Debates of May 31st, 2001

Supply

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, I too am pleased to take part in this debate and to support the motion put forward by the hon. member for Lévis-et-Chutes-de-la-Chaudière.

I believe this motion should get the support of every member in the House. I would like to read it again in order to put the debate in the right perspective. It reads as follows:

That, in the opinion of this House, the government should call a federal-provincial first ministers' conference for the purpose of reapportioning the tax base among the federal and provincial governments through the transfer of tax points.

I think the situation is excessively simple and it is also excessively dramatic. As it was pointed out already, and I think this should be stressed again, needs are currently under provincial responsibility, like health, post-secondary education and social services as a whole. All these responsibilities are at the provincial level, whereas money is at the federal level, in Ottawa. It is a situation that has to be corrected.

The strongest evidence that the money is in Ottawa is the fact that between 1993 and 2001 federal revenues have increased by 53% while federal spending decreased by 3%. Meanwhile, in Quebec program spending increased by 16%. I think these numbers illustrate quite well the situation where needs are growing in Quebec with a 16% increase in spending, while revenues are increasing and spending is decreasing at the federal level.

This allows the federal government to accumulate surpluses that are becoming indecent. From 1996 until now, there have been $60 billion in unforeseen, hidden surpluses. Over the years, the Minister of Finance has erred by 130% to 400%. Can the government pretend that such errors are inadvertent? I do not think so. This is a federal government strategy to undemocratically divert part of the taxes paid by Quebecers and Canadians in order to use them for other purposes than those that were announced.

The government has $60 billion in hidden surpluses since 1996. These are systematic, deliberate errors. The member for Saint-Hyacinthe—Bagot has done some calculations and has correctly identified the surpluses over the last years, something the Minister of Finance was unable to do.

The member for Saint-Hyacinthe—Bagot, whom I congratulate for his excellent work, had forecasted $60 billion in hidden surpluses. He now tells us that in the next four years $90 billion in surpluses will go into the federal government's coffers. What for? To pay off the debt.

This is the most undemocratic action since the passage of the so-called “clarity” bill, Bill C-20 tabled by the Minister of Intergovernmental Affairs, who wants to lock in the Quebec people and their right to collectively choose their future. In my opinion, after passage of Bill C-20, the most undemocratic thing the federal government has done is certainly diverting its surplus towards paying off the debt.

Why? Because the Liberal government got elected on the promise that 50% of the surplus would be used to cut taxes and reduce the debt and the other 50% would be devoted to all programs, particularly those under provincial jurisdiction.

Then we saw some low, despicable electioneering. The Liberals went through the campaign saying that this is how they would split the surplus, opposing their approach to the approach of other parties like the Canadian Alliance. The Alliance was proposing further tax cuts. The Liberals wanted to appear progressive, but in fact they chose to repay the debt without any public debate and they deceived the public.

I think this discredits the Liberal government and, unfortunately, the whole of politics. I think we must condemn such an undemocratic act and the conference we are proposing would be the opportunity for a real public debate where we could determine exactly what the surplus should be applied to.

Naturally, the Bloc Quebecois is not against paying down the debt. However, when we pay down a good part of the debt with hidden surpluses, without any public debate, in a way that is detrimental to the quality of public services, especially provincial ones, there is a big problem.

In this regard, I remind hon. members that the Minister of Finance greatly paid down the debt with concealed surpluses, in a way that was detrimental to health. This has been said before but it warrants repeating. A few years ago, the federal government funded 50% of all health spending in Quebec; it paid 50 cents on the dollar. Today, its share is only 14 cents on the dollar. At the same time, the federal government still wants to impose national standards on us.

As for post-secondary education, the level of transfer payments is at a 30-year low. Yet the liberals are telling us that investment in education is the Canadian way. What a lie. Over the past few years, federal transfer payments for post-secondary education have gone from 12.5% to 8.3%. That is reality. It is not just words, but reality.

A third element consists in the wholesale paying down of the debt with the concealed surplus, while refusing to restore transfer payments to the provinces to their 1993 level, a time when federal public finances were in a sorry state. This means that today federal transfer payments for program funding in Quebec have gone from their 1990 level of 20% down to 13%. This is a real problem.

We in the Bloc Quebecois have a solution for resolving this problem of fiscal imbalance. As has been said, this is a problem that goes back in history. During World War II, the provinces did indeed give up this source of revenue in order to contribute to the war effort. This is a situation we now need to remedy.

It is clear to the Bloc Quebecois that the best solution is Quebec sovereignty. With Quebec sovereignty, we would repatriate all of our taxes, make collective decisions and avoid the anti-democratic situation in which we find ourselves at the present time within the Canadian federal system, this systematic lack of democracy. The best example of this is the way the employment insurance fund surplus has been diverted and the way the surplus that came from all taxpayers has also been diverted.

Quebec sovereignty is therefore the choice that should be made here, but until that time it seems to us that for the good of Quebec and for all the provinces as well, all members of this House should agree with this motion. The government must sit down with the provinces in order to reapportion the tax bases and transfer tax points, which would become the property of the provinces, so that they may assume their responsibilities in the areas of health, education and all the social services.

That has already been mentioned. Historically speaking, all Quebec premiers, regardless of their position on the national issue, called for the re-establishment of a fiscal balance, be it Duplessis, Lesage, Johnson, senior, Jean-Jacques Bertrand, Robert Bourassa, René Lévesque, Pierre-Marc Johnson, Daniel Johnson Jr., Jacques Parizeau or Lucien Bouchard.

All these premiers wanted to rectify a situation that may be explained historically witch dates from the second world war. The federal government has systematically fought the desire of Quebec and the provinces to return to the situation that existed prior to the second world war.

To this, I must add an element in the debate, which I think will be picked up by the member for Hochelaga—Maisonneuve. This fiscal imbalance exists in the context of a social union, something that is extremely dangerous for the future of Quebec, because the other provinces have legitimized the federal government's intervention in Quebec's jurisdictions.

Quebec refused to sign the social union—which we agree with entirely—but in the context of fiscal imbalance, the provinces see their jurisdictions threatened.

The most amusing illustration of that perhaps was the millennium scholarships, in which the federal government did everything possible to ensure a little maple leaf appeared on the cheques.

It seems to me that the motion proposed by the member for Lévis-et-Chutes-de-la-Chaudière speaks for itself. Nevertheless, I would like to move the following amendment to the main motion. I move:

That the motion be amended by adding after the word “conference” the following: “, as soon as possible,”.

I think the situation is pressing. It is dramatic.

The federal government must call this conference. All the provincial premiers are calling for it.

[The Acting Speaker (Ms. Bakopanos)]

The amendment is in order. Debate is now on the amendment.

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, it is a pleasure to rise in the House this morning to speak on the Bloc motion, although I speak on it with some surprise. We have the Bloc asking for a first ministers conference to discuss the reapportioning of the tax base among the federal-provincial governments through the transfer of tax points. I am also surprised by the assertion of the Bloc that there is an imbalance between the provincial governments, or in this instance between Quebec and the national government.

As I listened to a couple of the speeches a few moments ago, there was also a substantial amount of rhetoric with respect to what the government was doing with the surplus and how we were managing our approach.

From the outset, I disagree with the statements made by the Bloc members that the government was not taking a balanced approach to its financing. When we look what we did with our tax file and our reinvestment in health care and post-secondary education, along with the debt repayment, it clearly reflects what Canadians have said to the national government. In fact they have said it to the finance committee.

I also found it quite humorous that a member across the way talked about how we were not consulting Canadians. If we look at the prebudget consultation process that was put in place when we took office, I believe it was more transparent and more open than any prebudget consultation. It was probably the most transparent approach to building budgets in the history of the country.

There have been a couple of statements already made by the Bloc that I have some difficulty with and I will address them as I continue my discussion this morning.

The point I would like to make at the outset is that while the Bloc has put this motion in front of the Chamber and has asked members to consider the idea of calling together first ministers to discuss the issue, first ministers meet often. This is an issue could be added to an agenda for discussion, but I find it outrageous that the Bloc would put forth a motion to discuss tax points, when according to the Bloc it does not mean anything. Therefore, I am a bit confused when I try to comprehend why it would need more tax points.

I would like to illustrate that point by the fact that since I have been in the House, dating back to 1993, and in the various debates which have taken place in the House, the Bloc has never acknowledged the value of tax points. That was said earlier by the hon. member across the way when talking about the federal government's contribution to health care in the province of Quebec. Just to clarify the record about health care and the value of tax points and cash, it is 30 cents of every dollar rather than the 14 cents as the hon. member said.

Again, the Bloc members have made a statement that they want first ministers to get together to discuss the issue of more tax points for the provinces, yet at the same time they never acknowledged the value of tax points. So I have some difficulty with that position. It is quite a contradiction on their part.

Also, there is no consensus among provinces on this issue. Unlike Quebec, many provinces in this federation would prefer additional cash funding instead of additional tax points. We would have to also acknowledge that the change the hon. members across the way are suggesting would lead to some inequities among provinces as well.

Let me point to an example where tax points are worth more in prosperous provinces than in less prosperous ones. One personal income tax point is worth $35 per capita in Ontario but only $17 in Newfoundland in the year 2000.

The cash component of the CHST ensures that all provinces get the same amount of funding per capita. Also, and this may be a point that the hon. member from the Bloc has great difficulty with, the cash transfers also enable the federal government to uphold national values. I point to the principles of the Canada Health Act and the prohibition on the minimum periods of provincial residency to receive social assistance. We had a situation like that recently where the cash transfers actually acted as a lever to ensure some upholding of national values.

The other point that the members across the way made was the issue of fiscal imbalance between the federal government and the provinces.

If we look at the facts, there is no fiscal imbalance between the federal and provincial governments. The majority of provinces, 7 out of 10, had balanced budgets in 2000-01 and 8 out of 10 provinces are projecting surpluses for the year 2001-02. The fact that provinces can balance their budgets and reduce taxes means that they have sufficient resources at their disposal. I should also point out that all provinces have reduced taxes since 1995.

I also have some difficulty with the assertion of the Bloc member that in some way provinces are junior players in the Canadian federation. That is not the case. Provinces are not junior players in the Canadian federation.

They have access to all major tax bases open to the federal government. They levy personal and corporate income taxes as well as sales taxes. They also have unique access to some of the fastest growing revenue sources. While there is some debate about the revenue sources, the provinces nonetheless have access to revenue sources like gaming, liquor and natural resources. When I look at the facts I have to disagree with the hon. member across the way when he talks about the imbalance that exists between the federal and provincial governments.

I would acknowledge, as would any member of the House, that provinces obviously face spending pressures. I hear it every day in my community, as I am sure many members hear it in their communities. The provinces face pressure with respect to health care and education. We all know that those two issues are extremely important to Canadians. Members across the way, particularly those in the Bloc, must acknowledge that the federal government recently announced a 35% increase in cash funding in five years in support of these programs through the Canada health and social transfer.

The Bloc put forward some points this morning with which I would agree. There are spending pressures in the provinces with respect to health care and education. It is incumbent upon the Bloc to recognize that the national government has played a role in helping to ease those pressures and to reflect what Canadians are telling federal members of parliament, for example that health care and education are priorities, so that the national government responds to those issues.

It is also incumbent upon Bloc members to recognize the value of tax points. Perhaps they are doing that now. Hopefully later today those members will rise to acknowledge the value of tax points. Up to this debate Bloc members have consistently ignored tax points and have said that they have no value. Yet today they are asking for more tax points and for a first ministers meeting to attempt to accomplish that.

It is important to point out the financial picture we are facing when we talk about the relationship between the federal government and the provinces. Compared to the provinces, the national government faces a much higher debt burden. In fact federal spending on interest payments is 25 cents per dollar of revenue and provincial spending on interest payments is only 12 cents per dollar.

We certainly face some challenges as a national government. We are prepared to deal with them. We are attempting to pay down the debt at the same time. We have always maintained in the House, since coming to office in 1993, that our approach would be a balanced one. We would not take an extreme approach to governing and working with Canadians.

The hon. member across the way also made the point this morning that the national government was running surpluses at the expense of provincial fiscal stability. I have to disagree with that statement. Our federal priorities are reflected in the recent actions that have been taken, namely the $100 billion in tax reductions to provide savings to Canadians and to spur economic growth. That type of tax plan will help provincial economies to prosper.

Since coming to the House I have consistently stated as a member of parliament that there is a relationship between a reduction in tax and the economy growing. I believe we must maintain a balanced approach. We do not want to jeopardize the very real priorities of Canadians, those being health and education.

There have been substantial increases in transfers to the provinces to support social programs. To date Bloc members have not recognized the value of tax points. I am hoping that today they will stand to recognize the value of tax points and recognize the role the national government plays in reflecting Canadian priorities and in supporting provinces in partnership to address provincial issues, which in many cases are national issues as well.

Tax points are a very important way in which the federal government transfers money to the provinces. My colleagues on this side of the House will be explaining how important they are. It is not the only way in which transfers occur. I would like to spend a few moments telling the House and Canadians about some of the others ways the national government transfers funds to provincial governments. If we want to understand what is happening and if we want to see the whole picture, we have to consider the full range of ways in which the federal government transfers resources to the provinces.

I will focus for a moment on the province of Quebec and make reference to other ways the province of Quebec receives funds from national programs. The province of Quebec receives 26% of federal research dollars, 33% of industrial R and D, 32% of health research funds, 26% of infrastructure dollars, 30% of CFI, 29% of funds allocated for research chairs, and 50% of technology partnership funds.

When we talk about the transfer of funds it is incumbent upon everyone to recognize that the transfer of dollars to provinces occurs in a number of ways, tax points being one. It is refreshing to hear that the Bloc is now recognizing that tax points have value. Cash transfers are another way of transferring money to provinces.

Let us look at the Canada health and social transfer. It is certainly what many Canadians would say is the most important transfer to provinces because of the programs if funds and in turn what those programs mean for families and their communities. Out of that transfer the provinces fund health care, post-secondary education, social assistance, social services and early childhood education.

I should like to present some historical context because it is important to go back in history, as my hon. friends across the way often do, to understand what we are talking about this morning. In 1996 the CHST, a single consolidated transfer, replaced two programs. It replaced the established programs financing which supported health and post-secondary education and the Canada assistance plan which contributed to social assistance.

The CHST transfers money to provinces and territories that helps fund these programs. At the same time, I emphasize, it gives provinces the flexibility to allocate those dollars to their own priorities.

Last September, some eight months ago, the Prime Minister and first ministers from across the country reached an agreement that included a strengthening of the financial commitment to the CHST. It is important to note as well that the first ministers gave Canadians their commitment to strengthen and renew health care services through partnership and collaboration, with the federal government being an equal partner in this renewal.

That commitment set out a five year stable funding plan which would mean a transferring of an additional $21.1 billion through the CHST. That agreement had an immediate impact. In 2001-02 the provinces and territories will receive $18.3 billion in cash. That will significantly help to accommodate some of the increasing pressures outlined this morning with respect to the many CHST funded programs. In fact that number will rise steadily to $21 billion by 2005-06.

The funding commitment was also accompanied by a renewed commitment to the Canadian health care system which was the latest in a series of important CHST related investments on the part of the federal government.

I should like to take a minute to think about some of the measures the federal government has announced in the last few years. In 1998 we raised the annual CHST cash floor to $12.5 billion. The 1999 budget announced an $11.5 billion cash investment in health. The 2000 budget provided a further $2.5 billion in cash. In the last two years alone the federal government announced CHST cash transfers of over $25 billion.

As I said at the outset, our debate today has to consider the whole picture when we talk about transfers to the provinces. Certainly the CHST may be the most important transfer to Canadians, but when we look at the way dollars are transferred to provinces we would be hard pressed to think of a transfer more typically Canadian than equalization.

In terms of policy, equalization means that the federal government helps to reduce disparities among provinces and regions and helps to ensure that all Canadians, regardless of where they live, have access to quality services.

In closing, although I could probably speak to this issue for the entire day, it is fair to say I have some difficulty in understanding the rationale behind the Bloc proposing the motion. Back in 1993-94 the Bloc never recognized the value of tax points. Now it is asking for more tax points. Its members talk about the fiscal imbalance between the federal government and the provinces. That is clearly false. Since 1993 we have been very open and transparent with respect to surplus and with respect to building budgets.

I cannot believe for one moment that the Bloc has any real interest in pursuing the debate and dealing with the facts, given that its only purpose is to continue to bring forward statements that are questionable in some cases. I certainly respect the opinion of my hon. colleagues across the way, but I respectfully disagree with a number of points they made this morning.

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

Madam Speaker, I listened carefully to the member for Stoney Creek. It is not out of ignorance that he made such ill-chosen remarks. He is familiar with the issue since he was, for a few years, the Parliamentary Secretary to the Minister of Finance. I find it hard to understand how he is approaching the issue and how he can make such ill-advised comments.

First, he said that the Bloc Quebecois never cared about tax points. The fact is that we have cared about them since we first got here. As early as 1994, we suggested that the transfer of tax points to the provinces, particularly Quebec, would provide some protection against the deep cuts made by the Minister of Finance—who was putting his fiscal house in order at the expense of others—to the Canada social transfer, for health, education and income support.

We were the first ones in 1994 to raise the possibility of transferring tax points in order to free up some area of taxation for the provincial governments, so that they could protect themselves against the federal government's slash and burn approach. Second, we were also concerned about the interpretation made by these professional demagogues of the use of tax points.

In the 1960s, the federal government transferred tax points, specifically at the Quebec City conference in 1964. Mr. Pearson was much more open-minded than this bunch of demagogues. In 1977, he transferred other tax points, freeing up the tax field and telling the provinces “From now on, I will look after my responsibilities in certain areas of jurisdiction, and I leave the tax field to you. You can collect taxes in my stead”.

Once you sell your house, you no longer have a say in what goes on there. That is the business of the new owner.

It is the same thing with the tax points. The Bloc Quebecois is denouncing the demagogic use the Liberals are making of these tax points transferred in the 1960s and 1970s. Do members realize what this allows them to say as a result? It allows them to say “On the contrary, we increased the Canada social transfer”.

The government has managed to almost double the value of federal transfers by factoring in old tax points over which it no longer has any say; the house has been sold. There is a new owner. The government's figures are misleading.

So, I ask the member for Stoney Creek how he can grandstand on an issue as important as this. He will recall, if he knows his Canadian history—although he does not seem to; it is a bit odd that a sovereignist is instructing a federalist on Canadian history—that in the 1960s and 1970s, we were looking at a fiscal imbalance. In those days, there were intelligent people on both sides, in Quebec and in the rest of Canada, who could sit down together and negotiate new tax sharing agreements. Could we see a little more intelligence and a little less grandstanding and cynicism on the other side of the House?

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, I am always interested to hear from my hon. colleague along the way. I had the opportunity to spend a bit more time with him when I was much more involved as a parliamentary secretary with respect to finance issues and the finance committee. His enthusiasm for his perspective has not diminished at all.

I still find it somewhat ironic that perhaps he was not listening earlier this morning when two members of his party were in debate and were talking about the participation of or the expenditure made by the national government with respect to health care in his province. I stand to be corrected, but I certainly understood the member to be suggesting that we were only participating to the tune of some 14 cents per dollar. If we calculate the cash transfer and include the tax points it is closer to 30 cents per dollar.

The hon. member might want to stand in his place and say that when members of his party first got here they acknowledged the tax points and the value of tax points. However when putting forward their position they continue in their rhetoric and continue to ignore the value of tax points and only speak about the cash portion.

If we take the position put forward by the hon. member, and this occurred a number of years ago, we must ignore the room that was ceded to the provinces with respect to tax points. I am not sure whether the hon. member is suggesting that we were to freeze the value of tax points back then. If we look at the value of those tax points today and the room that was ceded to the provinces, they are worth six times more today than in 1977. They were worth $2.7 billion then and today they are worth $15.7 billion.

We cannot have it both ways. While we acknowledge that the tax room was ceded to the provinces at that time, we cannot ignore the fact that those tax points were ceded by a national government. When we talk about transfers to provinces we must continue to look at the whole picture, and the whole picture involves the transfer of cash and the transfer of points.

When I meet with my constituents, and I am sure many members across the way meet with theirs, they are pressing the national government to ensure that it maintains some type of system of equality across Canada. Cash transfers are the way that is done. That is the way we uphold Canadian values and, for instance, the Canada Health Act. Equalization is the way we attempt to maintain equality of services for all Canadians across the country when some provinces are more prosperous than others.

We understand and accept that provinces have funding challenges, but it is somewhat irresponsible to suggest that the national government has played no role in trying to assist provinces. We must define the way we participate in that partnership. That is quite clear.

We help fund health care and post-secondary education and we do so by tax points and cash. I ask the hon. member to not only recognize that tax points were ceded back then but to acknowledge that tax points play a role in transfers to the provinces.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Madam Speaker, the member was erudite and thorough in his response. He made the point that the value of tax points ceded in the 1970s has grown sixfold. I do not know if that is in purely nominal terms or in real terms. I suspect it is in nominal terms. Nevertheless they have grown over time.

That is the great virtue of tax points as opposed to simple transfers that take place through the equalization system or through the CHST. Such transfers do not grow and therefore do not respond to the growing need for provincial expenditures in health care, education and other areas that will grow over time, particularly health care as the population ages.

What justification can be given for not ensuring that our health care system, which is by consensus across the country the most valuable of all our social programs, is funded through an expanding, guaranteed tax base that cannot be cut as was the CHST or its predecessor in the early to mid-1990s by the Liberal government? Those cuts left provinces in the lurch and created a funding crisis which continues to this day, notwithstanding the partial and very tardy, if I may say, return of some of those funds to the provinces.

Looking at those two options, what would be the principal reason for denying provinces a predictable tax base whereby they could operate the most important of all social programs at their disposal?

[Tony Valeri, Liberal, Stoney Creek, ON]

Madam Speaker, I hope the hon. member across the way does not disagree with what I am about to say. He acknowledged that tax points continue to grow and will continue to grow. However it is important to recognize, and I hear this from my constituents on a consistent basis, that Canadians want to see the national government play a role in national programs.

The province of British Columbia wanted to impose a residency requirement for the collection of social assistance. The only reason the decision was reversed was that the national government would have held back a cash transfer which would have imposed and reflected what Canadians were saying. They want national programs which, if not exactly the same from province to province, at least adhere to specific criteria to some extent like the health care program and social assistance programs.

Why is there a cash portion in our transfers? It is to ensure that national standards or a national approach to these programs is clearly evident. We have seen that with respect to social assistance and we want to see it with respect to health care.

[Stockwell Day, Canadian Alliance, Leader of the Opposition]

Madam Speaker, at the start of my comments I advise that I will be splitting my time today with the member for Lanark—Carleton.

Relating to the response and the question we have just heard, the British Columbia government passed a requirement that for healthy, employable people moving into the province, and it was very clear on that, there would be a three month residency requirement before they could access social services. That was the B.C. government supported by its population.

Because it ran counter to federal Liberal philosophy that the program should be available even to healthy, able-bodied people, the government put pressure on the B.C. government and said that it would fine that government every day the policy was in place. That was in direct contradiction to the democratic request of the people of British Columbia.

If we asked most Canadians whether there should be some kind of stipulation for healthy, employable people not to be able to immediately access social welfare programs, I think most would agree that there should be some kind of regulation and would not be in agreement with the federal Liberals.

It gives me great pleasure to rise today to concur with the Bloc Quebecois on the motion. I am being very careful in saying that. It is not often I am able to do so. On many issues such as the great question of national unity we do not agree with the Bloc, but wherever possible, as is the Canadian way, we strive to find common ground and proceed from there.

Today we are telling the government there is a common ground. We are asking the government to meet with the provinces to discuss the transfer of tax points.

The transfer of tax points was actually our policy before the formation of the Canadian Alliance. During the last election campaign the Canadian Alliance once again made the proposal to transfer more tax points to the provinces. It is therefore appropriate that we call upon the government to meet with the provinces to discuss, at the very least, the next step in a process which was begun by the Liberals in 1977. With the usual glacier-like speed of government we are trying to get the issue addressed.

All stakeholders should meet to discuss such a change because it affects all provinces. Therefore it should not be done unilaterally as the federal Liberals like to do on too many occasions. It is important to hear from all provinces so the merits and demerits can be properly considered.

Governments across Canada want to provide comparable services to all their citizens, regardless of where they live. We want these principles to be upheld; they are part of the Canadian tradition.

Allow me to put the issue in context by making an historical reference. The Rowell-Sirois commission, which was struck in 1937, made a proposal that only the dominion should levy income taxes. Although the proposal was initially rejected, when the war broke out it was adopted by the provinces strictly as a wartime measure. The provinces abandoned their income taxes and in return were supposed to receive unconditional payments to compensate them for that lost revenue.

In its agreements with each province the federal government undertook that at the end of the war it would reduce federal taxes so as again to create room for the provinces to resume levying their income taxes. In 1977 the Liberal government of the day ceded back to the provinces some of the tax room that the federal government had taken away. However the arrangement has been frozen since 1977.

The compromises provincial governments had to make 50 years ago to support the war effort must be recognized. The current Liberal government must act accordingly. We are not asking it to be generous, not at all, rather we are asking it to give back to the provinces the powers that are rightfully theirs.

A further transfer of tax points would also address two fundamental problems. The first is the present mismatch between the responsibilities of the provinces and the power they have to tax.

Last year three noted economists wrote a paper arguing that there “is a fundamental mismatch between the taxing power of the federal government and its restricted spending jurisdiction”. That is, the federal government simply takes in too much money compared to its constitutional responsibilities. It is an imbalance.

That generates the political problem of democratic accountability, since the government that raises the taxes, in this case the federal government, does not actually spend the money. Instead, the federal government transfers cash back to the provinces in the form of the Canada health and social transfer.

This means the federal government can cut the transfer arbitrarily, as the federal Liberals have done throughout their time in office. It has been their consistent approach. This has forced provinces to make drastic cuts in their areas of social spending, notably health care, and also undergo the consequent displeasure of the electorate. If the government does not transfer the full amount of resource, then provinces have to cutback and experience voter displeasure.

The CHST is still lower today than when the Liberals came to power eight years ago. They have removed a cumulative $25 billion from the CHST, but since they do not deliver the programs funded by the CHST the provinces then wrongly take the political blame for those cutbacks.

A further tax point transfer would help to realign democratic accountability, and that is what we are talking about. No longer would the federal government be able to reduce funding unilaterally and then place the blame for cutbacks on the provinces, as the federal Liberals have done consistently in the past.

The second problem is a related one. It simply has to do with trust. For the last seven years the federal government has rejected its responsibility for health, social and post-secondary education spending. As a matter of fact, it has spent over $100 billion on grants and contributions, while sacrificing the most important social programs which Canadians want.

Canadians are asking us how the federal government can then be trusted in the future to preserve that which is most valuable to Canadians? There is a lack of trust because of the history of the federal Liberals in this area. I believe that if the federal government feels it is necessary it will again act in a cynical, political way to abandon health care, if it is health care where the pressure is, or off-load cuts to education and social assistance to the provinces in order to preserve other items for their own public image. That has been their past history. I believe we run the risk of seeing that to be their future performance.

The present system of fiscal transfers encourages federal irresponsibility. The logical step to restore confidence and trust in the security of funding for our social programs is to realign the taxing power with the spending power, as indicated in our constitution, to make sure the government, which has the constitutional responsibility to deliver program, also has the power to go to its electorate to raise the money to pay for the program.

Can we trust the provinces? That is the next fair question. I believe we can. We can trust the provinces because those governments are all returned to office, or replaced and new ones brought in, by the very electors who share a broad democratic consensus for the need to have strong support for the social programs, especially health care. I remind the House that while the federal government was cutting over $6 billion per year from cash transfers for health, the provinces were increasing health care spending. They have proven their level of trust. They have earned the trust of Canadians and the government has not.

The issue of tax point transfers enjoys broad support among not only the provinces, but also the opposition parties in the House of Commons.

This area is one of great concern, as we have indicated. In 1997 Jean Charest's platform promised to convert $12.5 billion in CHST cash transfers to tax points in exchange for reaching a covenant defining federal and provincial roles in supporting health, post-secondary education and social programs.

This is an excellent position, which we fully support and about which we continue to be in agreement with Mr. Charest.

Accordingly we were very surprised and disappointed last week when we read what the current Conservative leader had told Le Soleil . I want to quote from the article:

Bernard Landry faces an uphill battle in bringing Ottawa to agree to the transfer of tax points to the provinces. Even the Conservative leader is refusing to get involved in this fight. For the time being, in any case, it is not one of his priorities. Therefore he will not champion it in the House of Commons or anywhere else in Canada.

That is why we support the Bloc motion.

[Rob Anders, Canadian Alliance, Calgary West, AB]

Madam Speaker, does the Leader of the Opposition agree that the Liberals should wait until after the summer before the House of Commons votes on the MP compensation package, so that MPs have a chance to hear from their constituents before voting on a pay increase?

[Stockwell Day, Canadian Alliance, Okanagan—Coquihalla, BC]

Mr. Speaker, the question is good. Because of the time allotted for this particular debate, I do not want to depart from the importance of the subject of the tax point transfer.

We will address the question of the MP pension plan because that is a transfer of cash to members of parliament, and citizens really want to know where we stand on that. It is a very important issue, but I do not want to deflect from this issue of calling together the provinces to talk about transferring the tax points to them, which the federal Liberal government took away some years ago.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Madam Speaker, I have a question for the Leader of the Opposition.

Could the Leader of the Opposition tell us whether his party is committed, regardless of its position on tax points, to maintaining or perhaps even expanding the cash portion of the transfer from the federal government to the provinces with respect to health care and post-secondary education?

From our point of view, the cash transfer is very important to maintain national standards. If we do not have anything to withdraw, or not transfer, or if national standards are not being met, for instance the conditions of the Canada Health Act, then the federal government loses its power to enforce national standards.

Could the Leader of the Opposition tell us whether his party is committed to maintaining the cash floor either as is or in an enhanced way, and whether or not his position on tax points in any way suggests that the cash floor should be eliminated?

[Stockwell Day, Canadian Alliance, Okanagan—Coquihalla, BC]

Madam Speaker, the ability of the provinces to continue to finance their programs under CHST, especially health care, is critically important. I can answer the hon. member's question by repeating the Canadian Alliance position, especially related to health care.

Not only should we maintain the five principles of the Canada Health Act, but we should add a sixth principle which would legislate the funding level for health below which the federal government could not go. That would put in place the assurance our citizens need that we would not see for political purposes the arbitrary reduction of the value of that portion.

Therefore, we would be not only supporting the cash transfer, but also the minimal level and restoring the full amount of the cash transfer, which still has not been done to the 1994-95 levels. Therefore, restore it to those levels and put into law the principle of a legislated amount below which the federal government could not go.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I listened with interest to the leader's remarks in this area. In his previous capacity as the treasurer for the province of Alberta, he will know, in terms of the farm situation, that in recent years the Liberal government made much of the fact that funding for farm aid programs was in the 60:40 ratio; 60% from the federal government and 40% from the provinces. The government would have us believe that has been the case since confederation. However there are all kinds of examples to indicate that it is a relatively new phenomenon.

I just came from a meeting of the agriculture committee at which it was made very clear that the have provinces, which would include Alberta, Ontario and Quebec, were probably better able to finance farm programs, such as the AIDA program and now the Canadian farm income program, than some of the have not provinces, including Manitoba and Saskatchewan at this point in time, as well as I suppose the Atlantic provinces.

Could the Leader of the Opposition comment on that and indicate what his party feels should be done in this instance?

[Stockwell Day, Canadian Alliance, Okanagan—Coquihalla, BC]

Madam Speaker, in response to the hon. member, there is an equity even in terms of how certain agricultural policy is applied. We have proposed a number of very clear initiatives that would help the entire agricultural community, regardless of whether they are so-called have or have not provinces.

First, there needs to be an aggressive initiative on the part of the federal government to negotiate downward with the United States and the EU community the subsidies which right now put us at a competitive disadvantage. For instance, it has not put together the leveraging power of the Cairns Group of countries on the agricultural side to pressure the United States. The federal government needs to do that.

It also needs to deal with the question of the Canadian Wheat Board. There is an inequity among provinces. The Canadian Wheat Board binds western provinces to market their grain through that wheat board, not having the choice or the ability for alternate sources of marketing. Ontario and Quebec are not bound by that. In fact, a farmer wanting to look at value-added processing would have to sell his or her product to the wheat board, buy it back at a higher rate and also add in the grain transportation cost even though there might not be any transport of the grain. That needs to be dealt with.

In terms of grain transportation, efficiency and market realities have to be put into the grain transportation system.

On the tax side, the taxes on farmers and on agricultural business have to be significantly reduced so we get the value added going in. The agriculture fees the federal government charges need to be reduced; $300 million alone just on the fertilizer. As well, diesel costs, excise tax and the GST on fuels should be lowered so the government is not taxing on tax. Those are a number of things that need to be done in the agricultural community.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Madam Speaker, I will start by deviating from the prepared remarks I have and comment on the question that was raised by the hon. member for Winnipeg—Transcona. Presumably he was referring to CHST payments and Bloc grants.

I was involved as the Reform Party's senior researcher in 1995 or 1996 when the CHST legislation was proposed. It was really a rehashing of the legislation that permitted the former Canada assistance plan and the established programs financing plan to exist. We put forward some detailed amendments which, like all amendments that came forward in committee, were of course voted down and never given a fair hearing.

At that time I looked at the details of funding and how it was withheld when non-compliance occurred with federal standards under the CHST. What was striking about it was how utterly discretionary it was.

For instance, the Minister of Health decided whether a violation has taken place. The Minister of Health at his or her sole discretion decides whether or not a penalty is appropriate, what the amount of that penalty should be, whether it should apply in one province but perhaps not in another province and if compliance has not been achieved whether the penalty should continue. What we see is a situation in which we do not have a standard that is enforced by any kind of impartial mechanism.

We have a standard that is enforced, if it is enforced at all, based on political considerations. Is it a province in which the government holds a lot of seats? Is it a province in which it might hold a lot of seats in the future, if it does the right thing? Is it a province that is assertive in standing up for its rights or is it one that can be easily intimidated by the government? Is there an election coming? Has an election just occurred? Is this going to play well elsewhere in the country? There is a whole series of considerations that have nothing to do with providing for satisfactory health care.

We made recommendations at that time that would have created some form of right of appeal of citizens or of provincial governments before the Federal Court of Canada. The court would then make the decision whether or not a standard was being violated.

It would also have the salutary effect of actually defining some of the national standards under the Canada Health Act, which are often not as clear as they ought to be. That would have been a real step forward. All of that was put aside. Much of it was actually incorporated in the 1997 Conservative platform which my leader cited today.

The idea of trying to get co-operative national standards is a bit more detailed than finding some form of standard to which there is an agreement to co-operate with and therefore an enforcement mechanism. None of that has been done. Therefore we would find that the Canada Health Act and the block transfers that are given under the Canada health and social transfer would continue to be as they are now, that is, extremely ineffective in ensuring enforceable, meaningful national standards.

I would now like to draw the House's attention to the fact that the motion we are debating today fits within a growing stream of voices from across the country that are calling for an end to the imbalance that exists under which the provinces have the vast majority of the spending needs. It is because they are assigned the most important social programs under our constitution and under which the federal government draws in most of the revenue and therefore redistributes it. This is a problem that has existed for a very long time.

If we look back to Confederation, the Fathers of Confederation provided for per capita cash transfers that continue to this day but they are very small because they were in nominal dollars and the economy has grown and inflation has taken place. Nevertheless, there was a system set in place for transfers to provinces and, I should mention, these were non-discretionary. They could not be withheld for any reason. Therefore there were some assurances the provinces would operate effectively within their spheres of jurisdiction.

Listening to the voices in recent decades over the need to return to the original intent and spirit of the constitution, we find that many of the voices have come from Quebec.

For example, there was the Tremblay Commission in the 1950s, last century. There was former Prime Minister Pierre Elliott Trudeau, who said in 1957 that there was no real basis for the federal spending authority in the constitution.

There are also the interim report of the Quebec Liberal Party special committee on the political and constitutional future of Quebec society that came out in January of this year, the report by the constitutional commission of Action démocratique du Québec and the Séguin commission.

All of these groups are talking about the transfer of tax points.

Outside of Quebec we see the same concerns being raised with an ever clearer voice. For example, an eminent scholar, Thomas Courchene, has recommended some form of tax point solution to the fiscal imbalance that exists in Canada. The so called firewalls group in Alberta has called for something of this nature.

The Canadian Alliance has been a consistent voice in favour of using some form of tax point system that would ensure our economy grows and that the health care needs of our aging population would be met without going through the song, dance and chicanery that went on when the government cut its own expenditures by a mere 6%. At the same time as it cut transfers to the provinces for health care and education, by I believe 20% to 25%, it also tried to lay the blame for the lack of health care spending on the provinces.

The tax point solution was also the policy of the former Reform Party. It was an excellent policy and one that we can all stand behind. I was involved in actually drafting the policy so I will read it for the benefit of the House. It states:

The Reform Party supports the establishment of an agreement to replace federal cash grants to the provinces with unconditional transfers of the tax base of each province, adjusted for differential provincial economic development so that the provincial tax revenues collected in each province will grow in parallel with the growth in the province's economy and population. This will allow the content and particulars of provincial policy to be set by provincial government clearly accountable to the electorate of that province.

Something needs to be said when the point is made about being accountable to the electorate of a province. Sometimes it is suggested that the federal government ought to impose national standards because the federal government knows best what Canadians care about and what is important to them. That means we must accept that the voter who goes out and casts a vote in the province of Ontario or Quebec is acting less responsibly and has less of a social conscience at that moment than he or she does when casting a ballot in the federal election. It infers that somehow there is this schizophrenia in the Canadian voter, that we are a hardhearted and uncaring people when we vote provincially but when we vote federally, boy we sure do care.

That is obvious nonsense and the only way it gets through is because there has been a really concerted effort on that side of the House to maintain that fiction. There is a very powerful vested interest in saying that the Liberals are the responsible ones here, that they are the ones who dictate what is good, fair and right in the country and that they protect our interests.

As I mentioned in my comments to the hon. member for Winnipeg—Transcona, the record shows that the federal government's performance in this area has been appalling. It has been shameful, inconsistent and politically based. It has not been based upon any kind of fairness or objectivity.

When other parties such as our own have come forward and proposed ways in which it could be made fair, objective and actually guarantee that health care and other national standards would be maintained through an agreed upon, consensual process that would be enforceable and would reflect the will of Canadian voters, it has been rejected out of hand without any hearing whatsoever. That is unfair and it should be changed.

The tax point solution proposed by the eminent authorities I have cited and also by the Bloc Quebecois today is the best solution. I encourage all members in the House to vote for it.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Madam Speaker, the member who just spoke was responding to something I said earlier. I hope I have the time to take that up with him because he makes a good point when he talks about how national standards are enforced.

However, while I still might have the ear of the Leader of the Opposition, it seems to me that there was a contradiction between what the member just said and what the Leader of the Opposition said in response to me when I asked him whether or not his party was committed to maintaining the cash transfers. He said that the Canadian Alliance was committed to it, committed to legislating it into law and that the cash transfer could not be unilaterally reduced.

Minutes later the hon. member got up and read from a Reform Party policy resolution that he said he had something to do with, which was the policy of the Reform Party and now the policy of the Canadian Alliance. He has the resolution in front of him but I do not. He may want to have another look at it as it talks about the total conversion of all cash transfers to tax points.

Someone is not levelling with us here. Is it the policy of the Canadian Alliance to convert all cash transfers to tax points? That certainly is what the member just read into the record, as the blues will show. If that is the policy then what was the Leader of the Opposition doing telling me that it is the policy of the Canadian Alliance to legislate the cash transfers? Is the Canadian Alliance legislating against itself? Is it going to legislate cash transfers so that when it forms the government it cannot implement its own policy? What is going on here?

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Madam Speaker, I cannot find the contradiction that the hon. member cites but I do point out that part of what a government does is legislate so that it cannot act in an irresponsible manner. That is why we have a constitution in the country.

We make amendments to the constitution that are not amendable by one government alone. Depending upon the amending formula, it requires unanimity, seven provinces or 50% of the population. A couple of other amending formulas for exceptional cases require different levels of consent.

However the point is to legislate something that one cannot change oneself. We did that with the Canada pension plan, as the hon. member will know, so that the federal government could not unilaterally change the rules under which Canadians enjoy the potential benefits of that plan. It was an amending formula which, at least on paper, was more strict than that of the seven provinces or 50% formula in place under that plan.

One does act in this manner. When we speak of creating binding agreements with the provinces, the point is that we bind ourselves and future governments so that they must act in a consensual manner and they must find the support of those provinces. This ensures that a government, which is almost always elected by less than 50% of the population until we have some kind of electoral reform, cannot act without seeking some kind of broader consensus which actually reflects the will of the majority of Canadians.

I do not see what the contradiction is in saying that we would legislate to bind our own hands.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

The member should read the policy and resolution into the record again and let the House judge.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Madam Speaker, I invite the member to check the record. We are not in favour of striking down the CHST. We are in favour of transferring some of the value of cash transfers to the provinces into tax points.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

It did not say some. It said all.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

It says cash grants. It does not say all and it does not say some. My understanding is that if we can find a way of getting the government to be more generous with cash transfers we would be very happy about that. We will encourage that when we get the opportunity to do so.

When we have the opportunity to ensure that some of those transfers, and we do not know the percentage but whatever percentage we can wrangle out of the government, could be put into tax points to ensure that there would be a guaranteed growing base for health care and education in the provinces over time, we would favour that. When we see the way in which tax points grow over time thereby ensuring—

[The Acting Speaker (Ms. Bakopanos)]

Resuming debate, the hon. member for Winnipeg—Transcona.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Madam Speaker, all I did was invite the hon. member to read into the record one more time exactly what he read into the record a few minutes ago.

On the face of it, if members were able to hear it, they would see that it was in direct contradiction to what the Leader of the Opposition told me in answer to a question that I asked him. The member was so unwilling that he quickly disowned his own policy. I could hear the cock crowing three times all the while that I was asking the member to get up and read it into the record.

It is his own policy. Surely he is not ashamed of it. Surely he would have been willing to read it into the record one more time, except it would have become obvious at that point that we get mixed messages from the Canadian Alliance on the question of federal transfer payments.

[Roy H. Bailey, Canadian Alliance, Souris—Moose Mountain, SK]

You invented mixed messages.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

I guess it is not a mixed message to favour—