Debates of May 31st, 2001

Supply

[The Acting Speaker (Ms. Bakopanos)]

Order, please. I implore hon. members to give the same respect to the member as was given to the other members today. There will be opportunity during questions and comments to put questions to the hon. member.

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

Madam Speaker, when we hit on something they start to yelp. We have hit on something that is a continuing contradiction within the Canadian Alliance Party. Its real policy is that it wants to get rid of cash transfers altogether. It is right in the policy that the member read into the House. It wants to transfer the tax points and return to basically a kind of pre-World War II confederation.

The Leader of the Opposition spoke about the kind of Canada we had before World War II and that it was only because of the war the provinces transferred these tax points to the federal government. It was a very clear indication that the policy of the Alliance Party is to return to that pre-war situation. Sometimes we get the feeling that it wants to return to pre-war social policies as well, but that is another matter I will not get into.

I want to say to the hon. member, who is somewhat unhappy with me at the moment, that I was actually intending to get up and agree with something he said in his speech before he read that policy into the record which so contradicted his own leader. He made a good point about national standards and the fact that we do not have a way of enforcing national standards that is not open to the charge of being a political process or a political judgment.

At the time of the debate around the social union, the NDP was open, and said so in a public document, to the idea of establishing national standards by mutual agreement between the federal government and the provinces. We wanted some kind of impartial mechanism for determining whether national standards had been violated, somewhat along the lines of what the member just spoke about. The difference is that we think the cash transfers must be maintained and enhanced, and that the federal government must bring them back to where they were and beyond. In that way the government would not only have the mechanism for enforcing it, which is to say withdrawing the cash transfers, but it would have the moral authority to do so because it would be playing its full role in the partnership that was established earlier on with respect to various social programs.

The problem is not that the provinces do not have the tax points. The problem is that the federal government is not living up to its part of the bargain. If the federal government were living up to its part of the bargain and maintaining the partnership, there would be no cry on the part of the provinces for tax points because they would be getting the kind of cash that they should be getting. Instead, we do not have that situation. In spite of all the hoopla last August about the health accord, the federal government is still not putting into health care and education what they were putting in prior to the 1995 budget. This is a fact that cannot be truthfully denied by anyone.

If the federal government were willing to do that then we would have a much different situation. I think we would still have the Bloc and the Alliance calling for the conversion of cash grants to tax points because that is their vision of Confederation. In the case of the Alliance, it wants a more decentralized Confederation. I am not sure whether the Bloc Quebecois is thinking about Confederation or about Quebec, but it does want more powers for Quebec and less ability on the part of the federal government to enforce national standards because it rejects the very notion of national standards.

Having said that, I think all members can see that the NDP cannot support the Bloc motion, though we think a first ministers' meeting to discuss this would be a good idea. It is not the idea of the meeting that we are against. There is probably good reason for having a meeting. First ministers would probably like an opportunity and should have an opportunity to make the case for the federal government to more fully live up to the commitments it made years ago when it brought in medicare. At that time medicare was to be a 50:50 partnership. Canadians certainly do not have that today.

A good point was made by the Leader of the Opposition. He said that the provinces have all these responsibilities while the federal government has the tax points and is able to raise the money. The federal government should be transferring that money to the provinces to the extent that they need it to implement programs brought in by the federal government. The solution in our mind is for the federal government to do its job and do it well. It must adequately fund medicare, post-secondary education and social assistance through equalization. That is where the solution lies from the point of view of the NDP. The solution does not lie in giving up on the Canadian project, on national standards and on national social programs. The solution is not to allow the provinces to take over these programs as the Alliance and the Bloc would like to see happen.

That is the NDP view. We agree with the portion of the motion that calls for a meeting but because the motion prejudges the outcome of the meeting we cannot agree with it nor support it. If the motion proposed a meeting to discuss the problems with an open mind as to how they might be solved, that would be a different matter, but that is not the motion we have before us.

The Leader of the Opposition said that the problem was lack of trust in the federal government. I agree. Canadians, by and large, although we could not tell from the way they voted, have a lack of trust in the federal government. Regardless of the political choices they make, they know when something is wrong. They know the federal government is not putting the kind of money into health care that it used to or there would not be these problems.

I disagree with the Leader of the Opposition and his colleague when they implied that Canadians have reason to trust their provincial governments. The problem for a lot of Canadians is that they are caught between a federal government that will not adequately fund a one tier health care system and certain provincial governments that are interested in introducing a two tier health care system and a more privatized health care system. They want to introduce the private sector into the health care system even more than it is now.

Canadians face a dilemma. They must choose between a federal government that wants to starve the one tier system to death and provincial governments that want a two tier system. It is not a happy choice for Canadians. A real choice would be to have a federal government that wanted to properly fund the one tier system so that there would be no pressure for a two tier system and no province could complain that the federal government had unilaterally withdrawn from the commitments it made in the past. That would be the solution. I urge the Liberals to consider whether someday they might live up to that ideal.

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

Madam Speaker, does the member for Winnipeg—Transcona 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?

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

Madam Speaker, I do not want to assume the role of the Chair in this, but it is obviously not relevant to the debate before us. Perhaps the member should speak to his own House leader who has been dealing with the issue on behalf of the Alliance Party. He might then receive information as to how members of his party collectively intend to deal with the issue, unless there is no collectivity left in the Alliance Party, which some days seems to be the case. If the member is interested in reinforcing the impression that there is no collective mind left in the Canadian Alliance, perhaps he could ask the question over and over again.

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

Madam Speaker, I have difficulty following the hon. member.

Is the hon. member telling us that the present situation with the federal government contributing, for health for instance, 14 cents for a provincial investment of $1, is an acceptable one?

Second, does he agree with the threats by the Liberals on their share of the funding for health and education? Because that is what cash transfers come down to. With them, the Liberals can decide at any point when to cut off their funding, or when to cut it, to slash it like they have since 1994. Is that what the hon. member is telling us?

Does he not realize—however, it does take some intelligence to do so—that most provinces, Quebec included, have said that they would respect the Canada Health Act, with its five conditions, and if ever tax points were transferred and a recalcitrant province did not meet one of the five, there would be legal proceedings by the federal government? There is no connection with cash transfers, as opposed to tax point transfers. It is simply a matter of proper administration of the Canada Health Act.

Does he understand this, instead of using all his convoluted analyses?

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

Madam Speaker, it is a gross misrepresentation of the NDP position to suggest that somehow we are happy with the status quo whereby the federal government contributes so little on a percentage basis to overall spending on health care.

I just finished saying, before the member rose, how unhappy we were with the fact that the federal government was starving medicare to death. I do not know whether the hon. member did not hear me or did not understand me, but we are not happy with the current situation.

However we think the solution is not to hand the ball over to the provinces. The solution is to have the federal government live up to its responsibilities. That would be a lot better from our point of view.

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

Madam Speaker, in his comments the hon. member for Winnipeg—Transcona seems to put a great deal of faith in future federal governments acting responsibly in the use of a spending power they have not used responsibly in the past.

I am willing to accept that if the hon. member were to find himself as prime minister in the future he would make transfers for health care his top priority and would do whatever was necessary. However I think he and I would both agree that it is unlikely he will be prime minister in the future.

Based on a record in which the federal government has gone from 50 cent dollars down to 15 cent dollars before more cash was put in, although we are certainly nowhere close to the 50 cent mark, we have seen the federal government effectively renege on the greater share of its health care funding.

Given that, I find it difficult to understand why he feels that is the responsible route when we are concerned about health care transfers. It seems we must find a way of binding the federal government's hands and requiring that those transfers be made. Tax points do that.

Perhaps there are other methods, but I do not see them being proposed at the moment. This seems to be the best option realistically available to us. It has the additional advantage of putting more money into provincial hands as the needs of an aging population grow and as the economies of those provinces grow. There are some other advantages that go along with encouraging prudent fiscal management in the provinces.

If we say that health care and national standards are the goal, it seems to me we are better off ensuring an adequate and growing source of funding than using any other means available to us. I cannot see how we can get around that. I wonder if the hon. member could enlighten me on this point.

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

Madam Speaker, without wanting to be too polemical about this, it seems that the hon. member once again is very much at odds with what his leader said. He is asking how else we can make the federal government live up to its responsibilities unless we convert all the cash grants to tax points. Yet the Leader of the Opposition said that as far as he was concerned the solution was to legislate such that the federal government could not reduce its cash transfer to the provinces.

That is one solution. Why did he not offer it? Why is he fixated on converting cash grants to tax points when his own leader is not?

With respect to the other question about why I should trust or have great confidence in future federal governments, the point is well taken. I do not have a lot of confidence in the present government. This and previous federal governments have made a whole lot of unilateral cutbacks in the federal commitment to medicare and post-secondary education, going back to the budget of Allan MacEachen and to the Conservative budgets. Almost every federal budget, with the exception of recent ones which have put back some of the money, unilaterally took out money from the partnership that was established.

Why does the hon. member trust future provincial governments? I am arguing on the basis of what I think the best system would be. I do not have a lot of confidence in Mike Harris or Ralph Klein. Maybe the hon. member does and that is the difference between us.

I am arguing for what I think the federal government should be. I am arguing for what I think the role of the federal government should be. My job as a politician is to try to make what I think is the best thing happen, not always to make judgments on the basis of how badly the Liberals are living up to what the federal government should do.

If I were to make judgments about what the federal government should do on the basis of how Liberals behave, I would not think that the federal government should have any role at all. However, because I hold up a higher ideal in my mind of what the federal government is than what Liberals are able to live up to, I continue to argue for the kind of Canada that I want.

[André Bachand, Progressive Conservative, Richmond—Arthabaska, QC]

Madam Speaker, I would like to inform the Chair that I will be sharing my time with the member for Kings—Hants, who will join us in a few minutes, I am sure.

That said, it is my pleasure to speak to this motion by our Bloc Quebecois colleagues, which we will of course support. We may have a few problems with the way it is drafted, but I think that, by talking on the subject, we will have the opportunity to readjust, review and improve federal-provincial relations. It can do no harm to hold a first ministers' conference. I think this motion must be agreed to right off.

Every time there is an opposition day, and we look at the subject proposed, questions come to mind. I do not want to detract from the motion's credibility or its objectives, but we always wonder what lies behind an opposition motion.

Is it current affairs, the problems of a given party, government policy on a specific matter? Is it a more specific policy that concerns Quebec? I do not want to detract from the good intentions of our colleagues in the Bloc, whom we like very much.

It perhaps has to do with the fact that our colleague, Jean Charest, visited the rest of Canada—as they say often—with ministers from the country's well off provinces to present a sort of common front, to stand up to the federal government on the issue of tax point transfers.

Madam Speaker, I will share a secret with you: it may be because the Bloc Quebecois wants to help the Parti Quebecois by saying “You know, we put forward a motion in the House of Commons and Liberal members voted against the transfer of tax points”. At the same time it wants to thwart Jean Charest's efforts.

As we know, a provincial election is looming in Quebec. There may be a more partisan motivation vis-à-vis Quebec on the part of the Bloc Quebecois. That being said, it takes nothing away from the merit of the motion. What will happen to it later on is everybody's guess, but I believe this to be its true purpose.

This is bad news if it is truly the reason behind this. We will however support the motion and I hope a number of members and parties will do likewise.

This being said, the transfer of tax points is an important issue, but one must be very careful when talking about tax points. It is connected to another issue, that of equalization.

One tax point transferred from the federal government to the provinces, assuming it is worth $1 today and the province in question enjoys significant economic growth, may be worth $1.05 or $1.25 one, two or three years down the line. A province's economic vitality pushes the value of tax points upwards.

This is why the bigger and wealthier provinces of this country want to have tax points transferred to them quickly because, in spite of the inflation, economic growth would add value to them. We must be careful. We live in a vast country where for the time being—I repeat, for the time being—some provinces are less well off than others. We must therefore talk about equalization.

If tax points are transferred, for example to Newfoundland, these points will have less value in 18 months than the tax points transferred to Quebec, Ontario or Alberta.

Therefore, we must have an equalization system that corrects this situation. This is important. This principle must be the basis for any federal-provincial discussion.

Even though the motion of the Bloc Quebecois cannot be amended the way we would like to, we must keep in mind that we should talk about equalization, to ensure that the have not provinces do not feel left out in this reapportioning of tax points, this reapportioning of existing and future wealth.

On the issue of equalization, I should point out that the premiers from Atlantic Canada asked that the ceiling be removed with respect to the calculation of royalties, as was done for Alberta over 50 or 60 years ago. The idea is to give the provinces a chance to keep the new wealth that they may have, without being immediately penalized.

Of course, the current government said no. This is not surprising, as we know, but it is unfortunate.

We say yes to a discussion on tax points and on transfers. This is important. Why? Because it provides and stabilizes a tax value for health, education, social services and so on, and it also gives it a permanent character.

This must not be a strictly political decision on the part of the central government. We agree with that. But this should really be part of a discussion with all Canadians, and the poorest provinces should not be excluded in calculating how many tax points to transfer. We are saying that equalization payments must also be considered.

That having been said, we are telling the government not to be afraid of talking with Quebecers, with the government of Quebec and with the people of Ontario and Nova Scotia. It should not be afraid of getting together with people from time to time. There is no harm in doing so. The goal is not necessarily to come up with a formal agreement overnight. But why not have a much more permanent discussion mechanism? Why not? Why not recognize the importance of our partners in this country? Why is it always necessary to rattle the central government's cage to get anything?

When the central government knows it is on the eve of an election, it decides to transfer a little more money. But the member for Saint-Hyacinthe—Bagot has put it very well, and has done so for years now, when he says that there are hidden billions.

When we look at the government's huge surpluses, the impression one is left with, in the case of the health agreements reached last September, is the same as if I were the federal government and my little boy of five, whose name is Gabriel, had come to ask me for money. What I would do is reach into my pocket, pull out a handful of change, give it to him and tell him how generous his father was. That is what it is like. I got off easy, because he was happy with the handful of change. But he did not know that my pockets were full of money, because he got more than one pack of Pokémon cards.

It seems like the provinces have to beg for pocket change compared to the enormous surpluses hidden in various programs and in the federal government's way of doing things.

Let us come to an agreement, talk about tax points and provide the provinces with stable funding. Let us give them a chance to plan ahead: equalization. Let us give poorer provinces a chance not to be penalized through the transfer of tax points and encourage them to put the money and energy needed for their development, particularly with regard to natural resources off the Atlantic coast.

We could be the world's largest oil and gas producer if we had a vision and if we helped our partners, the provinces, often the poorer ones and sometimes the richer ones.

We strongly support this motion, even though we know the federal government will say that it has done an excellent job since 1993 and government members will vote against it. Nevertheless, the Bloc's motion is important inasmuch as the provinces are asking for a tax partnership.

In closing, I will simply say that I invite members to look at the spirit of the motion proposed by the Bloc Quebecois today and to vote in favour of it. There is no obligation of result, but the first result that could come out of this motion would be for the federal government to accept, at a federal-provincial conference, to discuss such an important issue as the transfer of tax points.

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

Mr. Speaker, before asking my question, let me clarify.

In 1994, the Bloc Quebecois talked about tax points as protection against the terrible cuts the Minister of Finance wanted to make to the Canada health and social transfer.

In 1995, Mrs. Marois, then Quebec's finance minister, asked:

That the federal government withdraw from social program funding and that it transfer to Quebec the tax points used to pay for that funding.

In 1997, Quebec's minister of intergovernmental affairs said exactly the same thing:

Quebec will demand that its constitutional authority be respected, will seek to fully exercise that authority, will continue to denounce the federal government's interference, and will call for full financial compensation in the form of tax points.

Recently, even before Mr. Charest's tour through the rest of Canada, Mr. Landry said that he would fight this battle, because it made no sense that the health and education needs were in Quebec but the money was in Ottawa.

With all due respect for the member for Richmond—Arthabaska, we have been talking about tax points for a long time. Since Mr. Charest agrees with this proposal, and because he certainly still has very close ties with Mr. Charest, could the hon. member not convince him to throw his support behind the premier of Quebec, who is also calling for such a federal-provincial conference, and who will continue to call for the transfer of tax points in order to help right the fiscal imbalance that has existed, particularly in the last three years, between Quebec, the Canadian provinces and the federal government?

[André Bachand, Progressive Conservative, Richmond—Arthabaska, QC]

Mr. Speaker, first, I want to assure my hon. colleague that we do have great relations with our former leader. I hope things will remain the same after he is elected premier, maybe as soon as next year, who knows.

I do not think Mrs. Marois was finance minister in 1995, but it is true that the Bloc has consistently ensured for several years now, just like the government of Quebec, regardless of the political party in office—to keep, as the member for Saint-Hyacinthe—Bagot pointed out—some kind of protection for Quebec and for Canada against the ups and downs of the sad decisions made by Ottawa.

I will point out that the Mazankowski budget, for instance, was the first step of the very tough budget approach. It was under our government that the whole issue of transferring tax points began.

Yes, it is important for all partners, government members and opposition members alike, to join forces to fight the government.

Having said that, let me remind my colleague from Saint-Hyacinthe—Bagot that when Mr. Clark and I had the honour and privilege to meet with the premier of Quebec, Mr. Landry told us candidly that he did not think it was likely to happen. But we do have to hang on to some kind of hope if we want our requests to appear credible. The transfer of tax points is obviously very important. As I said earlier, equalization is also a major concern for Quebec. It is all interrelated. I am sure my colleague would agree with me.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, it is with pleasure today that I rise to speak to the opposition day motion brought to the House by the member for Saint-Hyacinthe—Bagot. I share the hon. member's view that federal-provincial co-operation needs to be expedited in the area of tax point transfer.

We have a huge difficulty in Canada now with the reticence of the federal government to engage in any meaningful co-operative effort with the provinces. The PC Party has a strong history in this regard, going back to our 1997 platform in which we proposed a tax point transfer to the provinces to enable provinces to better address some of the social investment needs. The provinces are probably most capable of determining those priorities as they are closest to the people affected by the decisions.

We need some sort of practical action to create a new system of government that is much more responsive, more accountable and ultimately more efficient. By giving provincial and regional concerns a clearer voice, Canada can become a stronger country.

These practical changes can be achieved through federal-provincial discussion and agreement without constitutional amendments. That is important because I think most Canadians want to avoid a constitutional dialogue at this point. If we can achieve that through federal-provincial discussions, which we can, then we should proceed.

This requires co-operative federalism, not brinkmanship, bravado and disdain for the provinces, which have been the trademarks of the government since 1993. The Liberal government has had a paternalistic approach to the provinces. It is an Ottawa knows best approach. Whether on health care, education or any social spending, the government has attacked the provinces since 1993 with draconian cuts to transfers. These arbitrary and unilateral cuts have created, for instance, a health care crisis in every region of the country. The government has also slashed transfers to the provinces while barely tinkering with its own spending in terms of program spending.

The Liberal government had a choice to balance its books. Instead of reducing federal program spending significantly, it chose to maintain federal program spending but to cut the transfers to the provinces such that the hard decisions ultimately had to be made by the provinces.

The question is why the federal government slashed health care transfers to the provinces while leaving its own departments unscathed. The answer is because it could. It had the power to. It was able to escape the accountability of explaining and dealing with the impacts of those cuts because it had the power to act unilaterally and arbitrarily.

This proposal of a tax point transfer to the provinces could go a long way to ensure that federal governments do not have that unfettered power to do again what this government did in the early and mid-1990s by cutting the transfers to the provinces so dramatically.

Again, the big problem here is that the federal government currently has the power to trample over the provinces and escape accountability for the consequences of these actions. Currently the provinces have very little authority over their revenues, yet they have all of the responsibilities for how the programs, investments and spending programs will be administered. It is like what Mark Twain once referred to as a bad job. We could say that currently the provinces have a bad job: a lot of responsibility but no authority.

The same federal government that created the health care and post-secondary education crises across Canada by its cuts to the provinces has tried to act like a knight in shining armour by introducing, for instance, a millennium scholarship program to directly fund students from the federal coffers. The government is more interested in whose names are on the cheques than in the long term interests of ordinary Canadians who want health care and education systems they can depend on. Clearly some sort of reform is necessary.

However, that is not exactly what the hon. member is calling for with this motion. He is actually just calling for a first ministers conference to discuss the possibility of a tax point transfer. Clearly there is nothing wrong with having a discussion of first ministers on an issue of this importance. I would hope that members opposite and members of all parties would see that in the interests of a constructive approach we should all be supportive of the notion of a first ministers conference to explore the possibility of this type of initiative. It makes a lot of sense.

Not only does this initiative make sense, but even those who may disagree with the notion of a tax point transfer should at least agree to the idea of having a discussion with the first ministers of the provinces on this. We also need to broaden the nature of this discussion to include equalization. Our equalization system is currently broken. When we look at the history of equalization, a cornerstone of Canadian public policy and the only constitutionally enshrined spending program, we see that it was introduced around 1958. At that time the stated goals of equalization were to achieve approximately equal levels of taxation and equal levels of services across Canada.

Clearly, particularly on the tax front, with some provinces like Ontario and Alberta increasingly in positions to take fairly aggressive tax reduction policies, we are seeing a ghettoization of Canada in terms of the very important role of tax policy. Ten years ago I do not think anyone recognized how important tax policy could be in terms of creating levels of economic growth, opportunity and ultimately prosperity for citizens within a particular jurisdiction. However, today we have seen what has happened in countries like Ireland, where an aggressive tax strategy focused on capital taxes and corporate taxes has helped achieve a 92% growth in GDP per capita over a 10 year period during a period of time when Canada has had a 5% growth.

Enabling the provinces to have through equalization a little more control over their natural resource wealth, for instance, would go a long way in provinces like Nova Scotia and Newfoundland toward actually enabling those provinces to reduce taxes and to create greater levels of economic growth, not specifically in resource areas but in new economy ventures et cetera. Clearly we have to address the issue of the clawback of resource revenues that impacts provinces like Nova Scotia and Newfoundland in such a negative way.

We also have to address the issue, as my colleague from Richmond—Arthabaska mentioned in his comments, of the caps on equalization. We have 10 provinces with 10 premiers who have agreed that now we should take the caps off the equalization levels that go a long way toward denying individual provinces and recipient provinces the opportunities and the ability to grasp the economic levers they need to grasp, including tax policy and social investment policy, in order to create some level of sustainable economy and to ultimately be independent of equalization.

In regard to the current equalization system's treatment of recipient provinces, it is like how in certain jurisdictions social welfare systems sometimes treat people worse if they get a job. If they actually get a job they end up worse off than if they stay on welfare. In some ways we have an equalization system that has created a welfare trap, in that we actually treat provinces that are starting to become successful and starting to forge ahead worse than if they were not to pursue and embrace economic opportunities in a way that we should be encouraging.

The former premier of Newfoundland, currently the Minister of Industry and self-promotion, said in October:

—the development of offshore oil and gas both here and in Nova Scotia have been made more difficult by the way the current equalization formula works. The current claw back provisions in particular slow the pace at which equalization receiving provinces can catch up to the Canadian average standard of living.

I could not agree more with his comments then. Goodness knows where he is on that today.

We need a consistent commitment from the government to enable provinces, through equalization, through tax point transfers, to achieve on behalf of their constituents prosperity and equality in the 21st century.

[Tony Valeri, Liberal, Stoney Creek, ON]

Mr. Speaker, I listened intently to my hon. colleague's comments. Earlier today in the debate I made the comment that I do not suspect that there is a lot of consensus or a consensus at all among provinces on this issue with respect to the movement to tax points versus cash transfers. I think it is fair to say. I know the hon. members from the Atlantic provinces did.

Certainly analysis has shown that a conversion to tax points for the smaller provinces would in fact be harmful given their smaller tax base. I am trying to reconcile this in my mind. I am trying to understand if the member, coming from the Atlantic provinces and knowing that the Conservative Party is supportive of eliminating cash transfers and going straight to tax points, much like our colleagues from the Bloc, has had any dialogue at all with his provincial premiers with respect to eliminating the cash portion of the transfers and going to tax points completely.

As well, I am a little concerned about and am trying to understand some of the inconsistency, perhaps, in the thinking on tax points versus the equalization payments, where equalization payments are a transfer of cash and there is a moving to tax points on the straight transfers. There is a bit of inconsistency in the thinking. I would like to hear from the hon. member on that point.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I appreciate the hon. member's intervention. This hon. member is not confused, but I believe he may be.

In terms of the issue of tax point transfers, it is entirely consistent with our party's position, going back to the 1997 election platform, that we should be enabling provinces to have more say over their own tax policies and ultimately over spending priorities through giving them an opportunity through tax points to achieve that.

That being the case, he is quite right that without an adjustment through equalization to ensure that there is some sort of ameliorative impact from the equalization perspective, some provinces would be worse off. That is why it is fundamentally important to ensure that the equalization system, as I articulated, takes that into account. One of the best ways to achieve that would be to remove the equalization caps, which we do have consensus on from 10 premiers across Canada.

There is another point. The hon. member from the Bloc Quebecois who has proposed this opposition day motion is proposing that there be a first ministers conference to debate and discuss this issue. If the hon. Liberal member opposite is ingenuously interested in hearing the views of Atlantic Canadian premiers, then he should be supportive of this motion such that first ministers would be able to get together and have this kind of discussion.

The hon. member from the Bloc Quebecois is not saying in this motion that he would want the transfers of the points. The motion says that we want to have the discussion.

Certainly the hon. member's government should not be afraid of a meaningful discussion, a first ministers conference on this issue, which would give an opportunity to Atlantic Canadian premiers, among others, to express their views and to negotiate and achieve on behalf of their constituents what they are capable of doing.

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, I just wonder what the member opposite would think about the fact that Canada's public medical services were financed originally by an earlier Liberal government, basically with cash, and then a subsequent Conservative government changed these cash transfers into tax points.

While that may work in most of the country, in the province of Ontario we have the dilemma where a lot of the money that is now going to the provincial government to finance health and social care is basically not getting to this target because the provincial government is spending less of its own money on health care or is only using the money it receives federally. I wonder what the member has to say about that.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Madam Speaker, the hon. member, respectfully, is wrong. The fact is that the provincial government in Ontario has increased its spending and investment in health care disproportionately when compared with the federal commitment to health care in Ontario.

There has been a sharp decline in the federal commitment to health care in every province and the provinces have had to make that up. In Ontario there has been a dramatic increase in the provincial investment in health care to help compensate for the draconian cuts by the federal government.

Unfortunately it is easier in some ways for a province like Ontario to make up that money but in a province like Nova Scotia with a weaker tax base it is very difficult. I would ask the member to be cognizant and respectful of that.

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

Mr. Speaker, first, I want to say that I will be using my 20 minutes to give a demonstration based on the motion we introduced this morning.

I would first like to reread the motion because, since the beginning of this debate, we keep hearing things that have nothing to do with the purpose of the motion. I thank my colleague from Kings-Hants, who clarified the motion by the Bloc Quebecois, to prevent the debate from going the way it seemed to be going this morning. The motion 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.

We are not saying that everything has to be turned upside down and that the value of equalization has to be challenged. We are not saying that the federal government's actions in its own areas of jurisdiction should be questioned either. The only thing we are saying, after four years of observation, is that it is essential that a balance be struck somewhere.

We have now reached a point where, and this has been the case for the last three years, there is too much money in Ottawa, given this government's constitutional responsibilities, and not enough in the provinces, including Quebec, given their responsibilities, particularly for health, education and income support. There is too much money. We are not talking about peanuts. We are not talking about a few billions, but rather several billion dollars.

Since 1995 the Bloc Quebecois has gotten into the habit of making its own forecasts regarding revenues and expenses, therefore surpluses, especially the surpluses that have been building up since 1997. We make forecasts because we do not trust this government. Ever since he has been holding the finance portfolio, the minister has been making forecasts that are way off, sometimes by an incredible 130% to 400%. How can we trust a government that does not even give us a true picture of public finances, which would allow us to make the right choices?

We came up with a rough forecast of surpluses over the next four years—one must be very cautious regarding the last year because four years is a long way away, even the third year is iffy. If we use the same economic growth parameters as the major banking institutions such as the SGF, the Caisse de dépôt et placement du Québec, the Mouvement Desjardins, the CIBC, the Bank of Montréal and the National Bank, and take into account not only the growth parameters but also the analysis of the growth, we see that over the next four years the Minister of Finance will have, thanks to the taxpayers of Quebec and Canada, a budget surplus of between $70 billion and $90 billion, plenty of room to manoeuvre.

We have hardly ever been wrong, maybe only by 5%. For his part, the finance minister has been way off; since 1994, his forecasts have been off by $60 billion. These are no small miscalculations. Over the next four years the government will accumulate surpluses of between $70 billion and $90 billion. Why such huge surpluses?

First, people pay too much taxes; second, the federal governments responsibilities are such that it cannot spend the money entrusted to it by Quebec's and Canada's taxpayers; third, if the surpluses are so huge it is because they have been accumulated on the back of the provinces by drastically cutting, gutting transfers since 1994. The provinces' needs keep on increasing whereas here in Ottawa money has been pouring in, especially over the past four years.

Since 1993 federal revenues have increased by 53%. Revenues from taxes and income tax have increased by 53% since 1993, while federal spending dropped 3%.

Let us have a look at the situation in Quebec. Program spending in Quebec has increased by 16% during the same period, that is since 1993. This means that the government of Quebec spends 13% more for programs under its jurisdiction.

In health care alone, the increase was twice as high: the government of Quebec's spending in health care has increased by 32%. Spending is increasing year after year, especially because of the natural aging of the population. Needs increase by 5% per year.

The federal government's spending has decreased by 3% since 1993. This is due to the fact that there were cuts to transfers to provinces. The federal government has reduced the level of its contribution to cost sharing programs, which had been set during the 1960s and 1970s, especially in the areas of health and education.

So much so that, for every dollar invested by the government of Quebec, the federal government contributes only 14 cents. However, these cost sharing programs were established on a 50:50 basis, the federal government contributing 50% of the costs and the provinces the other 50%.

In the area of education, it is even worse. The Liberals should stop misleading people by saying that there the federal government is not backing out. For every dollar invested by the government of Quebec in education, the federal government spends 8 cents. In the past it has even been 50 cents for 50 cents.

Over the next four years, there will be huge surpluses, so unbelievably huge as to be nearly surrealistic: between $70 billion and $90 billion in surplus for the next four years, and that is the conservative scenario. I would again point out that the Bloc Quebecois has never been wrong. The Minister of Finance has, and far wrong at that.

What is the Minister of Finance doing with these surpluses? First of all, the federal government is using these surpluses, under section 91 of the constitution and subsequent interpretation thereof, i.e. the power to spend, to intervene, or not to intervene, in areas under its jurisdiction.

Let us take the example of employment insurance. Instead of taking action, it makes cuts, while on the other hand, as the surplus accumulated over the past four years, its intrusions in areas of provincial jurisdiction, in particularly areas of Quebec government jurisdiction, increased proportionally.

Let us take for example the 1997 budget, where the first significant federal surplus appeared: $4.1 billion. The federal government invested in new initiatives, in areas of provincial jurisdiction, sums in excess of $2.3 billion. Out of a total of $4 billion, $2.3 billion were invested in areas coming under provincial jurisdiction. These include: the family, the child tax credit, research, education and health, particularly via the Canadian health information system.

Over half of the first year's surpluses were invested in exclusively provincial jurisdictions. However, in that same year, the Canada social transfer had not been restored to fund health and education through the existing networks that were well managed by Quebec and the other provinces.

In 1998, it was the same: a $10.8 billion surplus and $4 billion in new initiatives in areas in which the federal government has no business. In other words, it cuts on one side. It accumulates surpluses year after year, at the expense of the provinces, the unemployed and the poor.

The government then reinvests these surpluses through the back door, in provincial jurisdictions that it has obviously neglected if we look at the general transfers to fund health and education, among others. This is the tactic used by the federal government.

It was the same thing with the budget for the year 2000. The government will have between $15 billion and $19 billion in surpluses. The minister's forecasts called for less than half of that. The minister has lost all credibility in that respect. In any case, no one still believes him.

In the year 2000, close to $8 billion was spent on new initiatives and renewed initiatives from 1997, in particular, in jurisdictions that come exclusively under Quebec and the other provinces.

Is it normal that, on the one hand, the federal government goes after the provinces and has them bearing the brunt of all the cuts made since 1994 in health care and education when the needs of the provinces in both these areas are increasing? I want to remind the House that federal transfers for education have never been lower in the last 30 years. The government is cutting and not meeting the needs of the public.

On the other hand, it keeps infringing upon areas of exclusive provincial jurisdiction recognized in the Constitution of Canada and in many court rulings.

It is not normal to have the federal government juggling with a surplus while the provinces and Quebec are overburdened by heavy responsibilities.

We need to rebalance the tax base. This is such a matter of urgency that the government of Quebec and the premier of Quebec, Mr. Landry, have decided to set up, the Séguin commission, chaired by a Liberal who is a former Quebec minister of finance, to examine how great the imbalance is and how to correct it.

We are constantly in crisis. We cannot have a situation where the needs of the people are constantly growing while the federal government has huge surpluses and avoids debating the issue, because we know that the Minister of Finance, as astute as he is and with the lack of transparency he has shown, is predicting surpluses that have no basis in reality.

All the money that is not included in the budget and that magically appears at the end of the fiscal year, as we have seen since 1997, goes directly to debt reduction pursuant to the decision made in that regard. There is no debate. The government also avoids debating with the provincial governments, including the Quebec government, the fact that the needs are with the people but the surpluses are here, in this House.

This is not normal. For decades, successive governments and successive premiers in Quebec have fought every time an imbalance became apparent. It happened under Maurice Duplessis, as well as under Lesage, Bertrand and Johnson.

Mr. Bourassa said that the worst threat facing the government of Quebec was fiscal imbalance and a situation where the federal government continually, through its spending power, interfered in areas under the jurisdiction of Quebec and the other provinces, thereby preventing a consistent approach to public affairs management in areas which, under the Canadian constitution, are recognized as being the responsibility of the provinces, including Quebec.

Undoubtedly, the federal government has a problem. However, the provincial governments have more serious problems, because they have to meet the needs of the population.

We must limit the federal spending power. What is happening now was foreseeable. Since 1997, when the possibility of huge surpluses appeared for the first time, we have been saying that this would happen. Those who do not believe me can refer to Hansard ; our speeches were mostly on this issue.

The federal government will accumulate surpluses on the back of everybody: the unemployed, the sick people and the provinces. As soon as it has done so, as soon as the first surpluses appear, it will revert to its old bad habits, intrude into provincial jurisdictions and multiply federal initiatives in these areas just to stick the Canadian flag everywhere and to say that it is a good government, working in the best interests of the population.

How hypocritical to have cut programs of such basic necessity as education, health and income support, to have made the government of Quebec and Canadian provinces bear the brunt of it and then to have come in as a saviour by taking several initiatives in these areas through the back door.

This is why we have brought forward this motion, asking the government to reapportion the tax base by calling a federal-provincial conference.

In the last 50 years, there have been two important conferences. One of them took place in 1964, in Quebec City. Mr. Pearson was the Prime Minister of Canada, and Mr. Lesage was the premier of Quebec. Mr. Pearson was an intelligent man.

He was able to understand that the requirements of the provinces and of Quebec had to be met, if we were to have a better balance in this country. He did realize that, for the war effort, the federal government had borrowed the personnal income tax base of the provinces, but that after the war it was necessary to reapportion the tax base because of the constitutional responsibilities of the provinces. They had to regain the tax base they needed to finance these responsibilities. He realized that.

In 1977, during the second important conference, once again, the federal government realized what the situation was and transferred tax points.

Why is this federal government so dense? Why is it so obtuse that it cannot see the obvious? Things cannot go on like this for years. We cannot have the money in one place and the needs elsewhere. A reapportionment is in order.

The easy way is to use tax points, since this tax base can be easily reapportioned, by taking into account the needs of the provinces without denying the role of the federal government. Some members talked about equalization earlier. Certainly, when tax points are given to provinces such as the maritime provinces, there will be a problem at some point. These provinces have by definition some difficulty in getting from their taxpayers the taxes that would allow them to maintain services of the same quality as those provided elsewhere in Canada.

But there is equalization. We are not asking the federal government to transfer everything. We are asking that a new balance be struck. Might it not be open-minded at some point, instead of constantly saying no? We are used to no.

When it comes to Quebec, the federal government has always behaved as if it were a unitary state. It said no to Quebecers' democratic rights with Bill C-20. Everyone remembers that there was a reference to the supreme court. With Bill C-20, the government said no to Quebecers' democratic rights.

It said no to parental leave, for instance. It said we would have a program coast to coast. It is not nearly as good as the Quebec government's program, but that does not matter because it is the parents in Quebec who will pay at the end of the day. It said no to Quebec's program.

It is also saying no to young offenders, as we saw recently. The Minister of Intergovernmental Affairs, carrying indecency to a new high, beyond anything he had done up till now, went as far as to tell us that the consensus that we presented here, that my hon. colleague for Berthier—Montcalm presented, was a fabricated consensus because we had infiltrated all the organizations that supported us in our approach. We would then follow that we have infiltrated the Quebec Liberal Party. Such nonsense is quite incredible.

It is saying no again, because the transfer of tax points is another idea from Quebec. Sometimes we wonder if this government is not in the process of changing Canada into some unitary state, where differences are not tolerated. Forget about Quebec's specificity. We have almost become an internal colony. Before we were a colony ruled by metropolitan Britain. Now we have become a colony within Canada. We are told “No, Ottawa knows best. Ottawa knows everything. Ottawa knows what is good for Quebec”.

I hope we will find more open-mindedness on the part of the Liberals toward our proposal for a federal-provincial first ministers' conference for the purpose of redefining the tax base, of reapportioning that tax base. The current situation is unbearable.

Quebec is not alone. The government can say no to Quebec, in its colonial spirit, and seek to have a wall-to-wall policy across Canada, even while recognizing that sometimes Quebec's policy is better than the federal policy. We demonstrated it with respect to the Young Offenders Act. It can treat us that way if it wants, but a consensus is in the making across Canada.

It is not only Quebec. Members were speaking earlier of a national policy. We have a national government in Quebec City which is forming a consensus with the provinces to readjust the tax base.

In the case of the poorest provinces, it is very simple. There are equalization payments. We are not calling for them to be scrapped. We simply want, when we speak of the federal government's withdrawal and of redefining the tax base, the federal government to withdraw first from everything that concerns Quebec's and the provinces' jurisdiction—that would be the minimum—and to transfer the equivalent taxing power to the provinces. That could be discussed at a first ministers' conference.

I hear the Minister for International Trade bleating. If he stood up instead of being a wishy-washy member from Quebec, he would join the consensus. For once, if he stood up like a real Quebecer, he would defend Quebec's point of view.

I hope my colleagues in the House of Commons will vote in support of this motion.

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

Mr. Speaker, if the Minister for International Trade could go back to his seat and ask a question, I would not have to put questions to my colleague, the hon. member for Saint-Hyacinthe—Bagot.

I will first make a few comments. I would like to congratulate the member for Saint-Hyacinthe—Bagot, in particular for his demonstration. With the means available to him, which are far from what the government has at its disposal, he has always succeeded in forecasting as precisely as possible, more precisely than the Minister of Finance in any case, the size of the surplus. I think he deserves a special tribute for this. He was always very close to the actual figures, even though he did not have access to the same tools as the federal officials.

I am very proud of his support for the motion I brought forward. The members of the Bloc Quebecois have all worked together to bring this important motion forward.

Does the member for Saint-Hyacinthe—Bagot agree with the expression commission on fiscal strangulation used by the Parti Quebecois government? Does he consider this expression exaggerated or adequate? I would like to hear his comments on this point.

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

Mr. Speaker, it is no great feat to have forecast reality, because we have come pretty close to the right figure by using known and public figures, even those of the Minister of Finance.

If he has not done the same, then, it is because he has done a poor job, either out of incompetence or lack of transparency, or because he was trying to be astute, as I said earlier. He likes not forecasting a surplus; then he can decide on his own what to do with the money.

The expression fiscal strangulation is no exaggeration. We find ourselves in a situation—no joke here—in which the federal government's financial situation is going to be really flourishing. We are talking of $70 billion minimum over four years.

Those who find this an exaggeration have always said the same thing when we presented our estimates “It's an exaggeration, it makes no sense”. Yet we have always been dead on. There is, therefore, no exaggeration here and we have consulted many experts. We did not consult certain economists, not the friends of the Minister of Finance; we consulted all forecasting organizations. We were objective.

We are talking about fiscal strangulation in connection with needs. For instance, health needs are increasing in the provinces. In Quebec alone there will be a 5% rise. We are talking billions of dollars. The billions of dollars of surplus will pile up in the federal coffers while the health needs in Quebec and in the provinces will be very great.

These needs must be met; they are the needs of the population. Yes, there is fiscal strangulation going on. The present situation is a dramatic one. There has been an increase in initiatives in areas of jurisdiction that belong to Quebec, such as health and education, which do not take into account the needs of the public and the government of Quebec's policy in these two sectors in particular, where it spends more than the federal government. We are talking about $1 for every 14 cents in the health sector, and $1 for every 8 cents in the education sector.

The federal government is meddling in other areas, which have not been identified as fundamental needs by the government of Quebec. What does this mean? It means that the federal government is not making good use of our money. There are no two ways about it. So how are we to reconcile these two visions, Canada's and Quebec's? We are making an attempt. We are introducing a motion which says “Sit down with the premiers of Quebec and the provinces. Talk about rebalancing fiscal resources, but on the basis of the real numbers. Let us have no more of the Minister of Finance's nonsense, with estimates that are off by 140% to 400%. We want the real numbers”.

Everyone has the real numbers now anyway, because everyone is capable of taking a calculator, as I did with some of my colleagues, and doing the math. Even with the worst scenarios, the surplus will grow to $70 billion over the next four years.

This money does not belong to the Minister of Finance, nor does it belong to the member for Saint-Maurice. It belongs to taxpayers, whose needs are in areas such as health, education, income security and so forth, areas which should reflect the public's interest, not the leadership aspirations of the Minister of Finance.

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Mr. Speaker, I would like to make a comment that may be somewhat off topic.

I find it quite deplorable that the member for Papineau—Saint-Denis would be screaming from behind the curtains and does not even have the courage to take his place and ask questions.

I would like to congratulate my colleague from Saint-Hyacinthe—Bagot for his speech and I would like to hear what he has to say about the money the federal government owes Quebec.

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

Mr. Speaker, my colleague from Rivière-des-Mille-Îles has put his finger on a thorny issue.

I believe the federal government owes over $3.2 billion to the Quebec government and, despite repeated requests, it steadfastly refuses to pay up. These outstanding bills are documented. Every one of them is well documented and together they total $3.2 billion, which the federal government refuses to acknowledge it owes.

At issue is, for example, $1.9 billion in compensation for the GST. A few years ago Quebec harmonized its provincial sales tax, the TVQ, with the GST. It has been losing money ever since. The federal government never told us it would one day compensate the maritime provinces for doing exactly the same. Three maritime provinces got $900 million for harmonizing their taxes.

We are asking the federal government for $1.9 billion because harmonization has cost us dearly. We were the first ones to do it, on our own initiative, because we wanted the tax system to work well.

Is there any way that someday Quebec's demands will be met?

The same is true of the Canada assistance plan. The Quebec government is suing the federal government for $310 million owed to it by the federal government.

The Quebec government is asking the federal government for $96 million to administer the Young Offenders Act. I am not talking about the new harsh, barbaric act beneath the dignity of this parliament, but rather about the old act under its jurisdiction.

These needs are not being met. It is incredible; the Minister of Finance has billions of dollars, he even boasts about the surplus, and he lets the needy remain exactly that, needy. He lets sick people wait in hospitals. He invests elsewhere. For example, as far as health is concerned, he invests through the real transfer to the Quebec government, but he does nothing for the fundamental needs of the sick people.

He makes students wait. A student is not a student forever. At one point in his life he has needs that must be met quickly. This is incredible. The funding of education, through the CHST for post-secondary education, has never been this low in 30 years. The minister continues to brag about the surpluses. He is being astute by not making forecasts that reflect the real surpluses. He is avoiding debate and paying down the debt.

Could he not give a bit more to the people, dish out the dough as they say? Let him spend on the people in order to meet the real needs, and let him pay his bills and his debts. The federal debt is not the only one the minister has to deal with. He has a debt toward the Quebec government because we have taken measures that were warranted from a practical point of view. For example, there is the harmonization of the GST and the QST and the issue of young offenders. I think there is a lack of will on the part of the government. This government is ignoring Quebec completely, it just does not care about Quebec.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Mr. Speaker, just like my colleague from Saint-Hyacinthe—Bagot, I regret that Quebec and the other provinces have to bear such a heavy tax burden.

According to my colleague what group of people is hardest hit by this tax burden? How are they affected? Can he give us some brief examples?

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

Mr. Speaker, there is no doubt in my mind that the bad policies of the federal government have hurt two main groups, women and young people.

Employment insurance policies have affected and continue to affect women and young people, who make up 60% of all those ineligible for EI benefits.

It is also true that the Minister of Finance has recently cut taxes, but mainly for the rich. Single parent families, often headed by women, will go empty-handed this year, next year and the year after.

It is obvious. These two examples show that women are paying the price and will continue to pay the price. I want to thank my colleague for her question.

[Jim Peterson, Liberal, Secretary of State (International Financial Institutions)]

Mr. Speaker, what we have in the House today is a motion by the Bloc to transfer tax points from the federal government to the provinces. This is not complicated. It means the Bloc simply wants us to give up our power to raise revenue to the provinces. It wants us to give up our power to do the things which are absolutely critical to our country as a nation affecting every province and every person regardless of where they live, not just in particular provinces.

The Bloc wants us to reduce our capacity to make transfers to individuals. Our biggest single expenditure to individuals is over $25 billion a year to Canada's seniors. How much of that does it want us to give up? It wants us to give up our capacity to cut taxes.

We have just introduced the biggest tax cuts in Canadian history, $100 billion over five years. We have seen the benefits of that. Those cuts started January 1. Canada's growth rate in the final quarter of last year was 1.9%. In the first quarter of this year the latest figures show that our growth rate has gone up to 2.5% in spite of the serious downturn in the U.S. economy and one that was threatening us and one that members opposite were saying that we had to do something about, that we had to bring in new budgets because things were not working.

That stimulus presented by the Minister of Finance just when it was needed has ensured that we have not gone into a tailspin, but have been able to cope with that downturn.

The Bloc wants us to give up our capacity to pay down the federal debt in order for the provinces to pay down more of their debt. Paying down debt is good for all of us but the fact is that the federal debt is more than twice that of the provinces. We have made enormous strides in paying it down. When we took office it was 71% of GDP. It is now below 54% of GDP and heading to less than 40% of GDP within five years.

As members know, last year the finance minister paid off $15 billion in Canadian debt. This is important because this payoff is saving us about $2 billion a year in interest.

The provinces should maybe pay down their debt too but their debt cumulatively is less than half of what ours is. We pay about 25 cents out of every tax dollar to service the federal debt. The provinces pay about 12 cents. In terms of fairness, where should that capacity to pay down the debt go first?

When we look at the credit ratings that we get as a country and the lower interest rates that the bond rating agencies give us, it is because we have been able to balance our budgets for the past three years, reduce our taxes and pay down the debt. Those reduced interest rates constitute an enormous savings not only to the federal government but to every one of the provinces.

The Bloc members want us to give up to the provinces our capacity to make strategic investments for the future of Canadians, strategic investments in areas such as education, which is so critical to the economy of the 21st century and to the new economy, and to give up our capacity to support innovation such as through technology partnerships. All these programs are critical to the future economic well-being of Canadians. We are not going to do it.

We have seen an historic accord concluded last September by the Prime Minister of Canada with all of the provincial ministers. It was historic, first, for the amount that was involved, $21.1 billion over five years added to the transfers that we are already making to the provinces. In addition, another $2.2 billion for early childhood development.

What are the overall transfers that we are making as a federal government to the provinces? They are at an historic high. When we look at the CHST, including the tax points, and at equalization, which is at an all time high, it is over $40 billion a year that is transferred to the provinces.

Let us go back historically and take a look at how this whole issue of tax transfers appeared on the agenda. It started in 1977 when the provinces said that they needed more room to tax. The federal government said that it would give them more room but that they had to recognize that those transfers of tax points to the provinces would be transfers of revenue generating capacity. The federal government gave up its capacity to tax by 13.5% on the personal side and 1% on the corporate side. The provinces picked that up by imposing those taxes. They got the cash and we did not. It was a transfer of cash to the provinces.

Ever since then the provinces have said that the federal government was not transferring to them anything more than the cash component. How could they be so short-sighted? How could they go back on their word which they gave in 1977? How could they go back on their commitment to recognize that the tax points they took from us were in fact transfers to those provinces?

The net impact of tax points on taxpayers was zero, but it cost the government a lot of money.

In 1997, the value of tax points transferred to the provinces was $2.7 billion. That amount has been increased and is now at $16 billion, which is about half the total amount provided to provinces under the CHST.

What are our reasons for not going back on what we have done? First, doing tax points creates inequities among the richest and the poorest provinces. A tax point in Ontario is worth $35 per capita today. It was worth only $17 last year in Newfoundland. Is that the type of equity that we are trying to build for all Canadians? On the other hand, when we transfer cash to the provinces it means the same amount per capita. That is equitable.

The second reason we will not go back on this is that we will not give up the federal capacity to legislate the values which are so critical to Canadians, such as the Canada Health Act. This is why we have used the threat of cutting transfers to the provinces, and have actually had to cut in certain cases in order to ensure that the principles of the Canada Health Act were adhered to by the provinces. If all that cash were gone, total leverage would be gone and our admired system of public health in Canada would be finished.

In terms of social assistance, we used it to enforce the fact that provinces could not impose minimal residency requirements. That was fair. If one is a Canadian it does not matter which province one lives in, one's rights will not be cut off. That is what it means to be a Canadian.

We can look at our relative capacity to tax already. In 1977, before the transfer of tax points to the provinces, personal and corporate income taxes brought in about 60 cents for every dollar of federal tax. Today that is up to about 85 cents. When we add federal transfers to that revenue generating capacity in the provinces, the provinces end up with a higher revenue base than in the federal government.

We need the fiscal tools to be strong. Nothing could have demonstrated that better than the Canadian economic miracle of going from a deficit of $41 billion to three straight surpluses, heading to four, and having been called by the economists of London the economic miracle of the west.

The Bloc members, the opposition, have consistently denied the value of the tax points. They say that we give only 15 cents on the dollar to health care. They also ask us to give them more tax points. If tax points are so valuable, why did they ignore the tax points when they said we gave only 15 cents on the dollar for health care? It is over 30 cents. They cannot have it both ways.

That is hypocrisy. Twenty-six per cent of federal funding for research and development goes to Quebec. What percentage of the Canadian population does Quebec account for? Twenty-five per cent.

For industrial research and development, the government spends 33%; for the Canadian Institutes of Health Research, 32%; for infrastructure, 26%; for the Canada Foundation for Innovation as well as for 29 research chairs, 30% of the budget. For the CHST, 50%.

Now we can see why the Bloc Quebecois is proposing this motion. It is obvious. It does not want a federal government, a Canadian government. It wants to destroy Canada. That is their sole objective and that is the reason why a few weeks ago, here in the House, members of the Bloc Quebecois insisted that we switch to a North American dollar. They want to destroy Canada's ability to have an independent monetary policy. The sole motivation of the Bloc Quebecois is to destroy Canada, not to promote it. That, we will never accept.

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

Mr. Speaker, I would like to congratulate the minister on coming back to join us here in the House and on his very successful recovery. We all had him in mind.

The minister managed to work himself up into quite a frenzy over a proposal to continue with the status quo. He spoke as though the transfer of tax points between senior levels of government would somehow undermine the federation and the very glue that bonds it together.

Will the minister not admit that tax point transfers from the federal to provincial governments to allow them to finance programs more transparently within their own exclusive constitutional jurisdiction is a longstanding historic practice of the Canadian federation?

When he does admit this, why is he concerned about the motion which simply suggests that the first ministers gather for the purpose of reapportioning the tax base among the federal and provincial governments through the transfer of tax points? Is this not an ongoing process? Does this not happen from year to year? Is the negotiation of who finances what not a work in process in terms of tax points and cash transfers? If so, why is he so concerned?