Debates of Dec. 4th, 2001

Supply

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

Mr. Speaker, I imagine that I should have allowed the hon. member for Saint-Hyacinthe--Bagot to speak. I will continue using the same logic as the member who has just spoken. According to him, if the hon. member for Saint-Hyacinthe--Bagot is such a great forecaster, he ought to quit politics and work at getting rich. Applying that same logic to the Parliamentary Secretary to the Minister of Finance, does this mean that, as he was in the financial field before, he was such a poor forecaster that he had to leave that field and take a seat in the House of commons, with the associated drop in income?

Last year, he was probably one of the people calling for a raise in MPs' salaries. I would like his comments on this.

[John McCallum, Liberal, Markham, ON]

Mr. Speaker, unlike the hon. member, I do not make any claims to being an exceptional magician as far as my ability to make ultra-accurate forecasts are concerned.

I would therefore repeat what I have already said. If the hon. member is the only economist in the country with the extraordinary capacity to always be precisely accurate, then he ought to go work in the private sector, where he would become an instant millionaire.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, the parliamentary secretary is far too modest when he claims independent economists projected the Alliance fiscal plan would result in an $18 billion deficit in the last election. He is so modest he fails to ascribe the allegation to himself and himself alone.

He came out of a meeting with the finance minister a week before he declared his candidacy for the Liberal Party. Still posing as a bank economist he told the media there was a consensus that the Alliance fiscal plan would not add up. Every other bank economist in the meeting told me it was not the truth although that is a word I cannot use. It is not parliamentary language.

Many of his colleagues indicated they believed it was an affordable fiscal plan. Our proposal today is as well. WEFA, a major econometrics firm used by the finance department, has so indicated.

I challenge the parliamentary secretary in this regard. Does he not understand the impact of restraining spending over time? Can he not take out his calculator and add up the fiscal difference between a 3% program spending growth line and a 5% program spending growth line?

In 2006 the difference would be $153 billion under the Liberals compared to $141 billion under what we are proposing. Cumulatively that is $50 billion in additional fiscal capacity which could be allocated to tax relief. What does he not understand about that?

It was the finance committee which proposed that the government consider what we are proposing: inflation plus population as a spending line as opposed to 5%.

[John McCallum, Liberal, Markham, ON]

Mr. Speaker, the hon. member does not seem to understand the simple arithmetic that the size of the federal government today is less than it has been for 50 years.

I could perhaps illuminate history by describing the meeting to which he referred. After the meeting the National Post , which was then in the employ of the Canadian Alliance, pretended I was the only economist to claim the $18 billion deficit. The more neutral Globe and Mail reported on page A-1 that Clément Gignac, chief economist of the National Bank, said exactly the same thing. I was relegated to page A-8. The truth of the matter is that many economists including Clément Gignac believed the Alliance numbers did not add up.

[The Deputy Speaker]

It is somewhat unusual, but the member for Saint-Hyacinthe--Bagot has been referred to quite often in this debate. I will give him an opportunity to ask a question and then I will return to the member for Acadie--Bathurst to conclude this round.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I would ask the hon. member, who is a former economist with the Royal Bank, to check the forecasts that we have been releasing every year for the past five years, a few months before the end of the fiscal year. He will see that we have nothing to hide and that our forecasts were released in the context of a press conference.

If we have been able to accurately estimate surpluses, it is because, contrary to the hon. member, we had nothing to hide. We analyzed public finances year after year and month after month. With a bit of intelligence and a little less intellectual laziness, the hon. member could do like us every year and manage to be accurate in his forecasts.

If he is not intellectually lazy, I would ask the hon. member to give us his own estimation of the federal government's surpluses for this year and next year.

We will see if he can use a calculator and if, as the member for Lévis-et-Chutes-de-la-Chaudière said, he was not forced to leave the Royal Bank because he was unable to make accurate forecasts.

[John McCallum, Liberal, Markham, ON]

Mr. Speaker, I have two things to say. First, projected surpluses are calculated by economists from banks and other institutions who have no political reasons to hide anything.

Second, the hon. member continues to insist that he is the only one who can make such brilliant forecasts. I can only repeat what I said, namely that there are millions of dollars waiting for him outside.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, my question is simple. How can the parliamentary secretary be proud of his government when he says that there were surpluses, a recession and so on, and that $8 billion came from the employment insurance fund?

About 65% of the workers who contribute do not qualify for employment insurance, a program that is fully funded by them and their employers.

How can the hon. member be proud of his government, considering that it has taken money that belongs to workers? This is where the money comes from.

[John McCallum, Liberal, Markham, ON]

Mr. Speaker, our government just lowered employment insurance contributions for the eighth consecutive year. This means that, compared to 1994, employers and employees will save $6.8 billion this year. Not only did we do that, but we also increased payments.

[Shawn Murphy, Liberal, Hillsborough, PE]

Mr. Speaker, I rise today to speak against the motion. Like the hon. member for Markham, I find the content of the motion of the official opposition to be somewhat interesting.

The first position calls for moving resources “from low and falling priorities”. My question to the House is straightforward, strikes to the very heart of why I am opposed to the motion and is why I want everyone to reject the motion. My question is simple: Whose priorities are we talking about? Since the motion was tabled by the member for Calgary Southeast and seconded by the member for Edmonton--Strathcona, I assume we are talking about the priorities of the Canadian Alliance Party.

If the motion were to be accepted here today, here is a sample of some of the priorities, some of the programs, that would be headed for the chopping block: our government's programs to assist all aboriginal Canadians; many of the initiatives recently announced by the Minister of the Environment; many of the programs tabled to assist low income families; programs to increase the economic growth and economic diversification of our regions; programs to increase R and D spending by businesses and the application by businesses to innovation; and yes, programs that assist rural Canadians. These are only a sample of the programs that may be of low priority for the Canadian Alliance Party and would be at risk if the motion were allowed to pass.

My response, Mr. Speaker, is to assure you that unquestionably these issues are high priorities for the government, high priorities for the people in my riding, high priorities in the province I come from and high priorities for Canadians from coast to coast.

Regarding the statement in the motion calling for the sale of “non-core assets”, I want to remind the House that in the mid-1990s the government went through an extensive and exhaustive program to review and rationalize government services and programs. This was necessitated by the policies and mismanagement of the previous Conservative government. What was and is left are the core programs, core assets and core services that are required by all Canadians. Under the leadership of our Prime Minister and our Minister of Finance, the government has done an excellent job of managing the finances of the country.

If we forget the mistakes of the past, we are bound to repeat them. The mistakes I am talking about are the fiscal and economic policies that were practised prior to this government being elected in 1993. At that time, as everyone in this House is aware, the annual deficit was reaching $42 billion. Unemployment was approximately 11%. Our debt to GDP ratio was 73% and interest rates were substantially higher than they are today.

Over the past seven or eight years, all Canadians from coast to coast have benefited from the policies, the programs and the tough decisions made by the government. We have now, as everyone is aware, had three years of consecutive surpluses, $35 billion has been paid toward our debt, unemployment has been reduced to approximately 7% and our debt to GDP ratio, if we accept recently reported figures in the media, is now less than 50%.

As has been said here today, there is no question that we are in an economic slowdown. This slowdown started as early as May of this year. Not only is it being experienced here in Canada, but throughout the world. We must be mindful that we will always be subject to the business cycle. We can no more stop the business cycle than we can stop the tides from coming in and going out, but because of the sound policies of the government our economic and financial fundamentals are strong. Because of the strength of our economic fundamentals, we are in a much better position to deal with the economic slowdown.

What the country needs now, and I am talking about consumers, businesses and investors, is confidence, the confidence that the government has a plan, is prepared to act and will act. The market rejects uncertainty and punishes governments that convey the message they do not know what to do under the circumstances or do know what to do but are not prepared to do it.

If there has been any time in the history of our country when we needed a steady hand on the throttle, that time is now. To retain and enhance the level of confidence that is now needed, I urge the finance minister to of course reject the motion and stay the course that he is on right now; deal with the security issues that have to be dealt with; try to avoid a deficit; provide all Canadians with the level of security that is required; retain the consistency that the minister has shown in the past eight years in pursuing sound fiscal and monetary policies; keep spending under control; and, as he has done since being appointed to the ministry, let prudence be his guide.

In the strongest of terms, I urge the Minister of Finance to disregard the wording of the motion, to disregard the policies and programs of the Canadian Alliance Party and to continue on the very same path he is on right now.

Specifically, I urge the Minister of Finance to allocate sufficient funds to be used for the security of our nation. I am talking about security in a physical and economic sense. Second, I urge the minister to provide funding so as to enable the government to properly manage the country's borders so that these borders are secure while at the same time allowing for the free flow of goods and services.

I urge the Minister of Finance to continue the $100 billion in tax cuts announced last year. These tax cuts, coupled with the interest rate reductions announced by the Governor of the Bank of Canada, will provide the necessary fiscal stimulus to get us over the slowdown.

I urge the Minister of Finance to continue with the increased health care funding that he also announced last year. This is the number one issue on the minds of all Canadians and it must be continued.

I urge the Minister of Finance to continue with the innovation agenda of the government. I realize that some programs may have to be postponed, given current circumstances. Nevertheless, the message has to be conveyed that these initiatives are still very high on the agenda of the government.

In closing, let me say that the motion contains policies of the Canadian Alliance that have been rejected many times by the people of this country. I urge, in the strongest of terms, the Minister of Finance and everyone in the House to reject the motion.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I am astounded at the member's speech. First, I would like to say that I appreciate his participation in the finance committee.

We have been listening carefully to what the both parliamentary secretary and the member said. What is incredible is that while they spoke in favour of the motion, since every point they have been making is in our motion, they have said they will vote against the motion and they urge all members to vote against it. I do not want to accuse the member of being paranoid or schizophrenic or anything, but he seems to be speaking for what he will be voting against.

[An hon. member]

There is no vote.

[Ken Epp, Canadian Alliance, Elk Island, AB]

There is no vote on this. That is right. This is a non-votable motion, but at any rate, the member says he is against this very good, common sense motion before us today and is designed to give guidance to the government for when it brings in its budget next week.

How can he reconcile the fact that everything he said is in our motion? We basically are reflecting the report of the finance committee, “Securing Our Future”. We are just urging the government to do what Canadians across the country have told us to do. It is reflected in the report.

The Canadian Alliance this time did not table a dissenting report to the finance committee report. We did a supplemental report that states we agree with a lot of what they are doing. We would just like them to go a little further in some areas and maybe in a slightly different direction. I would like the member's response to that.

[Shawn Murphy, Liberal, Hillsborough, PE]

Mr. Speaker, as I indicated in my speech, the trouble with the motion is that it deals with moving resources from low and falling priorities to other areas. My question, which was simple and straightforward, was, whose priorities are we talking about?

I heard the member for Calgary Southeast speak. I have to assume the member agrees that the priorities being called for in the motion are the priorities of the Canadian Alliance.

My response to the member's question is that these priorities have been rejected by Canadians from coast to coast. They should not be considered by the Minister of Finance.

Second, dealing with the sale of non-core assets, I remind the member that the government went through a very extensive and exhaustive review back in the mid 1990s. Every program, service and asset was reviewed. As the member for Markham has already indicated, the size of the government is less than it was in 1993. Assets were privatized and assets were sold. What non-core assets are we talking about? I suggest they are the non-core assets as determined by the Canadian Alliance which is the reason I am speaking against the motion.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, not long ago I asked the parliamentary secretary a question about employment insurance and his answer was to reduce the premium. How about changing the rules for EI so people could more easily qualify? What is the priority for the men and women workers of P.E.I.? Is their priority to bring the premium down by 5 cents or is it to change the qualifying period, especially since we have an $8 billion surplus this year?

I would like to hear my colleague from P.E.I. tell us in which area the government should concentrate since his riding is very close to my riding.

[Shawn Murphy, Liberal, Hillsborough, PE]

Mr. Speaker, in response to the member for Acadie—Bathurst, I admit that there was a problem in the EI rules and regulations and it dealt with the intensity rule.

The rule was changed last year. The people in my province are satisfied with that change. I remind the member for Acadie--Bathurst that for eight straight years we have had reductions in EI premiums, reductions to employees and reductions to employers. As the hon. member for Markham has indicated, it results in a net cumulative saving of $6.8 billion to the employees and employers right across Canada.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to speak to the motion put forward by Canadian Alliance members.

Unfortunately, although this motion contains a number of positive features, it also contains others with which we are very uncomfortable.

For one thing, we are completely opposed to increasing national defence spending by $3 billion. We find this excessive. Three billion dollars would represent an increase of 25% to 30% in the present national defence budget. This would make no sense.

What we proposed instead in a recovery plan we released two months ago is investing at least $1 billion in defence and security over the next year. I think that this would represent an increase of around 10% in the budget and would be quite enough to meet the new imperatives present, particularly since September 11.

There are other proposals, such as the one to reduce EI premiums, which we do not oppose. But we have other priorities, which I will try to outline in the next few minutes, and which might have made the Canadian Alliance motion a bit more balanced in relation to the goals of Quebecers and Canadians.

We do not reject out of hand the idea of limiting government spending and reviewing any that is non-essential. This only makes sense. If the government is unable to manage the public purse appropriately, we are here to keep it on track.

Nor are we unreceptive to the idea of selling non-core government assets. However, this should be done on a case-by-case basis, because there are perhaps federally regulated companies which still serve a purpose, even now.

Finally, with respect to the capital tax, here too we already suggested in our campaign platform last year that it be gradually reduced for specific companies, including shipyards, in order to help them boost their production and productivity.

However, against the backdrop of this motion and the criticisms I have just mentioned, I would like to set out what we want to see in the budget and what we would have liked to see in the Canadian Alliance motion.

First, with respect to the budget forecast, while we may be cynical about this on occasion, even sarcastic, and sometimes even spiteful toward the government, the fact remains that anyone who is the least bit intelligent, who has a good calculator and who follows public finances on a monthly basis—as we have been doing for eight years now—is able to forecast and calculate the real surplus within a 3% margin, by looking at the money coming in, tax revenue, and the money going out, expenses.

The fact that the government is not doing this is no accident. The Minister of Finance and his cronies have hidden the surplus since 1997, the first year that there was a surplus. The surplus has been hidden systematically, every year, precisely to avoid debate on the use of the real surplus.

Earlier, the Parliamentary Secretary to the Minister of Finance said that I would need to find billions or millions of dollars elsewhere. That is cynical, by my books. I find his comments shameful. Particularly because, in hiding the real picture of public finances, this government and its supporters are betraying democracy. People want to know where their tax dollars are going. All this time, year after year, the government has been telling tall tales. The member should be ashamed to have uttered such cynical and spiteful comments.

If we look at the tax revenues and government expenses for this year, a $13.6 billion surplus has already been accumulated over the first six months.

Even though we can follow the monthly figures on public finances until the end of the current fiscal year, it is impossible, except for someone who wants to deliberately lie, and I am not mentioning any names—

[The Deputy Speaker]

Order, please. I am trying to pay attention and to make a proper decision in one official language or the other.

I think the member for Saint-Hyacinthe—Bagot used a term that is not in keeping with the usual practices of the House. I would ask him therefore to be more careful in his remarks.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, short of hiding the truth or the real state of public finances, this government cannot possibly be in a deficit position this fiscal year and it is practically impossible in the next.

This year, we calculate, according to revenues and expenses, that as of March 31, 2002, the end of the current fiscal year, there will be a minimum surplus of $13 billion , once all the tax cuts provided in the last budget and the new spending already announced for security and national defence have been made. The figure is $13 billion.

With the Minister of Finance presenting a budget in December, he will be astride two fiscal years, and will therefore have two sums with which to play: this year's surplus of $13 billion and next year's, which even according to the most pessimistic estimate, will be $11 billion. So the Minister of Finance has $24 billion to improve things, to use for the public and to see that the real public service provided by the provinces and by the Government of Quebec is improved.

It must be remembered—and this is our first priority—that the Canada social transfer, which the federal government gives to the governments of Quebec and of the provinces, has been savagely cut by this government since 1995. It was all very well to reinstate the money over the past two years, but the transfer is still $5 billion per year short of what it was prior to the savage cuts of the Minister of Finance.

We want to see the Minister of Finance take the first step in the coming budget, by converting the cash payments for funding health and education into tax points to be transferred to the provinces. Let him pull out of this field and convert these cash transfers into tax points. There are two reasons for this. First, to ensure that the provinces and the Government of Quebec have sufficient funding for health and education and, second, in order to provide them with protection against possible future slashes to this funding, like those we have been treated to since 1995.

This constitutes a first step. It will cost the federal government nothing, except that in future we will have protection and be spared federal mailings about services for you and health being a priority, education an investment, and so on. Yet, as far as health is concerned, the government invests only 13 cents yearly for every dollar invested by the Government of Quebec.

In education, the federal investment is a mere 8 cents for every dollar invested by the Government of Quebec. Yet it boasts in various general mailings of providing services in health and education. This is not only shameful, it is hypocritical as well.

So, the first step would be to convert cash payments into tax points. Before the government does that, we want it to top these cash payments up by $5 billion, which is what it would take to restore the Canada social transfer to the level it was at before the Minister of Finance's deep cuts.

The second priority is employment insurance. As my colleagues, including the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, have already pointed out, this is systematic, annual theft from the EI fund. It began with a $6 billion surplus, ill-gotten by the Minister of Finance, and it has now grown to almost $8 billion. This is where the federal government gets its fantastic surpluses from.

All we are asking for is that action be taken on the consensus reached by the Standing Committee on Human Resources Development, a consensus containing 17 recommendations, if memory serves. The Bloc Quebecois' second priority is that men, women and youth be entitled to EI, that they no longer be disqualified, that seasonal workers be treated not as second class citizens but as full members of society. That is our second priority.

Third, we want the members opposite to quit playing petty politics and transfer the amounts already provided for under the Employment Insurance Act to the Government of Quebec so that it can reform its parental leave system. It is our right. The federal government is denying young families money to which they are entitled today. They want to have children and look after them and to be treated fairly for their contribution to the social and demographic development of Quebec.

That side of the House is preventing, through despicable petty politics, these amounts from being paid. There are provisions in the Employment Insurance Act that allow for the transfer of these funds to the Quebec parental leave policy. The government is preventing the implementation of that policy. It is shocking to see such things. This is our third priority.

As for infrastructures, we are talking about a contribution to the economy, which is slowing down, if not in a recession. It might a good idea, as was asked by the Canada-wide coalition and the Quebec coalition, which is chaired by the Mayor of Laval, Mr. Vaillancourt, to increase transfers for infrastructures. The government has the means to do so, with surpluses of $13 billion this year and $11 billion next year, for a total of $24 billion.

At some point, will the Minister of Finance show enough judgment to realize that it might be a good idea to increase spending for infrastructures, in particular investments for road construction? There is a great need for such measures all across Quebec and Canada.

International aid is another fundamental priority for the Bloc Quebecois. It was Mr. Pearson, a true liberal in the literal and philosophical sense of the word, who set the standard of 0.7% of the GDP for international aid.

It is time that Canada invest in international aid, particularly since a recent study conducted by Informetrica shows that this aid has a greater impact on Canadian economy than investments in national defence. At some point, those whom we help in various parts of the world get richer and buy our goods and services. The study clearly and accurately shows that a dollar invested in international assistance is much more profitable to Quebec society than a dollar invested in defence and military equipment.

Finally, we are not stupid and we are not blind. We realize that we need to increase security and defence spending. However, the $3 billion increase proposed in the Canadian Alliance motion is excessive.

As we recently proposed, we think that a $1 billion increase over the next year should be enough to ensure significant investments in defence and security, and thus meet new requirements, particularly since September 11.

I would like to use my remaining time to reiterate one of the principles that we have been defending since 1993, that of justice and fairness.

For all of the government measures, the budgets, that have been proposed, from the first budget in 1994 to last year's budget, which was something of a political budget, if you will, coming right before an election, we have been motivated by this one single credo: justice and fairness.

We are conscious, and this is another priority, that the tax breaks announced in February 2000 and repeated in October of last year during the pre-election budget, should have been better targeted to help medium and low income earners.

It is not right that 80% of the tax breaks are going to the richest people in society and that families at the low end of the middle income bracket are being overlooked, those just above the low income cutoff, that could not and will not benefit, in years to come, from tax cuts that they had the right to expect.

Yet, someone earning $150,000 or more who benefited from the partial elimination of the capital gains tax is saving $9,000 or $10,000, while middle income families are pocketing approximately $300 in savings per year. I am talking about families earning $40,000 that will benefit from a $300 tax break this year.

It seems to me that this upcoming budget should take into consideration this concern for fairness and justice, and that tax breaks should be readjusted, or there should at least be further tax breaks targeted to middle and low income earners. As I mentioned earlier, the government can afford to do so.

Despite what they say on the other side, I will say only one thing. The Minister of Finance and his parliamentary secretary, always cynical and disdainful, often in public, are threatening us with the spectre of a deficit next year, if we are not careful.

That is pathetic. As I said, the Minister of Finance has extraordinary means at his disposal, even with the current recession.

If we look at the 2001-02 forecasts, with an upswing in the course of the year, we see he may still have a reduced surplus, which will reach $11 billion nevertheless. For us to have a deficit this year, spending would have to increase by 11%. Spending in real terms would have to increase by 11% for us to have a deficit this year. It is virtually impossible and ridiculous to claim that there could be a deficit this year.

Or, the GDP, annualized, that is, for the entire year—I point out that there are only four months left in the current fiscal year—would have to shrink by 5% since last March 31. That is ridiculous. The gloomiest forecasts refer to a 2% reduction over the year, that is for all the months between March 31, 2001 and March 31, 2002.

There is virtually no way we can have a deficit. When they say that, they add another argument on the other side in order to do nothing, nothing about reforming employment insurance, nothing about cutting taxes for middle and low income earners, nothing about investment in infrastructures and nothing about social transfers to finance health care and education. It is another pretext.

I often say that, by being too pessimistic, especially in the last four years, the Minister of Finance himself has contributed to the economic doldrums. It is partly because of him that consumers are a bit more careful with their money; they wait before spending. This has slowed down the economy. And he continues his game by adding to the slowdown, which has in recent months become a recession in Canada. He is continuing with this ploy and adding to the gloom and doom, instead of boosting people's confidence; yet he has the means to do so.

As I mentioned, there will be at least $13 billion in the surplus this year. And when there is, we will be asking the wise guys opposite whether it is sheer genius or whether it is scheming or intellectual laziness that prevents them from forecasting these surpluses year after year.

If I could give the Minister of Finance one piece of advice for next week's budget, it would be to stop crying wolf, to stop fearing fear itself and making others fearful. Because he himself is beginning to add to the economic slowdown, to the slowdown which taxpayers in Quebec and in Canada are bringing on themselves when it comes time to spend or buy a house, a car or whatever, in order to support economic growth through domestic spending and help us out of what is starting to look more and more like a recession.

It would be the advice a friend would give. It would be advice that would benefit everyone.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, it is an absolute scandal that the separatists have chosen for their next galvanizing point the idea of tax points. This is the issue they feel will coalesce Quebecers against the federal government because they know the federal government would not move in that direction.

Why would the federal government not move in that direction? First, cash transfers are a way for the federal government to hold the provinces accountable under the Canada Health Act and other acts of parliament. Without the cash points, it would not have the leverage, and the Bloc Quebecois and the separatists know that.

The second reason is that in 1977 the federal government transferred tax points to the provinces, 13.5 percentage points of its personal income tax. It was therefore totally transparent to the tax paying public. The taxation power went to the province of Quebec, for example, and other provinces. The federal government relinquished that. It was totally in the context of health care and education. However, guess what, Mr. Speaker? The federal government does not get credit for that anymore because the provinces conveniently forget to include that in the transfers when they talk about federal transfers to the provinces for health care, education and social services.

Does the member think the federal government will make that mistake again? I think it was a mistake in 1977. We transferred all these tax points to be more responsive and to allow the provinces, which are closer to health care and education, to manage their affairs more directly. However the provinces conveniently forgot and continue to forget to include that in the transfers the federal government makes to the provinces, which now amount to about $15 billion a year.

I wonder whether the member opposite will confess and be honest with the House and Canadians that this is a separatist strategy, to coalesce around tax points which he knows the federal government will not relinquish again.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, the hon. member speaks of a separatist strategy. A person has to be from another planet to come out with such things. Or to be totally blinded by partisanship. It is totally ridiculous.

Is Jean Charest a Quebec separatist? Yet he agrees with the transfer of tax points. Why? Because, since 1995, we have been being tricked by this government. The first cuts made were to the Canada Health and Social Transfer for the funding of health and education.

It is still incredible for a statement to be made such as this: “In 1977, we transferred tax points and then found that the federal government was not getting any recognition”. What kind of government are we dealing with here? It expects recognition for giving taxpayers' money back to the same taxpayers to provide them with services.

The response and comment he should be making is that he would be proud to transfer more money to provide proper health care, by ensuring that investments in education and health, these two areas of jurisdiction that belong to Quebec and the provinces, are at a level to meet people's expectations. This is not the case at present.

The federal government ought not to be expecting recognition; what it needs is a sense of duty. It must acknowledge its duty to help the sick to receive proper care, and to help students receive the proper education to face the challenges of the 21st century. Those are the arguments it ought to be presenting us with, and no others.

In 1977, by the way, that was no gift the federal government was handing out. It was returning part of what it had literally swiped from the provinces as income tax, in part to fund the war effort. That is the reality. When it claims that tax points would not be advantageous for Quebec, why not even consider this possibility if it is not advantageous for Quebec? We have other things on our minds as well. The people over there cannot count. We can, and we have done our calculations.

In the years to come, personal income tax—what we are referring to is personal income tax point transfers—is going to experience an exponential curve, at a time when it is very likely that their political decisions might again result in massive cuts to transfer payments which are fundamental to Quebecers. They have been doing so since 1995. That is the real question.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, I also have a question for the Bloc Quebecois member.

In its proposal to the House today, the Canadian Alliance made no mention of agriculture. Agriculture is important to this country. Our farmers have experienced many problems, including strong competition from the United States and European countries, given the massive subsidies that are provided in the United States and Europe.

There is currently an agriculture bill before the U.S. congress, which would provide massive subsidies to American farmers, to the tune of $173 billion.

Does the Bloc Quebecois agree that agriculture must be recognized as an important priority in next week's budget? I believe that we need to stimulate the economy in the agricultural sector across Canada, not only in the west, but in Quebec, Ontario and throughout the country.

Does he agree with this proposal?

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Yes, Mr. Speaker, absolutely. I mentioned our top priorities in my speech.

But obviously there are others. This comes under rural development and agricultural development. Quebec farmers and Canadian farmers must be able to benefit from a level of subsidies that will allow them to compete with their international counterparts.

That being said, I believe that we must not be afraid of the United States. Take this type of policy passed by congress. This is not the first time that this has happened. Since the early 1970s, Americans have been quick to provide ad hoc subsidies to help their farmers export in the international markets and practice unfair competition. I think this needs to be resolved through the World Trade Organization or by the trilateral panels set up under the North American Free Trade Agreement.

We need to stop what is known as top loading, when one government provides on dollar more in export subsidies and then another national government has to intervene to compete with the other's subsidies. We need to put an end to this.

We thought that, after 1994 with the new agreement, the 9th GATT agreement, which created the World Trade Organization, we had attained the goal of reining in the funding process and categorizing funding into those which are not trade distorting and are needed by agriculture, and those which constitute unfair competition.

I do not believe we have managed to do so yet. So, yes, that is a priority. The matter of unfair competition must, however, be settled in the international arena.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I would like to concur with my friend from Saint-Hyacinthe--Bagot with respect to the need for greater flexibility in fiscal federalism and his proposal for tax point transfers. In contra my friend from Etobicoke, I am a passionate federalist who believes that this federation would work more efficiently and redound to the benefit of citizens if we had this kind of fiscal flexibility within our federation. In fact today my colleague from Lanark--Carleton is making a presentation on behalf of the Canadian Alliance to the government of Quebec's commission on equalization in which he is proposing our policy regarding tax point transfers.

My question for the Bloc finance critic deals with his opposition to our recommended $3 billion increase in security and defence spending. Just to be clear, we are proposing that $2 billion be put immediately into defence and $1 billion annually t immediately into other policing and immigration related areas. According to the member, the Bloc finds this increase too high.

Does he not acknowledge that Canada's defence expenditure at 1.1% of gross domestic product is less than half of the average defence expenditure among NATO countries, which is 2.2% of GDP? Does he think that Canada can properly play its role on the world stage and meet its international and treaty obligations while essentially allowing the Americans and other countries to subsidize our NATO defence while we do not pay our fair share? Does he think that is appropriate for Canada as a major country and economy on the world stage?

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I agree with my colleague that there must be major investments, even to allow us to catch up as far as national defence is concerned.

That said, however, we find it excessive that there is suddenly a 25% budget hike in this area, while international aid is being neglected, particularly since 1995. It even started a bit earlier than that, under the Conservatives. If we have responsibilities as far as international conflicts are concerned, we also have them as far as international aid is concerned.

Let us remind our colleague that it is possible that terrorism may be fought by increasing security and defence budgets, but it will primarily be fought by reducing as far as possible the breeding ground for terrorism, that is world poverty.

I believe Canada has a role to play in international aid, one it is not playing at the present time. The country cannot pat itself on the back about its G-8 membership while at the same time, as the Minister of Foreign Affairs put it, leaving for the restaurant restroom when the bill comes to the table.