It is just unbelievable, as my colleague just said.
In a sense the government has just admitted that this is not a loan at all. It is not a loan to Bombardier. It is not a loan to Pratt & Whitney. It is not a loan to General Electric. It is an outright grant. At least the previous government was honest with what it called it. It called it a grant and there was no intention that it would ever be paid back.
We have seen millions of dollars of taxpayer money given away to these large corporations. Essentially the government tells us that the companies will give us research and development. We see that Bombardier is in a huge international subsidy war with Embraer of Brazil. The World Trade Organization has been very critical of the federal government for subsidizing Bombardier. The WTO said in its latest ruling that Canada had to stop. The federal government has not stopped this practice.
What happens? We recover the $3.3 billion from the provinces. The provinces have to go to their taxpayers and say that they have to up provincial taxes to get the money to give back to the federal government, money that the provinces thought was theirs and was spent on social programs over 10 years. Now the provinces have to raise provincial taxes or cut services. That is the option. It is as simple as that.
What will the federal government do with this money when it gets it? Hopefully it will be spent wisely. That is not always the record that we see in the House.
Taxpayers in Ontario and Manitoba will be asking, when they pay increased taxes, if the money will go to a hotel in Shawinigan, or motels, or arenas, or golf courses, or regional development programs that the auditor general criticizes routinely as essentially digging a hole in the ground and pouring the money in. That is the record.
Instead of these kinds of programs and state corporatism on which the government has been spending money, perhaps it should be looking at cutting income taxes and let people get ahead. That has not been their practice in the past.
It is really a matter of priority. We could take the confrontational approach that the government seems to be bent on with the current administration, the current Minister of Finance and I say the current Prime Minister because who knows how long that will last. Really what we need is a program, because Canadians deserve better than they are getting, an end to wasteful spending and a better co-operative approach with the provinces.
The federal government has made the mistake. I say let the federal government eat it and get on with matters.
When the Prime Minister says that we lose a few million dollars here and there, I do not think Canadians accept that. They would not want to see their taxes raised in those provinces or program spending cuts for health and education in order for the federal government to receive this money back and then waste it in that style.
As the premier of Manitoba has noted that the extra funding it received, which was calculated in error, was spent on hospitals, schools and roads.
What is the Liberal government doing on the other side of things? It has stashed $7 billion in off-book foundations, most of which is being invested, sitting in bank accounts not even being spent.
Some people suggested that the money was designed for the next election campaign. It could pull it out and use it as it wished during that time, $7 billion of which the auditor general has been critical as recently as the day before yesterday. In a speech in a Senate committee, the auditor general said that this was not acceptable accounting practices.
When the federal government gets the money back, what will it to do with it? The provinces received the money in error. We have seen that they have spent that money on hospitals and schools as opposed to the record of the Liberal government which has spent it on Swiss-style bank accounts with foundations and on patronage payments.
It is bad enough that the federal government has moved into social areas. I am just talking about the souring of relationships with the provinces and federal-provincial jurisdiction. If we take the confrontational approach, as the Prime Minister is basically saying we should, I suggest it will continue to sour relationships with the provinces, partly because the federal government does not have a very good record in this area. It moved over the past 30 years to take over a number of areas of provincial jurisdiction. It has muddied the water. It has even offered cost sharing programs that entice the provinces to accept some diminishment of provincial responsibilities in the jurisdictional area to get federal government money. It is like the proverbial carrot dangled in front of their noses.
Some of the areas that the federal government has moved into in the last few years that belong to the provinces are basically social areas clearly defined in the constitution as provincial areas such as health care, labour force training and education through such things as the millennium scholarship grants. We see more and more of this approach by the federal government through not minding the store in its own areas of jurisdiction and not doing the things it ought to, as was assigned to it over 100 years ago by the fathers of confederation.
Defence was an area that was clearly given to the federal government in the constitution. What has happened to monetary policy? What has happened to security and immigration? The government has messed up big time. In fact it has hardly paid any attention. If it paid any attention at all, it was to diminish the role of the defence department. Our armed forces are struggling to maintain even uniforms for use in desert conditions. My understanding is that they have them now though. They got the new uniforms just in time to come home. Is that not something? The defence department was cut back for years in the federal government's program of priorities.
What is it doing instead? It is muscling into provincial jurisdiction. It is none of its business. Why does it not pay attention to its own areas of jurisdiction? It does not have a good record there.
September 11 will show how weak the federal government has been in its own areas of jurisdiction such as security, immigration and refugees. I and my party say that the government should get back to the business that was assigned to it in the constitution by the Fathers of Confederation and stop meddling in provincial government affairs.
It seems to me that the approach the federal government is taking is one of confrontation. We believe that it should recognize that it was the main problem in the overpayment. It was a year after year miscalculation. Why does it not let it go, let the provinces solve their problems as best they can, get out of provincial areas of jurisdiction and really get back to what it should be doing?
Balancing the federal budget was done on the backs of the provinces. The Liberals already muddied the waters with the provinces. The federal government took $20 billion out of the provinces by way of transfers just to balance its own budget. We recognize it needed to balance the budget but why would it do it on the backs of the provinces and force them to accept many lesser amounts from the federal government? The provinces had to really scratch and cut in order to balance their books.
The federal government cut transfers to the provinces by $25 billion by the year 2000. What is happening? The federal government's budget was up with an increase in spending last year of almost 12%. About 2% of that happened because of increased security and defence spending.
The other 10% is just a Liberal increase, which has been so connected with this Liberal government over the last 30 years. It cannot resist increasing spending. With another $3.3 billion coming from the provinces, what is the government going to do with it? Probably it will just increase spending again.
The Canadian Alliance does not support this. We support a more co-operative approach with the provinces. Let us write this off as a mistake, correct the problem so it does not happen again and move on toward better provincial-federal relations.