House of Commons Hansard #107 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was finance.


Prebudget ConsultationGovernment Orders

10:55 a.m.

Markham Ontario


John McCallum LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, I am not generally reluctant to offer my opinion on budgetary matters but today is different.

As Parliamentary Secretary to the Minister of Finance, my role is to listen, to sit here in the House and take note of the ideas hon. members have on the budget.

As members know, it has been a tradition for some years to have a prebudget take note debate. Traditionally it has been in the last couple of weeks of December but it is fairly evident that we would not want the take note debate to occur after the budget. Since the budget this year will be in December we are having the debate today.

While I do not want to give my own opinions, it might be useful to provide a bit of economic context for the setting in which we find ourselves and perhaps describe possible options without indicating which of those options the government or I prefer.

It is now clear, I believe, that the world economy, and the U.S. economy in particular, was experiencing a major downturn even before September 11 because consumer confidence had dropped significantly in the United States the week before that.

If the world were in the midst of a slowdown prior to September 11, it is obvious that the tragic events of that day made things worse. For the first time in some years we find ourselves in a synchronized global economic slowdown. Just about every region of the world is in the midst of that slowdown including Europe and Japan, which has been in trouble for a decade or more. South America, particularly Argentina, has problems. North America is slowing down. The only place that is not slowing down is that of China, but it is not a particularly large fraction of the world.

It is of some consolation that Canada is slowing down at a slower rate than our neighbours to the south. That may be in part because of the tax cuts brought in by the government in early January.

Canada is holding up better than the U.S. at this time. However we do not have a wall around our country. We are part of the North American and global economy, and there is absolutely no doubt that all of us are slowing down.

It is also true the majority of economists are making the argument that the Canadian and global economy will pick up in the second half of next year. They base their argument on sound fundamentals and a considerable fiscal stimulus. I believe this is the most likely case.

The events of September 11 are without precedent. Nobody can be certain that this recovery will occur. It is the best information we have based on what the majority of experts tell us. Life changes from day to day and from week to week. Everyone in the House would agree that we are living in extraordinarily uncertain times.

Now, I would like to touch briefly upon certain options. The government is prepared to listen to any ideas from hon. members, but I can present some options, whether they have government support or not.

The first concerns surpluses and deficits. The first question I would ask hon. members is this: are you really very serious, or not, about the necessity of our not getting back into a deficit situation? The government has its own ideas on this, but we would like to know what members of all political parties think about the degree of importance to be attached to not going back to the deficit situation of the past.

I have mentioned the deficit, I will now speak about taxation. There are those who would like to delay some of the tax cuts to which the government has committed itself. There are those who would like to accelerate them. There are those in the middle who would like to carry through on them but neither accelerate nor delay them.

It would be interesting to hear what members of parliament including those in the Canadian Alliance have to say on the issue of taxation.

Finally, there is the matter of expenditures. These can, I think, be classified into two groups: those related to security, and the rest.

It seems that by far the majority of Canadians, myself included—here, I am expressing an opinion—set expenditures relating to security as a very high priority for at least two reasons. First, and most important, is the protection of Canadians' lives and security, and second is convincing the Americans that we are serious and do not represent a security risk.

As everyone is aware, it is absolutely crucial from the economic point of view for goods and individuals to be able to cross the Canada-U.S. border.

We have the security related expenditures that one can look at as a group. Then we have everything else, all manner of possible projects. It would be useful for the government to hear the opinions of members on all sorts of initiatives that are on the agenda including innovation, learning, children, urban affairs, major environmental concerns, increased foreign aid to less developed countries and initiatives related to the poor living conditions of our aboriginal population. This is not meant to be an exhaustive list but those are some of the possible areas of new expenditure initiatives.

I do not want to give my opinion. At the same time I do not want to indicate that the government has no opinion. I will mention two points that the Minister of Finance made explicitly. He said he would work like hell to avoid returning to a deficit. He also said he would honour the tax cut commitment. Members of the House may have different points of view. If so, we look forward to hearing them.

I would like to make a point regarding adding up. It is not useful if an individual proposes that we have large increases in expenditures on whatever the case may be, have large additional tax cuts and keep a balanced budget. The government's point of view is that it is more useful if the proposals add up. We cannot have big spending increases, big tax cuts and maintain a balanced budget.

I look forward to listening to the opinions of members. I will be taking notes, consulting the written version of the debate and reporting back to the minister on the sentiments of members of parliament.

Prebudget ConsultationGovernment Orders

11:05 a.m.

Canadian Alliance

Stockwell Day Canadian Alliance Okanagan—Coquihalla, BC

Mr. Speaker, I am pleased to participate in this take note debate on the upcoming budget. It is our sincere regret that it has taken the government nearly two years, over 650 days, to prepare a full accounting of the nation's finances.

It is unheard of in any free nation today that the government would go almost two years without tabling a budget. There is no premier in Canada or mayor of any city who could get away with such a high degree of unaccountability.

I congratulate the federal Liberal spinmeisters on deflecting media attention away from this glaring record, perhaps the greatest record of the last century in terms of length of time without accountability. This is not a laughing matter. It has been one of the many reasons for the lack of confidence in the Canadian economy.

Two years without a budget is far too long.

The finance minister has totally dismissed our concerns about the economy for months. We talked about the economy slowing down, the out of control spending of the government and how we were heading toward a deficit. The lack of clear information on the government's fiscal priorities was irresponsible and disrespectful toward parliament.

They laughed at us and ignored us. It is inexcusable that it has taken the beginning of a war and the onset of a recession to cause the finance minister and the government to finally table a budget.

It has been interesting to watch so many different areas of government public policy planning over the last seven years. In virtually every area the Liberal ship of state has been adrift at sea without an anchor and compass. When the winds of adversity blow the government panics. It puts up the sails and inevitably runs aground on some rocky reef of poor public policy planning. That is inexcusable.

It has been a decade of being adrift. It is not only in the area of not having a budget or fiscal priorities but also in the area of security where there has been no forward planning. There is only panic as with the anti-terrorism legislation that drifts into areas which perhaps we should not be going into.

We now have the softwood lumber problem that has thrown tens of thousands of people out of work. We warned the government about it for years. Yet it did not react. The panic sets in when those winds of adversity hit. It is inexcusable that nothing is being done and that people are run aground. We will continue to bring it to the attention of Canadians.

On September 11, the world changed and we have to view certain realities from a fresh perspective. It has forced us to review our priorities. We hope that the government will align its priorities with those of the people it is supposed to represent.

There are three critical areas in which the government must realign its priorities: first, the whole question of a deficit of resources for our national security concerns; second, the oncoming Liberal recession; and third, the long term decline in Canada's standard of living. Factual, calibrated and measurable, these must be addressed.

In the area of security, the first and foremost responsibility of any federal government is to defend national sovereignty and to protect the safety and security of its citizens.

That is why the Canadian Alliance, and before it the Reform Party, has consistently called for adequate resources for our police, intelligence and defence services, calls that have gone unheeded. We have done this even though we are a party that believes in smaller and less costly government in almost every other area. However we believe that freedom is not something we can take for granted. Freedom comes at a price and its price is eternal vigilance.

Regrettably, despite the blizzard of rhetoric from the Liberal government, its actions suggest that national security is in fact one of its lowest priorities. We can say all the things we want but we measure people on their actions and the actions of the government suggest national security for its citizens is among one of its lowest priorities.

Over the last few years the government has routinely dismissed our calls for necessary spending to enhance national security and defence. We made those calls long before September 11. It continues to dismiss those calls.

Since 1993 defence spending has been cut by $1.6 billion, a massive 23% reduction in real terms. Any time the Minister of National Defence stands up and talks about a very recent knee-jerk reaction in spending, moving up in a small incremental way, he must account for the fact that the Liberal federal government slashed our national defence by 23%. It was one of the single greatest reductions of any department. The government cut its own preferential spending by only 7%.

I get tired of hearing the Minister of Finance stand up and talk about dealing with the deficit in this country. He neglects to say that he did it by huge cuts in two areas: our national security and our national health care system. That is how he cut the deficit and did only 7% in terms of the government's own wasteful spending. Every time the minister talks about deficit reduction he should be mentioning how he did it and whose backs were affected. That is where the cuts have come.

During this time the reduction in terms of military personnel has declined from 90,000 to 58,000. The Conference of Defence Associations, which is the major scientific and advocacy group related to military needs, resources and spending, has defined in a very recent report that there is a $1.2 billion annual deficit in terms of the needs of our military. That $1.2 billion annual deficit is just for maintenance and ongoing operations and does not even address the ongoing needs of increased national security that we now face.

They are not alone. The auditor general has estimated between now and the year 2012 a $30 billion funding shortfall in defence equipment just in those few years.

The government has given Canada the embarrassing distinction of giving the second smallest defence commitment to NATO. These are the hard facts. Canada's commitment of 1.0% of gross domestic product is less than half of the NATO average of 2.2%. This is not something for which we can be proud. In other words, for Canada to match just the average spending in terms of the commitment that our allies share, it would require us to nearly double our defence budget from $10 billion to $21 billion. There must be an increase even beyond what the defence association says, of $1.2 billion.

I have addressed this subject many times. Our defence critic, the member for Lakeland, and other members of parliament in the Canadian Alliance have also detailed this enormous funding shortfall. We have made it very clear that it is impossible for Canada's military personnel, whom we personally believe are the most dedicated and the most courageous in the world and have proven that in the last century, to adequately meet all the commitments and requirements that are put upon them, which includes continental defence, treaty obligations, UN peacekeeping and now the war on terrorism.

We believe it is wrong to ask our military personnel, whom we believe are the best in the world, to defend this country, its assets and its interests at levels on which they are not able to do so. It is wrong for us to make promises we cannot keep. It is wrong for Canada to leave it to our allies, particularly the United States, to do all the heavy lifting on our behalf.

On September 11 Canada's free ride on national defence came to an end. The time has come for the government to make its lowest priority the nation's highest priority and that is the protection, safety and security of our citizens.

In analyzing what we believe will be the numbers in the budget, we have identified that it will require approximately $2 billion from low priority areas being moved to the Department of National Defence. That is as a down payment on additional future increases to give our military the resources it needs.

Maintaining national security is an increasingly important task of our domestic intelligence and police agencies, such as CSIS and the RCMP. Since 1993, again, the government cutting its own pet projects only by 7%, has reduced the CSIS budget by 28% in real terms at a time when we need more of that intelligence activity than at any other time.

Through the years the Canadian Alliance and our members before us have been telling the government about the concerns worldwide of bandit or rogue individuals or nations and that we would require even more resources in this area, but the government cut CSIS by 28% in real terms. That is a diminishment of our national security.

Given the enormous new demands on that agency it is only reasonable that the funding should be restored at least to the 1993 levels of $272 million. That would entail an increase of $76 million.

The RCMP is also currently in need of more personnel. Customs and immigration also require added resources, not just personnel but for major new technology acquisitions, updated passport scanners and computers, and potentially for advance biometric screening systems. They need all of this and it must be addressed.

It is interesting to hear the government talk about its concern for national sovereignty. The coast guard has seen its fleet cut by 40%.

When the government talks about national security and protecting Canadian sovereignty, it thinks that means we must respond to the minister of culture and stop watching satellite systems that come from other than Liberal approved programs. It believes that is what will keep our national sovereignty in place. Well it will not.

A 40% cut to the coast guard is irresponsible and does put national sovereignty at some risk. It requires new funding to replace aging vessels, to increase the coastal patrols and to acquire satellite tracking systems for incoming ships.

Finally, the Department of Transport will have to assume some of the cost related to airport security. Some of those costs could and should be shared by users but the Department of Transport will have to be there to share some of the costs of increased security measures. Altogether, these and other security related measures are likely to cost in the neighbourhood of a billion dollars annually. I hope the finance minister is jotting these numbers down.

Let me say again that enhancing our national security and working with our American neighbours to create a secure, common perimeter is not an option for Canada. I cannot understand the Prime Minister's paranoia when he says that building a strong continental border and working with the Americans somehow puts our national sovereignty at risk. That is a ridiculous state of paranoia.

The other night millions of Canadians gathered around their Japanese made television sets, wearing their made in China, fleece lined exercise outfits, sitting on furniture made in Sweden, watching an American baseball game played by players from all over the world including Puerto Rico, drinking Coca Cola and munching Mexican tacos. Their sovereignty was not being threatened by those actions and they did not fear their sovereignty was being threatened. However our sovereignty is being threatened when we slash the military and our security forces and say we will not work in common with Americans to develop some strong policies for North America. That is simply irresponsible thinking.

It is a necessity that we work together to increase the levels of security and the levels of safety for all of our citizens. This is all a question of priorities.

My colleague, the member for Calgary Southeast, will outline several billion dollars in wasteful and low priority spending. He, other Canadian Alliance members of parliament and the auditor general have done some good work on this. This year the auditor general pointed out hundreds of millions of dollars of waste, and he called it waste. The auditor general wanted to know who was minding the store. Well the official opposition is going to mind the store because the government does not. We will take on and have been taking on that responsibility.

These areas of wasteful and low priority spending have been identified. We need to reallocate from low priorities of spending and move back to high priorities of spending on safety and security which is what Canadians want. For example, we talked about the $2 billion immediate increase in the defence budget that is required. That is roughly equivalent to what the government spends now on corporate welfare.

The $1 billion that we see in additional security measures is less than the industry minister plans to blow out the door on his Internet scheme.

We expect some intelligent prioritization to go on. When we talk about a billion dollars being blown out the door by an Internet scheme we do not expect a response from him saying that the Alliance does not care about Canadians having computers.

Canadians in the free world are among the highest users of computers and that has been done without the billion dollar plan to get higher speed chat rooms for all Canadians from the government. Canadians have moved on it aggressively themselves and they will continue to do so. Safety and security are areas of priority.

We talk about an oncoming recession. The government needs to get its priorities straight on national security but it needs to be honest with Canadians about the deteriorating state of our economy and the nation's finances. We are tired of empty accusations from the finance minister and the Prime Minister when we raise, as we have been raising for a long time, questions about the economic recession which we were in pre-September 11. We get accused of being unpatriotic. Economists, like Jeff Rubin at the CIBC, predicted over a year ago that within 18 months the dollar would be sitting at 60 cents. We hit historic lows just yesterday. Mr. Rubin had better be careful, the Liberal thought police may be coming to arrest him for being unpatriotic. The government has to become honest with Canadians about this.

Last spring we issued many well-founded warnings about a potential downturn in the economy, one which we were witnessing was taking place before our eyes. We talked about the need for the federal government to tightly control spending in order to avoid going back into a deficit. We talked about that over a year ago.

The Minister of Finance and the government dismissed our concerns and continued to whistle past the economic graveyard and go down the path of increasing our vulnerability to a bleak economic picture. The minister's budget will not be able to hide the fact that he and the government led us into a recession. A decade of economic drift, as I have already indicated, has led us into a full blown recession and all of these indicators were in place before September 11. We are getting tired of the disaster and horror of September 11 being used to cover up the government's out of control spending and poor management which was happening well before that.

The aftershocks of September 11 clearly deepened our economic trouble. That is a fact. Let there be no doubt though that Canada was headed toward a serious slowdown before that tragic day. Economic growth screeched to a halt in the second quarter of this year and it is almost certain to contract in the third and the fourth quarters, with many economists predicting that the slide could continue well into next year. We hope that will not the case but many economists are saying that it will be.

The government should not be accusing us of being unpatriotic because we are concerned about the future and economic uncertainty of Canadians.

Employment was up before September 11. Thousands of job layoffs have taken place. The dollar hit an all time low yesterday.

As the Canadian dollar plummets, it is reaching out in desperation to grab on to some twig of confidence from the government but seeing none it continues to move downward.

The finance minister has allowed spending to get out of control at a time when revenues are beginning to contract. Yesterday's surplus may soon turn into tomorrow's deficit. Many economists, Dale Ore of WEFA, Don Drummond of the TD Bank and others, had predicted these planning deficits by the year 2003. The federal Liberals have been running three year projections in terms of where their spending was taking them. We analyzed the numbers and we could see that they were headed for a deficit before the three year mark. What was their response? They quit the three year planning and they put out two year projections.

If there is a projection that comes out that says we could hit a deficit in two years, maybe all they are going to do is project one year. It is irresponsible. They need to tell Canadians what we are facing. By knowing what we are facing we can prepare for it.

The Bank of Nova Scotia, for instance, is projecting an annual federal deficit of $5 billion by next year. What will that mean? Will it mean that our next projection will be only a six month one because we want to avoid the ones that people are putting out?

If the finance minister and the Liberal government lead us back into deficit, the slowing economy will not be to blame. Out of control spending, fuelled by the undeclared Liberal leadership campaign, has put at risk the surplus that the taxpayers have paid so dearly to achieve, paid for by a reduction in spending on security, a reduction in spending on national defence and a huge reduction in spending on our health care needs.

Spending jumped last year by 7%. That was twice the level of inflation plus population. The finance minister has allowed spending to so far exceed his targets year after year and to exceed this phenomenal growth in revenues being paid by taxpayers. If spending in the current year was at the level projected by the minister in 1997, we would have had a solid surplus of approximately $25 billion if he had kept his surplus in check rather than the $8 billion that most forecasters are predicting.

Markets look for signs of restraint in government spending and accounting but they have not seen it from this government and have made a judgment according to the value of the Canadian dollar.

The government must get its priorities straight. On the economic and fiscal front that means keeping a balanced budget while reallocating resources from low priority, unproductive spending to areas of high priority, including areas of continuing the stimulus effect of tax reductions in very necessary areas.

To stimulate and create jobs and create investment, the government must continue to implement the tax changes it announced last fall. It also has to proceed with other areas of taxing business and individuals in terms of high input costs, EI premiums being one alone where we have far in excess of what we need, even with the oncoming recession, in terms of the insurance fund being there. The government takes those hard-earned dollars, taxing individuals and businesses for employment insurances, and launches the money into all kinds of spending that has nothing to do with employment insurance.

The government should sit down and consider including a yearly basic exemption, as suggested by various industry groups, when it comes to EI. We must also look at eliminating or bringing down the very destructive capital tax. As recently as yesterday the finance minister pointed to capital going to the United States. Why does capital flee? It looks for quality and certainty. The government has provided neither. We have to start doing that and we can within our various systems.

These measures in the areas of input cost reductions and tax reductions can be accommodated within the existing budget. People across the way say that we should spend, spend, spend. Yes, we should spend on priorities but we should reduce on discretionary and wasteful spending.

Only if the government puts a freeze on all future discretionary spending and controls spending in the low priority areas can we do these things, but they can be done. Let us not respond in panic and fear to the accusations that they cannot be done. It is a matter of discipline. These are critical if the government is going to leverage the fiscal policy to join the Bank of Canada's efforts to fight this Liberal recession.

I served as a finance minister in a time when commodity and oil and gas prices were going down. Even in a down time of plummeting commodity prices and with the Asian crisis, we had the discipline and foresight to continue tax reductions to send the signal of confidence to the economy, an economy which continued to be confident because it was being stimulated; investment staying instead of fleeing. That is what has to happen here.

When the finance minister tells us there is no room for additional relief in these areas, I have to question him. Where did he find the extra $6 billion for the ministries of industry and human resources development, those great stewards of the public purse, to spend on those pet projects? Then he says there is no room to allow Canadians to keep their hard earned money in their pockets.

Canadians know that an extra dollar left in the hands of a hard-working citizen or innovative entrepreneur will do a lot more to create jobs and wealth than a dollar in the hands of a federal Liberal politician. Canadians continue to suffer. Every time the finance minister gets up and does his arm waving he never addresses these facts.

We have the highest income taxes in the industrialized world. That is a fact. I want to see the arm waving today when he gets up and starts talking about the great things he is doing for Canadians.

The government needs to get its economic priorities straight by spending less on interventionist pet schemes that do not work and putting more on priorities for Canadians by allowing them to keep more of their hard earned money in their pockets.

The upcoming federal budget represents an enormous missed opportunity by failing to take more decisive action in all the areas I mentioned: proper spending, tax reduction and paying down debt. We will watch for the arm waving today. Any way we shake it out, even though there have been payments on the debt, and the official opposition has acknowledged those payments, they have not been what they could have been. It is another hallmark of the era of lost opportunity and the federal debt today stands higher, at $557, billion than it was in 1993. That is the plain basic fact.

Yes, when the surplus has been splashing over in its economic bucket, the government has allowed some of that to go to the debt but not as aggressively as it should have. It has not legislated the down payment of debt.

These are the signals the market needs to see so that investment will stay here and not run southward where it will be taxed at a less punitive rate.

Canada is headed into a recession exposed by some fundamental economic weaknesses. We continue to carry one of the largest debt burdens in the industrialized world. It costs taxpayers over $40 billion a year just to carry that debt. It costs $100 million a day to reduce a debt that should have been reduced far more aggressively and should have had a law behind it saying that a bigger chunk of the surplus would go to its reduction.

Our dollar has lost 25% of its value against U.S. currency since 1993. We want to see Liberals stand and applaud today when the finance minister gets up to address this. We want to see how loud the applause is when he says that it is true that our dollar has lost 25% of its value since those people took office in 1993. That makes all Canadians poorer relative to our American friends.

There is a 22% gap between the Canadian and U.S. standard of living, which amounts to a difference of $29,000 for an average family. We want to see the cheering on that today when the finance minister stands and does his usual rant. We want to see the pompoms go up in the air.

U.S. productivity has grown at a 50% faster rate than in Canada over the past decade. I want to see the finance minister go after the Chamber of Commerce for being unpatriotic because it has said the nineties will stand out as the poorest decade relative to growth since the 1930s.

All these figures point to Canada's greatest economic challenge, to stop the slide in our standard of living and eventually, as we stop the slide and put in place the proper policies that stimulate confidence, I believe that on the race track of economic growth we can sprint ahead of the American economy. We do not have to lag behind. Every time the dollar drops and debt increases or some other economic measure hits us, the finance minister stands and says that it is the Americans.

Canadians can outpace them. We are a little upset that this year the Mexican peso is outpacing the Canadian dollar relative to the U.S. dollar. We congratulate President Fox. We offer no congratulations to this finance minister for allowing that to happen. We want to hear those cheers today when he stands up and addresses these factors.

We have a vision of our economy being strong and focused, a government that is disciplined and our business, our people, our hard workers literally being able to sprint past the Americans when it comes to productivity and growth. It is possible as long as we have a government that can recognize that.

The United States congress is in the process of passing an economic stimulation package that includes $100 billion in immediate tax relief on top of the $1.3 trillion tax cut that was passed earlier this year.

Canada cannot afford to stand still. The flight of capital and people is happening. There are 98,000 highly educated, highly skilled Canadians moving south this year alone. We have to get our economic priorities straight. That does not mean just more stimulative tax relief but tax reform that is designed to reduce and eliminate the disincentive that Canadians face right now when it comes to work, savings and investing.

The Alliance proposal is to eventually eliminate the marginal income tax rates. That would be a clear step in the right direction. The federal government should also explore ways to move Canada away from its huge overreliance on income taxes. It has to continue to look at reforming taxation, especially corporate taxation, relative to the recommendations brought forward by the Mintz commission.

If we are to close this gap in the standard of living, we must also implement some structural reforms, especially related to inefficient programs. The government took a big step backward in this regard, with Bill C-2, by rolling back its own very modest employment insurance reforms out of political fear and nothing else. Instead, we would pursue experience, rating and other reforms designed to modernize Canada's labour markets.

We should reform equalization to stop penalizing provinces that are starting to get ahead, especially those provinces having the ability to move ahead thanks to their non-renewable resources. Possibly for the first time since Confederation, Atlantic Canada has the opportunity to realize the promise of Confederation. However the federal government will continue to clawback its hard earned efforts at moving ahead. That is unacceptable.

The federal government has to drop its dogmatic approach to health care. Health care costs continue to skyrocket through the roof. The government's response has been to not restore health care to its 1995 levels. This is an economic situation as much as it is a health care and security situation. The government must begin to allow provinces to be innovative with internal market mechanisms within the public system, if we are going to preserve our provincial economies and help them to weather the storm that was set loose upon them when the government slashed their health care transfers by almost 35%.

We have to pursue serious reform of some of our entitlement programs to ensure that they are sustainable, making sure that maximum return to those people, especially on fixed income, is achieved. There are many ways in which that can be done. This federal government refuses to look at those possibilities.

The government should exercise real leadership in terms of striking down provincial trade barriers. It has not done that. It should be pulling the provinces together in many areas where those barriers still exist and get the type of reduction in those provincial trade barriers that is necessary.

Federal regulations need to be analyzed in a way that the costs are looked at carefully as to what regulations are effective and needed and which are ineffective, outdated and unneeded. That is a huge cost to business and a drag on our economy.

Rather than taking any of these bold steps to strengthen our economy and to secure our future, the finance minister, along with the rest of the government, continues to be adrift. The government ship of state is adrift at sea, tossed about on the waves of circumstance without an anchor when needed, without a compass when needed. For every serious challenge we face, the recession, the falling loonie, our slide in productivity, the finance minister blames some external forces.

We can be masters of our own destiny but we have to take charge. In difficult times like these Canadians want and deserve tough decisions, not familiar excuses from their national government.

The Canadian Alliance will continue to do everything in its power to ensure that the government gets its priorities straight. These include providing adequate resources for our national security; fighting the Liberal recession, while maintaining a balanced budget; and reversing the current downward trend in our standard of living.

I move an amendment to government Motion No. 17 as follows:

That the motion be amended by adding:

“and in particular, the need to increase spending on national defence and public security by reducing waste and spending in low and falling priority areas, such as the proposed new Industry Canada-HRDC strategy paper, preserve and accelerate scheduled tax reductions, restore confidence in the Canadian dollar, and avoid falling back into a fiscal deficit.

Prebudget ConsultationGovernment Orders

11:40 a.m.

The Acting Speaker (Mr. Bélair)

I declare the amendment receivable. Debate is on the amendment.

Prebudget ConsultationGovernment Orders

11:40 a.m.


Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I would like to inform you that I will be sharing my time with my colleague, the hon. member for Drummond, and that all of the other members of the Bloc Quebecois will also be sharing their time.

It is my pleasure to speak in this take note debate today regarding the budget that the Minister of Finance will be bringing down.

We would have liked to have had this debate earlier, since there have been clear signs of an economic downturn since September 11, and even earlier. This downturn has been exacerbated by the events of September 11 but it was already apparent several months beforehand.

We have been calling on the finance minister to intervene in support of the economy since October 3. He has the means, as I will explain later in my speech.

First, I would like to begin with a comment. If it can be said that anger does not help us think rationally, then the same can be said for excessive fear. When I hear the Minister of Finance say that nothing will ever be the same since September 11, obviously, security is the first priority, but there is more to it than that. By focusing on this aspect, the government is putting off other decisions that a responsible government must take.

Let me say from the outset that I accuse the Minister of Finance of contributing to the economic slowdown through his statements, his pessimism and his inaction. When he says that we did not have surpluses during the current fiscal year and that he cannot afford to make massive investments, he is deceiving consumers and making them much more cautious in their spending.

One of the reasons for this economic slowdown, if not this recession, is the consumers' unwillingness to spend. When the Minister of Finance keeps saying that things are bad everywhere, thus contributing to the economic slowdown, it can only make consumers put their spending on hold.

The Minister of Finance is also responsible for the economic slowdown because of his inaction. He should have taken action long before his upcoming budget. He could and still can act to support the economy and employment but he is not doing it.

What are these means? We are too used to seeing the minister fibbing every year when he says “Listen, we must be careful, there will not be any surpluses”. In the last fiscal year the government ended up with surpluses totalling $17 billion.

By not telling the truth on the actual surpluses, the minister avoids debates in the House and among the public on the use of these surpluses. Then, a few months before March 31, which is the end of the fiscal year, he no longer has any choice and must use all the surpluses that he deliberately overlooked, even though he knew full well that they existed, to reduce the debt.

We have nothing against paying off the debt but this government must deal with other priorities, and while security is important, so is people's economic well-being.

We did calculations regarding the evolution of public finances, as we have been doing for the past seven years, particularly for the past five years where there have been surpluses. This year, while a recession, which is a negative growth of the GDP in real terms, is likely over the next six months, there will still be a $13.6 billion surplus. This is the most conservative scenario. With a negative growth of less than 2% of the GDP over the next six months, we arrive at $13 billion.

The Minister of Finance can do something. He has the means. We are not asking him to return to a deficit situation, we hate deficits more than any other party in parliament. We even presented a bill on balanced budgets three years ago and the Minister of Finance rejected it. He rejected a bill opposing deficits. We detest deficits much more than they do.

We want a realistic plan that would use $5 billion of the $13 billion surplus expected in the present fiscal year to support the economy and jobs in order to guarantee the economic security of Quebecers and Canadians. This would also ensure that the slowdown, however deep it may be, would not turn into a deep and protracted recession. It would seem that the minister has forgotten the multiplier effect of a dollar invested in the economy and its effect on employment and tax revenues. We can support the economy.

This $5 billion plan we are proposing to the Minister of Finance includes the following. First, we want, and it is not costly, SMBs, which are currently suffering from the economic slowdown and need a breath of air, to enjoy a little relief from provisional instalments, that is the taxes they will have to pay in the coming months. We are asking that the instalments be put off for six months. This would cost almost nothing, $50 million, but it would be so effective right now that even the Chamber of Commerce and the Canadian Federation of Independent Business support this sort of measure.

We are also calling for some relief in contributions to the employment insurance plan. We can afford this too. There is a surplus of $6 billion or $7 billion in this fund. These two measures would inject nearly $2 billion into the economy.

We are also calling for—and this can be readily done to support workers facing the economic slowdown—the Employment Insurance Act to be amended. There is consensus in the Standing Committee on Human Resources Development on increasing benefit coverage for young people, women and regions hit with high unemployment.

One does not have to be a genius to realize that, in addition to the economic slowdown, there is restructuring in certain resource regions. These are calling for more extensive government intervention, at the cost of $1 billion.

We are also calling for another billion to help the tourism and aiarcraft industries, the most heavily hit by the economic downturn, which has been exacerbated since September 11. One billion dollars is being requested.

Last, we are calling for an acceleration—if this government can possibly grasp the concept—of investments that would have been made anyway during this fiscal year, for instance funding for social housing, within the infrastructures program.

Taking $5 billion of the forecasted $13 billion surplus for this year still leaves $8 billion. Part of that amount the Minister of Finance can reserve for security because we do not know what is around the corner. He can also show some open-mindedness in the next budget.

There are provinces suffering at this time because they have obligations toward their population as far as health and education are concerned. They are short of money.

Every year there will be a structural surplus in the coffers of the federal government. Would there be any way of having a meeting, a real federal-provincial meeting, on sharing taxation resources? There were such meetings in the sixties, seventies and eighties. Why is there such a closed mind about tax base redistribution? The needs are in the provinces and in Quebec as far as health and education are concerned, while the taxation resources are here. Surplus funds are accumulating year after year and this will not change, even after the recent events we are having to cope with.

What we are calling for is something very simple: for the government to realize that there are two kinds of security, one Security with a capital S and the other economic security. It is rather awful to experience feelings of insecurity because of the terrorist threat and at the same time to have to deal with economic insecurity because we cannot predict what the outcome of the economic slowdown will be on our lives and on our jobs.

We are asking the government to intervene. It has the means. We are asking it to use $5 billion of the $13 billion surplus expected for this year. We are asking it to permanently avoid deficits, forgetting of course that it was the Liberals who created the first deficits and who have a way with spending that is not always efficient or effective.

We do not want a deficit but we would like the Minister of Finance to get moving, to stop being so pessimistic about a balanced budget and to stop talking about the deficit. Such comments are not relevant this year. There will not be any deficit. The most skeptical outlook forecasts a surplus of $12 or $13 billion. So he should hold the rhetoric.

In the past, we heard about extreme caution. The Minister of Finance has lost so much credibility when it comes to his forecasts that he can no longer show his face. Today, the focus is on security. I am all for security. The terrorist threat is real but we also need to think about and look after people's economic security.

For this next budget, we expect the Minister of Finance to have understood this message and to have come up with a plan to stabilize the economy and employment. Since October 3, we have been offering him concrete suggestions to help him do this. He must consider security, but he must also consider peoples' economic security which is also important.

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11:50 a.m.


Antoine Dubé Bloc Lévis-Et-Chutes-De-La-Chaudière, QC

I want to congratulate the hon. member for Saint-Hyacinthe—Bagot on his speech. I think he ran out of time and would have wanted to talk longer.

He raised this, but I wonder if he could give us his opinion on the whole issue of reapportioning the tax base. As we know, in Quebec a commission on fiscal imbalance is examining this matter. I wonder if my colleague could tell us more about this.

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11:50 a.m.


Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, at the same time as we are proposing an emergency plan for the next six months, which is an ad hoc initiative by the federal government and not a recurring yearly measure, we have been noticing, particularly in the past two years, a tendency by the federal government to accumulate significant surpluses every year.

This is due to the federal tax structure. For example, in Quebec, 60% of the total personal income tax paid by Quebecers goes to the federal government, compared to 40% to the Quebec government.

The federal government is enjoying incredible fiscal capacity. And personal income tax is the type of taxation that increases the most rapidly over time. This means that there is truly a constant increase in tax revenues collected from individuals.

Because of this distortion in the tax system, the federal government finds itself year after year with a large structural surplus in its coffers, while responsibility for health, income security and particularly education needs falls to the Government of Quebec and the provinces of Canada.

We are therefore stuck with this skewed system, which must be corrected. There is a way to do that. We saw it used in the 1960s and particularly in the 1970s. The tax fields of the federal government and of the provinces were redefined.

In other words, the federal government gave out tax points. It gave the provinces additional tax capacity and it partially withdrew from the tax field in order to allow the provinces to collect additional money so they could meet their primary obligations, which are health and education.

Today we are back in the same situation we faced in the 1960s and 1970s. The federal government has excess tax capacity but the provinces are facing growing and inescapable demands in the fields of health, education and income security.

The Séguin commission is looking at ways of addressing this tax imbalance. We have specific proposals for a phasedin solution: gradually transfer tax points to the government of Quebec, starting with the portion the federal government is now paying in cash to the government of Quebec and the provinces for the Canada social transfer, the transfer for funding health, education and social assistance.

A portion of these transfers was already handed over to the provinces in the 1960s but there remains a cash portion of almost $2 billion for the government of Quebec.

This would be a good place to start.

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11:55 a.m.


Gilles-A. Perron Bloc Rivière-des-Mille-Îles, QC

Mr. Speaker, I congratulate my colleague from Saint-Hyacinthe—Bagot on his speech. I have a question in connection with his last remarks.

Is this concern over the federal-provincial transfer unique to Quebec or is it a general concern of the other provinces?

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11:55 a.m.


Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, my answer is that the concern is generalized. For some two years now, every time the first ministers and provincial finance ministers meet, this has been a concern.

At their last meeting in Montreal, the provincial finance ministers welcomed Quebec's proposal. It was to analyze the wisdom of having the tax point transfer accompanied by, for example, changes in transfer payments. To some provinces, tax points are not worth $260 million as they might be for Quebec or $450 million for Ontario, for example. They are worth less.

A maritime province, for example, would suffer with a tax point transfer because with tax points it would not get nearly what it does under the Canada social transfer. The reason is a matter of the relative wealth and population of these provinces. Generally speaking, the principle of transferring tax points was well received in Canada following the suggestion of the Quebec minister of finance.

However, one thing was agreed to by all. At the moment, there is too much money in federal coffers and this will be the case every year, despite the recent events. Quebec and the Canadian provinces have responsibilities in areas where there are desperate and unavoidable needs, in the areas of health and education, for example.

The federal government cannot set these needs to one side and look good by waving about billions of dollars in surpluses, which, we must not forget, come out of taxpayers' pockets. There is too much money here because there are taxpayers who pay too much tax and because the provinces do not have enough of the pie to meet their obligations as set out in the Canadian constitution, which these people claim to want to defend.

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11:55 a.m.


Antoine Dubé Bloc Lévis-Et-Chutes-De-La-Chaudière, QC

Mr. Speaker, there is one issue that is very important to the Bloc Quebecois and that is employment insurance.

I would like the member for Saint-Hyacinthe—Bagot to tell us if he has any suggestions for the program. I believe he does and I would like to give him the opportunity to expand on this topic.

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Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, yes, our $5 billion emergency plan to support the economy and employment contains some of the measures from the unanimous report of the Standing Committee on Human Resources Development. These measures were aimed at reforming employment insurance.

Among our proposals, a billion dollars would be set aside for the most urgent reforms, including changes for older workers. Since the POWA program disappeared there has been nothing to come to the assistance of workers aged 55 and older, a bracket that has been hit with massive layoffs by big business.

During an economic downturn, casual workers are the first to feel the crunch, workers who have less experience. This obviously affects young people and women more. Our plan to boost the economy contains extra measures to help youth and women survive the economic crisis.

There is also an increase in benefits for low income workers. Currently,employment insurance coverage stands at 55% but if one is a low income worker and has the misfortune of living in a resource based region that has suffered from the global downturn, one is doubly penalized. We are asking that the coverage for low income workers be increased.

In addition to these special measures that take into account the urgent nature of assistance for those who will be affected by the economic slowdown there is, of course, the whole issue of employment insurance reforms. Today we have a rare opportunity in this parliament. We have a unanimous report from a committee made up of members from all political parties. Why does the government not acknowledge the needs and carry out these much needed reforms?

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Pauline Picard Bloc Drummond, QC

Mr. Speaker, I would like to congratulate my colleague for St. Hyacinthe--Bagot for his speech. My colleague has been described by Canadian economic analysts as one of the top economists ever in the history of this House. He is known for his accurate and credible predictions.

Since the events of September 11, the economy on the world scale has been seriously shaken. Most experts believe that nothing is the same as before. At a time when our future was already uncertain in the aftermath of the terrorist attacks and with obvious signs of economic downturn on the horizon, the Bloc Quebec has acted in a responsible manner by suggesting a number of measures to the Minister of Finance to boost the economy.

Just recently the minister was still issuing the challenge to us to make some targeted and highly detailed suggestions in advance of his December budget. So the Bloc responded with alacrity, and presented its $5 billion economic stabilization plan. Our objective is clear: to attenuate the economic downturn and the loss of thousands of jobs resulting from the events of September 11.

As the minister delights in repeating in this House, and according to the witnesses heard at the Standing Committee on Finance, the Bloc's plan is without a deficit. I repeat, if that is what worries the government, we are anti-deficit.

Application of this plan relies on the principles of economic stimulation, increased aid to the provinces by handing tax points back over to them, paying back the debt and a zero deficit.

I would like to take this opportunity to mention the work being done by the Quebec minister of finance, Pauline Marois, who will be presenting her budget this afternoon. She will do so with courage, despite the limited openness of her federal counterpart, and the cool reception the federal finance minister afforded her this past weekend.

As the minister is well aware, he has in his coffers a surplus of several billion dollars. Even if he intends to make national security his priority, the battle against terrorism represents an expenditure of somewhere around one billionn dollars. These expenditures moreover, in large part, will not take place before the start of the next fiscal year. He therefore most certainly appears to have sufficient reserves to cope with unexpected expenditures and to sustain the economy.

It is all very fine for the minister to argue that his objective is to balance his budget and pay the heavy bill for national security, for he still has plenty of money left in his sock.

Let us take a closer look at the situation. Despite the economic downturns anticipated in the third and fourth quarters, this year the average growth for 2001 is expected to be 1.5%. At the same time, inflation is going down while unemployment is on the rise. And the Minister of Finance, true to himself, is underestimating budget surpluses. He began the year with an anticipated surplus of about $8.3 billion. An informed person would expect a $12 billion surplus and would not be far off the actual figure.

The surplus stood at $10.7 billion after the first four months of the year and at $11.1 billion after five months. When he talks about having limited leeway, the Minister of Finance is undermining his own credibility.

He really should seriously consider the plan that we presented to him to stabilize the economy. It is a serious and responsible proposal that would not put the country back into a deficit. It is so effective that the minister would have all the necessary leeway to fund security costs, support the economy and even pay off part of the debt. How? The minister challenged us and we met his challenge.

Under the Bloc Quebecois' plan, a mere $5 billion would be used for the following: $1.85 billion to support small and medium size businesses; $1.15 billion for employment insurance; $1 billion for various sectoral initiatives; and $1 billion for security and defence.

This plan is not a public relations exercise to reassure the public. It is a proactive and targeted measure.

I feel the duty to remind Canadians and, more importantly, the Minister of Finance, that history has proven that he is incapable of predicting his deficits because he inflates them artificially and he continually underestimates his budget surpluses.

Quebecers and Canadians should know that according to figures published by Canada's Department of Finance subsequent to the budget years, the federal government has accumulated more than $30 billion in budget surpluses since 1996.

Unlike the government forecasts, the Bloc Quebecois' forecasts were accurate on several occasions. With his misleading forecasts, the Minister of Finance is skewing the true picture of Canadian public finances. Accounting standards being what they are, the minister ends up allocating the entire unexpected surplus to pay off the debt. We understand that repaying the debt is a priority but it is one priority among many others.

Need I remind members that this past year's federal surplus was taken in large part from the pockets of workers? We are talking about $7.5 billion taken from the employment insurance fund surplus. In August 2001 the fund's surplus reached $39 billion.

With respect to forecasting, the Bloc Quebecois believes that, despite negative growth over the next months, the government will have a generous surplus: $15.4 billion with zero growth, and $13.6 billion with a negative growth of 2%.

Being prudent, responsible and realistic, the Bloc Quebecois has decided to go with the most conservative hypothesis: that the surplus will be $13.6 billion.

We are suggesting that the minister go ahead with specific, temporary measures to accelerate investments in order to give momentum to small and medium sized businesses. As requested by the Canadian Federation of Independent Business, which never got a reply from the government, instalment payments for SMBs could be deferred. The government of Quebec has already done this, giving SMBs some breathing space, some liquidity. All the government has to do is pay the interest, which would have a minor impact on the budget. It could also at least reduce EI premiums. We suggest that the minister give businesses a contribution holiday for the next two months.

The effects of these combined measures would be appreciable. They would put $1.8 billion back into the economy; $750 million for workers and even more for businesses.

The Bloc Quebecois is proposing active and passive measures to help unemployed workers. Active measures, such as investing the maximum in active job measures, or 0.8% of the payroll, or $640 million Canada wide, would encourage entrepreneurship and training.

The Bloc Quebecois is also proposing that help be given to those who will bear the brunt of the economic downturn. The minister must immediately implement the recommendations contained in the report tabled by the Standing Committee on Human Resources Development in May and adopted unanimously. To that end, he will have to convince his colleague, the Minister of Human Resources Development, of the wisdom of these recommendations, which deal with older workers, low income workers, young workers, and support to the regions, and which propose increasing benefit periods from 45 to 50 weeks.

Since my time is quickly running ou, I will wrap up my remarks. I also wish to put forward an amendment to the amendment.

It must be clear to members that the minister can do more than merely protect transfers already budgeted. There is room for investment in health, in infrastructures and elsewhere. His budget should tackle the issue of health care.

It would be quite simply immoral of the minister to pour all these surpluses into paying down the debt when the provinces are grappling with health care costs which will not be going down.

In closing, I would like to move as follows:

That the amendment be amended by adding, between the words “tax reductions” and “restore confidence”, the following: “while improving the employment insurance plan”.

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12:10 p.m.

The Deputy Speaker

The Chair declares the amendment to the amendment to be in order.

The hon. member for Lévis-et-Chutes-de-la-Chaudière.

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12:10 p.m.


Antoine Dubé Bloc Lévis-Et-Chutes-De-La-Chaudière, QC

Mr. Speaker, I too would like to congratulate the member for Drummond on the work she does in finance.

Last week I went with her to visit a business in her riding, as I was on my way back to Lévis. I heard from a number of people in her riding who commented on the member's effectiveness and assistance to the businesses in her riding, which until recently had a low rate of unemployment. Despite that, she is especially dedicated.

In her remarks she spoke of support for business. Despite the dynamism of business since the attacks of September 11, some industries have been affected, such as aviation and tourism. I know many people visit Drummondville to see the heritage village and to take part in the festival. These organizations are having difficulty at the moment.

I have a question for my colleague on help to small and medium sized businesses, which create 80% of jobs in Quebec. Could she talk about these measures a little?

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12:15 p.m.


Pauline Picard Bloc Drummond, QC

Mr. Speaker, I thank the hon. member for Lévis-et-Chutes-de-la-Chaudière for his kind words.

It is true that the riding of Drummond has experienced extraordinary economic growth. Small and medium sized businesses in the riding are doing rather well but they are adversely affected by the economic slowdown. They are concerned about this. Most of these businesses are in traditional sectors and they export 80% of their production to the United States. Everyone is concerned about the situation.

We are also affected by globalization. Some businesses invest in our region, which makes up for some layoffs, but people who have worked for 25, 30 or 35 years for a company are losing their jobs because of globalization. A company will shut down and move its operations to Mexico because workers there are paid less to do the same job.

This is very disrupting. Sometimes as many as 400, 500 or 600 workers can be laid off. The textile industry, in particular, is very vulnerable.

These workers include people who have been with a company for 30 or 35 years. These are older people who have worked at the same job throughout their adult life. They have a very hard time qualifying for another job because under our rules they are considered to be older workers. These people, who are in their fifties, often have children who are still in university, which is very costly. Unfortunately, since the federal government abolished the POWA program, they have nothing to turn to.

These measures, which were included in the unanimous report of the Standing Committee on Human Resources Development signed by all committee members, including Liberal members, would have given some hope to those who have been laid off because of the circumstances, the economic slowdown and globalization.

I may not have answered the hon. member's question specifically but I wanted to stress the fact that it is a very important measure for workers and for all Quebecers and Canadians.

The government absolutely must restore this measure. It should be changed, as we said in the past, but it should be restored to support people who lose their jobs.

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12:15 p.m.


Serge Marcil Liberal Beauharnois—Salaberry, QC

Mr. Speaker, I read something today on which I would like the hon. member of the opposition to comment. I share her concerns about older workers. This is a growing phenomenon, particularly concerning workers in industries like the textile industry, whose level of education is not very high.

Would it be totally normal under the circumstances for the government to avoid investing in services per se, since investing in government services will only increase its expenditures in the service sector and not necessarily stimulate employment?

Ought not the government nstead focus its efforts more on supporting the economy, which is supporting business, rather than reinvesting in services?

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12:15 p.m.


Pauline Picard Bloc Drummond, QC

Mr. Speaker, such an idea surprises me a great deal. It has been proven in the health field that investment in health services and health care stimulates the economy.

Everyone knows that poverty has negative effects on health. Often the poor have health needs because of a number of different factors. Investing in health care, investing in resources, that stimulates the economy.

At this point in time, the government really does have the means. The proposed plan is in the order of $13 billion. Those are very conservative figures. Using $5 billion leaves it with $8 billion. The government need not worry. We also know very well how the Minister of Finance operates. All surplus funds go toward the debt, while the provinces are in obvious need.

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12:20 p.m.


Lorne Nystrom NDP Regina—Qu'Appelle, SK

Mr. Speaker, I would like to say a few words this morning on this matter. It is a subject of great importance to the people of Canada.

There is a slowdown in the economy and it started before September 11. September 11 accelerated the slowdown in many ways across the entire world, not just in Canada. Figures released yesterday show that in the last three or four months the economy has slowed down by 0.4% in the United States. That is having a profound impact on Canada as well.

Yesterday the Canadian dollar closed at its lowest level in history. It was down to less than 63¢. A number of years ago the Canadian dollar was worth about $1.04 American. It went down to the range of 73¢ to 74 cents about 20 years ago. Then in 1990-91 it went back up to the range of 83¢ to 84¢. Now it is down to about 63¢.

We are facing a looming economic crisis. There is a decrease in government revenues and we are facing a recession. The recession will probably be a long one and not a short one. We have to figure out what we will do to navigate through these stormy economic times.

During the last five weeks, as a member of the finance committee I have spent a lot of time in prebudget hearings. We have heard from many Canadians from coast to coast. We travelled for two weeks. We were sitting here in Ottawa this morning. We sat here two, three and four weeks ago. We will be sitting next week. We are hearing from all kinds of Canadians and associations.

It is interesting that we hardly hear anything at all now about more tax cuts or paying down the national debt. Most Canadians are saying that the government's number one priority should be security because of what happened on September 11. In addition to security and extra money for security in the RCMP and customs and so on, the other priority should be building a stronger economy and creating jobs for each and every Canadian.

The budget that the Minister of Finance will bring down in a few weeks should concentrate on, in addition to security, how we build a stronger country, how we create more wealth and eventually create more equality in this great country of ours. That has to be the priority of the Minister of Finance when he brings down the budget.

We have to once again make this our country, make this our Canada. We must build a stronger Canada where we have security and prosperity for each and every Canadian.

Since the summer there have been tens of thousands of layoffs. The most recent layoffs were yesterday when 2,000 people received notice at the CIBC that they would be laid off.

What do we have to do? We have to do seven or eight different things. We have to put a lot more money into research and development, training, education and early childhood education for the Canadian people. We must have that long term vision of building a stronger country despite the fact that we are going into a recession or an economic slowdown. We have to have the vision of trying to make our country stronger. One way of doing it is by putting more money into research and development, scientific research and the training and education of our people right across the country.

In the years ahead it is knowledge and education that will become power. Knowledge and education will determine whether or not Canada will be a strong country that has a lot of jobs, as opposed to other places in the world.

Our country has been gradually sinking in the last few years. For a number of years according to the United Nations human resource index, Canada was the number one country in the world in which to live. Now we are number three. If we include our aboriginal people, the number is 63 using the same index.

We have a long way to go in terms of improving the human condition. The place to start is with education, training, skills and innovation. Compared to other countries in the OECD, we are not leading the pack. At the very best we are in the middle of the pack in terms of most of these indices. That is where we start. We should also be investing in infrastructure.

A few weeks ago I had a chance to speak in Peterborough, Ontario. I flew to Pearson airport and I rented a car and drove the 150 kilometres to Peterborough. The 401 is a big highway. I thought it would take about three hours on the road. I pulled into Peterborough four hours later because of the congestion on the 401. The member for Markham knows exactly what I mean. All the trucks and cars sitting on the 401 are spewing pollutants into the atmosphere. We wonder why our country has let its infrastructure deteriorate in terms of rail transport and rapid transit.

Europe and the United States have invested a lot more in rapid transit. A lot more freight is moving by rail than in Canada. We heard in our prebudget hearings across Canada that we should be putting a lot more money into rapid transit to move both passengers and freight across the country. It is good for the environment. It is good for the economy. It is good for the country. It has to be a priority. It has to be an investment.

If that is included in the upcoming budget, we will be creating more jobs, strengthening our country, building our infrastructure and saving our environment. There has to be a vision in terms of how we make our country stronger by investing in rail transport.

The same is true on the prairies. I see the parliamentary secretary across the way. If he were to go to my province he would see the consequences of a decision of the federal government many years ago to allow the railways to abandon rail lines, which forced grain companies to build inland terminals and close down elevators in small towns across the prairies.

The Saskatchewan and Manitoba provincial governments have spent millions of dollars building thin membrane highways to carry cars, small trucks and light vehicles. When the rail lines disappeared and were abandoned, big trucks were moving grain on highways which in some cases are like roads that have been bombed in terms of the potholes, ruts and breakage of the thin membrane.

Now millions of dollars have to be spent building thick membrane highways, but we do not have a national highways policy. We are one of the few countries in the world without a national transportation policy.

The hon. member for Churchill knows what I am talking about. In terms of the country's infrastructure, building highways and roads across the prairies, we need some assistance from the federal government. Because of the mistake made by the federal government many years ago by abandoning rail lines, elevator companies were forced to abandon elevators, which forced farmers to truck grain in big trucks on highways and destroy the roads.

It does not make any sense in terms of what has been done to our environment and to the economic viability of rural Saskatchewan.

A lot more money should be spent on cleaning up our drinking water. Walkerton was an example of that last year. North Battleford, St. John's, Newfoundland, and many aboriginal and other communities across Canada have real problems with drinking water. Money should be put into those areas to build a stronger Canada and have a viable country in the years ahead. Money should be put into infrastructure and research and development, two very important places to start.

Third is the whole area of housing. The federal government pretty well withdrew a long time ago from the whole market of affordable housing, social housing and co-op housing. We have heard brief after brief from people across the country talking about a housing crisis; the price of housing in Vancouver and Toronto, big metropolitan areas; and the lack of affordable housing in many communities.

If we want to kick start the economy, if we want to create jobs, if we want to build a stronger Canada to invigorate the economy, one way of doing it quickly is by putting money into housing. For every average house built an average of 2.8 person years of jobs are created.

If we want to kick start the economy, get people back to work, have people paying taxes and keep people off the unemployment insurance rolls, one way of doing that is by building houses. Let us have a national project to build houses across Canada. That is something that should be done.

In addition, the houses are needed. Many people are living in substandard housing. There is a housing crisis. People cannot afford housing. More and more people are facing homelessness in large cities.

When we walk in downtown Ottawa in the morning to the House of Commons, we run across homeless people. We see this in every major city in Canada today. The situation is getting worse instead of better.

It is training and education. It is infrastructure. It is housing. I will mention a fourth area in which the federal government should invest money: the agriculture crisis facing our farmers today not only on the prairies but across the country.

Farmers on the rural prairies are being forced to leave the land. Social problems are being caused by the economic crisis. Small towns are deteriorating. People are moving into the cities. People are going on to the welfare rolls because of the farm crisis.

I will give one example of the prairie farmer and what the prairie farmer is facing. The prairie farmer now gets about nine cents on the dollar from the federal government for support prices. The prairie farmer in the United States who farms in Montana and North Dakota, just across the border from Manitoba and Saskatchewan, gets about 35¢ or 36¢ on the dollar from the federal government of the United States in Washington.

The farmer in France gets about 56¢ on the dollar from Brussels. With 56¢ on the dollar for the European farmer, 35¢ or so for the American farmer and 9¢ for the Manitoba or Saskatchewan farmer, is it any wonder our farmers are going under?

I call on the federal government to implement a decent safety net program or farm support program for our farmers. It is needed and needed now if we want to protect our rural infrastructure, the production of food and the export of grain.

There is no reason at all we could not be spending an extra couple billion dollars a year without violating WTO rules. This is what experts told us before the committee. That is what the federal government should be doing if it wants to protect the family farm and ordinary farmers.

I will go from agriculture to other resources. I think of the crisis in forestry today. I think of the woodworkers that are being laid off across our country. I think of British Columbia that produces half of our softwood lumber. Softwood lumber and timber exports are our single largest exports, even larger than automobiles.

We saw the tariff levied by the United States. We saw yesterday the increase in the duties and charges on dumping Canadian lumber into the United States. Our government has to take a very strong stand to make sure these duties are rolled back so that we have a level playing field for Canadian workers in the forestry and lumber industries. That is how to create jobs.

On one hand the Americans applaud us for being great friends in their campaigns, but on the other hand their policies are laying off thousands of Canadian men and women across the country, particularly in the province of British Columbia. Our government must take a strong stand in doing what it can to make sure that this unfair practice by the United States is stopped right away.

These are some of the things that we have to do. If we are to get the country back on its feet, if we are to have a stronger Canadian dollar in terms of its purchasing power for the things we import, we have to build a stronger economy and a stronger country.

I am concerned about the erosion of our country, the sellout of our economy by more and more things going to the United States. Just last June, for example, the federal government decided to privatize the administration of Canada savings bonds to a company based in Texas.

I ask the parliamentary secretary why the government would do this. Some 60, 70 or 100 people who were doing this before in the public sector were laid off. These jobs are now in the private sector with call centres in Mississauga and Ottawa. Why privatize what was done by the Bank of Canada to Electronic Data Systems headquartered in Texas?

Canada savings bonds are a great symbol of our nationalism. I do not think the Americans would ever do this. Yet we are doing it as a country.

This is just one of many examples of what we are doing wrong: how we are selling out our country, how we are selling out the soul of our country instead of creating a country where we do more things for ourselves; where we do more upgrading of our natural resources; where we do more manufacturing, more research, more development, more education and produce more of our own commodities. Those are some of the things that are extremely important.

Then there is health care. We heard this morning from the Canadian Medical Association and the national nurses union at the finance committee in the railway committee room about the problems in health care and how the federal government cutbacks in 1995 have hurt our health care system and put it in jeopardy.

I am reminded that the medicare idea was brought to Canada by such pioneers at Tommy Douglas, Stanley Knowles and people in the CCF and the NDP who back in the 1960s forced the minority Liberal government led by Lester Pearson to implement national health care.

We were told at that time that health care was funded on a 50:50 basis by the federal government and by the provinces so that the federal government could have a publicly administered system, a single payer system with some clout in terms of uniformity across the country in the delivery of services of health care.

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An hon. member

Now look what they have done.

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Lorne Nystrom NDP Regina—Qu'Appelle, SK

As my friend from Vancouver says, look at what they have done. The Liberals must be hanging their heads in shame about what their party and what their government have done to health care. The cash transfers have been cut back. What does the federal government fund now? Is it 14, 15, 16 or 17¢ on the dollar as cash transfers to the provinces?

I know the parliamentary secretary says they are getting tax points, but he should have heard the CMA and the nurses this morning when they talked about tax points. If tax points are transferred to the provinces to cover some of the costs of health care, at the very best about 30% to 35% is being covered. However the power of the federal government is also being forfeited to enforce national standards. If there is a transfer of cash the federal government can withhold the cash to the provinces for implementing user fees, setting up private clinics or violating the Canada Health Act.

If Ralph Klein decides to violate the Canada Health Act and the federal government is only putting about 13% or 14% of the cash into an economy as strong as that of Alberta, Ralph Klein can just thumb his nose at the federal government.

I know the parliamentary secretary had to be here this morning when I was at the finance committee, but if he were there to hear the CMA, the nurses union and other people express their concern that the federal government must eventually fund once again half the cost of medicare or health care in terms of cash transfers, I am sure he would be moved by the argument. He would lobby the Minister of Finance to mend his conservative ways and go back to a national health care program eventually funded 50:50 by the provinces and by the federal government.

That is what we need. We need a strong federal government with a vision of making this our Canada, making this a stronger country, making this a country of which we are very proud. That is what should be happening in the budget that will be before us in the next month.

We should be leading the way in terms of a new international vision or a new world order to come to grips with some of the problems we have today because of starvation, famine, the AIDS pandemic in Africa and the like. We should be leading the way by articulating a vision of an international economic development organization that starts putting money into poor countries of the world and a vision of a modern day Marshall plan for the development of places like Africa and to make sure that places like Afghanistan have a chance to develop and their people have quality of life, some food to eat, some medical services, some housing and some education.

Those are the kinds of things we should be doing internationally. When the Minister of Finance goes to the IMF, the World Bank, the G-20 and other international fora, he should be speaking proudly of the motion we passed in the House two years ago to endorse the idea of the Tobin tax, a small tax on the speculation of currency around the world. I proposed that private member's motion which was carried by the House in a vote of 164 to 83 in March 1999.

This would go a long way to curbing some of the speculation on currencies we see today. Speculation is one of the problems we are having with our dollar: speculation on our dollar and on other currencies and the retreat of currencies into the United States as people visualize it as a bigger and stronger economy.

Our minister should have an international vision of some order and some regulation in terms of currencies in the world, a vision of putting more and more money into international development. If we had a Tobin tax in the world today where more than $1 trillion a day is speculated on currency markets, a small tax of 0.1% to 0.5% would create an international development fund of several hundreds of billions of U.S. dollars each and every year.

Let us imagine the kind of world we would have if we could spend tens of billions of dollars a year on international development.

Today we spend about $10 billion a year on the United Nations and the world spends about $800 billion U.S. on armaments and military equipment. We should flip those priorities around. Our country should be leading the way with that kind of international economic and social vision, which would help make this country strong.

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Serge Marcil Liberal Beauharnois—Salaberry, QC

Mr. Speaker, I would like to make a comment to follow up on my earlier question.

I would like to say that in today's issue of Le Quotidien , November 1, Minister Guy Chevrette, a member of the Parti Quebecois government in Quebec City, said that the budget was designed to help boost the economy:

Guy Chevrette promises that Ms. Marois' budget this afternoon will help boost the economy.

Without giving away any secrets, the minister of transportation indicated that the emphasis would be placed on creating and maintaining jobs, and not on increasing spending for services.

People will be critical because we are not increasing spending on services, but in order to act as a responsible government, we must support the economy, which is the government's source of revenue.

This was the context in which I asked the question of my colleague. I wanted to hear the Bloc Quebecois' opinion on its counterpart in Quebec City, the Parti Quebecois, regarding the direction that Canada's finance minister should give to his budget.

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The Deputy Speaker

It is not for me to interpret the comment. I will give the hon. member for Regina--Qu'Appelle an opportunity to respond before I recognize another member.

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Lorne Nystrom NDP Regina—Qu'Appelle, SK

Mr. Speaker, the member asked me my opinion on the Bloc Quebecois' perspective. I am a proud New Democrat in this House of Commons. I have no idea about the Bloc Quebecois' perspective. He should ask this question to the Bloc Quebecois, not the NDP.

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Libby Davies NDP Vancouver East, BC

Mr. Speaker, I congratulate the member for Regina--Qu'Appelle on a very excellent presentation. It called on the government to show the kind of vision, transparency and scope that we need to look for in a federal budget both internationally and nationally. He laid out the very critical need to build not only our physical infrastructure but also our social infrastructure. We have built up a social deficit as a result of successive cutbacks.

The member stated that we need to invest in training and education and that we need to ensure that post-secondary education is accessible to all young people across Canada without the burden of a massive debt. Student debt load has risen enormously. We must have accessible post-secondary education if we expect to perform in the future as a knowledge based economy. Would the hon. member care to comment on that?

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Lorne Nystrom NDP Regina—Qu'Appelle, SK

Mr. Speaker, that is a very good question. We have created a huge human deficit in Canada. The first nations population is a perfect example of that.

The United Nations human resource index rated us as number three in the world in terms of the best country to live. Using the same index, our first nations people are number 63 in the world, somewhere along the lines of many developing countries. We need to look at the abject poverty and the lack of opportunities among the first nations people. It is not a very good commentary on what our vision has been in terms of having an inclusive society and creating more equality. That is probably the best example of where the lack of opportunity has been.

Representatives of the CMA told a committee this morning that we have 50 aboriginal medical doctors in Canada, yet we have well over one million aboriginal people. They pleaded with us to ensure more spaces are made available for aboriginal people to be trained as medical doctors and registered nurses. Getting rid of the human deficit has to be a priority.

We must start with people like the first nations and the Metis who had tremendous problems in terms of being treated equally by our country. We can begin by gradually eliminating tuition fees and other barriers toward post-secondary education. That is the kind of vision we need, one that invests in people and human resources to create a strong country and a strong economy with greater equality of opportunity for everyone.

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Markham Ontario


John McCallum LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, the member for Regina--Qu'Appelle made thoughtful comments overall. I am not agreeing with every word but they were positively enlightening compared to the two speakers who preceded him.

It is sometimes said that if one has 18 priorities, one has no priorities. The member listed about eight initiatives that he would like the government to focus on. It would be interesting to know, in order for me to transmit this information, the order of his priorities. Is it the same as the order in which he presented them? If there is not enough money to do everything, it might be a good idea to know which priorities are the more important ones. Could he tell us what his first three top priorities might be?