House of Commons Hansard #130 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

The BudgetGovernment Orders

4:50 p.m.

Liberal

Gar Knutson Liberal Elgin—Middlesex—London, ON

Madam Speaker, I again invite the member to take a first year economics course. The value of the Canadian dollar is based on the demand for Canadian goods by outside economies. That is level 101 economics.

There has been a drop in commodity prices, whether it is grain prices or oil prices. As one of the countries that are commodity based in terms of their exports, we will see a drop in the Canadian dollar.

The BudgetGovernment Orders

4:50 p.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

The arrogance is rubbing off on you.

The BudgetGovernment Orders

4:50 p.m.

Liberal

Gar Knutson Liberal Elgin—Middlesex—London, ON

If the member looks at how other dollars and currencies of other countries have done in the world, he will see that Canada is not doing so bad.

The BudgetGovernment Orders

4:50 p.m.

Canadian Alliance

Joe Peschisolido Canadian Alliance Richmond, BC

Mr. Speaker, I will be sharing my time with the hon. member for Medicine Hat.

It seems obvious in listening to the debate that the government must have been advised by first year economics students. They are the only ones who would have advised certain elements in the budget.

The biggest flaw in the budget is that there is no real tax relief for working Canadians. In fact they will be paying more to Ottawa, to big government in January, in fact $1.7 billion more. The vaunted government tax cuts that we have heard from the other side will have virtually no effect. They will come into effect but they will have no real import on the economy.

The government is offering a miniscule cut to EI premiums, a tiny .5 cents for workers and seven cents for employers. This means that anyone making $39,000 or more a year will save a grand total of $19.50, and employers, for every employee who makes over $39,000, will save only $27.30. This, despite the government's rhetoric, is hardly a stimulative boost to the economy.

We have heard a great deal of debate today and during question period about what is a payroll tax. EI premiums are only one part of payroll taxes. Obviously the other part is CPP premiums and they are on the rise by quite a bit. Any person who makes $39,000 a year and who saves $19.50 in EI premiums will have to fork out $172 more in CPP premiums.

Thanks to the government's alleged largesse, the average Canadian worker will be out $152.50 this year. That is a tax increase of $152.50. That is how much a Canadian worker's paycheque will shrink. This is what the government calls tax cutting.

The record of the government since the 1993 election unfortunately is worse. Canadians have seen their payroll taxes increase by $610, or by 32%, since 1993. Obviously if we follow the logic, even the logic of a first year economics student, Canadians are poorer but the government is richer. The only reason the budget is balanced is because of the continued raiding of the EI surplus, a fund that has been built by the sweat of Canadian workers.

The EI account, by all accounts, is huge. The government would admit this. There is some dispute as to exactly how large it is. My colleague says it is about $40 billion a year. This money has been squirreled away to safeguard the system against a possible recession. That is fine and that is the way it ought to work. The trouble is that the chief actuary of the fund has said that to survive even the worst recession, the EI fund needs at most $15 billion in the bank.

The government has refused to say if it agrees with the number, and if not, what the number actually should be. Obviously if the government does not agree with the chief actuary, it is incumbent upon the government to table its own numbers in the House.

With $40 billion in the EI account, which simply is rolled into general revenues and spent on whatever program the government desires, we have almost three times more money than would be needed to outlast the worst recession. By the finance minister's own account, this recession should be quite short and not too deep. We do not know that, but that is what the government's position is.

Let us follow the logic for a moment. There is $40 billion sitting in the EI account. It would be quite easy to cut premiums in a very large way. In fact the chief actuary is so helpful, he is telling us how much should be in the account. He has laid it out. He said the break even point is as follows. We could cut the premiums from $2.20 per $100 of insurable income for employees to $1.75.

If the finance minister had done this instead of cutting only a measly nickel, then Canadians would have saved $195, which is more than the concurrent rise in CPP premiums. Canadians would have actually had a tax cut. The system at this rate would break even and the account would still be left with $40 billion.

Let me try to go through the government's position as far as I can understand it. The Liberals say there is enough money in the account, so do not worry, but they cannot cut premiums any more because they are not sure if there is enough money in the account. With all due respect, if the surplus is so large, there cannot be more than enough money and not enough money at the same time.

Logically, only one of these positions can be true. If the government does have a huge EI surplus, then premiums can be cut to the near break even point of $1.75 for employees and $2.45 for employers. If the government does not have a huge surplus, where is it? Where have the Liberals wasted it? Where did it go? This is a legitimate question that the government has tried to avoid.

I suspect that the government has no intention of ever really answering these questions. Unfortunately, that point has been clearly made by the tenor of the debate back and forth here.

The simple fact remains that payroll taxes are going up. This is bad for Canadians. This is bad for the economy. Unfortunately, it is very bad for the hardworking Canadians and those who, because of the lack of a stimulus part in the budget, will be losing their jobs.

In fact, the Minister of Finance agrees. Back in this House on May 3, 1994 the finance minister said that payroll taxes are a cancer on job creation. If they are a cancer on job creation and the minister has not admitted but has come pretty close in stating that we are in a recession, obviously it should follow that there should be a stimulus part in the budget and that payroll taxes be reduced.

The message the government should be sending to small businesses and large businesses is to go out and create jobs. The role of government is not to create jobs; it is to provide the environment in which jobs are to be created. The government has failed on that account.

The message from the government is just the opposite. The Liberals are saying they are going to make it harder to create jobs. The government will talk about what is a payroll tax. Is EI? Is CPP? The government will try to fudge things. The bottom line is there has been a major increase in payroll taxes.

In summary, the budget has been a major disappointment for Canadians. Hardworking Canadians will see their paycheques shrink. This is very unfortunate. In the House we go back and forth many times, but the hard reality is there are people suffering out there. There are people trying to make ends meet. There are people worried about their kids.

The government is involved in a public relations exercise. The budget is not truly a budget that will lead Canada into the next century. Some have argued that the budget is all about leadership issues. Others have argued that it is just a temporary way of holding down the fort until a real budget can come forth in the next six to eight months. That is very unfortunate because Canadians deserve better.

The BudgetGovernment Orders

4:55 p.m.

Markham Ontario

Liberal

John McCallum LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, with all due respect I believe the member is utterly confused with respect to taxation.

The comment that there is no real tax relief is ridiculous, when in fact a year ago we had a $100 billion tax cut over five years. If it is limited to this year alone, it is a $17 billion tax cut this year.

The BudgetGovernment Orders

4:55 p.m.

An hon. member

That is not true.

The BudgetGovernment Orders

4:55 p.m.

Liberal

John McCallum Liberal Markham, ON

That is absolutely true. That is the largest tax cut of any of the G-7 countries. The contention is made that there is no real tax relief.

Take the increase in CPP premiums. We do not agree that is a tax increase. Even if that were subtracted from the $17 billion, it would still be the largest tax cut among G-7 countries because we were way ahead. The $17 billion dwarfs the $2 billion or $3 billion increase in the CPP premiums.

Whichever way it is skimmed, even if it is taken the worst way, from a Liberal point of view we have the biggest tax cut among G-7 countries.

On the point about EI, the $40 billion is not there. As the finance minister said today, since 1986 the auditor general has said we should put that into general revenue. What have we done with it? Part of it, $6.8 billion, is lower EI premiums, but that has also gone into things like $100 billion in lower taxes, $23 billion in health care, just the things that Canadians want and Canadians have set their highest priorities on.

There is no point asking about where is the $40 billion accumulated surplus because it does not exist, except on paper. I think it is time the opposition learned that simple fact.

The BudgetGovernment Orders

5 p.m.

Canadian Alliance

Joe Peschisolido Canadian Alliance Richmond, BC

Mr. Speaker, the problem is that the government is trying to have it all ways. It is using facts and figures to try to meet its arguments. Sometimes it is a five year tax cut; other times it is a one year tax cut. Even if we are generous and look at the so-called $100 billion tax reduction over a five year period, we are only talking about $43.5 billion over five years.

Let us look at the payroll taxes for this fiscal year. I was astounded to hear from my colleague across the floor that there was no EI fund. The EI fund is not taxpayer dollars, and this is a key point. The EI fund is taken from workers and employers. The purpose of the EI fund is to ensure there is a solid system for men and women, hardworking Canadians who lose their jobs. It is not to fund government programs and mismanagement. That is the whole issue.

The government should come clean on it. If it is using the EI fund to fund other programs and to cover up its mismanagement it should state that. It should simply state that there is no EI fund and the chief actuary should not be there. It should stop the charade and say that all funds going into the EI system from workers is a tax.

Canadian workers should be told that their money does not go for their own EI possibilities but to the finance minister for his or her pet projects. I am fascinated to hear from the government side that is the purpose of the EI fund.

The BudgetGovernment Orders

5 p.m.

Liberal

Larry Bagnell Liberal Yukon, YT

Mr. Speaker, I thank the hon. member for Richmond for his speech. I thought it was a great compliment of the budget and the government in that he did not deal with any of the new announcements but just talked about two items relating to payroll taxes which have been announced before.

I am sure he agrees with the fact that every year we have reduced EI payments. That is a payroll tax. I am sure his party would agree with that, and we would agree with that.

That leaves one item left that he discussed: the Canada pension plan. He should have no problem answering my question because the same question has already been asked twice today.

As he knows, Canadian pension plan actuarials went over it and the provinces and the Government of Canada agreed, because it was a joint program, that deductions had to be made to keep it solvent. In recent days it was proven to be solvent. Does the Canadian Alliance support the Canada pension plan and the levels of payment that will keep it solvent?

The BudgetGovernment Orders

5 p.m.

Canadian Alliance

Joe Peschisolido Canadian Alliance Richmond, BC

Mr. Speaker, my approach to the budget debate of not going through the points in it should not be taken as a testament of the virtues of the budget but of its lack of virtue.

It is quite simple. The government is trying to have it both ways and cannot. I would not agree with my hon. colleague that payroll taxes have gone down. Payroll taxes are not only EI premiums. It is very simple in my view. Payroll taxes are a combination of two premiums: EI premiums and CPP premiums.

If we look at the government's numbers since 1993 there has been a reduction in EI premiums of about $300, but there has also been an increase in CPP premiums by over $900. In effect there has been an increase in payroll taxes of over $610.

The BudgetGovernment Orders

5:05 p.m.

Canadian Alliance

Monte Solberg Canadian Alliance Medicine Hat, AB

Mr. Speaker, it is a pleasure to rise to participate in the budget debate. At the outset, there is no question that this is the worst budget that this government has ever produced. I would argue that commentators around the country are drawing that conclusion.

I reluctantly admit, in the past the government made some good decisions. In fact, it accepted many of the arguments of the official opposition, the Canadian Alliance, and before that the Reform Party. Because of that, it was to some degree successful in balancing the budget and doing a few other things.

However this budget is an unmitigated disaster. Why? I will run through it. It is a missed opportunity. The government had the chance to address some real concerns that Canadians had with respect for instance to security. What did it do in the end with respect national defence? It dropped the ball. There will be $100 million a going into national defence when we had people like the auditor general and members of the Canadian Defence Association recommending $2 billion a year.

On one hand, the government pleads poverty. On the other hand it did not reallocate one cent from low priority areas to high priority areas. The member from Markham, the parliamentary secretary, sits on the finance committee. He knows very well that the finance committee recommended that money be reallocated from low and falling priorities to higher priorities, areas like national defence. Did his government do it. No way. I would like to hear his response to that later.

The government has gone into a planning deficit. I know the parliamentary secretary is duty bound, and his intellectual honesty binds him, to acknowledge that that is true. It has gone into a planning deficit based on the rules that it had in place until this year, but it eliminated the prudence factor, the contingency reserves to a large degree. Under the current rules, the government has avoided being in that planning deficit. However by the rules that it had up until last year, it would have been in a planning deficit. There is no question of that. In fact, a lot of commentators believe that it will be an actual deficit as of next year, and the government is doing all kinds of creative bookkeeping to try to avoid that spectacle.

For a number of reasons there are problems with the budget. To my friend from Yukon, he should not labour under the illusion that the official opposition does not have problems with the budget. We have huge problems with it.

I addressed a number of things that bother me right off the top, but I want to say a few more words and get into a little more detail about one thing the budget really fails to do, which is address the long term decline in the Canadian standard of living.

At a time when the dollar hit five new lows in the month of November alone, it is interesting to me that the budget, that big stack of papers, did not mention the dollar once. It speaks volumes about the intellectual honesty, I would argue, of the people who were addressing some of these issues. Clearly that is on the minds of Canadians.

My friend from Markham, I think would acknowledge, that the dollar is some kind of a barometer of the health of the Canadian economy relative to the United States, our largest trading partner and competitor, a country with whom we used to share a very similar standard of living. As my friend knows, Canada's standard of living dropped in the last year. Between 1999 and the year 2000, our standard of living, according to at least one study, fell by $100, from $17,900 roughly to about $17,800.

I would think that it would be something that the government would be concerned enough about to actually address in its budget, but it did not do it. To me that is unbelievable. Again, the dollar is the harbinger of what is happening with respect to the standard of living.

It was only a year and a half ago, maybe not even that long ago, when the current foreign affairs minister was the industry minister. His department produced a report that said the average standard of living in Canada had fallen below that of the poorest of the American states. That was what the industry department.

The BudgetGovernment Orders

5:05 p.m.

An hon. member

Rubbish.

The BudgetGovernment Orders

5:05 p.m.

Canadian Alliance

Monte Solberg Canadian Alliance Medicine Hat, AB

My friend across the way says rubbish, but it was the government's industry department that said it. If he wants to say rubbish, he should say it to his minister because it came from his department.

These are some of the concerns the official opposition has, which were not addressed in the budget. There has been all kinds of talk about tax relief. The parliamentary secretary wants us to believe that taxes will go down $100 billion over the next five years. That is untrue. He knows very well that a big chunk of that was a cancellation of future tax increases that were automatically slated because we did not have indexation of the tax system. To the member, cancellation of future tax increases is not a tax cut.

The truth is that taxes will go down from levels of last year by about $43.5 billion. What that does not take into account is the huge tax increases between 1993 and, I believe, it was 1999-2000. In fact, between 1999 and 2000, we saw taxes as a per cent of GDP go from 44% to 44.3% in Canada. Therefore, taxes are still ramping up as a per cent of GDP.

This would be of concern even if it was only an abstract debate. However I want to argue that this has a huge impact on people my Liberal friends purport to care the most about. Who does this hurt the most? Does it hurt members of parliament? Does it hurt people who have a lot of skills, abilities and capital already? No. Who it really hurts are people on the low end, people who come from regions of the country where there are already high levels of unemployment. When the economy is not moving at capacity, those are the people who cannot find jobs. If they can find jobs, they cannot find jobs that will allow them to support themselves or their families.

That is what makes me a little ticked about this budget. The government has done nothing to stimulate the economy to the point where we will be able to climb out of this recession and start to build upon our standard of living relative to the United States.

For Cape Breton coal miners who were laid off as a result of the closing of the mines recently, there is nothing in this budget that gives them hope that somewhere in the very near future they will start to see the economy moving to the point where jobs will be created so they can get jobs that will allow them to climb out of that hole. People from a northern part of the country, where we have high levels of unemployment, or a single mom or someone who does not have a very good education will be in the same situation . For people who are struggling in an inner city somewhere, there is no hope in this budget that they will be able to climb out of the trouble they are in any time soon. That is because the government does not have a vision over the long run. It does not have a plan that will give people the hope they need to continue to go forward.

I want to argue that it can happen. We saw the economy really boom in the United States during the last number of years. We saw unemployment drop down to 4%, the lowest levels in 40 years in the United States. Even the poorest quintiles of its population, the poorest quintile of the black population, which is the poorest visible minority in the entire United States, had an unemployment rate of 7%, which is lower than our unemployment rate today of 7.5%.

When the economy moves that fast, companies move into areas where there are high numbers of unemployed people and they give them jobs, skills and some hope. Unfortunately, we have not done that in Canada and the government has provided no plan in the budget to do it.

I will conclude really where I began. There are many things to criticize in the government. I touched on a few at the beginning. However, where I am coming from today is that the government does not have a long term vision to get our economy moving fast enough to raise standards of living to help people on the low end of the income scale. The government purports to care about those people, yet it failed completely to address this problem in the budget.

The BudgetGovernment Orders

5:15 p.m.

Markham Ontario

Liberal

John McCallum LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, first, I would like to compliment the hon. member opposite as being by far the most effective spokesperson for his party on economic affairs, which is not saying all that much, but it does make one wonder why he is sitting at the back rather than the front.

In my very brief time, I would just like to point out three errors he has made. First, he says we are planning deficit, when we are not. Second, he says we have done nothing to stimulate the economy, when we have. Third, we have adjusted the living standard issue.

On the first point, the contingency reserve is there for contingencies. I would challenge the him to think of anything that is more of an unexpected, uncontrollable contingency than the events of September 11 and its aftermath. We have eaten partly into the contingency reserve to deal with this mother of all contingencies. On that basis, we have absolutely no planning deficit.

On the second point, he said there was no stimulus. This very year we have $17 billion in tax cuts. We have $3 billion in health care spending. We have other things adding up to more than $20 billion, which is far more, relative to the size of the economy, than any stimulus that the United States has even contemplated, let alone done.

On Cape Breton, we have a $112 million fund to help the workers and give hope to that part of the country.

Finally, on living standards, productivity is key, and on productivity we have slashed the corporate tax rate. We have eliminated the income tax surtax. We have cut the capital gains rate to half. We have put money into R and D, and all of that supports productivity and living standards.

The BudgetGovernment Orders

5:15 p.m.

Canadian Alliance

Monte Solberg Canadian Alliance Medicine Hat, AB

Mr. Speaker, first, with respect to the planning deficit, there is no question that September 11 had an impact. However the truth is we were already sliding into a recession and we knew it as early as last spring. People started to sense that the economy was going south. The government had a massive surplus. Instead of setting it aside for a rainy day or doing something with it to start paying down debt, it spent it ahead of time, which ensured that we did not have the capacity to deal with the recession.

My friend said the government spent it on tax relief. I want to refute that. He mentioned $17 billion. I think my friend would have to agree that the $17 billion is comprised of things like cancelling future tax increases and the lack of indexation of the income tax system. That is not a tax cut. That is a cancellation of a future tax increase. That will not have the impact an actual tax cut has.

My friend mentioned something like the Cape Breton fund of $110 million. First, I mentioned a whole lot of different situations. People are without hope in many areas in the country. The way to address that is not with some specialized fund here and there. These funds have been fraught with disaster in many instances in the past. The TAGS program is one example. Entire villages were trained to be scuba divers and hairdressers. We need is a long term plan that creates enough economic growth that jobs are created and ultimately we find living standards go up.

With respect to living standards, the hon. member did nothing to address the fact I raised, which was that living standards actually fell from 1999 to the year 2000, and that relative to the United States, we are not keeping up. The United States brought in $100 billion in tax cuts. That will make it very difficult for Canada to compete.

As my friend knows, since September 11, and he mentioned this himself during finance committee hearings, companies that were looking for a place to set up in North America, and at one time might have been attracted to Canada because they would have had easy access to the U.S. market, will now seriously consider setting up directly in the United States. We have to redouble our efforts now to cut corporate taxes, to speed up corporate tax relief and get rid of the capital tax, which was the recommendation of the finance committee. The hon. member sits on that committee and was part of making that recommendation. It was not addressed at all. It is a hugely punitive tax with respect to productivity, job creation and that kind of thing. Those things were not addressed.

On those grounds, I completely refute what my friend said. I would suggest that the government has a long way to go if it really wants to increase living standards in Canada.

The BudgetGovernment Orders

5:20 p.m.

Liberal

Derek Lee Liberal Scarborough—Rouge River, ON

Mr. Speaker, I am pleased to engage in this debate. Somewhere in the middle of the debate the exchange of rhetoric on both sides of the House was somewhat surprising to me. I do not know how readers of Hansard or viewers of the proceedings are taking this but from time to time I get lost in the great gulf between the rhetoric of what seems to be on one side of the House and what is on this side.

For the benefit of my own constituents in Scarborough--Rouge River I will try to focus my remarks on something where there are not great gaps in credibility and understanding.

We have gone through a budget presentation. The budget records a number of landmarks around the budget year. The budget year is the year that will follow the budget, not the fiscal year ending in March 2002.

There are two or three landmarks I have taken pleasure in viewing. I would say the same no matter what side of the House I sat on. First, I have taken pleasure in the reduction of our public debt. We can measure public debt, net debt and foreign debt seven ways to Sunday, but to make the matter simpler we have managed over the last couple of years to pay down our net public debt by some $35 billion.

Someone in the House was inquiring what happened to the $17 billion surplus. Most of it went to pay down the debt. We did not pay down $35 billion in debt by losing money somewhere and not finding it. It had to be paid down with real money. It was paid down with real taxpayer money scavenged from the surplus we had accumulated over the last couple of years. Our debt now stands at about $547 billion by the simplest measure.

Second, our debt to GDP ratio has moved down from approximately 71% to 51.8%. Next year, the year beginning next April 1, it is anticipated that our debt to GDP ratio will fall to under 50%. That is particularly pleasing because most of the industrialized world uses the 50% threshold as the benchmark for affordability of national debt no matter how we measure it.

I will not get into a debate about the various components of our public debt, some of which are more manageable and repayable than others. However once we are under 50% GDP we have a very manageable portfolio.

The budget documents contain quite a bit of information about how the government intends to manage and diversify our debt to ensure Canadians pay the lowest interest rates and reduce the debt in an appropriately orderly fashion over the years to come. That will happen.

Third, there was a time a few years ago when it was said that we paid 36 cents of every tax revenue dollar on interest. The budget records the fact that this year, the year ending this coming March, we are only spending 23 cents of every revenue dollar on interest. Some will say it would be better if we did not have to spend 23 cents of every dollar, but that is a heck of a lot better than 36 cents of every dollar. That is where we are now. That is how far we have come. We are continuing to make progress.

The budget follows through with a number of other commitments the government had made previously. A lot of the rhetoric and discussion here today is about things that were not in the budget or should have been in the budget. The tax cuts that have been described as cuts of $100 billion over five years were announced previously. They were not in the budget. They did not need to be in the budget. They are already part of government policy.

The number for the fiscal year we are in is some $43 billion, but the tax cut over five years is continuing. It is in the pipeline. It does not happen in one year. Whether we measure it at 20, 40 or 100, no matter how many billions of dollars or how we slice it up, the tax reductions are in the pipeline for all Canadian taxpayers.

The budget was intended to address a weakening economy as well as the September 11 incidents. It is important to note that two things are happening already which most economists would agree in large measure do as much as possible to address a weakening economy: fiscal stimulus and monetary stimulus.

The fiscal stimulus is the current $17 billion of tax cuts which will find their way back into Canadians' pockets this year. That is already is the pipeline. That money finds its way back into the economy as fiscal stimulus by a reduction in taxes on paycheques for all who pay at source or for those who pay their taxes in other ways.

The monetary stimulus comes from the very recognizable reduction in interest rates across the country. Not that long ago we were all paying 10%, 11% or 12% interest on various things such as consumer debt, mortgages, business loans and the prime rates. Those rates have all come down to 3%, 4% and 5%. That is a huge difference to Canadians. These low interest rates are providing the monetary stimulus. There is not an economist anywhere who will not agree that they are mega, major stimuli for our economy. These things were already in the pipeline when the finance minister delivered his budget.

I cannot address the many other elements of the budget in the few minutes I have, but there is a huge emphasis on security. What happened on September 11 changed our perception of what is happening in the world. The threats manifest in that incident were quantitatively and qualitatively beyond anything we have experienced outside of wartime.

We know there is an enemy out there and the enemy is pretty much unseen. In true gamesmanship theory, when we have an enemy we must find and liquidate the enemy before the enemy gets to us. Without going into details about how we must do this, it is imperative that we do. It is arguable that this enemy is intent on blowing us into the dark ages. No one in the House will permit that to happen.

We must now invest in security and intelligence in a way that will let us find and root out the enemy. Some of that is happening today in Afghanistan as we speak, but there are many other things ongoing and many other threats related to that, not just in Afghanistan but here and in our neighbouring countries.

It is not always possible to go into detail about all the threats. Canadians understand that we cannot do it because there are ongoing attempts to find the enemy. If we tell the enemy we are looking for him the enemy then changes the players on the chess board and we make our success that much harder.

These things are going on now but there are huge risks out there. We do not know when the risks will reduce. There is no reason to believe they are any less today than they were on September 11. They will continue for some time.

In that process, it is possible that all of us as Canadians will be asked to rethink our own civil liberties from time to time and invest a bit in our own collective security. These issues have been discussed elsewhere in relation to Bill C-36 and Bill C-42. Where we will be a few months from now I am not sure.

I come from a riding which has a large representation from each of the five large Islamic groupings: the Sunni, the Shia, the Ahmadiyya, the Ismaili, the Bora and others. These groupings of the Islamic faith are embarrassed and unhappy that the terrorists have in a sense hijacked their faith and pretended that the Islamic faith is the reason for the terror.

This is not the case. We must all be sensitive to that. As we move along we must ensure that all Canadians are treated fully as Canadians and accorded all their civil liberties with great respect.

The BudgetGovernment Orders

5:30 p.m.

Progressive Conservative

Elsie Wayne Progressive Conservative Saint John, NB

Mr. Speaker, I will address an issue that has not been addressed in the House of Commons and in the budget. Enough money has not been given to our military in the budget.

The hon. member is talking about what happened on September 11. Following that we sent our men and women over to Afghanistan. We are talking about sending more, but we do not have the tools or resources for those men and women.

I do not know if the hon. member is aware that the filtration system on the supply vessel, the frigate that went over there with our men and women, broke down. They did not have any water to drink. They could not wash their hands. They could not take a shower. That was for over a week.

This was to be a military and security budget. The military got $300 million, for heaven's sake, to buy the equipment that it needs. That is nothing. Could the hon. member tell us when the government will put some money into the budget for boots, for equipment, for uniforms and for tools so the military can do its job? It did not put it in this budget.

The BudgetGovernment Orders

5:30 p.m.

Liberal

Derek Lee Liberal Scarborough—Rouge River, ON

Mr. Speaker, the hon. member will be pleased because I have a fairly good answer for her. As I mentioned before, not everything we spend shows up in the budget. The budget speech is intended to show new spending initiatives.

The hon. member makes reference to $300 million or whatever it was. The base funding for Canada's military in the current fiscal year is $11 billion.

There have been other amounts added to that. Over the next four years the annual additions for capital funding for boots and other equipment purchases that are being made separately from the base funding will total $7.6 billion.

The hon. member may like to focus on $300 million but the budget has an additional $1.2 billion. All we have to do is add the other $900 million to the $300 million for this year.

Over the next five years, Mr. Speaker--please read my lips and listen to the numbers--it is $7.6 billion for Canada's military. Our men and women overseas will not go without, whether they are in aircraft, on ships or on the ground.

The BudgetGovernment Orders

5:35 p.m.

Canadian Alliance

Inky Mark Canadian Alliance Dauphin—Swan River, MB

Mr. Speaker, I agree with the Liberal member that this is a security budget and I want to ask him a question about security.

Let us turn the clock back. When the government came to power in 1993 it wanted to balance the budget. It did balance the budget, but it took funds away from all our security agencies. The RCMP, CSIS, customs and Immigration Canada were all cut back.

I am a member of the immigration committee. We made a field trip to visit the different organizations and ports of entry. We found out that what was called for was in agreement with what the auditor general's 1997 and 2000 reports called for: more human resources and technical resources.

Will the hon. member on the government side account for his government slashing the budgets of our security agencies?

The BudgetGovernment Orders

5:35 p.m.

Liberal

Derek Lee Liberal Scarborough—Rouge River, ON

Mr. Speaker, no one out there should think anything other than that we had to cut spending to reduce our annual deficit. We have cut spending so much now that Canada's program spending is the lowest it has been in my lifetime. I will now have to say how old I am. This goes back to the year 1948-49. The percentage of GDP program spending is the lowest it has been in 52 years.

No terrorist incidents occurred in Canada as a result of anything Canada did or did not do or as a result of cutbacks to our policing and intelligence gathering. However now we need to reinvest along with our allies for the global purpose and we are doing it to the tune of many billions of dollars.

The BudgetGovernment Orders

5:35 p.m.

Mississauga South Ontario

Liberal

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

Mr. Speaker, the House is bursting at the seams.

September 11: How many times have we heard the date throughout the last three months? Last week I had the opportunity to travel to Washington with my colleagues on the transport committee. The officials there were referring to 9/11. They did not say September 11. They said 9/11. I think the budget reaffirms to Canadians what we all know, that it really was 911. It was an emergency call to all democracies around the world that value the safety, the security and the freedoms and values we have fought so long and so hard to establish for our countries, our families and our communities.

It really put a jump-shift on a lot of the important priorities that governments set for themselves. Prior to September 11, many members of parliament were working feverishly to make their representations to government officials and to ministers about some of their priorities. I wanted this budget to be a green budget. I wanted it to be a budget that dealt with the environment. I consulted with my constituents. I did a survey. Ten thousand surveys went out. My constituents told me that if we do not take care of our environment nothing else really matters because we will not live long enough to enjoy everything else we have in this beautiful country.

I wanted to allow spouses who stay at home to care for pre-school children, thus withdrawing from the paid labour force, an opportunity to buy into the Canada pension plan system for those years, so that over their career of working, whether it is paid or unpaid work, we would recognize the value of that work. They would have an opportunity to earn a full Canada pension plan. I thought it was an important priority to recognize the value of unpaid work.

I wanted to look at our EI system. I wanted to look at the possibility of improving the lot of casual employees who do not put in enough hours of work to ever qualify for benefits but have to pay the premiums. Rather than reducing the premiums directly, I wanted us to increase the exemption so that they would pay only on a smaller portion of their earnings. It would stimulate job creation.

Members in this place all have different priorities or ideas that they would like to see the government consider, but 9/11, September 11, changed that. It is imperative that we reassess our security and safety in Canada just as every other democratic country is doing. Without safety and security in a country there is no sovereignty. Without sovereignty we have no economy. Without an economy, a stable, growing and vibrant economy, quality of life starts to deteriorate. Therefore it was imperative that this budget be a budget of safety and security.

It has been that. It is not very glamorous but it is a necessity. I think all members agree with the steps taken to ensure the safety and security, the investment in policing, the investment in airline and airport security, the investment in our military and other defence measures and in our intelligence services, all totalling an enormous amount of money invested in security, because without that security we have nothing.

Canadians also know that Canada has to go on governing and following through to the best of its ability with the other important priorities for all nations. We have to take care of the financial fundamentals. We have to make sure that we are fiscally prudent and fiscally responsible, even in times of 911 calls.

In fact what has happened here is that the fiscal prudence of the government since 1993 has not only put us on good financial footing, but prudent financial management and contingencies have put us in a position of being able to address these 911 calls.

Canadians are probably comforted by the fact that this budget is a balanced budget, as budgets has been for a number of years now, with surpluses. We have committed to a balanced budget not only for this year but for the next year and the year following that. That has to provide important confidence to all Canadians.

We have paid down debt. We have not spent money that was available in surpluses. It was important to bring down our debt to an affordable level. We will continue to pay it down. In fact, it is now below 50% of GDP. It is an important step. We will do more, but we have to make choices and safety and security certainly have to be there.

Many of the speakers in the House have suggested there is nothing for new health spending or tax measures, et cetera. There is. There are long term commitments to our Canada health and social transfer and to tax cuts. A $100 billion tax cut program was presented by the finance minister and included in a previous budget so that Canadians could plan for and understand what their tax liability would be and so that provincial governments that receive the funding in support of program spending, for post-secondary education and health care, have scheduled funding and know it will be there.

This year there is almost $3 billion extra for spending in health care. In my own province of Ontario, 90% of the incremental spending in health care was financed by additional transfers from the federal government. It shows that the federal government is doing more than its share in Ontario and that Ontario should be spending more on health care. We cannot legislate that, but we will certainly make sure that the people of Ontario know that the federal government is doing its fair share on health care and that the province of Ontario is responsible for letting its citizens down by not matching its responsibilities.

The previous speaker referred to interest rates being at an all time low. I remember when we were fighting a $42 billion deficit back in 1993. We talked about the impact of interest rates and what a 1% drop in interest rates would mean in terms of mortgage financing and purchasing automobiles. That is real after tax savings to Canadians. Interest rates are now at a 40 year low. It is very important. This is helpful to Canadians.

There is no question about the defence issue. Many have said we should do more. I think the important thing for Canadians to know is that our military leaders have advised us that they have the tools and the resources to do the job they have been asked to do. They always have been there to do that job and I am very proud of that.

As a member of the transport committee, I had the opportunity, with my colleagues, to look at the whole issue of safety and security in our airlines and airports. I think Canadians should know that the United States very quickly passed legislation back on November 19 to put something in place before Thanksgiving because they wanted to, hopefully, re-stimulate the confidence of its travelling public during the week which is historically the busiest week for travel in the United States. We found out that only 80% of the aircraft actually flew during that week, and of those only 80% of the capacity was utilized. It basically means that on the busiest travel week of the whole year in the United States only about two-thirds of the capacity was utilized. It is obvious, then, that the impact on the confidence of Canadian travellers is just as severe and that it is very important for us to address the safety and security issues in Canada.

In my last moments I simply would like to thank the Prime Minister. He promised me that fetal alcohol syndrome would be on the agenda of the Government of Canada. It was in the throne speech at the beginning of this parliament and it was in this budget. He has kept his promise. He has delivered. I want to thank him very much.

The BudgetGovernment Orders

5:45 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Mr. Speaker, I have many questions to ask the member, but first I will respond to his last statement. I think all of us are greatly concerned about the fact that children are born suffering from the consequences of having mothers who drank while pregnant. That can result in brain damage which a youngster has to live with for all of his or her life.

My question to the member is, since there is a line item in the budget to support native young people or children who suffer from this, and I presume the money is going to be used for education, exactly how will the money be used and accounted for? What proof will we have that it is effective? What measurements will the government actually put in place to confirm that there is some real action taking place on this very important issue? I know it is an issue dear to his heart.

The BudgetGovernment Orders

5:45 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I thank the member for his question on fetal alcohol syndrome. The consumption of alcohol during pregnancy is the leading known cause of mental retardation in Canada, period. It is incurable but it is preventable.

The member is quite right in that included in the budget is some $25 million dedicated to prevention and a reduction in the incidence of fetal alcohol syndrome. Seventy per cent of aboriginal persons live off reserve, so programs developed here will benefit all Canadians. Fifty per cent of pregnancies are unplanned. The basic message is that if pregnancy is possible, people should abstain from consuming alcohol, period. It is very simple.

Two years ago a national advisory committee on fetal alcohol syndrome was established by the Minister of Health. Consultations were held right across the country as to the most efficient and effective programs. That report is forthcoming and programs will be developed very soon. Funding announced by the government will be utilized to ensure that the programs will have the best possibility of being effective in reducing FAS in Canada.

The BudgetGovernment Orders

5:45 p.m.

Liberal

Larry Bagnell Liberal Yukon, YT

Mr. Speaker, my colleague suggested at the beginning of his speech that he was depressed because so much money had gone into security expenditures that some other items could not be covered, particularly the environment. However, I want to pleasantly surprise my colleague.

This budget was not just about the important issues of security, tax cuts and health care. Money was still left for the environment. The two municipal environmental funds were doubled in spite of the reduced moneys available. The brownfield strategy was addressed in the budget. I am very excited about wind energy, which would reduce greenhouse gases, and this was also included in the budget. There were tax provisions for microhydro which also will help reduce greenhouse gases. Provisions for transition of woodlots were also included in this budget.

I hope these facts will make my colleague happy because this is tremendous environmental coverage.

The BudgetGovernment Orders

5:50 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, the member is quite right. There are a number of areas in which the government has been able to continue its efforts. We all know that the government continues to have study groups looking at important initiatives by which we can address some of our undertakings and the achievement of our Kyoto commitments. The member has outlined some of those items.

Canadians should know that there are many parliamentarians here who believe that our environment is one of our largest vulnerabilities. Automobile usage is probably the most significant contributor to greenhouse gases. We need urban transit strategies. We need alternative energy utilization strategies. We need a number of strategies. Some of them are on the table now, but more work is being done. Canadians can be assured that the environment is a priority of the Government of Canada.