Debates of Feb. 19th, 2003

The Budget

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

Mr. Speaker, I was listening to the member's comments and was not sure whether he was going back to the future to the Brian Mulroney days when he was talking about mismanagement and debt.

The member and the Bloc said the same thing and I want to respond to that. He suggested that there is a fiscal imbalance. There is no evidence of a fiscal imbalance, number one. Number two, the provinces have the same ability to raise taxes as the government does. The difference is we balanced our books first before we brought in the $100 billion tax cuts. The provinces, by and large, brought in tax cuts and then expected us to pay for it. The fiscal imbalance is a myth. I would have expected more from this particular member.

The member does not talk about the fact that the government is paying down the national debt, the only G-7 country to do so, 44.5% of GDP.

If we are, as the member said, a junk bond government, how is that we are able to reduce taxes, reduce the national debt, and provide services that Canadians ask for, that they need, and that we respond to in this country.

I would like to hear what the member has to say about that because clearly the member did not talk about the financial record of this government. I would suggest that the member was perhaps reflecting on his past Conservative government and that is where the confusion lies.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, the federal government balanced its books by slashing transfers to the provinces by forcing the provinces with the constitutionally enshrined responsibility to provide the health care and education to Canadians, face deficits, and health care systems and education systems in a crisis as a result of the its inability and irresponsibility to actually tighten its own belt more significantly.

The fact is the only reason the government has had any ability to be out of deficit today is because of the transfers of the responsibilities to the provinces and the vision, foresight and wisdom of the previous government. The previous government not only reduced the deficit from 9% to 5% of GDP, but had the courage to implement a free trade agreement that his party fought against. It implemented a GST that now collects almost $30 billion per year that his party opposed and now embraces. It deregulated financial services, transportation and energy, and laid the groundwork which allowed his government to be on cruise control on a Sunday drive for 10 years and not do anything to earn its stripes.

We are now starting to see the impact of 10 years of a lackadaisical, Sunday drive, no vision government with Canadians concerned about the future. The government, having run out of ideas of any sort, is reverting to 70s style spending policies that put us in the mess in the first place.

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

Mr. Speaker, as the member knows I have been very interested in education over the years. There was a small mention in the budget speech about students. If I remember correctly, more loans would be made available to students, including refugee students, and they would also have a special bursary or scholarship program for graduate degrees.

It seems to me that the people who are left out of this whole equation are thousands of rank and file students seeking their first or second bachelor degree in order to get a job. They are still facing tremendously high costs for books and ever increasing tremendously high tuition costs. In fact, I noticed from those universities that I have become aware of that the maximum permitted increases in tuition would be put into place this coming fall. So the hardships for these students is increasing instead of decreasing. This particular budget has totally failed to address the real questions and problems that are faced by these students.

Would the member concur with me in that assessment? Would he have any other ideas on how this problem could be addressed?

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I wish to thank the hon. member for Elk Island for his question. We miss him on the finance committee because he was always an involved and erudite member of that committee.

On the question of education, I want to first of all recognize the bold and innovative idea put forth in the House by the hon. member for Fundy—Royal to provide a tax deductability for the principal repayment made on student loans. That would go a long way to making it easier for graduates to pay off their student debts more quickly and provide a real tax advantage for them to actually stay in Canada, as opposed to leaving and seeking their fortunes elsewhere. That was the kind of forward thinking approach that I would like to see the government take to handling student debt issues.

Instead, the government voted against his private member's motion in the House and voted down what could have been a good idea that was supported by Canadian students and the Canadian Alliance of Student Associations. That was tragic because the motion had the real capacity to improve the state of education in Canada.

The budget proposes to have a new federal agency looking at issues of education and new ideas for education. There was very little, in fact, there was no consultation with provincial governments about this. This is a key area of provincial responsibility. The federal government that slashed transfers to the provinces in the late 1990s is now overreaching provincial jurisdictions and investing money in areas where it should be helping the provinces move forward. That is clearly offensive.

Dianne Cunningham, Ontario's Minister of Training, Colleges and Universities said:

I don't know why they are thinking up new things when they cannot fulfill their commitments. If the federal government really does care about students, they've got to invest money on the front lines.

I could not agree more with the minister from the Ontario government.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, my city of Saint John, which is the largest city in the province of New Brunswick, has never ever been in the mess that it is in today.

The city has lost over 20,000 people since the Liberals came into power. The city has lost its shipyard where the frigates were built. The city has lost its sugar refinery which was closed down by the government. The city does not have VIA Rail. As mayor I cut the ribbon at the new train station six months before I came to Ottawa . I cannot believe that the government does not have a vision like it should have.

How does the member see the government treating cities? Is Saint John, New Brunswick, the only city that is being treated in this manner, or is this the way the government treats all the cities across the nation?

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I thank the hon. member for Saint John for her question.

One of the reason that cities are in such trouble across Canada is that provinces are in trouble. The provinces have been put in serious fiscal peril because of the government's irresponsible slashing of transfers to the provinces. Instead of tightening its own belt at the federal level the government is turning on the taps on new, unprecedented federal program spending, yet the provinces are struggling.

The best way to help cities in many ways is to strengthen the ability for the provinces to better provide, not only for the cities, but for all municipalities and all municipal units, whether a county or a city. There are tremendous infrastructure needs that must be addressed. The government wants to address them directly and ignore the constitutionally enshrined rights of provinces to do their job.

I agree with the hon. member. We will get that train back there someday.

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

Mr. Speaker, the 2003 budget is marked by a number of milestones. It is a budget based upon continuity: maintaining a prudent and balanced approach to the fiscal needs of the nation.

The fact is that we now will have a debt to GDP ratio of 44.5%. Just five years ago we were at 71.5%. Again there has been a continuing decline in our national debt. We are the only G-7 state paying off the national debt. It reflects the resilient economy. Over 560,000 new jobs, most of them full time, were created last year. This country led the G-7 in growth last year and is expected to do the same for 2003.

Our resilient economic performance reflects strong economic fundamentals which are underpinned by the government's track record of budgetary surpluses and a commitment to maintain balanced budgets.

This is the sixth budget in a row that is balanced. Again this year we are able to deliver part of our pledge of $100 billion in tax cuts this year alone and another $20 billion over the next five years, and that is working its way through the system.

We are the only G-7 state with a balanced budget, but this prosperity could be threatened. Obviously there are concerns with the global economic and political climate. Therefore prudence is part of this budget, with strong fiscal planning and resorting back to the full contingency reserve in economic prudence, which the minister has outlined.

During the prebudget consultations, of which I and other members of the House were a part, we heard from Canadians who told us their priorities. They sought a society built on commonly held values, an economy that maximizes opportunity for everyone, and honest and transparent accounting of government efforts to achieve those goals. This has been a challenge which Canadians have brought to our attention and in this budget we have responded to the challenges.

First, this budget builds the society Canadians value by making investments in individual Canadians, their families and their communities.

Second, it builds an economy of promoting productivity and innovation in the country while staying fiscally prudent.

Third, it builds the accountability that Canadians deserve by making government spending more transparent and accountable.

Budget 2003 recognizes the critical link between social and economic policies and how an integrated approach produces policies that benefit all Canadians, and it is based upon sound financial management and responsible stewardship of our resources.

In 1995 The New York Times ran an editorial which said that we were basically an economic basket case, that we probably would have to apply to the IMF for assistance. That was in 1995. We had a $42.5 billion deficit.

Let us look at the situation today. The turnaround is unbelievable. Now we have countries coming to us and asking how we were able to do this. We are able to show, whether it is in debt reduction or in balancing the books for the sixth year in a row, that we are able to invest in Canadians and provide significant tax cuts.

Underlying any budget is the economic context of which the planning of that budget takes place. For Canada this context is one of the most solid, home grown successes in an uncertain global environment.

Canada has shown remarkable resilience in the face of two years of global economic weakness and uncertainty. In 2001 we not only avoided a recession but also posted strong gains and, most important, outperformed the United States and many of our major trading partners.

I mentioned that 560,000 new jobs were created. Sixty per cent of those jobs were full time and gains were seen in every region and every age group in this country.

Looking ahead, based upon the average of private sector forecasts, Canada's economy is forecasted to grow by 3.2% this year and 3.5% next year. This outlook could be affected by a number of factors, including economic recovery in the U.S., Europe and Japan, coupled with possible international military conflict. That is why again we have placed a contingency fund back on the table. We have that fund of $3 billion. Canada has again posted surpluses. We are the envy of the world.

This budget projects balanced budgets 2002 over the fiscal plan to 2004 and they are backed up by that $3 billion contingency fund. We are the only G-7 country expected to record a surplus.

We are moving forward and we are doing so from a position of considerable strength. There will be no return to deficits. We have heard comments about spending. The fact is that we are able to invest in Canadians because we have been prudent. Therefore we have no deficit, which is extremely important. We have a very strong fiscal anchor.

Economic success and fiscal discipline are only part of good government. The minister spoke before about having departments review their expenditures. We are going to continue to save money: the billion dollars that was announced by the minister.

However they are means to a much more important end, which is making sure that Canadian values are maintained. That is why the Prime Minister and the Minister of Health, after discussions with the premiers, are dealing with the most pressing issue on the part of Canadians, health care.

In the United States 44 million Americans have no form of health insurance. We do not want to see that in this country, where people are not covered. We have a universal medical plan, and compassion and social responsibility are part of that. Therefore we entered into negotiations with the provinces. Now we have the 2003 health care accord, agreed to by the Prime Minister and first ministers earlier this month. That of course will enhance the accountability of health care dollars into the system.

One of the things that should be pointed out is that the $34.8 billion we have agreed to over the next five years, over $5 billion is in this budget. Clearly, part of the reason for spending is in response to that accord, the $5 billion. We have a five year plan; $6 billion in a health reform fund to the provinces and territories to target primary health care, home care and catastrophic drug coverage. We have $9.5 billion in increased cash transfers to the provinces and territories, and an immediate investment of $2.5 billion through the CHST supplement to relieve existing pressures; $5.5 billion in health reform initiatives, including diagnostic and medical equipment; and $1.3 billion to support health programming for first nations. This will ensure future generations better and timely access to quality universal health care in every part of this country.

The government is taking its responsibilities seriously in supporting the provinces in terms of the transfers to those provinces for health care. Again, an agreement has come forth. We had one in 2000 where we pumped another $23.5 billion into that agreement for health care.

One of the things that I was surprised to hear from some members of the opposition was on the issue of cities. As a former president of the Federation of Canadian Municipalities, I can say that when the Conservative government of Brian Mulroney did not touch infrastructure in 1984, the FCM plan, which was proposed in 1983, laid dormant. When I hear some members, particularly from the fifth party, talk about infrastructure, I have to wonder where that party was during that period, because we know they did not do anything. We also know that they opposed the 1993 infrastructure program that this government brought in.

The fact is that municipal governments in this country have been complaining for years about support. The provinces have downloaded significantly, particularly the province of Ontario, and yet, constitutionally, the responsibility for cities is provincial not federal. This government stepped up to the plate and said that it would work in partnership with the provinces, with municipal governments and with the private sector in order to deal with the issue.

What happen? We had a 1993 infrastructure program which this Prime Minister renewed in 1997. We then brought in a new infrastructure program. Now, in fulfilling the Speech from the Throne commitment, we have a 10 year program. The FCM and mayors across this country have been asking for that for years. They now have it so they can plan long term for their capital projects.

We have a $2 billion strategic infrastructure fund for which the minister has announced another $2 billion. The minister announced a downpayment of $1 billion over 10 years for municipal infrastructure. If someone were to put a downpayment on a new car presumably the person would be paying more money on it. The dealership would not let the person have the car for $100 when it costs $30,000. The minister has indicated that more money will be coming. As the economy continues to move along we are looking at increasing that over the coming years.

The fact is that there is already an infrastructure program for which the municipal governments have been able to take advantage. When I hear some mayors saying that they have a $57 billion infrastructure debt, if the Conservative government had acted back in 1984 when the debt was $17 billion, they might not be in the shape they are in today. The problem is that they do not have the ability for the same type of taxation they need because some provinces restrict it. Some are more, dare I say, liberal than others in terms of allowing certain areas of revenue to be utilized.

However I would point out that it is absolute nonsense to suggest that the government is not supporting cities with regard to infrastructure. We are supporting cities with regard to affordable housing. The FCM said that it would like to see a national housing project. My colleague from Mississauga West worked very hard on the issue of affordable housing and now 40,000 new affordable units will be built in cities and towns across Canada. For anyone to suggest that we are not supporting an urban agenda is ridiculous. This amounts to $320 million over five years.

I hate to say this, but the impediment tends to be the provinces, particularly Ontario, which has the tenacity to say that it will not necessarily enter into an agreement. In fact, when it came to the money we put on the table with regard to housing, Ontario wanted to use municipal dollars rather than its own. This builds on the $680 million for housing already announced.

The RRAP program will receive $128 million per year, adding total funding to over $384 million.

For cities and the homeless, this government responded effectively through the SCPI program by working with communities across the country in order to respond.

It is not the federal government alone that can deal with these issues and therefore we worked in partnership. The national infrastructure program, housing and the homeless are partnerships. This government believes in building partnerships. However in order to be a partner responsibility has to be taken by all partners. Money has to be brought to the table and everyone must deal with these issues in a spirit of support.

We have provided in this budget $965 million in additional benefits for low income families, again assisting people in our cities and towns across the country.

The national child tax benefit, which is a most important component, has been increased to $150 per child in 2003, $185 in July 2005 and $185 in 2008. The maximum will be $3,243 by 2007. These are true investments in individuals, in children and in families.

This government worked with cities across the country and the 20% club dealing with the environment. We announced $2 billion over five years to support such things as environmental technology and partnerships. If cities want to access money for transportation in their communities there is a program through the strategic infrastructure fund.

We have allocated $40 million over two years for air quality, which will help reduce health costs for people who suffer from asthma, et cetera.

On research and development, I assume that universities and colleges are in urban communities. I assume that the $1.7 billion being invested over three years is going to help those universities and colleges across the country.

I could go on about the urban agenda. There is the urban aboriginal strategy, the film and video production services tax credit, all sorts of additional support for urban communities. These are extremely important investments to make sure that our cities continue to be healthy and strong.

I am very proud as a former president of the FCM that the government has done the kind of work it has done. Whether it be on infrastructure, the homeless or housing, it is important recognition. Unfortunately there are people who have a very short memory when it comes to the role that has been performed by the government.

On innovation, the heart of the government's agenda is the goal of achieving the highest possible standard of living and quality of life for all Canadians. The government will introduce measures that will build a Canadian advantage by investing $1.7 billion in 2002-03, over the next two years, to create a smarter and more innovative Canada.

This includes a new Canada graduate scholarships program supporting 2,000 masters and 2,000 Ph.D. students at Canadian universities. This is something that we have heard repeatedly from students and professors across the country.

It is unfortunate with respect to the Canadian millennium scholarships that provinces such as Ontario decided to claw back the $3,000. When I hear the hon. member from the Conservative Party suggest that somehow this has not been a good thing, the reality is that of course Mrs. Cunningham in the province of Ontario would say that, but at the same time Ontario is clawing it back. It is unbelievable.

There is $125 million annually beginning in 2003-4 to increase the budgets of Canada's three research granting councils. We are going to be home to the best and the brightest, attracting the best and the brightest and keeping them here.

There will be $225 million each year beginning in 2003-04 to help fund the direct costs of research at universities, colleges and research hospitals. Who could argue with that? I cannot believe anybody would argue with that, particularly when I have heard members on the other side suggesting that people were leaving the country. Here is an opportunity to invest in our best and our brightest.

There is $500 million this year for the Canada Foundation for Innovation for state of the art facilities. There is $75 million for Genome Canada for health projects. There is $15 million for the Rick Hansen Man in Motion Foundation. There is an additional $70 million over two years for the National Research Council of Canada to strengthen the industrial research assistance program.

These are investments. These investments are what makes the country great, to make sure that people are able to do the kind of things that need to be done in this country. They do that because the government balanced the books.

The government has made sure that it can provide the kind of tax relief Canadians want and need and at the same time invest in individuals and families. That is something that has been lost in the debate so far. We are investing in families. We are investing in people. We are making sure that we can provide support.

For example, there will be $60 million over two years to improve the Canada student loans program. That is another issue we heard about. The fact is skills and learning are extremely important.

At the same time we responded to the issue of small business. We looked at the capital tax and we also looked at the fact that small business said that these were issues that small business wanted the government to deal with. The government responded. From what I am reading we are providing the kind of assistance that small business has asked for. There is a $100 billion tax cut which people seem to forget is still going through the system and the fact there is no more clawback which was a major issue that the government responded to.

There are important government initiatives in the budget. They are based on strong fiscal anchors, making sure that we do not go back into a deficit while still being able to invest in health care. I have not had time to talk about our support for the military, et cetera.

In summary, this is a budget we can be proud of because it addresses the needs and aspirations of Canadians from coast to coast to coast.

[Roy H. Bailey, Canadian Alliance, Souris—Moose Mountain, SK]

Mr. Speaker, I listened carefully to the hon. member opposite. I would like to share with him what has happened in my constituency in the last 10 years.

If we were to ask people if the roads are better today than they were 10 years ago, the answer would be no. If we were to ask if agriculture was rosy, if the future looked bright and there was as much money as there was 10 years ago, the answer would be no. The number 1 highway that runs through my constituency still remains a two lane highway. With respect to grain transportation, the government removed the crow rate which means that my son-in-law now hauls his grain 90 miles to the terminal.

If the member were to come to my constituency, he would see that there is no joy in Mudville.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, on the issue of whether the roads are better than they were 10 years ago, they would not have been if his party had been in power because that party did not support the national infrastructure program. It did not support roads, sewers or bridges. That party opposed it. The answer is, if he thinks the roads are bad today, they would have been horrific had that party been in power. I also point out that communities in his riding supported the national infrastructure program at a time when, I do not know about the hon. member, but his party was saying no.

On the issue of agriculture, it is a 60-40 split. The fact is the provinces want us to give 100%. We have again announced giving over $5 billion. Agriculture is a shared responsibility, but we are coming to the plate with 60¢ on the dollar. He may want to ask his provincial minister of agriculture why the province drags its heels from time to time.

As for highway 1, I did not know that the highway system was the responsibility of the federal government alone. We have had discussions with regard to the issue of highway 1 and the Trans-Canada Highway in general. Again it takes two to come to the table. We often hear in the House about provincial jurisdiction. However it is only provincial jurisdiction when they are asking someone else to pay the bill.

On the crow rate, I have to concede to the hon. member that I am not as familiar with his particular situation. I would have to defer to people who are much more competent in the area of the crow rate than I am, but my understanding is that things have not been quite as bleak as may have been suggested. However, I would be prepared to hear further from my colleague.

[Jim Abbott, Canadian Alliance, Kootenay—Columbia, BC]

Mr. Speaker, I have been listening intently to my friend on the Liberal side. As usual he has glossed over the fact that the Liberals keep announcing things, making it sound as though they are actually doing something when in fact they are not.

On national parks the expenditure as outlined in the budget is $74 million. The budget calls for the establishment of 10 new terrestrial parks and five new marine conservation areas. It also talks about the fact that the government will be implementing a plan to take care of the maintenance backlog that is present in the parks.

There is well over $450 million of accrued liability for maintenance in the parks. Roads are falling off mountainsides. Toilets do not flush and when they do, they flush into an inappropriate place. How in the world can the member stand up for the government and say that only $74 million can handle this $450 million program plus establish 10 new parks and five new marine conservation areas? It is never never land once again from the Liberals.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I know my colleague is very concerned about parks, and particularly the beautiful area of the country that he is from in the Kootenays.

I certainly know that we will always have to invest in maintenance in the parks. Our national parks are the envy of the world.

I point out to the hon. member that in fact we should be congratulated for adding new parks. We should be congratulated for preserving the pristine wilderness in our country.

I would hope that the member knows, because I know he has a great interest in this area, that we are providing the necessary dollars. We are working toward making sure that not only these new parks but our existing parks continue to be a welcoming place for Canadians, that those parks will stay in pristine condition in the wilderness.

[André Harvey, Liberal, Parliamentary Secretary to the Minister of International Cooperation]

Mr. Speaker, allow me to congratulate my colleague, the Parliamentary Secretary to the Minister of Finance, for the exceptional work that he has done to ensure that the requests made by our caucus, regarding important sectors, be transmitted to the Minister of Finance. I am thinking, among others, of health, initiatives on infrastructure, and research and development. My colleague has worked extremely hard to promote, among other things, progressive measures for families.

However, I would like to give an opportunity to the Parliamentary Secretary to the Minister of Finance to dispel a myth that is currently going around in this country and which is called the fiscal imbalance. I am convinced—and the figures support this view—that the fiscal imbalance in Canada is to the provinces' advantage. Think about social transfers, equalization payments, tax points and government initiatives in critical areas of research and economic development.

I would like therefore to give my colleague an opportunity to dispel the myth to the effect that, in Canada, there is fiscal imbalance between the provinces and the Canadian government. Personally, I think that fiscal imbalance exists between the provinces and the regions, between the provinces and the municipalities. That is where the main problem lies.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, my colleague has raised an important point that I tried to address earlier. The fact is that the fiscal imbalance in this country is a myth. It is a myth first of all because the provinces have the same taxation authority, the ability to raise taxes, as this government has. The budget priorities, the fiscal priorities of the provinces are determined by the provinces. If some provinces want to spend money on tax cuts before they balance their budgets and expect Ottawa to pay for health care, that is a decision they make and I am sure that is a decision for which they will have to answer.

As I pointed out before, some provinces, including Quebec, say they do not recognize tax points, but then they turn around and say they want more tax points.

A classic example would be the myth that the provinces perpetrated on this country about the 14¢ that the federal government gave in health care. It is utter nonsense. The 14¢ was cash and the balance, which totalled 35¢ to 38¢, was of course tax points. Tax points do not sound like something on which we want to spend a lot of time, except that it is money this government raised and returned to the provinces. The provinces only recognize that when it suits them. In the area of health care, the 14¢ was a myth.

When it comes to the issue of fiscal imbalance, I would agree with my colleague when he says that the fiscal imbalance is probably among provinces or among regions.The fact is that if they have the same ability to collect revenues, they make those decisions. However they should not expect the federal government to be an ATM machine to help them out because they made priorities, which they are certainly allowed to do, without dealing with their books and without taking the responsible course that this government took in dealing with our own national deficit of $42.5 billion. We had to make tough choices.

At the same time I hear from colleagues on the other side that it was downloaded to the provinces. The issues are that this government made cuts in government spending. We cut in terms of members of the civil service. We had some pretty tough times.

The fact is though that Canadians understood the need to deal with the national deficit. That is why we are now at 44.5% of GDP in terms of the national debt. That is why we are able to invest in health care, invest in children, invest in communities without incurring a deficit.

To me that would seem to be the prudent approach to dealing with economic matters. Others may take a different view, but the fact is that the provinces are masters of their own financial fortunes. We are there as partners in many areas. When I hear certain members in the House talk about fiscal imbalance, not one shred of evidence has been brought forth that I have seen to suggest that there is.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, I am happy to rise today to speak on behalf of the Canadian Alliance with regard to budget 2003.

I thought the leader of the Alliance gave an excellent presentation this afternoon in pointing out the difference between the official opposition party and what we would do, based on what we have seen out of this budget, and the federal Liberals and their return to spending. I am hoping that this debate will provide a chance to clarify a number of issues and really solidify people's minds on where the parties stand and how different they are. I really think that is important. A number of our critics will be speaking later as this debate continues to outline those exact subjects.

I would just say that the main focus of this budget appears to be spending on big federal government programs. The finance minister has brought in a spending budget. The press is reporting a return to the kinds of spending levels that got us in all this trouble, spending levels similar to those of the 1981-82 budget years, which led to the huge deficits. I think that is a fairly accurate portrayal.

Many people see budget 2003 as the end to fiscal discipline in Ottawa. It is as if budget 1995 had never happened. Not only is the federal government every bit as big today as it was when the Liberals took power, it is in fact significantly larger. However, the real truth is that budget 2003 is not a reversal of Liberal government policy as the days of Liberal cost cutting were already long gone. Already they were long gone by 1997 under the former minister of finance. He started the trend again and really revved it up in 2000. Spending was increasing by 6% to 7% a year. Federal program spending has been on the rise since 1997. Over the last two years federal spending has increased, as I said, by 6% on average. Really, budget 2003 has just upped the ante.

The Liberals seem to be happy now to toss taxpayers' dollars around at a fairly dizzying pace. This is something I was talking about in regard to the spending spree from 1979 to 1984, which was very similar. There will be a staggering $14.5 billion increase in program spending for fiscal 2003, the year that is about to end on March 31. March has not arrived yet, so with the traditional March madness it could be substantially more than that.

I want to emphasize that this is an 11.5% increase over the year before. Only $5 billion of that is going to the provinces for health care funding. The Liberals would like to suggest, “Yes, we have had to increase it, but it is all health care spending”. It is not. As I said, of the $14.5 billion increase in that year, only $5 billion is for health care. That is all. That is a significant amount, but that is the difference. There is more on the way. A further $11 billion increase is what the finance minister told us is in the budget over the next two years. Between last year and March 2005, when the annual program spending will rise to $149.6 billion, the total hike will be more than 20%.

In fact, program spending will reach that $150 billion annually one year earlier than the Minister of Finance had predicted in his own economic statement in October of last year in Halifax. That is how fast it is growing. The government has already exceeded its expectations on spending, faster than it expected by a year. I suggest that perhaps it is the Prime Minister's legacy or buying a launch for the Minister of Finance for his campaign, but whatever the reason is, and we saw evidence of it yesterday, the Liberals are setting a torrid pace on spending.

[An hon. member]

It's out of control.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Out of control indeed, Mr. Speaker.

If one adjusts for inflation and population growth, budget 2003 involves the largest single year increase since the 1970s, the decade famous, or perhaps infamous would be a better way of describing it, for its poor policy decisions, which we are still paying for today and our grandchildren likely will have to pay for as well.

The Liberals have decided that our great-grandchildren must be on the hook too, so they have undertaken another round of largesse. The overall 11.5% increase means that government spending is growing three times faster than the economy. That is not a small point: three times faster than the economy. The economy has been going fairly strong, over 3%, so things are really out of control. That is not sustainable in the medium or long terms.

All this spending could also hurt the economy in the form of higher than necessary interest rates. The Bank of Canada has already signalled its concern that inflation is growing beyond acceptable limits and that higher interest rates are on the way. Canadians may well wonder why the Liberals are pumping a lot of cash into an economy that is already doing well in terms of growth and whether there will be any money when the economy is not doing so well.

Why are they overheating the economy with all this increase in spending? More than a massive spending spree, budget 2003 is a sloppy smorgasbord of spending. We see it in the papers today, with them saying “a little bit for everybody”. The Minister of Finance is known as the minister who cannot say no. I think we get to page 25 in the budget report before we run out of all the spending initiatives. It tries to do something for almost everybody. The laundry list of spending initiatives boggles the mind and has led many to suggest that the Minister of Finance, as I said, is the man who cannot say no. That is some criteria for a Minister of Finance, especially a Minister of Finance in a Liberal government that should have to say no pretty often because we know that it is probably addicted to spending.

Yet because of this shotgun approach, the budget's very effectiveness is now in question. In their effort to be all things to all people, the Liberals have spread the money around so thinly that there will not be much help for anybody, which is what the papers are full of today.

Let us deal with the tax cut issue for just a moment and raise the question about what working taxpayers get in return for shelling out all this dough to Ottawa. They do not get much in tax cuts, especially the kind that would actually impact on hard-pressed working families. Canada continues to have the highest rate of personal income tax in the G-7, whereas under U.S. President George Bush's latest tax cut round proposal, a family of four earning $40,000 annually would pay no income tax. He has revved it up there and other countries are accelerating their approaches as well. However, a similar Canadian family starts to pay taxes once income rises above $14,000. What a difference. We are being left in the dust again. The Liberals point to their so-called $100 billion tax plan. I suggest that this Liberal tax plan should be called the Liberal tax sham because that is really what it is. It is far less than is actually claimed.

Most Canadians would not call an increase in social spending a tax cut, but the Liberals did just that when they counted $7.8 billion in increases to the child tax benefit. The Liberals conveniently forgot that they increased payroll taxes by $28.4 billion, which significantly decreased Canadians' take home pay. When we asked Canadians if they saw a tax cut last year most said that they never noticed it on their pay slips. The reason they did not notice it is that other areas, such as CPP increases, have eaten it all up. There is nothing more. Somehow the Liberals seem to think that cancelling over $17 billion in potential tax increases was a tax cut. That has to be Liberal thinking at its best.

The bottom line is that a $100 billion Liberal tax cut is worth $46.6 billion to Canadians, or about $54 billion less than advertised. It is sham. It is a myth.

One looks in vain for significant new tax cuts in the budget. Even the good ones are rendered very inconsequential because they do not go far enough or are phased in too slowly. The so-called elimination of the federal capital tax and the airport security tax reduction are prime examples of this timid approach to cutting taxes.

The capital tax is particularly damaging to innovation because it discourages investment and must be paid whether or not a corporation makes a profit, almost like a property tax. Many were happy to hear that it will be eliminated, but it will not disappear for five years.

However, the capital tax is more than a bad tax. It is actually two bad taxes. Budget 2003 promises to phase out the capital tax known as the large corporations tax, which was introduced in April 1989 and increased in the 1995 budget. Let me point out that this tax, along with the other capital tax and a few others, was brought in to get rid of the deficit. As we know, the yearly deficit is gone but these kind of taxes have lived on forever under the former finance minister, the member for LaSalle—Émard.

Budget 2003 makes no changes in the tax known as part VI of the capital tax and referred to in the budget as the special capital tax, which applies to financial institutions and was also first introduced in May 1985.

Reducing the air security tax goes some way but is not good enough. The former minister of finance introduced this unnecessary and damaging tax in the December 2001 budget. I that see the member for Edmonton West is here. She should know that there are a number of airlines out west that are really being hamstrung by this airport security tax and want it completely removed, but what did we get instead? We got a 40% reduction in the airport security tax.

Many Canadians ask themselves why air travel is the only transportation industry with the only user pay system for national security requirements. It is really unthinkable that the Liberals were happy to raise the Canadian tax burden by $445 million a year at a time when the federal overtaxation netted the Liberal coffers a surplus of over $8 billion. In other words, Canadian taxpayers were being overcharged by $8 billion a year and the Liberals still added another $445 million with this airport security tax. The Liberals are content with reducing this tax by 40% when it should be gone completely.

On employment insurance, the employment insurance premium reduction is also a huge disappointment. The bulk of the reduction in EI premiums had already been announced in budget 2000. There is something familiar about this: re-announcing the same program over and over. Agriculture is a good example of that.

Yesterday's budget gave Canadians an extra 2¢ reduction in premiums for every $100 of insurable income. That $7.50 will not even cover the cost of one movie ticket a year for the average Canadian. Meanwhile the EI surplus continues to grow and has expanded by $2.8 billion over the first nine months of 2002-03. What is the minister's response? That he will lower the premium by 2¢.

However, it is worse than that. A surplus this size suggests that a decrease should be in the range of 30¢, to about $1.80 from the current $2.10. That would put premiums and benefits into balance with the cost of the program while keeping $15 billion aside for an economic downturn. The Liberal government is happy to continue overcharging Canadians for employment insurance. It adds to the general slush fund that the government uses with all this new spending.

Moreover, the budget claims to address transparency, and there was quite a bit of talk about this. There was a whole section on it. Let us just take a moment to examine what the Liberals would do with transparency in the EI process. In the rate setting they would do it by introducing public consultations to determine how to move to a new rate setting regime for 2005 so that EI revenues would line up with the expected program costs. The reality is that budget 2003 delays the move to a fairer system on the EI rate by an extra year. Some transparency. This is Enron style bookkeeping at its best.

The EI act actually requires the Employment Insurance Commission to set premiums on a break-even basis over the course of a business cycle. However, the Liberal government amended the act so that the government, not the EI commission, sets the premium rate for 2002-03. Another sham. However, budget 2003 will delay that move. The government is setting the rate for 2004, surprise, surprise. The plan is merely a stalling tactic: so much for the transparency.

The increase in RRSP contribution limits is an incentive to save and invest. However, without any income tax relief for hardworking Canadian families, I find it difficult to see how families struggling to get by on $35,000 a year will benefit. It is more of a priority for them to keep a roof over their heads and put food on the table. What I am saying is that it is fine to increase it, and we in the Canadian Alliance agree with that, but we say to leave Canadian workers and their families some money, to quit taxing them so hard. Then maybe they can take advantage of this and invest in RRSPs for their own retirement.

The finance minister makes much in his budget speech of the government's victory on slaying the deficit, claiming the goal has been accomplished by a balanced approach on spending and debt reduction. The truth is that a steady stream of high tax revenues from levies like the GST, employment premiums and for the past year air security taxes has let him, like his predecessor the former finance minister, continue overspending on pet projects and corporate welfare. Ottawa's public debt charge is forecast to eat up almost $40 billion or about 21¢ of every tax dollar. Canadians may well ask themselves why, for every dollar of debt reduction found in budget 2003, there is more than $2 in new spending.

Canadians want more spending on health care. The Canadian Alliance has heard that very clearly and has been calling on the Liberals to restore what the they took out of health care under the former finance minister for a long time. Canadians do not want their hard earned tax dollars wasted, something the Liberals do every day.

Based on the Liberal government's track record, I feel quite confident in predicting future Liberal spending boondoggles and scathing Auditor General's reports. Just look at its record. This is the government, after all, that brought Canadians the HRDC boondoggle. I think it was moving Hostess potato chips down the road from one riding to another in Ontario so that a Liberal member of Parliament maybe could benefit from it. That was the kind of sham that went on.

What about the gun registry fiasco? It was supposed to cost Canadian taxpayers $2 million. It is now $1 billion and running. It probably will be at least $2 billion by the time it is finished. This is the government we are supposed to trust? What about the sponsorship and the advertising scandals?

The minister is fond of saying that we have a new northern tiger under his whip over there in the Liberal government. I would say that to pay for this year's budget runaway spending, future federal surpluses already have begun to be spent, and good economic times factored in for Canada. Considering we are facing the spectre of war, a weak American economy and potential border difficulties, the Liberals are guilty of counting their chickens before they are hatched.

An economic downturn would cause this whole house of cards to collapse. The Minister of Finance likes to brag about Canada being called a true northern tiger, but he must know, and I am sure he does as do many in government and in the private sector, that despite recent economic good times, there is still considerable distance to make up for the bad public policy decisions made in the 1970s and 1980s, mostly by the same Liberal government that is sitting across the way today.

Prior to becoming the finance critic for the Canadian Alliance, I spent three years as the industry critic for our party. As the Minister of Finance knows, because he was the industry minister much of that time, the industry committee conducted three separate studies in terms of Canada's productivity and competitiveness and why we were slipping so badly. What our committee found out in those studies was a longstanding decline in Canada's competitive position in the world. It was not much of a surprise to most people. We basically knew that but we found out some reasons why. That longstanding decline goes back some 25 years. I think it would be about the same time that we had this massive run-up in spending under the Liberal government of the Trudeau regime in 1979 to 1984. Is that not interesting?

Let us look at how we fared based upon our major trading partner. Twenty-five years ago the United States was the number one country in terms of productivity and living standard. Canada was number two. Unfortunately this bad public policy has had the effect of dragging Canada down, so now we are 13th in terms of productivity and standard of living around the world, and our competitiveness has been greatly affected.

I will put it to the House that this was not an accident. Public policy of the very Liberal government that was in power during most of that time, and a subsequent government, had great influence in dragging down Canada in terms of standard of living. That is really what it comes down to. Our standard of living has declined to only 70% of that of the United States in that 25 year period.

Not only that, even in this tough time, in the last year the United States' economy has been bumping along and managed to squeeze out a 4% increase in productivity, again widening the gap with Canada. Why do I raise that as an issue? Because the fact of the matter is that the Canadian dollar just happens to be bumping along too, down in the range of 65¢, and has had a serious deterioration under the Liberal government.

The Canadian economic miracle is based largely upon the fact that we are a discount country with a discounted Canadian dollar. It is not so much that we are the best on the international scene. It is because we are cheap. However in the long run our standard of living has really suffered.

Budget 2003 has really failed Canadians. It fails because it spends too lavishly and banks on future economic success that is not guaranteed. It fails because it ignores hard-working Canadians, average Canadians who deserve real broad based tax breaks after all the years of Liberal tax hikes and half measures.

The budget fails because it pays little more than lip service to reducing the burden on our public debt, on the economy and on our fiscal situation. It does little to address the very real long term decline in our productivity, competitiveness and our standard of living.

Therefore, it gets a failing grade in the view of the Canadian Alliance. We will outline that further as our speakers continue this debate in the future.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, I listened carefully and somewhat disappointedly to the hon. member in his characterization of the budget.

I realize he has to read his speech prepared by the research branch of the Canadian Alliance Party. I realize he has to parrot the tax and spend phrase. I hope he is referring to the tax reduction, spend prudently and balance the budget Liberals, then I can buy into what he is saying.

The member suggests that the spending is way out of hand. The fact is that next year's growth projected by the private sector is 5%. The growth in government spending is 3%. That does not sound like spending going way out of control.

I will challenge the member on one item of accuracy, if the member will take note of this. In his own words he said that the EI premiums would only drop by 2¢ to $1.98. About 30 second later in his speech, he said that the current rate was $2.10. That is not a 2¢ drop. That is a 12¢ drop.

Let me take his figure of $8 per employee. If it is an $8 saving per employee, it is a $10 saving for the employer. Add the $10 and the $8 and it is $18 and that is multiplied by every working individual in the country. Let us say there are over 10 million workers. That is a $180 million saving. Is that not correct? Is he not misleading us a little in the way he is characterizing the budget?

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, I have never heard the words prudent and Liberal spending used in the same phrase together before. I do not think it fits.

We have seen ample evidence of how the Liberals have mismanaged the economy in the past 30 years, which put us in this huge hole. We still have a $536 billion national federal debt as a result of those guys over there.

Since 1993 the government has talked about how the debt has come down under the Liberals. The Liberals forgot to tell us that they inherited about $508 billion in debt from the Conservatives. They took the debt up to $583 billion. They have now reduced it to $536 billion, and they tells us they have reduced the debt.

The member asked about the increases in spending. There has been a number of private groups that have looked at the government's projections on budgets. I think it is pretty clear. If we add up the numbers for the fiscal year 2002-03, it is almost a 12% increase in this last year alone.

It will finish by March 31 of this fiscal year. It could even be worse than that. We know at the moment from the estimates that there will be an 11.5% increase in spending or over $14.7 billion in this last year alone. Given the direction of the former minister of finance in the last two years, I thought the new Minister of Finance would take this opportunity to show some new direction and chart a new course for himself. Unfortunately he did not do that. What he has chosen to do instead is spend on the same spending path of the former minister, the member for LaSalle—Émard, which is about 6% to 7% a year.

The member raised the issue of inflation and population growth. The formula that is widely used is about 2.5% or 2% as an accepted rate. These guys are spending at almost three times the accepted rate for population growth plus rate of inflation. If that is not a recipe for disaster I do not know what is.

Why can the government not learn from its past mistakes? This is what got us into that huge problem in the late 1970s and early 1980s when the government was growing the size of direct program spending year after year. It put us into a situation where we ended up with $583 billion in debt.

This year alone $36 billion are the interest charges on that debt. Imagine what we could do with that money if the Liberal government had not put us in that kind of hole. The government has not learned a thing. It is continuing the same path it was on in the 1970s. It is back to the future with the Liberals.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[James Lunney, Canadian Alliance, Nanaimo—Alberni, BC]

Mr. Speaker, on February 7, I asked the Minister of Health a question regarding the medical marijuana being grown by Prairie Plant Systems in Flin Flon, Manitoba. Actually my question concerned the hundreds of pounds of marijuana being grown down in the depths of the mine. I said that Canadians wanted know what was being done with the pot from the rock garden and how the joint venture benefited Canadians.

The problem here is that there is no transparency on this issue. On May 7, 2002, the Minister of Health told the health committee that the first harvest produced approximately 185 strains of marijuana. She failed to mention the quantity of marijuana and its intended use.

Since then there has been no mention of the first crop of marijuana or of the subsequent second crop of apparently research grade marijuana. I believe Canadians would like to know the fate of hundreds of pounds of taxpayer funded pot.

Another problem I am concerned about is that there is an obvious disconnect between the way Health Canada handles the marijuana file and the way it is handling the tobacco file. The federal tobacco control strategy has committed over $500 million over five years to get people to quit smoking and the government also gives permission to hundreds of Canadians to smoke marijuana. What is wrong with this picture?

Even though Health Canada admits it has not assessed marijuana use for medical purposes for its safety, efficacy and quality, it has granted licences to Canadians to smoke the substance.

As of February 7, Health Canada has issued 541 authorizations to possess, of which 537 are still active, 353 personal productions licences are out there and 32 designated person licences.

Health Canada offers us three categories for medical marijuana access. Category one is for terminally ill patients with a prognosis of a life span of less than 12 months. I do not think anybody would withhold marijuana from somebody who is dying.

Category two involves those suffering from specific symptoms associated with certain serious conditions, like multiple sclerosis, spinal cord injuries, spinal disease, cancer, AIDS/HIV, severe forms of arthritis and epilepsy.

Category three is for those who have symptoms associated with a serious medical condition, other than those described, where conventional treatments have failed to relieve their symptoms.

Nowhere does Health Canada tell the public how many of these people are terminally ill, category one, or how many belong in each category.

This is a problem. The medical community acknowledges that marijuana produces 50% more tar than the same weight of tobacco. Marijuana smoke contains 70% more benzopyrene than tobacco smoke. Smoking two or three marijuana cigarettes is widely estimated to have the same effect on the risk of cancers and the prevalence of acute and chronic respiratory systems as smoking 20 or more cigarettes.

To gain access, a declaration must be made that the benefits to the applicant from the recommended use would outweigh the risks, and that includes the long term risks.

If people are supposed to get their own marijuana, which is untested for uniformity, for safety, for efficacy, how is a medical doctor supposed to determine if the benefits outweigh the risks except in terminal cases? If a patient's level of drug tolerance and the depth of inhalation vary greatly and impact significantly on the amount needed to obtain the desired level, how can a doctor in good faith prescribe a correct dosage for the patient?

Why is Health Canada sending mixed signals to Canadians: that it is okay to smoke marijuana but it is bad to smoke cigarettes? What has been done with the pot? How are Canadians benefiting from this exercise?

[Jeannot Castonguay, Liberal, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I thank my hon. colleague for raising this matter in the House. We are going to try to reconnect some things that he thinks are disconnected.

Our determination to explore this matter and to make decisions in the best interests of all Canadians illustrates the Government of Canada's concern with the health and well-being of all Canadians.

First, I would like to point out something. Although there are non-scientific data on the benefits of marijuana use for people suffering from serious or debilitating illnesses, marijuana is not presently approved as a medication or therapeutic agent in any country in the world.

As my hon. colleague is no doubt aware, the Government of Canada signed an agreement in December 2000 with Prairie Plant Systems Inc.—which I will refer to as PPS—of Saskatoon. Its role is to provide a reliable source of affordable, standardized research grade marijuana in Canada.

The initial plan was to use seeds from the U.S. National Institute on Drug Abuse. These were characteristic, standard seeds needed to make the standardized research grade product.

As negotiations progressed, it became increasingly clear that we would not receive the seed on time for our research projects. Consequently, we had to turn to another source, that is, seed confiscated by the police.

You can certainly appreciate that the seed came from unknown products. The PPS had to produce quality or consistent seed in order to grow, with the help of good production practices, research grade plants.

Unfortunately, this unplanned additional work extended the development period considerably.

I am pleased to inform the House that so far the company has produced a large number of plants from different seeds with the goal of determining the best strain for research purposes. PPS is conducting other tests to make a final selection and to develop a standard growing and treatment procedure that will yield a standard quality product.

The procedure will also be such that the product will meet strict regulatory standards for human consumption. We will be informed of the product's quality, safety and effectiveness.

As the hon. member is aware, PPS, like any other drug manufacturer, must meet stringent quality requirements. Our inspectors have made a number of visits to their premises since the contract was signed, and we are satisfied with the process in place.

Now, as for the availability of this product, the manufacturing and control processes are over. A supply of research grade product will, therefore, be available in sufficient quantity before long.

I would like to take advantage of this opportunity to stress the importance of having a supply of standardized research grade marijuana. To put it simply, any research carried out without such a product would be virtually worthless.

More important still, Health Canada has a responsibility to promote and protect the health of Canadians and to help the people of Canada maintain and improve their health. In every area in which we intervene, whether regulation, research programs or product accreditation, the most stringent standards we can apply must be adhered to.

We know that this potential supply is good news for researchers. Canadians, however, wonder, and are entitled to ask, “What about people who feel they need it now?”

In future, Canadians suffering from severe and debilitating illnesses will be provided access to this research grade product as part of clinical trials.

This kind of research is underway at McGill University and in Toronto. Open clinical trials are also planned, which will certainly promote wider access to this research grade product for all Canadians.

In addition, those who cannot wait to qualify to participate in a clinical trial have the option of applying for the authorization to possess marijuana, and even for a licence to grow their own plants. If they are too ill, they may ask that a person be designated to do it for them.

To conclude, the government believes that it is not only meeting the expectations of Canadians, but that it is doing so in a responsible fashion, by limiting the risks while contributing to the general well-being of Canadians.

[James Lunney, Canadian Alliance, Nanaimo—Alberni, BC]

Mr. Speaker, we are concerned about the mixed message coming out of Health Canada. For example, in the statement today by the member for Vancouver North he said that there were advertisements in Vancouver for marijuana grow-ops, and I have seen ads in my own riding. People can grow their own medical marijuana and supply it. One of the people advertising this is a convicted felon. He has been convicted of growing and distributing marijuana and carrying firearms.

The message out there is that somehow marijuana has already been approved for use and that smoking marijuana is okay. What kind of message is this for young people? If marijuana is going to serve as a medical instrument, surely we would want to measure it, quantify it and prescribe it in appropriate doses rather than allow people to grow their own.

I submit that Health Canada is sending a mixed message to our young people who are very vulnerable. This is not only causing confusion but it is opening the door to the whole criminal element.

[Jeannot Castonguay, Liberal, Madawaska—Restigouche, NB]

Mr. Speaker, you were listening when I spoke earlier and I am sure that you heard me very clearly. First, we are planning to conduct research. In fact, research is already being conducted to see exactly how this product could be used as a pharmaceutical drug.

As I mentioned, we know that, at this point, it has still not been approved as a pharmaceutical drug anywhere in the world.

As regards the issue of compassion, there are terminally ill patients who tell us that they can benefit from this product. This is why they want a special authorization to obtain or grow this product. But we are talking about a very limited number of people, and this is why we said that we must continue to conduct research before opening the door to everyone.

I hope this alleviates the hon. member's concerns.

[The Deputy Speaker]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 6:40 p.m.)