many losers who have not only picked the pockets of this government, but, by extension, those of the taxpayers of Canada. Yet the finance minister sits in his place every year and rubber stamps more cheques. They go to the human resources minister, to the Indian affairs minister, to the industry minister and to the Canadian heritage minister. Too often they are used for things which are, frankly, political slush or things which are of such low priority that they are laughable. In some cases they go to some of the wealthiest companies in the world. It makes no sense.

I want to touch on briefly, for people who have been on another planet, what has been going on in the Department of Human Resources Development. Back in January the Reform Party brought to light an audit which revealed all kinds of terrible mismanagement. We found that there was absolutely no monitoring of files on over $1 billion worth of grants and subsidies. We found that there were many cases where applications were not even submitted but grant money was given to people. We found all kinds of unbelievable things.

The interesting thing is, instead of acknowledging right away that this was a scandal and saying “We are going to bring an end to these grants and subsidies”, because of, frankly, the political corruption that follows, they said “We are going to implement a six-point plan and we will do better”.

What has happened over the last little while is that the more we have dug the worse it gets. It is spreading like a stain. Now we find that the Indian affairs minister has all kinds of intrigues going on in his riding and the police have been called in to conduct investigations in the Prime Minister's riding. There is all kinds of stuff going on. This happens at a time when the finance minister brings down a budget.

What does the finance minister do? He continues to rubber stamp the cheques. We find that there is even more money in this budget going to the human resources minister. That is unbelievable, after that record. There is no question that she should be fired.

The $1 billion is only part of it. The government spends $13.5 billion a year on grants and contributions. We were talking about health care a minute ago. The entire time that the government was cutting the heart out of health care it maintained spending for grants and contributions. It could not let down its political friends or stop funding its pet projects. No way. It would rather cut hospital beds across the country so that it could fund hotel beds in Shawinigan. It is disgraceful, but that is exactly what happened.

I want to say a word about the Liberals' assertions that this billion dollar boondoggle created 30,000 jobs. Of course when they are challenged on the numbers they cannot actually produce any evidence that it produced even one job because they did not really keep any records. It is only a billion. After all, how could they be expected to keep records.

If that is true, if they really did create 30,000 jobs, and we know they have this big surplus, then why in the world would they not clean up all of the unemployment in the country? There are 1.1 million Canadians unemployed today. Why not spend $70 billion or $100 billion? We would not have any unemployed in Canada any more. Imagine the revenues that would pour in. It would be unbelievable.

The reason they do not want to do that is because they do not believe their own arguments. They know this did not really create jobs. All it did was take money from one group of people, the taxpayers, and give it to another group of people who happened to be their friends, or in some cases wealthy corporations. Why would they do that except to curry favour and buy votes? The fact is, they do not even believe their own arguments. Otherwise they would be arguing that the amount of money should be increased dramatically.

I want to say a word about something that was left almost unmentioned in the budget. It is important and it should be addressed. A moment ago my friend, the parliamentary secretary, blew off a question from a Bloc member about the debt. Is the debt not an issue in Canada any more? We have $577 billion of debt in this country and the government has absolutely no plan.

[An hon. member]

It has gone down.

[Monte Solberg, Reform, Medicine Hat, AB]

Oh, my friend says that it has gone down. It has gone down $6 billion. At that rate, in another 190 years it will be paid off. It is going really well. The fact is, Canadians see the debt as an impediment. They see it as something which holds the country back. When there is debt there are interest payments. In Canada today we pay about $42 billion a year in interest payments. This government has absolutely no serious plan to address the issue of debt.

We argue that the government should take some of the boondoggle spending from human resources development, put it into health care and education, and put it toward reducing the debt. That is what we want to see. Why does it not do that? I think Canadians are onside with us when we say that.

I will talk for a moment about what the Reform Party would do. It is only fair that we lay out our plan. We argue that the very first thing we should do is reallocate the wasteful spending that has become a symbol of the Liberal Party over the years. We would take that money from its political friends and we would put it into things which Canadians care about. I mentioned health care and higher education a minute ago.

We also believe that we should take that $13.5 billion, which over the next five years would be about $65 billion, which is a lot of money, and put it into things people care about. We think that we need to start to fund lower taxes in a way that really does put money into people's pockets.

[An hon. member]

We should be funding ESSO.

[Monte Solberg, Reform, Medicine Hat, AB]

My friends across the way sit and heckle. I think I have touched a nerve. They know, as part of a government that has presided over these large cuts to health care while continuing to fund boondoggle spending, that it is really the party that has cut more hospital beds and—

[The Deputy Speaker]

Order, please. I know the hon. member for Medicine Hat has raised points which have created some interest in the House and the debate is lively, but it is hard for the Speaker to hear the words of the hon. member for Medicine Hat, which the Speaker is interested in hearing, and I know that hon. members will want to conduct themselves accordingly.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, you are a wise man. I appreciate that wise intervention.

My friends across the way are very sensitive about their role in reducing health care to its present state, and well they should be, but I will not dwell on that.

We believe that we have room, because we have a surplus approaching $150 billion over the next five years, to reduce taxes tremendously.

[An hon. member]

Thank you.

[Monte Solberg, Reform, Medicine Hat, AB]

My friend from Simcoe—Grey says thank you, but it is really the taxpayers who should be thanked. They are the ones who have borne the burden of the deficit fight through higher taxes. There are incredibly high taxes today in Canada, the highest personal income taxes in the industrialized world. We need to lower them.

Our plan would do three different things. It would increase the basic exemption to $10,000, drawing from that big surplus. It would extend a $3,000 deduction to all families with children. It would take the 26% and 29% rates and move every rate down to a single rate of 17%.

What would the impact of that be? It would mean that every Canadian would see their taxes go down dramatically. We would see that our country would be the most attractive country in the world when it comes to investment. We would see money come back into the country. We have seen $135 billion flow out over the last 10 years under the Liberal government and under the Tories before it. That money would start to come back into Canada because this would be an attractive place to invest.

More than that, we would see some great social benefits. I want to say a word about that. We would see a tax plan that would lift two million low income Canadians right off the tax rolls. It is tough enough being poor without having the government tax people for the crime of having a low income, but that is what happens every year.

We would also end the discrimination against single income families, something the government failed to do in its budget. In the tax code there is a discrimination against single income families. It continues under this tax plan despite the efforts of some members across the way. Unfortunately it does not sound like the government wants to change it. Under our plan it would change. We would get rid of that discrimination.

More important, we would attract a tremendous amount of economic activity to Canada. I want to say a word about why that is important.

In a situation where the economy is underperforming like it is in Canada today where we still have almost 7% unemployment, who are the people who are hurt the most? It is people without skills. It is people without education. We need to help those people.

We would do that by having an economy that moved a lot faster. If it did, those people would be scooped up. They would get the jobs. They would get the experience, the contacts, the capital and the confidence which would allow them to improve their lot. They could maintain their dignity. They could provide for their own families instead of being kept dependent by the government. It is shameful that it would allow people to be left in that state, but the government does it.

Solution 17 will lift Canadians off the tax rolls. It will lower taxes. It will attract investment. My friends across the way should not let pride get in their way. They should make sure they adopt this plan. Let them adopt this plan. Let us get Canadians back to work. Let us create some opportunity for Canadians from coast to coast.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, in my experience for every complex problem there is a simple solution and it is wrong. The Reform flat tax proposal is such a matter.

I would like the hon. member to tell Canadians that if this were introduced and if people at the low end of the tax regime were dropped off and the highest income earners who are presently taxed at high rates came down to lower rates, then exactly who would pay for the lost revenues from the low and high groups? Would the hon. member not admit that it would be middle income Canadians?

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I would be happy to tell the hon. member who would pay. The Department of Human Resources Development and the minister would pay, because we would not fund that garbage any more. It would be gone and the benefits would go to Canadians of all stripes.

I am glad my friend across the way asked me the question. I would like to quote from a study done by Dale Orr of WEFA Inc. He is the fellow who chaired the finance minister's private sector economists and who prepared the documents for the fiscal and economic update in the fall. In talking about our proposals he said:

The tax reduction proposals...are well focused on the needs of Canadians today. They expand the economy, and most powerfully: personal disposable income, consumption and our standard of living. They create jobs. By lowering the marginal tax rates they are particularly effective in stimulating work effort, and stemming the brain drain and other productivity enhancing features. By powerfully reducing the level of personal income tax, particularly for Canadians of average and above average income, they are well directed at providing a more competitive tax environment in Canada relative to the U.S. They focus precisely and effectively on “bracket creep”, raising the basic personal exemption, particularly affecting the lowest income taxpayers, by much more than the rate of inflation: By eliminating the current 26% and 29% marginal tax rates, any bracket creep relating to these rates is eliminated. The issue of fairness is addressed, not only by the elimination of bracket creep, but by honouring the original policy intentions of the 5% “deficit reduction” surtax and reducing EI premiums to be consistent with EI policy....The tax reduction proposals of the Reform Party are affordable. If all of the tax reduction proposals are introduced as a combined package, over the 2000-01 to 2004-05 period, there would still be a fiscal surplus in each and every year.

That is what our plan would do.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I would like to ask to my colleague from the Reform Party a question. Every time I hear we should bring employment insurance premiums down, but what about those 800,000 workers who have lost their employment and do not qualify for employment insurance? What about the 1.4 million children who are hungry? What is the position of the Reform Party?

I have a motion in the House of Commons and it seems that the Reform Party does not want to support it. The only thing my motion says is to revise employment insurance. The only thing I hear from my colleague is to bring the premiums down. I have not heard any workers on the streets asking for the premiums to be brought down. They have asked that the benefits be brought up.

I would like to hear his position on that.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is interesting how different people think so differently.

I would rather see people have a job than an enhanced social program. Families with children need permanent jobs, jobs that pay a good salary. That is what we have to focus our efforts on. Why does my friend automatically assume that the best use of money is through the hands of a government, to hand it out to different people?

Let us give that money back to the job creators in Canada. They will provide the best social program in the world and that is a good job.

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

Mr. Speaker, we are talking about where money might be coming from to help out with spending on high priorities in this country.

Last week Environment Canada and Agriculture and Agri-Food Canada made a big announcement that they are going to put up $600,000 to put a sign by a farmer's gate to acknowledge that the farmer is helping out on environmental issues by the way he farms. Does the member believe that that $600,000 should go toward that fence post in front of that farmer's yard or should it be going into health care which we really need and want?

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, clearly my friend has pointed to another example of the idiocy that occurs on a daily basis in the ranks of government. We see good money thrown after bad.

My friends across the way are sensitive and they should be. At the same time as that is happening, hospital beds have closed, people have left the country because the taxes are too high, and people cannot afford tuitions because they have been raised and transfers to the provinces have been lowered for those sorts of things. It is time to change that. Let us change that by getting rid of the grants and contributions that go to boondoggles. Let us take that money and put it to good use instead.