Debates of March 1st, 2000

The Budget

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, I do not disagree with the member's concerns about Mike Harris and the direction in which he is taking the province of Ontario, although I must say that these days I am having a bit of difficulty distinguishing between the Harris Conservatives and the federal Liberals.

However, if the member is so concerned, why is the federal government inviting Mike Harris to do more damage? Why is the government creating the opportunity, as it is doing through this budget, to allow Mike Harris to open up the Canada Health Act to make further inroads in privatized health care?

The House must excuse me for being so blunt, but when it comes to the National Forum on health, the member is wrong, wrong, wrong. The National Forum on Health was very clear about the need for the country to preserve and strengthen medicare. It recommended enhancing medicare by putting in place a national home care plan, national drug coverage and reform at the primary health care level.

Everything the government is doing is in the opposite direction. One of the key players in the national forum, Tom Kent, said that the government must ensure that cash transfers rise to 25% in the short run and that we aim for 50-50 down the road.

Why is the member ignoring important policy analysts like Tom Kent and Monique Bégin? Why is the government ignoring the National Forum on Health? Why is the government ignoring the advice of Canadians?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, although the member said I am wrong, wrong, wrong, I did not comment on the points she raised, so I am not exactly sure how she got there.

The point is that the National Forum on Health advised Canadians, as well as the government, that our health care system had the cash but it was not being spent wisely and that it was necessary to get together with the provinces to start rationalizing our health care system to make sure we deal with it properly.

I agree with the member that there are areas in which we have to provide some vision with regard to the longer term because we have an aging society and the demands on health care will increase. We have put forward another $2.5 billion in one-time transitional funding for the provinces so that we will have the time to get together with them to discuss the future of health care and to do it right.

We also invested $11.5 billion in health care in the previous budget, the single largest investment the government has ever made. That represents a 25% increase over two years. That reflects the commitment of the federal government. The total support for health care and education will rise by $31 billion this year.

When we get together with the provinces the Government of Canada will be there defending the Canada Health Act, regardless of people like Mike Harris and Ralph Klein. Canada will have one health care system and it will be for all Canadians; not because they have money, but because they need health care.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, I am pleased to have this opportunity to comment on the budget. I have been commenting on the mismanagement of public funds by the government over the last few weeks, but that all ties in to the budget and I want to make some remarks today in that regard.

Over the last few years, in particular under the Liberal government, the budget has become much less a fiscal document and more of a political document. This budget was no exception. In fact it continued the trend.

The budget took what I would call a shotgun approach to government spending. It has thinly spread new tax money in all directions, with no commitment to controlling taxpayer funds and virtually ignoring the tax strain on middle class families.

The government and the finance minister, in spite of the minister's undeserved reputation for good management, have actually overspent the budget terribly over the last few years. In 1997-98 the minister exceeded his projected spending by $3 billion. Remember, a billion dollars is like winning a lottery for $1 million, or winning the Who Wants to be a Millionaire program, except that a person would have to do that three times every day for a whole year to have it total $1 billion.

The finance minister, the so-called good manager, overspent in 1997-98 by $3 billion. In other words, he said he would spend $105 billion and he actually spent over $108 billion. That was in 1997-98.

What did he do in 1998-99? He overspent again; not by $3 billion, but by $7 billion. If we ran our households or businesses that way we would be in real trouble. Canadians know that, but the finance minister had no problem overspending in 1997-98 and 1998-99, by $3 billion and $7 billion respectively, and he is still calling himself a good manager. I have to wonder whether he lives in the real world.

In 1999-2000 he told us he would spend $111 billion. Lo and behold, we find that what he actually will spend is $115 billion. That is overspending by $4 billion.

The finance minister has a very poor track record for staying within his budget. That is one of the points we want to make today.

In addition, he has gone on a spending spree. Not content to overspend year by year from what he told us he was going to spend, he has now decided to go on a real spending spree. Over the next five years he has promised a spending spree of $86 billion. That is money which Canadians will have to work to produce to funnel into the finance minister's treasure chest so that he can do all of the things he finds so enjoyable.

I will not go through the list, but almost no program spending will receive less this year than last year. Even the human resources department, which has just been found by its own audit to have bungled at least $1 billion in spending, will get almost another quarter of a billion dollars to do the same thing. I have to wonder if there is any prudence or good management left in the government.

The finance minister not only is continuing to spend, he has been spending huge amounts. In the next two years he will increase program spending by $10 billion. The finance minister tries to tell Canadians that he will give them some of their money back because he does not need it all. He is taking more than he needs, so he will give back some of it. However, we find that is not the case. What he is really doing is using $86 billion of that money, not to pay down our terrible debt, not to give it back to us so that we can do something for our families; no, he is going to spend it.

What is the government spending money on and why? What are its priorities? Over the past number of years we heard that it would get rid of the GST. That was its priority. That was dropped. Then we heard that health care was its priority. Then we heard that children were the priority.

Really, it is very clear, and becoming clearer year by year, that the real priority of the government is simply to be re-elected and to use our money in such a way as to persuade us to keep voting for it.

Let us look at the Liberal record. In 1993 the Liberals came on the scene, put their hands over their hearts and said that they would be the saviours of the Canada Health Act. Let us look at what they did.

In 1996-97 they cut transfers for health care by almost $4 billion; this at a time when health care costs were rising due to new innovations. Also, our population is aging. What was the result? Not a stronger health care system, but a weakened one under the Liberal government. Not only have the Liberals cut health care, they have not even said that they would maintain any of the small increases which they finally announced, under much pressure.

It amuses me to hear Liberals trash premiers like Premier Harris when they are the authors of the misfortune of the health care system, which they love to blame on other people.

This year, with this budget, less than $1 billion more will go to health care. That is less than $30 per Canadian which the government has dredged up to help a floundering health care system, which they helped to deadly wound. In spite of the fact that they will spend $86 billion more over the next five years, $1 billion next year will go to health care. In fact, this $1 billion will not be dedicated to health care alone, it will be dedicated to health care and education. The provinces will have to decide where to spend the money. That inevitably means that less than $1 billion will be spent on health care, less than $1 billion from a government that has $86 billion more to spend over the next five years.

The Liberals have cut almost $25 billion out of health and social cash transfers since they came to power. They put only $5 billion back in the last two years. In other words, for every dollar they put back they have slashed five, so they have barely begun to repair the damage they have done, and yet they love to blame other people and misrepresent other parties' positions on health care when they are the ones who have given a deadly wound to this important program for Canadians.

I want to examine the whole area of tax cuts. As hon. members know, the Liberals have had a great deal to say about the fact that they would cut taxes. Let us look at what they have actually done.

The tax cuts were announced at $58 billion. That sounds like a good, big figure, does it not? Let us look at the facts of this $58 billion tax cut, which will happen over five years. I point out that $7.5 billion is actually not a tax cut at all, but an increase to the child tax benefit, which is really more social spending. How more social spending equals a tax cut only a Liberal could explain, but it is definitely not a tax cut because somebody will have to put that money into the finance minister's hands so that he can offer it as a top-up to the child tax benefit. The finance minister has already lost $7.5 billion from his $58 billion in so-called tax relief.

Then we look at the $30 billion that Canadians will have to pay over the next five years in increased CPP premiums. Liberals like to say that this is really an investment in our pension, that it is not really a tax. However, the fact is that there is nearly $500 billion worth of debt in the CPP system. That money will not go to new pensions, it will be put into the finance minister's hands to pay for pensions which are already being received.

This is a debt. This is an unfunded liability. This increase in CPP spending will not benefit solely the people who are putting the money in. It is going to pay off the debt the Liberals have run up in our pension system. That is another $29.5 billion off the so-called $58.5 billion of tax relief.

Then we have a very interesting Liberal sleight of hand which says “if we were going to tax you but decided not to, that is a tax cut. It is not less than we are taxing now, but it actually cancels out some of the taxes we were going to charge”, like bracket creep, for example.

In fact, $13.5 billion falls into that category. That leaves a real net tax relief over five years of $7.9 billion. Over each of those years there is less than a $2 billion relief. For each taxpayer that amounts to just over $100 a year in real tax relief or almost $9 a month. Let us have a celebration. Each taxpayer will get a grand cut from the finance minister of $2 a week. I hope they do not spend it all in one place.

Since the finance minister took over his portfolio he has raised the yearly tax bill of Canadians by $104 billion. Those are the facts. Liberal sleight of hand and Liberal rejigging of the terminology do not hide the fact that they are not giving a tax break. The fact of the matter is that by looking at their paycheques month by month and year by year Canadians will see there is virtually no change in their tax position in spite of the grand rhetoric of the finance minister and members opposite. It is just not there.

I want to spend some time on the control of government spending. The finance minister will spend $86 billion more over the next five years. We are very interested as Canadians to see how he has managed the money so far because now he will be putting even more out the door.

The record is not reassuring to say the very least. This is what a recent audit showed on $1 billion worth of spending a year. In 11% of the cases there was no description of the expected results of the spending. In other words, the money was shovelled out the door with no clear idea at all of what it would achieve. It was just “It is not my money. There is lots where that came from. Canadians pay lots of taxes. Let us just send it out the door”.

In 15% of the cases no one had even applied for the money. Maybe they just went through the yellow pages and said “I think Joe should have a few dollars of other people's money. Let us cut him a cheque”. I do not know. There was no application.

In 25% of the cases there was no description of the activities to be supported. This was supposed to create jobs, but there was no description of exactly how that would be achieved. I guess it was on blind faith: if they put money out there it will surely do some good. It does not sound to me like the kind of management we would want for our money, but that is what happened.

In 46% of the cases there was no estimate of the number of job participants. They were to create jobs but they did not have any idea of how many people would participate in the program.

In 72% of the cases there was no cash flow forecast. We have no idea what these outfits that are supposed to create jobs are doing with the money: where they will get it or where they will spend it. There was no financial plan at all.

In 80% of the cases there was no financial monitoring. In 87% of the cases there was no evidence of supervision. Money was just given out with no supervision. We have heard day after day in the House of how that money has been abused, misused and ripped off. It is not achieving the results the government either hoped it would or says it does.

In 97% of the cases there was not even a background check on the recipients of this money, some of whom we know had very shady and chequered pasts. This is how our money has been spent in the past. However it appears to be of no concern to the finance minister. It did not merit a single line in the budget.

Can we imagine what would happen if a company had come forward to give its yearly report to the shareholders and there had been this level of massive mismanagement of the company's money and not a word in the report about what had happened, what were the consequences and what would happen to the operation as a result? There was not a word. They are to spend $86 billion more in the same way, with the same kind of mismanagement. That is the only conclusion that can be drawn, and that is a serious concern for Canadians.

We have a very serious situation in the country. We have a budget that pretends to give tax relief when, if we really look at what is being done, the tax relief amounts to less than $2 billion a year for the next five years. At the same time $86 billion in new spending is being shovelled out the door in an atmosphere and in circumstances where there are serious questions about the government's management and administration of the money it already has. It is so bad in fact that there are numerous instances where the RCMP has had to be called in to get to the bottom of how public moneys have been mismanaged.

That is what we are facing today in the budget which did not even address these serious concerns and had fake tax breaks. When we look at the numbers they are simply not there. They are either more social spending, or they are offset by increased taxes for other programs, or they were simply taxes the government was to impose but thought the better of it. They are counted as tax cuts when they are nothing of the sort.

These are troubled times for Canadians. I receive e-mails, letters and phone calls day by day. I know other members do as well, even members on that side of the House. Canadians are asking what is going on. They work hard. They pay their taxes. They trust the government to do the right thing with them, but it is becoming increasingly obvious that it is incapable and unworthy of that kind of trust.

I submit that this budget, this finance minister and this government are not providing the leadership to serve Canadians well and do not merit the support of the House or of Canadians.

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

Mr. Speaker, one could cover a lot of ground in commenting and rebutting the speech of the member for Calgary—Nose Hill. I will not speak about the CHST transfers to Ontario because I know my colleague from Mississauga South is champing at the bit to get into that debate.

I will not mention the fact that if Mike Harris in Ontario had reduced taxes by 25% instead of 30% on the first go-around, he could have topped up the transfer reductions that went to the province of Ontario. I will not get into that.

However I will talk about the tax cuts because I think the member opposite has her facts wrong. Yesterday in the House the Leader of the Opposition cited the example of Paul and Fran Darr, a retired couple with an income of $28,000. They were complaining about the taxes they pay. As I reported to the House yesterday, Paul and Fran Darr, wherever they are, will save with this budget 45.2% of their federal income taxes. I could go on and on with examples.

Let me give the example of a one earner family of four with an income of $60,000. Its federal income taxes will go down by 24%. Another example is that a one earner family of four with an income under $35,000 will receive more in benefits than it pays in taxes in the year 2004.

I would like the member opposite to contrast this with the flat tax proposal. I will give two quick examples, with the indulgence of the House. Under the flat tax proposal, solution 17 as it is called, a single taxpayer earning $30,000 would receive a tax reduction of 12% while a similar taxpayer earning $200,000 would receive a tax reduction of 39%. Is that not interesting?

As another example, a two earner family of four under the flat tax proposal, solution 17, with an income of $75,000 would get a reduction of 28% in federal taxes. A similar family with an income of $200,000 would benefit by 35%.

Could the member for Calgary—Nose Hill contrast the lack of progressivity in the Reform tax proposal? Would she be prepared to acknowledge the huge tax savings Canadians will benefit from with this budget?

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, I could go through the numbers and Canadians could get their calculators out and do it for themselves. Perhaps the Liberals may want to do that as well.

The minister claims over the next five years a $58.4 billion of tax relief. Subtract from that $7.5 billion, which is actually not tax relief but spending on the child benefit. Subtract a further $29.5 billion, which will be increased CPP premiums over the next five years, most of which, if not all, will go to pay off the unfunded liability in that program of nearly $500 billion. Subtract from that $13.5 billion, which were scheduled tax hikes that are now cancelled. It is not a cut of existing taxes. It is simply an abandonment of untenable proposed taxes. That gives us a grand total of $7.9 billion in real tax relief over five years, divided by five equals $1.58 billion. If we divide that by the number of taxpayers, which I think is about 14 million, we arrive at $107.60 per year per taxpayer in real tax relief. Those are the facts. If people want to take issue with those facts they should show us their numbers, but these are numbers from the budget.

Another point the member raised was the so-called lack of progressivity in our own tax plan. Our tax plan would provide real substantial tax relief. I invite people to look at it. We have laid out the numbers. It is transparent. Everyone can look at it.

Taking money from people who work hard to earn money is the last thing we want to do. Productive people assist others. They create jobs. They are consumers and entrepreneurs. They are the backbone of the economy. Somehow Liberal members think that the government creates jobs. I have news for them. It is productive, hardworking, innovative people who succeed that create economic activity.

If the Liberal government would only see that, we would have a country that looked a lot more like Ontario and Alberta than like some of the other provinces that labour under the misapprehensions of Liberal social engineering and bad economic decisions. This is exactly what the budget perpetuates.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I thank the hon. member for her HRDC speech. I did not hear too much about the budget presented on Monday.

I want to take issue with the tax reduction plan she talked about. If she refers to table 4 of the five year tax reduction review, therein is laid out $17 billion in annual tax reduction. It is a combination of both tax cuts and tax relief. The only tax relief that is in there is $2.5 billion for the child tax credit. That adds up to $58 billion. I therefore do not understand the hon. member's concern about tax cuts because the tax cuts are there. That does not include the EI cuts projected over the next five years.

The numbers the hon. member is putting forward are not realistic. It is in fact $17 billion worth of tax relief. It is in fact a five year tax reduction plan. I do not understand the thrust of the hon. member's speech. I also do not understand the thrust of the hon. member's selective failure to remember the EI cuts as well.

It seems to me that the hon. member and her party are somewhat against Santa Claus and Christmas at the same time.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, I guess I do not expect a Liberal member to accept those numbers.

I invite Canadians to examine the Liberal numbers and the numbers I put forward and make their own judgment. At the end of the day it is not the hon. member's money and it not my money. It is not even the money of any party in the House. It is Canadians' money and they have a right to have a very clear and thoughtful analysis of the real numbers they have to work with.

Canadians may accept the Liberal numbers, which I am sure the Liberals will defend to the death. They may accept the numbers that we put forward because they are the result of a thoughtful and careful analysis. I am simply putting them out in debate because at the end of the day we are only leading the debate. Canadians will have to make the decision on whether their interests have been well-served by the budget and by the government or whether there are other factors which the opposition is bound in duty to bring out that would lead to far different conclusions than what the government would like to urge on them.

We know the government will put the best face on its budget. Why would it not? It spends a lot of time and effort writing a budget that sounds like we are getting the best thing since sliced bread. All the opposition is saying, in as credible, thoughtful and sustainable a way as possible, is that there are other factors and other ways to characterize this that need to be taken into account. At the end of the day I invite Canadians to make their own decision.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, on the Canada pension plan, the hon. member will probably know that it was enacted in 1966 so that those people who came through the depression without a working career and unable to provide for retirement, as Canadians do today, would immediately get benefits. Today's workers pay for the pensioners because the pension was always in arrears. The deficit and the unfunded liability were not because of mismanagement. They were because we took care of people who did not have anything for their retirements.

Today's retirees get $8 out for every $1 they put in. To sustain that level of equality of pension plan for all Canadians, changes were necessary. This is exactly what the provinces, together with the federal government, came out with after consulting with all Canadians.

With every dollar that goes in, taxpayers will get it out and more when they retire. Her analysis—

[The Deputy Speaker]

The hon. member for Calgary—Nose Hill.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, if I can say so kindly, that really is a half truth. It is correct that there were a few people when the plan was put into place who had not been able to save for retirement. However, in addition to that, governments habitually and for a long period of time charged much less for this program than it cost. Since the hon. member sat on the committee he knows very well that people did not put in even enough to pay for their own pensions until very recently.

Younger Canadians are now being socked with that 30 years of mistake. They will to have to put a lot of money into the plan. They will get very little out in relation to their investment and that is what the hon. member has not said. This is a debate for another day, but I would simply say that the hon. member knows better than what he was just saying.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I will be splitting my time with the member for Niagara Falls.

I will begin by apologizing to the finance minister. I have, privately and publicly, described him as a tax cutting wimp. I thought that was an accurate description as far as previous budgets, but I am wrong. Quite clearly this budget is an aggressive run at tax issues that have been on the agenda for years and years and years.

Publicly, I would like to apologize to the finance minister because he has proved me to be wrong.

As I listened to the budget speech, I was absolutely stunned at the breadth and magnitude of the finance minister's commitment to tax cuts. Frankly, I had trouble believing that the finance minister reindexed the entire system and killed off bracket creep. This is enormous. This is the most important event in the entire budget process in the last seven years, second only to this government getting serious about eliminating the deficit.

Members of our caucus, members of the Standing Committee of Finance and others have talked repeatedly about the stealth tax that occurs in the indexation of the system and that nasty little surprise Canadians get when they get a modest raise which jumps them into a new bracket.

Many of us know that bracket creep was probably the most significant inequity in the tax system. On the first occasion in which the finance minister could meaningfully address this issue, he made it the centrepiece of his budget.

For those of us who have laboured long and hard in this area, it is indeed most gratifying. I would especially like to thank and acknowledge the work of the member for Durham who has spoken about this issue repeatedly over the past five years both in and out of caucus, and has spoken about it even when others were not speaking about this issue.

The good news does not stop there. The Minister of Finance also took the opportunity to raise the threshold to $8,000. The last time he raised the threshold we were given to understand that something in excess of 400,000 Canadians were taken off the tax rolls. I expect this will do the same thing.

Simultaneously, he raised the middle threshold from $29,000 to $35,000, and the top threshold from $59,000 to $70,000, while dropping the middle rates two points, from 26% to 24% effective July 1 of this year, and an additional point later on in the five year plan. I know this is a significant cost to the treasury and that it takes enormous courage on the part of a minister of finance to take these steps. Any one of these steps would be a significant reform to the income tax system. Cumulatively it is enormous.

However, it does not end there. He also mounted an attack on the 5% surtax after having completely eliminated the 3% surtax last year. As of July 1, the 5% surtax will be completely eliminated on incomes up to $85,000 and phased out on incomes over $85,000. Taken individually, these changes to the system of personal taxation would be significant but collectively they are enormous. I am sure that over time Canadians will start to realize that what they witnessed on Monday night was a radical remaking of the personal tax system in the country.

However, the minister did not limit himself to changes to the personal tax system but he also started the process of business tax reform. When we start talking about business tax reform we usually start to hear a gagging sound on the left. The rhetoric starts getting cranked up about rewarding rich business cronies on Bay Street, et cetera. The rhetoric gets a little childish at times and what gets lost is the simple truth that all businesses, be they large or small, must be successful. If a business is not competitive it will not survive. If that business does not survive it will have no employees.

I have never understood why the left wants to hobble business. It is like a gag reaction to any person who is successful or to any business that is successful. We seem to be compelled, it is almost in our culture, to bring Canadian business down to mediocrity. Canadians seem to like to reach for the bronze medal but leave the rest of the medals to everybody else.

I was therefore pleased to see that the Minister of Finance start to lower the tax rate on the high tech sector by 25% over the next five years. Regardless of what others say, this was absolutely necessary. High tech, by definition, is virtually borderless and can vacate a jurisdiction in a flash. Unless the tax environment is competitive—and here one might just as well read U.S. rates—business will move there unless there is some other reason to keep it here. We therefore have the strange anomaly of having fostered these businesses by bringing in our best educated people, providing the business environment with a good start up environment and providing research money and then, when it gets successful, it moves to California. It is the worst of all possible worlds.

I am not arguing that the magic of changes to a tax environment is the panacea to high tech business, or any other business for that matter, in terms of vacating the jurisdiction, but lowering the high tech rates generally and on small business immediately is the right thing to do.

It is clear that some of our most talented people leave for opportunities in other jurisdictions. It is my opinion that the tax environment does not drive them out of Canada rather it is factors such as career opportunities and research and development opportunities. However, the tax environment is still a factor of some significance and I believe that the Government of Canada made a significant step in the right direction.

The so-called brain drain is of concern to us all. I will point members in the direction of some information I came across recently. It was put forward by graduates who moved to the United States. It is a rank and class of graduates who moved to the United States for work related reasons. For those who moved, 42% of those graduates were in the top 10% of their classes and 39% were in the top 25% of their class. That cannot continue. We simply cannot survive in a modern industrialized economy if that continues to happen.

The tax environment is not the be all and end all of the brain drain. However, lowering the capital gains taxes so that the inclusion rate is now at 66% rather than 75% is a step in the right direction.

Postponing taxation on stock options to when the shares are sold rather than when the options are exercised is a step in the right direction. Increasing the amount investors can put into new investments by allowing a $500,000 tax rollover for qualified investments is a step in the right direction. These are significant in and of themselves but cumulatively these are extremely significant.

This is the best budget in 25 years. This is a taxpayers' budget. This is a budget that addresses the fiscal reality in an even-handed way. This budget is good for business. This is great for personal tax filers. I would urge hon. members to support the passage of this budget.

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, I must say that I would have been greatly surprised if the hon. member had stood to publicly denounce the Minister of Finance's budget. That would have been really something to hear.

However, there are two issues I would like to talk about briefly and ask the hon. member a couple of questions relating to them. One of course is the issue of bracket creep.

I hear hon. members across the way taking some kind of credit for the elimination of bracket creep. How many years has the government had to eliminate this? I do not think it has had as much to do with the government's decision on this as it has to do with the people like the Canadian Taxpayers Federation.

The Reform Party of Canada has had the elimination of bracket creep as a major policy principle for the last five years. We have been asking the government to do this for at least five years, and more than that outside of the House. My first question to the hon. member is why in the world did it take the government so long to eliminate this when it knew it was bad for Canadian taxpayers?

Second is the matter of health care spending. I am sure the hon. member faces the same kind of problems that I do in my riding with a deteriorating health care system which is inadequately funded. The major culprit is the federal government and its plan over the last few years to gut the health care system by cutting back on health transfers to the provinces.

Over the last five or six years it has taken out somewhere in excess of $20.5 billion. Now it is telling us that out of the goodness of its heart in this age of surplus it is going to put back in maybe $14 billion over the next few years. With the kind of mathematics I grew up with, this leaves us with a shortfall of $6 billion.

Does the hon. member believe that $2.5 billion, $1 billion this year, about $30 per Canadian, is going to fix Canada's health care system? Does he really think that is an adequate response to the deterioration of health care in this country? I would be very happy to hear his responses to these questions.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, the hon. member is right. Under no circumstances would I denounce the finance minister in the giving of this speech. Maybe the member should have read my speech from last year when I was somewhat critical of the budget. As the hon. member well knows, I am not above criticizing when criticizing is appropriate on this side of the House.

Having said that, there is nothing more pathetic than a question that asks who should take credit on the issue of bracket creep. The issue of bracket creep has been around since it was introduced by previous governments. In fact, this is the first occasion that we could meaningfully address bracket creep because this is the first occasion that we have had a meaningful surplus.

For the hon. member's information, he should note that bracket creep plus the upping of the basic threshold to $8,000 is going to cost the government slightly less than $3 billion on an annual basis. Simple math tells us that this was the first and only occasion the minister could have addressed that issue. That is the first answer to the hon. member's questions. The essential issue is that we have had deficits for a long time, unless the hon. member has missed this. This is the first meaningful surplus we have had.

On the issue of health care, if the hon. member will recall, the budget last year was in some respects the health care budget in which $3.5 billion was put into the health care system and directly into the hands of the health care ministers. It meant a significant sum of money in Ontario. Forty per cent of $3.5 billion is a significant sum of money. In addition, on the cap on CAP, the province of Ontario received a further $1 billion, a significant sum of money. Does the member know how much money has hit the ground in my riding? Zero. Precisely nothing.

There is this huge whine from the other premiers saying “Give us more money”. What did they do with the last bit of money? Nothing.

[Gary Pillitteri, Liberal, Niagara Falls, ON]

Mr. Speaker, I am pleased to speak in the debate on the budget. We are on the right track. Thanks to the efforts of Canadians, Canada has entered a new era, that of surpluses.

All Canadians, especially families with children, in all regions of the country will benefit from a budget that takes us to the future with an education system second to none, secure social programs and a five year plan of tax reduction.

With each budget I and many fellow Canadians have seen deficit spending being eliminated, progress being made by paying down the debt, our economy flourishing and the rate of unemployment declining at a faster rate than we had anticipated. The unemployment rate is now at its lowest level in 24 years. We must be doing something right.

In the budget speech the government made important announcements that will translate into a better quality of life for all. While we continue to follow a prudent and transparent approach to budget planning, with this budget we have delivered important investments in health care, in knowledge and innovation, in families with children and in the environment.

Since 1993 when I was first elected to serve my constituents of Niagara Falls in the House of Commons, the Standing Committee on Finance has consulted with Canadians from all walks of life and acted on their views and priorities year after year. In fact, I am delighted to see that many of the recommendations made by way of written submissions to a questionnaire sent to a great number of my constituents or by oral presentations to town hall meetings saw implementation in previous budgets.

The reviews from the riding on budget 2000 are more than positive. One of the headlines was “Niagarans are encouraged by this budget”.

I am proud to see that this budget as others before it is focused mainly on the welfare of our children, of our families, of our communities and of our environment.

The budget took into consideration evidence which suggests that the early years are vital for child development and their future ability to learn. It is only natural for parents to want their children to have the best and healthiest possible start in life.

As a result of budget 2000, families with children will see an increase in the Canada child tax benefit thanks to a boost of $2.5 billion. This means that families now receiving the Canada child tax benefit will receive more generous payments. More middle income families will qualify for this benefit.

The government's objective is to raise the maximum benefit to $2,400 for a family's first child by the year 2004. The benefit for a second child will also be raised to $2,200. This means that over the next four years low income Canadian families will receive $6 billion, while modest and middle income families will receive $3 billion.

These benefits as well as personal income taxes will be fully indexed so that family incomes will not be eroded by inflation. In all, the Canada child tax benefit will help nine out of ten Canadian children, or about 3.8 million families.

Budget 2000 puts forward the five year tax reduction plan that benefits all Canadians and families with children in particular. It is a plan that will put more money into the pockets of Canadians.

Our plan is secured by two fundamental changes. First, we are restoring full indexation of the personal income tax system. Second, for the first time in 12 years the middle rate will fall from 26% to 23%. This budget shows that it is possible to cut taxes and invest in the future at the same time. With this plan the government is providing real and lasting tax relief.

Tax indexation is not a new idea. Tax indexation was introduced by a Liberal government. It was later cancelled by a Tory government under Brian Mulroney, the same government which left us with a huge deficit which was eliminated not only by the good planning of this government but also by sacrifices made by all Canadians.

With indexation the automatic tax increases caused by the so-called bracket creep will disappear. This will benefit a great number of Canadian taxpayers. This means that the federal benefits such as the Canada child tax benefit and GST credit will no longer be eroded by inflation.

Indexation also means protection against inflation for seniors. While public pension benefits under the Canada pension plan, old age security and guaranteed income supplement are already fully indexed to inflation, the GST credit, the age credit and the OAS reduction threshold are not.

Canadian business will also benefit from tax cuts. This will in turn encourage innovation and investment and put all sectors of our economy on an internationally competitive footing. As a first step the government is lowering the tax rate paid by higher taxed industry mostly in the high tech and service sector from 28% to 21%.

Overall, budget 2000 provides at least $58 billion in cumulative tax relief to Canadians over the next five years. We are cutting personal income taxes by an average of 15%. Many will enjoy bigger cuts. Low and middle income Canadians will see their taxes fall by at least 18% and families with children will see their taxes on average fall by 21%.

By leaving more money in the pockets of Canadians we will see our economy flourish. In turn the government will receive more revenue. It will then be able to reduce taxes paid by Canadians even more. This will go on and on. The government will then be able to maintain funding for social services such as education, health and important infrastructures.

There are other important measures of this budget, for example the assistance that will be provided to Canadians with disabilities. By building on previous budget measures the federal government will extend support and implement tax initiatives to expand opportunities for persons with disabilities. It will help them and their families deal with the medical and care related costs.

Clean air, water and healthy habitats are essential to a higher quality of life. Understanding that our economy and our environment are closely linked is also part of the comprehensive strategy. Budget 2000 commits some $700 million in funding between 1999-2000 and 2002-03 toward the development of new technologies and tools that will meet our Canadian environmental challenges.

This initiative will be well received in my riding of Niagara Falls. Many of my constituents dedicate much of their time and energy to maintain and better our environment, to preserve and protect species indigenous to our area and the many spectacular natural beauties enjoyed not only by Canadians but by so many visitors to our area.

We are aware that our economy, especially the economy of the 21st century, requires the proper physical infrastructure. The budget proposes to work out a multi-year agreement with the provinces and the private sector to improve highways and municipal infrastructure. This will include green infrastructure and affordable housing in urban and rural communities across Canada.

My riding is a so-called border riding. As such it will benefit from the action taken in the budget to strengthen and control our borders.

The Canada Customs and Revenue Agency will receive incremental funding to modernize our border management process. This will allow the agency to devote more resources to enforcement activities that are most crucial to protect Canadian borders. Citizenship and Immigration Canada and the RCMP will also be receiving incremental funding and in this way will better ensure the safety of not only our borders but also of all Canadians.

Budget 2000 shows us that it is indeed possible to cut taxes and invest in the future at the same time.

[The Acting Speaker (Ms. Thibeault)]

I am afraid that the time is over.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I have a question for my eminent colleague, who is a major wine producer. But I will not mince my words.

What does he think of the following facts, given the credibility of the Minister of Finance, for whom he says he speaks?

Barely two and a half months ago, the Minister of Finance presented forecasts in his economic statement. At that time, he told us that the surplus for 1999-2000, that is the period ending March 31 of this year, would be $5 billion.

Two and a half months later, he brings down his budget and, big surprise, the Minister of Finance—the same one, unless it was his brother or a clone, but they look very similar—is talking about a $7.5 billion surplus, a $2.5 billion increase in two and a half months. What a strange coincidence: $2.5 billion and two and a half months—2.5 and 2.5. His forecast changed by 21% in two and a half months; this is a serious problem.

In addition, the very day the budget was brought down, there was a copy of The Fiscal Monitor , a publication put out by his department, in the lock-up room. In the third point of the second column on page two, it says that for the first nine months of this fiscal—in other words, the first three quarters—the surplus was $10.9 billion.

It was $5 billion two and a half months ago, $7.5 billion in the budget and $10.9 billion for the first three quarters of 1999-2000.

Yesterday I opened the newspaper and saw another discrepancy in the minister's forecasts. This morning, he said that the tax cuts, the Canada social transfer that he forecast in his budget could change, because he had taken a very pessimistic approach, and that we were not to worry, that the figures would change.

I look at this: a forecasting error of 21% in two and a half months, of 65% the same day—according to The Fiscal Monitor on budget day—, and, tomorrow, discrepancies of perhaps 70% between what he brought down in the budget and what he will actually do.

What sort of credibility does the Minister of Finance have? How can we view the budget brought down barely two days ago as a solid foundation? How does he explain his about-face and his election-minded fancy footwork in response to opposition to his budget?

[Gary Pillitteri, Liberal, Niagara Falls, ON]

Madam Speaker, I thank the member for his question. For years the hon. member and I have sat on the finance committee across from many economists. We have heard, especially in the last two years, growth estimates of 2%, 2.5% and 3%. He knows very well that we constantly get different readings on how much our economy is to grow. In the last year the estimate was about a 3% growth in the economy, but in the last couple of months we know it is over 3.5% and growing even more.

The member knows quite well, especially in the last couple of months with the growth in the economy, that it was possible for the finance minister to make those adjustments and give the benefits back to Canadians.

[Myron Thompson, Reform, Wild Rose, AB]

Madam Speaker, I suggest to all Canadians that in the meantime they do not buy more than one cup of coffee extra a week. It does not look too promising.

The member did not mention in his speech anything about the farm crisis and long term solutions that might be in the budget. I wonder if they are there. He never mentioned anything in his speech about the poverty that has been recognized by the United Nations on Indian reserves across the land, third world conditions on Indian reserves. There has been nothing mentioned in the budget speech or by anyone else about what the government will do about that.

What about wasteful spending? Does the member condone wasteful spending like on the filming of Bubbles Galore , committees on seniors and sexuality, the hanging of dead rabbits and all such nonsense which amounts to millions and millions of dollars? That member laughs because he thinks it is funny and great. Only a Liberal would laugh at anything that stupid. I wonder if he would like to respond.

[Gary Pillitteri, Liberal, Niagara Falls, ON]

Madam Speaker, I thank the hon. member for his remarks. We have different beliefs and opposing views. They say that the flat tax is the salvation of all, a better tax. It reminds me of a serial I used to watch on television called The Flintstones . With a flat tax, nothing moves, nothing is progressive.

I want Canadians to understand that Canada is a great country to live in. We as the Liberal government made it a better place to live in. When we get up in the morning we think it is a bright day. When members on the other side get up in the morning they think it is a real rainy day.

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Madam Speaker, I will share my time with the hon. member for Lotbinière, but it does not mean that all Bloc members will do the same.

Needless to say that I am disappointed, because there is an important flaw with respect to health care. If this government is really concerned about social justice and the future of Quebecers and Canadians, we would have expected it to have realized that the editorial writers, who represent an important segment of our society, are unanimously asking the federal government to increase transfer payments, and health transfers in particular, so that those who work on the front line, that is the provinces, can meet the particular needs of their citizens.

This is contemptuous and ridiculous. Even in our wildest dreams, we could never have imagined that a government could be so insensitive to public needs. How can the government table such a budget when a month ago, not far from here, in the Hull region, all the provincial premiers, whether Tory or NDP, masterfully led by the Premier of Quebec who, as you know, runs a fair government for the people of Quebec, were saying “Funds have to be released to the provinces for health purposes”.

It was estimated that some $4.2 billion were required. The Premier of Quebec said that, of this amount, $1 billion should go to Quebec, with $500 million going to health and $500 million to income security and education.

I will get a chance to come back to this, but the time is coming when it will be important for all Bloc Quebecois members and all other members in the House to come to grips with the structural pressures in the health system that make new investments in health care now imperative, or the future looks grim.

Let it be perfectly clear. The Quebec government has done everything it could with the resources at its command. I ask my hon. colleague and chairman of the health committee to pay attention to this. We will keep introducing motions for the committee to visit places where people actually experience problems in order to put maximum pressure on this very unresponsive government.

The health minister, Mrs. Marois, is always very well informed of what is going on in the system, and she knows what Quebecers want. Jean Charest himself said the same thing in the National Assembly: the first priority of Quebecers is their health care system.

The natural increase in health care expenses is 5%. That means $500 million.

If we calculate the part the Quebec government will receive from that miserable, shameful, insufficient and ridiculous $2.5 billion spread over four years, we arrive at $70 million a year.

This is absolutely outrageous, and it is why Pauline Marois said that it will not even pay for the operation of the health system for three days of this week.

What will we do in Quebec with the $500 million, the figure the Prime Minister talked about, at the first ministers' conference in Hull, for health care alone—$1 billion in total, $500 million for health?

I will give a few specific examples, especially for the benefit of the members opposite. I know I can count on my colleagues from Longueuil, Portneuf and, of course, on the talented and learned member from Saint-Hyacinthe—Bagot, who has been working on this issue for seven years. What would we do with $500 million? This is about a quarter of the operating budget of Montreal's hospitals; half of the budget for all the CLSCs.

Allow me to digress for a moment, to say that people from almost everywhere in America come to Quebec to find out how unique the CLSCs are, because such local community social service centres do not exist elsewhere, that is, a front line service, in some cases open 24 hours a day, at least to provide information by phone on emergency matters, and a front line network totally dedicated to people in key areas like seniors health and children's health from birth to adulthood and community groups as well. So, from almost everywhere in North America—I refrain from saying “the world”, because it could be a tiny bit pretentious—people come to find what CLSCs, which are unique to Quebec, are about.

As for the $500 million we are out by—annually, that is—it represents nearly half the budget for the whole CLSC network. It is the equivalent of the budget allocated to home support. It is well known—and I address this issue in a moment—that one of the structural pressures in the health care system is the fact that never before in the history of mankind have people lived so long. Not only do they live longer but some—not everyone of course, understandably—remain in good health longer. That is why old age is no longer synonymous with golden age, it actually comes after. Chances are excellent for all members in this House—that is at least my wish for everyone here—to get to old age.

Imagine the sharp mind of the Minister for International Trade at 80. I cannot think of him as one who would knit or play cards. I imagine him as alert and—a little like yourself, Madam Speaker—playing golf. For that to happen, it is important that the federal government transfer the money it owes the province. In light of the extent of the cuts it imposed unilaterally, this is hardly a handout.

Allow me to digress again. Is there someone in this House who will dare rise and say that $45 billion worth of cuts, which will be lowered to $33 billion by 2003, is an act of co-operative federalism? Did the premiers ever meet and discuss all this? This is beside the point, and I hope my friend the international trade minister will agree with me that to unilaterally impose cuts of this magnitude is not co-operative federalism.

I now come back this structural pressure on our health care system from our fellow citizens living longer and longer, which means that we will need extremely efficient home support services. We do not want people to be institutionalized longer than they have to; we want them to be cared for in their natural community, by their natural caregivers. But we are short $500 million.

Home support is important. I believe the government must realize this is a provincial responsibility first and foremost. It is out of the question for us to accept that the health minister establish a new shared cost program.

Imagine the paradox if we were to accept, as parliamentarians, a new joint program for home care when the federal government cannot even manage to give us all the transfer payment money we are entitled to.

I will get back to this later. I know I can trust you, Madam Speaker, to give the floor to my fiery colleague from Lotbinière.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Madam Speaker, I listened with great interest to the member opposite. He had quite a few things to say which pertained to health care in this great country of ours.

I want to note, though, that in the year 2000-01 the cash and tax point transfers for health will be $31 billion. That is an all time high. I invite the hon. member, who is quite well versed in issues of health, to recheck the facts, recheck the budget documents, and take a look at exactly and precisely the kind of money that not only other provinces will be getting but Quebec as well. Perhaps he could then advise Madam Marois of the good things that the federal government is doing in this very important area.

He should encourage the health minister for Quebec to come to the main meeting with the Minister of Health at the federal level and his provincial counterparts to see what can be done over the long term. The finance minister's budget has ensured that there will be a short term injection of money into the all-important health care system, but the main meeting will be crucial in terms of getting together provincial and territorial partners to ensure that a final, solid and long term solution is found.

I invite the hon. member, who I know has great influence in many areas, to do precisely that and to make sure that the health minister for Quebec is at the table and contributes in a very positive and meaningful way for a change.

Does the hon. member support the Reform Party's flat tax policy? Does he support what the Reform Party is up to in terms of this 17% nonsense? I would like to hear the hon. member's opinion. After all, it is the Reform Party which, in its platform, would have gutted health care, social programs, pensions and all the things which we have put in place for Canadians. Do not take my word for it. Check the Reform Party platform. If we check its new fresh start program we will see the kind of nonsense for which the Reform Party opposite stands. It is outrageous.

[Ken Epp, Reform, Elk Island, AB]

Not true. You are such a liar. You are just plain and simple lying.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

The question I have for the hon. member is quite simple. Does he, with his social conscience which is really quite attuned, support the flat tax concept? I would be very interested in that.

Listen to the hon. member opposite, the Reformer, calling me a liar. He should watch himself. He should go back to—

[The Acting Speaker (Ms. Thibeault)]

The hon. member for Hochelaga—Maisonneuve.

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Madam Speaker, I know we can always count on your efficient leadership to prevent fights and brawls in this House.

However, I warn my colleague against any attempt to divert the debate. We will find another venue to discuss the Reform Party fiscal policy, which we do not adhere to naturally.

I do not want to underestimate my colleague's influence, which is equal only to his kindness, so I ask him to become a voice within his party and to wake up the members of cabinet, whose lethargy is creating an injustice.

I want the member and all the other members who believe in social justice to assert clearly, as I do myself, that social justice starts with health and that the provinces cannot properly provide the services they should be giving to their citizens if this government does not restore the transfers it has cut unilaterally, without notice, off-handedly and with complete disregard for jurisdictions.

I ask my colleague to engage in this campaign with me; together we will succeed.