Debates of March 18th, 2002

Questions on the Order Paper

[Geoff Regan, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I ask that all questions be allowed to stand.

[The Speaker]

Is that agreed?

[Some hon. members]

Agreed.

Request for Emergency Debate

[The Speaker]

The Chair has notice of an application for an emergency debate from the hon. member for Pictou--Antigonish--Guysborough.

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, I appreciate the Chair's acceptance of this emergency debate application and the opportunity again to put before the House and Canadians the dire straits currently felt in Canso, Nova Scotia.

Last Thursday's decision by the fisheries and oceans minister from Nova Scotia to reject the proposal that was submitted by the town of Canso with respect to a division 3O redfish application for quota has had a devastating impact both on their spirits and their ability to re-open the Seafreez plant.

The Seafreez plant is the only major employer in the town of approximately 1,000 people and the surrounding community. I do not want to go over the same material again, but I remind the Chair that this is an issue of utmost urgency for these individuals, not only because of the work but because of the options that are no longer available to them. They have no ability to get the hours necessary to qualify for employment insurance benefits.

Similarly, to put it in historical context, this particular port has been relying on the fishery for over 400 years. The plant has been operating successfully for the past 10 years. Without access to the quota, there is no ability for the plant to open its doors.

It very much leads into and relates to a broader issue and that is one of overfishing on the east coast. I would respectfully submit there is a similar argument to be made on the west coast.

In particular, with respect to overfishing by foreign vessels, there has been much made and there has been much heard in recent days by the fisheries committee that has travelled throughout Canada and which is in Atlantic Canada as we speak. There is the problem or plight of the raping of the fish resource on the east coast.

The community does not have the options that might be available to other parts of Canada. People in the town, both young and old, have been resting all their hopes on and are clinging to the request that was made by the task force, the union, the trawlermen's association and the town supported by the surrounding areas in the county for this proposal.

The socioeconomic impact is enormous. The minister for ACOA has suggested that other industrial development programs and projects that might be coming to fruition in the near future will assist the town of Canso. That should not be an either/or situation. One should not preclude the other. The fisheries industry is vital to the economic survival of Canso.

I respectfully urge the Chair to accept this application. It would allow all members of the House, particularly those from Atlantic Canada, to focus on the issue of overfishing offshore, the economic impact not only of the collapse and moratorium that has been placed on some species, but also the broad ramifications for having taken away the livelihood of people on the east coast who for generations have been dependent on the fishery.

The number of foreclosures on homes and the number of businesses that have closed are real indicators of the grave need for revitalization of the fishery and the need for a concerted attempt and effort by the government and the minister in particular to manage the fisheries properly.

[The Speaker]

I thank the hon. member for Pictou--Antigonish--Guysborough for his submissions both today and on Friday on this matter. I note that he raised the matter of Friday and then suggested at the end that in light of possible events over the weekend he might prefer to have the debate today. I suggested he defer his application until today. He was willingly compliant with that request and for that I thank him.

Notwithstanding his forbearance I am afraid the Chair has reason to feel the particular application is one that does not warrant the intervention of the Chair under the provisions of Standing Order 52.

The Chair does not normally give reasons for its opinion in these matters, but I would draw to the attention of the hon. member for Pictou--Antigonish--Guysborough, who I know is an enthusiastic reader of Marleau and Montpetit, a particular citation on page 588 of that book which states as follows:

Chair occupants have established that the subject matter proposed should not normally be of an exclusively local or regional interest nor be related to only one specific group or industry, and should not involve the administration of a government department.

The last words are not appropriate but all the rest apply. His letter frames this in the sense that it is a matter of dealing with a situation in the community of Canso.

I am sure all hon. members share his concern about the economic impacts of the recent decision in respect of that community, but not withstanding I am not sure it is one that fits the parameters of Standing Order 52. Accordingly I am not prepared to allow the debate at this time.

I wish to inform the House that because of the ministerial statement government orders will be extended by 12 minutes.

Privilege

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, I would like to draw your attention to a situation that, in my opinion, prevents me from doing my work as a member of parliament properly, and therefore is a question of privilege. Incidentally, I did give notice of this question, pursuant to the standing orders.

I am new to this, so I would ask your indulgence and a bit of patience.

On Friday March 15—beware the ides of March, by the way—the Standing Committee on Procedure and House Affairs presented its 48th report, which determined that four items, Bills C-292, C-415, and motions M-414 and M-432 would be deemed votable. The other business from the February 28 draw, would therefore not be votable: motions M-34, M-431, M-329, M-357 and M-435, and Bills C-429, C-304, C-391 and C-407.

Bill C-407 is among this group, and it is a bill that I sponsored. The bill came about as a result of the Montfort hospital saga, this saga has tremendous importance for minority language communities in this country, be they French or English.

Furthermore, I can attest unequivocally that this bill meets all five of the criteria approved by the House in order to be considered eligible for “votable” status.

On March 13, I appeared before the Subcommittee on Private Members' Business and presented a document demonstrating that Bill C-407 met the criteria. The one question that a committee member asked dealt with the substance of the bill, and did not question the criteria. In fact, the chair of the sub-committee, the member for Hull--Aylmer congratulated me by saying:

I must congratulate you, because you are one of the rare members to respect the spirit of the five minutes to demonstrate that your bill is acceptable, rather than selling us on the merit of the bill, because the idea is not to sell us on the merit. The idea is to sell us on the fact that it should become a votable bill.

Then, on March 15, to my great surprise, I learned that Bill C-407 would not be deemed votable.

Despite my dissatisfaction and my frustration with a system that I consider to be cumbersome to say the least, I tried to find out why the subcommittee and the standing committee did not deem it votable.

Before the draw on February 28, one votable item remained in the order of precedence. The subcommittee could therefore add nine, but decided to add only four. Since the refusal to declare votable Bill C-407 and other items, such as Bill C-429 or Motion M-431, which, by the way, I also urge you to review, is therefore not due to a lack of room, it must therefore be because it did not meet the five criteria. If the refusal is not based on these criteria, the situation is even worse than we imagine.

I will not go over the five criteria for the House. They are readily available, and you are probably more familiar with them than anyone, Mr. Speaker.

I spoke with four of the six subcommittee members. I was trying to understand. One told me that he thought that the bill was not federal in nature. Another one said that was not it at all. A third one told me that I should have spoken to him about it in advance, and added that this was not the best way of moving the issue forward, that it would be preferable to refer it to a committee. The fourth one refused to tell me anything at all, even after admitting to a certain incongruity in the situation. The other two people did not return my call.

It was therefore impossible for me to find out why or which of the principles the bill did not comply with.

The reality is this that I am faced with the following situation, along with all other members whose motions were declared non-votable: the decision is one that has been made behind closed doors, with no explanation, and no means of appeal.

Even prisoners who are refused parole can know the reason. The public can take part in meetings where reasons are made public. Any citizen of this country can request information under the Access to Information Act and if this information, or part of it, is refused, the government has to give the reason.

Yet in the Parliament of Canada, in the House of Commons, a member is not entitled to know why his bill or motion is not votable.

This bill addresses something of importance to millions of Canadians throughout the entire country and I cannot be told why it has been declared non-votable. One of my primary roles is that of legislator.

This tool available to members, private members' business, is vitally important. Yet when my bill is blocked and no reason is given, my privileges as a legislator are being attacked. If we are not to be told why it is held up, how can we move a bill ahead? This is where I deem that my privilege as a parliamentarian has been breached.

This past weekend, I read several reports of previous rulings, and came to realize that this is a very particular and very difficult question.

In what I hope is the very unlikely event that you should decide this is not a matter of privilege, I would like to also, with your leave, raise a point of order.

According to the standing orders, private members business is to be determined as votable or non-votable based on merit and not on the number of supporters. In order to determine this merit, the Standing Committee on Procedure and House Affairs, as well as its Subcommittee on Private Members' Business, have set certain criteria. These were amended in 1999 with the 70th report of the standing committee, tabled in the House on April 20.

Let me quote from the December 11, 2001 evidence of the Standing Committee on Procedure and House Affairs. It states:

We have the criteria and when I design a bill or motion and have it drafted, I try to have it meet those criteria. Then you find out that the subcommittee on votable items doesn't like it, so they don't support making it votable. To me, if you're going to have criteria, everything that meets the criteria should be votable, or why bother the hell having criteria?

What I sense is that the subcommittee, of which I am part, despite its claims to the contrary, ends up passing judgment on whether the motion or bill that has gone through the lottery, if you're lucky enough to have your name drawn, meets our standards of being worthy of a vote or not. And therein lies the problem. If it meets the criteria, however many criteria there are, it should be votable.

I don't see how you can have it one way or the other. You either throw out the criteria and say this silent group of people is going to be judge, jury and executioner of all private members’ business--because that is what is happening now--or you have criteria and make everything votable if it meets the criteria.

Those were the words of the hon. member for Prince George--Peace River.

My first procedural point of order is whether or not the subcommittee is adhering to the criteria set by the standing committee. In recent times the standing committee has taken to accept without question, in camera and without explanation the decisions of the subcommittee. If the standing committee does not verify that the criteria are properly applied, who does?

Would this fall under the gambit of Standing Order 1? Would the matters I have raised under the question of privilege for that matter also fall under the same gambit?

My second point, and I am concluding with it, is about the way the subcommittee reaches its decisions by consensus, which is rapidly becoming by unanimity. A review of the standing committee's discussions on the matter of private members' business in the fall of 2001 seems to indicate that this is becoming a preoccupation. Yet this practice is not well defined and could lead to problematic situations such as the subcommittee has experienced lately. We all know the power contained in the necessity of unanimity. I think this has to be addressed.

Finally, I do not have any antipathy toward members of the subcommittee. I believe they are caught in a rather awkward situation. I hope that this can be addressed because I now understand firsthand some of the frustrations other members have experienced. I think the system we have for private members' business must be corrected. The way we do it now can lead only to more and more frustration and lack of respect for members of the House.

[Garry Breitkreuz, Canadian Alliance, Yorkton—Melville, SK]

Mr. Speaker, I will speak to the issue as well. I support my colleague's contention that he is being hampered in his ability to do his job as a member of parliament. I will not speak to the specific matter that has been drawn as part of his bill. Rather, I will speak to the general problem that needs to be addressed. It is a serious problem. It is of major concern to members of the House so we cannot sweep it under the rug.

Mr. Speaker, I will point out a few statistics for your enlightenment. Some 235 bills introduced by members of all political parties have not made it past third reading. Of all the bills that have been introduced only two private member's bills or motions have made it to a vote at second reading. That is less than 1%. We have had 376 motions introduced. Only four have been adopted. That is just over 1%. The two bills that made it to committee stage from the 36th parliament were killed in committee by the Liberal majorities on the committees.

We have had over 150 hours of debate in the House during this parliament for consideration of private members' business. If we were to take the House budget and divide it by the approximate 1,000 hours we spend here every year it would show we had spent $45 million on private members' business. That is a fair assessment. I do not know if the figure is precise but we know we are spending millions of dollars. The money is being wasted because bills and motions are not deemed votable.

Mr. Speaker, perhaps you can give us some advice. The House passed a motion last June advising the Standing Committee on Procedure and House Affairs to bring back a recommendation to make all private members' business votable. In December 2001 when we were ready to dot the i's and cross the t's the government decided all of a sudden it could not do it. That was way back in December. It was supposed to be done this April. The recommendation was supposed to come to the House and it did not.

Mr. Speaker, we did a survey in which you probably participated. Most MPs want all items drawn on private members' business to be made votable. The procedure can be worked out. As we have seen today, member after member has been rising in the House because they are extremely frustrated with the system. It obviously does not work. We need to fix it.

Mr. Speaker, I do not know if it is obvious to you, but the Liberals across the way are trying to avoid controversial issues like the one raised by the hon. member by not deeming them votable. That is not right. We should not allow it to continue.

In conclusion, many MPs in the House have excellent ideas. They should be allowed to bring them forward. This strikes at the heart of what my hon. colleague has raised. By not allowing issues to be votable the government limits the ability of MPs to be effective because we cannot bring issues to the House and have them resolved.

Canadians want issues brought to the House for proper debate. They want to do this through their members. The way the system is set up they cannot. The hon. member has explained this quite well. The system must change. Canadians' perception of what we do in parliament could be enhanced if we began allowing all private members' business to be votable.

Mr. Speaker, I know you cannot direct the committee to do this, that or the other thing. However I appeal to you to intervene in some way to make sure the issue is resolved.

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I will say a brief word I hope will be encouraging to members of parliament who have the kinds of concerns that have been expressed by the hon. member for Ottawa--Vanier.

This subject matter has expressed itself in frustration on all sides of the House of Commons. I think there is a general desire in the House to find a better way of dealing with these matters and determining how private members' business proceeds through the House and ultimately does or does not come to a vote. I suspect the matter does not fall precisely within the definition of a question of privilege but it is a genuine expression of concern that begs for a solution.

It is my understanding that the committee, in this case the Standing Committee on Procedure and House Affairs, is prepared to examine yet again possible solutions to the matter.

Among the House leaders there have been preliminary discussions and some understanding that at an early meeting we will turn our attention to the matter to see if we can find a better way to deal with these types of proceedings so individual private members can feel a higher degree of satisfaction that their issues as expressed in bills, motions and so forth are properly addressed by the House and in a timely manner.

That does not specifically speak to the procedural point about privilege but I hope it indicates a clear willingness on the part of all of us to find a better way to deal with the matters that have been raised today by the hon. member for Ottawa--Vanier.

[The Speaker]

The Chair will happily take this matter under advisement, and I do appreciate the advice that has been offered by members on this important issue.

The suggestion is that somehow I might have expressed my view in answer to a questionnaire or somehow might want to urge changes in the rules that would go one way or the other with respect to private members' business.

Of course the Chair is the servant of the House. I can only stress that and I cannot stress it too forcefully, and any opinion I might have had in the old days is irrelevant now. I was a member for many years of the procedure and House affairs committee and participated in discussions that led to some of the rules that are now being discussed in this question of privilege. I was part of it. I had opinions then but I do not any more.

I can only assure hon. members that I will do my very best to examine the point of order or the question of privilege, the alternative question of privilege, that has been raised by the hon. member for Ottawa--Vanier.

I appreciate the comments made by other hon. members and I thank them. I will get back to the House regarding this issue.

I also appreciate the fact that the leader of the government in the House suggested that an attempt may be made to find another way of solving these issues. I hope that House leaders, perhaps with the participation of the whips, and particularly the chief opposition whip, who submitted ideas to this effect today, can work together to find another way of doing things. This might help all members of parliament in their work.

I thank the hon. members for their submissions. I will get back to the House to decide whether this is in fact a question of privilege. Whether I can be of great assistance in the matter I am not sure, but I will certainly examine all the issues that have been raised and reported.

The House resumed consideration of the motion.

Supply

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, I believe that you would find unanimous consent of the House for the following motion:

That at the conclusion of today's debate on the Bloc Quebecois' motion, if a recorded division is requested on that motion, that it be deferred to Tuesday, March 19, 2002, at the end of government orders.

[The Speaker]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

Motion agreed to

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, it is not the first time the Bloc Quebecois speaks up in the House against the dysfunction of Canadian federalism and its negative impact on the provinces.

Since coming here in 1993 we have intervened regularly to show that the line of conduct followed by the liberal government is pushing provinces, especially Quebec, to the limit. Wrongfully, some people resented our position and accused us of politicizing the issue. They know better today because our point of view on the dysfunction of the federative system in Canada is shared by the conference board, an independent non-Quebec organization that cannot be accused of being a natural partisan of ours.

Even if the government refuses to face reality, the Commission on Fiscal Imbalance chaired by Yves Séguin, a former liberal MP, describes very well the problem between the central government and the provinces. It comes to the same conclusions as us, namely that the money is in Ottawa while the needs are in Quebec as well as the other provinces.

Mr. Speaker, I will be sharing my time with the member for Argenteuil--Papineau--Mirabel.

By refusing to face reality, this government is only looking for a fight. Obviously, it is not with this kind of attitude that it will be possible to find solutions.

On what planet are the Prime Minister, his Minister of Finance and his Minister of Intergovernmental Affairs living, when they repeat constantly that there is no fiscal imbalance?

The Séguin commission was praised by all the analysts for the high quality of its work. In Quebec City, the three parties unanimously agree with its findings, which lay the foundations for a fundamental debate on the future of the Canadian federation.

Our fellow citizens know now that the status quo cannot continue. They are the ones who are paying for the inappropriate sharing of tax resources. In Quebec, seven out of ten people believe there is a fiscal imbalance. It is obvious that there are problems in tax resource sharing and that the way this government is proceeding does not correspond to the needs.

How can this Liberal government and its ministers justify the fact that the provinces are literally collapsing under the burden of health expenses while their government is raking in surpluses in Ottawa?

The Séguin commission tried to determine if this was a structural or an economic phenomenon. In the past several years, the provinces have been reacting to the arbitrary nature of the federal transfer program on which they depend to balance their budgets. The program is so arbitrary that the federal government changes the rules as it sees fit.

Must I remind the House of the words of the current Prime Minister who, in 1999, showed how arbitrary his government was in determining transfer amounts? He said, “There are mornings when I want to give them money and then, the next morning, I say no. We will see at the time of the budget”. This was in La Presse on January 16, 1999.

This statement clearly shows that the federal government has total discretion in determining the amounts provided to the provinces, an arbitrary discretion that goes against the very principle of the federation.

The arbitrary nature of the Canada health and social transfer and the federal government's withdrawal, in addition to the enormous surpluses past and future, will maintain Quebec and the other provinces in an uncertain financial situation. The provincial governments will continue to have a very hard time making ends meet and providing health care services, among other things.

The finance minister can say that the provinces are receiving lots of funds through the Canada health and social transfer and the equalization program, but the Séguin report shows that these programs are flawed.

Not surprisingly, prominent government members think that fiscal imbalance is a myth. They are the ones who have assumed the right to spend in areas that are not within their jurisdiction. It is annoying to see how much energy they spend denying the fact that the fiscal imbalance has been growing over the last decade; it is indecent for them to refuse all our proposals for rectifying the situation; it is unconscionable that they would say that provinces have problems because they lowered income tax too much. It is ludicrous.

The government would do well to read the report of the Séguin commission. The arguments it uses to deny the fiscal imbalance are rebutted in that document one after the other. The arguments of the Minister of Finance are said to be unconvincing, since they do not recognize the existence or the size of the fiscal imbalance, which is detrimental to provinces.

The situation has been going on since the mid-nineties when the federal government intensified its cuts in social transfers to the provinces. The government then acted drastically without taking into account their impacts on social, health and education programs. Its investment went from 18¢ to 14¢.

Between 1994 and 2002, the government pulled out. Its share of expenditures for health, education and social services went from 18.1% to 14.1%. I want to stress that its contribution was 23% in 1984-85.

In so doing the Liberal government gave itself some leeway it is using to interfere in areas of provincial jurisdiction. It gradually changed the rules for cost sharing. Thus we went from a system where both levels of government were sharing the costs and risks to a block funding system in which it controls the funding parameters as it pleases.

The governments's withdrawal from its funding responsibilities for health, post-secondary education and income security is a key element of the fiscal imbalance. The drastic cuts enabled the federal government to improve its own fiscal health at the expense of the provinces.

In Quebec alone changes to the Canada social transfer deprived the province of $4.7 billion in revenues just for fiscal 2001-02. Because of that, the impact of federal cuts has been more pronounced in Quebec than in the rest of Canada.

The conclusion is obvious: the federal government has reduced the ability of provinces, particularly that of Quebec, to efficiently deliver services in areas under their jurisdiction. The federal government's backing out is one of the direct causes of the fiscal imbalance.

I am compelled to say that in many cases taxpayers do not know anymore which level of government is responsible for services. The federal government has no qualm about encroaching on areas under provincial jurisdiction, thus creating useless and harmful duplication.

In conclusion, there are ways to rectify the situation and achieve a better distribution of resources. The Bloc Quebecois, in its customary fashion, has put forward solutions to reduce this imbalance without plunging the federal government back into a deficit situation.

At the very least, as we have always asked for, transfers to the provinces should be restored to the 1994-95 levels. It is a short term and very imperfect solution though.

As Quebec has never stopped asking for, the federal government must withdraw from areas under provincial jurisdiction and provide fiscal or monetary compensation.

I know we have a long way to go. This government does not seem to be willing to solve the fiscal imbalance. It is more interested in pursuing its own goals, namely to be interventionist and centralizing instead of meeting the needs of Quebec and the Canadian provinces.

The emergency is real. Quebec society, whose fiscal and economic autonomy is being stifled by the federal government, must rise and fight to avoid being asphyxiated.

The federal government's attitude is one more reason to maintain that Quebec will only truly come into its own when it has achieved sovereignty.

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

Mr. Speaker, I thank the hon. member for Drummond for her very well structured speech.

I should like to ask her the following question: what are, in her opinion, the consequences of this imbalance? She spoke about it, but I would like to hear her elaborate further on this fiscal imbalance as it pertains to areas of jurisdiction that are clearly provincial, such as health care, education and assistance to the most disadvantaged.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, the Bloc Quebecois has been saying for a long time that this fiscal imbalance is hurting the provinces because of the reduction in transfers to the provinces. It stems from there.

The first thing the government did in 1994-95 was to cut drastically the Canada health and social transfer. We know this transfer allows the provinces to provide services, since they are responsible for managing the services that are offered to the public. In Quebec, it is the national assembly that manages health care and education, as well as social services.

The federal government has slashed the Canada nealth and social transfer since 1993-94. And it is no joke: it has gone down from 20¢ to 14¢. It does not make any sense.

There is a lot of talk these days about the aging population, about expensive new technologies and expensive drugs. The needs are increasing in the provinces. The federal government has the responsibility to support the provinces through the Canada social transfer. Now is not the time to slash transfers, especially in light of the fact that the federal government has been closing its books at the end of each fiscal year with billions of dollars in surplus that come from personal income tax, the GST and other taxes. The new airport security tax that has just been introduced will come into effect on April 1. Not only will it pay for the measures that will be put in place, but it will generate more revenues.

The federal government takes all that in and ends up with a $17 billion surplus, while the provinces are struggling to maintain existing social programs. The federal government, whose mandate is to reapportion the tax base, does not care about that. It even laughs in the face of the provinces and, to have a foot in the door, it offers them little goodies.

That is why it established the Canada Millennium Scholarship Foundation. It is a way for this centralizing government to get what it wants, which is to take away the provinces' jurisdictions. That is what it wants even though it plays us for fools and thinks that we do not know what it is up to. It wants to have control over everything and uses all possible means to get it; it is starving the provinces. This is also what is behind the social union. It is a good thing that Quebec did not ratify it. We can see today what the government is doing with that.

We heard that the provinces were selling their birthright for a dime. This government has forced the provinces to sell their jurisdictions. That is what is meant by fiscal imbalance.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, it is my pleasure to take part in the debate. First, I wish to congratulate my collegue, the member for Drummond and one of our finance critics, for her excellent speech on the fiscal imbalance and, among other things, on the Séguin commission and its report.

I am particularly glad to speak to all Quebecers who are listening today and, at the same time, to give information to Canadians. In a previous life, I was president of the Union des municipalités du Québec.Today, I want all Quebecers, all mayors, all councillors, all school trustees from Quebec to remember.

Canada, the federation we know, operates in a way that makes it hard for its citizens to find their way around the complex issue of taxation. The federal government collects its own taxes: the personal and corporate income taxes, the GST and the excise tax on gas; the province does the same thing and collects personal income taxes, corporate taxes, QST and excise tax on gas; the municipalities, as we all know, collect the property tax from the landowners. People also see their rent go up when taxes are increased. The school boards also collect the school taxes.

In this morass of taxes, it is hard for people to find their way about and understand the impact that it has. There is one thing I want to tell the House today: remember 1994. My colleagues explained it clearly, 1994 was the beginning of federal cuts in transfers to the provinces. This is clear. No one in this House can question that health and social transfers fell from 18%, or 18¢ per dollar spent, to 14% between 1994 and 2002.

This is a reality, and all those who had to administer budgets in the province of Quebec had to deal with the aftereffects. We cannot forget that school boards and municipalities are created by the Government of Quebec. They are the ones that must provide services to Quebecers.

All too often, we forget that the water that flows from our tap, residential garbage, wastewater, sidewalk and street maintenance, public transit, all of these responsibilities come under municipal governments. These powers were delegated to the municipalities. For example, when it comes to public safety, some municipalities have their own police forces, others use the Sûreté du Québec. These powers are delegated by the province to municipalities and school boards.

In 1994, mayors and city counsellors had to deal with the infamous Ryan reform, which resulted in a $200 million fiscal burden being transferred annually to the municipalities. They had to live with that and either cut services or raise taxes.

When we try to find our way through the complexities of the taxation system in Canada, we realize that the transfers from the province of Quebec to the municipalities were tied directly to cuts in federal transfer payments to the provinces for social programs, health care and education. To try to make up for the loss, the provinces had to rely on their creatures, the municipalities and school boards.

I pleased to be able to explain that today, and demonstrate to my former colleagues who are still mayors or city councillors that it is all too easy today for municipalities to negotiate with the federal government agreements on infrastructure. The federal government is trying to make up for its errors by bypassing the provinces.

It has decided to negotiate programs directly with the municipalities. Before this year, these tripartite programs were negotiated with the provinces. But from now on, with the infrastructure fund, the federal government will deal directly with the municipalities.

That is the reality. Once again, it is trying to make people forget about the fiscal quagmire in the Canadian federation. The federal government does not give back to each province the fair share it deserves. That fair share was demanded by all premiers and provincial finance ministers.

At recent meetings, the premiers and the provincial finance ministers unanimously called on the federal government to increase its contribution to health care, among other things, to the 1994 level, that is from 14% to 18%, or from 14¢ to 18¢.

This is an unanimous request made by the premiers and the finance ministers, despite the fact that an agreement was signed in 2000 by the provincial premiers. Of course, this solution is the lesser of two evils. Instead to getting nothing, they sign an agreement. An agreement was signed, but immediately afterwards, there was a meeting of the premiers and the finance ministers, where they asked that the federal government review its contribution through provincial transfers. This is the harsh reality of the Canadian federal system. This is what councillors, mayors and school commissioners must understand when the federal government does not transfer its fair share of health related costs.

Earlier, the Parliamentary Secretary to the Minister of Finance gave us the following answer when we asked him what he believed the federal contribution was. Let us remind the House that, in 1977, there was a federal-provincial agreement and tax points were transferred, that is, the federal government did not get into a specific tax field to allow the provinces to get into it. He was asked what the federal contribution in health care was in 2002. He replied that it was between 30% and 33%, or 30¢ and 33¢. That is what he said. This is the reality.

We are at 14¢, as the provincial premiers said. Of course, the federal government is getting into another field of taxation that it had agreed not to get into. This is virtual money. When you do not get into a field of taxation, you leave it to someone else. The fact still remains that there is fiscal imbalance. When the federal government says, and the parliamentary secretary tells us that he himself believes that the contribution is between 30¢ and 33¢, this is a hard reality. There is still 17¢ missing to achieve parity and for the federal government to contribute half of the expenses in health, education and social transfers.

In the meantime, if it does not happen, if this transfer does not happen, the pressure from the provinces will come to bear on municipalities and school boards. The federal government will then tend to try to bypass the provinces and try to deal directly with mayors and town councillors to score political points. This is why I am calling on my former colleagues the mayors and town councillors.

Do not fall for it. Our people, our constituents, Quebecers will not have increased health services if the federal government works out agreements with the cities to solve certain infrastructure problems or issues. This is not the way to go. The federal government must pay its fair share. This is a fact.

If ever it does pay its fair share, the astronomical $17 billion surplus in 2000-01 will dwindle to over nine billion in 2001-02. In spite of the repeated demands by the Bloc Quebecois, the Minister of Finance will not make an announcement. He wants to wait and see. We know it will be over nine billion dollars.

In the meantime, the federal government is accumulating surpluses and the parliamentary secretary even dared tell the provinces “You just have to raise your taxes. We are not responsible if you are unable to pay for health care costs”. This is the harsh reality.

We live in a federal system where the federal government decides on its own how much it will give the provinces. It unilaterally decides to transfer money. It does it when it sees fit, but mostly when it can score political points. Right now, it will not play politics trying to help the provinces deal with the health care issue. It is too expensive. It is trying to score political points by dealing directly with municipalities, those with big infrastructure programs or just by increasing—it is essentially what the minister of Finance said in his last budget speech—doubling health research.

They are doubling health research but they will not double their funding of health care costs. They will do more research but they will not invest in order for people to benefit from the results of this research. What is costly is not so much to do research but to pass on the results of the research to individual Quebecers to improve their health. The federal system does not allow that. As it stands today, the Liberal government is not thinking about Quebecers. It is thinking about scoring political points.

[John McCallum, Liberal, Secretary of State (International Financial Institutions)]

Mr. Speaker, I appreciate the opportunity to speak to the Bloc motion.

First let me say that the federal government denies the existence of any fiscal imbalance in Canada. Such a thing does not exist. It is a myth.

Hon. members opposite from time to time trot out these new studies purporting to show that there is this fiscal disequilibrium. The Séguin report is just one in a long list of such studies. More often than not, when subjected to analysis and put under the microscope, they are found to be unrealistic and unreliable.

For example, the authors of this report claim that the imbalance will generate a $90 billion federal surplus in 2019-20. Naturally, this is ludicrous.

Conclusions based on such projections are not reliable. Let us be realistic. As I said in the House a few days ago, it is difficult to make two year forecasts and almost impossible to make five year forecasts; forecasting twenty years down the road is therefore ridiculous and pointless.

The Séguin commission's long term projections are a purely hypothetical exercise. Moreover the assumptions are inappropriate and unrealistic. There is an assumption that over a 20 year period there has been no recession. Now I know we have been doing better recently but to assume that over a 20 year period there has been no recession is not realistic.

It assumes there were no tax cuts over 20 years. We just had our $100 billion tax cut a year or two ago. It is not as if we stopped. It assumes there has not been one new government program. I do not think agreement will be found on that among most of the ministers around the cabinet table.

Another example concerning the uselessness of 20 year projections comes from the United States.

The United States government, which used to publish long-term economic and fiscal projections, started phasing these out in its last budget.

The reason given for the U.S. recent decision to abandon these long-term projections was that the events of the last year underscored the difficulty of making reliable budget estimates even one year ahead. No one knew what types of economic or political shocks would arise in the future. The government of the United States is agreeing with the proposition that projections of two years are difficult, five years very difficult and 20 years I would say, literally impossible.

If federal surpluses like those projected in the Conference Board of Canada report do materialize the federal government would be happy to undertake further tax reductions or increase spending in support of those programs that are most important to Canadians. It is not as if the government is going to sit there for 20 years and do absolutely nothing in terms of tax cuts or expenditure initiatives and watch on the sidelines as the surplus rises to $90 billion per year.

The report also predicts that Quebec will be in deficit next year.

However, Quebec finance minister Pauline Marois rejected the commission's projections, saying that the province's budgets would be balanced in a foreseeable future. So, even the Quebec minister disagrees with her commission.

Finally, the minister is now preparing an economic statement and budget update to support her theory. She herself does not believe in the projections of the Conference Board of Canada.

More important, I must take issue with the opposition's definition of fiscal imbalance itself. The reality is that a fiscal imbalance cannot exist since federal and provincial governments have access to a wide range of revenue sources and are free to set their own fiscal and budgetary priorities. Provincial governments, like the federal government, are free to set tax rates consistent with their responsibilities. In most federations the provinces or states do not have nearly such wide taxing powers.

Provinces have access to the same major tax bases as the federal government does, including personal and corporate income tax as well as sales and payroll taxes. Provinces have access to some tax bases which we do not, such as gaming and liquor profits, property taxes and resource royalties. Some of these are growing very rapidly. Provincial revenues last year from the combination of liquor and gaming levies, property taxes and resource royalties were $27.4 billion compared to just $10 billion in 1990. Those provincial revenue sources, which the federal government does not even have, have enjoyed rapid growth in recent years. That is an annual average growth rate of 10%. On the other hand the few federal-only revenue bases are small and volatile.

For example, because of the liberalization of trade, import duties have decreased substantially, from more than $4 billion at the beginning of the 1990s to less than $3 billion today.

The Séguin report implies that federal revenues will grow faster than provincial-owned source revenues but the report from the Conference Board of Canada, used by the Séguin commission, predicts otherwise.

According to the study, Quebec's revenues will increase at an average annual rate of 3.2% over the next 20 years, which is exactly the same rate federal revenues are expected to increase.

Quebec's assumption concerning the higher increase in federal revenues is based on the fact that personal income tax is one the fastest growing revenue source and that a large part of such revenues are collected by the federal government.

However the situation is changing. Recent federal tax cuts and the full indexation of the personal income tax system will reduce the future growth of federal and personal income tax revenues. There will be continuing international pressure to reduce taxes to improve Canada's growth prospects. This will be particularly acute for the federal government because only the federal government can provide income tax relief for all Canadians, not just those in a few more affluent provinces. Moreover provinces claim that the perceived imbalance is rooted in rapidly growing health care costs.

Despite assuming an average growth rate of almost five per cent for health care spending, Conference Board of Canada projections show that government revenues and program spending will grow at the same rate for both the Quebec government and the federal government.

How does this evidence support the notion of a fiscal imbalance? The answer is that it does not. We do not need to look to growth projections in estimates of future surpluses to see that there is no fiscal imbalance.

It is just that for over two decades, provincial revenues have been higher, and substantially so, than federal revenues, a trend that will continue for the foreseeable future.

On top of this, federal cash transfers to the provinces are expected to increase more than three times faster than the growth in federal revenues over the next five years. These funds are available to provinces to use as they see fit on health care, post-secondary education, social programs and early childhood development. The federal government faces a much bigger debt burden than the provinces, almost double that of the provinces on average.

In fact, in the last fiscal year, the federal government has paid $42.1 billion in interests, compared to the debt charges paid by the provinces, which totalled $22.4 billion.

It is an enormous cost that makes us more vulnerable than the provinces to the volatility of interest rates worldwide.

Moreover, it reduces the federal government's fiscal room to manoeuvre when managing its own responsibilities and pressures, pressures which are not inconsiderable.

There is no doubt that health care and education represent major challenges for the provinces but the same is true for the federal government. Almost 70% of all the new federal spending initiatives we have undertaken since balancing the books have been in the areas of health care, education and innovation.

In support of the historic agreements reached by first ministers in September 2000 on health care renewal and early childhood development, $23.4 billion in increased funding is being provided to provinces and territories over five years. That is a huge new spending initiative and undoubtedly one of the largest in Canadian history. The sum of $21.1 billion of this investment is for the Canada health and social transfer, CHST, and $2.3 billion is for targeted investments in medical equipment, primary care reform and new health information technologies.

This investment will lead to innovations in health care, increase the number of doctors and nurses, provide new MRI machines and other medical equipment, and enhance the use of technology to improve the care Canadians receive.

This is one of the largest single expenditures by any Canadian government in the country's history and it will bring federal transfers to record highs, starting this year.

Clearly the quality of social programs is not being jeopardized by the government's actions, quite the contrary. Provinces are receiving $2.8 billion more in CHST cash this year, bringing CHST cash to $18.3 billion. Next year the increase rises to $3.6 billion. These amounts keep growing. By 2005-06, CHST cash will reach $21 billion, which is $5.5 billion or a 35% increase over the levels of 2000-01.

While the CHST is at its highest level ever, the Quebec government would have us believe that this program should be abolished in favour of a transfer of GST revenues to the provinces. More generally, in 2001-02, total transfers to Quebec, that is CHST and equalization, were almost $12.4 billion. That is about 25% of Quebec's total estimated revenues.

Moreover, the transfers are expected to total about $1,670 per person, about 16% above the national average. The province wants to trade CHST cash for GST revenues, a scenario in which Ontario would receive 22% more per capita than Quebec. The less wealthy provinces would receive even less than Quebec.

What we are talking about today is the essential issue of fairness that lies at the very heart of our federation.

First, the CHST and equalization programs were conceived with fairness in mind, a fairness that could never be achieved through the transfer of tax points, whether GST or personal income tax.

Second, only the federal government can provide income tax relief for all Canadians, not just those in a few more affluent provinces.

Third, there is another issue at stake here. Just last Thursday our Bloc colleagues issued a press release stating that they believed the Séguin commission's recommendations should be phased in according to a five year plan. While Mr. Séguin himself suggested that his recommendations be implemented without the federal government returning to deficit, the plan advertised by the Bloc Quebecois in its press release last week would, according to the conference board's own numbers, return us to a deficit of some $6 billion in 2006-07.

This plan does not take into account the great influence that the federal government's financial situation has on interest rates in Canada. Canadians, as well as the provinces, have benefited from lower interest rates resulting from the federal government's sound financial management.

The Bloc program would put us back into a big deficit and that would jeopardize the low interest rates which have become so important for the Canadian economy. Our economy is beginning to recover from the global economic slowdown. This recovery is being fueled by consumer demand, demand enhanced by low interest rates and tax cuts, which would not have been possible without healthy federal financing.

The plan supported by the Bloc would put our financial situation back into jeopardy. After the sacrifices they have made, Canadians will not tolerate the federal government going back into deficit. The struggle to restore fiscal integrity was just too long and too hard fought. I might say for my colleagues on this side of the House that they will not want to go back into deficit either because I have noticed that Liberal members of parliament are more against going back into deficit than are bank economists.

There will be unanimity on this side in terms of not going back into deficit and that is why the plan of the Bloc Quebecois, which would put us back into deficit within a few years, is so utterly and totally irresponsible. Certainly that is reason enough for me to vote against it.

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

Mr. Speaker, listening to the member, it is hard to believe that he trained as an economist and worked as one for the Royal Bank.

His analyses are unbelievably misleading, and contain major errors that would be unworthy even of a first year economics student at a CEGEP. It was not for nothing that he used to be an economic advisor to the Minister of Finance, one of the five or six economists consulted each year, who were out by 173% in what they told the Minister of Finance the surplus would be. What I have heard is unbelievable.

Does he know anything about trend analysis? This is what the Conference Board did. It did not take real surpluses and make projections. It gave the federal system every chance, saying: “Now, we will take the worst-case scenario”. Do you know what the worst-case scenario is? It is what the Minister of Finance forecast as a surplus for the first three years in his December budget. These are forecasts that were no good but the conference board took him at his word and said “This is how we will do it. We will even take away from the federal government the entire EI surplus”.

The conference board thought that the federal government would perhaps accept the chief actuary's recommendations that the surplus be eliminated by lowering premiums to $1.70. Their projections were based on overestimated expenditures, and underestimated revenues which have climbed to $90 billion in 20 years of federal government leeway, while every year the provinces are in the red. This is trend analysis—they are not real figures—it is a trend. If real figures had been used, it would have been much worse than $90 billion after 20 years.

The secretary of state says that analyses based on one year are good; under a year, even better; two years, risky; and, after three years, no good. I have just one question for him, but there are two parts to it. Two weeks from now, on March 31, at the end of the fiscal year, what will the federal government's surplus stand at?

Does he think it is right that in December, therefore, three months ago—these are accurate forecasts at three months, less risky—the Minister of Finance, whose forecasts are out an average of 173% every year and who is getting ready to make one that is out 500% this year, forecast a surplus of $1.5 billion for March 31? Is this reliable?

[John McCallum, Liberal, Markham, ON]

Mr. Speaker, what I said is that two-year forecasts are hard to make, five year forecasts nearly impossible, and 20 year forecasts, ludicrous. That is why the Liberal government has decided not to make five year forecasts anymore, since huge errors were made in the past. The federal government made a decision to plan over two years instead of five. So, this is in keeping with what I just said.

I would like to add that the hon. member from the Bloc is perhaps the only persons in all of Canada to predict huge surpluses. I think it has to be one of two things: either the Bloc member is wrong and has no credibility whatsoever, or he is the most brilliant economist in the world. In that case, he should leave politics and start his own business, because his very valid forecasts would make him an instant millionaire.

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

Mr. Speaker, tit for tat. If the member is no longer with the Royal Bank, if he was fired, it may be because he could not come up with any reasonable forecast. Let me put the question to him again.

If one year forecasts are reliable and two year forecasts are risky, then three month forecasts must be quite reliable. What does the member think about the surplus forecast for the year ending March 31, which the finance minister made last December? Three months ago, the minister estimated these surpluses at $1.5 billion, but the facts do not bear this out. Let me tell you what the reality is, not that I am a genius, but I can do the math. I take a calculator and I figure it out. For five years now, we on this side of the House have consistently not been wrong. Our forecasts are now being used by large institutions. Institutions not only from Quebec but from all over Canada call us to find out what the federal surpluses will be this year and next year.

Let me tell you what the reality is. Even with tax cuts, the security measures announced last December and the tax instalment payments deferred for six months, there will still be a $9 billion surplus come March 31 of this year.

[An hon. member]

At least.

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

At the very minimum. Let me again put my question to the brilliant former economist of the Royal Bank who advised the finance minister very poorly based on forecasts that were off by 173%.

Does the hon. member find reasonable the $1.5 billion surplus the finance minister forecast three months ago for the period ending in a few days? Is it accurate? It must be very reliable, since he just said that forecasts for under a year are quite reliable.

Are such forecasts reliable? Is this government reliable, having predicted three months ago that the surplus would stand at $1.5 billion? Please answer the question instead of uttering complete nonsense.

[The Deputy Speaker]

Before giving the floor to the secretary of state, I want to say that it is all right to disagree but I would ask members not to forget the Chair. It may be useful from time to time. Therefore, I ask you to address your remarks to the Chair. The secretary of state has the floor.