House of Commons Hansard #54 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was provinces.


Federal-Provincial Fiscal Arrangements ActGovernment Orders

11:55 a.m.

Some hon. members


Federal-Provincial Fiscal Arrangements ActGovernment Orders

11:55 a.m.


Alexa McDonough NDP Halifax, NS

Madam Speaker, I appreciate the co-operation from members. I was so exorcised and frankly dismayed at the hypocrisy reflected by some of the previous comments that I was distracted from making that point at the outset. I do appreciate their co-operation.

I want to say at the outset that a fair formula for equalization is critically important to the constituents I represent, the people of Halifax. More than that it is critically important to citizens who live in and throughout the four Atlantic provinces, as well as citizens in the provinces of Quebec, Saskatchewan and Manitoba.

I will go further than that. I do not believe it is only the people who are on the punishing end of the measures taken by the federal government to artificially have equalization payments who care about this issue. I think what it means to be Canadian is to subscribe to a fair equalization formula capable of establishing not just the words to express it but the reality of Canadians, regardless of where they live, being eligible for a roughly comparable level of services.

Equalization is about ensuring that we do not experience a growing gap between those who have and those who have not, as it relates to individual citizens and regions. That growing gap is very alarming and is causing real strains in the lives of people, their families, their communities and inter-regionally, as a result of the government turning its back on a fundamentally important principle.

Let me say very clearly at the outset the position of the New Democratic Party. It has been championed by a succession of New Democrats in the House, but none more effectively than my colleague, the finance critic from Regina—Qu'Appelle. He has been a faithful, inveterate champion of the importance of a fair equalization formula throughout the 30 years he has served the constituents of his own community and all Canadians who believe in the fairness a proper equalization formula represents.

At the very heart of our concerns about the bill before us and the inadequacy of the amendments is the fact that there is an artificial limit on equalization payments that will be reinstated in the year that is now upon us. As far as we and fair minded Canadians are concerned the cap on equalization must be removed.

I guess the government needs to be reminded at every opportunity that Canada has a constitutional obligation to ensure that provincial transfers are set high enough so that all provinces have the capacity to serve the public interest and to ensure that the basic needs of the residents of all provinces are met. For historical, legal and moral reasons this must be the principal goal of the equalization plan.

The plan as it stands fails to achieve the goal. I listened to the Parliamentary Secretary to the Minister of Finance say what the bill is about. It would ensure that the objective of roughly comparable levels and quality of services is achieved for all Canadians. If the cap on equalization payments is reimposed then it is absolutely clear the objective he stated in the House this morning simply cannot be met. Not only can it not be met. It will not be met. The government has turned a deaf ear to the pleadings that the cap not happen.

One cannot possibly imagine that the parliamentary secretary, the finance minister and the Prime Minister do not understand that objective cannot be met. One has to go further and say that they do not intend that constitutional obligation and that important principle to be met by the provisions in the Federal-Provincial Fiscal Arrangements Act amendments before us.

We know the Liberal government has absolutely decimated fiscal transfers to the provinces, undermining the national interest and in the process destroying the very moral authority needed by a federal government that professes to believe in the concept of roughly comparable services being available to all citizens of Canada regardless of where they happen to live and regardless of the state of finances of their respective provinces.

Then the federal government shows great surprise and is actually puffed up with indignation when a province like Alberta introduces bill 11, when a province like Ontario is as bold as we saw the premier being this week when he talked about going further into privatization and turning our health care system into a commercialized operation, one based on the notion that profits will be extracted from people's illnesses and misfortunes.

We cannot repeat too often the fundamental flaw in the fiscal arrangements act that is now before us. Bill C-18 seeks to remove from the fiscal year starting April 1, 1999, the ceiling that would otherwise apply to equalization payments, but the bill then reimposes that ceiling for the year 2000-01.

Surely it is worthy of note that all 10 Canadian provinces are in agreement. They want the federal government to remove the cap on equalization. Even the provinces that are in the have category, that are the net contributors to equalization payments, agree that it does damage to the fabric of the nation and that it erodes the quality and comparability of services to people in the have not provinces to artificially impose and maintain that limit on equalization payments.

The Atlantic provinces and Manitoba asked the government very effectively before the finance committee last week that if it will not make a commitment to remove the cap, to remove it permanently, it should at the very least rebase the ceiling on equalization to the higher level of $10.79 billion.

Finance ministers from all five of those provinces made their case this week before the finance committee and did so very effectively. However the government, the Minister of Finance and the Parliamentary Secretary to the Minister of Finance have turned a deaf ear to the concerns of those finance ministers and the people whom their governments represent.

The minister of finance for Manitoba stated it very well. He said that the equalization program should be allowed to do its job by lifting the ceiling as a preferred point. As an accommodation it should be rebased to the level to which it grew in the year the ceiling was lifted, 1999-2000. That would offer much needed support to the provinces that are still reeling from massive unilateral cuts to transfer payments by the government.

The government must use a 10 province standard to ensure a truly equalized equalization formula and, more important, the concrete outcome the equalization formula is intended to achieve. The federal government has so drastically cut CHST transfers to the provinces, strangling their ability to adequately fund health care and post-secondary education, that when Harris and Klein started down their privatization track the federal government was not in a very strong position to defend the Canada Health Act or did not seem to want to.

One does not have to be very insightful, and I do not think it is cynical, to suggest that in the process of weakening the commitment to comparable services across the country and of engaging in massive cuts to transfer payments that enable provinces to deliver health care, education and fundamentally important social welfare services the people need, the federal government knew it was destroying public confidence, absolutely eroding public confidence in the important public services Canadians depend upon.

Further, the federal government must immediately restore funding to CHST transfers to the provinces. It has invested a pittance into infrastructure and transportation, causing delays of much needed essential repairs to transportation infrastructure in every part of the country.

The government has abandoned its federal constitutional responsibilities for far too long. It should recommit on every front to ensuring that provincial governments achieve the goal enshrined in the constitution that goes to the very heart of the kind of country we say we want to be, the kind of country that with considerable success we were becoming. That was recognized by others around the world.

If we fail to do that we are not only letting down the people who need and depend upon those services, but we are striking a blow to the very concept of Canada which means so much to people in this country and people around the world.

The government's actions speak to an attitude of indifference toward the real needs of Canadians. It is not too unduly harsh to say that the government is arrogant and out of touch with the real needs of Canadians, particularly in the less advantaged provinces.

When the government introduced its throne speech it completely failed to address the fundamental issue of ensuring some semblance of comparability of services to every citizen in Canada. At the time I raised a question on recognition and commitment from the government to deal with the problem posed by an unfair equalization formula, one that makes it virtually impossible for governments in have not provinces to make progress because of the excessive clawback of resources from offshore development, for example, that may now give an opportunity to Nova Scotia and Newfoundland to move out of the have not status.

On every front it seems that the government, not the people of Canada, has given up on the Canadian dream. When a government stops dreaming, when a government abandons something as fundamentally important and changes an equalization formula to artificially restrict the capability of provincial governments to deliver on that dream, it should examine what it is all about.

There are many elements to the battle to try to get the Canadian government once again to believe in that fundamentally important dream. I can speak from a Halifax perspective of what it means to the citizens of my community to have the federal government quite cynically make a decision to remove the cap for one year and then turn around and reimpose it.

I can speak about it from the point of view of what it means for citizens not to be able to get the health care they require, from the point of view of students unable to afford an education, or from the point of view of what it does to the lives of students if they go into debt to the level necessary to gain a post-secondary education these days. In a very real way it becomes a double jeopardy situation for the government to artificially cap equalization payments and to pull back on transfer payments. It becomes an out migration policy in effect of people going to the wealthier parts of Canada from the have not regions.

That is not the kind of Canada we believe in and not the kind of Canada we as parliamentarians are supposed to be here building together.

In conclusion, I implore the government to consider that what is a very small matter in terms of the text of this fiscal arrangements bill is a very fundamental matter that will have massive consequences if equalization payments are to be artificially constrained by the continuation of the cap in the year 2001. I ask the government to reverse itself and agree that the artificial cap should be removed.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:15 p.m.


Lorne Nystrom NDP Regina—Qu'Appelle, SK

Mr. Speaker, I wish to say a few words in this debate before the House today as well.

I consider this one of the most fundamental parts of Canadian federalism. We have had fiscal federal-provincial programs going back to the forties and fifties. Back in the days of Pierre Trudeau, 1968-69, we had the department of regional economic expansion and equalization payments being expanded and made part of our law.

The big turning point came in 1981 with the patriation of the Canadian constitution. It was decided then to make equalization payments part of our constitutional make-up. I think that was extremely important because we recognized that in our unique federation, which is one of the most decentralized federations in the world, we needed some way of equalizing conditions between people in all parts of the country. We needed some way of equalizing the fiscal ability to have comparable services for health care, education and farm support programs from one province to the other.

We have great inequities between the provinces and the regions because of our constitution and because of our resources. We also have great disparities. We have three provinces, Ontario, Alberta and British Columbia, that have been better off historically than the other seven provinces which have historically drawn funds from equalization payments. Saskatchewan, my province, is one of those provinces that has usually drawn equalization payments but, from time to time, has had an economy where the growth rate was high enough that it did not receive those payments.

I think part of the Confederation bargain was to support a program like equalization. However, the government removed the cap on equalization, which was $10 billion for the year 1999-2000. In terms of payments, it went from $10 billion to almost $10.8 billion. That was done, coincidentally, before the last election campaign. What a coincidence. The Prime Minister made the announcement to take off the cap and then dropped the writ. He wanted to win more seats in Atlantic Canada, in Manitoba and in Saskatchewan. What did the government do next? It reinstated the cap. There was no election. The cap went back on again.

When the ministers of finance from Manitoba and the four Atlantic provinces were before committee they told us that they did not want the cap on, or, at the very least, that the base go from $10 billion to $10.8 billion.

It is interesting that the Prime Minister made a commitment to take the cap off. It is also interesting that all 10 provincial finance ministers said to take the cap off. With a surplus predicted to be around $15 billion to $17 billion for the fiscal year, we now have the fiscal flexibility. A minister's statement will be coming out in a couple of weeks. We will be able to handle greater equalization payments to equalize conditions across the country.

Despite all that evidence, when we moved amendments in the finance committee a couple of days ago the parliamentary secretary would not entertain any idea of amendments. Of course the committee itself cannot produce a ways and means motion to amend the act. However, the committee suggested that the minister bring an amendment before the House at report stage to raise the cap from $10 billion to $10.8 billion. Even that timid suggestion was turned down by the parliamentary secretary.

In an irony of ironies—and I think this was reported in some of the Atlantic papers—my friend from the Bloc Quebecois moved an amendment asking the minister to consider the possibility and the wisdom of perhaps some day considering raising the cap. However, even that was turned down by the parliamentary secretary as being too radical.

What we need is some serious parliamentary reform. The committees need to have more independence to suggest what is right for Canadian people. The committee I was talking about was told by all the ministers of finance from the Atlantic provinces and Manitoba that the cap should be gone or that it should at least be rebased at $10.8 billion instead of $10 billion per year.

If the committees are not given independence, we will have growing inequalities between the have and have not regions. We will have growing inequalities in terms of health care services, education and social services. We will have growing inequalities in terms of the taxation burden on Alberta and, for example, New Brunswick and many other provinces.

Because of the constitution, Alberta is very blessed and fortunate to have all kinds of oil and gas. In fact, this will be an interesting problem in terms of fiscal federalism in the future because Alberta, with the development of the tar sands, has more gas and oil than Saudi Arabia. It will be an interesting situation to deal with in the years ahead.

The Fathers of Confederation did not foresee this kind of wealth in gas, oil and many other resources. The rights to these resources have now been turned over to the provinces. I support the provinces' right to have jurisdiction over gas and oil but I also believe it is the fundamental right of the federal government to have an equalization program that redistributes wealth in order to have a greater equality of conditions.

Those are some of the problems we will be facing in the future. Alberta's tremendous oil wealth, which will be more than Saudi Arabia's oil wealth, will be a very difficult issue to deal with because it will create tremendous inequities between two or three of the Atlantic provinces and, indeed, much of the provinces of Quebec, Saskatchewan and Manitoba. One of the ways we could deal with it is through the constitutional idea back in 1981 which called for equalization payments to be enshrined in the constitution.

By implication, that would force the federal government to make generous enough payments, which would be in accordance with our fiscal capabilities, to ensure equality of condition for every Canadian. It would not matter whether one lived in Corner Brook, Newfoundland or Calgary, Alberta, everyone would have the same opportunity to send their kids to school, to get a decent education and to receive decent health care. That is the basic philosophy behind equalization.

I hear the Alliance Party people criticizing the government's involvement in all kinds of different programs and talking about massive cutbacks. The Alliance Party agenda calling for cutbacks and cutbacks, has had a great impact on the country and one that has spooked the Liberal Party. It has spooked the Minister of Finance and the Prime Minister, and has made the parliamentary secretary pale with fear.

In 1995, in particular, there were massive cutbacks in government spending like we had never seen from a Conservative government any time in the history of this country, going back to R. B. Bennett in the 1930s. In fact, it makes my Conservative friends over here look like raving socialists in comparison to what we saw across the way.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:20 p.m.

An hon. member

We are.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:20 p.m.


Lorne Nystrom NDP Regina—Qu'Appelle, SK

My Tory friend from Newfoundland said “we are”. In comparison to the Liberals, they certainly are.

We had massive cutbacks in 1995. The Liberals were pushed, prodded and poked by the Reform Party which was basically anti-government and anti-public program in terms of creating any kind of equality of condition. The former Reform Party and now the Alliance Party stood for that and the government has picked up its agenda.

It is time to turn the corner. We must now attack the human deficit, the people deficit, in terms of more social spending and more equality in our taxation system, and we have the capability to do that.

Some Alliance people would lead us to believe that equalization means that the taxes of Alberta go directly to the people of Newfoundland. That is anything but the truth. The equalization payment comes from the consolidated revenue fund of taxes collected across the board by the federal government and then given out to the poorer provinces to create equality of condition. The Alliance objects to this by trying to heckle us on the idea of equality, justice and fairness. It wants a system where the rich get richer and the powerful get more powerful.

The Alliance wants a flat tax, an idea that has been rejected by the Bush republicans in the United States. Those are the kinds of ideas that cater to the wealthy, the rich and the privileged. No wonder the Alliance Party is in trouble with Canadians from one part of Canada to the other.

These archaic ideas from the time of Fred Flintstone have no place in the modern world. Canadians want equality and they want justice. Alliance members should crawl back into their caves. Their ideas are outdated.

It is time in the debate to tell the government across the way not to be spooked by those sitting across from it, to do the right thing, and to do what the provincial ministers of finance have said, including the ministers of finance from Alberta, British Columbia and Ontario. They have all said to increase equalization. They have all said to get rid of the cap, or re-base the cap from $10 billion to $10.8 billion.

The Prime Minister of Canada said that before the election campaign. The four Atlantic provinces have come here asking for it, as well as Manitoba and Saskatchewan. If we do not do it we will have greater inequalities, greater inequities between the regions and more people living in poverty and lining up at food banks.

It seems to me that if we do what we should do as a parliament, we must make sure we have equality of condition for the common good, so that a child in the north, the prairies, Alberta, Newfoundland or Quebec has exactly the same opportunity as a child anywhere else in the country.

I would once again like to plead with the parliamentary secretary across the way to speak with his government and to come back before the House with a ways and means motion to amend the equalization bill before us, or at least, in the financial statement coming down in two weeks where there will be a budgetary surplus of $15 billion to $17 billion, to make sure that as part of that financial statement there will be an increase in equalization payments in order to treat every single Canadian with fairness and justice regardless of where she or he may happen to live.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:25 p.m.

Progressive Conservative

Greg Thompson Progressive Conservative New Brunswick Southwest, NB

Mr. Speaker, I can easily pick up on the comments made by the previous member because there is much on which we agree.

I could not agree more with the member's remarks when he talked about federalism and what Canada was all about. It is about sharing; sharing our wealth and sharing the blessings we have.

From time to time many provinces do not as well as others. Some provinces that are doing very well today were not doing well in the past. One province I will point to is Alberta. Until Alberta struck oil it was doing just about as poorly as Atlantic Canada.

I want to focus so that the listening audience will have a sense of what we are talking about. We are talking about the equalization formula and the government putting a cap on it. Equalization is an unconditional transfer of payment from the federal government to eligible provinces that is determined by a formula which takes into account numerous economic, demographic and fiscal indicators.

Mr. Speaker, before I go any further, I will be sharing my time with the member for St. John's West.

The equalization formula was designed to make up for a province's inability to raise sufficient revenues from its own economy. Equalization payments are made so provinces have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. That is quite important to understand.

Obviously the poorer provinces, to maintain health care, education and all the other services that governments deliver, simply cannot do that on their own. It is quite noticeable in my home province where equalization payments are the single largest source of revenue for the province of New Brunswick. I think I am being accurate when I say that also applies to Prince Edward Island, Newfoundland and Nova Scotia.

When the federal government arbitrarily, without consultation, takes off the cap or caps the payments, it creates a handicap for those provinces. Basically the government is taking away the very spirit of the Constitution Act of 1982, when it is guaranteed in our constitution that those payments will be there. When those payments are capped, the cap results in a handicap for us in the poorer provinces.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:30 p.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

Manitoba and Saskatchewan.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:30 p.m.

Progressive Conservative

Greg Thompson Progressive Conservative New Brunswick Southwest, NB

Manitoba and Saskatchewan, as the member for Pictou—Antigonish—Guysborough just mentioned to me, are also recipients. In fact I will refer to my notes so this will be on the record. Seven provinces are currently recipients of equalization payments, namely: New Brunswick, Nova Scotia, Newfoundland, Prince Edward Island, Quebec, Manitoba and Saskatchewan.

Those payments are made by the federal government from federal revenue sources to which all taxpayers contribute. It is not coming out of one pot of money. It is coming out of general revenues.

Before my colleague from Newfoundland gets on his feet to drive home what I think is a more regional message—I may be mistaken on that, but I think it is—I do want to go through the history of equalization in the country.

It is a long established practice in the country to share the wealth, so to speak. I refer to an article written by Kenneth Norrie, Richard Simeon and Mark Krasnick entitled “Federalism and the Economic Union in Canada”. It is a summary of major developments with respect to equalization.

For the record, this practice began in 1867, at the very birth of our country, in the BNA Act, with what were then called the BNA Act statutory subsidies, payments made to provinces in return for surrendering indirect taxes to Ottawa. There was a formula already established, then, for having given up direct taxation. In 1940 that was renewed with what they called then the national adjustments grants, which were recommended by the Rowell-Sirois report. These grants were paid on the basis of fiscal need.

In 1957 there was another look at equalization. The first formal equalization plan was established in 1957. It was part of the 1957-62 fiscal arrangements. The federal government at that time agreed to bring per capita yields from three standard taxes up to the average yield in the two wealthiest provinces, hence bringing us up to a higher level based on the prosperity of some of the other provinces that happened to be doing better.

In 1958 there was another look at it, with increased equalization for personal income tax. Again it was a trade-off. The provincial share of personal income taxes paid to the provinces increased from 10% to 13%. This entered into the equalization formula.

Between 1958 and 1961 there was another look at it. The government came up with the Atlantic Provinces Adjustment Grants and Newfoundland Additional Grants Act, an act of parliament. Additional unconditional grants at that time to the Atlantic provinces were rationalized on the basis of the provinces' low fiscal capacity, in other words, not as much strength in their economies.

In 1962 we revisited again as a nation what was then called the 1962-67 fiscal arrangements agreement. Again the personal income tax share rose up to 16% in accordance with the tax arrangements and there was the introduction of 50% of the three year average of provincial revenues and taxes from natural resources. The equalization standard was again reduced to the national average level.

From 1962 to 1967 another look was taken at it. The provinces acquired an increased share of personal income tax. In 1964-65 there were some changes to the natural resources act. Then we move on to our centennial year and the federal government introduced the representative tax system of equalization. In 1972 the same thing occurred and that program was extended. An addition of three new tax sources brought the total level to 19 tax sources at the time. Revenues from these three tax sources, racetrack revenues, medical premiums and hospital premiums, were previously equalized under miscellaneous revenues. There were some changes there.

In 1973-74 school purpose taxes were included. In 1974-75 there was energy revenue modification. In 1977 the equalization component of the Fiscal Arrangements Act was passed by parliament. In 1981 Bill C-24 had two provisions: withdrawal of the sale of crown leases category from the program and a personal income over-ride with no province eligible for equalization if its per capita personal income exceeded the national average level in the current preceding two years.

As we can see, various Liberal and Conservative governments were taking steps all along the way and provincial governments were doing the same thing in recognition of equalization and how important it was for the stability of the country.

In 1982 a new tax source was added. In the 1982-87 fiscal arrangements there was the new representative five province standard equalization program.

I have one minute left and will conclude by saying that April 17, 1982 is a date every Canadian will remember. That was the date of the new Constitution Act. The new Constitution Act of 1982 was struck, signed onto by the provinces and the prime minister at the time. There was a provision in the act ensuring that equalization was enshrined in Canada's new constitution.

Canada has a long and good history of sharing the wealth in our country. I think the present government's position and attitude are very meanspirited. I look forward to hearing the comments of the member for St. John's West, who will carry on.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:35 p.m.

Edmonton Southeast Alberta


David Kilgour LiberalSecretary of State (Latin America and Africa)

Mr. Speaker, my colleague the hon. member for New Brunswick Southwest spoke of Alberta and also referred to the study by Ken Norrie on federalism and the economy.

I would like to assure the hon. member that we Albertans know we are very fortunate at the moment and we do want to share our prosperity with people in Saskatchewan or New Brunswick and elsewhere. I wonder how the hon. member feels this situation should be handled. How do we encourage people who might be out of work in his province, say, to come to Alberta? As I am sure he knows, we are very short of skilled people in Alberta and we would like to have more people come to our province to help with things like the tar sands.

Does he also have a comment with respect to what a caring and sharing country should do in terms of a province that is at the moment having very high surpluses, as I am sure all the members know?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:35 p.m.

Canadian Alliance

John Duncan Canadian Alliance Vancouver Island North, BC

Mr. Speaker, I rise on a point of order. I would like clarification.

After the member for Regina—Qu'Appelle spoke I did not hear an invitation for questions and comments. We went straight to resuming debate. I did not rise as a consequence. Am I mistaken or was there a difference between the previous speaker and this speaker in terms of questions and comments?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:35 p.m.

The Acting Speaker (Mr. Bélair)

Yes, my colleague, there is. As you know, we have started third reading of this bill. The first three speakers are allowed 40 minutes with no questions and comments. In this case, the New Democratic Party asked for unanimous consent to split its time so that it would have two 20 minute periods instead of one 40 minute period. That is why there were no questions and comments.

However, as of the remarks of this first speaker, the hon. member for New Brunswick Southwest, there will be either 10 minutes for questions and comments or 5 minutes for questions and comments if members indicate they wish to split their time.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:40 p.m.

Progressive Conservative

Greg Thompson Progressive Conservative New Brunswick Southwest, NB

Mr. Speaker, I appreciate the minister's question in relation to Alberta, the rest of Canada and my home province of New Brunswick. In fact, we do have a lot of young Canadians leaving the poorer provinces of Canada to seek work elsewhere. We like to see that mobility, but obviously it does create a problem in some of our provinces. We talk about the brain drain to the United States, but there is also a drain of talent from eastern Canada to western Canada. We can understand that and we appreciate it. We do not want to see any artificial barriers put up, and I know the minister himself would not.

In fact, in terms of putting a cap on equalization, one of the arguments the premiers used, and I think successfully, is that we are doing our best and we are moving ahead, and we want that stability so we can continue to move ahead and build the infrastructure that is needed and build an economy back home that will allow our young people to stay there.

At the end of the day, the government cannot give with one hand and take back with the other. For example, in the equalization formula we have a connection between that and the CHST, the moneys that the federal government transfers to the provinces in the health and social transfer. When it takes money out of that pot and pretends to put money in another one, nothing happens. There is a sort of balance in the sense that we are really not moving ahead. Giving with one hand and taking away with the other would be the correct analogy.

However, the truth is that governments should not be doing that, because they have to look at the overall picture. To build good education systems, health care systems and a strong economy in New Brunswick, we need that little bit of help to get us going.

There will be a fair degree of economic growth in New Brunswick. The numbers that are coming out of Atlantic Canada are looking pretty good, because we have built on some of our successes and we want to continue to build on those successes. We do not want to be penalized because we are succeeding, and that is really how we look upon this, as being penalized for succeeding.

The federal government is still very important to us in this country, and it has to take the lead. We do not want to penalize anyone in this country for being successful, either on the tax end as an individual or on the giving end in terms of recipients of equalization. We want to build on our strengths.

The truth is that we would love to see a society where young Canadians would not have to leave their homes to seek work elsewhere, whether it is in the United States or some other part of Canada. That would be a perfect world. We will probably never achieve that, but let us not penalize the poorer provinces for the successes they are enjoying.

The federal government is enjoying a fair amount of economic success over the last number of years. Let it share that with the rest of Canada, because every single Canadian has paid into general revenues and those are the dollars that are being used to help support the poorer provinces.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:40 p.m.

Progressive Conservative

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

Mr. Speaker, let me thank my colleague from New Brunswick Southwest for sharing his time with me.

I listened to him explain how we arrived at the present process of equalization and I listened to the leader of the NDP Party and the member for Regina—Qu'Appelle. I must say that the more I listen to people speak on the equalization process, the more I realize that we all agree the present system of assisting have not provinces, and I use those words very loosely, is not working. We all agree it is not working. We all agree there are better ways of doing it. Many of us recommend better ways of doing it.

That begs the question. If most of the parliamentarians in the House understand what is happening across our country, if we understand the fiscal realities of the have and have not provinces, if we understand the sharing, the equalization systems, the goods, the bads and the uglies, why is it that we do not do something constructive about it? Members on this side can only point out, recommend and represent. It is the people on the other side who must to do something, but we have not seen very much being done.

Bill C-18, which would remove the cap on equalization payments for one year, is a positive step and one which various provinces have asked for. They have also asked that the cap be removed entirely, which is something I would also recommend, but removing the cap on equalization would not solve all the problems. Changing the whole equalization reality would equalize it.

The word equalization is deceptive. When we hear the word we think of the old Robin Hood syndrome: if we take from the rich, being Alberta and Ontario, and give to the poor, everybody becomes equal. If that were the case, what a wonderful country we would have, but that is not the case. All we are doing is taking a very minuscule sum of money and sharing it on an equal basis depending upon status.

The province of Newfoundland has been looked upon by our fellow Canadians for years as a have not province, a province that has absolutely nothing to offer. Those who are experienced and travelled politicians, or experienced in the sense of having read and educated themselves about all the provinces, realize that is not the case.

I doubt if there is a province in Canada as rich as Newfoundland in relation to the resources within its boundaries. If we look at the small population of Newfoundland, slightly over half a million people, and divide it into the value of our resources, on a per capita basis we could be richer than any province in the country.

The parliamentary secretary from Alberta asked my colleague from New Brunswick Southwest whether it would not be good for the people of his province to travel to rich Alberta where they could find employment. I say to the hon. member that many people from Newfoundland have travelled to Alberta and have contributed significantly to the growth of that great province. Alberta and Newfoundland have been extremely close over the years. I had the privilege of serving in a government in Newfoundland in the mid-eighties at the same time that Premier Lougheed was the premier of Alberta. There was an exceptionally strong bond between our two provinces and that bond has held.

In recent months, Premier Hamm of Nova Scotia has led the fight for drawing attention to the plight of equalization clawback arrangements. It is interesting to see him being supported by other premiers who have not been directly affected and by the new leader of the opposition, Mr. Williams in the province of Newfoundland.

When Premier Hamm and opposition leader Mr. Williams took their plight nationally, the people of Alberta began to realize what they were being asked for. It was not just more money from Alberta and putting nothing back in return. When they saw the reality of what was happening, the people of Alberta, Premier Klein, former Premier Lougheed, the University of Alberta, the Calgary Herald —and I could go on—in their comments, their speeches and their editorials, all expressed support by saying that what these people wanted was right and proper and that it was not something that Albertans did not get in the past.

I talked about Newfoundland and its riches. Besides our forestry and farming potential and our small business and IT sector, which are growing rapidly, we have one of the greatest tourism potentials anywhere in the world. We are one of the last frontiers in Canada, as many people are starting to see. We are limited only by access because of unfair treatment by the central government in the type of ferry system we have, a monopoly airline, et cetera. Other than that, we have the last frontier as it relates to all the other areas except the far north.

We also have major resources. People must remember that we brought the fishery into Canada. We brought the Grand Banks of Newfoundland and all the surrounding fisheries around the coast of our province within the 200 mile limit. For years Canada bartered Newfoundland fish for deals, such as the sale of wheat and other sales to Russia, China and Europe. Everybody got a piece of our action, such as the Spanish, Portuguese and Russians. Our fishing grounds were ravaged by countries given quotas in lieu of deals made to ship off other Canadian resources.

In the end Newfoundland paid the price. Our water power in Upper Churchill was developed by an agreement with Quebec. Newfoundland receives about $10 million a year while Quebec receives closer to $1 billion in royalties out of our water power. I do not blame Quebec. It was a federally sanctioned deal, with absolutely no federal assistance, that provided a power corridor through to the United States markets, which is what was done for Alberta oil and gas across the rest of the country.

Newfoundland is extremely wealthy with minerals, especially the major find in Voisey's Bay. It is not being developed for several reasons, but the main one is that people want to move it somewhere else in order to create jobs.

Our oil and gas, which is now being developed and, as Alberta grew and prospered on its onshore oil, Newfoundland will eventually grow and prosper. As Alberta slides economically, maybe Newfoundland will be able to pick up the slack and reciprocate on the assistance it has received.

Confederation is supposed to be about sharing. Newfoundland, Nova Scotia and other provinces are not putting their hands out and saying “give us”. They are asking for a chance. They are saying that they have the resources to become a have province but that they need the chance to develop those resources and hold on to the royalties until they can create the infrastructure to make themselves a have province.

If the government wants to create equalization across the country, it should start doing it properly. It should try to be fair so that some day each province in this country will be equal.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:50 p.m.

Etobicoke North Ontario


Roy Cullen LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I know the member for St. John's West speaks on behalf of many Newfoundlanders who have raised the concern about equalization. I would like to go over some of the data.

The government recognizes that equalization is a very important program. It is meant to help those provinces that are the so-called have not provinces in order to deliver a roughly equal level of services and programs to their residents.

In 2001-02, Newfoundland and Labrador will receive almost $1.6 billion in equalization. That includes the CHST and equalization. It will account for about 40% of Newfoundland and Labrador's estimated revenues. It is expected to total about $2,930 per person, which is more than twice the national average and the highest of any province.

If we look at those per capita receipts, which are twice the national average, one intuitively reaches the conclusion that it is supposed to work that way. On a per capita basis Newfoundland and Labrador will receive, by this formula, twice as much on a per capita basis as the national average.

Does the member feel that it is not sufficient for Newfoundland and Labrador to deliver the same quality of services and programs to its residents?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:55 p.m.

Progressive Conservative

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

Mr. Speaker, I find the question basically insulting. The parliamentary secretary seems to be asking if it is not enough that we are getting welfare and more funding than anybody else. That is not what we are looking for.

We are talking about $1.6 billion being thrown into Newfoundland. Just from our hydro resource alone we are putting a billion dollars into Quebec, not to mention the oil, gas and mineral resources. We are getting nowhere near what we are contributing.

We should be getting our fair share of royalties. We are not looking for more handouts. That is what is wrong. It is the attitude of government members across the way that tells us to take the welfare and thank them. That is not what we want. We want the opportunity to be a contributor. We have the tools, resources and the intelligence to do it. All we are asking is that the government let us do it.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:55 p.m.


Alexa McDonough NDP Halifax, NS

Mr. Speaker, I have two questions to raise with the member for St. John's West. I also applaud him for recognizing that it was the premier of Nova Scotia, not of my political stripe but of his, who spearheaded a lot of the battle for a fair equalization formula. Our party has been very pleased to co-operate with that effort.

Could the member comment on the role and position of the former premier of his province of Newfoundland on the equalization formula? I remind all members of the House that when he made his decision to run in the last federal election, wrapped in the unity flag and all sorts of rhetoric about equality of opportunity, he said that one of the reasons he was running was that he wanted to see changes in the equalization formula and the removal of the cap.

Has the member for St. John's West been tracking what the current Minister of Industry has done to contribute to persuading the government to lift the artificial cap on the equalization formula?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:55 p.m.

Progressive Conservative

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

Mr. Speaker, Premier Hamm has certainly been the one who has led the fight that has now been picked up by others. I presume the hon. member knows the answer as well as I do to her question. The Minister of Industry has done very little, either before or after his return to Ottawa.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:55 p.m.


Roy Cullen Liberal Etobicoke North, ON

What about the $700 million?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:55 p.m.

Progressive Conservative

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

The $700 million was announced five different times. It was the same money over and over. One of these days I will analyze the benefits to our region for the hon. member, and that will embarrass him even further.

The Minister of Industry spent a lot of time in Ottawa and delivered nothing for Newfoundland as a premier. The only time he raised the issue of equalization was during the election campaign when he was to save Atlantic Canada. He was elected, but there were very few with him because he campaigned on a new equalization deal. He did not deliver and that is no surprise to any of us.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:55 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Mr. Speaker, I will be sharing my time with the hardworking and faithful hon. member for Vancouver Island North. I could have used more adjectives, but I did not want them to go to his head. It is an honour to stand in the House to talk about Bill C-18, a very important bill, and to address at this stage the broader question of equalization payments and the meaning of them.

I cannot resist the temptation to lay down a bit of what one might call a philosophical foundation for the idea. That foundation is what we as Canadians believe in so strongly. We believe in community and sharing with those who have need. The Liberals have somehow exploited this in their communication pieces to try to pass it off to Canadians that they are the only ones who care. They certainly are experts at caring in one particular way and that is taxing Canadians to death, then deciding how they can distribute the money they have gathered together.

Just yesterday, without any previous debate or approval of the House, the Prime Minister declared some of his values in Toronto when he announced a $500 million program to aid culture in Canada. 180 I shake my head at that when we have that same government saying that it will not increase the ceiling for equalization payments to help provinces pay for hospitals, education facilities for students and things like that. The government is ready to give us $500 million more for its interpretation of what Canadian culture is.

That is a very narrow point of view of what it means to be Canadian and what it means to be community. Very frankly the cultures that I see across the country are many and varied. These cultures for the most instance are very able in representing themselves and thriving without the aid of a bunch of government grants.

In fact in my riding we have a large Ukrainian community that does wonderful things to promote its culture and to keep it and its language alive. I had a conversation not long ago, actually I guess it is over a year ago but at my age years fly into days or weeks, with several people from the Ukrainian community. They said we should support more cultural grants from the federal government.

I engaged them in a little debate and asked them where they thought the money came from. We talked about it a bit. I told them that we were overtaxed with the huge burgeoning bureaucracy that was involved in sending money to Ottawa and that the bureaucrats spun it through their centrifuges. A bunch of that money would spill over the edges but would never get to the target for which it is intended. Then finally some would go back to a select group chosen in some cases by the Prime Minister because, as I understood it, he had a lot of clout in cabinet. However if they did not happen to be one of those they would not get the money.

I was able to show them that we would all do a lot better if we could simply reduce our taxes. Then all of us in all our cultures could fund to our heart's content the Ukrainian schools, the German schools and other schools that we would have liked to have but were prohibited from because of the official program of the government of taking about half of everybody's earnings and distributing it according to its will.

I also say that in the broader sense of community I do not want to restrict my community just to the town near which I live, nor my riding. It is a wonderful riding. I welcome you, Mr. Speaker, to come and visit. We have a national park in our riding. It is called the Elk Island National Park, named after my riding. It is a wonderful place and great place to visit. I would not like to restrict my sense of community just to our province.

It was mentioned earlier today that Alberta in the last year or so had a very good economic picture because of the energy situation. I can remember back a scant eight years ago when that was not the case. Albertans were struggling with their education and health funding probably as much as anyone. We had tremendous challenges in the province to rationalize the delivery of the health care system. A lot of it was due to the fact that this federal government reneged on what was originally an agreement to pay for half of the health care for the provinces. Over the years it eroded it to a point where it was once again the responsibility of the provinces. However it never reduced the taxes it sucked out of our provinces to bring to Ottawa. Therefore, I feel the government funding of those programs was irresponsible.

My country is my community. I came to the House as a Canadian. I stand proudly when we sing the national anthem in the House. Some may remember that I was even unwittingly and unintentionally the centre of a lot of controversy a number of years ago when I insisted that there should be nothing wrong with my having a flag on my desk in the House of Commons. Ultimately, it was ruled not permissible. It was considered a prop, so I am without my Canadian flag. So be it.

However I am a proud Canadian and this is my community. I insist that we would do well by extending the word community across this whole country and that we provide the needed health care and educational facilities to our citizens, which are more or less equal, at comparable levels of taxation. However it is impossible to have them exactly equal as that is just a practical consideration but they should be as equal as is possible.

Again, it is worth drawing the attention of the members to the fact that this is in our constitution. If we look at the Constitution Act, 1982, we will find section 36. I am going to read it because perhaps some people have not heard it. It states:

Without altering the legislative authority of Parliament or of the provincial legislatures, or the rights of any of them with respect to the exercise of their legislative authority, Parliament and the legislatures, together with the government of Canada and the provincial governments, are committed to

(a) promoting equal opportunities for the well-being of Canadians;

(b) furthering economic development to reduce disparity in opportunities; and

(c) providing essential public services of reasonable quality to all Canadians.

Then subsection 36(2) of our constitution states:

Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

Although that was brought in by a Liberal government, it seems to me eminently fine. I have absolutely no problem with that particular clause in our constitution. It behooves us to make sure that Canadians across the country have comparably equal services at comparable levels of taxation.

However we need to make sure that there is not duplication. We must ensure there is efficiency in the delivery of those services. We must make absolutely sure that the provinces and the citizens in those provinces continue to have all the motivation in the world we can extend them to improve their situation, regardless of where that is. I insist our country would do best if we neither hung a milestone around the necks of those who are doing well as they will then do better, they will expand our economy and they will provide more jobs, nor leave destitute those whose needs are greater.

Quite clearly I could have spoken for longer but my time is up. I appreciate the opportunity to address the House on this important issue.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:05 p.m.


Gérard Asselin Bloc Charlevoix, QC

Mr. Speaker, it is with pride that the Parliamentary Secretary to the Minister of Finance rose in the House this morning to make his speech and say that the federal government has been generous in giving money back to the provinces. The government feels generous because, among other things, it gave Quebec $489 million in equalization payments.

If the federal government is returning money to each province through the equalization program, it is primarily because these tax revenues from the provinces and workers have increased, while government spending has decreased. The government has now eliminated its deficit, but not because it is a good administrator, not because the Minister of Finance is better than his predecessor. Rather, it is because the Minister of Finance decided to take $6 billion a year from the employment insurance fund. It is because he decided to make cuts to transfer payments to the provinces for health and education. The federal government has relinquished all responsibility for the maintenance of airports and piers.

This money is not a present from the government, it is money owed to us. In a sovereign Quebec, we will manage the $33 billion that is collected through taxes and we will tell the federal government “Keep your equalization program”. I am prepared to trade $33 billion for $489 million.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:10 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Mr. Speaker, I was just waiting for the end of the interpretation. Unfortunately I am unilingual and I depend on those wonderful people in the booths to do my talking for me.

I will answer the question in the following way. Indeed there is but one taxpayer. We are burdened to death with taxes at all levels of government. The federal government takes the largest share, then the provinces and our municipalities take some.

I would definitely agree with the member but I would ask him to come to a small degree of realism. Members of the Bloc are intent upon leading their people into forming a separate government independent from Canada. That is their commitment. They are good at communicating it and I have to admire them. It is a party that has managed to stay on track and focused on what its goals are.

However I caution the member, the members of his party and all citizens of Quebec to make sure they do the arithmetic accurately. As residents of a recipient province in the equalization program, they would have a very hard time demonstrating to me, using hard facts and numbers, that they are not net beneficiaries of the program. Undoubtedly they pay their share of taxes and I have no problem with that. However they are net beneficiaries when it comes to the equalization program. The numbers are very clear.

Other than that the member was right on in his statements.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:10 p.m.

Canadian Alliance

John Duncan Canadian Alliance Vancouver Island North, BC

Mr. Speaker, this is not the first day we have debated the bill but it is the first day we have debated it on third reading.

There is a history and a track record to the legislation in this place. The real track record was the first minister's conference communique of September 11, 2000, when the announcement was made on the one year lifting of the ceiling on equalization payments would occur. Of course that was about one month before a general federal election was called. People, particularly the Prime Minister who was the major part of making that announcement, would very much have had the election in mind at that time.

We have an agreement that was reached in a very politicized environment. It is for one year and one year only. We really are talking about retroactive legislation. The spin doctoring that has come out of the Liberals on this particular initiative has been absolutely incredible.

I have the press release from the minister's office dated March 15. It spent more time talking about the fact that because of the Ontario's hot economy the total transfers were going to be $1.8 billion higher than it did the substance of the press release which was supposed to be about the legislation, this bill which was tabled that day in the House of Commons.

There is a general recognition, a disquiet and a discomfort among some of the bureaucracy in the finance department and other places that this is a politically opportunistic, unprincipled way to approach the whole issue of financial transfers to the provinces. They really are trying to bury the facts of how we arrived at this.

The real reason we ended up with that announcement last September 11 was that the federal government had balanced the books. It got rid of the deficit between 1993 and 1999 in three ways. First, it gutted transfers to the provinces, particularly the CHST which funds health, education and other important areas, by reducing it 33%. Second, it gutted the Department of National Defence. Third, it reduced all other programs by an average of 3%.

We can see how much damage was done because the priorities of the government were obviously not the priorities of the people. This is an attempt to make up for the first set of cuts to the CHST, the health and social transfers to the provinces, on a one time basis in a politically charged atmosphere.

I have great difficulty with all the breast beating coming from the Liberals about how generous they are. They say this is a good announcement and pretend it will somehow continue. The official opposition supports the principle of equalization. It is the government that makes equalization look bad by this kind of ad hoc, band-aid reaction.

The bill is very narrow in scope, as I mentioned. It deals with only one year, yet the government is attempting to make it look more broadly based.

We support the notion that the federal government ought to equalize access to core public services at reasonably comparable levels of taxation. There are many problems with the current system. It should be much more open to discourse and debate.

I listened carefully to the member for St. John's West when he talked about how economic development, particularly in the non-renewable natural resource sector, is penalized by the current way the equalization system is applied.

It reminds me of what we have done with the north. Equalization payments apply only to the provinces, but in the north we have federal territories: Nunavut, the western Arctic, the Northwest Territories and Yukon. Federal transfers to those jurisdictions are the major part of their budget. Anywhere from 80% to 90% plus of the total revenues of territorial governments come from the federal government.

Historically the equalization formula has worked in a perverse way. If a region creates economic development it is penalized on an almost dollar for dollar basis. What is the incentive to become self-sufficient? This is contrary to economic thought and rational development policy.

Let us look at the economies of countries with mobile populations. I heard the Secretary of State for Latin America and Africa ask about the demand for skilled workers in the province of Alberta. How do we get people to fill those jobs? How do we get them to move to that jurisdiction? That is a crucial question.

It is clearly demonstrated that one of the major reasons the U.S. economy is resilient and strong and has low unemployment is that culturally and by policy its population is used to travelling to new jurisdictions to seek employment. The United States has the highest labour mobility in the world. That is what gives its economy such great transitional strength and reduces its unemployment numbers.

Any country that makes it more convenient to stay in one place than to move to new opportunities is doing its people a great disservice. The Secretary of State for Latin America and Africa was on to a very important question about which our young people are thinking a great deal.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:20 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Mr. Speaker, I am truly impressed. The adjectives I used to describe the hon. member have now been proven correct. He gave a great speech.

I have a couple of questions or comments. The Prime Minister, during his swing through the Atlantic provinces in the election campaign or leading up to it, made a significant policy change. He announced that the cap on equalization payments would be removed for one year.

What does the member think about a government that makes major policy changes for one year only during an election year? If it is a necessary step, should it not be taken whether or not there is an election and not cancelled when the election is over?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:20 p.m.

Canadian Alliance

John Duncan Canadian Alliance Vancouver Island North, BC

Mr. Speaker, I concur with that, but I attribute it to something more than a concern over the government's or the Prime Minister's behaviour in this regard. The larger concern is that we have a parliamentary democracy that does not allow for real ratification.

For example, in most western democracies a prime minister or president could make a statement such as the September 11 statement of last year outlining their intent. However it would need to be argued, debated and ratified and there would be a great deal of uncertainty as to whether it would be approved.

In Canada, on the other hand, our democracy is so skewed that parliament is virtually a rubber stamp. The Prime Minister or even a cabinet minister can now make these kinds of announcements. The cultural announcement to which the member for Elk Island made reference is the same thing.

The biggest portion of the $560 million announcement by the Prime Minister yesterday includes $108 million to foster and develop Canadian content on the Internet, and French language content in particular according to the heritage minister.

Since when is money for Canadian culture usefully spent on getting us into Internet type stuff that the private sector, private investors and the stock market and everything else have run with from day one? How did that become a priority? How could an announcement be made when nothing has occurred in this place to enable the announcement to be made?