House of Commons Hansard #59 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

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11:25 a.m.

Bloc

René Laurin Bloc Joliette, QC

Mr. Speaker, I rise on a point of order. Considering the importance of the issue, could you check to see if we have a quorum?

And the count having been taken:

The BudgetGovernment Orders

11:25 a.m.

The Deputy Speaker

I see a quorum. The hon. member for Saint-Hyacinthe—Bagot may continue.

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11:25 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, we applauded the full indexation of tax tables, and we continue to do so, because the Bloc Quebecois has been fighting for seven years to convince this government to end this tax injustice whereby, for 14 years now, taxpayers have been paying an extra $3 billion in taxes every year. Indeed, without any announcement from the Minister of Finance about tax rate increases, the minister was collecting at least $3 billion per year.

We condemned this injustice. In 1995 we even tabled a report proposing a reform of the personal income tax system. In that report, our first recommendation to the government was the full indexation of tax tables to end this systematic robbing of taxpayers.

Seven years and $17 billion later—because the federal government's inaction has cost taxpayers $17 billion—the government finally decided to index tax tables. Let us render unto Caesar what is Caesar's. Had it not been for the Bloc Quebecois, no one here would have talked about full indexation.

This year the Minister of Finance would probably have announced a $2 billion tax reduction without changing anything to the tax structure. In the end, he would have given $2 billion to taxpayers while at the same time taking back between $3 and $5 billion through the back door.

It is thanks to the Bloc Quebecois, the only party in this House to raise the issue, if this long term adjustment has been made and if, over the coming years, we will be seeing real tax reductions, not disguised ones.

Where are the tax cuts that everyone is calling for this year? There are none, or almost none. The most that the government has done is to freeze people's taxes at the same level as last year. That is it.

Next year there will be minimal tax cuts. I will give a few examples.

There will be no tax savings at all for a family of two adults and two children with an income of $20,000.

For a single income family of two adults and two children earning $35,000, the real tax saving this year will be zero.

For a single income family of two adults and two children earning $65,000, the tax saving this year will be $700—less than $60 a month.

But the lucky friends of the Minister of Finance and of all his colleagues, the folks who earn $250,000 and up, are the real winners this year. Their savings will be $4,796.43.

So much for tax relief. As usual, the Minister of Finance makes sure that these tax cuts are for those whose income is $250,000 or more this year. Next year it will not be all that different.

With full indexing, the tax cuts will happen, but mainly four or five years from now. In my opinion, those tax cuts need looking into more closely.

The Minister of Finance gave us an interesting show yesterday, but if we scratch the surface, we can see that the Minister of Finance is an expert at making things look good. However, when the time comes to take really effective measures, he will certainly not be the one to do so.

Now for agriculture. This is a particularly important sector and one which has in recent years been hit with considerable cuts in the successive budgets of the Minister of Finance, particularly the cuts to subsidies and the measures aimed at the farmers of Quebec.

After six budgets in which there have been more than proportional cuts in the federal agriculture and agri-food budget, it seems to me that it would have been a good idea for there to have been a little help this year for Quebec farmers in the form of subsidies.

This is all the more important, crucial even, because of the impasse in the WTO, where there are no longer any discussions about subsidy levels in the United States and Europe, and our international competitors receive two or three times what the agricultural producers of Quebec do.

How can there be competition against people who are being subsidized up to three times as much as we are? He ought to have restored some of the agricultural subsidies so as to enable that sector to be a front-runner on the international level, despite this inequity on the international level. He did not.

Everyone deplores this now, particularly the president of the Union des producteurs agricoles, who said that agriculture had been completely ignored in the budget. When agriculture was mentioned in the past six years, it was always to announce bad news, such as the elimination of certain benefits that had been in place until then.

I also want to mention infrastructures. There is unanimity against the minister. Again, in today's newspapers, we can see that all those who fought for a real infrastructure program to construct roads, and for other types of infrastructures, particularly municipal infrastructures, will be very disappointed. Some of them already are this morning, but those who were expecting more from the federal government will be even more disappointed.

Some claim that the opposition can say anything, that its members are not taking into account the need to achieve fiscal balance, etc. This is not true. Whenever the Bloc Quebecois has made proposals, it has always kept in mind the need for fiscal balance and sound management of public finances. The same cannot be said of the government opposite, given what is going on at the Department of Human Resources Development, including the scandal about the lost billion, the possibility of bribes here and there and the largesse toward friends.

We redid the forecasts by taking into account the evolution of the economy over the past three months and the most recent major criteria for economic forecasts.

We recalculated the Minister of Finance's surplus forecasts for the next five years and discovered that there will be not $95.5 billion in surplus, but more nearly $140 billion.

With the Minister of Finance we are used to errors in forecasting verging on 100%. Three months ago, he presented his economic statement. He forecast a surplus for 1999-00, that is, the fiscal year ending March 31, of $5 billion. Yesterday, in the budget, the surplus had reached $7.5 billion. In two months and a half, he erred by 21%.

There is worse to come. Yesterday, at the time of the budget, I took out his own department's latest financial review. In the first nine months of the current fiscal year, the surplus was already over $10.9 billion.

The Minister of Finance has a real problem. Either he does not know how to count or he does not know how to estimate or he does not know how to manage or he does not know what is happening in his own department, since the figures he gave yesterday, those of two and a half months ago and those of the same day in the financial review vary between 21% and 50%.

The problem is that the Minister of Finance manipulates figures. He is a great manipulator. I will not use any unparliamentary language, but we need only look at page 20, first column, table 1.2 of his budget plan 2000. It provides for spending in 2000-01 of $4.4 billion he committed in 1999-00. Already we have $4.4 billion that will be spent later on showing up in this year's figures.

Why does he do this? To mislead everyone. He talked about a $5 billion surplus. He realizes that the actual figure will be in excess of $12 billion. He adds $4.4 billion to this year's figures that will be spent the following year. He reduces this fiscal's real surplus of $12 billion by a corresponding amount. At the end of the year, he will crow that he was right on the mark.

It is really too bad that we are treated to this sort of sleight of hand.

He also could have brought in tax reform. That is what he did for individual taxpayers, but we encouraged him to do so for corporations. He did not follow our advice. Large corporations are carrying forward far too much in unpaid taxes. The amounts involved are not small. Year after year, profitable corporations carry forward over $45 billion in taxes they owe Revenue Canada.

I will mention just one, Bell Canada Entreprises, which has been in the news in recent days, which will acquire CTV at a cost of $2.3 billion. This is approximately what BCE owes the federal government in unpaid taxes carried forward. Another example is Bell Canada, which owes $2.1 billion. Seagram owes over $2 billion.

Seagram and BCE taken together represent enough in unpaid taxes to restore the Canada social transfer, to be able to invest in health and postsecondary education and help the poorest members of society. But the Minister of Finance does nothing.

We are keeping our eye on him for the rest of this government's term of office in order to see that he introduces this reform, that he stops arranging things to suit his little millionaire friends, that he gives a thought to the most disadvantaged and listens to people's pleas.

I move:

That the amendment be amended by adding after the words “real tax relief” the following:

“and real and immediate adjustments in the employment insurance system as well as in transfers to the provinces to fund health care, education and social assistance.”

The BudgetGovernment Orders

11:40 a.m.

The Deputy Speaker

The amendment to the amendment is in order. The debate is on the amendment to the amendment.

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11:40 a.m.

Etobicoke North Ontario

Liberal

Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I wish to begin by saying that it is a great pity that Canadians listening to this debate do not have an accurate picture of budget 2000.

We have heard some speakers who are mired in the past and speakers who are speaking half-truths. For example, on the question of taxation we heard about examples from previous years, but did the speaker talk about what this budget actually delivers for Canadians?

I will give some examples. A one earner family of four with an income of $60,000 will see its taxes go down by 24%. Did we hear that? I do not recall hearing it. The elimination of the 5% deficit reduction tax on income of up to about $85,000 will help middle income Canadians. Did we hear that? I did not hear that. A one earner family of four earning $40,000 will see its net personal income taxes reduced by 48%. Forty-eight per cent. I did not hear that in this Chamber just a few moments ago. A two earner family of four with an income of $60,000 will see its net income taxes reduced by 27%. Twenty-seven per cent. These are the facts.

When we talk about transfers, the budget fully restores health and social transfers to the provinces. In fact, it moves them to new levels of $30 billion annually. With the equalization payments, it moves to $40 billion annually being transferred to the provinces.

It is no secret that the province of Quebec certainly with respect to equalization payments receives the lion's share. The Quebec government receives close to $5 billion in equalization payments. The CHST has fully restored the funding on the transfers for health, education and welfare.

I wonder if the Bloc Quebecois member would make a small comment on transfers. Does he have any exact figures, or is this a sort of make-believe story?

The BudgetGovernment Orders

11:40 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, we are going to talk of reality, not the inflated statements on the Minister of Finance's tape, as replayed by his parliamentary secretary.

Does he want to know about tax savings? A family of two adults and one child, with a single income of $65,000, will save $700 this year, which is barely $60 a month. That is a lot, is it not, $15 a week?

Taking the same family of two adults and one child, but with two incomes totalling $65,000, they will save $250 this year. Wow. Some tax cut. This is wonderful.

If I had had the time earlier, I would have also talked about the inflexibility of the federal tax system as far as Quebec is concerned. I will give some examples, if I may. Quebec gives tax credits for shipbuilding, but they are then taxed by Ottawa.

There is also inflexibility as far as deducting student loan interest is concerned. Since student debt load in Quebec is less than in the rest of Canada, our province is not getting its share regarding that tax deduction. This is an example of the inflexibility of the federal tax system.

Then there is the deduction for daycare costs. Everyone wants to copy Quebec's $5 a day daycare program, but the federal government has turned a deaf ear when it comes to making the necessary tax adjustments. Some families in Quebec will lose tax deductions, because they are claiming less in daycare expenses from the federal government. The tab is $70 million. I could have talked about this inflexibility.

Yesterday, it was announced—and I would have done it earlier if I had had the time—that the super deduction for research and development the Quebec government—through the Minister of Finance, Bernard Landry—had announced in its budget last year, a measure similar to what has been done in Ontario for ten years with the hundreds of millions received by Ontario businesses through federal deductions for research and development, is quite simply a thing of the past.

Businesses did not even have six months to take advantage of that deduction, while Ontario companies had ten years to benefit from the hundreds of millions of dollars given by the federal government.

To those who claim that federalism is beneficial to Quebec, I say think again. It was demonstrated again yesterday that when Quebec has a good idea, Ottawa turns a deaf ear, because the Quebec government would look too good. When there is a measure that is good for economic growth, the government scraps it, as it did with the excellent Quebec research and development deduction. That is what is meant by federal flexibility.

I am tired of hearing about transfer payments being at the same level as in 1993. That is not the case. They are lumping cash transfers and tax points together. Tax points were transferred in the late 1960s. We wish the government would quit trotting out this tired old refrain. No one takes it seriously any more.

The truth is that provincial governments are out $4.2 billion every year, and the Government of Quebec is facing a $1.7 billion shortfall in health care funding. It is the fault of the federal government that people wait so long in emergency rooms and on surgery lists. It is the fault of the federal government that hospitals are closing, because, by 2003, it will have cut transfer payments for health, post-secondary education and social assistance by $31 billion. Members opposite should stop obediently playing the same old tapes, and the government should do its job.

The BudgetGovernment Orders

11:45 a.m.

Bloc

Odina Desrochers Bloc Lotbinière, QC

Mr. Speaker, I obviously fully support the remarks by my colleague from Saint-Hyacinthe—Bagot on the economic and social consequences of the budget presented yesterday by the Minister of Finance.

I have in my hand an article published today in Le Droit . I think with my colleague's expertise we have a good idea how federalism is cost effective in Quebec. The article concludes by saying:

Even with the natural increase in the performance of the tax points, Ottawa's total contribution has increased from $30 billion to $32 billion in ten years, a miserable increase of .06% a year.

It then says:

In all, with all transfer payments combined, for each Quebecer, cost effective federalism is $1,566 as compared to $1,600 when Robert Bourassa left politics ten years ago. This does not warrant a speech by the current Minister of Intergovernmental Affairs—

I would ask my colleague if he agrees with these remarks and if he can tell us in greater detail how the current budget will impoverish Quebec further this year.

The BudgetGovernment Orders

11:45 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I thank my colleague from Lotbinière. What he has just said is quite right. I will simply take one cut to show that Quebec is doing more than its share in absorbing cuts and is therefore poorer than the other provinces in Canada as the result of the actions by the Minister of Finance. Let us consider the cuts decreed in the 1995 budget in the Canada social transfer, with which, it must be remembered, Quebec was to fund health care, post-secondary education and social assistance.

The plan for the cuts, which began in 1995 and will conclude in 2003, will mean that Quebec alone will suffer of some $16 billion of the $31 billion in cuts decreed by the Minister of Finance. This is over 50% of the cuts.

Quebec is going to suffer 50% of the cuts to the social transfer, while it represents only 24.5% of the Canadian population. Is this fair? Is this equitable? Absolutely not.

Looking at R and D expenditures—this should be heeded by those subservient Liberals from Quebec across the way, because we have been saying this for 20 years over and over, and they still haven't got it—we have not received our fair share of federal government goods and services expenditures and structuring expenditures. We are $2.5 billion in the hole every year.

Telling us that this system represents enrichment for Quebec is false. My colleague from Lotbinière has done well to raise this aspect of the question.

The BudgetGovernment Orders

11:50 a.m.

NDP

Louise Hardy NDP Yukon, YT

Mr. Speaker, I know that Quebec has a very large northern region and I was wondering if the member would elaborate on how devastating this budget is when it comes to health care in northern areas that depends on Medivac.

The BudgetGovernment Orders

11:50 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, by not restoring the transfer payments via the Canadian social transfer to their 1993 levels, the people whom the hon. member represents will be hard hit, because it is already experiencing problems with health care funding.

With the population growth that region is undergoing, the needs are becoming more and more urgent and pressing. The Minister of Finance has decided to keep the people of the Northwest Territories and the Yukon waiting once more, as he has for the past two and a half years.

It must not be forgotten that the surplus started two and a half years ago, and the Minister of Finance has managed so far to avoid any debate on its allocation, by concealing and disguising it, as he has again this year. We must not believe that the surplus will be $5 billion, as he has announced. It will be $12 billion instead, this year.

He could, therefore, have done far more to improve the health sector in the hon. member's riding and elsewhere, but has decided not to. At best, he is going to invest $2.5 billion, but over the next five years, so that will be $500 million yearly. This figure represents about 12% of annual requirements, according to the figures given by the provincial premiers and territorial leaders.

The BudgetGovernment Orders

11:50 a.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I rise to say a few words on this very important budget debate today. I remember the Minister of Finance in London last fall saying in his financial update that we were into the age of a surplus.

When we get into the age of a surplus we can start looking at the values of a society in terms of where we want to invest our money and in terms of the new fiscal dividend. It is a new era. It is a new age. It is a new chapter in terms of where the country wants to go.

Because of that I looked forward to this budget with a great deal of interest as the dawning of a new age, a new era, a new direction for Canada. Because we have turned the deficit corner what would the fiscal dividend be used for?

We listened to the Canadian people and we heard a great deal of optimism about reinvesting in people, health care, education, a children's agenda and the farm crisis, all kinds of things for ordinary people and bringing down some taxes that affect them such as the GST, bracket creep and others as well.

If we go back to 1995 we notice that the fight against the deficit was carried out by a radical slashing of social programs, the most radical slashing we have ever had in Canada. It was much more radical than any Conservative government under Brian Mulroney or John Diefenbaker or any other Tory in the history of the country had ever done. The Minister of Finance slashed and burned social programs in Canada to the point where social programs such as health care are in jeopardy today.

Then came last night. Last night the minister rose in the House to present his budget. I thought for a while I had a health problem. I thought I had a hearing problem. I kept hearing the Leader of the Opposition but I kept seeing the Minister of Finance. I checked with my colleague from Kamloops and he was adjusting his glasses. He was looking around. He saw the Minister of Finance but he thought he was hearing the Leader of the Opposition.

What we had last night was a very important paradigm shift by the government, moving in a sharply conservative direction from the past history of Canada, from the past history of the Liberal Party. We had a very conservative tax cutting budget.

I checked more closely and watched the Leader of the Opposition. He was embarrassed. He was blushing. He looked very red in the face because what the Minister of Finance was saying remained the things the Leader of the Opposition had been advocating for the last two or three years. Meanwhile the Minister of Finance was boasting and bragging about the new direction in which the country was going.

A friend of mine has some very appropriate buttons. I should not mention another member's name in the House but I can read what the button says: “Paul Martin for UA leader. Paul Martin for leader of the United Alternative”. The Leader of the Opposition may have competition for the leadership of a new conservative party.

What we have seen very importantly is a paradigm shift. We had the deficit fought on the back of social programs. We expected that once we got to a surplus position the social programs would be reimbursed, that health care would be reimbursed, that education would be reimbursed, and that people who had paid for the fight against the deficit would all of a sudden get the positive result of a fiscal dividend. However the opposite happened.

We now have the smallest government we have seen in the country since 1949-50 in terms of government spending and government programs. The 2000-01 fiscal year spending on government programs will amount to 11.6% of the GDP. That is down some 5.3% from 1992-93 when government spending was 17.5% of the GDP in Canada.

Investment in government programs has dropped by $4 billion since 1993-94, the year Brian Mulroney left office and the current Prime Minister came into office. In the budget speech the government boasts about this radical downsizing of the public sector and federal government programs. That is a drop of $4 billion at a time when inflation is gradually increasing costs, when government revenues are going up and when the affordability is there to expand government programs for health care, education, homelessness and farmers. There is a cutback of $4 billion in terms of government programs which help ordinary people.

There is a shift in values. I ask where those good old time Liberals are, the Lester Pearsons. After its start in Saskatchewan he started a national health care program that brought in the Canada pension plan. Where is Pierre Trudeau? Where is Paul Martin Senior, the national father of many of our social programs who boasted about building social programs and expanding them when they became affordable? Where are those old time Liberals?

In the House today many Liberals are hanging their heads in shame as they think back to the legacy of the Liberal Party which tried to build some social programs and to invest in government policies. Those programs are now gone. Where have they gone? Some of them are in the Senate. Others have just gone out of politics, but where is the legacy of the old Liberal Party?

We have had a radical downsize like we have never had before in terms of government programs and social programs. Instead of spending about 75% in terms of health care, education, the farm crisis, children and senior citizens, in the budget for fiscal year 2000-01 about 25% of the surplus is going into these programs and 75% will go into tax cutting and cutting back on the national debt. It is exactly the other way around to the way the priorities should be. We should be reinvesting in people.

I want to look at some of the interesting facts. In the next four years they are projecting tax cuts of $58 billion. The spending on transfers to the provinces for post-secondary education, health care and other social services will be $2.5 billion: a billion this year, a half billion next year, a half billion the third year and a half billion the fourth year. That is $58 billion for tax cuts and $2.5 billion for health and post-secondary education. For every dollar that goes to cut taxes, some two pennies go into increases in health care.

What does that mean?

Two days ago I was visiting a person in the Pasqua Hospital in Regina. I talked to some of the nurses about the crisis in and the shortage of health care. No matter where we go, whether it is the Pasqua Hospital or any hospital in the country, we get the same story about health care being in crisis.

The federal government in the days of Paul Martin Sr. and Lester Pearson funded health care on a 50-50 basis with the provinces. What is it today? Today, under the son of Paul Martin Sr., about 13 cents or 14 cents on the dollar comes from the federal government, depending on the province. It is no wonder that Liberals hang their heads in shame in the House today with this kind of track record.

What does it mean in my province of Saskatchewan? Over the next four years this $2.5 billion will mean $80 million to the province of Saskatchewan. That is enough to fund health care for one day, two days or three days in those four years. I suspect it will be the same in Manitoba, New Brunswick, Nova Scotia or any of the smaller provinces in the country. That is what the Liberal Party is giving us, funding for health care for an extra three days in the province of Saskatchewan.

In fact the effects of this budget will be even worse in Saskatchewan. Because of the changes in the tax system our province will be at a net loss in terms of what it receives in transfers from the federal government. There will be an extra $80 million in transfers, but a loss when it comes to the change in the tax system because our tax system, except for Quebec, is piggy-backed on the federal tax system. It is no wonder there is a great deal of shame across the way.

Years ago the Liberal Party would boast about the role of government and the public sector in building a strong network of social programs to help Canadians who need help. The Liberals are now changing on a dime. They are intimidated by the Leader of the Opposition, intimidated by the Reform Party. They have slashed $4 billion from government spending since they took office from former Conservative Prime Minister Brian Mulroney.

It is no wonder the Canadian Medical Association is saying that there is not enough money in the budget for health care. It is no wonder the people are worried about an American style of health care, two tier health care coming into the country. What the Minister of Finance did last night was open the floodgates to the possibility of the American style of two tier medicine. The federal government is not paying its fair share of the cost. At 13 cents or 14 cents on the dollar, when it used to be 50 cents, the government is inviting the provinces, in particular Alberta, which has the cash, to implement a two tier system of health care.

I remind the House that in the United States 48 million Americans are not insured for health care. They are mainly poor people, black people, people living in inner cities and people living in rural areas. That is the kind of vision the Minister of Finance has in mind for Canada. It is not the Canadian way. It does not reflect Canadian values. It is not what Canadians are telling MPs from one end of the country to the other. That is not the way we want to go in the New Democratic Party.

We need more money for health care. We need more money for education. We need more money to invest in ordinary people and in services for people. That did not happen last night. Last night there was a shift in the values of the Liberal Party, which is adopting the agenda of the Reform Party. That is why the Leader of the Opposition was blushing. He did not know what to say. All he could talk about last night in front of the cameras was HRDC and how the government had spent money in those programs over the last two or three years.

I turn for a moment to education and the children's agenda. A number of months ago the Prime Minister spoke of a children's agenda. Where is that children's agenda? It is not there. Where is the extra money for education? The extra money, except for a small portion of that $2.5 billion over four years, is not there. It is not there at all.

If we want to build a stronger country and a more competitive country, if we are concerned about the so-called brain drain, then the place where we should start investing immediately is in the children's agenda, in child care, in early childhood development and in post-secondary education so that we can invest in human resources, training and education to create in the future a workforce that is second to none in the world and one which will build this country into a strong country in the next century.

That is the vision and that is the direction in which we should go. Instead, the income gap is widening. There are more and more people living in poverty. There are more and more kids living in poverty, more and more kids without opportunities some 10 years after we passed a resolution to eradicate child poverty by the end of the last century. Now we have the money. Now we have the surplus. What does the Liberal government do? It decreases spending in proportion to our GDP rather than increase it. It is the agenda of the Leader of the Opposition and members of the Reform Party. They have intimidated the Liberal Party, which has responded in kind by bringing in their agenda, which is not the way that Canadians want to go.

I would like to speak about the farm crisis. We have the worst crisis in the farming sector in Saskatchewan and Manitoba since the 1930s. We have had protests. We have had people being forced off the land. We have had bankruptcies. We have farm stress. We have had people committing suicide. We have had people on hunger strikes. We have had tractor demonstrations. We have had questions put by members of this party in the House of Commons for the last year. We have had delegations led by Premier Romanow and Premier Doer.

With all the protest, the lobbying and the questioning that is going on, what did we get from the federal government? We got a measly $240 million last week, when all the major farm organizations in the prairies were saying that they need a minimum of $1.3 billion for Saskatchewan and Manitoba if they are to survive, seed crops next year and the year after and maintain the family farm. That is all they got. There was nothing added in the budget.

Last night there was nothing in the budget about a long term farm program, which prairie farmers are saying should be based on the cost of production. That would give them some guarantee that they would get back at least their costs and a decent income in the years that lie ahead. Where was that vision? That vision was not there, despite the fact that European farmers are being subsidized to the tune of 56 cents on the dollar by the treasury in Brussels and American farmers are subsidized by 38 cents on the dollar, while our Canadian farmers get 9 cents.

Agriculture has taken the biggest hit next to social programs from the Minister of Finance and the Liberal government with the elimination of farm support programs and the Crow rate over the last few years. Now that we have a fiscal surplus, what is there for farmers? Mere peanuts for farmers and nothing in terms of a long term vision.

This is a paradigm shift in Canadian politics. We are seeing the Liberal Party shift to the right and adopt the agenda of the Reform Party in terms of fiscal conservatism, in terms of the law of the jungle and people having to make it on their own in terms of the marketplace.

It does not matter where we look. Take, for example, the CBC. There was not a penny last night for the CBC. There was very little for arts in terms of a vision for our country, taking our country back and standing for Canada and our identity.

There was very little for international development in terms of playing a role in the third world.

There was nothing for parks.

I want to mention taxation. There were some good things done in terms of indexing the taxation system and increasing the basic exemption. After our party has been pushing, year in and year out, for a fair and progressive move for the ordinary Canadian citizen, the Liberals finally listened to this party and to the Canadian people and indexed the taxation system.

At the same time they had to throw something to their wealthy friends. They are going to change the capital gains system so that instead of being taxed on 75% of capital gains, people will be taxed on only two-thirds of their capital gains. Someone who is a wealthy person and makes $200,000, $300,000 or $400,000 a year in capital gains will get a major tax break compared to the ordinary citizen.

It is the same with RRSPs. We can now invest 20% of our RRSPs in foreign markets. That is a considerable expenditure by ordinary Canadians, amounting to billions of dollars a year. Now the government, despite what the Canadian people are saying, wants to increase that to 25% and then to 30%. The taxpayers of this country are subsidizing people to invest in the economies of the United States, Asia or Europe, and yet it is the taxpayers' money. These things are going in the wrong direction.

In the remaining time that I have I want to put a bit of a human face on the budget that we saw last night. We have been in touch with a few people this morning and we have heard different reactions to the budget. For example, we spoke with John, who is a currency trader in Toronto. He is one of those guys in red suspenders. He was very happy last night. In fact, this morning he had a bit of a hangover from popping all the champagne. He was happily toasting the Minister of Finance because he made $200,000 in capital gains. With that kind of capital gains he will have an extra $8,000 in his pocket because of the change. It was not a bad budget for John. It was no wonder he was popping the champagne and munching on caviar as he watched the Minister of Finance deliver a budget that was good for him because of the capital gains exemption.

We also heard from Donna. Donna is not like John. Donna is a high school teacher. She earns $60,000 a year and comes from a one earner family of four. Next year she will get a tax cut of $1,007. By 2004 she will have a tax cut of $1,477. What does this tax cut do in terms of lost services for Donna? She has children in university. She sees tuition fees going up, and yet there are no increased transfers for education and health.

In 1990-91 the average arts tuition at the university where her son went was $1,496. In 1999-2000 that tuition had gone up to $3,370, a hike of 125.9%. The reason is that the federal government has not kept up its transfers to the provinces for post-secondary education.

The Liberals have help from their friends in Ontario, like Mike Harris, whom they seem to worship nowadays. By the way, Mike Harris increased spending on government programs at the same time that this government decreased spending. We have a government that is even more Conservative than Mike Harris. Donna is a net loser as a result of the budget of last night.

We heard from André, who is a student. What is in the budget for him? Nothing at all. Tuition fees will not go down, they will go up. There is nothing new in student loans for André.

We heard from a retired couple. Milfred and David live in Kamloops. They make $30,000 a year. They will see their personal taxes reduced by $546 a year, or $1.50 a day. Through the tremendous generosity of the Minister of Finance, by 2004 they will be able to go to Tim Hortons to share a couple of cups of coffee, if they are small cups. They would sooner see that money invested in the health care system and education for their grandchildren than in $1.50 to buy a cup of coffee at Tim Hortons.

Doug is from my hometown of Wynyard. He will make probably $2,000 or $3,000 next year. He may get an $8,000 payment from the federal government. He will not be paying any income tax. There is nothing in the budget for him. There is nothing more for farmers. There is nothing for their cost of production. There is nothing for him.

This budget is very unfair in the way it treats ordinary people. We need a vision in which we invest in people, social programs and health care; not a budget and a government which governs for the wealthy.

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12:10 p.m.

Liberal

Sarkis Assadourian Liberal Brampton Centre, ON

Mr. Speaker, I followed the comments made by my colleague from the NDP very closely.

He forgot to mention that full indexation of personal income taxes will cost the government $6.3 billion, which will go to the taxpayers. He never gave the government credit for that.

Headlines in the Globe and Mail read: “$13.3 billion in additional spending will go mainly toward health care, research and education”. The Winnipeg Free Press read: “It's payback time: Martin slashes $58 billion in taxes and puts an end to bracket creep”. Further, former NDP MP, Doug Fisher, said: “Finance Minister Paul Martin knows the nation's financial situation has been improved under his stewardship”.

The other point I want to bring to his attention is that he mentioned that last week the federal government gave Saskatchewan and Manitoba $240 million. Who is complaining? The premier of Saskatchewan was very happy. I do not know who speaks for Saskatchewan, the premier or the hon. member.

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12:10 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I did mention indexation. We have advocated full indexation for our taxation system for years. I am glad the government has finally listened to the NDP and the ordinary people and has done something on the tax side which will help ordinary people in Canada.

The concern I have is that at a time when the government should be investing in people, it is not doing that.

Take a look at the government's budget books. I will only refer to the budget in brief because the big budget might be a bit more complicated for the member across the way to go through.

On page 18 of the budget in brief, we find that in the fiscal year 2000-01 the government spending initiative is to be $1.2 billion. Its tax cut initiatives are $3.5 billion. It will set aside some $4 billion in terms of contingencies and prudence which will probably be spent on the national debt. In the next year 2001-02, spending will be $3.1 billion, tax cuts of some $7 billion and it is setting aside $5 billion for the national debt.

We can see what its priorities and values are. Its values are not investing in people, the health care system, education or the farm crisis. Its values are not the values of the Canadian people and not the values of the Liberal Party of old.

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12:15 p.m.

Reform

Ken Epp Reform Elk Island, AB

Mr. Speaker, I appreciate the opportunity to set the record straight. The member in his speech made some comments about the Reform Party's position on health care. I point out to him and to anybody else who happened to hear those scurrilous statements that they were false and what follows is the truth on the matter.

The Reform Party is, has been and I presume will be, a party that listens to the people. We are a grassroots party. From the beginning Canadians have told us by our own membership polls and other indicators that we have had from many public meetings that health care is priority number one.

It is true it has always been our highest priority. All one needs to do is to look at the literature. Instead of simply spewing back what others have said about us incorrectly, look at the actual literature from our various campaigns. Look at what we have actually proposed. It has always been a high priority. We have a great commitment, contrary to what they are saying about us, to the health care system. It is our number one priority. We would like to prop up and buy some more equipment for hospitals instead of fountains in Shawinigan.

I wanted to put that on the record. I do not know whether the member wants to comment on it or whether he has another scurrilous comment to make. Unfortunately that is what happens in these debates but I wish he would simply stay with the truth and recognize that is what our party is about.

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12:15 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I remember going to the Reform convention as an observer. I heard them talk about tax cuts that amounted to $104 billion over five years when the federal Department of Finance was projecting a surplus of about $100 billion over five years. Reform wanted to spend the entire surplus on tax cuts.

If one is doing that, we are not even going to keep up to the increase in inflation in terms of health care and education. We can see what kind of priority health care is for the Reform Party of Canada. The other thing about the Reform Party of Canada is that it supports Ralph Klein in a two tier American style health care vision for our country. The Reform Party of Canada stands for that.

Canadians want a single tier national health care system as supported and enunciated in the Canada Health Act. Our party and the Canadian people stand for that. We want to fund the national medicare program. We want to bring back federal funding. Canadians stand for that and the Reform Party stands on the opposite side of that. It wants two tier American style medicare. That is not what Canadians want.

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12:15 p.m.

Progressive Conservative

Elsie Wayne Progressive Conservative Saint John, NB

Mr. Speaker, is the hon. member from the NDP aware of what was brought down yesterday in the budget? When it comes to the CHST, only 2% will be going into the total Atlantic region. Ninety-eight per cent will go to central Canada and out west.

People back home put a think tank together. Our people will be hit extremely hard. I will read what was said by the minister of finance back home in the province of New Brunswick. He said that there is an imbalance in the Canadian federation with Ottawa hoarding all the money while the provinces are left holding the bag on the country's most expensive program, health care. I want to say that when a province only gets 2%, it is not even coming up to the 1993 level.

This is a very serious situation which must be addressed by both sides of the House. Was the hon. member aware of that? Are all my colleagues in the House aware of what took place here yesterday?

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12:20 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, the member of the Conservative Party makes an excellent point. I am aware of it. I fully agree with her. The premiers of Atlantic Canada, the Liberal premier and the three Tory premiers, have said the same thing as the two NDP premiers on the prairies, Romanow and Doer, that last night's budget will be a net loser in terms of transfers to the small provinces.

In my province alone, the transfer will be about $80 million for health care over four years. That $80 million for health care, according to the premier in his comments this morning, is enough to keep the hospital system going for three days in Saskatchewan.

It is even worse than that when we factor in the tax changes. The tax systems in all of our provinces, and I am talking to the member from New Brunswick, are tied to the federal tax system. Because there are changes to the federal tax system, there will be tax losses in the smaller provinces. The four smaller provinces in the Atlantic, Saskatchewan and Manitoba will be net losers as a result of the transfers that were announced by the Minister of Finance last night.

That is a really sad commentary when the smaller and poorer provinces are the net losers in terms of the transfers and social programs. It is about time we had a new vision that put people first, that invested in people first.

The government is far more conservative than any Conservative government we ever had under Brian Mulroney or John Diefenbaker. We now have $4 billion less in terms of government programs than we had in 1992-93 despite the fact that the cost of living has gone up and despite the fact that government revenues have skyrocketed since 1992-93. I commend the member for her question.

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12:20 p.m.

NDP

Nelson Riis NDP Kamloops, BC

Mr. Speaker, I got a letter from a constituent. It says, “I appreciate that the Minister of Finance said that he has a significant surplus in this year's budget. Did he not get this surplus by dipping into the EI fund, money that was set aside by employees and employers for people who lose their jobs?” What is my colleague's view on this question from my constituent?

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12:20 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, the hon. member's constituent in Kamloops is absolutely right on. The reason we have a surplus is that the EI fund has gone into surplus and that goes into the general revenues. What should be happening is that the benefits should be expanded. Only about 35% of the people who are now unemployed qualify for benefits, under 30% of women and 15% of young people. We should expand the benefits like we used to have them a number of years ago.

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12:20 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, last night when the finance minister introduced his seventh budget there was much anticipation about what the budget could do for the standard of living of Canadians, for the prosperity of all Canadians. Canadians will be very disappointed with the budget once the dust has settled.

There have been seven budgets, we could say seven deadly sins from the finance minister. Again the missed opportunities of this budget will hold Canadians back when they should be rushing forward to seize the opportunities of the 21st century.

The government is big on labels. The 1998 budget was the education budget and the year after that, 12,000 graduates in Canada declared bankruptcy. The 1999 budget was the health care budget and over the past year, hospital waiting lists have continued to grow in Canada. Canadians remain uncertain about the future of health care. They do not believe their health care system will be there when they need it. That was the result of a health care budget.

This year we have seen the tax cut budget. Before this budget, we had the highest personal income tax rates in the G-7 and the second highest corporate tax rates in the OECD. Well, guess what? After this budget we will have the highest personal tax rates in the G-7 and the second highest corporate taxes in the OECD. There is no change because as we take these baby steps forward, other countries are taking gigantic leaps forward.

The government is working with a $150 billion surplus. It says it is going to devote $58 billion over five years to tax reduction. It is including the elimination of bracket creep and the reindexing of tax brackets in that.

The fact is this is not a tax cut. This is a cancellation of future tax increases. To promote it as a tax cut is disingenuous at best.

We are pleased with the reindexing of tax brackets. We have been calling for it for three years. It was a deficit reduction measure and once the deficit was gone we wanted to see the tax brackets reindexed. We are pleased that finally the government has taken a page out of our book on this.

With this budget the government continues to look inward when it should be looking outward. The government is ignoring the global realities that are occurring around Canada while bragging about progress within Canada.

Progress within Canada frankly is in many ways irrelevant if we are simply comparing ourselves to our past performance. It has nothing to do with the reality of how we are going to build a stronger economy and increase the standard of living of all Canadians and the levels of opportunities for all Canadians.

In this hypercompetitive global environment, we do not write the rules, but we ignore the rules at our own peril. Other countries have embraced these global realities earlier. In response to these global changes, our trading partners have pursued policies of lower taxes, less regulation and lower debt. The levels of growth have been striking.

Ireland's real GDP per capita growth has been 92% from 1988 to 1999. Corporate tax reductions helped in Ireland because it drew capital, entrepreneurs and investors to Ireland to create a greater level of economic growth. GDP per capita has increased in the U.S. during the same period of time by 18%, and in the U.K. and in Germany by 14%. Yet in Canada our GDP per capita growth has only been 5% during the same period.

We are stagnating while other countries are progressing. While citizens in other countries are getting richer, in Canada we are getting poorer. In the 1990s we have seen an 8% drop in our personal disposable income or take home pay in Canada. During the same period, Americans have enjoyed a 10% increase.

With this budget the government has opted for baby steps with regard to tax relief and tax reform. The progress that Canadians expect to make as a result of this budget simply will not materialize because as we take these microsteps forward, other countries are rushing forward with much more visionary approaches and much more gigantic steps and leaps.

Canadians may gain some comfort from seeing the directional shift of the government on taxes. However with the mobility of capital and the mobility of people that exist today, we cannot afford to be one nanosecond behind our trading competitors.

It used to be that high taxes redistributed income. In the current technologically driven global environment, high taxes redistribute people. That is what we are seeing.

Perhaps one of the most damning barometers of how we are doing is the unprecedented level of brain drain in this country. Young people, in particular our best and brightest people, are leaving Canada to seek greater levels of opportunity elsewhere.

Over a 10 year period we have seen the number of Canadians seeking opportunities in the U.S. grow from 17,000 people per year to almost 100,000 people per year. Some of our best and brightest, the types of people we need to build a stronger more productive society, are choosing to go elsewhere to seek greater levels of opportunity.

Capital gains taxes are a major contributor to the brain drain because increasingly, Canadians particularly in the high tech sector are compensated with stock options. After this budget is fully implemented, effective capital gains rates will still be 13% higher than the effective capital gains tax rates of the U.S.

It would cost about $70 million to $80 million, not billion, per year for the government to equalize our capital gains tax regime with that of the U.S., but it is not doing it.

The reason why it is not doing it is that the government is dealing with perceptions. It is not dealing with realities. In reality, effectively oppressive capital gains tax regimes will continue to drive innovators out of Canada. When we lose those innovators, when we lose that investment, we lose the jobs, the growth and the entrepreneurial energy that Canada needs to move forward.

In our tax task force report tabled in January we were calling for a reduction of capital gains taxes in Canada to the U.S. effective levels by reducing our inclusion rate to 50%, not 66%. That step would have put us on a level playing field with the U.S. in the very important areas of capital gains and taxation. Unfortunately the government in its incrementalism has missed the boat again and as a result Canadian entrepreneurs will be held back.

The government also had an opportunity to adjust tax brackets to a more realistic level reflecting global realities. Unfortunately again it failed to do so. Moving the top marginal tax bracket from $60,000 to $70,000 is a pathetic, tiny step in the right direction.

The government could have used the opportunity it had to reform and reduce taxes to redefine Canada's middle class. Instead the government believes that Canadians making $70,000 should be taxed as if they are rich. One does not hit the top marginal tax rate in the U.S. until he or she is making an income of $400,000 Canadian. Yet in Canada we are taxing those making $70,000 Canadian as if they are rich.

This means that a high tech worker in Vancouver making $70,000 per year will be taxed at the top marginal tax rate of around 52%, federal and provincial combined. A high tech worker in Seattle, an hour and a half away, making the same level of income will be taxed at a 26% marginal rate. Do we wonder why these people are leaving?

The starting wage for most MBA graduates from Canadian schools is over $70,000 in technology driven companies or the financial industry. We are sending those people out of Canada. We are telling them that we do not want their innovation, their brains, their sweat, work and efforts to build a better country. However, the U.S. wants young Canadians because they are well educated, bright, hardworking, the best in the world and will build a better country. Unfortunately that greater country will not be Canada because of the government's backward thinking policies. That greater country will be the U.S.

Don Goodison of the Canadian Certified General Accountants Association, said after the budget last night that it was not good enough. If he were contemplating moving south of the border this budget would not keep him here. The current Prime Minister has suggested that young Canadians should leave the country if they are unhappy with Canada's taxes. I am afraid that he may get his wish. Sadly, when we lose the best and brightest young people, we lose the capital and talent necessary to create a greater level of prosperity for all Canadians.

On the digital highway of the global economy Canada has fallen two years behind the U.S. in e-commerce. Silicon Valley is full of expatriate Canadian innovators who are there not because they want to be but because they needed to access the entrepreneurial environment and capital necessary to grow.

Canada's comparatively high tax regime has driven over $135 billion worth of investment from Canada over the last 10 years. Access to capital is critical in the high tech sector, particularly in the incubational stages. While there are Canadian high tech innovators here the government is making it very difficult for them to stay.

We are proud of our new technology success stories like Nortel or JDS Uniphase. We are proud of the new economy startups like Versus Technology, Bid.com, Leitch Technology, EcomPark, Imagic TV from Saint John that is riding the wave of the future of convergence of technology, and Hemosol, a cutting edge biotech industry player that is emerging in Canada. We are proud of all these ventures.

We believe that the CDNX can be Canada's NASDAQ or NASDAQ north, financing Canada's future and creating greater levels of economic growth. For that to happen, the government has to recognize the power of technology and the power of the opportunities facing Canadians. It should stop getting in the way and start helping the Canadian technology industry seize the future.

We need to do more than simply to retain Canada's best and brightest. We need to develop a high tech industrial strategy that attracts innovators from other countries to Canada. With the death of distance as a determinant in the cost of telecommunications, with the quality of life advantages in Canada, particularly Atlantic Canada, and with the highly developed post-secondary education infrastructure in Canada—and coming from Atlantic Canada I am very proud of our post-secondary education infrastructure—these are advantages we can utilize to succeed in the global environment, not just to compete.

I believe that Canada can be a world leader, not a world trailer. We can lead the world of innovation if we actually start producing policies designed for Canadians well into the 21st century, instead of merely focusing on policies that may give the Liberals a bump in next week's polls.

The government should be striving to develop a tax system as it applies to the technology sector that is not almost as good as the U.S. system but in fact in some ways is better than the U.S. system. As I mentioned, we are two years behind the U.S. in the very important area of e-commerce. We are now entering a period of growth in the biotech industry. In fact it is a biotech revolution. We still have an opportunity. I see our health critic here. He is very interested in the future of biotech as it applies to the Canadian health care system and health reform.

This can be an opportunity for Canada. If we change our policies now, we do not need to be a laggard. We do not need to be held back. We do not need to watch the U.S. and other countries move ahead. We can actually ride the wave of the biotech revolution, create jobs and opportunities, and reform our health care system at the same time.

On the debt issue, the finance minister was ignoring warnings from economists that Canada needs to set out a more aggressive debt reduction strategy to reduce the debt in real terms. The former Liberal finance minister, Donald MacDonald, has asked the government to reduce the debt that he helped to create in the 1970s.

This $570 billion albatross costs Canadians $40 billion per year in debt servicing charges. By not addressing the debt issue more seriously, the Minister of Finance is forcing future generations of Canadians to face the issue he continues to duck. Debt reduction may not be the most politically exciting way to invest a fiscal dividend in the short term, but reducing Canada's debt in the long term is the best way to ensure that we can continue to afford the social programs and low taxes that we value as Canadians.

At current levels of debt reduction it would take 150 to 200 years to eliminate the accumulated debt. The finance minister is crowing that within five years Canada's debt to GDP ratio will be down to 50%. The situation in France and the U.K., for instance, has allowed those countries to have debt to GDP ratios of 40% now, and we are saying we strive to have a debt to GDP ratio of 50% in five years.

In terms of health care, probably the greatest single disappointment in this budget is its failure to address the real needs of Canadian health care. At one time the federal government shared the cost of health care equally with the provinces. Fifty cents of every dollar spent on health care was spent by the federal government. In recent years, particularly under this government and its draconian slashing of the CHST transfers, that share has been reduced to 13 cents on the dollar. Only 13 cents of every dollar spent on health care in Canada come from the federal government. The $2.5 billion over the next four years is frankly a drop in the bucket.

Health care expenses in Canada are growing in some estimates of upward of $2 billion a year due to inflation, population growth and the aging population. The increases the government is promoting do not even keep track with the increase in the expense in health care.

This investment hurts provinces like mine in Nova Scotia. It hurts all provinces, but Nova Scotia Premier John Hamm said that without full restoration of the health transfers cut in the fight against the deficit Nova Scotia health care standards would slip. They have already slipped under this government. We have seen the health care system in Nova Scotia and across Canada deteriorate significantly.

Even Brian Tobin, Premier of Newfoundland, wannabe Liberal leader on the other side of the House some time and perhaps a future competitor for the holy grail of Liberal leadership, is saying that the government missed the boat by not reinvesting in health care.

Mike Harris, Premier of Ontario, said that we could not deliver the quality of health care we are delivering today with declining dollars from the federal government.

The Canadian Health Care Association said that the budget's announcement of an additional $2.5 billion over four years did not recognize the severity of the current health care crisis in Canada.

This budget has virtually ignored the agricultural crisis in Canada. When it talks about the agricultural crisis the government believes that if it is not grown in the west it is not agriculture anyway. It is ignoring the plight of farmers in the west, but at least it is talking about the agricultural crisis in the west. It does not even talk about the agricultural crisis in eastern Canada and we have some real problems in Atlantic Canada in terms of an agricultural crisis.

On defence, since 1993 the government has cut 23% from defence spending. The budget's anemic attempt to reinject a bit of much needed cash into defence falls far short of what is actually needed. In an increasingly complicated global environment we are asking our soldiers to do more and more. Instead of giving them more to do that, we are actually paying them less and less. Quality of life issues are paramount.

On equipment, we are sending helicopters up in the air with baler twine and duct tape holding them together. The government, which is only reinvesting $1.9 billion over the next several years in defence, was willing to spend half a billion to cancel a helicopter contract for political reasons. The government is more focused on short term politics than on the long term needs of Canadians. Canada spends less on defence as a percentage of our GDP than any of our NATO partners except Luxemburg. After this budget Canada will still be spending less on defence on a per capita basis than any other country except Luxemburg. It is an embarrassment.

On infrastructure, the government's reinvestment in infrastructure is an insult to the provinces. It means that highways like highway 101 in Nova Scotia will not be twinned. Death traps in some of our provinces will not be addressed. The $100 million this year for the infrastructure program is nothing, given the cost of what needs to be done across Canada with the municipalities and with the provincial governments.

One of my disappointments with this budget was that the Minister of Finance in the estimates is giving the HRDC minister an increase in her blank cheque of $1.3 billion in this budget. Instead of cutting her allowance we are giving her more money. The Minister of Finance must have been wearing his boondoggle blinders when he wrote this budget. For the past two months Canadians have been focused on waste in the HRDC department and in other departments. The minister has ignored this fact.

We could have lower taxes. We could have better spending on health care. We could have better spending on defence, highways and agriculture if the government had the courage to ensure that Canadian taxpayer money would be invested carefully instead of wasted rampantly.

We need more vision if we are to lead the way into the 21st century. I believe Canada can do it, but only if the government seizes the day and starts to recognize the opportunities and challenges facing Canadians.

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12:45 p.m.

Etobicoke North Ontario

Liberal

Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I am quite surprised. The member for Kings—Hants is a member of the finance committee and I would have thought he might have read the budget. He covered so much terrain and there are many areas in which there is much misinformation. I would like to focus on a couple.

First of all, on the CHST and the transfers to the provinces, the member cited a 13% increase. As I indicated earlier and as the budget papers clearly portray, the cash portion of the transfers, which is only one part of the transfer as there are tax points as the member full well knows, is increasing with this budget by 25%. In fact, the CHST has been fully restored. If we throw in equalization, it is at a level of about $40 billion in transfers to the provinces.

He talked about making business more competitive. The budget reduces the corporate tax rate from 28% to 21% for the highly taxed sectors. That is a pretty bold move. It takes the 21% rate and for small businesses applies that immediately for income between $200,000 and $300,000.

He talked about access to capital and incubation of small companies. If he turns to the budget papers, he will realize that the budget introduces taxation benefits for stock options, the capital gains treatment of stock options. That will help businesses, start-ups and particularly those in the high technology sector. If he read the budget papers, he would realize that the government has introduced capital gains tax remission for companies that roll over their capital gains and put it into small businesses and start-ups and part of the invigorating part of our economy.

If he actually read the budget, he would discover that the capital gains tax inclusion rate has been reduced from three-quarters to two-thirds.

If he read the budget, he would understand that it puts close to $2.4 billion into defence.

I could go on and on but I think the member should read the budget before he comes to the House. Normally he is most informed on these issues. I was surprised today. Has the member read the budget?

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12:45 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I appreciate the non-partisan intervention from my colleagues opposite.

The hon. member asked if I read the budget. I did read the budget. But had he been sitting in the House when I gave my speech he probably would have heard a little more clearly what I was saying. I did not say 13%. I said 13 cents. Just to reiterate, the government feels it is appropriate for the federal government to only pay 13 cents of every dollar spent on health care. Clearly that is not consistent with what the Canada Health Act has set forth when it was 50%. I expect the hon. member has been clarified on that one.

When we talk about global competitiveness issues I am not surprised the hon. member is confused. As a party that fought free trade and thought it was a bad thing, clearly his is not a party that can actually put together the types of policies that Canadians need to compete in a global environment.

Corporate tax reduction is very important. After this budget is fully implemented, Canada's corporate tax rates will go from being second highest in the OECD to being fourth highest in the OECD. That is assuming that over the next five years no other OECD countries reduce their taxes. In fact 28 of the 31 OECD countries plan to reduce corporate taxes. We will be just catching up in five years to where we should have been much earlier.

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12:45 p.m.

An hon. member

Five year plans did not work in the Soviet Union and they will not work here.

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12:45 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

The government is focused on five year plans. As my hon. colleague just mentioned, five year plans did not work in the former Soviet Union and they probably will not work here either.

The government is constantly playing catch-up and unfortunately Canadians are trailing when we should be leading.

On the capital gains tax regime, the hon. member opposite boasted that the government has reduced the inclusion rate from 75% to two-thirds. If he had been listening to my speech, he would have heard me reiterate the PC Party's position of reducing it to a 50% inclusion rate which would have provided an effective capital gains tax regime equal to that of the U.S. Instead the effective capital gains tax regime after the government's budget will still be 13% higher than that of the U.S.

The member believes that he should be boasting about a system that is 13% more oppressive in Canada than in the United States. Capital gains taxes impede productivity. They hurt initiative. They punish entrepreneurs and they damage the Canadian economy and the potential for us to grow in the future. And he is satisfied with a 13% disadvantage in Canada. He may be satisfied but I am not satisfied. My party is not satisfied with that and Canadians will not be satisfied with that kind of response in the next election.

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12:50 p.m.

Liberal

Mac Harb Liberal Ottawa Centre, ON

Mr. Speaker, my colleague is trying to have it both ways. Let us talk about the economic health of the country. The Conservatives came to power back in 1988 and by 1993 the deficit was about $42 billion. The debt moved from $170 billion in 1988 to over $400 billion in 1993. It is fairly clear as history shows and it is documented everywhere that if this government had followed the Tory traditions of the late eighties and early nineties, by the year 2003-04 there would have been a zero transfer payment in the areas of health care and education.

This government first had to put the nation's fiscal house in order. It would have to eliminate the deficit. It would have to control the economic situation. It would have to reverse the trend of tremendous cuts the previous government had made to social programs and the spending of the previous government.

We have put the nation's fiscal house in order. We have controlled the debt. We have controlled the deficit. Now we are beginning to invest, unlike what those guys have done. Every year from 1988 to 1993 the Conservatives said they would reduce the deficit and they never once met their objectives or targets. Why should Canadians believe them when they say that they are going to do a better job than we are doing?