Debates of June 6th, 2002

Supply

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Mr. Speaker, just as a way of keeping the debate lively, obviously it is not the Alliance's position to do as he suggested with health care. It is obviously the Alliance's position to respect the constitution as founded in 1867 and the fact that the delivery of health care services falls within provincial jurisdiction. That is certainly the way the federal government should be going.

On a small point in terms of health care, the federal government is not the sole funder of health research and I think the hon. member knows that. The Alberta Heritage Foundation for Medical Research has led the way in the country in terms of funding health research. It has certainly led the way far more than has the CIHR or the MRC before it. The hon. member should be aware of that.

I have one specific question for the member. He identified the fact that there was interest earned on the $3.3 billion. The government has indicated that it is opposed to the motion and will not vote for the motion. I assume that the government is intent on at least recouping some of the $3.3 billion. If it is more than $3.3 billion, is the government intent on recouping more than that amount?

In terms of the auditor general, I just have a comment. I do not think the government is fair in saying that the auditor general audited the books and therefore the fact that he or she did not find this is a way of relying on that person. The auditor general, as he well knows, looks at certain areas very specifically and should not be held to account for every item in every budget year. It is simply too much to expect the auditor general to do that.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, in the opinion of the member then, $3.3 billion is really not material enough for the auditor general or the Government of Canada to be concerned with. I do not agree with him.

I am pleased that the member finally agrees that 14% of Canada's health care costs is not the right number with regard to Canada's funding. He admitted that research funding is part of it. He ducked the question on the tax points. He ducked the aboriginal health issue and he is ducking everything else.

I do not speak on behalf of the Government of Canada. I am here as a member of parliament. In fact, I am a member of parliament from Ontario, a province that was the recipient of a $2.8 billion overpayment. Should I come here and say that because it is my province I will fight to make sure it can keep the money and the hell with the rest of Canada? No.

I believe in the principle that if an inadvertent error was made, that there was no intent, it was just a computer mistake that happened, we should seek to correct the situation as much as possible and put the parties back in the positions they would have been in had the error not occurred.

I also understand that when we are talking about this amount of money we cannot be draconian about it and say that we want the cheque today plus interest because it does affect the government's operations and cash flow requirements. That is why I am glad the government, upon verifying the numbers, was immediately in discussions with the affected provinces to work out the appropriate resolution. Keep in mind that if we were to write this off and say that the government blew it, too bad, it has to eat it, it would set a terrible precedent that would be a long term detriment to the federal government.

For those reasons, this member of parliament will be opposing the motion.

[Grant McNally, Canadian Alliance, Dewdney—Alouette, BC]

Mr. Speaker, I will be splitting my time with my colleague from Esquimalt--Juan de Fuca.

I want to begin my comments by refuting some of the things said by the previous speaker for the government side that my colleague was pointing out as well. We know that in this place our colleague from the government side who just spoke is able to bamboozle us with statistical analyses and rationalizations beyond the ability perhaps of any other person in this place. The bottom line is as is stated right in the motion. This is the entire issue and I will restate it for my colleague on the other side:

That, after overpaying at least $3.3 billion to several provinces as a result of its own accounting errors, this House calls upon the government to forgive any past revenue overpayments to the provinces since retroactively clawing back these revenues would severely affect the provinces' ability to pay for healthcare, education and social services.

The overpayments we are talking about are overpayments that are a direct result of the government's irresponsibility. My colleague can laugh and say what he likes but the fact is that these overpayments began in 1993. Let us have a quick history lesson.

If my memory serves me right, that is when the Liberal government took over and that is when these overpayments happened. The government is ultimately responsible for that. We have heard lots of rationalizations as to why the government should not be responsible for this and should download this back onto the provinces but the ultimate fact is that it is the federal government's responsibility. It is its error.

As we have seen in this place day after day, the government is losing the confidence not only of the House but of the people of Canada because of its mismanagement of taxpayers' dollars. We just finished a question period where we had many questions asked of the government about taxpayers' dollars going to agencies that placed ads for the government and then gave dollars to the Liberal Party of Canada on an ongoing basis. We know there are several police investigations.

I think back to 1997 when I was a new member here. I have used this example before. It is one that sticks with me because I think it highlights some of the problems that are going on with this other scandal with the Liberals. There was a rather small news story about an individual in Quebec who was a fundraiser for the Liberal Party at that time. He no longer is but at that time he was. His name is Pierre Corbeil.

Somehow he got hold of a list of individuals in Quebec that were receiving grants from the government, federal taxpayers' dollars. He was going to those individuals and asking them to donate cash dollars to the Liberal Party of Canada. They were told if they did not do so then their grants would be at risk. That individual was not only charged but he was convicted of influence peddling.

Since that time we have heard details over and over again of individuals who have been involved in these kinds of things. There have been other individuals charged and a few others convicted. The web is getting wider. Things are starting to unravel for the government in terms of its ability to have the confidence of the people.

To govern effectively one must have the trust of the people. I would submit that the government is quickly losing the trust of the people because of this mismanagement. It is not only because of mismanagement. The motion before us today simply highlights the mismanagement or incompetence of the government dealing with this particular issue sooner.

The bigger scandal of ad agencies getting government contracts and kicking back dollars to the Liberal Party went beyond mismanagement and incompetence. It went a level further. These are the kinds of things that disturb taxpayers. They disturb people who work hard and send their tax dollars to Ottawa only to seem them spent in these kinds of ways.

The government is intent on going after the provinces to get the $3.3 billion back. As others in this place have mentioned, that would have a dramatic effect on the provinces, on communities and on individuals in their everyday lives because the dollars have already been budgeted by the provinces for health care and education.

The federal government is already decreasing funding for health care and other priority areas. Why is that? Part of the reason is that it takes the hard earned tax dollars of Canadians and wastes or mismanages them on things like the Groupe Everest and Groupaction contracts. The dollars do not go to health care. They go to Liberal friends. That is unconscionable, and the government will be held to account for it.

How can the people of Canada trust the group on the other side of the House whose members tell them not to worry because they will take care of the overpayment and manage the issue? How can Canadians trust them when they say they will fix the contracting problems by looking at contracts to see if they need to be altered, changed or not given in the future? In many ways it is like the fox minding the chicken coop. These are the individuals who have been responsible for the administration of government since 1993, so how can they be trusted to handle taxpayer dollars responsibly? The case is gaining weight day by day as each new scandal rolls out on the government side.

In my province of British Columbia the softwood lumber issue is huge. My hon. colleague from Vancouver Island has been on the case for years. It has had a devastating impact on the economy of British Columbia. It is an issue the federal government has not paid enough attention to. With the provinces hurting already, the federal government's move to claw back the overpayments would magnify the impact on our communities.

In my own riding of Dewdney--Alouette there are many remanufacturers of lumber products who should not be included in the softwood lumber dispute. Even the international trade minister has said that. However they are, and they are losing their jobs because the government has not addressed the issue.

My hon. colleague from Edmonton mentioned that the government's contribution to health care has been declining. It is down to 14%. These kinds of actions have a direct effect on the people at home. There is one taxpayer, and the taxpayer is bearing the burden of the government's mismanagement and scandalous behaviour. It is hurting the taxpayer in a big way.

The Liberal caucus is divided on the issue. We know about the leadership issue which has been going on under wraps although it is now fully exposed. Some Liberal members will support the motion tonight and some will vote against it. We encourage the government to consider it thoughtfully and support it because it makes sense.

[Marlene Jennings, Liberal, Parliamentary Secretary to the Minister for International Cooperation]

Mr. Speaker, I would inform the hon. member on the other side that I will not be supporting the motion.

The premise of the motion is questionable, to say the least. According to its logic the government made an accounting error through what the opposition deems to have been mismanagement, and therefore the provinces should not be required to return the money.

Let us apply the same logic to other issues that have provoked acrimonious debate in the House such as the issue of contracts. The opposition has accused the government of mismanagement in awarding contracts. It has said there were unjustified payments. Are opposition members saying if that was the case and it was the government's fault then companies like Groupaction should not be required to return the money?

[Grant McNally, Canadian Alliance, Dewdney—Alouette, BC]

Mr. Speaker, it is a bit of an apples and oranges analogy. However there is another aspect to the contracts the government doles out that the hon. member did not mention: The dollars from some of them go back to the Liberal Party of Canada.

We saw in the last election that government grants are funnelled through a separate body, the Quebec Liberal Party, which decides which ones should be approved or not. It is unbelievable. Is the hon. member saying the provinces are involved in some kind of kickback to the Liberal Party? I certainly hope not. It is not true and she knows it. It is unbelievable.

The government is responsible for this error. It happened on its watch. It must take responsibility for it. The hon. member's colleague across the way said it was the previous auditor general's fault for not catching the error so the government should be absolved of responsibility. That is not right. It is absolutely false.

I appreciate that the hon. member said which way she will be voting on the motion tonight. Perhaps she will ask for repayment of the contracts that were given to Liberal friends in her home province of Quebec such as Groupaction and Groupe Everest. That would be great. We would appreciate it.

To my knowledge there has not been a police investigation into the overpayment motion we are talking about tonight. There have been police investigations into contracts given to friends of the government. When it is one or two we get alarmed and concerned, but when we cannot keep up with the list it is a sure sign the government can no longer be trusted to manage the hard earned tax dollars of the Canadian people.

[Marlene Jennings, Liberal, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I agree with the hon. member when he says there are police investigations. However the investigations were launched at the request of the auditor general who had conducted an external audit at the request of the then minister of public works.

This demonstrates the good faith of the government. As soon as there appeared to be problems with the contracts and the administration of the programs the government took action to get to the bottom line of what happened and why. The government has made a clear commitment that if there are administrative mistakes or weaknesses it will correct them. If there is evidence of criminal wrongdoing and the culprits are identified I have faith in the ability of our justice system and the RCMP to pursue the matter and call them to account.

However the hon. member's response does not answer the question I posed about the logic of the motion. If there is an overpayment as a result of a good faith error, and no one is suggesting there was not good faith--

[The Deputy Speaker]

The time has lapsed and the hon. member still has not begun his reply. I will give him no more than a minute to reply.

[Grant McNally, Canadian Alliance, Dewdney—Alouette, BC]

Mr. Speaker, I will be brief. In many ways I feel for the hon. member and her colleagues. They are perhaps not directly involved in the scandal but they are affected by it. They have been tarnished because of the actions of some.

I will refer to the point I made earlier about a convicted Liberal fundraiser named Pierre Corbeil. He somehow got a list of government grant agencies and went to them to persuade them to donate to the Liberal Party. Where did he get the list? How can that be defended? I believe it is the tip of the iceberg. It is a matter of trust. The Liberal government has lost the trust of the people.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure to speak to the motion my party has put forth.

Let us look at the facts. An overpayment of some $3.3 billion was given to the provinces. What is absolutely shocking about this is that it took years for the government to miss $3.3 billion of the taxpayer's money. What kind of accounting system allows such a massive amount of money to go missing or, as an hon. member from the other side has said, what kind of computer error? What kind of computers is the government using? What kind of programs is it using? What kind of auditing is it using to miss $3.3 billion of the Canadian taxpayer's money? This is not a few thousand dollars. In view of the need for money in critical programs like health care and education it is unbelievable that it took the government so long to miss it.

The federal government has the audacity to ask the provinces to repay the money when it cut transfer payments by 33%. How does it do that in good conscience, particularly in view of some of the things I will unveil in the next while? An overpayment of $3.3 billion, 33% of it in the form of transfer payments, is being yanked away from the provinces by the federal government. The government said it had to cut costs so it will cut 6% of its own funding and remove 33% from the provinces. What does that mean? It means the government is trying to balance its books on the backs of the provinces.

What the federal government has neglected to say is that, as my hon. colleague has mentioned, there is only one taxpayer. Only one person bears the brunt and the burden of the government's actions, good or bad, in terms of money: the hard-working Canadian who slogs, is overtaxed and often underpaid for the work he or she does. That is what is happening. It is a complete violation of the public trust.

Is it intentional? That is up for debate. Some of us would argue it is. However at the very least it demonstrates gross and utter incompetence on the part of the government in managing the public finances, one of the key roles of government. One of the questions the Canadian public will ask in any election is if a political party has the competence and professionalism to manage its finances and tax money adequately. The judgment is a resounding no, and the proof will bear it out.

At issue is not only the $3.3 billion that went “missing” and was suddenly discovered. Let us look at the government's creation of foundations. The public will be interested to know that since the late 1990s the Liberal government has shuttled away $7.3 billion of the taxpayer's money into arm's length foundations which I call slush funds. Some $7.3 billion of the taxpayer's money has been hidden away from public audits leaving parliament, MPs and the minister unable to oversee where it is spent.

Given that we are labouring under a $540 billion debt and have significant expenditures in health care, education, defence and other areas, why was this done? Why was $7.3 billion shuttled away to the side, put under a carpet and hidden from public audits and the jurisdiction and oversight of parliament? Why did that happen to the public purse? There is a case against the government in terms of its misspending, misrepresentation and its neglect, misuse, and abuse of the public trust.

Let us look at the distribution of contracts. The public would be shocked to know the Prime Minister's own riding of Shawinigan received more government handouts and contracts than entire provinces in western Canada. My province of British Columbia did not receive as much as one riding which happens to belong to the Prime Minister. Is it a coincidence? I think not.

Let us also look at the government's expenditures such as ads. We shockingly found out that the government had been charged 26 times the cost that was charged to the provincial government in Quebec for ads in a Quebec publication. Why did that happen? Why does the government feel that it can spend money in such a fashion? Where is the accountability and the oversight that allows individuals in the government to spend 26 times what they should for ads? That is an important question. Why did the government pay $1.6 million for three contracts with Groupaction, two of which were identical and neither of which the government received? How did that happen?

CIDA has aid money to be spent internationally, supposedly to help the poorest of the poor. Why is the vast majority of those moneys spent in Canada, never getting to the sharp edge of aid and care for those most impoverished? The Prime Minister has asked for more money for CIDA. Why do we not ask the question first: Is the money spent appropriately? Is it spent effectively? Why is it being spent in Canada instead of being spent in the most needy countries in the world?

Part of the reason this has been allowed to happen is that the Prime Minister's office and the Prime Minister have neutered parliament. The normal oversight mechanisms that we should have to access information are onerous, complex and difficult. Why does the government hide and white out critical pieces of information that allow members from all sides of the House to analyze the way in which the public's money is spent?

One of our key roles is to use the public's money wisely. Why are we not doing that? Why are we not allowed to do our job? Why has the Prime Minister's office chosen to emasculate and neuter parliament, preventing us from doing our job? That is why the government has these problems. The hot water the Prime Minister finds himself in today is directly of his own doing. He has neutered parliament. He has amassed such a large amount of power in his office that the normal checks and balances in any healthy democracy are absent. They are absent because we live in a dictatorship and the creation of this dictatorship has removed the checks and balances that we need to do the work of the Canadian public.

It goes on. We saw the billion dollar boondoggle in HRDC. We have seen gross misrepresentation of finances by the government time and time again. One thing that may help is regular public audits. The government should be obligated to utilize the good work of the auditor general. Why the government does not use the auditor general to get the public's finances in better order, I do not know. However the auditor general is an effective resource that should be used to develop ways and methods of accountability in how we spend the public's money.

Second, we could create a system of accountability within the system. If people in the public service save money, they would receive a benefit. That would be a healthy thing to do. If they come up with good suggestions to save money without diminishing effectiveness, they should be rewarded financially. If a public servant can come up with a plan that will save the taxpayer $1 million, his or her department should receive, say, 5% of that. Giving $50,000 to a department that saves $950,000 is a good investment. Developing an incentive program would go a long way to improve the morale and the health of our public service. It would also enable us to use public money more wisely.

Many members in the public service are paid less than their counterparts in the private sector. This would be a way to improve effectiveness and encourage the public service to offer a financial reward for good work.

In closing, I hope the government sees this as a constructive motion. I hope the motion will say to the government that it has an obligation to spend the public's money wisely and effectively, that it is not doing a good job, that it should buck up, listen to the constructive solutions coming from this side of the House and implement them. If that happens, we will all be able to do our jobs better.

[Grant McNally, Canadian Alliance, Dewdney—Alouette, BC]

Mr. Speaker, my colleague has been in the House since 1993, a bit longer than I, and he has seen a lot of waste in this place. He has highlighted a few of those examples. The government is in the midst of a full scale scandal and the leadership issue is going on as well.

Would he highlight for us his top two or three examples of incompetence, mismanagement or outrageous spending? Would he agree with me that the government is quickly loosing the trust of Canadians to administer their hard earned tax dollars?

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I will give my colleague one example. I think the public will be very interested to hear about this, and the government should listen because it can fix it.

The technology partnerships Canada fund, a partnership between the private sector and the government, was set up in 1996. Up until December 2001, $947.7 million in approved loans had been doled out. Guess how much of that money has been repaid to the government? Only 2.58%. Of the money given out, 97.5% has never come back. This is taxpayer money. It is a not a few thousand dollars. Nearly a billion dollars of taxpayer money has been given out but has never come back. That is horrendous. There are also other government loan programs that need to have a publicly disclosed audit.

We have spoken about the contracts given to Groupaction.

The other area that desperately needs a public audit is CIDA. Millions of dollars have been sent out in contracts in Canada and no one knows where those dollars have gone. We have a great deal of difficulty ascertaining for what they have been used. A public audit of CIDA is desperately needed to determine where those moneys have gone. The Prime Minister wants to make Africa a cornerstone of the G-8 summit and has asked for more money for CIDA. I would submit that no more money should go into CIDA until a public audit takes place so we can ensure public moneys are being used wisely.

There are many other examples. We on this side of the House have given a very clear case to the Canadian people and to the House that one of the government's primary roles is to manage public finances wisely and responsibly. Time and time again it has shown wilful neglect and abuse in this matter. It is incompetent to deal with public finances. The reason for that is because the government uses taxpayer money to buy votes. It uses taxpayer money to curry favour with the public, to encourage division and dissension within Canada and to essentially buy the votes of people for the next election.

Canadians demand more and want more. The government should listen to the members of the Canadian Alliance. We have the ideas on how to put public moneys on a firm fiscal footing and how to spend it wisely and effectively for the betterment of all Canadians.

[Reg Alcock, Liberal, Winnipeg South, MB]

Mr. Speaker, I would like to ask the member a question on the substance of the motion rather than the tedious litany that his research bureau has put together for him.

The motion says that these overpayments should be forgiven completely. Given that this was a mutual error, does he not think that the provinces bear some responsibility?

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, the provinces are not responsible for the management of public funds of the federal government. That is the responsibility of the federal government.

In committee a few years ago, the member gave an excellent suggestion on managing public finances better. The member from the Liberal Party suggested that a road map was needed to determine the finances that go into a department, what is spent and whether objectives are identified and met at the other end. The government should listen to its own member and implement that excellent suggestion. If that took place, every ministry would work better and more effectively on behalf of the public.

[Maurizio Bevilacqua, Liberal, Secretary of State (International Financial Institutions)]

Mr. Speaker, I appreciate the opportunity to speak today to the motion tabled by the Canadian Alliance regarding overpayments to certain provinces.

The Alliance Party claims that the error in tax collection would impede the ability of the provinces to pay for health care, education and social programs should the funds be clawed back. The provinces have been overpaid because of a problem that may have been in existence since 1972 in the accounting of the capital gains refund for mutual fund trusts.

As soon as the auditor general confirmed that the problem existed, actions were taken to prevent further overpayments, yet the issue of past overpayments remains. I am sure the hon. member can appreciate that this is in fact a complex matter. As the Minister of Finance said in the House recently, no decision has in fact been made on how to resolve the issue of overpayments to the provinces.

I must take issue with the implication of the hon. member's motion that the wealthy federal government is endangering the finance of the poor, needy provinces. Once again, we are hearing that the needs are in the provinces while the money is in Ottawa.

The reality is that 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. The fact is that the provinces have access to the same major tax bases as we do, including personal income taxes, corporate income taxes, sales taxes and payroll taxes.

As well, provinces have access to certain tax bases which we do not, such as gaming and liquor profits, property taxes and resource royalties, some of which are growing rapidly. In fact, 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. 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, due to trade liberalization, import duties have actually shrunk from $4 billion at the start of the 1990s to under $3 billion today. The simple fact is that the total revenues of the provinces have substantially exceeded federal revenues for more than two decades and will continue to do so 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 higher debt burden than the provinces, almost double that of the provinces on average.

In fact, in the last fiscal year the federal government paid $42.1 billion in interest costs compared to $22.4 billion in total provincial debt charges. This is a huge cost and also makes us more vulnerable to volatility in global interest rates than the provinces. 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, education and social services represent major spending challenges for the provinces. Access to health care, education and opportunity is central to the quality of life that families enjoy and that they want for their children. The federal government has recognized those priorities in its own spending. In fact, almost 70% of all new federal spending initiatives we have undertaken since balancing the books have been in the areas of health care, education and innovation.

Indeed, in the 1999 budget the federal government announced an increase in CHST transfers totalling $35 billion. Most recently, in support of the historic agreements reached by the 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. Of this, $21.1 billion is for the Canada health and social transfer and $2.3 billion is for targeted investments in medical equipment, primary care reform and new health information technologies.

This investment will lead to innovation 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 will bring federal transfers to a record high, starting this year. Provinces are receiving $3.6 billion more in CHST cash this year than in 2001, bringing CHST cash to $19.1 billion.

These amounts keep growing. By 2005-06 CHST cash will reach $21 billion, a $5.5 billion or 35% increase over 2000-01 levels. Furthermore, the value of CHST tax points is growing. It will grow to an estimated $16.6 billion this year. This historic agreement added up to $14 billion that the provinces and territories have received in additional CHST transfers since 1999: $11.5 billion announced in the budget in 1999 and a further $2.5 billion in budget 2000.

This funding marks the largest investment the government has ever made and it will be distributed on an equal per capita basis, the same amount for each Canadian in every province. Clearly the quality of social programs is not being jeopardized by the government's actions, as the hon. members opposite would have us believe.

On top of this tremendous investment, the government has provided funding to the Canadian Institute for Health Information, which is playing an increasingly central role in providing Canadians, health care providers and policy makers with the information on the health of Canadians and the health care system. Furthermore, the government provides funding for the 13 Canadian Institutes of Health Research, which are doing groundbreaking work in areas such as aging, cancer, diabetes, arthritis and women's health. Their research today will mean a healthier Canada tomorrow.

The government has always believed that our children are the future of the country. Since our first mandate, education has been a priority. We have demonstrated our commitment by supporting early childhood development, programs for aboriginal children and a number of other initiatives.

For example, in budget 1998 the government announced the Canadian opportunities strategy in order to make knowledge and skills more affordable and accessible for all Canadians. Measures including the Canadian millennium scholarships, the Canada study grants and the Canada education savings grant program were introduced and have since proven to be extremely effective.

In fact just a few months ago, my colleague, the Minister of Human Resources Development, announced that the Canada education savings grant program had passed an important milestone. It has now paid a cumulative amount of $1 billion in grants for the education of more than 1.5 million Canadian children. These grants are the direct result of Canadian families contributing over $5 billion toward their children's post-secondary education.

The federal government is continuing to invest in Canadians' futures. The CESG program is just one proof of our success in encouraging greater investment from all Canadians to invest in the future of their children.

Budget 2001 went even further to give Canadians greater access to skills and knowledge in a variety of practical ways. It increased support for industry led sector councils that help identify skills required in the workforce, develop training programs and point workers to new job opportunities. It enhanced Canada student grants for students with disabilities. It expanded youth entrepreneurship programs. Through partnerships with the private sector, the government will build on existing initiatives that enable talented young people to gain valuable insights into the world of science, technology and business. As well, it provided new tax incentives to encourage Canadians to pursue educational opportunities. These included a new deduction for the extraordinary cost of tools for apprentice vehicle mechanics and extending the education tax credit to include people receiving EI benefits.

Recognizing that research and innovation are keys to success in today's global economy, we also provided universities with $200 million to cover the indirect costs of research. The budget provided additional resources in support of research in natural sciences and engineering, as well as the social sciences and humanities, through their respective granting councils. It increased funding for the National Research Council network of regional technology centres. All of these measures build on significant investments the government has made over the last several years, including the creation of the Canada Foundation for Innovation and the Canada research chairs.

The Canada Foundation for Innovation was established in 1997 to award funds to help post-secondary educational institutions, research hospitals and not for profit institutions modernize their research infrastructure and equip themselves for state of the art research. To date, the foundation has funded projects in every part of the country, reinforcing strengths in both small and large institutions and creating new opportunities for established researchers and promising new researchers.

About half the money awarded to date has been for health research. This year the CFI announced investments of $779 million for projects at 69 Canadian universities, colleges, hospitals and not for profit institutions. This includes research into therapies for recovery from spinal cord injury, for sustainable higher quality water supply, for the prevention and cure of cardiovascular disease, and for improved fire safety in residential and commercial buildings. The work of the CFI is complemented by the Canada research chairs, an initiative of the government to attract and retain the best researchers by establishing and sustaining 2,000 research positions by 2004-05.

We acknowledge that the tax collection agreement overpayment issue is a complex one and we have assured the House and the provinces that we will find a solution that is fair, equitable and fiscally responsible. However, when I read the motion of the opposition it is clear to me that it does lack credibility. I have mentioned just some of the investments that we have made in the areas which the hon. members feel the provinces will not be able to act on. I think that any fair observer of reality, as we see it, would say that in fact the federal government has made some very wise investments, very consistent, may I say, with our economic growth strategy, a strategy that has created literally millions of jobs and prosperity for our nation.

When the economy does well, so do the provinces. That is something that the opposition needs to appreciate. It needs to understand that worldwide, in fact, Canadians are looked at as excellent economic managers. That is the reality.

When the Liberals took office back in 1994-95 what did the Wall Street Journal say about Canada? It said that we were a third world economy. What does the Financial Times of London say about Canada? It says that we are the top dog of the G-7. Why? Because we made smart investments, because we understood that we had to reduce the deficit, that we had to be fiscally disciplined, and that we have to be focused like a laser beam on the future of our nation.

I can tell the House that everywhere I go throughout this country, in every little town and in every big city, what I hear from Canadians, from Canadian businesses and from people in coffee shops, high schools and universities, is that they feel more confident about the economy. They feel confident about the society that we have been able to build, a society that has been able to move forward without leaving anyone behind, a society that has been able to reward the risk takers, celebrate success and bring about positive change in people's lives. This has happened because of our approach, an approach that basically tells people that if they work hard they will be rewarded and that if they take risks we will celebrate their successes with them. What has happened is that over the years we have been able to develop a culture of opportunity that is attracting many people from all over the world to our country.

Since the opposition, I am sure, travels and listens to Canadians, I want to share with members how proud I was, during my brief stint of four months as Secretary of State for Science, Research and Development, to go into research institutes and hospitals and find out that many Americans are coming to Canada because they have opportunities for research. We are becoming a magnet for individuals who want to excel, who want opportunity and who want the best state of the art equipment to bring about the types of inventions that will improve the quality of life and standard of living for everyone.

I was here in opposition back in 1988. I cannot believe the fact that we are now talking not only about balanced budgets, not only about eliminating the deficit, but we are even talking about reducing the national debt. It is no wonder that throughout the world people are referring to Canada's economic miracle, the remarkable comeback of this nation.

While the opposition may use a lot of its time to criticize the agenda of the government, everywhere I go people are saying that it is one thing to sacrifice for nothing but it is another thing to sacrifice for something. What they are finding is that there is a belief in this nation. When they see that a government says it will reward their efforts and cut personal income tax and corporate taxes by $100 billion, the largest tax cut in Canadian history, and may I say even larger than what the opposition proposed, much to its surprise, the reality is that today we essentially celebrate the efforts of Canadians who brought about this economic miracle.

We celebrate their efforts and we celebrate their belief in our country, the ability to generate wealth and the ability to share the benefits with everyone across the country, whether one is from western Canada, whether one belongs to eastern Canada, Quebec or Ontario. The Canadian family is strong. We are definitely back on our feet and looking to the future with a great deal of excitement.

No, I will not allow the naysayers in the House to put down the country. I am not going to allow the naysayers to say that everything is wrong with Canada, because far too many people in this country have worked far too hard to bring about the excellent economic conditions we are witnessing.

It is very difficult for the opposition to accept the fact that over the years, through the wise management of the economy and through a belief in Canadians, because this economic plan would not have been possible without the great support of Canadians, we are now living in a time where people in Canada are happier, consumer confidence is up and business confidence is up. Our stature internationally in economic circles is really amazing to see. The lesson for everyone in the House is that when one has a plan and executes it right, when one gets people to buy into it, then success is achieved.

Today, while we debate a motion that obviously has very little to do with reality, the fact is that the land is strong and Canadians have contributed a great deal. We on this side of the House extend to them our sincerest gratitude for making Canada the greatest nation on earth.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Speaker, I would like to remind the last speaker that this was not a one time mistake. It was a multi-year mistake. At the same time as this mistake was being made the federal government was off-loading health care onto the provinces. The government got rid of 99% of its deficit by off-loading it onto the provinces and through tax increases.

The government took those actions unilaterally. Now it does not want unilateral accountability for this overpayment. What it wants is for the provinces to be accountable for the federal overpayment. Why?

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, the government has already said that this is a very complex issue and that it will find a solution that is a fair.

However I do not think you can get away from what your motion says. What you are saying here is that because of this issue the provinces--

[The Deputy Speaker]

One moment, please. Before we continue this, I do not want the Chair to be left out of this debate so please make your interventions through the Chair because that short circuit can sometimes lead to something else we would want to avoid.

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I want to go back to the original point I was making. It was in relationship to the fact that the hon. member I think was skating and trying to redirect the debate.

In all good conscience I cannot allow individual members of parliament to get up in the House and tell Canadians that because of the federal government's action, and I quote, “would severely affect the provinces' ability to pay for health care, education and social services”.

The debate has been going on all day. I think the point we have made is that not only is that not the case but that in these particular areas the federal government has made unbelievable investments given the fiscal situation.

We must also look at the issue of the debt as it relates to both the provincial and the federal government. We must look at the ability of provinces to tax. I went through an example that actually said that the provincial revenues last year from a combination of liquor, gaming levies, property taxes and resource royalties were $27.4 billion compared to just $10 billion in 1990.

I also remind Canadians that the provinces have access to the same major tax bases as we do, including personal income tax, corporate income tax, sales tax and payroll taxes.

The reality is that the federal government and the provincial governments have access to a wide range of revenue sources and are free to set their own fiscal and budgetary priorities.

In my comments earlier on I made it very clear that we do not accept the premise of the motion because it does not really reflect the type of investments that we as a federal government have and the type of co-operative spirit that exists within the federal-provincial relations.

I am somewhat concerned about the tone of the debate simply because it fails to illustrate to Canadians the type of headway that we have been able to make working together with other governments and the people of Canada. To allow this debate to state that somehow the federal government is putting a great deal of pressure to the point that the provinces cannot deliver those services is just not credible.

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

Mr. Speaker, I have listened carefully to my Liberal colleague.

It takes a lot of gall to make statements like that, saying for instance that the provincial tax revenues were not in danger because they had the fiscal capacity to seek out tax revenue, on alcohol and gaming, for instance.

Is he trying to tell us that, to make up for the loss of the $875 million in equalization overpayments Quebec, for example, would have to pay back because of the federal government's error, it would have to encourage Quebecers to drink and gamble more? This is patently ridiculous.

What he neglected to say was that there is a fiscal imbalance at the present time, and the former finance minister kept making ridiculous statements in the House, year after year, about the amount of surplus. As for federal tax revenues, they have been inflated by the fact that the tax base is heavily dominated by federal personal income tax, which has gone up 7.3% annually since 1993.

Then there is all the money that has been cleverly pocketed by the folks over there from the unemployed, putting another $6 billion or $7 billion into the EI fund. As well, there are the cuts inflicted on the provinces, which represent $24 billion net shortfall for health and education.

Now, with the billions of dollars in government surplus funds, $17 billion last year, $10 billion this year and $14 billion the next, they are incapable of treating the provinces properly. They cannot do without demanding reimbursement from provinces who received those funds because of a miscalculation by the federal government. The mistake was the federal government's. They must be allowed to keep this money, but the others who did not have the benefit of this mistake, must be compensated.

It seems to me that this would be the right thing to do, for once, to deal properly with the provinces, which are being forced to cope with delivering necessary services to their populations, essential services such as health and education.

Let them finally get that through their heads instead of making such ridiculous statements.

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I first want to thank my hon. colleague who spent a great deal of time in the finance committee when I chaired it. I am glad to see that he is very consistent in his opposition. I do not want the House to think that somehow we do not have an issue here. Of course we have an issue and the government has said that it would fix the issue in a fair manner.

The hon. member referred to some of the decisions we had to make back in the year 1993 through program review. The hon. member has to understand that in that era Canada was faced with a difficult situation, one that required discipline and one that required us to make some very tough choices.

It is interesting to note that most of the investments we made, after we left the dark age of deficit, brought about a surplus for a number of years and paid down our debt. We also have an excellent macroeconomic environment now where prosperity has taken place.

We also invested in those key areas that I know the hon. member from the Bloc cares about. I spent a great deal of time with him and I know he understands. I remember clearly saying to him that we need to invest in the key social and economic areas.

As the chair of the finance committee back then in my previous role, I listened very attentively. That is the reason we were able to present the package to the Canadian people that included great investments in key areas, such as health, education and research and development, which spur on economic growth.

In fairness, those were not just my ideas. I travelled the country extensively. I listened to people from coast to coast to coast and they told me that if we were able to implement the plan that we in fact implemented that they could rally behind it. There is no question in my mind that Canadians have rallied behind our plan because the economic success of this country is self-evident.

[Gary Lunn, Canadian Alliance, Saanich—Gulf Islands, BC]

Mr. Speaker, I will be splitting my time with my colleague.

I am pleased to rise to speak to this important issue today. The official opposition is asking for something simple. We are asking the government to forgo any collection of the $3.3 billion overpayment to the provinces, an overpayment that is a direct result of a federal accounting error.

That this should even be an opposition supply day motion is an indictment of the government. This issue should have been resolved months ago. The provinces were told about this at the end of last January. It would seem that the federal government knew about it some time before that, although how much before we will probably never know.

Where was the Prime Minister? Why was the former minister of finance not making this $3.3 billion disaster his top priority? It would seem that both he and the Prime Minister were too busy with their own internal squabbles.

The former minister of finance is said to have favoured forgiving this error. However the current Minister of Finance is said to support trying to recoup the money. He has also stated that he will follow the course mapped out by his predecessor.

It seems that the minister has a choice in front of him. He could wade into this moral and legal swamp as the enforcer of the Prime Minister's bully boy tactics or he could take the high ground and recognize that this was an error of the federal government that the provinces should not be forced to pay.

However a warning is in order that bad things tend to happen to free thinkers on the Liberal side of the House. If he dares to stand up for the provinces he may find more than just his leadership campaign getting choked off.

The Minister of National Revenue has been quoted as saying that this is between governments. “It does not affect individual taxpayers”. I submit that the minister was seriously mistaken. There is only one taxpayer. The loss of $3.3 billion will affect individual taxpayers. They will face even bleaker choices in the future of their health care and education budgets.

The Canadian Taxpayers Federation reports that health care costs have taken up 62% of all provincial budget increases in the last three years. The total cost will exceed $100 billion annually within a decade.

In my home province of British Columbia we are just now beginning to dig out from under 10 years of NDP mismanagement. Overall health care costs are expected to consume 50% of all provincial spending in B.C. by 2007. Hard decisions have to be made right now. The B.C. government is trying to put our province back on its feet. It is already stretched to the limit and the loss of $121 million more would be catastrophic.

When the Minister of National Revenue suggests that decisions of the government in Ottawa will not affect individual taxpayers, she is sorely mistaken. There is only one taxpayer. Somehow the government has missed out on this very simple concept. It is unable to grasp that. If the funds are taken away from the provinces, the services the taxpayers have already paid for through taxation will be reduced. If it is suggested that they will get the same services from the federal government, I would suggest that the government should look at the record.

In 1957, when the federal government became involved in Canada health care, funding was supposed to be on a 50:50 basis between the provinces and the federal government. Since that time the feds have become increasingly interventionist while also eroding transfers. Today the federal government pays for less than 14% of health care costs. The federal government has habitually cut transfers to feed its own spending habits and, my goodness, have we seen a lot of these spending habits.

We see all kinds of government mismanagement and waste, and money going to its own personal cronies. I will get to those in more detail in a few minutes.

While transfers to the provinces have been cut by 33% discretionary spending by the federal government, again money that it diverts to its friends, has only been reduced by 6%. At the same time we saw the $1.1 billion boondoggle that was in the Department of Human Resources Development. It put hundred of millions of dollars of questionable grants in the Prime Minister's riding. We have seen that over and over again. There is more money going into the Prime Minister's own riding than the four western provinces combined.

The government paid $1.5 million to get the same useless report done three times. It paid someone to slap a new cover on it, change a few words, pull it off the Internet and resubmit it to get another half million dollars while ensuring that there was a cheque for the Liberal Party of Canada. It is appalling but the Minister of National Revenue said that it does not matter.

With a record like that we would all be better off leaving this so-called overpayment in the hands of our provincial governments. There is compelling evidence to put as little of our money in the hands of the federal government.

I know the hon. member for Ottawa South has considerable demands on his time. Not only is he the new Minister of Finance but he remains the infrastructure minister and the Deputy Prime Minister. Given his busy schedule I want to offer him some advice.

For years the Liberal government has interfered with the areas of provincial jurisdiction. We have seen it over and over again. It has waved its spending authority around like a hammer, careless about what it might smash in the process. Planning by the provinces has been difficult in this climate. Funding is reduced and innovation is discouraged with threats of further funding reduction. This all needs to be changed.

In the short term we need: first, stronger limitations on federal spending power, something that would prevent the federal government from encroaching on provincial authority through clever manipulation of purse strings; second, a binding dispute resolution mechanism, not just an informal non-binding agreement to co-operate; and third, an audit system to ensure that the federal-provincial transfers are not subject to these kinds of mistakes in the future.

In the short term we need something simple. We need to re-establish trust. Imagine what a novel concept that is, to actual regain some trust. We have seen in the polls trust plummeting among the Canadian public. Why? It is because the government blatantly doles out millions of dollars to its cronies, to its friends, to people who donate back to the party. We have seen it in the advertising and promotional contracts and in the Groupe Everest contracts. We have seen it in other departments as well where there is no accountability and there is nobody watching how this money is spent. The government says to trust it, it will do a good job. It has to establish that trust.

I urge the government to vote in favour of the motion and send a clear signal that it is able to admit that it made a mistake, which is another novel idea. It would be a signal that the government is willing to formally cease collection on the $3.3 billion and it will not make Canadians suffer for its errors. The minister would find such a decision to be a great first step. The government has a long way to go, but it would show that the government can trust the provinces to fund health care and education without playing the part of the schoolyard bully, always threatening to steal the lunch money of the Canadian people.

It comes down to few words. It is about competence, accountability and most importantly, trust. The government has breached all three of these and it continues to do so. It has to earn that back. Simply firing the former finance minister will not do it. It is time that the Prime Minister looked in the mirror and made some serious changes.

[Joe Jordan, Liberal, Parliamentary Secretary to the Prime Minister]

Mr. Speaker, I want to thank the member who just spoke for the sincere advice he has given the government.

He talks about trust. He stood in essentially what is the highest court in the land and said the federal government contribution to health care is 14¢ on the dollar. I have heard that figure thrown around and I was concerned by it. If that is true, if it is 14¢ on the buck, then the federal government's authority in this area has certainly diminished. Then I looked at the facts.

He says that health care is supposed to be 50:50. I would suggest to him that it was never 50:50. There were things in the health care envelope like psychiatric health care, and we have a big psychiatric centre in my riding, that was never covered.

When he arrived at 14¢, and he is quoting Ralph Klein, that is taking only the cash portion. He is ignoring the tax points. I do not want to get into that and confuse the member, but I will tell the House that they are worth every bit as much as money. That is why the provinces are encouraging us to give them more tax points. He took the cash portion and applied it to the entire Canada health and social transfer envelope. The provinces spend 62% of that on health care, so we must apply that same percentage to that portion. When we do the math, it is probably around 36¢.

The member may argue that, but would he not admit that the 14¢ on the dollar figure is absolutely wrong and apologize to Canadians for standing up here and repeating that nonsense that is coming from Ralph Klein?

[Gary Lunn, Canadian Alliance, Saanich—Gulf Islands, BC]

Mr. Speaker, the member should come out to British Columbia where I live and look at the people who have been waiting on lists for up to a year for cancer treatments. He should come out and talk to the people who have been waiting for heart surgery for months, or talk to children who have serious illnesses, sometimes fatal, who cannot get into a hospital. He should come out and speak to the people who are having to close schools in British Columbia and ask them if they have seen the cuts.

He should come out and talk to the people and get out of these white ivory towers. If he would talk to people and quit trying to baffle them with a bunch of numbers he would see real people hurting. He would see suffering out there. I hear all the members yelling and screaming that they can do their own math, but their math is not credible.

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

Mr. Speaker, I rise on a point of order. Could you ask the Liberal members to be quiet while my colleague gives his explanations? I think that it would be a good idea.

[The Deputy Speaker]

Everyone has a different level of tolerance. Perhaps mine is not the same as someone else's.

However, I certainly want to be fair to everyone. I will see to it. The hon. member for Saanich—Gulf Islands.