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House of Commons Hansard #129 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

Order in Council AppointmentsRoutine Proceedings

10:05 a.m.

Halifax West Nova Scotia

Liberal

Geoff Regan LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, I am pleased to table today, in both official languages, a number of order in council appointments made recently by the government.

Government Response to PetitionsRoutine Proceedings

10:05 a.m.

Halifax West Nova Scotia

Liberal

Geoff Regan LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, pursuant to Standing Order 36(8) I have the honour to table, in both official languages, the government's response to several petitions.

Report on Rural CanadaRoutine Proceedings

10:05 a.m.

Parry Sound—Muskoka Ontario

Liberal

Andy Mitchell LiberalSecretary of State (Rural Development)(Federal Economic Development Initiative for Northern Ontario)

Mr. Speaker, I am pleased to table, in both official languages, the second annual report to parliament on rural Canada entitled “Enhancing the Quality of Life for Rural Canadians”.

World War IRoutine Proceedings

10:05 a.m.

Saint Boniface Manitoba

Liberal

Ronald J. Duhamel LiberalMinister of Veterans Affairs and Secretary of State (Western Economic Diversification) (Francophonie)

Mr. Speaker, hon. colleagues, I rise in the Chamber to speak about the first world war and the fate of some Canadian soldiers, a fate that has been essentially forgotten in the pages of history.

For the young nation of Canada, the promise and optimism that infused the dawning 20th century was abruptly cut short by the first world war. No one anticipated such carnage, or that we would soon be sending young citizens into a war that would see 65 million people from 30 nations take up arms, where 10 million people would lose their lives and 29 million more would be wounded, captured or missing.

Never before had there been such a war, neither in the number of lives taken, nor in the manner of their taking. New weapons would turn fields of battle into slaughter grounds, while the rigours of life in the trenches would kill many of those who escaped bullet or bayonet.

This “war to end all wars” challenged our small country of 8 million to its limits. Almost 650,000 served in the Canadian Forces in the Great War. Over 68,000—more than one in ten who fought—did not return. Total casualties amounted to more than one third of those who were in uniform. Thousands came home broken in body, mind, and spirit.

The service of Canadians in uniform was as remarkable as it was distinguished. History records their sacrifice in places whose names resonate even to the present day. Battle names such as Ypres, The Somme, Vimy Ridge, Passchendaele and Amiens.

Those who lived then and the historians who followed would declare that Canada came of age because of its actions and ingenuity during World War I.

But where history speaks of national sacrifice and achievement, it is too often silent on the individual stories of triumph, tragedy and terror of those who fought and died on the terrible killing fields of France and Belgium.

Those who went to war at the request of their nation could not know the fate that lay in store for them. This was a war of such overwhelming sound, fury and unrelenting horror that few combatants could remain unaffected.

For the majority of the Canadians who took up arms and paid the ultimate sacrifice, we know little of their final moments, except that they died in defence of freedom.

Today I want to talk about 23 of our fallen. I would like to tell the House about these soldiers because these circumstances were quite extraordinary. These 23 soldiers of the Canadian Expeditionary Force occupy an unusual position in our military history. They were lawfully executed for military offences such as desertion and, in one case, cowardice.

We can revisit the past but we cannot recreate it. We cannot relive those awful years of a nation at peril in total war, and the culture of that time is subsequently too distant for us to comprehend fully.

We can, however, do something in the present, in a solemn way, aware now, better than before, that people may lose control of their emotions, have a breakdown for reasons over which they have little control. For some it would have been known today perhaps as post-traumatic stress disorder.

To give these 23 soldiers a dignity that is their due and to provide a closure for their families, as the Minister of Veterans Affairs on behalf of the Government of Canada, I wish to express my deep sorrow at their loss of life, not because of what they did or did not do but because they too lie in foreign fields where poppies blow amid the crosses row on row.

While they came from different regions of Canada, they all volunteered to serve their country in its citizen-army, and that service and the hardships they endured prior to their offences will be recorded and unremembered no more.

Allow me to enter their names into the record of the House: Quartermaster Sergeant William Alexander, Bombadier Frederick Arnold, Private Fortunat Auger, Private Harold Carter, Private Gustave Comte, Private Arthur Dagesse, Private Leopold Délisle, Private Edward Fairburn, Private Stephen Fowles, Private John Higgins, Private Henry Kerr, Private Joseph La Lalancette, Private Come Laliberté, Private W. Norman Ling, Private Harold Lodge, Private Thomas Moles, Private Eugene Perry, Private Edward Reynolds, Private John Roberts, Private Dimitro Sinizki, Private Charles Welsh, Private James Wilson and Private Elsworth Young.

We remember those who have been largely forgotten. For over 80 years, they have laid side by side with their fallen comrades in the cemeteries of France and Belgium.

I am announcing today in the Chamber that the names of these 23 volunteers will be entered into The First World War Book of Remembrance along with those of their colleagues. Adding the names of these citizen soldiers to the pages of this sacred book, which lies in the Memorial Chamber not far from here, will be a fair and just testament to their service, their sacrifice and our gratitude forevermore.

Lest we forget.

World War IRoutine Proceedings

10:10 a.m.

Canadian Alliance

Roy H. Bailey Canadian Alliance Souris—Moose Mountain, SK

Mr. Speaker, on behalf of Her Majesty's Loyal Opposition, we fully support what the minister has done today. We believe this is not only owed to our veterans but that it is one of the ways in which the great country of Canada can avoid covering up or trying to hide and instead can give recognition where recognition is due.

Canada can be proud of its participation in World War I and of its significant contribution to world peace and political stability. It was also a time when we became a nation. In World War II we were one step ahead in lending support to the allies. Not only that, we made a defining difference to the outcome of both wars.

Many Canadians do not realize that 94 of our Canadians received the Victoria Cross which is awarded for bravery, a daring act of valour or self-sacrifice in the presence of the enemy. Even with our small population, Canada received about 10% of all honours issued worldwide. Let no one ever doubt that Canadians were among the very bravest in the world.

However, as the hon. minister has noted, when we speak of the horrors of war we describe experiences and traumatic events that, even for the best of our soldiers, were very hard to overcome. Every soldier handled the horrors and terrors to the best of their ability. Yet, not unlike today, there were some who were not able to cope with the events.

Today we have toned down the language that was used at that time. What is sometimes referred to today as post-traumatic stress disorder was simply called shell shock or some other negative term. Before that, some soldiers were simply labelled as cowards or deserters but they were not deserving of those titles. That is what the hon. minister has done in bringing this issue forward. Whatever the label, whatever the cause, there exists in our history what might be called a dark spot, but today that dark spot has been erased forever.

Twenty-three of our soldiers who were executed in a foreign land and whose graves occupy foreign soil are today receiving what is rightfully theirs: the formal recognition of their deaths recorded forever in The First World War Book of Remembrance .

With this act it is my hope and indeed the hope of the opposition that closure will be given to the families of these individuals to this event in history.

World War IRoutine Proceedings

10:15 a.m.

Bloc

Louis Plamondon Bloc Bas-Richelieu—Nicolet—Bécancour, QC

Mr. Speaker, on behalf of the Bloc Quebecois, and the entire Quebec nation I am sure, I would like to express our satisfaction with the acknowledgement of the involvement of these 23 soldiers in World War I.

These 23 young men volunteered to defend freedom. They took part in a cruel war, and one we realize today was completely pointless: 30 countries, 10 million dead, 29 million wounded. These young men came to question certain decisions, to wonder about the appropriateness of certain commands.

For daring to think, for daring to question, the cruel law of war , instead of trying to understand them, had them executed, forgetting the months of sacrifice they had given in the service of their country.

Today we are correcting that error, at least in some part, by entering their names among our heroes in the Book of Remembrance.

I would like to encourage their descendants to be proud of these men. I would also like to extend to them the condolences of my party and myself.

I would like to remind them of the words of the great French author, Alexandre Dumas, “Those whom we have loved and lost are no longer where they were, but they continue forever to be wherever we are”.

World War IRoutine Proceedings

10:15 a.m.

NDP

Peter Stoffer NDP Sackville—Musquodoboit Valley—Eastern Shore, NS

Mr. Speaker, it gives me great pleasure on behalf of the federal New Democratic Party across the country to welcome the veterans affairs minister's comments today in the House of Commons and let him know we support without question the induction of the names of these 23 brave men into the hallowed book of remembrance on Parliament Hill. It is a wonderful act. It is long overdue, but we are glad some closure can be brought today.

One cannot help but think about soldiers, those who die on the battlefields and witness the horrors of war, and notice the courage and bravery these men and women have shown throughout the history of our country.

Courage and bravery are also shown in this room today by the Minister of Veterans Affairs who brings great honour and courage to his department. On behalf of the New Democratic Party I wish him and his family the very best of the holiday season and better health for the near future. May God bless him.

As one who comes from a family liberated by Canadians in World War II, I will also mention the sacrifices made by Canadians. When a young man or woman signs up they do not know what it must have been like until they get there and smell, feel and see the horrors.

Who in the Chamber could say they would not show a bit of cowardice or challenge to authority if someone told them to get out of a foxhole and run toward a bunch of shooting arms in their way? How many of us would have the courage to do that? Unless we are in that situation we do not know what goes through the mind of a young man or young woman.

The names of these 23 men have a rightful place in the book of remembrance. We are proud to stand here today with the Minister of Veterans Affairs to show our support not only to him and the department but to the families of these men. As he said, lest we forget their names, forever they will be honoured in the House of Commons.

World War IRoutine Proceedings

10:20 a.m.

Progressive Conservative

Elsie Wayne Progressive Conservative Saint John, NB

Mr. Speaker, I thank the hon. minister for what he has done today in the House of Commons for these 23 first world war veterans.

It is an honour to rise today and pay tribute to these men. When the Great War began in August 1914, Canada was still in its infancy. In many ways the volunteers who joined the Canadian expeditionary force reflected Canada itself: young, full of innocence and eager to prove themselves.

None of the soldiers, regardless of what part of Canada they came from, could have been prepared for what they encountered. The barrages of artillery and constant machine gun fire that surrounded them always left them wondering “Why am I here? Only for my people back home in Canada and around the world”. They constantly waited for the whistle to blow that would send them across the mud fields of the Somme, Vimy Ridge or Passchendaele.

My mother's only brother, my uncle Samuel Cook, was one of those who was in the first world war. He was shot. The bullet went through his neck, through one side and out the other. However he was one of those who came home.

I had the honour and privilege of visiting Vimy and seeing all the names of those who were lost in the war. Their bodies did not come home. Their names are on the monument. These 23 men walked past friends who had fallen on barbed wire fence and much too often had fallen to death. In the four years of fighting 10 million soldiers were killed and 20 million were maimed.

The war was a psychological nightmare for all. We are not here to debate the 23 soldiers who were executed for military offences. We are here to remember and honour them. They experienced horrors we can only imagine. Even then it is beyond our grasp. We are aware now that the horrors and subsequent reactions were beyond their control. We cannot go back in time to help them through the horrors but we can give these 23 soldiers a dignity that is their due. They were Canadians. They were soldiers. They were men who made sacrifices. Their names should now be included in our The First World War Book of Remembrance , and rightfully so.

I thank the minister and the House, particularly at this special time of Christmas. Lest we forget.

Committees of the HouseRoutine Proceedings

10:20 a.m.

Liberal

Sarkis Assadourian Liberal Brampton Centre, ON

Mr. Speaker, I have the honour to present, in both official languages, the fifth report of the Standing Committee on Fisheries and Oceans.

Pursuant to Standing Order 108(2), the committee completed a study on marine infrastructure, small craft harbours.

PetitionsRoutine Proceedings

10:25 a.m.

Liberal

Bryon Wilfert Liberal Oak Ridges, ON

Mr. Speaker, pursuant to Standing Order 36, I present to the House a petition on behalf of a number of Canadians concerning the issue of protecting people with disabilities and the Latimer decision of the Supreme Court of Canada.

The petitioners ask the House under subsection 15(1) of the charter of rights and freedoms to uphold the Latimer decision of the Supreme Court of Canada.

PetitionsRoutine Proceedings

10:25 a.m.

Liberal

Ben Serré Liberal Timiskaming—Cochrane, ON

Mr. Speaker, I present a petition on behalf of residents of my riding of Timiskaming--Cochrane. They request that the Parliament of Canada ban human embryo research and direct the Canadian Institutes of Health Research to support and fund only promising, ethical research that does not involve the destruction of human life.

I would like the record to show that I agree with the petitioners.

Questions on the Order PaperRoutine Proceedings

10:25 a.m.

Halifax West Nova Scotia

Liberal

Geoff Regan LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, I ask that all questions be allowed to stand.

Questions on the Order PaperRoutine Proceedings

10:25 a.m.

The Deputy Speaker

Is that agreed?

Questions on the Order PaperRoutine Proceedings

10:25 a.m.

Some hon. members

Agreed.

Questions on the Order PaperRoutine Proceedings

10:25 a.m.

The Deputy Speaker

I wish to inform the House that because of the ministerial statement government orders will be extended by 19 minutes.

The House resumed from December 10 consideration of the motion that this House approves in general the budgetary policy of the government.

The BudgetGovernment Orders

10:25 a.m.

Canadian Alliance

Jason Kenney Canadian Alliance Calgary Southeast, AB

Mr. Speaker, it is an honour to resume debate on the motion with respect to the budget following last night's adjournment of proceedings.

The budget presented by the hon. Minister of Finance yesterday represented a time of choosing for the government, a time to set things right and get priorities straight. However this was a budget that occurred 652 days since the previous accounting to this place on behalf of the Government of Canada, the longest stretch ever in the history of our parliament without an accounting of the nation's finances. That in itself is unacceptable.

It is doubly unacceptable that the government was forced into finally presenting a budget plan to the House because of the onset of an unexpected international security crisis and a recession which has come to fruition under the watch of the finance minister. It is unfortunate that we find ourselves in a position where the government had to scramble to put together something that would have the appearance of a fiscal plan at a time of crisis and uncertainty.

When we look at the budget it is quite clear that the government had an opportunity to get its priorities straight and make difficult decisions to provide adequately for national and economic security. Those were the tests it faced in the preparation of the budget. It failed those tests. It failed to get its priorities straight. It failed to make the difficult decisions and provide adequately for our national and economic security. The government has failed the test.

It is quite clear when we look at the budget that the predictions offered by the senior communications officer in the Prime Minister's Office bore fruit when she said in an unprecedented shot at the finance minister that “This budget will be written by one person. It happens to be the Prime Minister of Canada, not the finance minister”. Apparently that came from Francoise Ducros, director of communications in the Prime Minister's Office.

If indeed it is true that it was the Prime Minister who wrote the budget, and it appears to be, that might explain why it took 652 days. It certainly explains why the budget so closely resembles the tax and spend and spend and spend budgets of Liberal governments during the vintage years of the Prime Minister when he was finance minister in the late 1970s and a member of cabinet in the early 1980s.

We have not seen spending increases in a federal budget at the levels proposed since the heady days when the current Prime Minister was part of a government which helped drive Canada into a deep, deep fiscal hole from which we are still trying to recover.

As I said last night, if the budget were to have a title it would be “2001: A Waste Odyssey”. We have seen a proposal in the budget for an increase in program spending in the coming year of ostensibly 9.2% or $11 billion. That is the largest program spending increase presented to this place in living memory. It is a 9.2% increase.

To put it in perspective, in a year when the economy is projected to grow at only 1.1% the government is proposing a spending increase nine times as large as the rate of growth in the economy and about four times the combined rate of growth in inflation plus population. That is irresponsible. It is unsustainable.

As I said, the 9.2% program spending increase proposed here is only ostensibly 9.2%. When one looks more closely through the fog of the budget numbers as presented by the finance minister it turns out the spending increase next year will more likely be in the range of 10.6%, moving spending up to $133 billion.

Why do I say that? I say that because what was known as the contingency fund, the rainy day cushion against downturns in the economy, has been reduced from $3 billion to $1.5 billion and even that $1.5 billion has been pledged to expenditures in other areas. The government expects to spend that money if in fact it does not end up consuming what is left of the contingency fund to finance an unexpected downturn in revenues as a consequence of the Liberal recession.

We can expect a 10.6% increase in spending next year. That follows from an $8 billion or 8% increase in spending in the current year or a combined spending in two years of over 18%. That is unprecedented in the fiscal annals of this parliament.

The spending far outstrips the productive capacity of the nation. We do not know whether the government will stop there. Its track record on spending is a business and its spending is out of control.

Let me give the House an example for the current fiscal year 2001-02. In the fall 1999 budget the finance minister stood in his place and projected that spending in the current fiscal year to end next March would be $121 billion. He then said in the fall 2000 budget that spending in the current fiscal year would be $130 billion. He now advises us that spending in the current fiscal year will be $136.6 billion. If he plays games with the contingency fund as he suggests, spending would likely be closer to $140 billion. That is $19 billion more than initially projected and $19 billion off budget.

The point of a budget is for the finance minister to give parliament a transparent picture of the fiscal plans for the nation of the executive branch and to allow parliament to pass judgment on it. How can we pass judgment on budgets from the government knowing that its track record is to overshoot spending projections by as much as $19 billion or 20% for a given fiscal year?

I submit that the 10.6% budgetary increase projected for the 2002-03 fiscal year would likely outstrip anything we have seen in the fiscal history of the nation if the government follows the precedents it has set.

All of that would be understandable in certain circumstances. Increasing spending in and of itself is not necessarily a fiscal evil if there were a legitimate national emergency. One can make that the case if we were to find ourselves in emergency-like circumstances following the end of our holiday from history on September 11.

We in the official opposition have been the most vocal and consistent voices of fiscal prudence and discipline. We have recognized the need for additional security spending in the current environment.

Let me anticipate one of the objections from some of my colleagues opposite by saying that objecting to huge increases in overall spending does not mean that we are objecting to increased security spending. What we are objecting to is the government's total abject failure to set priorities. That is the problem.

I am disappointed in the Minister of Finance for whom I have some considerable regard. On September 17, 2001, in an article in the Toronto Star the Minister of Finance was quoted as saying:

—and Ottawa is reviewing its $124 billion in spending on an item by item basis to see where reductions can be made. We are looking at what are the lower priority areas and how do we make sure that we can fund the higher priority areas.

That was a sensible remark. I was encouraged when I heard it because it echoed what we in the Alliance had been saying for years: the idea of reallocating, setting priorities and cutting in low priority areas.

This sentiment was endorsed overwhelmingly by the report of the Standing Committee on Finance. The official opposition concurred in that report partly because it called for the reallocation of spending from low priority areas to high priority areas. The report stated:

To the extent that new spending on security and defence could lead to a deficit, the government must balance this new spending with spending cutbacks elsewhere. The committee recommends that the government make a firm commitment to balanced budgets.

This is not an official opposition publication although we concurred in this recommendation. This is a recommendation from every government member on the Standing Committee on Finance including the Parliamentary Secretary to the Minister of Finance. They understood, as did virtually every business group and responsible think-tank that appeared before the finance committee, that in difficult times difficult decisions and choices must be made. Yet not one cent of reallocation, not one dime of reduced spending in wasteful areas, is found in the budget.

What that says to us is that in the exercise of setting priorities the government has no priorities: every dollar is of equal priority; additional resources for the frontline of our military are equally important as grants and handouts to TV and film producers; additional resources for the provinces to improve the quality of and access to public health care are equally important as the billions of dollars in grants and handouts and corporate welfare provided by the Minister of Industry; and additional resources for our police, security and intelligence agencies are equally important as the hundreds of millions of dollars of waste detailed in the recent auditor general's report.

Andrew Coyne, a leading commentator on fiscal matters in Canadian journalism stated in today's National Post :

At no point in the entire document is a single area identified where the government might reduce spending. Not one. Everything, it seems, is a priority.

I studied formal logic in college and that is a non-sequitur. Priorization means that certain things are identified as being more important than others. Yet the government has utterly failed in that exercise. A bar was set by its own Standing Committee on Finance, by every major business group in the country and by all clear headed people. The government has imperiled the fiscal health of the nation by failing to get its priorities straight.

We have given the government whatever small share of credit is due to it for eliminating the large deficits inherited from the Mulroney government. However the vast majority of the deficit elimination which occurred between 1993 and 1997 was attributable to increased revenues through higher tax rates and working families putting in more hours and working harder to pay more to the government. Canadians were principally responsible for giving the government a windfall in revenues through which it moved toward a balanced budget.

The government essentially made the wrong choices in terms of spending. The vast majority of its program spending cuts were reductions in transfer payments to the provinces to finance the top public spending priority, namely health care.

It cut departmental spending by less than 4%, except in the Department of National Defence, RCMP and CSIS, the frontline agencies of national security, which it cut by over 20%. It was a government that made wrong decisions. It cut health care, national security and raised taxes.

Nevertheless we did manage to find ourselves, thanks to economic growth and free trade with the United States, in a surplus position for the last four fiscal years. The budget imperils that hard won taxpayer surplus through fiscal irresponsibility.

Many Canadians may not be acquainted with the Byzantine accounting methods of the government. Let me offer a brief tutorial on how the government has engaged in its fiscal planning in recent years.

The Minister of Finance developed an innovation starting in the mid-1990s. It was based on an honest analysis of the grotesque fiscal failure of the Mulroney government. The finance minister used to come in with rosy scenarios that were blown out of the water by economic circumstances. We always ended up, year after year from 1984 to 1993, exceeding the projected deficit. That reduced international and market confidence in the fiscal credibility of the government.

The current Minister of Finance sensibly proposed that the government adopt as a line item in its budget something known as a contingency factor. He set it at about $3 billion a year and it was supposed to increase over the years. He added a second prudence line, known as the prudence factor, which was to take into account potential fluctuations in national income and the growth of the economy.

These two factors together were to act as a fiscal cushion should the government's projections not be realized, should revenues fall short of their projected level and should expenditures outstrip those that were planned, which incidentally happened in every year of the government's mandate.

The prudence and contingency factors, cumulatively representing $4.5 billion in the last fiscal year, would soften the blow and prevent us from moving into a deficit position. Further, if the combined prudence and contingency factors were not spent by the end of the fiscal year, they would be applied to reducing the national debt. That has helped some of the nominal reductions in debt we have seen over the past two or three years.

However the whole idea of prudence and contingency is to have a fiscal reserve when times get tough. We do not need a fiscal prudence plan for good times. We need it when the economy turns sour as it currently has under the government's leadership. Yet the government has decided at precisely the wrong moment to make the wrong decision to eliminate the prudence factor and to cut the contingency factor to $1.5 billion.

If the government's projections for the economy were slightly off we would find ourselves in an underlying deficit. However the government applied a new reasonable term called the planning surplus or planning deficit. It appeared in all budget documents since 1996. If the government's surplus were to exceed the combined value of the prudence and contingency factors it would then be known as a planning surplus.

Indeed in this place last spring my colleagues will recall that the Leader of the Opposition and I and others raised questions day after day with the Minister of Finance about projections coming from independent private sector economists indicating that the government was headed for a planning deficit; that is to say, it would have to eat into the contingency and prudence factors to stave off an actual deficit.

The finance minister danced, denied and did not fess up, but what has happened is quite clear. By failing to make tough choices, by failing to set priorities, by allowing the Liberal leadership campaign to take over the spending agenda of the government, by allowing spending to grow at a grotesque rate of 18% over two years, the government is now in a planning deficit and is skating oh so close to an actual deficit. It is skating far too close to threatening the progress that Canadian taxpayers have made over the past years in the hard won fight against the deficit.

In fact, there will be a combined planning deficit of $6.2 billion in the fiscal years 2001 through to 2003. What we projected in the spring has come true. I believe the finance minister's denials have been discredited along with much of his credibility as a fiscal manager.

Let me make another brief note about the way the government presents its budget. This may seem to some an arcane point, but it is critical to the ability of parliament and Canadians who are concerned about such matters to properly assess the fiscal progress of their government.

It is very interesting. If we look through the budget document, I would submit that about 80% of it is produced by the government's propaganda department or sales and marketing. It has nothing to do with transparent presentation of the fiscal plans of the government. There are selectively chosen charts and tables that the government thinks would be helpful in presenting the most positive gloss on its fiscal story.

However, in the document, some plans and programs are presented on a one year horizon, others on a two year horizon, some on a three year horizon and occasionally we actually see five year numbers creep in when the government needs a five year horizon, for instance, to squeeze in its tax plan or its security spending increases.

If this was a public company and the finance minister was its treasurer, and he presented a document of this sort, I submit that the auditing firm reviewing a document like this would throw the book right back at the treasurer. The board would fire him and he would end up making licence plates in a provincial institution. This is not a document presented according to generally accepting accounting standards for the public sector.

One of the central functions of parliament is to give the representatives of the people an opportunity to provide the checks and balances to provide scrutiny against the power of the purse exercised by the crown, vested in the cabinet. We essentially are unable to do so because we do not know where the government is going in five years, as I already have said. In the past three fiscal years alone its combined overspending, above and beyond what it had projected, was $13.2 billion. For the current year alone, it is as much as $19 billion.

Because of our concern about the fiscal direction of the government, made yet more acute by the planning deficit presented in yesterday's budget, we need to see consistent, transparent, five year projections of the government's fiscal plan. We made this point last spring. The official opposition has done its homework. At the finance committee on May 17, the hon. Leader of the Opposition demanded a commitment from the finance minister that he would provide a five year forecast in this budget to allow for full transparency.

Guess what the finance minister said? “We will be providing five-year numbers in the fall, Mr. Day”. That commitment, “preference for five-year planning horizon”, was the preference of the Standing Committee on Finance. Again, the finance minister has flip-flopped on his commitment to provide transparent projections and has rejected the recommendation of his government dominated finance committee.

This may seem like an arcane point, but it is not. Last spring we issued a warning about a planning deficit, which has been borne true. On behalf of the opposition, today I issue a warning that the government is driving us toward not just a planning deficit, but an actual deficit in the out years of its fiscal plan. We want full accounting. We demand it and that is our right in this parliament.

This failure to get priorities straight has not only jeopardized the fiscal health of the country, not only are we again threatened by a deficit, but the government has utterly failed in this document to address one of the largest and most pernicious factors in our long term economic slide as a nation. That is our national debt of $547.5 billion which is still costing us nearly $41 billion in interest or $7,500 in interest payments paid through taxes for an average family of four. It is still the third highest level of public indebtedness in the OECD and the second highest level of indebtedness in the G-7, second only to the infamous fiscal basket case of Italy.

This is not sustainable and yet we see in the budget document not one patina of debt reduction. I refer to page 24, the fiscal outlook, wherein the finance minister projects a net public debt in 2000-01 of $547.4 billion; in 2001-02, $547.4 billion; 2002-03, $547.4 billion; and a net public debt in the year 2003-04 of $547.4 billion. There is not one dime in debt reduction for a country with the third largest debt in the developed world, the second highest debt in the G-7.

This is wrong. The parliamentary secretary is absolutely right. It is wrong for the government to have dropped debt reduction as a priority. Government members say that the debt will shrink as a percentage of national income over time and so on.

I see the finance department is calling my colleague across the way with talking points.

The BudgetGovernment Orders

10:50 a.m.

An hon. member

He needs a lot of help.

The BudgetGovernment Orders

10:50 a.m.

Canadian Alliance

Jason Kenney Canadian Alliance Calgary Southeast, AB

He needs help. Debt reduction is one of the top priorities of Canadians for obvious reasons and should not be a discretionary matter.

Again, those of us in the official opposition should take some pride for being a bit prophetic about these things. When we proposed, as we have for years, the idea of a legislated debt reduction plan in law with an annual requirement of at least $6 billion in debt reduction, we did that for a purpose. We understood that when times got tough, Liberal politicians were likely to let debt reduction fall right off the chart. That is what they have done.

We have been completely vindicated in our call for debt reduction legislation, which we proposed would require, at bare minimum, an annual debt reduction of $6 billion plus 75% of any unanticipated surpluses. This is legislation that has been adopted and which has worked practically in Alberta, Manitoba and Ontario. There are other less stringent statutes in other legislatures, which have been very effective.

The government has given us an object lesson in the need for a debt reduction strategy and today we renew our call for that kind of statutory fiscal discipline so that an irresponsible finance minister does not have the discretion to pass onto future generations a burden which belongs to us. It is a moral responsibility and one which we must take up.

The failure to pay down the debt, the risk posed of a future deficit and the reality of a planning deficit imperils our economic security. The government, as I said at the outset, had two obligations in this budget. One was to provide for national security. The other was to provide economic security. Again we submit that it failed on both counts.

In terms of economic security, Canada is still suffering the effects of a decade of decline and economic drift, mainly under the management of this government. In 2000 the total tax burden was 44.3% of gross domestic product, up from 1999. However the Canadian standard of living has been falling for 20 years. Personal disposable income is below where it was 18 years ago.

The gap between Americans and Canadians, in terms of personal disposable income, increased by $2,900 between 1989 and 2000. That gap now represents $7,557. Those figures are in Canadian dollars or dollarettes.

That is a $7,500 gap between the average Canadian and the average American thanks to a decade long decline in our standard of living, our personal disposable income, our productivity and our competitiveness, fuelled principally by these destructively high levels of debt and taxation, as well as a burdensome regulatory regime which crushes much of the creative energy out of our economy. That is the long term economic challenge facing this nation; a $7,500 gap in the personal disposable incomes of the average Canadian versus the average American.

If we extrapolate that to an average family, as the current Minister of Foreign Affairs did when he was Minister of Industry at a speech he gave in the spring at the Empire Club, $7,500 times four, the average Canadian family is about $25,000 behind or poorer than its American counterpart in terms of personal disposable income. That is a consequence of the decade of drift. On an annual basis, our labour productivity is growing at half the level as that in the United States.

The best evidence of our relative decline in wealth and productivity as a nation is very obvious to any one of us who has followed the sad story of the Canadian loonie. That lame loonie, under Liberal management, reached 62.37 U.S. cents three weeks ago, the lowest value of our currency in its history.

We know that the value of a currency reflects the international market's perception of the value of an economy. The international currency markets have clearly given the government and its fiscal management a failing grade with the value of our currency. The government has said that it is just an aberration, or that it is just because of low commodity prices or it is a flight to safety in the United States. It is excuse after excuse. Every time we reach a record low, we hear another excuse.

The reality is that since the government came to power in 1993, we have seen a reduction in the value of the loonie of over 20%. We have lost value over the past couple of years against the Mexican peso, against the British pound sterling, against a number of other currencies, including the Japanese yen. In fact, the Bank of Canada reports that we have lost 20% of the value of our currency against a basket of six major international currencies over the past several years.

I submit that this budget ought not to have simply addressed the immediate fiscal agenda of the government but rather the long term economic agenda of Canada. We cannot afford to take a break in the race to international productivity and competitiveness. We cannot afford to sit on the sidelines and say there is an international recession or a security imperative that we must address. That is not an excuse. There is no excuse for complacency in the fight to improve the standard of living of working families in Canada.

We must be relentless and tireless in moving to reduce our debt levels, our tax levels and our regulatory burden and to liberate our labour markets so that we can see more wealth in the country, more investment, more savings, more employment and a higher level of personal disposable income that real people feel in their real lives. That should be the first economic responsibility and priority of the government, yet it clearly is not. Not only is the government threatening a deficit and neglecting to pay one cent on the national debt, it did not offer one dime in new tax relief in the budget. When a nation has the highest level of personal income tax as a percentage of national income in the G-7 and the government does not offer a dime in new tax relief as the country goes into a recession and people are losing their jobs, it is shockingly irresponsible.

In fact, next year the government will be raising those taxes that are most sensitive for the labour market. It will be raising payroll taxes. Combined payroll taxes will be going up next year by 6%. There is a $40 billion cumulative surplus in the employment insurance account which, parenthetically, is more than twice than what is necessary, according to the auditor general, to finance benefits in the most extreme downturn. Notwithstanding that, there is a cumulative surplus of $40 billion and an annual surplus of $6 billion in the EI account. Yet the government has announced a rate reduction per $100 of premiums of only five cents for employers and employees next year. That will be far outstripped by the largest increase in CPP premiums in Canadian history, which means that the average employee will be spending an extra $300 next year on payroll taxes split between the employer and employee.

What does that mean when we are in a recession where unemployment is going up, as it did last week? Last week Statistics Canada reported that unemployment had risen from 7.3% to 7.5% with a loss of 43,000 full time jobs. Yet the government, starting January 1, will increase the price of a job. It will make it more difficult for small businesses to hire people on the first rung of the ladder in the labour market. That is irresponsible as we move into a recession.

What we need to do is make it easier for people to be employed. We need to reduce the cost of hiring Canadians by reducing payroll taxes. We could reduce the combined employer-employee EI premiums by 25 cents to the break even level. The government would still be left with at least a notional surplus of $40 billion. We could also look at more meaningful fundamental reform to secure the future of public pensions. By giving younger workers an option to direct a portion of their savings into regulated private savings vehicles, we would allow them to increase their returns at lower cost, thereby decreasing the overall payroll tax burden even further.

Yesterday in his budget speech the finance minister said that in the mid-1990s some Canadians were concerned about the sustainability of the public pension system but they no longer are. He is dead wrong. Canadians who understand the demographic time bomb and the dynamics of the aging population know that the changes made to the Canada pension plan in 1997 and 1998 simply are not sufficient to manage the enormous future expectations of our retiring population.

The government has failed to provide stimulus to the economy in the midst of a recession into which it has led the Canadian economy, even though Canadians want and understand intuitively that tax relief helps create wealth. According to a Léger poll from November 18, 74% of Canadians prefer tax cuts to spending as a key to jump-starting the economy. Almost precisely the same result came from an Ipsos-Reid poll published last Friday. Three-quarters of Canadians said they wanted to see tax relief in this budget to stimulate growth in this recession and a majority of Canadians said they opposed new spending if it meant moving us into a deficit in this recession.

Canadians get it. They understand, after all the pain we have gone through over the past decade in the country, that leaving more money in the pockets of entrepreneurs, working families and home-keepers does more to create wealth and jobs than giving that money to government politicians and bureaucrats like the ministers of industry, culture, heritage and HRD to waste. They understand that and so too should the government.

The government might say there is no more room for tax relief. First, the government alleges that it is providing, get this, $100 billion in tax relief over five years. When we go to Wal-Mart and see something priced at $9.95 we understand that is a marketing gimmick. It is choosing a price level for marketing purposes. The finance minister, when his bureaucrats were trying to come up with a tax plan last year, said “We have to make this $100 billion, a nice big round, three digit figure. We have to get that number as close as we possibly can to the Alliance's vigorous $125 billion tax cut”. He said “Whatever you do, boys, add up the numbers so they come up to $100 billion”. That is exactly what they did. It was a joke.

The fact of the matter is that the real value of that tax cut was $42.5 billion. Of the $100 billion the government claimed, $7.8 billion was increased social spending, transfers to persons, through the program known as the Canada child tax benefit. It is not a tax cut. It is an interesting and worthwhile program, but it is a spending program, not a tax cut. There was $29.5 billion eaten up by the increase in CPP premiums that I just talked about. Of the government's notional tax cut, $20.7 billion was the effect of indexation of the tax brackets, of the thresholds and the exemptions.

Let us just think about that for a moment. The government is saying “We will no longer tax you on inflation and that non-taxation of inflation will count as a tax cut”. The government is saying that it is counting as a tax cut a non-tax increase. Based on that logic and accounting, with revenues of $130 billion and an economy of one trillion dollars it could say that there is an $870 billion tax cut. When we net all that out, the total real tax reduction, for which we give the government some credit for grudgingly moving in our direction, was $42.5 billion or $58 billion less than advertised.

Even after it is fully implemented, that will still leave Canada with the highest income tax burden as percentage of national income in the G-7 and in fact in the G-8. Let me just say that Russia is experiencing an economic turnaround today. It has doubled its tax revenues and is improving its balance sheet. Why? Because it adopted a single rate tax of 13% two years ago. Sometimes good ideas, when given a practical chance, actually work.

On corporate income tax the government did nothing yesterday. It was not just the Alliance that again had recommended further tax relief. In fact, the finance committee in its report tabled in this place a couple of weeks ago recommended the immediate elimination of the capital tax, which is an insidious tax on innovation.

Virtually every single business group that came before the finance committee echoed this recommendation, which is why it found its way into this report. That quote is:

The Committee recommends that the federal government encourage a harmonization of the capital tax base, and the elimination of the capital tax.

There was a Liberal majority on the finance committee. I see one of the members here who approved this. Are they upset that did not find its way into this budget? This is not a huge revenue item. It would represent notionally forgone revenue of $1.3 billion a year, which is a relatively small piece of revenue. It is less than the finance minister throws around as baubles to his leadership campaign friends, for TV producers and high speed Internet programs and such.

It is $1.3 billion, but every major business group in the country says this must happen. For instance, Bruce Burrows of the Railway Association of Canada stated:

At the risk of sounding repetitive, by eliminating the capital tax...the federal government would be sending a strong, positive signal to investors at a critical point in the business cycle. What better way could you provide a step to further encourage the deployment of new energy-efficient and productive assets to serve the economy?

The government talks about its innovation agenda, but when businesses, the leaders who actually innovate in our economy, who create wealth, who make profits and who employee people, say that this is the best way to help our economy innovate, the government does not listen. Instead, it gives $110 million to the industry minister to hook up people to the Internet. What is the government thinking?

There is no capital tax relief and there is no further corporate tax relief. There is no tax fairness for the resource sector, which is still being penalized at a second level of 28%. Over half a million Canadians work in the energy industry involving oil, gas and mining. It is a core industry in Canada. Those industries are being penalized by the government with a discriminatory rate of 28%. Every major group from that sector has called for changes, but none have been offered.

Let me say, lest I sound too polemical, that there were some minor technical tax changes in the budget that we approve of. We are pleased to see that after vigorous efforts on our part the government accepted certain technical changes to the treatment of venture capital. We also are pleased to see that the government accepted the recommendations we made allowing more generous treatment in terms of capital gains for gifts of shares to registered charities. This was something that was pressed for very effectively by Nesbitt Burns vice-chairman Donald Johnson in Toronto. Those are some baby steps in the direction of tax reform.

However, there is no personal income tax relief contained in this budget. Payroll taxes have been increased. There is no capital tax relief. The government ignored the public's call for further tax relief. In fact, to close out my remarks on taxation, the government, believe it or not, is increasing taxes and revenues in this budget. With the $1.2 billion increase in CPP premiums next year, the new air traveller security charge announced and a $430 million tax increase presented to us in the supply motion currently before the House, we are talking about $2 billion in additional taxes next year.

The finance minister claims that he is providing stimulus for the economy in this recession. He says there will be what he claims is a $20 billion tax cut in the calendar year 2002. Nonsense: if we do the real accounting the actual tax cut the government is offering is in the range not of $20 billion but of $9 billion. If we net out an additional roughly $1 billion in tax increases proposed in this budget for that year, it comes down to $8 billion, which is a measly portion for such an overtaxed economy.

The government has failed to get its priorities straight when it comes to tax relief, when it comes to the long term slide in our economy, when it comes to reallocation. Let me address this now in terms of government expenditures.

I talked about the huge spending increase proposed in this budget, but the government will say that it is important spending. For instance, it will say that the delivery of $160 million for fetal alcohol syndrome and youth health care programs delivered by the Department of Indian Affairs and the health care department is important spending. I do not think any of my colleagues would disagree with that.

We understand that one of the moral imperatives of the government must be to address the root causes of poverty and despair on our aboriginal reserves, but let us be clear. There is $10 billion of combined spending from all three levels of government on aboriginal persons. There is $7 billion alone at the federal level. While that department has received the largest spending increases of any department over the past six or seven years, we continue to see the standard of living of people who are the ostensible recipients of that generosity deteriorate, the despair increase and the hope disappear.

Something is wrong with the way in which we are actually allocating those moneys. Certainly the auditor general has identified at length the waste, mismanagement and frankly, corruption in the administration of programs through aboriginal affairs. I have a 10 page briefing note of misuse of taxpayers' money by band councils which was extracted from the auditor general's report. There were hundreds of millions of dollars of waste. My colleague from Vancouver Island North, the official opposition critic for aboriginal affairs, will be detailing some of the waste.

The point is that we should be putting money into fetal alcohol syndrome, youth education and health care for aboriginal people, but we should be finding that money by taking it away from the waste and corruption that the auditor general has identified. Instead of increasing overall spending and ignoring the wasteful spending, we should cut the wasteful spending to target it strategically in areas like fetal alcohol syndrome. That is called priority setting. That is what the government has failed to do. It does it in various departments.

Look at some of the waste in the budget. First, we just need to refer again to the auditor general's report last week. She referred to grants and contributions of over $16 billion which are rife with waste. She said that there is waste and abuse in at least 16 departments. She identified grotesque examples of this kind of waste. We all know what they are. That has been added to in the budget.

The finance minister has given the Minister of Industry, as I mentioned before, $110 million for his pet project for the Internet so that he could say that he won something in the budget in the bizarre ego game that goes around the Liberal cabinet in the budget-making exercise.

There was $160 million for the Minister of Canadian Heritage's friends in the TV industry. What is that about? We are talking about kids starving on aboriginal reserves, about Canadians waiting six months for critical operations, about a military with equipment that dates from the 1950s and we are giving $160 million to TV producers? Where is the government's priorities?

There will be $170 million given to the Minister of Health for health programs that will not actually deliver any health care to people.

Andrew Coyne said in his article today that he is not sure when it was decided that the leadership campaign should be publicly funded but at least the Minister of Finance should have been told. In other words the Prime Minister seems to have written the budget.

There is waste. We have identified $6 billion to $7 billion of low priority spending which could be reallocated to the urgent and high priorities of national security, tax relief and health care. Some $6 billion of waste. There is at least $1.2 billion in corporate welfare grants from the government. There is $1 billion a year in regional development schemes like western economic diversification.

Often when we talk about regional development in this party people think we are picking on one region. I will offer up, and I think my colleagues from the west would agree with me, we do not want western economic diversification and its $300 million of business welfare. Let it go into the private sector along with FORD-Q and ACOA. There is $1 billion there.

There are subsidies to bloated crown corporations like the $1 billion annual subsidy to the CBC. We know that company could offer it more effectively by raising capital through the private sector.

We have talked about waste in the department of aboriginal affairs, not core spending but waste. As well, there are certain tax expenditures that the government could crack down on to save taxpayers money. For instance, we are losing about $800 million a year on a tax break that is being abused by certain people in the film production business. That should be cracked down on.

The Mintz commission recommended over $2 billion in base broadening measures for the corporate tax system which have not been implemented by the government. These measures alone could be implemented so that we could afford the tax measures for the resource sector and afford the elimination of the capital tax.

My colleagues remind me that in terms of priorities, our farmers are going bankrupt because they are on the losing end of an international trade war being subsidized by the treasuries of the United States and the European Union. It is virtually not even an issue on the foreign policy agenda of the government.

We have asked for $500 million, a relative pittance in international terms as emergency support for our agricultural sector. The government has been able to find $160 million for TV producers, an $800 million tax break for movie producers that it still has not closed, but it cannot find $500 million for farmers who are going bankrupt and are losing fourth and fifth generation farms. The government does not have its priorities straight.

As I was saying, we have identified $6 billion in waste and low priority spending. I would include in the list over $2 billion in equity positions which the government still has in Petro-Canada and Hibernia. The government made commitments to sell those shares years ago.

It was in the 1997 budget that the finance minister said the government would liquidate its shares in Petro-Can, shares which reached historically high values about six or seven months ago and which are now on the decline. The government has already lost an opportunity for $2 billion that could go to debt reduction which would reduce the interest payments by a couple of hundred million dollars. That is $200 million that could then go to health care and agriculture.

The government is holding on to Petro-Canada and Hibernia shares because the Prime Minister has some strange 1970s twisted dream about government ownership of the energy sector. He does not want to lose hold of that symbol of the national energy program.

Instead of reallocating, instead of making choices as the finance minister said he would do, instead of selling redundant assets, instead of allowing crown corporations to raise their funds in the private sector instead of from taxpayers, instead of ending corporate welfare, the government has not done one of those things. This is why we find ourselves driving into a big fiscal hole.

I have not been able to calculate the full effect of yesterday's budget, but before yesterday's budget, it was very clear that the government was missing a $50 billion opportunity over the next four years to get its priorities straight. Let me explain.

Almost every private sector economist and business group has encouraged the government to limit its program spending increases to 3% per year on average, which would be the average combined rate of inflation plus growth in population. In fact the finance committee reiterated its longstanding recommendation that the government limit spending increases on the program side to 3% a year. If we were to do so, that is the combined level of inflation and population so it would mean no absolute cuts in program spending but, as I have expressed, the government has been raising spending at rates of 6%, 7% and 8% per year. If the government were to restrain its program spending to the level of 3% that we have recommended, it would have over the next four years an additional $50 billion available for tax relief, debt reduction, health care and agriculture, in other words, the priorities of Canadians. That does not even account for the effect of the reallocation of $6 billion a year that we in the opposition have suggested.

The Parliamentary Secretary to the Minister of Finance often says that our numbers do not add up. If he takes out a calculator and extrapolates the program spending line of 5% minimum, which is what the Liberals are on, versus the 3% that we recommend, he will find an extra $50 billion that could go to working families to improve their standard of living, to eliminate capital taxes, to pay down the debt, to reduce payroll taxes, to improve the quality of and access to health care for Canadians. In other words it would get the priorities straight, which the government has failed to do.

Let me now turn to the last section of my remarks regarding national security. The government has agreed that the budget must address the urgent imperative of national security. We do not need a lot of poetry about what happened on September 11. We all suffered an abrupt wake-up call on that morning. It has changed our world but I really do not think it has fundamentally changed the government's priorities.

Three months ago today, violence of the worst kind was inflicted on our neighbours, friends and relatives to the south. We realized that the idea of globalization is not a concept; it is a reality and it is here, particularly for those of us on this continent. We share such a marvelous relationship with that great democracy to the south.

We must do our part. We have a moral obligation as a free and democratic nation not to be a grudging or half-hearted participant in the war on terrorism but to be there on the front line, shoulder to shoulder with the United States of America and our treaty allies every step of the way.

In the budget yesterday the government outlined some $7.7 billion in ostensible security measures over five years. Again with its goofy accounting some of these measures are over two years, some over three years and some over five years, but we do not have the time to break down the accounting here.

Suffice it to say that of the moneys it is proposing for security areas, first of all, it is not all security. Some $600 million of it is for infrastructure at the borders, which is good. We endorse that. We recommended half a billion dollars for infrastructure at the borders so that we can accelerate trade.

We endorse and support a number of the measures: increased resources for screening incoming immigrants and refugees; prescreening overseas; hopefully new technology for passport screening; biometric identification technology or at least we hope prototypes will be experimented with; and additional personnel at both customs and immigration. These are all measures we support.

Indeed the government actually has taken a step in the right direction in terms of funding for both the RCMP and CSIS. However I would point out the reason it had to take a step in that direction is that since 1995 the government has cut resources drastically for our front line police and security intelligence services. It is proposing a $1.6 billion cumulative increase for these two agencies.

The CSIS budget, even after these increases, will fall far short of where it was in real terms in 1993. It will still be 20% lower than the $244 million it was at in 1993. In fact we in the official opposition have recommended a much larger increase to the intelligence agency. We have proposed a $100 million annual increase and the Liberal budget breaks down to a $55 million annual increase. We proposed an increase roughly twice the size of what the government has.

Just as an example, we currently spend less than $200 million Canadian on intelligence. The United States spends some $30 billion U.S. on intelligence. We literally spend a fraction of one per cent of what the Americans do in relative terms.

In terms of the RCMP, it saw its budget gutted. As a result the RCMP saw the amount of federal officers decrease by 16% from 5,200 in 1994 to 4,300 in 2000.

Over $100 million a year is needed just to reverse the decline in officers. RCMP resources were already stretched to the limit before September 11. We do not think the funding increase for the RCMP is adequate. It falls short of the minimum $250 million needed for 2,000 new officers. That is why we have called for a $315 million increase to the annual RCMP budget.

We support the border measures and new infrastructure to expedite trade at the 49th parallel. However the sharp edge of national security is our military and national defence. It represents our ultimate power as a nation to assert our values in defence of freedom and democracy. The budget is an embarrassment and an abject failure when it comes to providing adequate resources for our men and women in uniform.

There are some 56,000 people, 44,000 less than there were in 1993, who wear a uniform which symbolizes their willingness to die for Canada and its values. These are people who stand willingly to make the ultimate sacrifice. We as a parliament, and indeed taxpayers of the country, must be prepared to make a sacrifice for them by giving them the equipment they need to do the job we assign them.

Yesterday's defence budget was an embarrassment. The government announced $1.2 billion for the military over five years, an average annual increase of just $240 million. That is far short of the $1.3 billion minimum the auditor general said is required to bring the forces up to a level of minimal operational effectiveness and further short of the $2 billion the Conference of Defence Associations has recommended for operational effectiveness.

Defence spending last year totalled $9.7 billion. That is $1.6 billion lower than the 1993 total of $11.3 billion in nominal, not real terms. The defence budget would have to increase to $12.6 billion just to bring inflation adjusted spending in defence up to the 1993 level.

The consequence of these drastic military cutbacks is that Canada now has the second lowest defence expenditure in NATO. To our everlasting shame we are virtually tied with the lowest defence expenditure, that of the Duchy of Luxembourg which has a standing army of 800 people. In relative terms it is the only country that spends less than we do on the military.

We spend less than half the NATO average. As a percentage of national income our defence expenditure is 1.1% of our gross domestic product. The NATO average is 2.1%. Our American friends whom by neglect we effectively force to subsidize our defence spend 3.3% of their national income on defence. That is three times what we do in relative terms.

Canada ended the second world war with the third largest navy in the world, the fourth largest standing army, and one of the most effective and respected air forces. It was a true valiant defender of freedom from 1940 to 1945. Now we are an open joke in international defence circles, not because of a lack of bravery, expertise or courage on the part of our fighting men and women but because of a lack of equipment, resources and personnel through government funding. It must end.

I thought September 11 would wake us to this new reality. If we were to simply raise our spending to the NATO average, not exceed it but meet it, it would require a doubling of our defence budget. Clearly that is something we cannot achieve overnight. It gives us a picture of how far behind we have fallen.

In yesterday's budget the government provides only $300 million for new equipment. About three-quarters of new defence expenditure announced yesterday will be allocated to new tasking being given to our military such as guarding important installations, nuclear power sites and so on.

We are giving the military a dollar but saying it must use 75 cents of it to do new tasks. We are giving it virtually nothing in terms of new equipment. It is no wonder the budget has been roundly condemned by experts in the Canadian defence community.

We in the Alliance Party have recommended an immediate increase of at least $2 billion in addition to the $1 billion or $2 billion for operational costs immediately associated with Operation Apollo so we can, it is hoped, eventually achieve something like the NATO average. My colleague from Lakeland, the opposition critic for defence, will be expanding on this.

This was not a security budget. The government took some small steps in the right direction in certain areas and thankfully followed our advice in some of those areas. However the war on terrorism is not over. The war in Afghanistan was phase one of a task that will take years and potentially decades.

Yesterday's budget reflects a basic flaw in Liberal political thinking. The Liberals believe peace is the ordinary condition of humankind. They believe in the perfectibility of human nature. They cannot understand that every now and then we are interrupted by violence and the reality of history. They cannot understand that there is evil on the planet from which we must protect ourselves and all other free nations.

I will say this one more time because I feel it so strongly. We have a moral obligation to do our part and no less. It is so wrong for us to get on our moral high horse, as Liberals so often do in Canada, and criticize our friends in the United States for their many failings while at the same time allowing and essentially forcing American taxpayers to subsidize our defence. It is wrong and it must come to an end.

The budget has failed to get the government's priorities straight. It has failed to present clear, easily understood and transparent projections for the future of the government's accounts. The government has put Canada into a planning deficit based on its previous accounting standards before it moved the goal posts in this budget. It has refused to give even a token acknowledgment of the need for debt reduction in a country with the third highest debt in the developed world. It has done nothing to respond to the recession into which it has led us.

There is nothing in the budget in terms of the tax relief three-quarters of Canadians are demanding. There is nothing to help us reverse the decade of drift we have suffered under the Liberal government. There is nothing to set priorities straight, reduce wasteful spending, reallocate spending and liquidate redundant government assets. The budget has fallen far short of what is minimally necessary to provide our military with the resources to defend and advance our national security.

In closing, the budget falls far short of what I expected from the finance minister. Once again it reflects the politics of his boss, the Prime Minister. It is a shame. It is a missed opportunity, the consequences of which will be clear to us in the years to come.

I move:

That the motion be amended by replacing all the words after the word “That” with the following:

“this House rejects the Government's Budget statement because it fails to provide adequately for the national and economic security of Canada by continuing to underfund Canada's military at the second lowest level of defence expenditure in NATO; by increasing overall spending at a rate nine times faster than the rate of growth in the economy; by failing to reallocate spending from low to high priority areas such as health care and agriculture; by failing to address the long-term slide in Canada's productivity and standard of living; by increasing payroll taxes in the midst of a recession; and by planning for no reduction in Canada's $547 billion debt”.

The BudgetGovernment Orders

11:40 a.m.

The Deputy Speaker

The Chair will take the amendment under advisement briefly. In the meantime we will continue debate.

The BudgetGovernment Orders

11:40 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, today we are still wondering why the Minister of Finance brought his budget down now instead of waiting until March. Two months ago, he was asked to move it ahead, particularly with respect to defence and security, and to support the flagging economic and employment situation.

A person did not need to be a genius—and I include the minister in this group—to figure out that the economy was in a downturn. That is why he was asked to move up his budget.

Yesterday brought a rude awakening, however. An examination of the budget shows that it contains nothing significant for the economy. This budget even includes one totally ridiculous measure, which demonstrates this government's lack of finesse and intelligence.

As we know, the first industry hit by the economic slowdown, and even more so by the events of September 11, was the airline industry. We were expecting the government to help this industry. It did the opposite. It imposed an additional tax of $2.2 billion on air travel.

What prompted the government to slap another tax on the sector hit the hardest by the economic slowdown and the events of September 11, as it was claiming to be supporting the economy? Where is the logic? This measure alone shows how ridiculous and illogical the budget is. It also shows how little impact it has on the economy.

The Minister of Finance had the means to support the economy. We will return to this a little later, when we talk about the surpluses and the tradition that has established itself in parliament since the Minister of Finance took office. I refer to the systematic annual underestimation of the government's true surpluses and the real manoeuvring room available to him, as of this year, to assume his responsibilities as the Minister of Finance and support the economy and employment.

Everyone looked for support for the health and education sectors. In Quebec as in the rest of Canada, everyone has been calling for the past year for an infusion of money into health care and education. Last year's agreement was not enough.

With the provinces and the government of Quebec drained, obviously even the slightest increase is immediately welcome, because health care and educational needs are growing.

Despite the means at the disposal of the Minister of Finance, nothing in the budget provides for the return, through the Canada social transfer, to the government of Quebec and the provinces, of the wherewithal to enable them to meet their obligations in providing health care, education and income security.

It is really quite incredible that, given today's headlines about the lack of resources for seniors and the sick, the Minister of Finance is unmoved by their fate and that reserved for education. Our Minister of Finance is cold and insensitive.

The Minister of Finance has cut the Canada social transfer by $35 billion since 1995. This is approximately the amount by which he has paid down the debt. He has used the sick, the elderly and the most disadvantaged members of our society to pay down the debt. And he has used these unexpected surpluses in the EI fund—$7 billion again this year, which the Minister of Finance will pocket instead of helping the unemployed—to produce these surpluses and these annual performances.

Let us talk about employment insurance. From a strictly logical point of view, we would have expected to see the government act on the 17 recommendations made by the Standing Committee on Human Resources Development and reform the EI system so that the majority of workers who find themselves unemployed are not disqualified from receiving benefits.

Now we are facing a major downturn, or a recession, to call it what it is, where thousands of people, and there will be more in the weeks to come, will join the ranks of the unemployed.

Instead of helping these people through a difficult period, the Minister of Finance has decided to maintain the status quo and continue to deny them benefits.

With this economic slowdown, many people will find themselves in a tough spot tomorrow morning, thinking that they are entitled to EI, because they have never had to apply for benefits during the last eight or nine years of economic growth. They will be in a tough spot when they find out that they do not qualify, because the criteria are too restrictive.

The actuary has just given his forecast a few days ago; the ink on the documents is not yet dry. The actuary said that the surplus would be $7 billion. This is $8 billion less the $1 billion set aside by the Minister of Finance for reductions in premiums; the balance is $7 billion. In his budget, the Minister of Finance notes that the surplus in the EI fund is barely $3.7 billion. This is cooking the books. This is what we have come to expect of him in the past five years; that he will underestimate the surplus. As MInister of Finance, he is not doing his job.

We were also expecting announcements to be made to help and support regions that are experiencing problems. Instead, the Minister of Finance mentioned the transport tax that will hit the airline industries. The regions will be severely affected by this measure. A person flying from Gaspé to Mont-Joli will pay $24 more on a return ticket, as though air fares in the regions were not high enough to begin with.

All things being equal, it is the regions that will be hardest hit by this new tax. Another tax. This is another fee being charged that relegates people living in the regions to the status of second class citizens.

Let us talk about tax breaks. Yes, last year's tax breaks have been maintained. That is precisely what we did not want. We wanted the minister to restore some balance to the tax breaks, because the tax breaks introduced for the next five years help those in very high income brackets for the most part.

Let me provide an example. This year, Mr. Speaker, you would be lucky if you earned $250,000 or more, because you would save $9,000 in federal taxes. I know that this is not the case for you, Mr. Speaker, but those earning $250,000 were coddled by our millionaire Minister of Finance. He will be saving $9,000 in federal income taxes this year. A person earning $40,000 however, will save $300. Last night I took part in—

The BudgetGovernment Orders

11:45 a.m.

An hon. member

Shame.

The BudgetGovernment Orders

11:45 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

It is shameful, yes. Last night I took part in an open-line broadcast. A gentleman called in and said that his family income was approximately $10,000 per year. He has a permanent disability, and a dependent. Last year and this year—this year, I am referring to last April—he paid $600 in federal income taxes. His income is $10,000, he is a person with a disability and has a dependent. Is this what a fair tax system looks like? Is this what tax breaks that help everyone look like? It is time to stop kidding us and taking us for fools.

We had asked that some balance be restored to these tax breaks to help middle and low income earners. Nothing. All this time, our Minister of Finance, whom we have been watching closely since 1993, with his shipping lines in Barbados for example, has been working on a tax convention between Canada and Barbados that has been denounced by the OECD.

The OECD is not full of members of the Bloc Quebecois. The OECD has said that tax conventions signed with countries such as Barbados, which is a tax haven, facilitate tax avoidance. They facilitate unfair tax practices. They even facilitate, to some degree, money laundering in a number of tax havens, which have been clearly identified by the OECD.

But the Minister of Finance pushes on, as though it were no big deal to allow this tax convention to be maintained. The auditor general recently said that in a sample of 53 of the richest taxpayers in Canada, among them, they had $800 million in assets in Barbados, completely sheltered from federal taxes, while back home, we are forcing a person earning a yearly income of $10,000 with a dependent and a disability to boot to pay. We are making him pay federal income tax, but $800 million in assets belonging to 53 of the richest people in Canada is tucked away in Barbados, sheltered from the Canadian tax system.

This tax convention is being allowed to remain in effect. It is shameful. Since 1993, we have been asking the Minister of Finance to reform the tax system to make it fairer, to close tax loopholes and put an end to injustices.

The Minister of Finance carries on as if nothing were amiss, as if he had done everything possible, as if his cumulative tax cuts of $100 billion, which he speaks of ad nauseam, were helping everyone. Easy, one accumulates funds for five years and ends up at some point with a huge sum. Who is going to benefit from this? His gang, not the people watching us here, not the people who helped put public finances back on an even keel. The middle income families and the workers with their contributions to the EI fund, as well as the employers, particularly small and medium size businesses, are the ones who financed part of the spectacular announcements our poor excuse for a Minister of Finance has been making to us for the past five years. This is disgraceful.

They are patting themselves on the back as far as international aid is concerned. It has been stepped up by $300 million per year. Under the circumstances that have been a concern to us ever since the events of September 11, it became evident fairly quickly—and to everyone, not just my colleagues in the Bloc Quebecois—that there are two ways of combating terrorism. There is force, via national defence and security, and then there is the ongoing battle we must be engaged in against world poverty. This is what produces the breeding ground for international terrorism.

Osama bin Laden and the Al-Qaeda recruit their future terrorists, the people who will become suicide bombers, and where? In areas fertile for terrorism, that is in areas where children and adolescents living through civil wars, or just plain wars, have been without hope since they were very young. Year after year, they have to deal with growing injustices. They have access to the media and see how rich the West is. They know our children are born with hope for the future.

The countries with pockets of incredible poverty, particularly in the Middle East and Africa, offer a fertile terrain for terrorism. There it is easy to recruit people who have nothing left to lose and everything to gain for the future of their people. Because of their vulnerability, they can readily be convinced that they will become heroes, immortalized by a glorious death.

It is easy to recruit terrorists in these breeding grounds, and this is why international aid becomes one of the key facets in any strategy against terrorism. What do we learn from the budget? That there will be $300 million more annually.

The government is increasing international aid from 0.25% of the GDP to 0.26% of it, one tenth of one percentage point. Is this not incredible? The objective proposed by the OECD of 0.7% of the GDP is the figure proposed by former Prime Minister Pearson, winner of the Nobel peace prize and initiator of Canada's peacekeeping force. At the rate we are going, we will never achieve this objective. We calculated the growth of the GDP with spending at the rate presented yesterday. At the rate of $300 million a year, we will never reach 0.7% of the GDP.

People have to understand that we must, of course, look after the poor and our fellow citizens. However, the events of September 11 should perhaps make people give thought to the wars going on overseas, in the middle east and elsewhere, and the human suffering involved. Globalization brings human suffering closer, through the media and unfortunate events such as those of September 11. In this case, we can no longer say that the events are happening elsewhere and do not concern us.

They are taking place elsewhere right now and they concern us. The government, which has not been pulling its weight in international aid—this fact is recognized worldwide—should have further increased international aid, and did not do so in the latest budget.

In the case of infrastructure, things are shameful. The government said it was going to invest in infrastructure in order to stimulate the economy and get the jump on projects. In Quebec, in the most recent budget, Ms. Marois, the finance minister in the Landry government, with few means at her disposal, decided to push projects along in order to stimulate the economy and help people get through the economic slowdown.

In this case, the government has the means, but not the ideas. It is incredible. It is putting $600 million new dollars into infrastructure over the next three years. It talks about a foundation that will perhaps one day be receiving funding. But it has budgeted nothing for this period, when what was required was rapid action to stimulate the economy. Now it is talking about creating a foundation, which it might fund in the future. Why has it not used the money at its disposal? Why has it not put it directly into the trilateral agreement with the provinces and municipalities? It would have been so simple. But it would not have been a good idea politically.

This is a government that is interested in appearances only, and that resorts to propaganda. It actually says that health and education are its priorities, when for every dollar the government of Quebec spends on health, it spends only 13 cents, and for every dollar the government of Quebec spends on education, it spends only 8 cents. And it calls these priorities? Right.

It mails out propaganda to everyone saying that it considers health and education priorities. Is this not a shocking misrepresentation?

In the case of parental leave, the budget contains nothing in the way of a transfer to Quebec City for the young families awaiting the introduction of Ms. Goupil's parental leave system. Is it not disgraceful to put one's popularity as a manager generating spectacular unexpected surpluses ahead of the needs of young families? It is reprehensible.

Let us talk about aboriginals: $185 million over two years is peanuts. Following through on the recommendations in the royal commission of inquiry would have required a minimum of $500 million, and $238 million this year alone to help young aboriginals with their post-secondary education.

It is all very fine and well to say that one wants to help aboriginals and support their initiatives. But when one says before the budget is brought down that it will be a budget for aboriginals as well, and then announces spending as paltry as this, it is a disgrace.

Did the Minister of Finance have the means to do this? Of course. We will repeat again what we have been saying for the past five years, namely that, this year again, the Minister of Finance has systematically underestimated the surplus. This year's surplus will not be $7 billion, with nothing under these new initiatives; it will be $13 billion.

So, the minister is again hiding a net surplus of $6 billion. This is $6 billion he could have invested in health, to help the elderly, in education, and in employment insurance reform, to help the unemployed. This is rather incredible.

For the past eight years, the Minister of Finance has been telling people “Help me put our fiscal house in order; help me deal with our deficit; help me make sure that we have a sound tax system”. The public said “Yes, we are prepared to make sacrifices”. But when the time comes to help these same people make it through difficult times, the Minister of Finance runs and hides. He has abdicated his responsibility.

After nine years of economic growth, this once we asked him to come up with innovative ideas to support the economy, to do his job as manager of the public treasury, so as to get us out of this recession as quickly as possible. But the Minister of Finance is not proposing anything to support the economy.

He thought he would confuse us with his defence and security issues. People are not stupid. Defence and security, sure, but economic security is also important. Helping the unemployed and those who will join them in the future because of the economic slowdown is also important.

But no. The minister claims that he has done everything he could, that he does not want to have a deficit again. What a joke. It is ridiculous to say that we could have a deficit this year or next year. We have looked at the worst case scenarios for economic growth. We did a thorough analysis of the government's expenditures and revenues, and concluded that it is “i-m-p-o-s-s-i-b-l-e” to have a deficit, particularly with yesterday's budget. It is plain impossible.

The Minister of Finance tells us that we must be careful. He is also budgeting a surplus of only $3.7 billion for this year in the employment insurance fund. He must really think we are stupid to come up with something like this.

We are condemning this budget and, on behalf of the Bloc Quebecois, I will propose an amendment to the amendment presented this morning. We will work very hard to explain to the public this budget, which does not include any measures to help those who will the worse off in the coming weeks.

The BudgetGovernment Orders

Noon

The Deputy Speaker

I would ask the honourable member for Saint-Hyacinthe--Bagot to move his amendment to an amendment.

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Noon

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I move:

That the amendment replace all the words after the word “fails” with the following:

“to reallocate spending from low to high priority areas such as health care and education via the Canada Health and Social Transfer, employment insurance reform, support for seniors, increased international aid, practical measures to assist the regions and aboriginal peoples, assistance to agriculture and adequate support for a faltering economy, and because it may be supposed that this statement hides a six billion dollar surplus for the current fiscal year which can be used to achieve these objectives”.