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House of Commons Hansard #148 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was provinces.

Topics

PetitionsRoutine Proceedings

12:05 p.m.

Canadian Alliance

Inky Mark Canadian Alliance Dauphin—Swan River, MB

Madam Speaker, the second petition calls upon Parliament to protect the rights of Canadians to be free to share their religious beliefs without fear of persecution.

PetitionsRoutine Proceedings

12:05 p.m.

Canadian Alliance

Inky Mark Canadian Alliance Dauphin—Swan River, MB

Madam Speaker, the last petition calls upon Parliament to protect our children by taking all necessary steps to ensure that all materials which promote or glorify pedophilia or sado-masochistic activity involving children are outlawed.

PetitionsRoutine Proceedings

12:05 p.m.

Liberal

Pat O'Brien Liberal London—Fanshawe, ON

Madam Speaker, I am in receipt of some 25,000 signatures on a petition from Canadians across London and southwestern Ontario and I am pleased to table today 2,000 of those signatures that have been properly vetted.

These Canadians are calling upon the Government of Canada to reaffirm the definition of marriage as the union of one man and one woman to the exclusion of all others. They remind the Parliament of Canada that it is on record on this several times, including in legislation.

I am very pleased to join with these Canadians in calling upon the government to reaffirm the traditional definition of marriage.

PetitionsRoutine Proceedings

12:05 p.m.

Progressive Conservative

Rex Barnes Progressive Conservative Gander—Grand Falls, NL

Madam Speaker, I wish to present a petition to recognize the institution of marriage as being a lifelong union of one man and woman to the exclusion of all others.

Only a couple of the petitions here today fulfill the requirement but I have many others. I have close to 7,000 others in my office that will be sent to the minister. I submit these today for the record.

PetitionsRoutine Proceedings

12:05 p.m.

Liberal

Marlene Catterall Liberal Ottawa West—Nepean, ON

Madam Speaker, I have several petitions to present from people in my riding and elsewhere calling upon Parliament to use all possible legislative and administrative measures, including invoking section 33 of the charter, if necessary, to preserve and protect the current definition of marriage.

Questions on the Order PaperRoutine Proceedings

October 31st, 2003 / 12:05 p.m.

Bras D'Or—Cape Breton Nova Scotia

Liberal

Rodger Cuzner LiberalParliamentary Secretary to the Prime Minister

Madam Speaker, Question No. 254 will be answered today.

Question No. 254Routine Proceedings

12:05 p.m.

Progressive Conservative

Loyola Hearn Progressive Conservative St. John's West, NL

With respect to the Employment Insurance Program (EI), will the Department of Human Resources Development consider: ( a ) moving forward on the long-promised review of the EI premium-setting mechanism; ( b ) bringing EI premiums into balance with EI costs; and ( c ) separating the EI fund from general revenues?

Question No. 254Routine Proceedings

12:05 p.m.

Brant Ontario

Liberal

Jane Stewart LiberalMinister of Human Resources Development

a) Moving forward on the long promised review of the EI premium-setting mechanism

The review of the EI premium rate-setting mechanism is already underway. In the 2003 budget, the government launched a consultation process on a new permanent rate-setting regime for 2005 and beyond and outlined five principles upon which the consultations would be based.

--The Department of Finance and HRDC held a series of roundtable consultations with business and labour stakeholders, economists and technical experts and the EI Commissioners for Workers and Employers.

--All Canadians were also invited to provide submissions by mail or Internet to the Government of Canada before June 30, 2003.

The consultation phase of the rate-setting review is now complete. HRDC and the Department of Finance will produce a public document summarizing the views received during these consultations. Legislation will also be introduced in time to have a new rate-setting mechanism in place for 2005.

b) Bringing EI premiums into balance with EI costs

The 2004 premium rate has been set at $1.98 of insurable earnings in budget 2003. According to the private sector economic forecasts used in the budget, this premium rate should bring premium revenues in line with program costs over 2004. The premium rate for 2005 and beyond will be set as part of the new rate-setting regime. While the outcome of this process is not known, it must be emphasized that balancing EI premiums with EI costs is one of the five principles on which the future process is to be based.

c) Separating the EI fund from general revenues

Since 1986, following the recommendation of the Auditor General of Canada, the employment insurance account has been fully integrated into the overall finances of the Government of Canada as the government controls the parameters of the EI program. Separating the EI fund from general revenues is one of the several proposals that Canadians made during the premium rate-setting consultations.

At this time, it would be premature to speculate on the outcome of any particular option raised during the consultation process before all options have been thoroughly assessed.

Question No. 254Routine Proceedings

12:05 p.m.

Liberal

Rodger Cuzner Liberal Bras D'Or—Cape Breton, NS

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

Question No. 254Routine Proceedings

12:05 p.m.

The Acting Speaker (Ms. Bakopanos)

Is that agreed?

Question No. 254Routine Proceedings

12:05 p.m.

Some hon. members

Agreed.

The House resumed from October 30, consideration of the motion that Bill C-54, an act to amend the Federal-Provincial Fiscal Arrangements Act and the Federal-Provincial Fiscal Arrangements Regulations, 1999, be read the second time and referred to a committee.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:05 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Madam Speaker, I am pleased to speak on this important issue, the federal equalization program.

With this bill, the government wants the current five year equalization plan, which is to expire on March 31, 2004, to be extended for a year at the most, but perhaps just a few months. This would give the provinces and the federal government time to agree on a new five year equalization plan.

I can understand that the government wants to gain some certainty with respect to the equalization payments for 2004, given the completely unpredictable political context, which has been sending this government in two directions ever since the member for LaSalle—Émard decided to pull the strings from behind the curtain, and the outgoing Prime Minister lost any credibility in terms of leading the government and effecting the necessary changes, very quickly, to the equalization plan for the next five years.

Before explaining what needs to be done for the next five years in the equalization program, and the major changes that need to be made—because for this program and this governmental approach, it would take major changes—allow me to explain, for the public's benefit, what equalization is.

It is very complex and involves formulas that contain more than 300 variables. There are 33 tax bases to be considered in each of the Canadian provinces and in Quebec. It is very complicated.

Nonetheless, the equalization principle is simple and has been enshrined in the Constitution. Very few government programs are to be found in the Constitution. Nonetheless, the Constitution Act, 1982, recognizes equalization.

Why? Because it is a principle whereby each province in Canada, from east to west, can provide services such as health and education that are of equal quality, but not similar; in other words, equal quality from one province to the next. This applies to health and education.

To accomplish this, they came up with this equalization payment program, which uses complicated calculations to determine the fiscal capacity of each province, that is its capacity to collect taxes of various types from its taxpayers. Based on this capacity to generate funds for the provincial coffers in order to fund services, certain provinces are evaluated as disadvantaged compared to others, as far as providing quality services is concerned. As a result, there is a risk that service quality will not be uniform from one province to another. Briefly put, the equalization payment program works in favour of those provinces that would otherwise be the most disadvantaged, in order to establish, if not equal service quality, at least similar standards.

Toward the end of my speech I will address the payments per province. Federal government payments to the provinces are made on a per capita basis.

In other words, entitlement to compensation or equalization payments is based on the province's population. As a result, when we look at the advantages one province can gain compared to another as far as equalization payments are concerned, the amount per person is what must be compared, and not the total amount.

I will get back to this point. I have heard reference all through the debate about the extraordinary benefits Quebec draws from the equalization system. You will be surprised because Quebec is, out of all the provinces that receives such payments, the one that gets the least per capita. Such is the spirit of the system.

Obviously, the size of our population gives us a higher payment, but what needs to be looked at is the compensation for fiscal shortfall per capita, not the overall amount.

This equalization program is reviewed every five years. The last renewal was in 1999. Shortly before 1999, the federal government and the provinces tried to come to an agreement on a new, less complex, more efficient and less unpredictable formula. They were unsuccessful at the time.

This means that in 1999, the equalization program we still operate under today and which will be in effect until March 31, 2004, was basically the same as it was in 1994. It is extremely difficult for one province after the other to come to an agreement with the federal government on new data and a new framework for equalization.

There are major flaws in the present system. These are the same flaws that existed ten years or so ago. Allow me to list them because that is what is on the table for the federal government and the provinces to discuss in preparing the fiscal equalization program for the next five years.

One of theses flaws concerns the equalization standard. Briefly put, there is need in this program to establish a standard on the basis of which the federal government can provide assistance to a province under the equalization system. To do so, the capacity of each province to collect taxes per capita in order to finance services has to be determined.

The fiscal capacity of the provinces is determined based on five provinces instead of all ten. These provinces are Quebec, Ontario, Manitoba, Saskatchewan and British Columbia. An average capacity is calculated for each province. For those provinces that fall below the standard, equalization makes up the difference between their own fiscal capacity and the five province average.

Let me just give you one example. If the fiscal capacity per capita of Manitoba for 2001-02 was estimated at $4,834, this meant that each person in Manitoba was expected to pay $4,834 in taxes. But in the five standard provinces, the average fiscal capacity was $5,900.

In 2001-02, the shortfall for a province like Manitoba was approximately $1,000. This meant that Manitoba was not in a position to get the maximum tax contribution from its taxpayers to finance quality services comparable to those generally found in Canada. The fiscal capacity of each province is compared to the average for Quebec, Ontario, Manitoba, Saskatchewan and British Columbia.

The problem with using this benchmark that is calculated based on only five provinces is that the other five provinces and the territories are forgotten. Leaving out Alberta, for example, Canada's richest province, means that one ends up underestimating the standard, the average point at which intervention is required in some provinces to compensate for the incapacity to generate tax revenue, in order to provide comparable levels of public services.

If the standard were established on the basis of ten provinces, not five as is the case at present, we would be in a situation where the payments to reduce the gaps would be much higher. For example, if the average fiscal capacity of all ten provinces—that is, the capacity in each province to generate taxes, including income taxes, to finance their services—were considered, the average would have been $6,237. Some provinces would have found themselves with a fiscal undercapacity, that is the potential to seek more taxes up to $6,237. Interventions would fill in the per capita gap.

Let us take Quebec as an example. In 2000-01, it was calculated that each Quebecker could provide taxes and income taxes in the amount of $5,180 per person.

If the standard for all provinces were $6,237, we would have needed $1,100 in equalization payments per resident. But taking the average of five provinces that I mentioned earlier, this comes out to around $730 per capita.

This ten province standard is a much better reflection of reality than the five province standard. Each province should be included in the average and the amount needed should be calculated fairly. That would mean that the differences in wealth to finance reasonably comparable levels of public services between the provinces would be smaller than they are at present.

The five province average means that, despite the equalization payments received by Quebec—I was using it as an example, although I could have used other provinces, because many receive equalization—there is still a gap of 8% between the fiascal capacities of Ontario and Quebec, for example.

This means that the goal of reducing as far as possible, if not eliminating, differences in wealth and providing comparable levels of public services from province to province, is not achieved. Still, if we used the ten province average as the standard, we would have a gap much smaller than the 8% one we now see.

The second problem with the current equalization program—and we hope that, with regard to the new program, the federal government will be open to our comments—is that there is currently a ceiling on equalization payments. This ceiling was set arbitrarily, in 1999, at $10 billion indexed to inflation. However, when equalization payments exceed this amount, the federal government asks the provinces to repay that amount.

The problem concerns the repayment. There is a ceiling, which limits how far the gap between the provinces can be closed, which is the purpose of equalization. Furthermore, when repayment is requested, the amount is based on the proportion of equalization payments the province received several months earlier.

I want to use Quebec as an example. I mentioned earlier that payments are calculated on a per capita basis, but since Quebec has the second largest population in Canada, it receives 62% of all equalization payments.

When cuts are made, they are not done based on the amount per capita in excess of the ceiling, they are based on the proportion of equalization payments Quebec has received, which is 62%.

Since 1982, the ceiling has been exceeded five times. This cost the provinces $3 billion, although normally they should have received the full compensation amount.

The third problem is related to tax bases. To establish each province's capacity to impose taxes, a list of government sources of revenue is drawn up. This means municipal, provincial and any other government in the province.

However, the 33 sources of revenue are often poorly defined for each province. They are often approximate. An equalization payment is made one year, followed by numerous revisions that can be made within 30 monthsof the first equalization payment. As a result, there can be enormous variations.

The provinces are struggling to keep their heads above water because, often, they are asked to repay as much as $600 million to $800 million at one time, because their fiscal capacity was incorrectly estimated. Their fiscal capacity was underestimated. So they received a higher payment than they should have, and then the correction is made 30 months later. These corrections leave enormous holes in the revenues of the governments of Quebec and the provinces.

This needs to be corrected. The 33 types of taxes that are used for establishing the fiscal capacity of each province have to be reviewed. There has to be an end to the use of guesstimates, or approximations, simply because no one can be bothered to get the real figures.

Take property taxes for example. In calculating the equalization payment for each province, instead of finding out the real property taxes paid by taxpayers, the figure used is the average income per capita for each province. However, everyone knows that there is often a huge gap between the average income per capita and the property value of the homes which generate property tax.

Everyone knows that homes in Toronto, Vancouver, or Montreal do not have the same value and do not generate the same property tax revenue for their market value or median value. That is why the property tax base is not used for each province; income is used instead.

I will give a simple example. Using the real property tax value for Quebec in 2000-01 would not have resulted in a 22% difference in what was assessed as the capacity to generate revenue from property tax compared to the standard in the five provinces. The difference would have been closer to 35%.

This means that Quebec's fiscal capacity was overestimated because income was used rather than the proper criterion: property value. Had property value been used instead, we would have received a higher amount per capita. As far as property taxes are concerned, they would have seen that there is a large gap between Quebec and the five province standard.

This is just one of the problems, There are 33 sources of taxation revenue included in the highly complex equalization formula, and the whole process needs to be reviewed. Proposals for this have been made by the Government of Quebec and the provinces of Canada. Their purpose is to simplify administration of this program, to make it more predictable, and also to make it clearer as far as the variables selected are concerned, namely the various kinds of tax revenues used in calculating entitlement to equalization payments.

This great variability can have a variety of effects, and I will give a few examples of these. We are told that the equalization payments fluctuate because a lot of revisions are carried out and the approximations of variables used are poorly defined. Let us look at just one example.

In 1997-98, equalization payments increased by 3.1%. One year later, in 1998-99, they increased by 27.3%. The following year, they decreased dramatically to 18.5% and, in 2000-01, rose again to nearly 30%. Such a program is unmanageable. The difference in wealth between the provinces cannot be this huge over a period of five years. That is impossible. It is due to the volatility of the data used.

As I said, this is reviewed every 30 months and, in each province, equalization estimates are reviewed eight times a year to update each source of tax revenue. It makes no sense to have a program like that. Besides, it is causing problems for the provinces.

We hope that, by March 31, 2004, we will have a new equalization program, these problems will have been resolved and the program scheduled to end at that time will not be extended for too long. In fact, I think I heard the parliamentary secretary mention something about retroactivity to March 31, 2004, if the new five year program were implemented a few months after that date.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:25 p.m.

NDP

Wendy Lill NDP Dartmouth, NS

Madam Speaker, it is a pleasure to rise today to speak to Bill C-54, an act to amend the federal-provincial fiscal arrangements with regard to equalization payments.

From the debate in the House today, we all know that the equalization program is an essential component of fiscal arrangements in Canada and it needs to be strengthened to fulfill its constitutional mandate.

The growing fiscal imbalance between the federal government and the provinces and territories raises concerns over the adequacy of fiscal arrangements between the different levels of government.

The equalization program enables all regions to offer more comparable levels of public services and narrows the differences in tax burdens for Canadians across the country. It is certainly not simply the NDP that believes this. In fact, this is entrenched in the Constitution.

The importance of equalization has been acknowledged in subsection 36(2) of the Constitution Act, 1982. It stipulates:

Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

This is a critical part of our Constitution. It is certainly a critical part that regions like the one I come from, Atlantic Canada, hold onto and believe in deeply.

In its current structure, the equalization program is becoming more inadequate in its ability to achieve these constitutional commitments. Since the beginning of the nineties, equalization entitlements have been declining as a proportion of GDP while fiscal disparities in Canada have not been significantly reduced.

I would like to focus on the concept of adequacy and equity in this program of equalization.

I had a chance to look at the Finance Canada website recently, under transfers to provinces. I worked with the figures that were posted, showing total major transfers by provinces for the years 2000-01 to 2003-04.

Numbers are not necessarily my forte, but I do have access to a Radio Shack calculator. After crunching a few numbers from the Finance Canada website, I found some pretty disturbing things.

The website starts off telling us that between 2000-01 and 2003-04, total major transfers from the federal government to the provinces, mainly equalization and CHST, increased from $42.8 billion to $49.2 billion. That is an increase of almost 15% in just three years. That sounds good. The trouble is that not every province managed to get a seat on the gravy train.

For New Brunswick, total major transfers over the three year period increased, not 15% but a mere 3.6%. For Prince Edward Island, the increase was only 1.6%.

However, even those two provinces were better off than Newfoundland and Labrador and Nova Scotia. Unlike P.E.I. and New Brunswick, Nova Scotia and Newfoundland and Labrador have some revenue from offshore oil and gas. Instead of getting a minor increase in major transfers, they got a major decrease in major transfers. Nova Scotia's transfers dropped 1.3%. Newfoundland and Labrador's dropped more than 10 times that, at 14%.

For the Atlantic region, overall total major transfers from the federal government dropped by 3.3%, from 2001 to 2004, for a total decrease of $200 million. For the country as a whole, total major transfers from the federal government to the provinces increased by 15%, or more than $5 billion.

The Atlantic region is the poorest part of the country. It has the highest rates of unemployment, taxation, and post-secondary tuition, and the lowest per capita rate of expenditure on social programs. For this region, major federal transfers dropped by 3.3%, or about $200 million. There is something wrong with this picture.

If the purpose of these federal transfer programs is to provide a level playing field for Canadians from coast to coast to coast, why are the poorest provinces being cut back before they get anywhere near that level playing field?

Under our Constitution, Canadians have the right to reasonably comparable levels of public services at reasonably comparable levels of taxation. It is time the government started taking the constitutional obligations seriously.

The NDP is calling on the government not only to forgive the census related costs it has calculated in the recent census measurements but to accept a great deal of the responsibility for those losses. We are asking the government to work with Nova Scotians to make the province again a place that will sustain families and their hope for a better life.

We found out recently, this week in fact, that another funding crisis is hitting Nova Scotia's health care system. It is in the form of the largest health care district, the capital district health authority, being forced to cancel overtime for nurses.

Despite the difficulties our province is having in paying for our health care services, education services and what I have just been talking about, the Liberal government is threatening to claw back over $80 million in equalization payments based on the recent census figures.

It took the federal government nearly seven years to realize that its failed economic development programs were forcing young Atlantic Canadians to leave. Its first response was not to determine what went wrong. Its first response was to demand money back. That is an astounding thing to me.

Changes in the employment insurance program meant fewer people could earn a living in Nova Scotia through seasonal employment. The federal government could have fixed that. Instead, it chose not to. A lot of people went down the road.

Cuts to funding for education and health care through the CHST have sent more people down the road. The incredible cost of post-secondary education in my part of the country has made it impossible for young people to carry those debts. Again, we have seen a decrease in our population due to the government's punitive economic measures. We are now being asked to pay back money that in fact is not coming our way.

The offshore oil and gas industry was supposed to be a saviour for Atlantic Canadians, a cash cow like the one Albertans have enjoyed for many years. However, the promise of increased revenue from our offshore has not come true and there are no signs that it will ever be a viable industry that will provide a great deal of revenue for our province.

The Nova Scotia offshore accord, signed by the province and the federal government, was supposed to provide an equalization holiday for Nova Scotia once oil and gas started flowing.

Unfortunately, the accord was signed and came into effect before the member for LaSalle—Émard brought in his infamous 1995 budget which dropped the Canada assistance plan for the new Canada health and social transfer and put in a new set of rules for the provinces. In addition, the transition period for offshore revenues was only set for 10 years. It runs out this year. I know our colleagues from Newfoundland and Labrador also face difficulties with revenue earned from the offshore and its impact on equalization payments.

Although it is not actually a part of equalization, under the CHST brought in by the member for LaSalle—Émard, health care funding to provinces is inequitable. It is based only on population, not on need.

The provinces with the lowest overall levels of health get the same level of money for health care per person as provinces with much healthier populations. For the Atlantic provinces, it is a double edged sword. Failed economic policies mean younger, healthier people are leaving our region, as I already mentioned. The result is an aging population in poor health which means we have higher health care costs per person.

Everyone in the House should be aware that a low socio-economic standing poorly affects health outcomes. Poorer provinces automatically have higher health care needs to offset that. The current Canada health and social transfer does not reflect that reality and the new separate transfer for health is based on previous spending. Again, it is not on need.

In conclusion, I want to emphasize that we need to review how equalization payments are calculated so that they can truly be a tool for poorer provinces to provide a comparable level of care to that of our wealthier neighbours. We should not wait for another year and force provinces to scramble around to meet their budget priorities with such a flawed agreement.

We need an equalization program that treats provinces equally, that treats all citizens across this country equally, and that does not punish a province for the results of the federal programs that have been very hard on many of our provinces.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:35 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, I thank my colleague from Dartmouth for a very instructive and informative speech. I learned a great deal about some of the issues facing some of the provinces, especially in the Atlantic region.

A lot of us in the west would be interested to know that what we expected to be a brand new era for these two provinces with the harvesting of offshore oil and gas has failed to yield results. It has not brought the anticipated relief. Listening to the hon. member, I can certainly empathize with this situation.

I note from her speech that the budget promised $10.3 billion in equalization to the provinces last year. According to the fiscal reference tables from finance they did in fact receive $10.3 billion but during the same period of time, the government also clawed back $2.3 billion.

I understand the hon. member's point. Nova Scotia, due to the census and the double whammy of losing population due to lack of opportunity, is being doubly disadvantaged by having its equalization payments cut on a per capita basis given the population it has lost.

The member is a representative from Atlantic Canada. Rather than managing poverty, which is essentially what the government has been doing with regions of Atlantic Canada, would it not be logical to simply allow Newfoundland and Labrador and Nova Scotia to keep all the revenue from oil and gas for a fixed period of 20 years until we actually equalize those provinces and the opportunities available to those provinces? Then perhaps we could look at negotiating the type of clawback that exists today. Would that not be a logical step in terms of a permanent solution to the disadvantages that unfortunately exist in some of those regions?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:40 p.m.

NDP

Wendy Lill NDP Dartmouth, NS

Madam Speaker, I wish members on the other side of the House and the government could actually see the wisdom of that kind of measure.

The Nova Scotia government, the NDP members of Parliament and members from the other side of the House from Nova Scotia have made that point. We need to have some kind of fair accounting and a method by which we can keep some of the wealth that is now being generated.

The size of this potential clawback that is going to be visited upon the Atlantic region, because of the re-figuring of the census, could be as high as $500 million. That is a figure that Bernard Lord, the Premier of New Brunswick, has mentioned. It is an astounding figure. Half a billion dollars would keep a lot of schools and hospitals going across Atlantic Canada. In fact, it amounts to over 70% of the spending on public schools in Nova Scotia. It is almost equal to the budget of the capital district health authority, which I mentioned earlier.

We are talking about money that could absolutely cripple society and life as we know it in the place that we come from. This is at a time when we have already fallen way back in terms of our standard of living and the ability to keep our young people in the region with the hope of a good life in the future.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:40 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, along the same lines, I would like to ask the hon. member what her view is of the issue. Does it translate into pure politics? Does she think that the ruling Liberal government is wise to be going after the money now with an election looming six months from now?

I wonder what she thinks the reaction will be from ordinary citizens all over Atlantic Canada if the Liberal government follows through with these punitive measures of clawing back money that is already spent. It was not adequate to begin with but it was eagerly spent as soon as it was received. If the government actually followed through with the threats to claw this money back from these struggling regions, does she not think it would be political suicide for the federal government to do that? Would it not want to rethink that as a political strategy?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:40 p.m.

NDP

Wendy Lill NDP Dartmouth, NS

Madam Speaker, for one thing it would be quite in violation of the country's Constitution if the government clawed back moneys. It is absolutely required right in the Constitution to provide some level of reasonably comparable levels of public service at reasonably comparable levels of taxation.

I mentioned already that in our region, taxation and the costs of health care and post-secondary education are higher than anywhere else in the country. At a time when these are the realities for people living in the east, it would be unfathomable that the federal government which is sitting on this enormous surplus at this point in time would think it would be any kind of fair treatment for a major part of the confederation.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:45 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, as seatmates the member for Dartmouth and I have often had many conversations but it is rare that we get to have one on the record so it is my pleasure to continue this dialogue.

I wonder what the member's views are of dealing with surpluses, the last point she mentioned. A recent paper on fiscal imbalance from the finance department of September 2003 states that the federal government will not apply 100% of its future surpluses to debt reduction. I remember a time about two years ago when the Liberal government said it would be one-third, one-third, one-third, that any surplus would be divided equally in thirds. It would be one-third tax cuts, one-third debt reduction and one-third spending on programs.

What does the hon. member feel about this reversal? The current Minister of Finance is threatening to apply again, for the third year in a row, every penny of the surplus to debt reduction and not one cent to spending in regions such as her own.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:45 p.m.

NDP

Wendy Lill NDP Dartmouth, NS

Madam Speaker, it is clear that the whole issue around the use of the surplus is one that is very controversial. As far as I can see in the region that I come from, it is unfathomable that some of the surplus would not be spent on some of the very critical expenditures that need to happen.

We need our military equipment replaced. We need the Sea Kings replaced. That was needed 10 years ago and it is needed now.

Cape Bretoners who live on North America's largest toxic waste dump need that issue resolved. They need it cleaned up.

There are the widows of the veterans who are now being nickel and dimed by the government. Twenty-five thousand spouses of brave veterans of our country are being told sorry, too bad so sad, they are not eligible for the tiny pittance of money that would allow them to stay in their homes, help them shovel their snow and just look after themselves.

It is intolerable to think that the federal government would not use the surplus, which is based on the taxes of the country, for things that obviously would improve the quality of life of Canadians.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:45 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, I do not know where the bulk of the surplus came from but I do know where $20.8 million came from. It came out of my riding in terms of EI money that used to be spent on income maintenance and benefits for people which under the new rules is not. That is $20.8 million per year.

I wonder if the hon. member for Dartmouth can say how much the EI changes cost her riding per year that is adding to this enormous surplus.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:45 p.m.

NDP

Wendy Lill NDP Dartmouth, NS

Madam Speaker, $30 million has come out of my community this year because of EI payments that have not gone to workers who have been laid off.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

12:45 p.m.

Progressive Conservative

Loyola Hearn Progressive Conservative St. John's West, NL

Madam Speaker, it is a pleasure to say a few words on this extremely important bill. This bill is of particular importance to my region of the country.

I listened attentively to what the member for Dartmouth said. She laid it out quite clearly as to how federal funding generally affects not only the country but specifically the Atlantic region. The points she raised when she referred to her home province of Nova Scotia, I could just switch the province to Newfoundland and they would also fit. I congratulate the member on how well she understands the financial situation in which the Atlantic provinces find themselves.

I want to say from the start that we support the legislation. That is not to say that we support the present equalization funding mechanisms because we certainly do not. We are supporting what the legislation does which is to extend the present agreements for a year so that presumably the new government will put in place a type of funding program for the provinces that will really be equal. Certainly, the equalization program that we have today is not equal in any respect and I will explain that as I go on.

The proposed legislation extends the present agreement for one year, I presume in the event that the government does not have its act together. We might ask why the government would not have its act together because it has known for some time that this agreement was going to run out. The answer is it has not been paying any attention to this agreement or any other agreement because it has been too caught up in playing its own games; one Prime Minister is trying to develop a legacy and the other prime minister is trying to make an impression.

What will be interesting when the incoming prime minister in comes is the effect it will have on the incomes of the people across the country. If he delivers on half of the promises, not on all of the promises, then we will not have to worry about surpluses any more because he will have overspent tremendously. People are looking at that very carefully.

The question raised at the end of the speech by the hon. member for Dartmouth concerned the overpayment to provinces and the negative effect it is having on the Atlantic provinces in particular, Nova Scotia, Newfoundland, New Brunswick, and P.E.I. perhaps in this case to a lesser extent. They have been told, “The census figures are out of whack. You owe us a lot of money and we want it”. It is funny when the provinces come to Ottawa looking for money that they are owed or which they deserve, they do not get that same quick response that the federal government is expecting from them.

Perhaps the federal government should look more closely at the census generally. We are now seeing the manipulation of a process that has existed for a number of years, that is, the process of changing the electoral boundaries every 10 years. The change is based on a close accounting of the electors and the boundaries are adjusted to make sure that there is relative equality. We could argue equality here also because trying to represent 80,000 or 90,000 people in an urban riding compared to representing that same number in rural Canada is certainly two different kettles of fish entirely.

Because of the wishes of the incoming prime minister, there is a need to have an early election. He wants to get rid of those who surround the present Prime Minister and reward some of those who have patiently sat in the backbenches, all 150 of them who think they are going to be in cabinet, so that they will live happily ever after.

In order to do that he is faced with the conflict of having two groups around him. Because he does not want to bring a lot of the backbenchers up front and he certainly does not want to keep the frontbenchers around him, the easiest thing to do is to clean house. That is exactly what he intends to do.

There is a complication in that under the existing legislation he cannot call an election under the new boundaries until August 25, 2004. In order to have the best of both worlds, the incoming prime minister was instrumental in getting the government to bring forward legislation to move the implementation date up to April 1 so he could call an election any time after that date based on the new boundaries.

However because of the lesser amount of time that the Office of the Chief Electoral Officer has, despite what they say they cannot do justice to the census to determine the number of electors in certain areas by following such a circumvented process. Therefore we question the reliability of the figures upon which the government bases its payments or overpayments to provinces.

The member from Winnipeg asked whether the government, in light of an upcoming election, would put pressure on the provinces to pay back that money because it is not going to be a very popular political thing to do. There is another reason the government may not put pressure on the provinces to pay it back. There is an election coming, but when the government originally made that decision, it probably said, “It does not matter because the people are going to vote for us anyway as they have for the last 10 years”. That is not necessarily true anymore.

There is a major political change taking place in this country. For the first time in many years, we are seeing a party that will be front and centre, that will be taking on the Liberals head to head in the next election. Unfortunately for my friend from Winnipeg, it is not the NDP, but as I have always said, I hope members of the NDP will still hold a small presence in the House because they do present that social conscience which a place like this needs. The new Conservative Party now gives Canadians an alternative and the Liberals will not be doing anything rash between now and election time. Hopefully that will be to the benefit of provinces such as my own.

On equalization, the word itself is certainly a misnomer. There is no way that equalization describes what is happening in relation to the payments that are distributed across the country. The cap, which the government has now agreed to relax for a while, prevented that equal flow of funds from the rich to the poor, sort of a Robin Hood scenario. The whole concept based around equalization is have provinces and have not provinces, but what is the definition of a have not province? Ordinarily one would think of these poor provinces that have no resources and consequently, out of the kindness of their hearts, those of us who have will help them.

History has shown that over the years provinces across the country, or even before provinces were established, regions across the country have helped one another during the bad times. When the west was having a lot of trouble, it was helped by the east. Now perhaps the east is being helped by the west. As oil and gas dry up in the west and it becomes much more lucratively developed in the east, then undoubtedly the reverse will be true again.

Newfoundland and Labrador is referred to as a have not province and yet we have major offshore oil developments. We have the best, the cleanest and the most prolific hydro developments anywhere in the country, and they compare with any in the world, although many are undeveloped. We have great mineral resources and new ones are always being discovered. We have a rich forest industry. We had and still do have to some degree a tremendous fishery. Unfortunately, because of the federal government's complete and utter mismanagement, we have seen the stocks diminish.

A recent assessment was done by some very knowledgeable people of some 1973 landings, which was before we let the foreigners take over the resources, before we let the seal herds grow to the point where they destroyed the fish and before we completely abandoned surveillance and protection of our resource. The value of the 1973 resource in today's dollars would have been $3.38 billion on groundfish alone. One can just imagine what that could do to the economy of Newfoundland.

For the past couple of years the landed value of our total fishing resource has been roughly in the area of $1 billion, mainly because of crab and shrimp, the shellfish, which 10 or 15 years ago was only a very small part of the revenues produced. Shellfish has now become the saviour of the fishery in our province and has become a lucrative resource for those who still participate in the industry.

However, with the amount of fish that we had in 1973, if we had been able to protect and preserve the resource, as we should have been able to do with any leadership at all from the federal government, instead of trading it off for other benefits, it would have amounted to $3.38 billion. Newfoundland is not the only province that has been affected. Most of Atlantic Canada and a lot of Quebec also benefited from that resource. We have seen that resource disappear. As I said, it would have been $3.38 billion alone in what was landed in 1973 if we had been able to maintain that level.

In relation to our hydro developments, because of poor dealings in the past, when we had a government, unfortunately, a Liberal government--maybe I should say, from my perspective, fortunately a Liberal government--we negotiated a deal with Quebec with no help from Canada and somebody on our side forgot to insert an escalator clause. Quebec has benefited greatly from the deal and our revenues each year are approximately $10 million. From the sale or resale of that power I think the revenues for Quebec are somewhere in the area of $1 billion at this stage. That is another resource that has completely disappeared.

We have had no assistance whatsoever in the development of lower Churchill. Newfoundland and Quebec have talked in the past and under the new progressive government in Newfoundland, with tremendous leadership and cabinet, which will be put in place this coming week, and tremendous individuals involved, we undoubtedly will see Newfoundland dealing with Quebec again, hopefully for the development of our power, but in a way where we all benefit, not just one party, from the agreement.

With our mineral developments, again without any federal assistance or federal input, we see the resources being developed and brought out of the province to create jobs somewhere else. We are contributing to the national scene.

Some say Newfoundland is a have-not province and that it constantly takes from the centre. When we are providing Quebec with hydro and the spinoff from that is over $1 billion, when we are providing Manitoba and Ontario with our minerals for processing, when we are providing everybody around the world with our fish, how can we be a have province?

People might say that it is our own fault, and a lot of it is. A lot of the decisions were made with the lack of input from provincial governments of the past. That day is over. The resource giveaway from Newfoundland and Labrador has ended. I would issue this challenge to the rest of the provinces. The resources within our provinces should be primarily developed for the good of our provinces.

In a federation we undoubtedly will share and help wherever we can but we must look after ourselves first. However coordination and leadership is supposed to come from Ottawa but we have not seen it. Is it any wonder that provinces are upset? Is it any wonder Quebec is upset by its treatment from Ottawa? Is it any wonder Newfoundland and Labrador is upset? Not at all.

We have not seen fairness. We have not seen solid, central control. What we have seen is a whittling away of our controls and a lack of input from the government in the areas where it should be helping. The government interferes in areas where it should not and does not help in areas where it should.

When we talk about equalization let us first look at what we are trying to do. The government says that the theory behind equalization is to ensure that everyone in the country is treated fairly. What a joke. If it wants to treat us fairly, then it should let us help ourselves. We do not need handouts. We do not want to take federal money and still hold on to our own. We have never asked for that.

As we develop our finite natural resources we want to be treated the same way as Alberta was treated in the beginning. We want to hold on to enough of our revenue to reinvest so we can become a have province. If we could hold on to a larger percentage of the revenues garnered from the development of our resources we could invest in our own province and it would not take too long to create the jobs that are necessary.

We need to get legislation through that does not put provinces in the position of having to give away their resources. We need the freedom to develop and the right to reinvest until we can become a contributing partner.

Newfoundland and Labrador has only 500,000 people. With our resources we should all be millionaires. Why are we a have not province? The answer is quite simple. It is like the old days of serfdom when the lords were sitting in Ottawa and the peons were scattered throughout the country taking only what the lord giveth forth. That is not the way a Confederation is supposed to work.

Maybe we should look at the word equalization again. Maybe we should look at the fact that all areas of the country are not equal.

We should listen to the member for Dartmouth who talked about health care funding. Some time ago the federal government funded 50% of health care costs. Today in some areas the funding is down to as little as 14% of the total cost. The burden has landed in the laps of the provinces.

The member talked about what was happening in Nova Scotia. The situation is even worse in Newfoundland because we are the only province that is losing a high percentage of its residents. Over the last 10 years around 50,000 people, or 10% of our population, have gone to British Columbia, Alberta, Ontario and some have gone south of the border. What is left is an ageing population requiring, as the member said, more funding. Not only do we receive fewer dollars but we have greater needs. With the geography that we have, it is almost impossible to deliver that funding.

If we are going to look at the equalization situation and if we are asking for a year's extension to develop a proper program, then let us do it properly. Let us look at the entities across the country. Let us create a country where everybody is treated equally. Let us create a country where we help ourselves and the federal government lets us help ourselves by staying out of our hair.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:10 p.m.

The Acting Speaker (Ms. Bakopanos)

Is the House ready for the question?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

1:10 p.m.

Some hon. members

Question.