Debates of Oct. 30th, 2003

Federal-Provincial Fiscal Arrangements Act

[Inky Mark, Canadian Alliance, Dauphin—Swan River, MB]

Mr. Speaker, I think one question needs to be raised. Why are we doing it now in relation to the change in the Liberal leadership? Does it mean that the new leader does not want to deal with this issue? That question needs to be asked.

In terms of the deals that come up on the equalization side, there is no doubt the reason it is in place since the Constitution Act, 1982 is to make sure that the money flows. If the money does not flow, then I believe the provinces have the constitutional right to complain.

There should be provisions in the agreement for provinces whose wealth creation initiatives are successful and they are creating more wealth. It is not good enough just to say that because a province is making more money the federal government wants it all back and the province cannot have any of the equalization.

There are a lot of things that need to be done. The first thing is that the federal government has to be at the table.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I have a short question. As we know, in the ongoing federal-provincial negotiations, the provinces have asked that the equalization formula be amended to take into account the fiscal capacity of all ten provinces. It is estimated that such a change would cost the federal government another $3 billion a year.

Is the bill introduced today not a way for the government to put things off for another year and a half, to get through the period where nobody knows who is Prime Minister and to get through the next election, and then to come back with another bill we do not know nothing about?

Is there more than meets the eye with the introduction of this bill today, given all that the provinces are asking for, including taking into account the situation of alle ten provinces, which is not what the federal government is doing at present?

[Inky Mark, Canadian Alliance, Dauphin—Swan River, MB]

Mr. Speaker, that is a very interesting question and a valid one.

As I said earlier, it is possible that one of the motives for doing this is to allow the new Liberal Party leader off the hook. If we put this in place at this time for the period of the next year and the process is not open and the doors are closed, obviously nothing will change. In fact all the concerns will remain, even Premier Hamm's concerns about the offshore accord and the offshore protection clawback provisions.

The new government of Danny Williams in Newfoundland and Labrador has the same concern in that when the provinces are creating wealth they want to be self-sufficient. The province I come from, Manitoba, is a have not province. If the provincial governments are doing their jobs, creating wealth and getting people to come home to their provinces and increasing their populations, then certainly they should be the benefactors of those elements.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, we have before us Bill C-54, the purpose of which is to extend the Federal-Provincial Fiscal Arrangements Act.

As mentioned by the previous speaker, this bill must be put in the current context, that of an extremely difficult transfer of power between the current PM and the future PM, the member for LaSalle—Émard. This bill is before us today only because the Liberal Party of Canada wants to retain the whole array of instruments needed to manage this difficult transition without having to come back to Parliament, so that it can close down the House whenever it sees fit.

As the Bloc Quebecois and its leader have said over and over again, we believe that this House must keep on sitting no matter how difficult this transition is, and that this bill is premature. There are still five months left before the current equalization payment formula expires. At their last meeting, on October 10, the provincial finance ministers and their federal counterpart said that they would do everything in their power to reach an agreement by March 31.

Why put forward a bill extending arrangements dating back to 1999 that are full of holes? These flaws have been condemned by every single province, in particlar by the current government of Quebec. They were also severely criticized by the Séguin commission on fiscal imbalance created by the premier of the day, Bernard Landry.

Why this bill now? Not because the provinces want to reach an agreement with the federal government. Not for lack of time to find a solution. It is because, for partisan reasons, the Liberal Party does not want to have its hands tied in the context of the difficult transition between the current PM and the future PM, the member for LaSalle—Émard.

That is why the Bloc Quebecois put forward a motion asking the current Prime Minister to relinquish power shortly after the Liberal Party convention to avoid this sort of situation, where a bill which is totally uncalled for at this time is being introduced prematurely.

Everybody will understand perfectly that the Bloc Quebecois does not disagree with the fact that, in the end, if negotiations between the provinces, Quebec and the federal government are not satisfactory, a bill can be introduced to extend the present agreement for a year in order complete the negotiations.

However, the presumption behind this bill is that there will be no agreement. We are making this presumption even though, on October 10, the provincial ministers of finance and their federal counterpart said that they would negotiate in good faith and hopefully would reach an agreement before March 31, 2004. Therefore, The presumption is that no agreement will be reached before that date, not for lack of good faith on everybody's part, but because, for a certain period, this government will not be able to conclude agreements with the provinces. This is because the one person who is really leading the government is not here to be held accountable, but is nonetheless pulling the strings.

We cannot approve that approach. We think that, with five months ahead of us to negotiate and the good will showed by all parties, an agreement can be reached, especially if the present Prime Minister bows out soon after the convention of the Liberal Party of Canada. It would appear that, at the Liberal caucus meeting yesterday, he sort of hinted that it was a possibility. However, we cannot approve the current paralysis by supporting the bill before us.

As I said, we hope to sit with the new PM, the next leader of the Liberal Party of Canada, during the winter session. We would like to be able to exert pressure on that leader and this government so that an agreement can be reached on a equalization formula that will be more equitable for the provinces.

At this stage, we cannot support Bill C-54 in its present form, not because we will not have to eventually renew the existing arrangements, but because this bill is premature. Supporting it would be like approving the present paralysis of this Parliament and co-operating with the Liberal Party of Canada and the government who want to find a way to suspend the sittings of the House until an eventual throne speech followed by an election.

The Bloc Quebecois will vote against this bill on second reading. We hope to improve it so that we have all the leeway we need to reach an agreement before March 31 and submit to the House the new agreement on equalization we are hoping for. We will reserve our decision on the position we will take on third reading.

It is important to remind the House that equalization is a very important tool for the provinces and especially for Quebec. That cannot be denied. The situation we are in is extremely strange, with what we call the fiscal imbalance, in which 60% of Quebeckers' tax dollars end up in Ottawa. This money then has to be transferred back to Quebec and other provinces through programs like the Canadian Health and Social Transfer and the equalization formula, when it would be so simple to let the provinces, and Quebec in particular, have the tax base they need to carry out all their responsibilities.

Clearly, in these circumstances, we will have to improve the existing equalization formula, which distributes the tax burden equally among all the provinces. Ottawa spends about $10 or $11 billion annually on equalization, a relatively modest sum, I would say. Even if it appears to be a fairly large amount of money, it is only between 1 and 1.3% of the gross domestic product. While not a lot, it is nonetheless helping those provinces who do not have a large enough tax base to provide a number of services.

However, and this has already been pointed out by the hon. member for Drummond, among others, the current equalization formula is not satisfactory. Therefore, extending it in advance, immediately, presuming that there will be no agreement before March 31, simply condemns Quebec, for example, to lower revenues in the coming year than in the current year. That is quite abnormal in Quebec public finances, as we know.

Moreover, Quebec's is not a unique situation. At present, nine of the ten provinces, all but Alberta, are in financial trouble. Strangely enough, we are being told that the cumulative deficit of all the provinces for the coming year will be about $10 billion. In a way, if the $10 billion that goes through the federal government had gone directly into the provincial treasuries, we would have avoided this money-shuffling game.

That said, the rules being what they are, the equalization formula must be improved. As I was saying, the current formula means that the Government of Quebec will have less money next year than this year, and this at a time when Quebec's finance minister has announced a financial shortfall of nearly $3 billion. I remind the House that if the Government of Quebec does not want to tamper with health and education, there will only be an envelope of $9 billion in which to find that $3 billion. It is utterly impossible.

In the current situation, federal government transfer payments for health and education are inadequate, after the deep cuts we suffered during the war on inflation. Thus, neither transfer payments nor the current form of equalization can help the Government of Quebec fulfil its obligations in health and education. It has no choice. If it wants to balance the budget next year, the Government of Quebec will have to make come cuts in health and education. It cannot find $3 billion out of $9 billion—it cannot. It is impossible. The whole issue of fiscal imbalance is illustrated by this situation.

The current equalization payment is a significant transfer for all the provinces, except Ontario and Alberta. The equalization payment is a significant transfer for Quebec. The fact remains that a certain number of problems have been identified by the Séguin commission, the Government of Quebec, and the provinces.

For instance, there is the fact that the standard being used is based on the situation in five provinces, not all ten. The extremes are excluded, in other words, the Atlantic provinces because they are not wealthy enough, and Alberta because it is too wealthy.

This situation ends up penalizing Quebec, in particular, and other provinces as well. We agree with the provinces, the Government of Quebec and the Séguin commission that the new equalization formula should take into account the per capita fiscal capacity of all ten Canadian provinces, including Quebec, Alberta and the Atlantic provinces, as I mentioned.

The second problem identified by the Séguin commission, the Government of Quebec and all the provincial governments, concerns the equalization ceiling. In 1999, for the last formula that will expire in March 2004, the ceiling was arbitrarily set at $10 billion and indexed each year to nominal GDP.

The ceiling was fully applied only in 2000-01. This denied the provinces entitled to equalization a sum of $224 million. Knowing the provinces' situation with respect to public funding, it is safe to say that money would have been extremely helpful.

The way the cuts are distributed also disadvantages Quebec, because it is done in proportion to the entitlements of each province, and is not based on demographics. That said, when there are cuts to be made, Quebec assumes 62% of the cuts, yet we represent 24% to 25% of the population.

It is therefore extremely important to us that the ceiling on equalization be lifted to ensure there are no shortfalls to the provinces and Quebec.

Another element that is extremely important to the Séguin commission, the Government of Quebec and the provinces, is the tax base used to determine equalization entitlements. At present, these are poorly defined. We know that they are calculated based on 33 tax bases, including property tax. This is a serious problem for Quebec, since the federal government arbitrarily decided to measure fiscal capacity taking into account the income of owners, and not property value.

Common sense would dictate that, when looking at a tax base like property tax, one would look at the value of the property or buildings, and not the income of the owners who live in them. This anomaly results in Quebec's fiscal capacity being overestimated. Consequently, Quebec is being deprived of $800 million.

The gap between the fiscal capacity of the provinces and the average is currently 22%, while the gap based on property values is 35.5%. This too needs to be corrected.

As I indicated previously in a question, the provinces are asking, as the Séguin commission and the Government of Quebec did, that Ottawa make payments much more predictable. There are a number of statistics involved. In fact, some 3,000 figures are used to calculate equalization. It would need to be much more transparent. Also, whenever there are changes in these figures, these changes should not be applied to the current year or retroactively, but rather over a period of three to five years.

In practice, the federal government always ends up spreading the repayment or cut required over several years. But even then, only after strenuous negotiations. There is always blackmail involved on the part of the federal government, which starts off by saying, “You will have to pay”, but, under pressure from the opposition, the Bloc Quebecois, the provinces and the public at large, eventually makes arrangements.

It would be better for everyone if the rules were clear and if the amended equalization amounts, based on a statistical variation, were spread over three to five years so that the provincial finance ministers, in their budgets, would not have to deal with unexpected clawbacks or changes to the transfer payment amounts under the formula. As I mentioned, all the provinces have reached consensus on these demands.

Under the formula proposed by the provinces, the fiscal capacity of all ten provinces, instead of five, would be taken into account. However, this would cost the federal government $3 billion.

Obviously, the Minister of Finance is saying that this is impossible. This week, to everyone's surprise, he announced a technical deficit, a new invention of the Department of Finance. This tactic has already been used to hide any surplus. First, as you will remember, a $3 billion contingency reserve was created. Since that did not do the trick, the current Minister of Finance invented a new category called economic prudence.

When he was asked in the House to explain the difference between the contingency reserve and a reserve for economic prudence, he could not, because there is none. That side is merely playing with numbers to avoid having to reveal the actual surplus and is hiding the true state of federal finances from the public, as well as the fact that the federal government is able to meet the provinces' demands, for example, that the fiscal capacity of all ten provinces, not five, be calculated.

I would remind hon. members that, for the fiscal year ending in March 2003, the Minister of Finance was talking about a $3 billion surplus just weeks ago. Three weeks later, oddly enough, the surplus had reached $7 billion. It is rather disquieting that the finance minister cannot estimate the amount of surplus at the same amount on two occasions only weeks apart. This is an error of 133%. Hon. members might say this is a trifle compared to last year, and they would be right. In 2001-02, the then finance minister, now member for LaSalle—Émard, and prime minister to be, was 493% off. So this year is somewhat of an improvement.

Oddly enough, the Bloc Quebecois, with its meagre means, is able year in and year out to predict the surplus within about 10%. In the past four years, we have never been more than 10% off.

So the Liberal government is employing a strategy to camouflage the true condition of public finances by underestimating the surplus—their past tactic was to underestimate the deficit, now they overestimate the surplus—in order to make the public think they do not have the money. But they do.

For example, for the coming year, the Minister of Finance tells us he is already in a technical deficit. This is something new he has come up with. His technical deficit means in fact that his surplus will not be as large as projected. Instead of three or four billion, it will be something less.

There will in all probability be a surplus. I am even convinced that it will be three or four billion. This surplus is, however, not called a surplus any more; now they call it a technical deficit. This is just smoke and mirrors. Fortunately, fewer and fewer people in Quebec and Canada are buying that story.

With our calculator and our very simple model, we did a rough estimation of what the surplus will be for the current year. We believe that the government will easily end up with a $6 billion to $7 billion surplus. This means that there is more than enough room to follow up on the provinces' request and increase the tax base so that equalization payments better reflect the actual fiscal capacity per capita of each province--and we are talking here about $3 billion--and to commit immediately to transferring the $2 billion provided for in the health agreement.

This is the $2 billion that has been used shamelessly for blackmail over the last few weeks. We know that the government will have enough money to address the provinces' concerns with regard to equalization payments and health transfers.

We have five months ahead of us. I am asking the federal government and the Minister of Finance to undertake negotiations in good faith, as requested by the provinces and by Quebec, to find a solution as quickly as possible. We have the money and we can do it.

If the future prime minister wants to take part in these negotiations, it is fine with me, but we do not want to hear about an extension of fiscal arrangements. We know full well that this will take away all the pressure to negotiate on the part of the federal government, and we will probably end up, in the spring of 2005, with another extension or with an arrangement that is not satisfactory.

If they negotiate in good faith, they can find a solution to this problem and, as I was saying at the beginning of my remarks, this is why we will be voting against this bill at second reading, hoping that we can amend it in committee to take into account all the elements that I just mentioned, and then be able to vote in favour of this principle at third reading.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I listened with intent to the speech from my colleague from the Bloc. He is not my colleague in the same party, but he is a parliamentary colleague.

I noted he said in one place that Alberta and Ontario did not like equalization. I would like to correct that because I think we do like it. It is in our Constitution. My party at least has a policy that states it approves of and supports the principle of equalization. It is not only in our country's interest, it is in the interest of each province, not only those who receive equalization payments but also those who contribute to them.

I am from Alberta. Under the equalization formula, it receives zero, but I am not unhappy with that because I think that it is good for Canadians to live in the province of their choice. I was born in Saskatchewan and I had to move to Alberta to pursue my career. People should be free to move from province to province, but most of us like to stay in the province in which we were born and live there.

If we did not have equalization, we would either have excessive taxes in some provinces and lower taxes in others or we would have a wide disparity between the level of services provided to the people by their governments.

I would like to correct that. I think he said it just in passing. We do support the principle of equalization, but we want to make it more fair.

The other thing that I want to point out is with respect to the numbers the Bloc members keep using, and the previous speaker drew attention to this as well. They have said that per capita Quebec does not get as much. The math just does not add up.

The latest numbers I have on my computer, and unfortunately I did not update them, are from 1998. At that time Quebec had around 24% of the country's population, but that same year it got 45% of the equalization payments. Therefore, per capita I believe it is somewhat ahead of the game.

I wish members would look accurately at the numbers. I pulled mine right off the public accounts. These are the actual numbers. I wish Bloc members would be a little more precise in the way they use mathematics and statistics, because it is my honest belief, based on what I have read and studied, that they have been net beneficiaries of the equalization program. We welcome them to it, but I wish they would perhaps be a little more accurate in their evaluation of it.

I am not begging them to say thanks a lot. I am saying that we should be realistic in what it means to be part of the family of Canadian provinces.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, perhaps there was a problem with the translation, but I never said that Ontario and Alberta do not like equalization. What I said was that Alberta and Ontario do not receive equalization payments. That is all I said. I did not in any way criticize the opinions of Ontarians or Albertans on equalization. Unfortunately, I am unable to say whether they like it or not. All I said was that they do not receive any.

However, in his comments, the hon. member implied that Albertans and Ontarians are footing the bill for equalization. It is the federal government that pays for equalization, not Alberta and Ontario. Of course, the Alberta and Ontario taxpayers are paying something, as are the taxpayers of Quebec and all the rest of Canada.

I also mentioned in my speech that it was a relatively small amount. For example, for this year, we expect to receive about $183 billion in tax dollars from the federal government, and equalization payments amount to $10 billion. It is not equalization that creates pressure on the federal treasury, any more than would an additional $3 billion if the tax base were such that all provinces, and not just five of them, were part of the new equalization formula.

I want to add one more thing on this subject. The federal government, which slashed transfer payments to the provinces a few years ago, has reinvested very little. It has, however, greatly inflated its bureaucracy.

For example, from 1999-2000 to 2002-04, federal departmental expenditures increased by 34% or one-third. This is not direct services to the public, just government operations. At the same time, program spending, or transfers to individuals, increased by barely 14.5%, which is three times lower.

The budget has been balanced on the backs of the unemployed and the provinces, bureaucracy has been inflated and there have been no improvement to programs such as employment insurance, old age pensions or the guaranteed income supplement. The hon. member for Champlain, who is here, can testify that many seniors are currently deprived of the guaranteed income supplement as a result of the federal government's laxity.

Therefore, program spending has increased at a rate three times slower. Barely 23% or less than one-fourth of the budget went to the CHST.

The problem is obvious. Clearly, for several years yet, equalization will be an important way to ensure equity among the provinces. However, the equalization formula is only one part of the solution needed to resolve the fiscal imbalance between the provinces, including Quebec, and the federal government. Quebec and the provinces have more and more responsibilities and, unfortunately, the money is accumulating in Ottawa, where the responsibilities are insignificant.

In closing, I want to say that if federal spending increases, the surplus in question could quickly disappear. That is why we want the future prime minister, the hon. member for LaSalle—Émard, to respect the commitment he just made, as well as his recent statements that he wants tighter controls on federal spending. We suggest a 3% annual increase in federal spending, more or less equal to inflation and population growth. He can find the necessary margin in existing budgets to satisfy the provinces' demands with regard to equalization.

[Marcel Gagnon, Bloc, Champlain, QC]

Mr. Speaker, you can tell I was anxious to rise to participate in the debate. I was not a hockey referee, but I was quite athletic in my youth, and I am always anxious to get into a debate such as this.

I find it quite interesting to hear the member for Joliette. I was listening to Mr. Séguin, the Quebec finance minister, who said that the equalization formula is so complicated that, according to him—and he said this as a bit of a joke—there may be 10 or 12 people who fully understand it. He said that its very complexity makes it extremely expensive to administer. We are fortunate, because the member for Joliette must be one of those 10 or 12 people who have a good understanding of the equalization formula.

When I see that the government took into account 3,000 variables to distribute a tax base of $10 billion out of $180 billion, I think this is extremely costly and there should be other formulas.

I would like to hear what my colleague has to say about the amounts that we could save if, for example, Quebec were to become independent and keep all its revenues. I would like him to comment on this.

[The Deputy Speaker]

I ask the member for Joliette to share this expertise with us for about one minute.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, in only one minute, I will obviously not be able to provide a comprehensive answer to the hon. member for Champlain.

However, I think he identified the real problem here. Quebec needs equalization within federalism as it exists because we have to get back part of the taxes we are paying Ottawa. We also need health and education transfers to carry out our responsibilities because, as I said earlier, part of our taxes goes to Ottawa.

If we were to get back all the taxes we pay, we would be in a position to manage services to the public much more efficiently than at present. We could avoid duplication and overlap in provincial jurisdictions and abolish all the various institutes and foundations the federal government has established to increase its visibility.

To conclude, let me give the House an example. In the last budget, the finance minister announced the creation of the Canadian Learning Institute, with an initial budget of $100 million. That is $100 million that is going to waste and that could have been used to better educate our children.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I am very pleased to speak to Bill C-54, an act to amend the federal-provincial fiscal arrangements, in order to ensure continuity in the equalization payments to Quebec and provinces that are entitled to receive them.

The equalization system in Canada is governed by legislation that usually lasts five years. The current legislation took effect on April 1, 1999 and will expire on March 31, 2004. Effective March 31, 2004, there will need to be new legislation on equalization that governs federal-provincial fiscal arrangements.

The federal government currently does not seem to want to respond favourably to the provinces' demands with respect to upcoming legislation to cover 2004 to 2009. In addition, for a reason that is hard to understand, the federal government is proposing a bill five months before the current legislation expires. Why introduce this bill today when it could do so in February 2004, should an agreement not be reached with the provinces?

The fact that the federal government is introducing this bill when the provinces and the federal government are still negotiating sends a rather offensive message to the provinces. Some very constructive suggestions for improving the legislation have been put on the table by the provinces. Some are political, while others are technical. We know that the equalization system is very complicated and that it has been a roller coaster ride for the provinces for the past few years.

Once it has been announced that the provinces will receive $500 million or $1 billion less, a few months later the numbers are recalculated and we are told that the provinces are entitled to $500 million or $1 billion more. This scenario creates unbearable confusion in the day to day management of provincial budgets. We would like to be able to correct this. The provinces also made proposals to improve the situation.

What we have before us is some kind of temporary legislation to cover this period of uncertainty about who is leading the government in the Parliament of Canada, because Canada currently has a two-headed government, with one head preparing to leave and the other anxious to take over as soon as possible but unable to do so. In the meantime, instead of resolving the situation and determining who is the head of the government who will be answering to the public, every trick in the book is being used not to offend the current Prime Minister, who is on his way out, and to give a fairly free hand to the next prime minister.

It so happens that this one-year extension will also cover the next election campaign and, consequently, place the provinces in a less favourable bargaining position to get what they want from the federal government. The Bloc Quebecois therefore intends not to support the principle of the bill.

We do not have anything against equalization per se, of course. I think that our equalization model has worked in the past. But it is not the best. I think that, ideally, Quebec should become a sovereign state and control 100% of its taxes and 100% of its revenues, so that it can be managed as a self-sufficient and mature state.

Until then, the equalization system in the Canadian context must be maintained. However, it should not be used the way it is currently being used by the federal government, and definitely not in the spirit in which this bill has been introduced.

We therefore cannot support the principle of Bill C-54, even though we support the principle of equalization. We will try to bring forward amendments so that, if an agreement on a new formula can be reached by March 31, 2004 between the provinces and the federal government, the new formula can be applied to payments made to the provinces.

The Bloc Quebecois will try to give back to the provinces the bargaining power the federal government is taking away from them. Indeed, it is taking the wind out their sails by declaring that it will be preserving the status quo for at least one more year. This way, the government is in no rush to negotiate with the provinces and does not need to act quickly to correct the situation.

We will try to amend the bill at committee.

As for our position, we shall see what happens when we get to third reading. We shall see where we are when the time comes to pass the bill. Apart from the future prime minister, hardly anyone wants to see this bill put through as soon as possible. We want time to be taken to allow the provinces to put forward their arguments. They also need to be able to gain some points, and the entire system needs to be improved so that we end up with the best equalization payment system possible.

It is not a matter of simply changing the law to please the potential PM, as we did with the effective date of the electoral map. The same logic applies here. The non-partisan electoral legislation called for the electoral map to take effect one year after its official recognition. The elections ought therefore to be held a year after the electoral map is adopted. The government decided to changethis and move the date to April 1, to suit the emperor in waiting.

So now they are doing the same thing with the bill on equalization payments. Democracy stands to lose as a result of what was done with the electoral map, but in this case it is fair treatment of the provinces that will lose out. I think the public will be able to judge this situation for itself.

The current legislation has another five months to run before it expires on March 31, 2004. Let us allow time for negotiation. As I said, this is one more demonstration of the paralysis that is setting in within the federal government. It seems that no one wants to shake it out of its paralysis.

On Tuesday, we had a votable motion in which the Bloc Quebecois called on the Prime Minister to step down as soon as possible. There are many within the Liberal majority who have been working for a long time to get the present PM to go, but that majority decided to vote in favour of his staying. Unfortunately for them, we have learned that our motion has had some impact on caucus and on the Liberals' discussions. At last, the Prime Minister is wondering whether he ought not to leave as soon as possible. He realizes that there are some major problems.

In practical applications, like the equalization program, we are dealing with the money that allows provinces to balance their budget. It is imperative that the best possible legislation be enacted. And for that, one needs time to negotiate.

For the sake of those who are not familiar with the notion, the purpose of equalization is to reduce horizontal gaps in the provinces' fiscal capacities. There are extremely complex mechanisms to determine how to do that. The basic principle is still to better balance the means of the provinces. Also, the federal government makes equalization payments according to some set mechanisms.

And then there are the demands from the provinces. I talked about that earlier. They should be the reason for the government's action today. Instead of putting forward this bill, the federal government should send a clear message to the public that it is trying to find the best possible equalization arrangement, that the finance minister is in contact with his provincial counterparts, that they are hopeful something positive will come out of it and that a bill taking those arrangements into account will be forthcoming.

That is not the message that is being sent by the finance minister and the federal government. The message we are getting is that they are trying to sweep the issue under the rug, gain one year, and by then the provinces will have no more leverage, and they will be able to get their way in any equalization agreement.

What the provinces are asking is first that the formula be changed to take into account the fiscal capacity of all ten provinces. Currently, it only takes into account the fiscal capacity of a sampling of provinces. It was realized that in actual facts this did not lead to the desired fairness. The formula proposed by the provinces would cost the federal government about $3 billion more a year. It is a lot of money, but that must be put into context. Last year, that same government had a $7 billion surplus .

In fact, for the sake of equity between Canadian provinces, would it not be better to allocate that supplementary $3 billion on an annual basis? It would help solve part of the fiscal imbalance across Canada. This interesting proposal was made by the provinces and other stakeholders at a press conference on October 9, 2003. It was made as they were preparing for the meeting of the federal provincial finance ministers. That meeting was held on October 10, 2003.

Although that meeting with the Minister of Finance did take place, now, even before the month of October has gone by, they are introducing a bill saying that the status quo will remain for one more year. Instead of showing some courage, instead of giving a clear answer to the provinces, the federal government has decided that it would put off dealing with the problem. I think such behaviour is totally inappropriate.

There is another provincial demand that even the federal government has to recognize. The review mechanism needs to be reviewed. As things stand now, it is very difficult for the provinces to know in advance what equalization payments they will be entitled to. Therefore, the provinces are asking that Ottawa make payments more predictable.

In our system, if there is one frustrating thing about managing a provincial budget, it is certainly suddenly finding out that an additional amount is forthcoming or not. That plays havoc with any attempt to balance the budget. If we were to make only one technical change in the agreements on equalization payments, this would surely be the one to make.

We are proposing that any adjustment linked to new statistics be automatically spread over a period of three to five years instead of being required in the year where statistical changes happen; that will reduce the volatility of the adjustments.

I would add that in case of a sudden increase or decrease in available moneys, it can also be frustrating to hear something like, “You have to give us $350 millions back, next year” for example, or, “You will receive $350 million more”.

This has happened to the Quebec government. It was difficult to maintain a balanced budget. We needed more money in health and suddenly, at the end of the fiscal year, we discovered that there was a substantial cushion we could have used during the whole year if only we had known.

Consequently, the people of Quebec did not benefit from the services they were entitled to, not because the Quebec government did not want them to have those services, but because it did not have the right information as to what its budget would be. It is important, therefore, that this be corrected.

We have learned through leaks that the federal government might be willing to agree to this request. If this is true, why not integrate it right away in this bill? Why not find a way to let it be known that this request would be accepted?This would show some good will on the part of the federal government. As far as I know, there is noting of the kind in the bill as written.

The provinces are also asking for a simplification of the program, because reaction to the word equalization itself is that this is something rather mysterious that calls for a lot of expertise. The fact is that the system is very complex system.

For example, there are about 3,000 variables used just to calculate transfers to the provinces. All this should be made more transparent. This is what the provinces have requested. In addition, it has been requested that all general revenues, and not just some of them, be included to better reflect the context within which the system operates.

We would also like some of the 33 sources of revenue currently used to determine the provincial fiscal capacities to be reviewed, particularly the tax-back effect, which can lead receiving provinces to be less interested in adopting measures to stimulate economic growth.

Indeed, when we learn after the fact that funds were available, those are resources that we could not anticipate, because people in the provinces are asking their governments to be prudent and to refrain from counting on revenues that they are not sure they will get. By correcting this situation, provinces will be able to do better.

This behaviour, also seen in the case of Bill C-54 on equalization, is another example of the paralysis now affecting the legislative process in Parliament. Another example is the fact that the government is supposed to bring down a budget in February. The Minister of Finance himself says that he cannot prepare his budget without knowing what the prime minister wants to do. The same thing is true of equalization.

The prime minister in waiting has said, “I reserve the right to review every single government decision”. Thus, the proposal before us reflects that clearly: this bill provides the minimum to the provinces—maintaining the status quo—but it does not correct the legislation. This is another way of saying, “We will see what happens when the new prime minister comes in”. Nevertheless, this bill says nothing about day to day management, the mechanisms that have to be changed, and the recommendations that have been approved, and that should be there.

In my opinion, it would be more responsible to say that we are against this bill because the equalization system must be improved, rather than introducing it as it is, saying that it will be in force for a year, and that later on we will see if there are changes resulting from negotiations with the provinces.

On the one hand, it is an authoritarian and somewhat centralizing behaviour to say, “We will introduce a bill that maintains the status quo, but we do not feel obliged to negotiate improvements before the bill is passed. As the federal government, we are taking out an insurance policy that will enable us to keep operating”.

On the other hand, however, the provinces are given no guarantees that they will be able to obtain some of the improvements they believe are necessary. The federal government shows no signs of the spirit of compromise that would be necessary for such a bill.

As things stand, the Bloc Quebecois cannot vote in favour of this bill at third reading unless, in the end, we see improvements that will satisfy the provinces. Let us take the time to include these improvements. There is no urgent need to adopt this bill in its current form.

Obviously, it is very important that equalization continue, but in order to achieve that, we have the time to do good work, to achieve a satisfactory result, to include appropriate measures in the bill, and to integrate what the federal government is ready to accept as a result of negotiations with the provinces, and which is not there at present.

This is the kind of behaviour on the part of the federal government that exasperates the provinces. If the future prime minister wanted to prove that things are going to be different in the future, that he will not be a Liberal like the rest, that he will not take a centralizing approach like the others, this would have been the perfect opportunity to demonstrate that by taking a different approach here, but this does not appear to be the case.

When it comes to the resolving the fiscal imbalance, improving the equalization program or finding a way to regulate federal spending powers, the current government has done nothing to show that things will be done differently in the future.

Since our party is here to defend Quebec's interests and wishes, like all the other provinces, and since we want Quebec to get its rightful share and ensure the fairest possible system as long as we are part of the federal system, we feel it would be irresponsible to support this bill in its current form only to be told in two or three months, “You agreed to it” or to hear, during the next election campaign, “You voted in support of the bill as it stood and that should suffice. Why are you asking for more?”

In my opinion, the public needs to hear this. People should also understand that equalization is working. However, it must be based on the year in progress and on a functional model that will be operational and that will take into consideration the demands of the provinces. When this has been done and when these changes have been made, we will be able to adopt legislation that meets the requirements of Quebec, the provinces and the federal government.

In the event that no agreement is reached and a bill remains necessary to ensure continuity, there will always be time to obtain the Bloc's cooperation. In the meantime, however, there is no question of adopting such legislation.

The principle of this bill, as drafted, is to recognize the status quo, which is not what people want. I know that Quebeckers will support the Bloc Quebecois, as we are speaking on their behalf here.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I enjoyed the speech by the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, especially his conclusion, which was extremely balanced.

In my view, he explained the Bloc Quebecois' position very well. Consequently, I would like to know if, in his view, the fact that this bill is being introduced at this time is not another illustration of the fact that we are currently living, albeit involuntarily, through a period of paralysis in the House of Commons and in this government, because of this unending transition between the current Prime Minister and the future prime minister, the member for LaSalle—Émard.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I think the paralysis started to set in this past summer, as soon as we learned there would be only one real candidate in the Liberty Party of Canada leadership race.

So an overall plan was drawn up. First, change the effective date for the electoral map, so that the gentleman soon to be prime minister can call an election without having to defend himself here in this House. He will thus be able to avoid having to take part in any debate during oral question period, and will also manage to avoid the Auditor General's report scheduled for November. In fact, if Parliament is not sitting at that time, that is a good way to get around all this. That is part one of the plan.

Part two concerns the equalization payments we are discussing today. They are talking about maintaining the status quo and extending the period by one year. This will get us over the coming year while not requiring the new prime minister to disclose his position on this matter. At the same time, it saves the present government from public contradiction such as we have witnessed with Via Rail and a number of other instances. The government and the present prime minister have their hands tied. The PM is unable to take any decisions to get government business moving.

The same thing is happening now with the equalization payments, and this is why we must avoid falling into the trap. It must be made clear that equalization payments are a good thing, but it is not a good thing to pass this bill now. It is not a good bill, because it places the provinces and our fellow citizens at a disadvantage.

Before such a bill is passed, maximum use must be made of the negotiation approach. In February 2004, there will be all the time in the world to enact such a bill. If it should happen that an agreement is not reached, the period could then be extended so as to ensure the equalization payment system can continue to operate.

If an agreement is reached in the meantime, however, it must be adopted in the House and not in a bill such as the one we have before us at this time, which will enable the federal government to gain two years of negotiation. Once again, this perpetuates the traditional view that the federal level has the spending power, has the money, and has the upper hand whenever anything is asked of it.

In this debate, we want to see equality of opportunity for the provinces and the federal government. We do not want to see the federal government armed with one more tool or weapon, thus creating an imbalance so that we will not get the best possible system.

[Marcel Gagnon, Bloc, Champlain, QC]

Mr. Speaker, I find today's debate extremely interesting and I am learning a lot about equalization and its components.

I have one concern about this bill, and I think my colleague mentioned it briefly towards the end, but I would like him to come back to this issue.

As we all know, there will be an election next spring. Short of a miracle, an election will be held. Right now, the provinces are in a strong position to negotiate and have many demands. In the next five months, they could have the opportunity to negotiate and get what they deserve.

If the agreement is extended for a year and a half, the provinces may lose ground. The provinces are now the strongest, but the new elected government may not see it that way. This is one reason why I will be voting against this bill, to ensure that the provinces are in a strong position to negotiate and get their fair share.

Also, as my hon. colleague briefly mentioned, for these people to say that we voted for such a measure is both frustrating and insulting. I also have a feeling that we will be criticized later on for supporting the previous formula because we voted in favour of a bill extending the agreement for another year.

I would like the hon. member to clarify some of my concerns and tell me if I am right in my thinking.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, it is clear that the provinces are currently in a strong position to make interesting gains if negotiations take place when they are supposed to.

The current legislation expires on March 31, 2004. We have specific demands. If the bill is passed as it stands, the next election campaign will find the government making political promises for its next mandate, when it could have easily resolved the situation already. The government will make a partisan issue out of certain aspects of equalization management, which should be non-partisan.

We hope this is resolved as soon as possible in a healthy climate of federal-provincial relations, and not through blackmail. The best example of this is that the provinces are demanding that the formula be changed in order to take into account the fiscal capacity of the ten provinces. This is a logical argument.

Based on the current method, we have had for several years a system based on a sample of five or six provinces. It is suggested that, given Canada's size, the economy and the new reality, all the provinces should be taken into account. But this comes at a price, and it would cost the federal government an extra $3 billion.

It would be healthy to start negotiating now and see this process through. If no agreement has been reached by February or March 2004, when the current legislation expires, we will vote in this House according to the progress made in ensuring that the system can continue to operate and payments continue to be made.

Why give the federal government another excuse for saying it does not have to negotiate right away with the provinces. As far as including all ten provinces is concerned, the government could take an extra year to work on that, which would save a great deal of time in the end. We can never tell what the fiscal realities will be six or twelve months from now. We have seen what happened with the money the federal government had committed to pay the provinces. The current finance minister has been trying for the past six months to find the right excuse not to pay out, at the end of 2004, the money promised for health.

If there is a lesson to be learned in this Parliament, it is that it is much better to negotiate when we have the power to do so and when we have the time to do a good job of it. This is much better than to sign off on extensions of the status quo which, at the end of the day, will cost more money and will leave the provinces with no power to go after the money they are owed and living with the past.

That is why this bill, as it stands, is not acceptable to the Bloc Quebecois. Let us debate the issue. We will debate it in committee, just as the public will debate it, then the premiers of the provinces will make their demands. But let us not pass this bill until as much interaction as possible has taken place between the provinces and the federal government. I think that it is our duty, as parliamentarians and members representing Quebec in this House, to take this approach.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, I was told that the NDP would go before the Bloc Quebecois if the member who was supposed to speak was here. Since she is not ready, I will proceed. Is that correct, Mr. Speaker.

[The Deputy Speaker]

The Chair simply seeks guidance on whether there is an agreement or otherwise. If the member for Halifax is disposed to take the floor now, the Chair will recognize her.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I have just returned from the foreign affairs committee meeting and I am trying to get into stride in this very important debate.

I had an opportunity at the outset to question the parliamentary secretary on the issue of the lifting of the ceiling on equalization payments. It is an arbitrary ceiling that was in fact imposed many years ago. When I was pressing him on this question he took great offence that I was not congratulating the government on actually doing what needed to be done, which is to finally lift that arbitrary ceiling.

This has been a very serious problem and a very punishing one for many provinces. I can speak particularly of my own province of Nova Scotia and others in Atlantic Canada. Other have not provinces as well are in receipt of federal equalization payments. They depend very much on the health and social transfer payments.

The difficulty I have when the Parliamentary Secretary to the Minister of Finance goes on the offence, which I guess is a political tactic, is that the government has now been in power for a full decade. Equalization has been a problem for our provinces that are desperately dependent upon equalization payments for the whole 10 years. If I do not see it as a priority to be falling all over the government and falling on my knees in gratitude to the government that it has finally moved to the point of being ready to lift the ceiling, then I hope he can understand that it arises out of knowing what incredible hardship has been endured in many of those provinces by a great many of our citizens.

Sometimes when we are having a debate about transfer payments and equalization payments it sounds as though it is just a fight over money. It sounds as if it is a question of dollars and cents and playing around with statistics and figures.

Make no mistake about it. It is about the very lives of great numbers of our citizens, particularly our most vulnerable citizens who do not have deep pockets, who do not have fat bank accounts, who are tragically on the receiving end of massive cuts by the federal government.

They are unilateral cuts, reckless cuts and punishing cuts to the most vital public services on which people depend. This is especially true of health care. The government has arbitrarily taken out billions and billions of dollars from transfers to the provinces. It means that the package of our fiscal transfers that includes equalization, the territorial funding formula and the social and health transfers really loses any coherence and integrity.

It is intended that this is a coordinated financial package that theoretically, and the minister said it again and again today in his speeches, exists for the purpose of ensuring that all Canadians, regardless of where they happen to live and regardless of what their wealth is, are able to have reasonably equitable access to the services that they require. These services are supposed to be available to every Canadian citizen. It assures that these services shall be feasible to be provided at roughly the same level of taxation.

That all has been absolutely out of balance since the infamous budget in 1995. That budget began hacking, slashing and burning some of the most vital services. It put further strain on our equalization payments.

To make a brief contextual comment, Canada is one of the most decentralized federations in the world and fiscal arrangements between federal and provincial levels of government are the very glue that ties this nation together.

With that supposed guarantee of comparable levels of service in the areas of health care, education, income support and so on, equalization is the key to the entire system of federal-provincial fiscal relations. What is very frustrating and infuriating is that the government, in coming in today with this legislative measure, expects there to be a great display of gratitude and instant support without there being any question about what is going on here.

The fact of the matter is it is built into the equalization agreement that every five years there will be a full revisiting, review and revisions made to that formula to better serve Canadians. We see here that at the eleventh hour because the government has not gotten that job done, it is asking us to rush something through that would guarantee that the equalization payments would be possible to flow after April 1.

That is not good enough. It shows quite clearly that the government has not taken seriously some of the changes around which there is actually a very high degree of consensus by the provincial governments. In response to that, the federal government should have been moving to introduce the kind of changes that are needed.

It is not just a matter of Canadians feeling aggrieved by the fact that this has not been a priority for the government. It is also something that arouses great fear in Canadians. It is not without foundation. Before very long the prime minister in waiting, the member who largely hides behind the curtains when it comes to a lot of the important decisions being made on the floor of the House of Commons these days is actually going to be the prime minister. He is not going to be just in the role of finance minister where he inflicted great harm on many of these fundamental programs on which Canadians depend, but he is actually going to be the prime minister.

That member will be in a position to fundamentally reorient some of these programs. It is absolutely important that we move to make the kinds of changes that are needed before we find that the member for LaSalle--Émard is in fact prepared to take a meat axe to our equalization payments in the same way that he did to our health and social transfers.

The parliamentary secretary said that the government is making some changes to the CHST. It is true that the government has finally capitulated to the pressure of provincial governments that have said that the federal government cannot keep doing this to them. Great inequities and great injustices were inflicted upon people's lives as a result of the major damage done to these programs over the period when the member for LaSalle--Émard was the finance minister.

I do not think the government should be surprised that there is concern about delaying further on dealing with the new regime of federal-provincial fiscal relations. There is a basis for the apprehension about what we might end up with under the provisional prime minister when he actually is at the helm.

The reality is that for the past two decades as social services expanded, federal transfers kept pace with social spending. That goes back to the early years of these programs. By the 1980s, under the previous Liberal government, the federal government began a series of cuts. It drastically reduced the federal share from 24% of provincial revenue in 1980 to just 15% before we even got to the year 2000. This has put increasing pressures on the poorest provinces which find themselves facing increasing financial constraints.

I recognize that the fiscal capacity of the provinces across the country is not the same by any means. It is the federal government that has been congratulating itself and celebrating the very large surpluses in recent years. Most of the provinces have not had large surpluses with which they could make up the deficiencies from those major cuts at the federal level.

I want to say clearly on the record that I do not have a lot of sympathy for some of the provinces. Some provinces have taken themselves out of the surplus situation in which they would have been by giving massive tax cuts to those who least needed them instead of putting those resources into shoring up and strengthening health care services, child care, home care, accessibility to education and so on.

The reality is that the majority of provinces, and I will speak for my own province and the other Atlantic provinces when I say this, have been absolutely unable to make up for the massive reductions that have come at the hands of the federal government both because of the cuts in social transfers and the arbitrary ceiling that was maintained by the federal government through all of these years. It could have lifted that ceiling instead of shifting the burden onto the provinces that did not have surpluses and did not have any room to generate the extra dollars needed to make up the shortfall.

It is disappointing in the extreme that the government has not dealt with this crisis. Now it is saying it may or may not get to dealing with the revisions in the formula and so it is asking for carte blanche from this Parliament here and now for an extension of the status quo.

If the status quo were adequate, if it were sufficient and equitable and if it worked for people, I do not suppose there would be any resistance on the part of members to carry on with the status quo. The reality is that the status quo is not serving a great many Canadians in the way that is needed. It is not acceptable from our point of view to ask us to simply give the green light to carry on with the inequities and the injustices that are embedded in the current system.

All of the provinces, recipients of equalization payments and non-recipients alike, have consistently supported the call for adequate federal equalization. I have heard the occasional grumbling from Alberta. I was glad to hear some of the members from Alberta, even in the Alliance, say that they actually support a fair system of equalization payments. This is all the more reason the government should get on with delivering on the improvements and the modifications in the current equalization formula and not ask for carte blanche to carry on with the inequities that are there now.

The government tends to talk out of both sides of its mouth. One minute it is crowing and congratulating itself about a very sizeable surplus. We all know the game now. Canadians know the game that when the government brings in its budgets, it lowballs deliberately, quite systematically and somewhat cynically, the size of the surplus. Then when the real size of the surplus becomes apparent, the government again engages in a round of self-congratulation, saying that it has managed so well, not ever acknowledging that this is taken out of the hides of a great many vulnerable Canadians.

The government says that it has managed so well, which was by restricting many programs that are fundamentally important to people, that it now has a bigger surplus, which is a measure of how well it has done. It now looks like we are headed toward a surplus of somewhere between $6 billion and $10 billion. Although at this point we cannot estimate the surplus, it is mind-boggling. Nevertheless, the government is unprepared to make the kind of changes in the equalization formula that would result in some of that surplus being redistributed in the form of equalization payments that are desperately needed.

I am not an authority on the actual figures that we are talking about here. I want to quote briefly from a report that came out of a finance ministers meeting that took place here in Ottawa a week ago today, I believe. What was pointed out was that the kind of changes in the present equalization formula that are being sought by the provinces would result in a $3 billion change in the way the federal government redistributes money to the provinces.

The reality is that Ottawa has a sizable surplus. It has already been confirmed that it is $2.1 billion for the first four months of the year. What we know is that many provinces are facing, not just the normal strains of insufficient resources but in some cases the major punishing strains from totally unpredictable events. I speak of the situation we faced in Nova Scotia but I certainly recognize that this is also true in other provinces, whether we look at the impact of SARS, mad cow disease or the horrendous floods and fires in other provinces.

I want to speak about my province of Nova Scotia and the riding of Halifax that I represent . The current equalization formula does not serve us fairly and adequately. We find ourselves in the situation of huge costs that have been inflicted by hurricane Juan. Almost simultaneous with that, we find out that because of the way the equalization formula applies, and it would seem the inability of government to do the kind of calculations that would allow for a timely adjustment, we also face a huge clawback of equalization money paid in earlier years.

It has to be recognized that the formula that is needed and what has been largely agreed to, as I understand it, among the provinces and in negotiation with the federal government would mean a 20% raise for Nova Scotia in its equalization payments next year. That translates into about $240 million.

I can tell the House that it would be an act of irresponsibility on my part to stand in the House, knowing how inadequate the current formula is and how pressing the financial needs are in Nova Scotia, to simply vote for the status quo when the changes would deliver some desperately needed resources to my province so it could live up to what is supposed to be the purpose of equalization payments and the promise of social and health transfers; that is, for people to be assured of having access to the basic services that they require at roughly comparable taxation rates. The current formula does not do it. That is why we cannot possibly give carte blanche to carry on with it.

The government should move quickly to remedy the inequities and injustices in that formula. If that means keeping this session of Parliament open, we are ready to do that because I for one would not know how to explain that this Parliament is in such a state of paralysis that it will shut down instead of dealing with these kinds of crises that are affecting people in their daily lives.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I listened to the member and I have to say that I am perplexed as to what the member is trying to suggest. She is suggesting on the one hand that the government should come up with a new equalization formula with the provinces, which is in fact what we are doing. We have had very good discussions with the provinces. The member mentioned that the Minister of Finance met with his counterparts on October 10. It was a very useful and fruitful discussion and it is an ongoing process. We want to get it right.

On the other hand, the member seems to think that there is something objectionable or mischievous about the government introducing legislation that essentially is an insurance policy to ensure that in the unlikely event that we do not conclude an agreement by March 31 the first payment would roll out on April 16. That member would stand up and complain on April 16 if in fact equalization payments did not go forward.

Even when we were looking at cutting costs during the mid-1990s, equalization payments were not affected at all. The government believes very strongly in equalization. It is the cornerstone of the government and we continue to support it. We have had, as I have said, very useful and fruitful negotiations and discussions with the provinces.

However it is prudent management to ensure we have a contingency where if in fact it did not happen on March 31, the payments would still flow up to a year. Nova Scotia wants that. British Columbia wants that. The provinces want that. We have been discussing in good faith and I think the member has been suggesting that we have not.

Would the member rather we not introduce this, that we continue to have negotiations and if for some unforeseen reason we do not get an agreement, that payments would end after March 31? If that is what she wants to tell the Canadian people, that she and her party do not want to have that extra bit of insurance, then she should say so.

I believe this is the right thing to do. I have not heard anyone suggest for a moment that we have not been discussing with our provincial counterparts in good faith.

Yes, the member is absolutely right. Every five years we do this. However for her to suggest that because we are in October and this ends in March we are doing it at the last minute, I do not think so. What we are trying to do is make sure we have the insurance.

How does she respond to the issue that if we do not introduce this and something unforeseen happens, the payments will not flow?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, anyone who is listening to what I have said on the subject, anyone who knows how delinquent the government has been in ensuring that a fair and equitable package is in place to serve the needs of have not provinces, could not possibly suggest that I am advocating that if there are no payments after April 16, then that is just tough.

My point is that the government has been in place for 10 years and there has been a need for adjustments all the way along, including the lifting of a ceiling that only now is the federal government finally prepared to do when it has been punishing Canadians for 10 years.

There is something pathetic about the fact that we find ourselves here in October saying that we need a contingency plan, that we need to take the pressure off the federal government, the heat off the federal government and remove the hammer that is there to press the federal government in case almost six months from now it still has not done it.

We seem to be prepared to suspend the very federal governmental apparatus that needs to be there to serve Canadians. I do not know how to explain to people that we are now at the end of October and we have to make contingency plans for the possibility that the government is not likely to function for the next six months. That is what is going on.

Embarrassment ensues every day in the House. We have the battling of the egos of the two aspirants for the prime ministership, the one who does not to move over despite the fact that he lost the confidence of his own caucus and of Canadians, and the other one who has not been elected to office but who hides behind the curtains most of the time and conveniently avoids addressing most of the major issues, but has his henchmen saying that the government had better not commit to any money because he will review every bit. This place is in a state of paralysis.

I do not think it is up to opposition members to help the government out of the fix of paralysis that it has us in. It is up to the government to do its job, to sort out its internal petty bickering and to get on with arriving at a new formula for equalization that is long overdue so the money can flow after April 16. It should not depend upon us to get it off the hook by asking us to rush through a piece of contingency legislation.

[Diane Ablonczy, Canadian Alliance, Calgary Nose Hill, AB]

Mr. Speaker, I was interested to hear the parliamentary secretary's characterization of the legislation as an insurance policy.

I would be interested in hearing my colleague's take with regard to the legislation, which she points out is simply to bail out the government for not getting its job done and letting the status quo limp on.

Does the member feel that the government is justified in calling the legislation an insurance policy? I am curious about that.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, there are a lot of common views among members of the official opposition, but I am equally annoyed and amused by the government referring again and again to the legislation that is before us as an insurance policy.

What the government is really asking is that we provide a kind of cover for its ineptitude and paralysis. It wants us to ensure that it does not face the pressure that is appropriate to bring to bear and that it should feel to deliver on that new equalization formula by April 1. In that sense, I suppose, it is asking us to provide an insurance policy for it to cover for its ineptitude.

I do not think parliamentarians should be asked almost six months in advance to let the government off the hook from getting the job done. It is an odd notion of an insurance policy but in terms of who is being insured, it is not Canadians who need a fair and equitable equalization formula. It is the government asking us to ensure that it does not face the embarrassment and the exposure of its own failure to fulfill the commitments that Canadians want and deserve with respect to an equalization formula that works for them.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I totally agree with the member's analysis. I would like to remind the parliamentary secretary, who, unfortunately, is now leaving, that it is the first time that a government introduces such a bill in the House of Commons. Despite the fact that the equalization formula is renegotiated every five years, the government had never introduced such a bill. So there is something exceptional about it.

I would ask the member if, instead of simply being an insurance policy as the parliamentary secretary was saying, the bill before us is not primarily a tool that will allow the Liberals to adjourn the House as they please.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I generally agree with the point the member has made that this problem has been created by the paralysis in the House. I am not sure that it is a cause of the paralysis in the House. I think because the government has virtually ground to a halt and made it impossible to really function, we find ourselves now with this kind of contingency legislation.

I, for one, have a very difficult time trying to explain this to my own constituents. I do not want to pretend that I have a lot of constituents phoning me up or writing me letters asking me to explain why the government is asking me to support legislation to let it off the hook six months from now with respect to delivering on the new equalization formula. That is just not the case.

What people are asking is how can it be, and I mentioned this previously. When a cabinet member comes forward with a positive, progressive initiative to invest heavily in our railway system, the member for LaSalle—Émard has one of his henchmen go to the people involved to tell them that his boss will not necessarily agree to honour the commitments made, and therefore, they had better not dare commit a single cent. I do not know how to explain that.

I guess I do understand why the government wants to shut down in the embarrassment of all this, but surely a government that wants to lead the country should be able to figure out how to break this log jam and get on with the business of the nation.

[Marcel Gagnon, Bloc, Champlain, QC]

Mr. Speaker, here we have a debate that seems very curious to me. We have just heard an hon. member say that she does not agree with this kind of insurance policy. I agree with her completely.

It is quite surprising to see a government, not yet a full three years into its mandate, elected with a huge majority, hurrying to adjourn the House and get ready for an election, when in theory a government is elected for five years. People are asking us questions, “Why is there such a hurry? Why do you have to go so fast or stop working now, when the government is still in its teenage years?” Elected for a five year term, we have not yet completed three years, and here we are passing laws to take out insurance policies, just in case, and put off the work. It seems very curious.

I forgot to mention that I will be sharing my time with the hon. member for Bas-Richelieu—Nicolet—Bécancour.

I do not think we need this insurance policy, because we have all the time in the world. This agreement is good for five years and there are still five months left until it is due for renewal. We simply have to keep on sitting and working. The provinces would like nothing better.

Why should we pass a law that gives the federal government an insurance policy against its inaction and against the fact that we will not be sitting, even though we were only elected three years ago? This Parliament's mandate could theoretically last five years. Why is this government so inactive that it needs an insurance policy? At the same time, what would that insurance policy provide to the provinces?

In the spring, we will be having an election. Between now and the spring, we will hardly be sitting at all. Why? Because there is a man at the controls who does not want to show himself. And what is more, there is a man who shows himself to us, but he is not at the controls. The other day, he said that the Liberals could walk and chew gum at the same time. The difference here is that one of them is doing the walking and the other is chewing the gum.

It is quite curious to see that we are in a situation where nothing is moving forward. This is the second bill we have had to consider that moves something up. It is also the first time that a government has presented a bill like the one that moved the date of implementation of the new electoral boundaries ahead. Under normal circumstances, we would have had until August 28 to work with the old electoral boundaries if there were an election.

Suddenly, there is someone outside the House, walking between the walls and the curtain, who is pulling the strings. Or rather to ensure even greater invisibility, he is walking between the wallpaper and the wall. Sometimes he is visible. Suddenly, like the holy ghost, he disappears. This makes things difficult.

We are being asked to adopt this bill, which will mean that provinces will not be assured of being heard. Once this bill is passed, the government will have one year. This means that there will be an election and a new government. As a result, those in power will be able to say that they have all the time in the world, and the provinces will not be assured of being heard. This is normally the case, and it will be even more true once the hon. member for LaSalle—Émard is at the helm.

It is difficult to believe that Canadians and Quebeckers will be subjected to something so completely illogical.

The equalization program is up for discussion and is being discussed. It is also difficult to understand. It must be renewed and is subject to constant negotiations. This is an extremely costly program to administer and is extremely difficult for all the provinces and those heading the negotiations to understand.

The old program is being extended, simply because there is a refusal to deal with our obligations. It would be infinitely easier, as the Bloc Quebecois motion asked, for the hon. member for LaSalle—Émard, the future prime minister, to come to the House. In a few days, he will be elected leader of his party, so he should be in his seat. Instead of paralyzing the government, which is afraid of being wrong about issues the hon. member will be asked about prior to an election, he should face the music so that negotiations on equalization can continue and so that we can do our jobs.

We will not be asking for an insurance policy for the federal government. The best insurance is for us to do our jobs. There are five months left in which to negotiate with the provinces and renew the equalization agreement. Then the provinces should be able to demand whatever they are currently unable to demand because everyone has been waiting for the federal government to renew the agreement since the spring.

We can see what is happening with government spending and all that is being spent to paralyze the government. I know how much it costs to run this government and the House of Commons. For several months, we have been at a standstill. A telling comparison would be a car without snow tires on an icy road. The wheels are spinning and the car is not moving. We are just killing time.

A more logical approach, and a better insurance policy, would be for those who are pulling the strings from behing the scene come to the House. We could then do our work.

The hon. member for Joliette mentioned the astounding increase in spending, especially in the administration of a program such as this one. For example, he said that the cost of running the federal bureaucracy has increased 35%. Meanwhile, they managed to cut the budgets of almost everyone. They have cut the health budgets of the provinces and demanded all kinds of things in return for handing them their due.

The income of seniors has been cut, because they were not given the guaranteed income supplement. We know a bill is in the works, just before the election, to right these wrongs. The fact remains that some $3 billion has been taken from the income of the neediest seniors. The EI fund has also been used.

This government feels it can used whatever means are necessary to serve the political interests of the party and of the one who is pulling the strings behind the scene.

To conclude, I would like to tell you that the best insurance policy we can get is for the House to go on sitting and finish its work, so that the provinces and our fellow citizens will be well served.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, if I understood properly, the member for Champlain did not have enough time to present his whole case, if I may put it that way.

He concluded by using the expression insurance policy, which the parliamentary secretary used earlier when he said he was introducing this bill so that we would pass it and it would be our insurance policy.

I would like to know what the member thinks about this argument, since this is the first time that such a bill has been before the House. Never before, in the context of negotiations for the renewal of equalization formulas, has a government had to introduce a bill extending the existing agreements for an additional year because it has not been able to get results.