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

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1 p.m.

Markham Ontario

Liberal

John McCallum LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, I will be speaking shortly about the budget, so I will limit myself to one question for the right hon. member.

I do not understand for the life of me how he can boast about his own government's record when it was the Conservatives who left this government in 1993 with a $42 billion deficit. That was absolutely central to the first several years of this government. That was why the Wall Street Journal said Canada was about to become a third world country.That was why we had to cut foreign aid, among other things, to get us out of this Tory hole.

Now that we are finally out of the Tory hole, we are restoring foreign aid and health care and we are cutting taxes.

How he can claim that he left us a wonderful legacy of a $42 billion deficit, from which we emerged only several years ago, is quite beyond my capacity to understand.

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1 p.m.

Progressive Conservative

Joe Clark Progressive Conservative Calgary Centre, AB

Mr. Speaker, that is not what the Royal Bank used to say through the voice of its chief economist. He had a much clearer view of reality at that time and was quite prepared to acknowledge two things. First is that the Progressive Conservative government, when it came to office, came to office facing a $38 billion deficit that had been left by Liberal governments before. Second and far more important is the transforming impact upon the country and its prospects of the economic initiatives that were taken by the government during the 1980s and the early 1990s.

The real tragedy here is not to debate the merits of free trade or the merits of the GST, all of which have been debated. The real focus here is that it was a government that was prepared to act to make Canada a leader in the world. It perhaps took too many initiatives. It certainly paid a high political price for those initiatives but at least it acted.

We have seen, sitting here in the most fortunate country in the world, a government now through three terms. When I asked the Prime Minister in debate during the election campaign could he name one single major accomplishment of his time in office, he could not name one, nor could the Minister of Finance. As I said in my remarks, there has not been a significant economic initiative taken by the government since NAFTA and NAFTA was closing up the business of the government that went before it.

What we need if we are going to maintain our capacity as a leader among nations is a government that is as imaginative as its people are. We need a government that is prepared to take the kinds of long term risks to build for the future and make Canada an economic leader in the future.

I am immensely proud to have been part of a government which was prepared to bring in the free trade agreement, which was prepared to face the hard realities of the GST.

Yes, we accepted the advice then of the chief economist of the Royal Bank of Canada. He had better advice then than he does now. It was good advice. It was good for the country. It has given us great opportunities which the Liberal government year after year has wasted. It has wasted and squandered them again in the budget that was brought down yesterday.

The budget could have followed the advice of the auditor general. It could have taken her direction as to where the waste was rampant and eliminated that waste. That would have given us the room for targeted corporate tax cuts. It would have brought growth to the country and given us the room for investment. It would not have been an insult to the men and women who serve in the armed forces.

There is so much that could have been done. There has been so much that could have been done over this last wasted decade, but the Liberal government sat, drifted and let the world pass us by. Now Canadians are paying the price.

Soon Canadians will have a choice. When they have that choice they will say that they have had enough of a government that wastes the potential of Canada and let us get back to building this country again.

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1:05 p.m.

NDP

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

Mr. Speaker, it is always amazing as a New Democrat to sit here and watch the Tories and Liberals banter over who is responsible for the high debt and deficit of the country when both are responsible.

I admired the speech of the hon. member for Calgary Centre. I agree with many of the things that he has said, especially regarding the military. The fact is that the budget was to end the terrorist threat in Canada as we would not allow terrorists in. However, when we look at the miniscule budget that went to the coast guard and the armed forces, terrorists can still drift into this nation and do whatever harm they wish to do. The budget will do nothing about that.

My great concern is that the previous budgets years ago used to have employment figures in them. There were targets for unemployment rates. Since 1996 those figures have disappeared. They are gone. There has been absolutely no commitment on the part of the government over the last eight years to tackle the unemployment situation or to even tell Canadians what the current rate of unemployment is, whether it is going up or down, and what the government is going to do about it.

Why does the hon. member think those figures are missing from previous budgets and this budget as well?

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1:05 p.m.

Progressive Conservative

Joe Clark Progressive Conservative Calgary Centre, AB

Mr. Speaker, that is a very good question. It is a perceptive one because it goes to the heart of the con game that the government has been trying to play for so long with budgets.

The Minister of Finance always exaggerates the figures that he puts in his budgets and he keeps away information that is germane. Those unemployment targets should be in the budget of Canada. They allow people to have some sense as to what our prospects are and what our path should be.

We have seen this again in the budget that was brought down by the minister yesterday. He claims he is making a $2 billion tax cut for small and medium size businesses. He says that it will be a great help to them. It will let them defer their tax payments for six months. Why is that? Because he knows that if they pay those taxes this year and not next year, he will show a deficit next year. What is pretending to be a tax deferral for some, not farmers, not fishermen, but some small businesses, is actually a means of cover. It is a means by which the Minister of Finance can try again to fool more Canadians about the real state of the Canadian economy. He does it by hiding unemployment figures. He does it by playing hocus-pocus with tax changes.

What we need is a budget whose honesty and figures Canadians can count on. We did not get it yesterday.

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1:05 p.m.

Mississauga South Ontario

Liberal

Paul Szabo LiberalParliamentary Secretary to the Minister of Public Works and Government Services

Mr. Speaker, the right hon. member twice now has mentioned the matter of the tax deferral for incorporated small businesses. He incorrectly stated that this does nothing for farmers and fishermen. He said it twice in this place. The member is quite incorrect, as he well knows, because farmers and fishermen can also incorporate their businesses.

The member would like to suggest that somehow the government is deficit planning. He should well admit that cash flow to small businesses is absolutely essential particularly at a time when, some have said, Canada is in a recessionary period, which the member will well know is going to severely restrain cash availability.

I would like the member first to admit that he was incorrect with regard to his assertion regarding all farmers and fishermen--

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1:05 p.m.

The Acting Speaker (Mr. Bélair)

The right hon. member for Calgary Centre.

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1:05 p.m.

Progressive Conservative

Joe Clark Progressive Conservative Calgary Centre, AB

Mr. Speaker, I do try to be accurate. The parliamentary secretary is correct. Some few farmers can incorporate and some few fishermen can but most do not. The people who need help most in those industries will not receive it. That is the perspective.

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1:05 p.m.

An hon. member

They do not farm or fish in Mississauga.

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1:05 p.m.

Progressive Conservative

Joe Clark Progressive Conservative Calgary Centre, AB

My colleague reminds me that they do not farm or fish in Mississauga, but they do farm and fish in parts of the country where the economy is in terrible shape and there is a real need for help.

Let me tell the hon. member that if he wants cash flow for small business, let him reduce the EI premium. If he wants cash flow for small business, let him change the capital gains tax.

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1:05 p.m.

An hon. member

The EI cannot do it. They have to do it on the basis of payroll, not taxes.

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1:05 p.m.

Progressive Conservative

Joe Clark Progressive Conservative Calgary Centre, AB

No, Mr. Speaker, the member shouts from his seat that the EI cannot do it.

Let me say who cannot do it. The Minister of Finance cannot do it. The government cannot do it. It is not that the Liberals cannot do it; it is that they will not do it. They will not rise to their responsibilities or to the opportunities of the country. That is why the budget is such a travesty and why it could be such a tragedy for a country like Canada.

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1:10 p.m.

Markham Ontario

Liberal

John McCallum LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, just one last word to the leader of the Tory Party on his comments. His first line of defence for his $42 billion deficit was that he inherited a $38 billion deficit from the Liberals in 1984. What an achievement. He turned a $38 billion deficit into a $42 billion deficit, whereas the Liberals inherited a $42 billion deficit and we turned it--

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1:10 p.m.

An hon. member

That is what they say every day in this place.

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1:10 p.m.

The Acting Speaker (Mr. Bélair)

Order, please. The hon. parliamentary secretary has the floor.

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1:10 p.m.

Liberal

John McCallum Liberal Markham, ON

Mr. Speaker, the point I was making was that their achievement was to turn a $38 billion deficit into a $42 billion deficit some nine years later, whereas we turned a $42 billion deficit into a sizable surplus. I guess it has to do in part with the size of the objectives and goals one sets for the future.

Mr. Speaker, I neglected to mention that I will be sharing my time with my colleague from Beauharnois--Salaberry.

I want to talk about two myths that have been propagated by the opposition and some provincial premiers about this budget and then I will summarize with a very brief statement on why it is a good budget.

The first myth is the idea that the budget has provided no stimulus to the Canadian economy at this time of global economic slowdown. Contrary to what has been said on the other side of the House, it does not much matter when the decision was made. What matters is how much support is provided to the economy this year and next year when we are in the midst of a world economic slowdown.

The fact of the matter is that because of wise decisions taken a year ago, Canadians have $17 billion extra in their pockets this year because of a tax cut, the largest among G-7 countries.

We have an extra $3 billion for health care this year because of the health accord a year or so ago.

In addition, because of infrastructure programs and a number of other initiatives in research, we have a total fiscal stimulus this year of $26 billion, which in American terms would be $260 billion since it is 10 times larger than Canada.

In fact this year and next year the government is providing substantially more support to the Canadian economy through lower taxes and investments in health care, research and innovation than the U.S. or other G-7 countries.

It is partly for those reasons that economists in the IMF and the OECD unanimously say that Canada will do better than the U.S. this year and next year in terms of both jobs and growth. Those are facts.

The second myth is related to the first, which is an idea propagated by provincial premiers, notably Ontario and Quebec, to the effect that when the bill for health care has to be paid the federal government goes to the washroom. The fact is that because of the health accord and other actions, over the last five years the federal government's share of health care expenditures in Ontario has been rising and its share of total Ontario program spending has increased from 22% of the total five years ago to 27% this year. In Quebec it is even higher. The share is 30%.

Why are the provincial governments saying different things? It is because they choose not to include our contributions in the form of tax points or tax rooms contributed some years ago. Those are just as much contributions as the cash. If they added up the sums correctly, using the a nice chart in the budget book, they would find a rising share of federal contributions to provincial coffers over the last five years.

If the behaviour of the Ontario government is reprehensible, the behaviour of the Parti Quebecois and their friends from the Bloc Quebecois is worse. Not only do they hide the real federal contribution, but after saying that they do not count tax points as part of the federal contribution, they then ask the federal government to give nothing but tax points to the Quebec government. This means that they want us to give more to the provincial government, but that this contribution will not be recognized at all.

Of course, from a separatist point of view, if you are a separatist, which I am not, it is a fantastic idea. More money coming from the federal government and no acknowledgement whatsoever of the role played by the federal government. It is therefore a separatist ploy. I can say that this government is not stupid enough to accept such a separatist idea.

The statement that this budget gives no stimulus is a myth. It is well over 2.5% of GDP. It is in the form of lower taxes which puts more money into people's pockets. It gives more money to health care and more money to the government's key priorities: the learning agenda, the environment and research and innovation. We are simultaneously providing economic stimulus to support the economy and investing in the key areas that matter most to Canadians, health, research and so on.

The budget provides support to the Canadian economy at a time when the Canadian economy needs it most. It also implements the government's long term vision. It does what is necessary with regard to safety and security, our number one priority, but it is not doing more than is necessary on that front. It also addresses a matter of absolute importance to the Canadian economy, that is to say, the Canada--U.S. border in terms of both its security and the free passage of goods and people which is absolutely crucial to the long term health of our economy.

On all those scores, this is a good budget that sustains the economy when it needs it most. It is consistent with the government's long term vision of where this country is heading. It does what is needed on security and safety and addresses the critical question of maintaining a border that is both secure and free flowing.

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1:15 p.m.

Bloc

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

Mr. Speaker, the Parliamentary Secretary to the Minister of Finance has dealt with something I am interested in, tax point transfers. He said that members of the Bloc Quebecois and the Parti Quebecois do not talk about that. But he forgot to mention—

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1:15 p.m.

An hon. member

Separatists.

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1:15 p.m.

Bloc

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

The hon. member used the word “séparatiste”. He can use any word he wants, but I would like to ask this member a question.

Tax points—and I am not referring to cash transfers—were introduced because, as far back as Duplessis, the provinces did not agree with the federal invasion of provincial jurisdictions, more specifically in health care, education and social assistance.

The provinces realized that the federal government was using its constitutional spending power to do it, and they demanded compensation in the form of tax points and cash transfers.

Let me point out a specific aspect to the Parliamentary Secretary to the Minister of Finance. Does he find it normal that, in 1961, personal income tax generated $2.130 billion in federal revenues, and $89.580 billion in 2000? This is 40 times higher than 40 years ago. This was condemned by all the Canadian provinces, not just by Quebec separatists, not only by the sovereignists, but also all good federalists in Canada.

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1:20 p.m.

Liberal

John McCallum Liberal Markham, ON

Mr. Speaker, let us suppose that, tomorrow, the federal government were to convert all cash transfers to Quebec into tax points—it will not do so, but let us suppose for a moment that it did—what would happen?

The Quebec government would say that today the federal contribution to health and education is nil. But the real contribution of these transferred tax points would be equal to what it is today. Thus, what separatists are asking us to do is to indicate that our contribution to the provinces is nil, according to them, even though, in terms of funds lost by the federal government, it would be the same thing.

This is why I say that this is a separatist idea, one that the federal government would be absolutely crazy to follow. And this is why I also say that we will not do so.

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1:20 p.m.

Canadian Alliance

Brian Fitzpatrick Canadian Alliance Prince Albert, SK

Mr. Speaker, when I look back at Canada in the 1990s and the early part of this century, it seems to me that there are two provinces that are largely responsible for the economic growth in the country, the provinces of Ontario and Alberta, especially Ontario in the last five years of the 1990s. The first five years of the 1990s were rather dismal.

When I look at the other provinces I see economic performance either going sideways or backwards. When I see a city like Montreal losing its baseball team and the Montreal Canadiens losing their ownership to Americans, I ask myself what is happening in other areas of the country.

I ask my learned colleague on the other side of the House, are the Liberal policies really designed to bring prosperity to Alberta and Ontario or is it perhaps the Liberal government, the provincial governments and other governments in other provinces that are holding the provinces down so they cannot perform like Ontario and Alberta?

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1:20 p.m.

Liberal

John McCallum Liberal Markham, ON

Mr. Speaker, I am delighted to hear the suggestion from our hon. colleague from the Canadian Alliance that the Liberal government has been biased all these years in the direction of favouring growth in Alberta rather than in other parts of the country. I take that as a compliment. I am not sure it is quite true but we certainly have not been against Alberta. As he has suggested, possibly the good policies of the federal government over the years, as well as a spot of oil, have helped Alberta make a certain progress.

However it is also true that there has been some catch up, that over the last 20 years to 30 years, or indeed since the second world war, in terms of per capital income, GDP or living standards, the have not provinces of the maritimes have caught up to a significant degree and are closer to the national average living standards than they were 20 years or 30 years ago.

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1:20 p.m.

Liberal

Serge Marcil Liberal Beauharnois—Salaberry, QC

Mr. Speaker, I take this opportunity to participate in this debate on the budget that was brought down yesterday by the Government of Canada. We are well aware that, when a government brings down a budget, it is analyzed and criticized positively or negatively.

I am analyzing the budget, wondering what more we are getting, compared to previous years. Does this budget cut services? Does it increase taxes, compared to last year? Given the present economic situation, there are numerous question that parliamentarians must focus on.

On the face of it, I find that, compared to last year, this budget is a marvellous plus, because the government is maintaining what it had announced for the next few years. In health, the government had announced $23 billion over five years. Given the economic situation, was the Government of Canada able to maintain his commitments to the provinces, its commitment to hand over $23 billion to the provinces? This sector could have been affected.

When they are faced with a crisis, an emergency or a difficult situation, governments act like they did in the 1990s. To lower their deficits, the federal government as well as its provincial counterparts analyzed all their programs, dropped the least effective ones and cut services. But no, the amount of $23 billion is maintained, which is a plus. This means that in the next four years, $23 billion will be handed over to provinces.

The same thing applies to housing. We had announced $685 million for housing for the next five years. Is this program at risk or is the government trying to maintain it at the same level? All the funds already pledged for subsequent years have been maintained in this budget.

As for the tax cut, it has been in effect only since January 1, 2001. Therefore, it is the first year of the five year $100 billion tax reduction program. Such a big tax cut had never been seen in the history of Canada. It too has been maintained.

We now realize that all the commitments made last year by the Government of Canada have been maintained. It is staying on course. There is no coming back. On the contrary, almost all the commitments have been increased.

The good thing is that tens of billions of dollars will be invested in the economy as such. When there is an economic downturn, the government must create a positive environment for businesses to be competitive and to generate wealth, so that services can be paid for.

The stronger the economy, the more revenue the government can collect, which allows for more and better services for the public, such as health care, social services and so on. The government is involved in the economic environment precisely to allow businesses to be more competitive.

The proposed budget is extraordinary in this regard. We will invest in the security infrastructure for all Canadians, just as they requested. The people told us what they wanted. The psychosis of terrorism was making its way into Canadians' lives. The public asked the Canadian government to introduce new security measures, at least domestically.

The measures proposed in the budget reflect this clearly. Several billion dollars will be invested in infrastructures relating to security and border crossings. There are several border crossings in my riding. We will act in this area. We responded to the public's requests.

A government is not there only to do what the opposition parties want. The government is there to represent all Canadians, to listen to them and to meet their needs.

What is also fairly important, is that above and beyond all of the announcements made in last year's budget, beyond the new infrastructure programs between Canada and Quebec, or rather Canada and the provinces and municipalities, providing almost $2 billion over five years, now there are resources allocated to the environment, green funds for the municipalities that will be doubled, and a new infrastructure project which introduces an obvious idea: that we can now also act in concert with the private sector.

I would like to talk further about Quebec and about the greater Montreal area to demonstrate that the implementation of this strategic infrastructure foundation will indeed have an major impact on Quebec, all of Canada too, obviously, but particularly on Quebec and the greater Montreal area.

When referring to the deficits run up by greater Montreal area businesses due to delays shipping to the U.S. market, it is important to recall that 85% of Canada's exports go to the United States, and that our market really is the U.S. We do more than $2 billion in trade every day with the United States, with Americans. Our market is in the U.S. Where are our competitors? They are in the United States and Mexico.

The Government of Canada's responsibility is therefore to help Canadian business be more competitive on the U.S. market and with our other competitors.

In 1999, the greater Montreal area alone lost more than $500 million due to shipping delays. What can we do to help our businesses respond more quickly to the market? We can equip them with infrastructure that will give them access to the market. We are therefore finalizing plans for a major project, highway 30, as part of a proposal made by the firm Roche to the Federal Bridge Corporation. On January 19, 2000, Mr. Chevrette asked the Government of Canada to build the bridges that span the seaway.

All I can say is that I am delighted the government is going to invest a minimum of $2 billion in a foundation that will enable Quebec and the other provinces to put forward projects and fund them, not just with the provinces and municipalities, but with the private sector as well. This is a totally different approach, a brand new one, and I am delighted to hear it announced.

The $2 billion can be renewed annually. At the end of each fiscal year, surpluses may be invested in this foundation. It means that, in years of huge surpluses, there could be more and, in years where there are not any, well there will not be any. We can say, though, that we at least have announced an immediate investment of $2 billion.

I think all businesses and the mayors of Quebec—we got their reaction yesterday—are very pleased at this announcement. This morning I was speaking with people from the Conseil du patronat, who were positive about a budget commitment of this size.

It is something else to take a country with an operating deficit of $42 billion and a very large debt and, in the space of barely eight years, totally eliminate the operating deficit, lower the debt by over $36 billion and save over $2.7 billion annually in interest that does not have to be paid and can be used for other purposes, such as job creation and support for the economy, do all that and return $23 billion to health care and invest $2 billion in infrastructures and housing. It took a government that had courage and vision. Today, we have positive results and a positive budget for Canadians and Quebecers.

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1:30 p.m.

Bloc

Ghislain Lebel Bloc Chambly, QC

Mr. Speaker, I listened carefully to the member who just spoke. I was unable to be here yesterday evening when the budget was brought down so I have not heard about the final provisions in it concerning the $2 billion held in trust.

Is there a plan for working this out with the provinces? The member talks about his two bridges, but I think that the approaches to these bridges have to be built by the province. Will provincial priorities be respected? Will their choices be considered by this trust, which is apparently a body with I am not sure just what legal form?

I ask the member to enlighten me on this.

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1:35 p.m.

Liberal

Serge Marcil Liberal Beauharnois—Salaberry, QC

Mr. Speaker, I was talking about bridges. We cannot talk about highways as such because, under the Canadian constitution, construction of highways comes under provincial jurisdiction.

But the construction of bridges over the St. Lawrence Seaway is a federal responsibility. We cannot put money into the construction of a highway which does not belong to us, but we can, at the request of a province, put money into a sector over which the Canadian government has jurisdiction.

We are talking about highway 30, but we could just as easily talk about the ice control structure, which is also a major public transit project. We could talk about other highway projects throughout Quebec, which have been put forward in recent years by government members and also by the provinces.

As for how the foundation would work, I have no more information than the hon. member, because the announcement was made only yesterday. A foundation will be created, with a board of directors and a president. It is clear from the budget that the emphasis is on projects with provincial and municipal governments. Obviously, no private concern can stick its neck out and say that it will build a road between two particular villages without the approval of Quebec or the province in question. This falls under provincial jurisdiction.

I am certain that the primary purpose of this foundation was to guarantee annual amounts, as well as ensure that this fund would grow. Its purpose is also to ensure the development of a greater sense of partnership, both with the provinces and with municipalities and private enterprise.

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1:35 p.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

Mr. Speaker, I listened with great interest to the hon. member and the previous government speaker as they crowed about the ability of the finance minister to have slain the deficit.

It is interesting to throw into the mix the $38 billion that was inherited by the Conservative government of the day and the effort that was made, the political capital that was spent in bringing in a deficit reduction tax like the GST and, of course, free trade. Those are constantly left out of the discussions when the government is in a self-congratulatory mode and bending over backward to pat itself on the back.

I want to at least inject some intellectual honesty into the debate when we are talking about how the government accomplished these great things. It was done on the backs of taxpayers. It was done by taking the money from businesses, employers and employees to accumulate the surplus that now exists.

My question for the hon. member refers more to what has happened in the budget with the EI premiums. What has happened is really nothing. While we had one red nickel taken off the EI premiums last week, there is no mention of it in this particular budget. To the hon. member, I am concerned that what we see here is the EI premium staying the same, and at the same time we are seeing CPP premiums increase by 40 cents per $100.

How can the government and the member defend this policy and this budget by not reducing EI premiums so that people in places like Mulgrave, Afton and River John, Nova Scotia will be able to make a go of it this winter?