House of Commons Hansard #131 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.


Committees of the House
Routine Proceedings

1:30 p.m.

Canadian Alliance

Jason Kenney Calgary Southeast, AB

Mr. Speaker, I was disappointed but not the least bit surprised that the parliamentary secretary in his 30 minutes of remarks failed to mention once the subject of the motion before the House, that the House concur in the 10th report of the Standing Committee on Finance.

As an opposition member I find myself in the very peculiar situation of concurring in and supporting a committee report drafted principally with the direction and support of the government majority members on that committee while the Parliamentary Secretary to the Minister of Finance, I gather, opposes the report which the House now seeks to concur in. How do I so gather? Whence do I make that inference? Quite simply from the fact that the parliamentary secretary did not bother to address the report.

How sad it is that he has become a lackey for his minister's department rather than actually being intellectually honest about the budget. How sad it is that he could not even make reference to this report presented to the House by the finance committee. There is one good reason for it. It is because about 90% of the recommendations of the Standing Committee on Finance were either ignored or contradicted by the budget presented in this place this week.

I and other members in this place have had a chance to begin the general debate about the shortcomings of the budget and the wasted opportunity it represents. There is the government's lack of prioritization; the fact that there is no debt reduction, tax relief, support for health care or agriculture; the fact that the government could not find one cent in ways to reduce. We have talked about that and developed those themes but I want to go straight to the point of the motion, concurrence in the standing committee report.

Sitting here at my desk I have identified 25 substantive recommendations of the Standing Committee on Finance, 23 of which were either ignored or contradicted by the budget presented in this place. The finance minister said at the outset of his speech that he wanted to thank the Standing Committee on Finance for the marvellous work it did in consulting with Canadians and how this represented the new open and transparent budgeting process of the government.

What hogwash when we see that the literally thousands of hours of witness testimony, preparation, hearings across the country and work by the members of the finance committee to produce this report were completely ignored by the finance minister. I suspect that he never read it. In fact I suspect that his parliamentary secretary, who sits on the committee, never read it.

I will begin to go through the 25 substantive recommendations in terms of fiscal policy. On page 25 the report states:

Tomorrow's productivity gains also depend on maintaining a commitment to balanced budgets--

The finance minister presented us with a stealth deficit, not a balanced budget, last Monday. It is not only the opposition that says this. It is a growing list of independent economists, such as the TD Bank, which stated that the finance minister “was able to show a zero on his budget's bottom line for this year and next only because of some fancy accounting footwork”. David Rosenberg, the chief economist at Merrill Lynch said “A small deficit in the next two years is a good possibility”. Ted Carmichael at J.P. Morgan said “At least a modest deficit now looks likely”.

The fancy accounting footwork to which TD referred was the fact that the finance minister took $2 billion of revenues that are owed to the public treasury in this year and, through a bogus deferral of that tax to the next fiscal year, moved money from this fiscal year to the next fiscal year. He broke every accounting rule in the process in order to show an ostensible deficit. He also had to cut $3 billion out of his combined prudence and contingency reserves to avoid showing a planning deficit.The government contradicted the first recommendation of the committee to balance the budget.

At page 26 of the report in terms of reallocation it states:

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.

In support of that it quotes the BCNI as stating:

Finding the money needed to ensure the security of Canadians will require determined efforts to chop less essential spending to defer to other proposals for new initiatives.

It also quotes the Insurance Brokers Association of Canada as stating:

If increased spending in the area of national security is to occur in a context of fiscal prudence, funding for other initiatives will inevitably have to be curtailed.

On that point of reallocation, to cut low priority spending and move it to high priority spending is something which the finance minister ostensibly agrees with. On October 6 he told the Toronto Star :

Ottawa is reviewing its spending on an item by item basis to see where cuts 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.

The finance minister agreed with the finance committee but in the budget there is not one dime in reallocation, not one cent. In fact, he was quoted in the National Post today as saying that he could not find any fat in the $130 billion budget, which led columnist Andrew Coyne to write that it would appear that there is no such thing as a priority in Ottawa these days; everything is given equal billing.

At page 27, the finance committee recommended that all government spending undergo a program review which should include: a public interest test; a role of government test; a federalism test; a partnership test; an efficiency test; and an affordability test. It also states:

The Committee recommends that the government follow the program review process while maintaining a balanced budget in the face of new priority spending.

There is no mention, not one word in the budget, of a program review. The committee quoted David Paterson of the Canadian Advanced Technology Alliance in support of its recommendation as stating:

Increased spending on security is essential, but we believe it can be offset by reduced spending on less important programs. New initiatives can be postponed until a budget surplus has been restored to a more adequate level--

Again there was no reallocation and no program review. At page 27 the committee also recommended:

The Committee has in the past recommended that the federal government strive to limit program spending growth to the rate of inflation plus population growth.

Inflation plus population, which the committee recommends, is a 3% rate right now yet the program spending budget increases ostensibly by 9.4% in the budget. Actually, if we look at the dedication already of the contingency reserve, it grows by over 10%. That is three times higher than what the finance committee recommended, the committee of which the parliamentary secretary was a member.

Here is another contradicted recommendation of the report. At page 30 of the committee report it speaks to five year projections. It states:

While the Committee is broadly in agreement with this approach, it is concerned that the May economic update employed only two year fiscal projections. The Committee feels that the five year estimate of surpluses for planning purposes presents a framework within which budgetary debate can take place.

Under questioning from the Leader of the Opposition at the finance committee last May, the finance minister indeed stated “Yes, I will provide five year figures this fall”. He failed to do so. He broke his own word. He broke the recommendation of the finance committee to provide five year projections so we could see the direction the federal government was headed in. The reason he did it in this budget of course is that he did not want to show what he knows, which is a deficit appearing in his plan in the out years. At page 31 the committee recommended:

--any time the full amount of the contingency reserve is not available for debt reduction, the difference should be added to the contingency reserve of the following year.

It went on to state:

The Committee applauds the government's commitment to use unutilized contingency reserves for debt reduction. The Committee also supports the government's commitment to announce each fall how much of the anticipated surplus over and above the contingency reserve will be used to pay down the debt.

It quoted, in support of this recommendation, the Vancouver Board of Trade as stating:

--utilizing a contingency reserve in its annual budget, with an extra degree of economic prudence to provide further assistance against falling back into a deficit. This approach no doubt is proving to be very beneficial this year as the economic decline erodes revenue.

The Canadian Manufacturers' Association said, in support of this recommendation:

--it is essential that the government revise its spending plans in order to ensure that existing reserves set aside for contingency and economic prudence purposes are sufficient to offset any deficit that may arise in its underlying budget balance.

What did the finance minister decide to do in response to this recommendation? He trashed it. He took $4 billion for contingency and prudence, reduced it to $1.5 billion and said that it would not go to debt reduction but rather it would go to new program spending in the form of foundations which have been condemned by the auditor general and another recommendation that the finance committee contradicted by the budget. At page 32 the committee recommended:

That any new spending initiative be subject to the rigorous and detailed tests of the principles of Program Review...that the federal government initiate a regulatory audit of all regulations to ensure relevancy and benefit of regulations in our current context. This audit should include a clear process and schedule for the elimination of undesirable regulations.

I already have addressed the absence of a program review commitment here. With respect to deregulation, the committee made a further recommendation at page 126 that:

--reiterates its call for the government to institute better oversight of the cost of regulations and user-charge programs by reporting on them annually with the budget.The application of these must not be undertaken in isolation but must be consistent with the government's overall policy objectives, namely international competitiveness...and an improvement in living standards via enhanced productivity.

There is no mention, not one word, about deregulation or a review of regulations, another recommendation of the finance committee ignored by the government. At page 35 there is an interesting comment by the Business Council on National Issues.

There can be no doubt that the war against terrorism will require additional spending. Such new costs, however, should not be simply loaded on top of the business-as-usual approach to all government activities.

That is precisely what happened. At page 48 the finance committee renews its call for the government to engage in a productivity covenant. This is a very respectable and positive hobby horse of the finance committee chair.

The Committee reiterates its long-standing recommendations that the government should commit to a productivity covenant. Just as Program Review is an ongoing examination of federal spending, this covenant should subject all existing government an assessment which evaluates their expected effects on productivity and hence the standard of living of Canadians. Every new budgetary initiative should be judged according to this productivity benchmark.

What happened? Nothing, no productivity covenant or benchmark, is in this budget. At page 45 the committee said:

--we must ensure...that tax relief is sustainable, so that we do not embark on a roller-coaster ride of tax cuts followed by tax increases whenever the budgetary position is threatened by financial turmoil and economic slowdown.

We are in that condition now, yet the government not only did not reduce taxes in this budget, it increased taxes. It increased CPP premiums by over $2 billion. It increased tobacco taxes by $400 million with no offsetting decrease elsewhere. It increased taxes on air travel by $400 million. It contradicted the committee's recommendation for no tax increase.

At page 53 the committee recommended a white paper for defence to assist government in revising its defence policy. It quoted the Conference of Defence Associations as saying:

--Canada spends only $265 per capita on defence. The NATO average is $589. The study (of the CDA) concluded that, notwithstanding recent increases, an additional $1 billion per annum needs to be added to the DND budget merely to check the decline of the Canadian forces. Furthermore, the Canadian forces “currently inhabit the worst of two worlds: conventional military capabilities are in decline; and, new capabilities are unaffordable.

At page 55 the committee recommended:

A fast-tracking review of the 1994 Defence White Paper to determine its continued relevance, an acceleration of the replacement of out of date equipment, and additional funds to DND.

All of that was broken except that there was $100 million in additional funding to DND per year in this budget, which is 5% of what the CDA recommended; another recommendation broken.

At page 60 the committee recommended that the government invest in border infrastructure to assist in the rapid flow of goods across the border. The government did that with a $600 million infrastructure commitment, which we support and applaud. At page 76 the committee recommended:

Given the Committee’s views on the dangers of falling back into deficit, we recommend postponing any major new non-security spending initiatives until the longer-term fiscal outlook is secured

The committee said no new spending in non-security areas, yet the finance minister raised spending by $10 billion, about three-quarters of which was in non-security related areas.

There is one other positive point. At page 82 the committee recommended that the government exempt from capital gains the gift of securities to registered charities. The government accepted that recommendation. We applaud it for doing so. That is 2 out of 25 recommendations. On employment insurance premiums at page 83 the report states:

The Committee recommends that the government continue to reduce EI premiums so as to gradually get closer to the break-even rate.

It quotes the CFIB supporting this by saying:

The $100 billion federal tax plan includes a 10¢ EI premium cut for 2002. A lower rate cut will signal to employers and employees that the government is prepared to move off its tax reduction plan.

What did we get? A five cent reduction, not a ten cent reduction. We did not substantially move any closer to the break even rate; another recommendation ignored.

At page 84 the committee recommended “That the government consider implementing a yearly basic exemption for employment insurance”. That would have substantially reduced by several billion dollars the EI payroll burden. It was ignored. At page 86 the finance committee recommended:

That the government undertake the research necessary for a comprehensive reform of the capital cost allowance rates to better reflect the pace of technological change and the ever-shortening economic life of modern machinery and equipment.

That was a very important recommendation that came to us from a number of industry groups. There was not a single word in the budget about capital cost allowance or any other form of corporate tax reform. At page 88 the committee recommended:

That RRP and RRSP limits be indexed to inflation, consistent with the government's decision to restore full indexation to the tax system. Similarly, the Committee recommends that the government consider a one-time increase in contribution limits for the full range of savings plans beyond what is already planned.

Most witnesses recommended that increase be to $18,500 on RRSPs. Of course, there was not a word about pension tax reform or increasing RRSP limits in the budget, which is another recommendation ignored.

At page 91 the committee made a recommendation that we change section 31 of the Income Tax Act to make it clear that horse race operators who had a reasonable expectation of loss and incurred a loss could write those expenses off like other businesses do, and the government ignored that recommendation. At page 92 the committee recommended:

That the government consider measures to promote the use of ESOPs.

This was a very popular recommendation of witnesses, and it is nowhere to be found in the budget. This is another recommendation ignored. Finally, at page 113 the committee recommended:

--given current economic conditions, the government sell its remaining stake in PetroCanada consistent with the government's longstanding commitment.

That plus the continued share ownership in Hibernia represents about $2 billion in government equity which could be applied to the debt, realizing about $150 million in annual interest savings, money which could then go to stimulative tax relief or to health care and agriculture.

The point is that over 85% of the recommendations of the finance committee were ignored or contradicted by the government. The Parliamentary Secretary to the Minister of Finance is a member of this committee. He stood up on a concurrence motion. I presume that he does not concur in the committee report.

The official opposition took the unprecedented move of actually concurring in this committee's report and issued a supplementary, rather than a dissenting opinion even though we did not agree with all of it, because fundamentally it was sound.

The theme of reallocation, the theme of setting priorities, the theme of further tax reduction, the theme of balanced budgets and the theme of further tax reform and reduction, capital tax relief, payroll tax relief were all eminently sensible. In closing, the opposition concurs in the finance committee's report. It is a shame that the government does not.

Committees of the House
Routine Proceedings

1:50 p.m.



John McCallum Parliamentary Secretary to the Minister of Finance

Mr. Speaker, this is an excellent report. The member opposite is getting all excited. It is a well crafted report. He totally misses the point.

There are two critical chapters. Chapter II, “Seeing Through the Storm: Holding Course on the Productivity Agenda”, deals with the short term issues and sets out five priorities for the budget, on page 33. First, the government should invest in national security. Second, the government should not return to deficit. Third, we should follow through on the health care spending. Fourth, we should follow through on the $100 billion tax cuts. Fifth, we should spend more on research.

Those are the short term priorities stated by the committee. Every one of them is in the budget. All his citations come from chapter IV, which is entitled, “Planning for the Future”. The sensible members of the finance committee understood that these would not generally be in the budget, given the exigencies of the day, but each and every one of the short term objectives set by the finance committee were indeed carried through in the budget.

Committees of the House
Routine Proceedings

1:50 p.m.

Canadian Alliance

Jason Kenney Calgary Southeast, AB

Mr. Speaker, the member does not know what he is talking about. I drew recommendations from every section of the report. In terms of immediate priorities, it talks about reallocation. It states there must be cuts in any program areas to offset new security spending and that:

--new spending on security and defence could lead to a deficit, the government must balance this new spending with spending cutbacks elsewhere.

There was not a cent in spending cutbacks elsewhere. The committee referred to its previous recommendations to limit spending to the rate of growth of population and inflation 3%. Spending in this budget was increased by over 10%.

He says that the recommendations in the latter part of the report are for some indefinite point in the future. Not so. The recommendation on the capital tax was for “immediate” elimination of the capital tax and to move immediately toward the break-even rate unemployment insurance.

I know the parliamentary secretary is embarrassed for himself and his minister because they went through this public relations exercise, spent probably millions of dollars of House resources to produce this report and to placate interest groups to make them feel like they were being listened to, and then they just threw the report in the trash, along with fiscal responsibility in this budget.

Committees of the House
Routine Proceedings

1:55 p.m.

Canadian Alliance

Jay Hill Prince George—Peace River, BC

Mr. Speaker, I have listened with great interest to the finance critic for the Canadian Alliance. I find myself agreeing with the general thrust of his comments; that shame on the government for ignoring so many of the recommendations contained in the very report of a committee that is dominated by government members. It is incomprehensible that it has done such a disastrous job for the nation in drawing up this latest budget.

Specifically, could I elicit a comment from my colleague about the new $24 per ticket fee, what the parliamentary secretary calls a user fee, on all domestic and international air travel?

The member may not know that in a vast northern riding such as mine in northeastern British Columbia, there are many smaller airports with smaller airlines that do not even have screening facilities or security measures, yet, supposedly under this plan of the government, people will have to pay the $24 fee.

If at some point in the future the government reduces its security measures, will we see this tax on air travellers reduced or eliminated or is the travelling public is just stuck with it forever?

Committees of the House
Routine Proceedings

1:55 p.m.

Canadian Alliance

Jason Kenney Calgary Southeast, AB

Mr. Speaker, Thomas Jefferson said that there are two things certain in life: death and taxes. Another thing that is certain is that a tax never dies. This new $24 per round trip tax is a punitive penalty on those who travel.

There are many smaller airlines that fly smaller routes and their fares may be only $50. All of a sudden, the cost of a ticket on those airlines will increase by 50%. It is completely insensitive to price. The cost of this new tax is the same whether one flies business class from Halifax to Victoria for $4,000 or takes a $50, 10-minute flight from Victoria to Vancouver. It is a terribly designed way to pay for this.

I have every anticipation that the revenues from this will end up in a slush fund, much like those from the EI fund which have now furnished the government with a $40 notional surplus to pad its budget.

International Year of Mountains
Statements by Members

1:55 p.m.


Claude Duplain Portneuf, QC

Mr. Speaker, the United Nations declared 2002 the International Year of the Mountains. Throughout the year, the UN will seek to promote conservation and sustainable development in mountain areas, by raising public awareness, and promoting and defending the cultural heritage of mountain communities and societies.

The International Year of Mountains will provide an opportunity to raise awareness concerning the importance of mountains, the fragility of their resources and the need for sustainable approaches to mountain development.

Mountains are fragile ecosystems and are important at the global, regional and national levels. The United Nations described them as adirect life-support base for about one-tenth of humankind. They also supply between 30% and 60% of freshwater in tropical zones, a figure which rises as high as 95% for semi-arid and arid areas.

The United Nations Food and Agricultural Organization, in conjunction with other UN organizations and with NGOs, is planning numerous events and initiatives to raise awareness, and to communicate key information on mountain-related subjects.

We in Canada are very fortunate that, in many of our parks located in mountain areas—

International Year of Mountains
Statements by Members

2 p.m.

The Deputy Speaker

The hon. member for Okanagan--Shuswap.

Veterans Affairs
Statements by Members

2 p.m.

Canadian Alliance

Darrel Stinson Okanagan—Shuswap, BC

Mr. Speaker, part of the holiday season is sharing it with family and friends, including remembering those who have gone before us.

The Government of Canada bears special responsibility to remember Canada's veterans, including providing wreaths on behalf of Canada to be laid at cenotaphs across the country during ceremonies each November 11, but we have a problem. The Government of Canada only provides wreaths for communities which have an operating Canadian legion building.

My riding includes two small communities which conduct November 11 ceremonies at their local cenotaph but have no legion branch so the Government of Canada provides no wreath.

Partly due to the age of Canadian veterans, this year in B.C. alone it is expected that six to eight legion branches will close and the Government of Canada will provide fewer wreaths on November 11.

I urge the government instead to provide one wreath on behalf of Canada to every community which remembers veterans at its local cenotaph each November 11. Lest we forget.

Science And Technology
Statements by Members

December 13th, 2001 / 2 p.m.


Bill Matthews Burin—St. George's, NL

Mr. Speaker, 100 years ago yesterday, on December 12, 1901, a new age of communication was born. Amidst skepticism and facing extreme odds, Italian born scientist Guglielmo Marconi sent the first wireless signal across the Atlantic Ocean. The message, simply the letter S in morse code, was sent from Poldhu, England, to Signal Hill in St. John's, Newfoundland, a distance of 1,700 miles.

This simple accomplishment changed the course of history. Marconi received many honours including the Nobel Prize in 1909, and Signal Hill gained distinction as the place where the impossible became possible.

This is a proud part of our Canadian history. The legacy of that single transmission is still heard literally all around the world.

I ask all hon. members to join me in saluting the achievement of one determined scientist so many years ago as well as the accomplishments of all present day Canadians whose innovative ideas are changing the shape of modern technology.

Position of Parliamentary Poet Laureate
Statements by Members

2 p.m.


Marlene Jennings Notre-Dame-de-Grâce—Lachine, QC

Mr. Speaker, I am very pleased to rise in the House today to underscore a great moment in the history of our parliament. On December 11, 2001, this House passed Bill S-10 in third reading. This bill, sponsored by Senator Grafstein, will create the position of parliamentary poet laureate, once royal assent is received.

I myself had the honour of being able to work on it, but my colleague, the hon. member for Saint-Lambert, is the one who ensured the bill's safe passage through the House.

I thank the MP for Saint-Lambert profusely for her hard work and dedication to the creation of a parliamentary poet laureate. Her skillful stewardship ensured the successful passage of Bill S-10 through the House.

December 11 will be remembered as a good day for Canadian culture. The creation of a parliamentary poet laureate will ensure that Canadians' knowledge and appreciation of their poetry is further enhanced.

New York City
Statements by Members

2 p.m.


Gérard Binet Frontenac—Mégantic, QC

Mr. Speaker, on December 1, 2001, several thousands of Canadians took part in the “Canada Loves New York” rally to demonstrate their support of the people of New York. Canadian dignitaries and citizens made their way to ground zero during the celebrations, and a Christmas tree was put up over the ruins of what used to be the World Trade Center.

I am very proud to point out that this fir tree came from Plantation Lavertu in Weedon, in the riding of Frontenac—Mégantic. It is a great honour for the region to have been able to contribute in such a special way to this great demonstration of friendship by Canadians to their American neighbours.

Merry Christmas to my fellow residents of Frontenac—Mégantic.

Parliament of Canada
Statements by Members

2:05 p.m.

Canadian Alliance

David Anderson Cypress Hills—Grasslands, SK

Mr. Speaker, the definition of respect includes the words to “regard with deference, esteem or honour.” It also includes the phrase to “refrain from offending, corrupting or tempting.” Over the last year I have seen initiatives that have caused my respect for this institution to increase. I have also experienced things that have shaken my respect for this place.

I hope the reports that we had this morning were false. These reports suggested that there is a move from within the Liberal government by its members to provide each of its MPs with a constituency slush fund whereby money would be doled out not under the auspices of independent programs but as the member sees fit. More disturbing is the fact that this has actually been given serious discussion.

At times the arrogance of the government has shaken me but I have never seen such a disconnect from regular folks. I have never heard such a damning proposal and I have never before been embarrassed to be a member of parliament.

Respect must be earned. Let us not throw away the little public respect still left for us and for this institution.

Nobel Prize
Statements by Members

2:05 p.m.


Raymonde Folco Laval West, QC

Mr. Speaker, I would like to draw the House's attention to the fact that this year is the 100th anniversary of the Nobel Prize. This prize rewards excellence in medicine, physics, chemistry, literature and acts promoting peace.

Throughout the 20th century, people and institutions around the world have been honoured. For 100 years, the prize has been conferred on men and women who have made the world a better place through their commitment, their talent, their discoveries and their actions.

Think of Marie Curie, Melvin Calvin, the Prime Minister of Canada in 1957, Lester B. Pearson, Mother Teresa, Nelson Mandela and Kofi Annan.

The Nobel Prize reflects great discoveries, struggles and the political and artistic evolution of the world.

I wish the Nobel Foundation many more centuries of rewarding those who work to change the world.

Middle East
Statements by Members

2:05 p.m.


Francine Lalonde Mercier, QC

Mr. Speaker, the cycle of horror in the Middle East is continuing. The Palestinian authority says that Israel has declared war on it. The Israeli government has decided to cut all ties with the Palestinian authority, which it holds responsible for the most recent attacks.

We cannot let the peace process derail. We cannot let the Middle East turn into a war zone.

The Palestinian state has a right to security. The Palestinian people have a right to a viable state. Only negotiation can bring peace. It is now up to the international community to make it possible.

Yesterday, in an interview on the CBC, the elected president of the Palestinian authority, Yasser Arafat, who is still recognized by Kofi Annan and the United States, made a plea to Canadians. He said “We need your help and protect the peace process in this Holy Land”.

We answer his plea with a yes.

Statements by Members

2:05 p.m.


Sarmite Bulte Parkdale—High Park, ON

Mr. Speaker, I rise today on the occasion of the 20th anniversary of the declaration of martial law in Poland on December 13, 1981.

December 13 holds a particular significance to the Polish community. On this date the communist government in Poland declared martial law in an effort to quell the democratic Solidarity movement. This rule brought extreme hardship to many people who opposed the government. Many were interned or escaped from Poland.

The Canadian Polish Congress, the voice of over 650,000 Canadians of Polish descent, worked with the Government of Canada to create a special immigration category for Polish citizens affected by the sudden imposition of martial law. Canada's gesture was immensely important, showing that people persecuted for their belief in freedom could find refuge in this great country. Many arrived in Canada and have made a positive contribution to their new homeland.

As a result of the Solidarity movement in Poland, communism was later overthrown in all of Europe and the cold war came to an end.