Debates of May 3rd, 2001

Competition Act

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Madam Speaker, it is a pleasure to speak on Bill C-23 today on behalf of our industry critic, the member for Kings—Hants, who has been very much involved with these issues.

All of us are involved with competition issues almost every day. During my former job as transportation critic there were several instances where the competition bureau was involved, especially during the evolution of the airline industry. There was a lot of involvement by the competition bureau when Canadian Airlines was consumed by Air Canada. There still is and will be for some time.

The competition bureau has outlined rules whereby Air Canada must allow competition to start and flourish in order to create a competitive environment in the aviation industry in Canada. Air Canada is so strong that it effectively could put new companies out of business before they even start. It can subsidize four revenue lines from its better revenue lines, thereby competing with other smaller airlines that do not have access to the more profitable lines. It can lower rates on its lower revenue lines by subsidizing from the higher revenue lines.

Everyone understands how the system works. Air Canada has complied quite astutely but the competition bureau has been involved in a couple of cases. That is just an example of what we are talking about here.

I have another example that is a little closer to home. A member of my family received a call saying that she had won a car or some huge prize. She had to call a 1-900 number and answer a few skill testing questions. I remember that the low end of the prize award was $2.73 and the high end was a car. When she called the number she was kept on the line for almost an hour. They charged her a lot of money, and sure enough she had won the $2.73. It was a total scam to make money on the phone call.

Another senior lady in my riding was scammed out of hundreds of thousands of dollars by two or three different outfits from the province of Quebec. They were the same people who just changed names, identities and addresses. They used all kinds of excuses to access this lady's money. In the end she lost her home and her money. It was a confidence scam. She should have had quick and easy access to the Competition Act to prevent this sort of thing from happening.

Our party is pleased to see these amendments come in. It is a credit to parliamentarians and private members' bills that have come before. They have all been generated by people who have come to us as members of parliament and advised us that they had been scammed, cheated or were victims of abuse in some way.

Members of parliament have responded by raising the issue with several private members' bills which are now reflected in Bill C-23. Quite often people do not give us credit but the system actually does work. It may take a while but it does work.

People are concerned about issues of conspiracy, bid rigging, predatory pricing, misleading advertising and deceptive marketing practices. Many of us have been victims of those practices, including me and certainly some of my constituents. When the bill is in its final form hopefully it will address those issues.

Non-criminal or reviewable matters include mergers, abuse of dominant positions and people taking advantage of others. They may not be criminal but they are reviewable and they are not fair. This is where the competition commissioner should have the power to intervene and protect the citizens who have no other avenue or no other source of protection.

The competition tribunal and the competition commissioner have done a good job with the tools they have had to work with. Bill C-23 would give them more tools. In any case I have been involved in the competition commissioner has done a thorough investigation, has heard both sides of the story and has done a good job.

The bill was developed because parliamentarians responded to citizens through private members' bills. However it has also come about through consultations across the country, through public policy forums and a consultation paper that formed the basis of the discussions entitled “Amending the Competition Act: A Discussion Paper on Meeting the Needs of the Global Economy”. All these sources of information certainly enhanced the bill.

Part of the issue is international co-operation. That is important because the same people from the province of Quebec who were scamming other people were doing the same in the United States. The American authorities had limited access to address this issue because of international rules. The bill would allow a closer relationship between the law enforcement offices and the competition bureaus of both countries to deal with these international issues.

The bill would deal with deceptive practices such as the notice of winning a prize as in the case of my family member. A lot of Canadian companies are providing these services or promoting these scams in the U.S. The same can happen the other way around. American companies can scam Canadians. There has to be some international co-operation, and the bill would do that.

The bill intends to streamline the litigation progress, which is a good thing. It would help the tribunal that manages each case it hears to be more efficient and to give easier access to people. The tribunal would be able to award costs against a party, which is also a good thing. Many people have taken on incredible legal bills to fight the mail and telephone scams I have mentioned. In a decision the tribunal would at least be able to award costs to the victims.

The tribunal would gain the power to summarily dispose of a matter that it believes has no genuine basis for application. That is a good thing as well. Frivolous actions are taken and it would have the power to determine whether or not an action is frivolous.

Under the new proposal the bureau would be able to issue temporary or interim orders prior to completion of the litigation. This was perhaps led by some of the Air Canada judgments. Powers would be given to the competition commissioner in the aviation case. It could make judgments early and immediately, before the case even comes to the tribunal.

Therefore there is a lot of good in the bill. Our party is anxious to get it to committee as well. We want to make sure that it has teeth, as the government has proposed. We want to make sure the teeth are actually there. We want to make sure the competition bureau is independent. We want to emphasize that this whole issue evolved from citizens complaining to members of parliament, who brought it forward in private members' bills and now in a government bill.

We will be pleased to see the bill go to committee and we will make our decisions and amendments there.

[Karen Redman, Liberal, Kitchener Centre, ON]

Madam Speaker, we have before the House today a package of amendments to the Competition Act and its companion statute, the Competition Tribunal Act. Together these statutes constitute a fundamental framework in the rules for the operation of free trade and a competitive marketplace for Canada.

The Competition Act is a broad based statute that affects virtually all industrial sectors and business entities in Canada, whether large or small, domestic or international, or involved in manufacturing, services or resources. The legislation seeks to enhance competitive market forces.

Competition is important. It is not a means to itself but rather a means to an end. Competition encourages firms to lower costs, reduce prices, improve services and develop new products.

Consumers are the prime beneficiaries of a competitive economy. After all, competition is driven by consumer demands. In a competitive environment consumers decide what they want to buy based on their individual needs, preferences and incomes. The marketplace responds efficiently to this demand by supplying consumers with the right product at the right price.

An amendment being considered today would make it an offence to promote deceptive contests by mail, fax or Internet. Under the new provision it would be a criminal offence to make people believe they have won a prize and that they must make a payment or incur a cost to collect it, to increase their chances of winning it or simply to get more information regarding it.

Deceptions of this sort hurt Canadians. I have talked to people across the country about the devastating effects on the people that have been duped. These practices also hurt responsible businesses and charities by undermining their legitimate marketing efforts and many of them damage our reputation abroad by targeting persons outside Canada.

For these reasons such rackets must be stopped, and the sooner the better. The new provision would add a valuable enforcement tool against deceptive marketing practices. It would complement existing provisions against deceptive advertising and telemarketing and help ensure that consumers have the information they need to make informed choices.

Sellers would be rewarded for their ability to offer good products at low prices rather than their cunning ability to deceive the consumer. Honest businesses would no longer be threatened by the anti-competitive practices of dishonest businesses.

The amendments proposed in the bill would help keep Canada's competition laws up to date, but the work is clearly not over. Globalization and rapid technological developments are continually changing the marketplace and the ways in which business is conducted. To remain effective and relevant the Competition Act must remain both modern and dynamic.

The amendments constitute one step in the continuing evolution of our competition legislation. The changes constitute a balanced package of amendments that would better enable the Competition Act to protect free competition and the public interest.

The amendments would protect consumers and honest businesses alike. The bill would strengthen and improve the overall level of competition in the marketplace and benefit all Canadians.

I wholeheartedly endorse the amendments and believe they are worthy of the support of all members of the House.

[Dan McTeague, Liberal, Pickering—Ajax—Uxbridge, ON]

Madam Speaker, I am very pleased to speak about this bill and about the new ground broken in terms of recognizing members' efforts to ensure that the legislation that comes before this parliament and its committees is an accurate reflection of the concerns we hear about in our ridings.

I have a lot to say on the bill and will try to be as brief as I can in the next nine and a half minutes. Much of the bill reflects the efforts of members on this side of the House to effect much needed changes to the Competition Act. It is for that reason that I thank the hon. Minister of Industry, his parliamentary secretary, the member for Scarborough Centre and the competition bureau that have been working very hard to ensure the Competition Act reflects the changes in market structure that we see throughout the country.

I will give a bit of background on why we are here today. The hon. member for Kelowna said earlier that it is a beautiful day. I think it is a wonderful day. There is finally a ray of hope that our competition policy will begin to look more globalist, will be open to small and large players, and will ultimately have more teeth.

In 1997 when gas prices were heading up, 52 members on this side of the House began a study of the industry, particularly at the retailing end, and found the level of concentration to be alarming.

For that reason one of the recommendations was to ensure that a more appropriate definition of predatory pricing be established. The House not only made private member's Bill C-235 votable. It also ensured that it would be properly studied by committee.

That clearly was not the case. Nevertheless, out of that came a more open process that allowed a number of issues to be studied, not just one area of competition policy. One such issue was that section 45 of the Competition Act, the conspiracy section, may not be relevant in addressing problems in the economy or in ensuring that strategic alliances which may look collusive but have very strong competitive effects are somehow segregated from the egregious types of collusion.

As for the issue of predatory pricing, a move was made with the help of the industry committee to review some of the criminal aspects which are difficult to enforce if not to detect. With the help of VanDuzer and Paquet we were able to propose changes to the Competition Act which would make it more user friendly and make criminal burdens of proof civilly reviewable.

We followed that up with a commitment by the previous Minister of Industry, the current Minister of Foreign Affairs, who must be acknowledged here. He began allowing the public policy forum to conduct a broad study of the Competition Act, particularly in terms of some of the legislation I brought forward.

I commend my two colleagues who spoke before me, the member for Kitchener Centre and my colleague from Mount Royal who brought forward the bill dealing with international co-operation. The public policy forum effectively criss-crossed the country last summer to determine the public's concern with respect to abusive dominance in the grocery industry and retail domination in almost any form.

The second recommendation dealt with private access, conspiracy, collusion and summary disposition of temporary orders which we see rolled up in the bill today. The package received a significant amount of interest. Most alarming, however, was the consistent pattern we saw among those with vested interests, particularly powerful lobbies that constituted themselves as a diversity of individuals but were really part of the same group that opposed almost any changes to the Competition Act.

Last week I explained who wrote the Competition Act in 1986. There are not only concerns that it is an act whose time has come in terms of need for change. There are questions as to who really wrote it. Most of us in the House know, as Peter C. Newman said in the book Titans and in his interview with the chairman of the Business Council on National Issues, that it is interesting Canada is the only nation that has allowed its Competition Act to be written by the very people it was meant to police.

That has set off alarm bells in most circles and certainly in the House of Commons. However more important is the impact it has had on the competitive process. For that reason the competition bureau, in concert with the minister and with parliament, has taken a bold step today in saying that irrespective of what the interests are we must make sure the competitive process is honoured and that it flourishes.

Opportunities have been made clear on several occasions in the industry committee. People have testified to the committee suggesting that by the time the competition bureau makes a ruling the person it affects is out of business, the damage is done and it is irreparable. The initiatives taken today are extremely valuable and should ensure there is an ongoing process for amendments to the Competition Act to ensure that it is pragmatic and changes with changing times.

I want to make sure the House understands that the process before us today must be an open one. The government has initiated, through the wisdom of the minister, an opportunity that would allow members of parliament to ensure that issues of importance to them and to consumers have a voice on the floor of the House of Commons.

Many members are talking about one of the bills. My colleague from Kitchener Centre addressed the question of deceptive practices, particularly as transmitted through mail by using Canada Post or other means.

That is an extremely important issue with which the public readily identifies. However there are other issues the public may not have seen. Another initiative taken up here today is the whole question of international co-operation. Why is that important? Most Canadians do not know it, but for the past several years we have been part and parcel of a cartel that has forced up the price of citric acid, various important chemicals, certain vitamins and lycene.

Those issues were resolved, discovered, advocated and taken from the competition act in the U.S. For that reason it is important to ensure that where there are international cartels Canada can effectively prosecute no matter where it occurs in the world.

It is interesting that the competition bureau was successful in prosecuting these issues and bringing revenue back to Canada. That revenue, according to some, did not equal what the public lost in terms of higher prices, but it nonetheless helped the general revenues.

I will also point out something that is not in the bill but which the industry committee has nonetheless been effective in transmitting to parliament. I am talking about the need to ensure the competition bureau has the resources to carry out its very lofty mandate and to ensure the market remains balanced.

Questions are being raised in many areas. There is an opportunity for such questions to be addressed in the industry committee. I caution hon. members that the pinstripes and the big suits will be coming to the committee. I implore members of parliament to ensure a balance of the views of consumers and ordinary people out there who do not have a voice but who nonetheless are an important part of our economic structure. Those individuals count for everything in the economy and must count for something if the legislation is to be meaningful and successful.

Members of parliament will be lobbied by some of the most interesting people in the country. Members will need to decide for themselves, in committee and on the floor of the House of Commons, whether to enhance and maintain the competitive process for all Canadians or merely for those who happen to have the wealth and the power to influence them.

This is a very good day. There are obviously a number of concerns we must address. It is the beginning of a much larger process. It is vindication for a lot of the work I have done and which I have brought to the attention of the House of Commons and on which other hon. members have worked so diligently. Let us ensure that Canada remains ahead of the game, that its international reputation as a place for doing business remains pristine, and that Canadians benefit from a vibrant economic environment in which all people are meaningful participants and are treated as equals.

[The Acting Speaker (Ms. Bakopanos)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Ms. Bakopanos)]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

[The Acting Speaker (Ms. Bakopanos)]

Accordingly the bill stands referred to the Standing Committee on Industry, Science and Technology.

The House proceeded to the consideration of Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act, as reported (without amendment) from the committee.

Federal-Provincial Fiscal Arrangements Act

[Lawrence MacAulay, Liberal, for the Minister of Finance]

moved that the bill be concurred in.

(Motion agreed to)

[The Acting Speaker (Ms. Bakopanos)]

When shall the bill be read the third time? By leave, now?

[Some hon. members]

Agreed.

[Lawrence MacAulay, Liberal, for the Minister of Finance]

moved that the bill be read the third time and passed.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, I welcome the opportunity to address the House at third reading of Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act with respect to the equalization program. The bill fulfils the government's commitment made by the Prime Minister at last September's first ministers meeting to lift the ceiling for the equalization program for the 1999-2000 fiscal year.

In addition to this commitment, the Prime Minister asked the Minister of Finance to consult his counterparts in the provinces and territories as to how best to ensure follow up. The Minister of Finance concluded his consultations before the bill was introduced on March 15.

At the first ministers meeting, landmark agreements were reached on a plan to renew health care, improve support for early childhood development and strengthen social programs. These agreements resulted, through Bill C-45, passed in the last parliament, in the largest federal contribution ever made for health, post-secondary education, early childhood development and other social programs.

Over the next five years, federal spending in these areas will total $23.4 billion, $21.1 billion of it under the Canada health and social transfer.

As hon. members know, the CHST is one of the three transfer programs through which the federal government provides support to the provinces for health care and other social programs. The other two programs are territorial formula financing and equalization. Equalization is the subject of today's debate. Today the federal government transfers approximately $40 billion to the provinces and territories through these three programs.

The purpose of the equalization program is to ensure that less prosperous provinces can provide reasonably comparable public programs and services to their residents without their taxes being out of line with those of more affluent provinces. Equalization has played an important role in defining the Canadian federation since it was established in 1957. In many ways it expresses the generous spirit of Canadians.

The program is unique among federal transfers in that its objective was enshrined in the Canadian constitution in 1982.

The constitution states as follows:

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.

Equalization is also unique in that it was one of the very few programs not touched during the period when the government was struggling to bring order to the nation's finances. This reaffirmed the importance the government attaches to the program as part of the essential fabric of the country.

Equalization payments are unconditional and provinces can spend the money as they see fit. In 2000-01 the seven receiving provinces, Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan, received payments totalling $10.8 billion.

Since 1993 the program has grown by 33% or $2.7 billion. This rate of growth of the program demonstrates clearly that the government understands what equalization means to receiving provinces.

According to the estimates, which are updated twice a year, the program is now at its highest level ever. Over the same period, other non-transfer program spending has grown by 2.6%. The latest estimates released in February by the finance minister show that payments to receiving provinces will be about $1.8 billion higher than estimated last October. These higher figures are due in large part to the exceptionally strong growth over the last two years in Ontario, one of the non-receiving provinces, not to the poor economic performance of receiving provinces. Those economies have been improving each year.

On February 27, 2001, the Minister of Finance announced that there would be an immediate increase in equalization payments of approximately one billion dollars. Of this amount, $52 million is for 1999-2000 and $955 million is for 2000-01. The other $800 million is the additional funding that will be provided to receiving provinces through passage of the bill.

I would like to stress also, as I did during the second reading debate, that the equalization program is reviewed on an ongoing basis by federal and provincial officials to ensure that differences in the abilities of provinces to raise revenues are measured as accurately as possible. Those discussions are under way as we speak. In addition, the program is renewed legislatively every five years, most recently in 1999.

A province's capacity to provide public services obviously depends on how its economy is performing. Equalization payments therefore are based on a formula that measures the relative performance of provincial economies. The formula applies in the same way to all provinces and adjusts automatically in response to economic developments in the provinces.

When a province's economy is booming relative to other provinces, its equalization payments automatically decline under the formula. Conversely, when a province's economy and therefore its fiscal capacity, or ability to generate revenues, decline relative to other provinces, its equalization payments automatically increase. In this way the program acts as an automatic stabilizer of provincial government revenues.

I would urge hon. members to keep in mind that individual provinces do not receive the same amount of equalization because they do not have the same economic circumstances. This year, for example, Saskatchewan needs $230 per person to be brought up to the equalization standard, while Newfoundland requires $2,000 per person. Equalization payments are also subject to ceiling and floor provisions.

The capping provision, which has been applied in only 5 of the last 20 years, enables the program to grow at a rate that the federal government can sustain. By setting a maximum payment level, this provision ensures that the program does not grow at an abnormally fast rate.

The floor provision is the flip side of this coin. It provides the provinces with protection against large and sudden decreases in equalization payments that would otherwise be warranted by the straightforward application of the formula.

The equalization ceiling does not cut entitlements, as some have suggested. Rather, the ceiling allows the program's growth to mirror the rate of growth in the economy and to grow at a sustainable rate. Based on the forecast for GDP growth in last October's economic statement and budget update, the ceiling will rise to $12.5 billion in the year 2003-04.

I would now like to turn to the specific bill we are debating today, which lifts the equalization ceiling for the 1999-2000 fiscal year and only for that year. As I explained earlier, lifting the ceiling fulfils the commitment made by the Prime Minister last September at the first ministers meeting. The final communiqué released at the end of the meeting states that:

The Prime Minister agreed to take the necessary steps to ensure that no ceiling will apply to the 1999-2000 fiscal year. Thereafter, the established equalization formula will apply, which allows the program to grow up to the rate of growth of GDP.

While the final cost of lifting the ceiling will not be known until the fall of 2002 when the final estimates for 1999-2000 become available, it is currently estimated to be $792 million.

That amount will be allocated among the seven eligible provinces on a per capita basis. In order to determine the payment that will go to each, the per capita amount is multiplied by the total population of each receiving province.

Each eligible province will receive an additional $67 per person. Viewed another way, here is the total breakdown per province. Newfoundland will receive $36 million. Prince Edward Island will be eligible for $10 million. Nova Scotia will qualify for $62 million. New Brunswick will receive $50 million. Quebec will receive $489 million. Manitoba's payment will be $76 million. Saskatchewan will receive $69 million.

In conclusion, the government realizes that not all parts of the country can generate the same revenues to finance public services. Federal transfers therefore help ensure two things: first, that important programs are adequately funded, and second, that all Canadians receive reasonably comparable levels of public services regardless of where they live. Bill C-18 contributes to achieving these goals.

It underscores the priority the government places on equalization and helps ensure that the receiving provinces continue to have resources to provide the services their people need and want.

Further, it fulfils the Prime Minister's commitment to lift the equalization ceiling for the year 1999-2000, which means more money for receiving provinces.

Bill C-18 continues the tradition of fairness through which equalization has been delivered for over 40 years. I encourage all members to support the bill and pass it without delay.

[Deepak Obhrai, Canadian Alliance, Calgary East, AB]

Madam Speaker, it is a pleasure for me to speak to Bill C-18 on behalf of the constituents of Calgary East.

At the outset I want to make it absolutely clear that the Canadian Alliance believes in the concept of equalization. We believe in the concept that from coast to coast all Canadians should be receiving equal services. The Canadian Alliance strongly supports the equalization method of ensuring that a quality standard of living applies across our nation.

However, we certainly do have a problem with the way it is handled, the way the equalization formula is applied, and the way the Alliance feels it is used by the government to score political points.

Madam Speaker, at this time I wish to advise you that I will be splitting my time with my colleague from Kelowna.

The bill takes away the ceiling and increases the money requested by the provinces. We believe that the equalization system should serve the longer term purpose of equalizing economic opportunity and autonomy in all regions and should not create incentives for perverse economic policies on the part of provincial governments.

The lifting of the cap is a one time ad hoc reaction that fails to address the bigger and longer term problems and it was promised for purely political reasons. It may be good politics but it definitely begs the question, is it a good policy?

The fact that this one time band aid solution is even being proposed indicates the need for an open discourse in parliament to review the equalization program. The bill is part of a political effort to make up for the Liberal government's irresponsible $23 billion or 35% cut in health care funding.

At the first ministers conference the government agreed to increase the CHST but it never restored it to 1995 levels. As a result, the provinces requested more money to address health care issues. Therefore, the crisis was brought about by this government in the first place when it cut the CHST. In order to balance that out and look good, the government said it would commit $792 million to the provinces. That was because of its own shortfall in not raising the CHST transfers, as agreed at the first ministers conference, to the 1995 levels. What we have is the government trying to play politics by trying to lift up the ceiling to address the issue, which originally it failed to do.

The parliamentary secretary has indicated why there is a necessity for a ceiling and we agree. Otherwise it will spiral out of control. We saw during election time the money given to the supposed future contender for the Prime Minister's office, the Minister of Industry, when he received more money in equalization payments just prior to the election so he would look good in Newfoundland.

It is no secret across the nation that when the government cut the CHST it started a health care crisis, a crisis from coast to coast. In my own riding we heard stories from people who came in to tell us what the cuts had done to health care.

On the one hand, the federal government has the Canada Health Act. We agree with the Canada Health Act, but the government uses it as a stick to the provinces, saying “this is how health care services must be delivered”. On the other hand, the government took away the purse. It is supposed to give money to the provinces to administer their rules in the way they feel they should be addressing the health care issues. This is a contradiction.

We are in agreement with the five principles of the health act. As a matter of fact, we tried to put in a sixth principle, stable funding for health care, so that provinces do not in the future have to play games with governments that one morning decide to cut health care but will not make any changes to the Canada Health Act or will not give the provinces the leeway to see how they can deliver the services.

The merits or demerits of how the provinces are going to deliver services or whether they will be private will be left to the Canadian public to decide. As we have stated, we are not in favour of a two tier health care system. As the government of Alberta has said quite clearly under its bill 11, it needs more innovative ways to deliver health care services because it does not have the money, the money that the government cut.

The government cut this money and then said it had balanced the budget, leaving the provinces to handle how they were going to deliver the services. As we all know, as the population increases the demand on health care grows stronger. Our own health care critic, my colleague from Calgary—Nose Hill, will be leaving shortly for Europe to study how the system there is delivered.

The health care report we are receiving for Canada is that for the amount of money we put in, the end product, the delivery of services, is not that efficient. Therefore it needs to be addressed. As a matter of fact I saw today in a report that the premier of Ontario has been saying that he needs more money and that the surplus the government has should be given to health care.

Everyone in the provinces is demanding that. Canadians who have been using health care services are demanding a better system. Health care workers, with their shortage of nurses, doctors and patients are all demanding a better system because health care is failing. This all started because the government cut the funding for health care. It did that in 1995. Even when the government tried to bring the funding back up, even when it had the first ministers conference, it was not brought up to 1995 levels. There is also the factor of inflation and all these other things. When we add up all those figures and include the expansion and growth of services that is needed, the transfer of money from health care is bigger than what is indicated in the figures.

As members of parliament, we receive numerous calls from people who use health care services about how much trouble they have getting services. I am sure members on the government side do as well. Those who are rich are demanding that we do something because they have the money to get those services from the U.S.A. and it is not the right thing to do when we are supposed to have a public health care system.

The government turns a blind eye to that and trumpets about its past when health care was good. Yes, it was good in the past, but the demands were there before the cuts. The Minister of Health keeps saying that our health care system is good. He has tunnel vision. He closes his eyes and then stands up and huffs and puffs in parliament and tells us he is for a public health care system and that the government will maintain the five principles of Canada health care. He keeps saying these things.

That is all fine and dandy, but he forgets to tell us that the finance minister keeps cutting the funding. Of course, he is not the one who is implementing the delivery of health care services. It is being delivered by the provinces and the provinces are asking how they will deliver these services when the federal government cuts funding for health care.

On the CHST there is an agreement. The federal government gives money to the provinces through the CHST. The government says it has addressed this issue. Has it really? No, it absolutely has not addressed this issue, because we read in the newspapers and hear from our television stations that the provinces are still having difficulties and want innovative solutions.

Finally the government woke up. Now we have a commission to look into health care, headed by the former premier of Saskatchewan, Mr. Romanow, which I think started two days ago. I must say it was good for Premier Klein and Premier Mike Harris to say they want everything on the table. I am very happy to hear that Mr. Romanow has said he would put everything on the table. Finally we have somebody to look into the whole situation and see how we can best deliver health care services.

Coming back to the equalization issue, I need to repeat that we in our party are in support of equalization, because we believe that all Canadians from coast to coast should enjoy a comparable quality and level of important government services. However, we have a problem, as usual, with the way things are handled by the government. Our opposition to the bill is not based on disagreement with the equalization principle but more on the way it is being handled, the way it is done, because we do not think this is the most effective way to do it.

[The Acting Speaker (Ms. Bakopanos)]

Does the member have unanimous consent to split his time?

[Some hon. members]

Agreed.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Madam Speaker, thank you for the opportunity to enter this debate. I hope that in the discourse of the debate the hon. parliamentary secretary will take back certain messages to the Minister of Finance, because I do want to introduce certain things in the debate that I think he would be very well advised to take to the Minister of Finance.

As my hon. colleague who just spoke emphasized, the Canadian Alliance is not opposed to equalization payments. These payments are absolutely fundamental because we have provinces with varying economic development. Some are very wealthy and others are not as wealthy and there is a way in which we can equalize that. We certainly agree that provinces should not be penalized because their economies are in trouble or because they do not have some of the natural resource bases and so on. They should still be able to provide programs and services that are roughly comparable to those of other provinces. We agree with that principle.

The issue is not so much that. I want to deal with the way in which the legislation has been introduced. The first problem is that the legislation is actually retroactive legislation. I think that is really bad.

The Minister of Finance and the Prime Minister have committed the expenditure of funds without the parliamentary authority to do so. That is an insult to the hon. members on this side of the House and to colleagues on the other side of the House. We are here to look after the finances of our country and to find the best possible way to disburse funds across the various provinces.

I also would like to take issue with the way in which the hon. parliamentary secretary almost blew up his chest in a bragging sort of way as to what a wonderful thing the government had done by increasing the CHST transfers, as if the government given to the provinces something that was new and additional to what they had before. The problem with what he said, and with what the Minister of Finance said before him, is that somehow this does not even replace what was taken away. What kind of situation is it when the government asks people if they are not happy to be given $21 billion and then says, guess what, though, $22 billion has been taken away? It is absolutely reverse logic.

Some of us are parents and give a child an allowance of $5. Let us say that one year when things are not so good we take away $2, giving the child an allowance of $3. The next year we tell him we are going to restore the allowance. What is the first thing the child thinks? The child thinks he is going to get $5, but we only give him $4 and call it a restoration of his allowance. It is not. That is what has happened here.

I think we have to be very careful about the way in which we create the message. Let us tell the truth in the way it ought to be said.

The hon. parliamentary secretary said some very interesting things about the equalization formula. That was very good. Our listeners need to know how the equalization formula works. Unfortunately we do not have the time to go into the details of the formula to see exactly how it works.

There are some very interesting quirks within the formula itself. It does not always produce the same results even though one would think that putting the same numbers into it would produce similar results. The bases that are used in the formula for various provinces depend to a large degree on what the end result is on the equalization payments. That is why we have some disparities within the formula itself.

We do not have the time now to get into those details, but the hon. member will know that this is in fact the case and that he should go back to the Department of Finance and work through some of those details so that the bases used in calculating the amount of equalization payments are comparable, fair and equal across the provinces, that it is adjusted in the way it should be. There is an adjustment mechanism in there, but I do not think it is adequate at this time.

The other point we want to register at this stage is that we need to recognize that this is the lifting of a ceiling for one year. That is the assurance we are given. I do not know how many of us here in the House have ever experienced a situation like this.

When a ceiling is lifted what is the expectation for next year? The expectation seems to be that we would reach that ceiling again. What appears to have been a ceiling becomes a minimum or an expectation. I am very fearful that is exactly what will happen in this case. The ceiling this year will be increased by about $800 million then next year the pressure will be on to do it again.

Let me go back to the CHST transfers that have taken place. This is a government program that transfers money for health and social services to the provinces. It is very clearly designated as a special plan and usually deals with welfare, education and health. These are the three big areas.

These transfers are designed to do a particular job. The government now has an equalization formula, and the argument is made that it will help some of the provinces. When the agreement was made with the premiers, they said they wanted the equalization formula to be such that the ceiling would rise so they could subsidize the transfers of the CHST. That is the practical impact of this.

Therefore, the government is paying twice for the same thing under two different titles. That is wrong because it misleads Canadians into thinking the CHST transfers are adequate and that the equalization payments are there for everything else when in fact that is not what happens. We have to be careful that we tell the truth in these and other matters. The government needs to recognize these particular issues.

The other point I want to make is that the government needs to be a trustee of public funds. When this amount of money is given away, it makes us question whether the role of the government is to simply see how much money it can extricate from taxpayers and then give it away when asked for more. Is that the role of government? I do not think so. The government should treat public funds as a trust which it is managing on behalf of its citizens.

It is in this connection that I will refer to something I would like the hon. Parliamentary Secretary to the Minister of Finance to take to the minister. It has to do with a letter that I received from one of my constituents, which said:

Mr. Schmidt: I am returning a cheque for $125 made out to my mother. I am sure you must be receiving many such cheques. I am sure you must agree it is ridiculous the way the Federal Government has distributed these funds.

My mother died in October 2000 and prior to that lived in an extended care nursing facility for the preceding 10 years. I cannot even imagine how much of the taxpayers dollars have been needlessly wasted.

Members may ask what is the point of this. The lady died in October 2000. On January 31, 2001, she received a cheque representing the relief for heating expenses which was a fully funded initiative of the federal government. It was a special one time tax repayment to low and modest income individuals and families to ease the burden of high heating expenses. This lady had not paid heating expenses for at least 10 years and she died in October 2000. Four months later she received a cheque.

The cheque stub said:

We have determined that you are eligible to receive an amount of $125 to provide relief for heating expenses.

On what basis was this determination made? It clearly was not made on the basis that she was alive. Was it made on the basis that she was dead? Was it made on the basis that she was in a home care facility for 10 years? Was it made on the basis of her son or daughter? On what basis was it made?

[Roy Cullen, Liberal, Etobicoke North, ON]

Madam Speaker, I rise on a point of order. I was listening to the hon. member talk about the home heating oil rebate. I fail to see the relevance to the equalization formula in the bill before the House today.

[The Acting Speaker (Ms. Bakopanos)]

As the hon. members know, there is a lot of flexibility in terms of what can be said or referred to within the context of debate in the House of Commons.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Madam Speaker, I thank the hon. secretary for raising the question. I think it emphasizes the point I was just making before I proceeded to refer to the case.

I suggested to him and to all members opposite, in particular those in the government, that we must consider public funds, the taxpayer dollars that we collect, as a trust that we manage on their behalf. We ought to do so with integrity, with the best judgment and intentions so it meets the needs of our people in Canada. That is what we ought to do.

What I am suggesting with this particular example is that this does not demonstrate careful analysis. It does not demonstrate acting in the best interests of Canadians. It does not demonstrate either that it is helping this woman. What do we do about this lady who is in the grave? What is she going to do with $125? She cannot even cash the cheque. That is the point I am trying to make. I think we really have to register these kinds of concerns.

We also need to look at exactly what the bill would do. The bill would remove the $10 billion ceiling on the 1999 equalization payments and would add about $800 million worth of funding for the seven provinces that qualify for transfers: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan.

That equalization program has already indicated that it is designed so that these provinces can offer roughly the same level of public services in health and education, for example, as other wealthier provinces without imposing excessively high rates. The bill was designed in accordance with the agreement that was made last fall between the Prime Minister and the first ministers of the various provinces.

I also want to recognize that in the equalization formula we want to be careful that it is not manipulated in such a way that it benefits some provinces at the expense of other provinces. That can happen. We need to be very careful about that. We would strongly support a re-examination of that equalization formula itself.

In particular, we want to recognize that we need to address the bigger, long term problems that were promised. Promises seem to be such a vacuous thing for the government. It seems almost as if it can promise one thing and do another, or totally ignore the problem or, in some cases, even deny the problem and vote opposite to it.

In fact the government did that with the appointment of an ethics counsellor. It said an ethics counsellor would be appointed by parliament, report to parliament and would advise on the ethics of ministers and the Prime Minister in particular. What happened? We took the government at its word.

We proposed a motion in the House and said that the ethics counsellor should be appointed by parliament. In fact we took the exact words out of the promise book. Guess what? Every Liberal in the House voted against that motion. It makes one wonder about the integrity.

[An hon. member]

Except for the few that did not show up.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

That is not what I said. My hon. colleague said that members who did not show up did not vote against it. That is true. However they may as well have because they were not here. The only votes that count are those who are here. Integrity is in question in either case. First, members should have been here to vote because that was what they were elected to do. Second, the government did not do what it had promised to do in the red book.

Is the government actually going to evaluate and re-examine the equalization formula? Is it in fact going to be fair or is it going to operate in such a way that it can be manipulated and can change the way in which moneys are distributed? These are very serious questions, which I think need to be addressed and need to be dealt with very quickly and efficiently.

I am going to stop my remarks at this particular point and emphasize that we support equalization payments, that the formula for equalization has to be re-examined and that to lift the ceiling at this time is probably not the right thing to do.

Therefore, we are going to oppose this particular bill but not for the reason that we do not like equalization payments. We like equalization payments. We want them, we need them and Canada needs to support them.

[Alexa McDonough, NDP, Halifax, NS]

Madam Speaker, I am very pleased to have the opportunity this morning to speak on this bill before us which deals with amendments to the Federal-Provincial Fiscal Arrangements Act, or more accurately to deal with the inadequacy of the amendments to the Federal-Provincial Fiscal Arrangements Act.

On the way to dealing with the subject, I must say it was a bit like listening to two Sauls being converted on the road to Damascus when I heard the Alliance members singing the praises of equalization, of transfer payments and beating up on the federal government for having introduced such drastic unilateral cuts in 1995 for which the people of Canada, particularly the people in the seven have not provinces, are continuing to pay a terrible price today.

Why do I say like two Sauls on the road to Damascus undergoing conversion? No voice, no force, no power in this House worked harder than the Reform Party, now reincarnated as the Alliance Party, in trying to bring about the very kind of drastic cuts that were introduced by this government.

Having said that, let me clearly say that I and my party do not accept the notion that the Liberal Party should automatically, through force, implement the mean-spirited destructive policies represented by the Alliance. Yet that is exactly what it has done in recent years. It is absolutely clear that, not only the have not provinces but an overwhelming majority of Canadians, regardless of the party they represent, also do not accept that.

I neglected to say at the outset, that I intend to split my time. I would ask for the unanimous consent of the House to split my time with the member from Regina—Qu'Appelle.

[The Acting Speaker (Ms. Bakopanos)]

Is there unanimous consent?