Debates of March 28th, 2001

Canada Foundation For Sustainable Development Technology Act

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

The recorded division on Motion No. 9 stands deferred.

The House will now proceed to the taking of the deferred recorded division at the report stage of the bill.

Call in the members.

And the bells having rung:

[The Deputy Speaker]

The chief government whip has asked that the vote be deferred until later this day at the end of government orders.

The House resumed from March 22 consideration of the motion that Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act, be read the second time and referred to a committee.

Federal-Provincial Fiscal Arrangements Act

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, when I concluded on this very issue a week or so ago, I was talking about the equalization formula as it applied to Alberta a number of years ago and, specifically, the revenues that were generated by resources in the ground.

There is some concern in Atlantic Canada that these are being clawed back to the tune of about 80%, which prohibits the growth of regional economies when the government is basically taking money away from equalization simply because we are making more money on our minerals, oil resources and natural gas. I took exception to that.

I concluded my remarks, just to remind the House and the viewing public, by stating that from 1957 to 1965 Alberta received equalization from Ottawa. The energy industry there was in its early years, just as Nova Scotia, New Brunswick and the other Atlantic provinces, including Newfoundland are today. The major difference was at that time Alberta received 100 cents of every royalty dollar. Ottawa did not clawback the money through other programs like equalization which the government is doing today, which is patently unfair.

It allowed the Government of Alberta to build on success. That is the only way we will move the poorer provinces along the road to economic prosperity.

I wish to outline what equalization is supposed to do. The Constitution Act, 1982, commits the Government of Canada and the governments of the provinces to promote equal opportunities and economic development and to provide reasonably comparable levels of public service across the country with comparable levels of taxation. That is the basic principle behind equalization.

In addition to the clawback issue, which is a serious issue in terms of restricting the growth of poorer provinces, the government has what it calls a capping provision. It caps the benefits to the provinces or caps the growth in equalization payments. The cap was a sore point back in 1982 when the government brought it in. The cap creates a ceiling so that equalization payments are restricted from growing faster than the national economy.

That has been a bone of contention going back to 1982. It restricts the growth or the development of provinces when things are going well. It is a reverse attitude in terms of what is being attempted with equalization. The idea is more or less that they are poor, that they will stay poor, and that we will not do anything about it.

From an Atlantic Canada perspective, and I can speak with some authority to the other provinces as well, it is not any different in Saskatchewan or Manitoba, two provinces that are concerned about the equalization formula. I will stick to my notes because they are fairly technical and I do not want to be misinterpreted in what I am saying.

Imposing a ceiling or a cap on equalization payments interferes with the ability of the formula to equalize fiscal capacity to the level of the program's standard and further hampers the ability of the program to meet its constitutional commitment.

The government told us that it would lift the ceiling. It was announced by the Prime Minister and the Minister of Finance. The Minister of Finance put out a press release on this very subject matter in terms of lifting the ceiling on equalization on March 15, and we appreciate that.

The lifting of the ceiling for one year only, which the government has done, will provide only a temporary solution to the problem. In order to allow the formula to work effectively the ceiling must be eliminated, not just for one year but in perpetuity.

The strength of the Canadian economy combined with the design of the current ceiling provision has put the ceiling in danger of being breached in the year 2000-01 and in future years. This would result in the federal government withholding future equalization transfers to compensate provinces even though these revenues would be needed in future years when economic growth may not be as strong.

In summary, it is an ad hoc approach to a problem. It has to be long term thinking on the part of the federal government if equalization and the strengthening of the economic position of the provinces are to be improved. It cannot be done on an ad hoc basis year by year. We could legitimately accuse the federal government of doing it on an ad hoc basis. It makes it up as it goes along but has no long term plan. It has the same approach on so many other issues. It is a trademark of the government. It works through the problem but does not plan for the future.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I was glad to hear the member make reference to the importance of equalization payments to provinces such as Nova Scotia, New Brunswick and Manitoba, where I come from. I was glad to hear the tone of his comments.

We share the same view in a way, that our equalization system is probably the single greatest achievement of Canadian federalism. It does more to inspire the idea of a strong central government that moves forward together, instead of leaving certain pockets or certain segments of the country lagging or languishing in a lack of economic development.

The member limited his remarks to the ceiling that is being lifted by mutual agreement. The removal of the cap is something we all welcome. I have heard from ministers of finance of certain provinces who feel they have being misled somewhat. They feel that the arrangement being announced now, the removal of the cap and the reinstatement of the cap in one year. will be at a level lower than they thought they had agreed to on September 11, 2000.

Would the hon. member comment on that? Has he heard, as I have, from provincial finance ministers that what they thought they had agreed to on September 11 and what is being announced today are two different things and that there is a dissatisfaction with the announced arrangement?

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, that is truly what has happened. The formula itself is very complicated. If there were three economists in the same room they would come out with at least five or six different points of view because they would disagree with themselves after examining the documents. What they sometimes agree to in a meeting with first ministers or finance ministers is not always the fact after the case has been examined. That has been obvious in some of these negotiations.

Manitoba, New Brunswick and all others provinces are getting less than what they thought they would be getting. They are being penalized for some economic revival within their respective provinces and that is wrong. We have to build on success, not discourage success, which is exactly what the formula does.

In my opening remarks a couple of weeks ago I talked about the difference between Canada and other nations. Canada is a very generous country. It is recognized as the best country by the United Nations. We developed that strength or recognition because of the generosity we have exhibited or have created over the years, a recognition that when areas of the country need help we help them. We have always done that.

We do not discount the government in that regard. Over the years the record was not too bad on equalization, but the fact is that they were falling far short of the mark as of 1993. Lester Pearson and Pierre Trudeau would be ashamed of what the Liberals are doing to the poorer provinces in this fiscal arrangement they have designed themselves.

We do not want to go back to the old days prior to equalization because it has always been sensitive. This is what we do and it has been the right thing to do. An example of a country gone off the rails in terms of a person either doing it himself or it does not get done would be the United States. They have poor states by definition, such as Maine, Mississippi and New Hampshire. Mississippi has problems with its educational and hospital standards.

Any country could benefit from a system like ours. We have to build on the strengths of that system. We cannot be meanspirited, as the federal government presently is, in terms of equalization. We have to build on our strengths and the generosity we have exhibited in Canada for generations. We can only build on that. We do not want to see it destroyed.

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

Mr. Speaker, I wish to say a few words on the equalization bill before the House at report stage. It is actually a very brief bill. It removes the $10 billion cap for one year on equalization to the poorer provinces and allows the cap to go up by several hundred million dollars. However, after that one year, it restores the original cap of $10 billion and allows equalization to increase by the rate of the GDP.

There is some controversy in this regard. The understanding of some provincial governments was that the cap would be higher than it would be in future years but that it would go back to what the original cap was. That is not good enough because of all the government cutbacks to transfers to the provinces in 1995.

Equalization is perhaps one of the shining symbols of success of our federation. In 1980-81 I remember Prime Minister Pierre Trudeau deciding to patriate the constitution. One of the things that our party pushed for was to enshrine equalization into the constitution of the country.

It is very interesting that we are probably the only country in the world that has equalization payments as part of its constitution. Other countries have ways of trying to equalize the wealth and potential in their countries through various government programs. Canada is probably the only country that has it as a constitutional right for provinces having difficulty or that fall on very difficult economic times.

I was very proud when that happened. I was on the special joint committee of the Senate and House of Commons in 1980-81 as the NDP constitutional spokesperson. We talked a lot about the question of equalization and the need to have it enshrined in the constitution: to share the wealth, to be part of the vision that being Canadian meant those provinces that were better off and those people who were better off would share some of that wealth with the poorer provinces.

I come from Saskatchewan which usually is a recipient province in terms of equalization. There have been times when we have not been a recipient province of equalization. We will be once again in the position of not receiving equalization payments in terms of the economic potential of our province.

The formula is a very complex formula based on the taxing potential of each of the provinces. The reason my province is getting closer to not qualifying for equalization is the increasing revenues from oil and gas, potash and uranium that are coming in to the province.

As a person from Saskatchewan, if what happened a number of years ago happens again, I am proud of the fact that we would no longer receive equalization. I am equally proud of the fact that we would be participants in terms of the government as a whole in providing equalization to other provinces in an attempt to make sure that their services are equal to the services in Saskatchewan and other provinces.

One way the equalization formula is calculated is by looking at taxation potential. It is done by eliminating in the formula the four Atlantic provinces of Prince Edward Island, Newfoundland, Nova Scotia and New Brunswick, and Alberta, which is the province that has the most potential to raise revenues because of the gas and oil industry. The other five provinces are used to average out the potential and the revenues they can collect in trying to bring the provinces that are not part of that five, excluding Alberta, up to a national standard.

National standards are also extremely important in terms of equalizing opportunities for education, health and social services. It is the Canadian way and the Canadian spirit that if we live in Newfoundland our opportunities should be as great as if we live in Alberta.

There is now a new trend in the country which disturbs me a bit. We have heard about it from Alliance members who have asked in debate why we should be paying all this equalization. We have heard complaints from the Alliance that it is a socialistic program. We have also seen as part of that tendency a move in the country in the last few years to greater decentralization, a lessening of the role of the federal government.

We see this in Alberta with Ralph Klein. We see it now in Ontario with Mike Harris. Of course we see it in spades in Quebec with the new premier, Bernard Landry. The provincial Liberal Party in British Columbia is talking about a looser federation. If that were to happen, we would have four large provinces talking about more provincial rights and we would have a looser federation and a weaker federal government.

I am a great believer in a diverse country with a lot of diversity and flexibility, but I am also a great believer in a strong federal government that has the resources and the taxation base to make sure we have national standards in education, in health and in social programs for each and every single Canadian. That is part of the Canadian way of life. We will be involved in a real debate in the next few years about the vision of federalism or fiscal federalism as we look at this new movement in Ontario, Alberta, British Columbia and the province of Quebec.

I am disappointed in Ontario in particular. Over the sweep of our history as a country Ontario has really led the way in terms of being a very staunch supporter of a strong central government in Ottawa. I think of the great contributions of Premier Robarts and Bill Davis and other Conservative premiers in that province. There has been a shift in Ontario in the last three or four years with Mike Harris and that shift coincides with what is happening in the province of Alberta.

This will be a great debate in the country. It will unfortunately pit the larger, more populous provinces against the smaller, weaker provinces in terms of population and economics. That is a debate we will all have to engage in. I think the Alliance Party, along with the Bloc Quebecois, will espouse that vision of a looser, more decentralized Canada.

I think there are still majorities in the House on the Liberal side, the New Democrat side and in the Conservative Party that want to make sure we maintain a very strong federal government to work on behalf of each and every Canadian. That is part of our way of life. That is part of this federation.

I can remember the great debates over the patriation of the constitution and the tremendous fights at that time about making sure that equalization was part of our constitution. We must have that balance in our federation. Too, I remember at the same time when the original package came down that there was nothing in it reinforcing resource revenues and resource rights for the provinces. The government House leader was in the Ontario legislature at the time, I think, but he of course remembers the stories, the struggles and the great divisions in the House among all political parties about the patriation of the constitution.

In our party we used what leverage we had to make sure the provinces did have rights guarantees in terms of resource revenue and natural resources, because we also believe that in a federation provinces must have strong and protected rights and a very strong role to play. At the same time we need to have a strong federal government which also has an extremely important role to play in the governing of Canada. That is part of the debate today and it will probably be part of the confederation debate for many years.

It reminds me of 1968 and 1978 and the election of Pierre Trudeau. Ed Broadbent said at the time that probably the most fundamental thing Trudeau did in his first term was to initiate a department of regional economic expansion, the old DREE department, in terms of more aid, assistance and development to many of the provinces like Quebec and Atlantic Canada, northern Saskatchewan and northern Manitoba. That is part of fiscal federalism.

We have seen some of those programs diminish over the last few years, so it is important that we talk about equalization, that we talk not about rolling back the cap to where it was a year or two ago but about increasing the cap.

The other point I will make is that in 1995 when the federal government decided on a lot of cutbacks because of the large problem in the debt and deficit area, it cut back radically on the transfers to the provinces. There were radical cuts. I know there are a lot of Liberals across the way that are embarrassed by that slash and burn policy of the Minister of Finance and the Prime Minister. I suppose some even hang their heads in shame. The government House leader is signalling that his head is in a noose on this one and he is probably right.

Never in our history have we have seen larger cutbacks by a federal government. In the fiscal sense the government across the way—and you, Mr. Speaker, were elected as a Liberal in northern Ontario—is the most conservative government in Canada's history. I am speaking here of conservative politics in terms of the massive cutbacks in government transfers to the provinces in education, health and social services.

[Pat Martin, NDP, Winnipeg Centre, MB]

Crippling cutbacks.

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

They were crippling cutbacks, as my friend from Winnipeg says. They were major cutbacks. They hurt most not in Ontario and Alberta but in New Brunswick, Saskatchewan, Newfoundland and Manitoba, the poorer provinces of the country. The larger provinces with stronger economies could afford to put more of their own money into social services, education and health.

I will give the House the example of my own province of Saskatchewan, where there are slightly over one million people. In the early nineties it was staggering with tremendous debt and deficit. Saskatchewan had a deficit that was the largest in the country next to that of the province of Newfoundland. The deficit was run up by a premier named Grant Devine who was probably more right wing than many of the reformers who are in the House today.

Despite the huge debt and deficit, the Romanow government decided to backfill every single dollar into the health care budget that the federal government had cut out. That was extremely difficult for a province with a huge debt. Fortunately, Saskatchewan's economy was not doing too badly. The farm economy was relatively okay compared to now. However, the government had to introduce taxes right across the board. Income tax went up and the sales tax went up by 2%. A deficit repayment tax was implemented in the province.

Provincial officials did that to maintain services. Despite that, right across the board many rural hospitals had to be closed because of those tremendous cutbacks that hit Saskatchewan. I am sure the same was true in the provinces of New Brunswick and Nova Scotia where hospitals were also closed largely because of federal cutbacks to the EPF.

These items are all part of the debate. The government has done a tremendous amount of cutting which has really hurt the cause of co-operative federalism in Canada. It has really hurt the cause of having a strong central federal government whose purpose is to create equality of conditions. It has hurt the cause of the vision I believed in so strongly when I was in university. It is the vision of a Lester Pearson or a Tommy Douglas or a Bob Stanfield, the vision of a co-operative federalism.

Members may remember the vision of co-operative federalism of Douglas, Pearson and Stanfield back in the sixties and seventies. That vision was to make sure everybody was brought up rather than brought down. That was the vision of co-operative federalism, with sharing, flexibility, strong provinces and a lot of diversity. It was a vision with the uniqueness of Quebec, two languages and many cultures, but a strong central government.

We have been sliding away from that vision over the last number of years. The bill is another small example of that. Sure the cap goes up this year, but the cap will suddenly be gone and will go back to what it was for the years that lie ahead.

The economy is not as strong as it was a few months ago, but it will likely rebound starting in the last part of this year. With the fiscal surplus we have today, I appeal to the government to spend more of that money on programs like equalization and transfers to the provinces for education, health and social services so we invest in the human infrastructure of Canada and create a country with genuine equality of conditions regardless of whether one lives in Fogo Island, Newfoundland, downtown Edmonton or Moose Jaw, Saskatchewan. That has to be the vision of our country.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, coming from Saint John, New Brunswick, I have watched what the government has done to the largest city in the province of New Brunswick and it tugs at my heart.

We had to close St. Joseph's Hospital in Saint John. It was our first hospital, the religious hospital. We had to close it because of the government. On top of that, schools have had to close. This is a city that is the second largest city in square mileage in Canada, 126 square miles.

We in Saint John were leaders of the way. We built the frigates for the military. Look at us today. We do not have a shipyard open. The shipyard has a lock and bolt on it. Look at our VIA Rail. We had rail passenger service until this Liberal government came to power. We no longer have rail passenger service, and a brand new train station had been built.

All of this comes from the economy. It comes down to transfer payments for education and social programs. The hon. member did not mention the homeless. However, I want to tell him that I had the homeless and their representatives in to see me just last week. Because of the cutbacks, we have people living on the streets. Never before did we have that, not until this Liberal government came into power.

I say we have to increase the equalization payments. We have to make everyone equal across this country. I ask the hon. member if he agrees with that.

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

Mr. Speaker, I certainly do. The fundamental thing about being a social democrat is that one believes in the equality condition, in sharing, in co-operation, in fairness and in justice. One role for the government of the country is to be the instrument of public policy that tries to equalize conditions.

Of course the homeless situation is one of the consequences of the cutbacks in terms of transfers to the provinces in social programs, in housing and in education. I also think of social housing, which has had massive cutbacks in the last number of years.

There has been a real shift in the way the government has gone. If I can risk being political for a moment, I think the member for Saint John might agree with me that the Reform Party has had a tremendous impact on the government's agenda, driving it and dragging it by the nose, as my friend from Winnipeg said, into a very conservative position of slash, burn and cut back and damn the consequences.

Where is the old Liberal Party of Lester Pearson, Allan MacEachen, Walter Gordon, Pierre Trudeau, Jean Marchand and Gérard Pelletier? Where is that old Liberal Party that was progressive and innovative and tried to equalize conditions in this country? Now it is terrified of the Reform Party and the shadows of the Leader of the Opposition and his predecessor.

[Loyola Hearn, Progressive Conservative, St. John's West, NL]

Mr. Speaker, I listened with interest to the hon. member. We talk about equalization and CHST payments, particularly in relation to health care and post-secondary education. One of the main resources we have in the country is our young people. As we see declining payments to the provinces, we see the costs of education becoming a greater burden to students and their families. In the areas where we have failures in the fishery and failures in relation to shipyards et cetera, the people cannot afford to pay for the education of the students.

What does the hon. member think about this lack of investment in our young people and where is this country going if we do not invest in our most precious resource?

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

Mr. Speaker, one of the tragedies of the cutbacks in transfers to the provinces for health and education is that they have made education less accessible for our young people. The future is our young people. Power and prosperity in the future is based around knowledge and the knowledge economy and good education and training. We are really falling back.

Just today I was talking to somebody in the lobby of the House of Commons who said that tuition fees in American universities were $40,000 U.S. If we keep going down this road we will be heading in that direction. I am sure that you, Mr. Speaker, sitting in the chair, would not want to see that happen to our young people.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I rise on a point of order. I wonder if the House would agree to take the recorded division on this particular item so that it could be referred to committee in an effort to advance the legislation.

[The Acting Speaker (Mr. Bélair)]

Is there consent?

[Some hon. members]

Agreed.

[An hon. member]

No.

The House resumed from March 27 consideration of Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions, as reported (with amendment) from the committee.

Financial Consumer Agency Act

[The Acting Speaker (Mr. Bélair)]

It being 5.30 p.m., pursuant to order made on Tuesday, March 27, the House will now proceed to the taking of the deferred recorded divisions on the report stage of Bill C-8.

Call in the members.

Before the taking of the vote:

[The Speaker]

The question is on Motion No. 1.

(The House divided on Motion No. 1, which was negatived on the following division:)

Division No. 39

[The Speaker]

I declare Motion No. 1 lost.

[Randy White, Canadian Alliance, Langley—Abbotsford, BC]

Mr. Speaker, I would like to make sure that my vote is recorded as having voted with my caucus. Perhaps just one other vote might defeat these Liberals, so I would appreciate that.