Debates of May 14th, 2003

Motions for Papers

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, in relation to all those questions just called, the specified executive search firms were not engaged with the Business Development Bank of Canada to conduct searches in relation to positions at the vice-presidential level or higher during the relevant timeframe. Therefore no relevant documentation exists, and we therefore respectfully ask the right hon. member to withdraw his motion.

[Joe Clark, Progressive Conservative, Calgary Centre, AB]

Mr. Speaker, I will give the request of the government my usual careful attention.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I ask that all other Notices of Motions for the Production of Papers be allowed to stand.

[The Speaker]

Is that agreed?

[Some hon. members]

Agreed.

[The Speaker]

Therefore, we will hear back from the right hon. member in due course in respect of the others, and I presume that those will also stand in the meantime.

Budget Implementation Act, 2003

[Ralph Goodale, Liberal, for the Minister of Finance]

moved that Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003, be read the third time and passed.

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

Mr. Speaker, it is a pleasure to rise today on third reading of Bill C-28. We have had a lot of debate with regard to the budget implementation bill.

I want to again emphasize to members of the House that this budget is built on strong fiscal fundamentals. First, we have no deficit. We are paying down the national debt. We are the only G-7 state that continues to pay down the national debt. We have gone from 72.5% in 1996, down to 44.5%, and declining. We have had our sixth consecutive balanced budget or better. At the same time we are investing strategically in areas like health care.

The Minister of Finance made it very clear that he wanted to hear from Canadians. He wanted to know what kind of Canada they wanted, in terms of the budget. I would like to quote the minister. He said:

Canadians told us that the budget choices we make have to be about more than the tallying of accounts. Our choices must reflect the sum of our values. They must reflect Canadians’ pride in their country and, above all, their hope and determination that their children will inherit an even better Canada and a better world.

The minister's comments certainly are reflected in the work of the 2003 budget.

The budget responds to many challenges. It responds to the issues of health care. It responds to issues of poverty and affordable housing. It responds to issues dealing with our cities, ensuring that they become more competitive and that our communities become better places to live. Again, strong economic fundamentals is very important; no deficit. We will not go back into a deficit. The government has made that very clear, and that is what the Minister of Finance has delivered.

As far as our cities are concerned, as the former president of the Federation of Canadian Municipalities, I take great pride in the fact that it was the Liberal government in 1994 that embraced the FCM's 1983 plan for national infrastructure. It lay dormant under the Conservatives. The Liberal government came in 1993 and the next year implemented the national infrastructure program. We have built on that over the years.

For example, the current budget builds on the 2000 and 2001 budgets by providing an additional $3 billion in infrastructure support as a down payment over the next 10 years. The Federation of Canadian Municipalities has asked for years to have a 10 year program. Those of us in municipal politics know full well that to deal with capital issues and look at projects, it needs to be done over the long term, for 5 and 10 years. Fortunately the government and the budget has responded.

Two-thirds of this will be used to double the funding available under the Canadian strategic Infrastructure fund for large scale projects such as those located in Canada's major urban centres. As a member of the greater Toronto area caucus, I was pleased that the government announced $435 million, matched by local municipalities, by the GO, by VIA, to improve local transportation, rail, bus and otherwise, in the greater Toronto area, and this is leverage money.

Unfortunately the province of Ontario still has not responded to the announcement made by the government at the end of March. I hope, as it gets closer to an election, it will make an announcement because we are waiting, the commuters of the greater Toronto are waiting, so we can have a fund of about $1.2 or $1.3 billion to improve transit in the greater Toronto area. That is because the government has worked effectively with municipal governments over the years.

I quote from the president of the FCM. In a letter he says, “FCM wants to continue its positive working relationship with the Government of Canada”. This has been the cornerstone of the government working directly with our communities across this country.

The remaining one-third of the money of course goes to new municipal infrastructure funding and again we are looking at those details. As members know, we have agreements with each province.

The budget further provides an additional $320 million to the affordable housing initiative over the next five years. It provides $384 million over the next three years to extend the residential rehabilitation assistance program, something again for which municipalities have asked.

The budget invests $405 million in the next three years in supporting communities partnership initiatives to continue the fight for homelessness. We have to congratulate the Minister of Labour for her leadership in that regard. The Minister of Labour listened to this Liberal caucus when it came to the homeless issue. She has responded and she has worked very effectively with community organizations across this country. Again this has been well received across Canada.

The budget also invests in new technologies and alternative energy and begins to deal with competitiveness in the North American and global markets.

In addition, budget 2003 delivers security to Canadians in the quality of our society and the strength of our economy. Beyond these investments in our future, Canadians are expecting accountability from the governments. Again the budget delivers. In short, the minister said, with regard to this budget, that it was about the society that Canadians value, the economy that Canadians needed and the accountability that Canadians deserved. Many of these measures are addressed in the bill we are debating today.

The principal investment in this budget was health care. That was the number one issue we heard across this country, reinvesting in health care. To begin, the budget makes significant investments to address the concerns of Canadians about their health care system about waiting lists, about the availability of diagnostic equipment and accountability for their tax dollars. These investments, as agreed to by the Prime Minister and by provincial first ministers in the February 2003 accord on health care renewal, will help to improve access to the health care system for Canadians, enhance accountability for how dollars are spent in health care and ensure the future sustainability of the system.

The budget confirms $34.8 billion in increased funding over five years to meet the goals outlined in the health accord. Bill C-28 implements these measures in the important agreement between the Prime Minister and the first ministers. Investments agreed to in the health care accord and implemented in this bill include a five year, $16 billion health reform transfer. It is targeted to primary health care, home care and catastrophic drug coverage. I know, having held my own consultations in my own riding last year, these were the three key issues that were brought to our attention of by professionals and by members of the public.

Further investments agreed to in the health accord and implemented in this budget include: an immediate $2.5 billion supplement to the Canada health and social transfer, the CHST, to help relieve existing pressures on the health care system; an additional $1.5 billion over the next three years for the acquisition of diagnostic equipment and related specialized staff training; $600 million to the Canada Health Infoway for health information technology; $500 million to the Canada Foundation for Innovation for research hospitals; $75 million to Genome Canada for applied health genomics; and $70 million to the Canadian Institute for Health Information to enhance its capabilities to report on the health system and the health of Canadians. All of this is without going into a deficit. All of this is responding to what Canadians said was their number one priority, health care.

Following on the five year funding framework that was put in place after the September 2000 agreement with the Prime Minister and the first ministers, which agreed to health and early childhood development, federal support for the provinces and territories, the ones responsible for the delivery of health care in this country, the health care and social program transfers are further increased by $1.8 billion and funding is extended for an additional two years. This will ensure a stable, predictable and growing new five year funding framework. As a result, the total annual cash transfers for health and social programs will now rise to $26.1 billion in 2006-07 and then $27.7 billion in 2007-08.

In addition to further financing, the first ministers also agreed in the accord that the sustained renewal of a Canadian health care system needed structural changes. We heard that even last night in the discussions in the House. This is why they agreed to restructure the CHST into two separate transfers, and this is a very important initiative: a Canada health transfer and a Canada social transfer effective April 1, 2004.

This would ensure that the federal transfer support for health care is transparent to Canadians because there was an issue of transferring money to the provinces and no one knew where it went. At the same time the first ministers strengthened the equalization program by agreeing to permanently remove the ceiling on payments beginning 2002-03.

One of the most important foundations in our society are families and children. This budget would strengthen the government's longstanding commitment to Canadian children and families in several key areas. One of the most important measures, for example, would provide a six week paid compassionate care benefit, for the first time under the employment insurance program, to help families provide care and support to a gravely ill or dying parent, to a spouse or a child. We will continue to monitor this and look at the success of this particular important initiative that the government has undertaken.

Another important point would increase the assistance through the Canada child tax benefit for children in low income families. By 2007 annual benefits would increase to a maximum of $3,243 or up to $3,495 for a child under age seven. A third measure would allocate an additional $900 million over five years for investments in early learning and child care as agreed to by the ministers responsible for social services. The most important formative years are zero to five and we have responded to that.

For those facing the challenge of disability, a new indexed $1,600 child disability benefit effective this July would provide additional annual assistance to low and modest income families with a disabled child. In addition, the budget would provide $80 million per year to enhance tax assistance for persons with disabilities drawing on the evaluation of the existing disability tax credit and input of the technical advisory committee. We are continuing to improve with regard to the issues of people and children with disabilities.

Further, infirm children or grandchildren would be able to receive a tax deferred rollover of a deceased parent's or grandparent's registered retirement savings plan or registered retirement income fund proceeds. The list of expenses eligible for the medical expense tax credit would now include certain expenses for real-time captioning, note-taking services, voice recognition software, and the incremental cost to individuals with celiac disease of acquiring gluten-free food products. This new addition is as a result of listening to Canadians and responding in that area.

We know that better economic performance tomorrow requires a more productive, innovative and sustainable economy today. Improved skills and learning are vital to improved productivity and competitiveness, and a better life for all Canadians. That is why this budget takes action to help give Canadians opportunities to gain new skills by committing $60 million over two years to the Canada student loans program to put more money in the hands of students and better enable post-secondary students to manage their debt.

In addition, access to interest relief would be available to individuals who are in default of their Canada student loan or who have declared bankruptcy. This is another issue that we heard lots about during the prebudget consultation discussions. Protected persons under the Immigration and Refugee Protection Act, including convention refugees, would now be eligible to apply for student loans.

We looked at the tax system. We are in the third year of the largest tax cut in Canadian history, a $100 million tax cut. To further improve the tax system and enhance incentives to work, save and invest, the 2003 budget would build further on that five year tax reduction.

It would encourage savings by Canadians by increasing RRSP and registered pension plan limits to $18,000 over four years and indexing these new limits. So we are indexing them as well. It would extend the 12% federal small business tax to business income between $200,000 and $300,000 over four years. It would eliminate the $2 million limit on the amount of small business investment eligible for capital gains rollover. This is something we heard from small businesses and the minister has responded. Another measure would reduce business costs and complexity by improving the tax treatment of automobile benefits for employees and auto expenses for employers.

We know that a competitive tax system is necessary to attract investment to Canada and to encourage entrepreneurs to create and develop their businesses. It is the small business community that is the engine behind making the necessary jobs in the country. With this in mind, the budget would totally eliminate the federal capital tax over five years. This tax is currently levied on all corporations with more than $10 million of capital used in Canada. The first step in the phase out would raise it to $50 million which is the level of capital at which a firm begins to pay tax.

Additional tax measures would include: implementing the increase in federal taxes on tobacco, effective June 18, 2002, as part of our anti-smoking campaign; removing the 4% per litre excise tax on diesel fuel from biodiesel fuel; and providing authority for interested first nations, those first nations that want to, to levy a broadly based sales tax consistent with the same provisions as the goods and services tax.

The budget would also take action in such vital areas of public concern and support as climate change and the environment. The Minister of the Environment led a strong battle dealing with the Kyoto accord and the budget would assist the Minister of the Environment to ensure that the necessary dollars would be there to respond to public issues dealing with diversified fuels, for example. It would also respond to issues in the agricultural field. Again, the government is responding in this budget.

It seems clear that the scope of the budget plan is very broad. It is responding to strategic investments because this is what we heard when the Standing Committee on Finance visited constituencies across the country.

What is also important is the government's need to be accountable for the money it spends. I want to make it clear that the Minister of Finance has made it very clear that the priority is accountability. Canadians made that clear during the prebudget consultations. As a result, this budget introduces several new steps to make government spending more accountable and indeed transparent.

First, following up on the government's commitment to review the air travellers security charge, to ensure that the revenue remains in line with the cost of the new system, the budget would reduce the charge by just over 40% to $7 from $12 on each domestic flight.

Next, the budget announced the launch of consultations on a permanent employment insurance rate system regime for 2005 and beyond. As we know, for the last 10 years EI rates have come down consistently under the government. The minister wants to go further. He wants to have these consultations to ensure that, in setting the permanent EI rates, it is done in a transparent and open way with all stakeholders and that it provides employers and employees with certainty about contribution rates.

Until that time, this legislation would set the employment insurance premium rate for 2004 at $1.98. This is the 10th premium rate cut since 1994 and it would bring yearly savings for workers and employees to over $9 billion compared to the 1994 rate. As we know, before that they went up and since the government has come to power they have gone down every year. Based on private sector economic forecasts in the budget, it is estimated that this rate would generate premium revenues equal to projected program costs for 2004.

An improved accountability framework in the health care accord includes a commitment by all governments to report regularly to Canadians. This is another example of accountability and transparency. This framework would give Canadians more information about their tax dollars and how they are being used to bring in reform in the health care system. I know all members of the House would agree.

The government is also making foundations more accountable. Most of these changes would be made directly with the foundations involved. As we know, all foundation reports are public documents. The heads of those foundations would be called before various standing committees.

The Canadian Foundation for Innovation, the Canadian Millennium Scholarship Foundation, and the Canadian Foundation for Sustainable Development Technology were established by federal statute. As a result, amendments in Bill C-28 would ensure that any unspent funds would be returned to the government if those foundations were ever wound up.

The budget would terminate the debt servicing and reduction account which was established to pay interest on the public debt and ultimately to reduce the debt. There is no longer any need for this account since the debt servicing reduction account revenues must ultimately be deposited in the consolidated revenue fund.

Clearly we have a budget with no deficit. We have a new culture of accountability and transparency. I could go on and on about the investments we made in the military and elsewhere. We have been criticized by some members in the opposition about how the spending has gone up. The major spending component, of course, was health care. Members may want to debate the fact that we agreed to the first ministers accord and put the necessary dollars into health care. That is up to them. We wanted to address the number one issue of Canadians as well as issues of child poverty, cities, tax cuts and homelessness.

It is important that governing is about priorities. It is important to ensure that we listen carefully. The Standing Committee on Finance had 49 recommendations to which the minister responded to 34, in whole or in part. He responded effectively in ensuring that he listened to those concerns and invested in the needs of Canadian families.

We want to ensure that we not only have accountability, but that we have an atmosphere where the economy can continue to grow. It is important to note that expenditures are still significantly down from what they were in the 1990s, which was around 18% or 19%.

It is important to note that we are working on many fronts, but we are ensuring that we do so in a responsible manner. We would not have the kind of debt that we have seen for many years. We are getting the national debt down having eliminated the deficit. Whereas Japan is now about 130% of GDP in terms of its debt. It is going up. We are sliding the other way, the right way. We are going down and soon to be below 40%.

It is extremely important that we are doing it in the context of going from the bottom of the G-7 to the top. The economy is performing well. We are seeing that reflected in a number of industries. It is therefore important to pass Bill C-28 to ensure that those initiatives about which Canadians have talked about are addressed.

We cannot do everything in one budget so we have to build on it. As I said with regard to taxes, we addressed the issue of capital taxes this year. We dealt with personal income taxes and we will have more room in the future. We are working with members of Parliament, stakeholders, and Canadians generally on many issues.

It is important to work in a fiscally sound and responsible manner. There were too many years when we spent money we did not have. One of the things the government said when it was elected in 1993 was that it would deal with that issue. It dealt with the $42.5 billion deficit.

Government is about making choices. As a government we must make sure that we address these issues, but that we address them in a way which is fiscally responsible. In terms of many recommendations, we would have liked to have done more, but there is only so much fiscal capacity to do so.

Other issues which may not have made it into the budget may be addressed in the future. The fact is we have a budget today, a budget on which we have debated for many hours in the House.

The budget deals with issues on the environment which are very important to Canadians. We are taking very important strides in that area. I congratulate the Minister of the Environment because this is a very tough file. Again, $2 billion has been added to that file, making sure that we can address these issues in cooperation.

Government is about listening. It is about collaborating with the public. It is about making sure we do it in a way that we do not make the mistakes that have been seen in the past, that we do it in a manner in which we can say very proudly that we are not in a deficit, we are dealing with the debt and we are investing. If we continue to do that, future generations will certainly be thankful.

Unfortunately I am part of a generation that inherited lots of debt. Debt is a major concern to me and I know it is a concern to my colleagues across the way. I do not like personal debt and I certainly do not like to see government debt.

We have a contingency fund. The minister has set aside $3 billion. Fortunately the economy has been moving along, but we always have to be prepared. The minister has made sure that $3 billion is there.

More Canadians are working. There were 560,000 new jobs in Canada last year alone. It was the reverse in the United States, so we are fortunate. Many of those jobs are full time jobs in high tech, manufacturing and other sectors that are very important to the Canadian economy. It is important that we continue to see that and that we continue to assist and to listen both in terms of issues that affect the business community where we want to see jobs grow and in terms of the social aspect. As I have said, a budget is not simply a balance sheet. It is to make sure that the life of each and every Canadian is better than it was before and that we continue to build on that.

I am hopeful that after all the discussions we have had in the House we will move on Bill C-28, that we will continue to work together as parliamentarians. As we embark on the next round of prebudget consultations which is not very far off, we will continue to deal with the fundamental issues Canadians are telling us they want addressed but at the same time we will do it in a fiscally sound manner.

Business of the House

[The Acting Speaker (Mr. Bélair)]

It is my duty, pursuant to Standing Order 81(14), to inform the House that the motion to be considered tomorrow during consideration of the business of supply is as follows:

That this House urge the government not to take part in the United States' missile defence plan.

This motion standing in the name of the hon. member for Saint-Jean is not votable. Copies of the motion are available at the table.

The House resumed consideration of the motion that Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003, be read the third time and passed.

Budget Implementation Act, 2003

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Mr. Speaker, I want to acknowledge the speech that was made by the Parliamentary Secretary to the Minister of Finance and recognize one of the major points that he struck which was that the 2003 budget is on fiscal fundamentals. He said that it is fundamentally correct and fundamentally sound because there is no deficit. That was the major plank in terms of its fiscal responsibility and fundamentals.

The other point my hon. colleague mentioned was that there is more transparency, a greater accountability.

I would like to point out that one of the major statements that was given to us as Canadians in the prebudget consultations was that this budget was designed to make Canadians more competitive.

I wish the hon. member had mentioned exactly what he meant by that. One way of measuring the competitiveness of Canadians would be to compare the relative tax that they have to pay to certain other people. He did use the comparison between Canadians and Americans.

I wish to draw attention to a particular category of persons in Canada and compare them to the United States. The example I will use is an individual who earns about $65,000 a year and has a $2,000 dividend income in his annual revenue.

Such a person in Canada would pay on the tax dividend of $2,000 a tax of $498. On the salary of $65,000 the person would pay income tax of $15,160 leaving a discretionary income of roughly $51,342 of the $65,000 that he or she earned in the first place.

Let us compare that to a person in the United States who earns $65,000 and has a $2,000 dividend. The taxes on the dividend would be zero, compared to $498 in Canada. On the salary the tax in the United States would be $3,795, for a discretionary income of $63,205.

There is a considerable difference between the disposable income of an American vis-à-vis a Canadian. If we want to make Canadians more competitive vis-à-vis an American, surely we would like to leave more discretionary income in the hands of the Canadian than of the American. This is one measure of competitiveness that we really want to address.

I am sure there are other members across the way who will say that is based on American dollars. Indeed the adjustment here is on similar dollars.

I do not want to go to that particular area any further. I wish to address a further issue with regard to budgets and with regard to fiscal responsibility and fundamental considerations as to what it means for Canadians and what it means to the economy generally.

Here I must address you, Mr. Speaker, and also the hon. member opposite that I am heavily indebted to the research that has been done in the comparison of economic freedom in North America, which was done in comparing the United States and Canada in terms of the relative economic freedom enjoyed by these two countries and the people in those countries.

The question I am sure listeners would want to ask is what in the world is economic freedom? I wish to address the definition as it was used in this particular study:

Individuals have economic freedom when (a) property they acquire without the use of force, fraud or theft is protected from physical invasion by others and (b) they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. Thus, an index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions.

That is economic freedom. What the researchers did is they compared the economic freedom of people in Canada vis-à-vis the economic freedom of people in the United States. They ranked on the basis of this index all of the states in the United States, as well as the provinces in Canada and guess what? Most of the provinces in Canada rank at the very bottom. In fact, Prince Edward Island is at the very bottom. The state of Delaware is at the top. Alberta is about halfway through and Ontario is quite a way down.

The study went on to describe this economic freedom a little further:

The freest economies operate with a minimal level of government interference, relying upon personal choice and markets to answer the basic economic questions such as what is to be produced, how it is to be produced, how much is produced, and for whom production is intended.

There are four elements.

As government imposes restrictions on these choices, the level of economic freedom declines.

From the earlier statement I made, we can tell that the researchers found there is less economic freedom in Canada than there is in the United States.

The research flowing from the data generated by the Economic Freedom of the World reports, a project the Fraser Institute initiated almost 20 years ago, shows that economic freedom is important to the well-being of a nation's citizens. This research has found that economic freedom is positively correlated with per capita income, economic growth, greater life expectancy, lower child mortality, the development of democratic institutions, civil and political freedoms, and other desirable social and economic outcomes.

The hon. member opposite mentioned the significance of dealing with child poverty. I agree wholeheartedly. We want to deal with child poverty. I would suggest that one of the reasons we have child poverty is because the parents are poor. One of the reasons the parents are poor is because their disposable income is down, and the reason that is the case is because their taxes are so high. If we really want to get serious about dealing with child poverty, let us deal with the disposable income of the parents.

Just as Economic Freedom of the World seeks to measure economic freedom on an international basis, Economic Freedom of North America has the goal of measuring differences in economic freedom between the Canadian provinces and U.S. states.

I just indicated that.

This study looks at the 10 Canadian provinces--excluding Yukon, the Northwest Territories, and Nunavut--and the 50 U.S. states from 1981 to 2000. Each province and state is ranked on economic freedom at the subnational and all government levels. This helps isolate the impact of different levels of government on economic freedom in North America.

It clearly suggested the relationship between the federal government and the provinces with regard to the national government in the United States and the individual states.

Let us now examine three elements of this economic freedom. They are subsidies and transfers that happen to individuals and provinces; the level of government employment; and occupational licensing. On transfers and subsidies:

When the government taxes one person in order to give money to another, it separates individuals from the full benefits of their labour and reduces the real returns of such activity. These transfers represent the removal of property without providing a compensating benefit and are, thus, an infringement on economic freedom. Put another way, when governments take from one group in order to give to another, they are violating the same property rights they are supposed to protect.

Is that not interesting. That is exactly what happens when this sort of thing is done.

Some form of government funding is necessary to support the functions of government but, as the tax burden grows, the restrictions on private choice increase and thus economic freedom declines. Taxes that have a discriminatory impact and bear little reference to services received infringe on economic freedom even more. High marginal tax rates discriminate against productive citizens and deny them the fruits of their labour.

That is part of the problem. That is why we on this side of the House have advocated and will continue to advocate the need to reduce taxes so productive individuals can become increasingly productive because they will have the incentive to do so. Take the example I mentioned earlier. Is it any wonder that people are attracted to moving to another country where they would have greater disposable income than if they stayed here. That is the issue.

We need to recognize what happens when money is taken from one group and given to another group. We are taking away the freedom from one group in order to exercise that. When we give money to someone freely, is that an incentive to continue to be productive or not or does that become a disincentive? There is a lot of evidence to indicate that it creates a disincentive rather than an incentive. I could talk for another couple of hours on that particular issue.

I want to move to the second point: government employment as a percentage of total state and provincial employment. Economic freedom decreases for several reasons as government employment increases beyond what is necessary for governments' protective and productive functions. This is the whole business of bureaucratic entrepreneurship and the business of hiring people to the point where it is unnecessary to have that many people in government employment in order to carry out the services.

There has to be a bureaucracy. There have to be employees of government, whether it is civic, provincial or federal. That is not the issue. The issue is, what proportion of the total employment group, the worker component, is in government service and what proportion is outside of government service? I do not have those numbers exactly before me, but I have looked at various statistics. There is an increasing proportion of the total labour force that is employed in government offices as compared with non-government offices. That is the issue we are talking about here.

This business of having an increase of that sort restricts the ability of individuals and organizations to contract freely for labour services, since potential employers have to bid against their own tax dollars in attempting to obtain labour. That is the issue.

High levels of government employment may also indicate that government is attempting to supply goods and services that individuals contracting freely with each other could provide on their own.

Government should not be providing goods and services that can be provided equally well or better in the private sector or by individuals. Government should not be doing those kinds of things. That is what we are talking about here.

It may also be that the government is attempting to provide goods and services that individuals would not care to obtain if they were able to contract freely. Maybe there are some services or goods provided that individuals would not buy or would not want if they had to provide them, because they are unnecessary and they are not a priority. Sometimes these kinds of things are invented for political advantage or for certain other advantages which have nothing to do with the improvement of the economic position in Canada.

We also indicate that government is engaging in regulatory and other activities that restrict the freedom of citizens. Let us talk to a small entrepreneur. Let us talk to a small business person. What is the number one issue they will tell us about? Number one is the tax level. The second one is regulatory infringement on their ability to do what they feel they want to do freely. These are very serious issues and I think they need to be addressed.

I know there was some indication that there is going to be a reduction of some of the regulatory functions. That is a good thing, but there are other areas where the regulatory function has increased rather than decreased. The issue here is that if we want to increase the economic freedom of Canadians we need to reduce regulatory intrusion into their activities.

Finally, high levels of government employment suggest government is directly undertaking work that could be contracted privately. When government, instead of funding private providers, decides to provide directly a good or service, it reduces economic freedom by limiting choice and by typically creating a government quasi-monopoly in the provision of services. For instance, the creation of school vouchers may not decrease government expenditures, but it will reduce government employment, eroding government's monopoly on the provision of publicly funded educational services while creating more choice for parents and students and thus enhancing economic freedom.

That is only one way of doing this sort of thing. We have had all kinds of other indications where parents should be given the choice. I will give one other example. I believe that it was the hon. parliamentary secretary who recently indicated that there was going to be a $3,200 child benefit so that parents could use that money, but it is going to be paid not to the parent but to these various institutions. Our position would be to reduce the taxes so that parents will have the freedom to choose where they are going to send their kids and how they are going to have them looked after, or to give the money directly to the parent to do that. To have government do this and dictate where they should go and how they should be treated there I think is an infringement on the economic freedom of individuals.

The third point is occupational licensing. I am sure, Mr. Speaker, that you know only too well what this is all about. It has to do with architects, engineers, doctors, nurses and teachers, a whole host of professions and special occupational categories. They are licensed on a provincial basis.

What is happening is that a person who is licensed in one province is unable to practice, in many instances, in another province. In order for a medical doctor licensed and practising in Ontario to take that Ontario licence to British Columbia, he or she would have to be licensed in British Columbia. They would be told, “Sorry about that. You have to be licensed in British Columbia and guess what? We're not going to give you a licence, because your licence is from Ontario, unless you take certain courses or re-write the examination or whatever. We're going to put a barrier in there”.

Not only does that exist for medical practitioners, it exists through the host of professions that I have listed and many more. That is a serious problem, because if a situation arises, and it has, where there is a real shortage of certain kinds of practitioners, and whether it could perhaps be a transfer of persons, they are unable to practise simply because of this barrier.

This is in effect a provincial barrier that exists in Canada and which in my opinion is absolutely atrocious, because if a medical doctor can perform laser surgery in Ontario, for example, why can he not do it in Victoria or Vancouver? He knows how to do that with that laser surgery equipment. This is absolute nonsense. It defies logic. These are the kinds of problems that exist. When these kinds of licensing practices exist, they interfere with the economic freedom of both the practising professional and the individual who wants to have the service performed.

These laws often protect the interests of “insiders” from potential competition. Is that really what we want to do? Do we really want to make sure that governments interfere in the opportunity for these people to compete with one another so they build artificial walls called licensing walls? Surely that is not what we want to do and yet that exists in Canada. I know it exists and I am sure, Mr. Speaker, you do too.

In Canada through the 1980s, economic freedom remained fairly constant at the sub-national level while it increased somewhat in the all-government level, perhaps as a result of a change of federal government and the resulting change in policy in 1984. In both indexes, economic freedom fell in Canada in the early 1980s and then began to rise in early 1990s. Federal, provincial and municipal governments began to address their debts and deficits, but typically more through increased taxation than through lower spending. However, as debts and deficits were brought under control, governments began to reduce some tax rates through the mid-1990s and particularly the late 1990s. Also in this period, fiscally conservative governments were elected in Canada's two richest provinces, Alberta and Ontario.

Without a summary statement on that particular part of it, it should be pretty clear that the fundamental talked about by the parliamentary secretary to not have a deficit is indeed a fundamental pillar and principle that is important, but what he did not say was that debt has to be planned to be reduced. We had all kinds of claims that the government has reduced debt over the last number of years, and it has. That is good. It has brought the deficit under control and it has paid back some debt, but there is no plan to repay the debt. Oh yes, indeed, there is a contingency fund of $3 billion this year, and if we do not need it for something else, then we will pay that into reducing the debt.

A great point was made about the proportion of the debt vis-à-vis the GDP, but as the GDP rises and the debt remains more or less constant or rises only slightly, small wonder. As a proportion of GDP, the debt takes a smaller portion. But the banks do not care about that; they care about the interest that they applied to the debt. Our interest charges on $536 billion of debt are exactly the same whether it is 50%, 10% or 60% of GDP. If we compare the interest payments being made by the Government of Canada today on our debt, they run around roughly the $40 billion to $42 billion mark. That is more than the government contributes to the health care program.

Another big point was made about the great contribution that has been made to health care. Yes, there has been an increase. Yes, money has been put back into the health care system, that is quite correct, and it is now at the level where the Liberals took it away in 1993. They have just now increased it back to that level. If one adds the inflation that took place during that time and the population increase, they are still in a deficit position vis-à-vis where they were. It is all very well to talk about accountability and it is all very well to talk about transparency, but then they must tell the whole story: “We took the money away first and then we gave some back but, guess what, we did not give you back as much as we took away in the first place”.

There is another dimension here. The money is there now, but what about the delivery of the service? It is very good that the money is there, but we now need to recognize that delivery of health care is every bit as important as the ability to pay for it. If we are inefficient at the delivery of the system, the waiting lists will not go down and the technology that should be applied will not be applied. The onus is now upon every administrative unit in the health care system to be as efficient and as effective as it can possibly be. I certainly hope that some of the elements that will be brought in with this money will in fact encourage the more efficient and more effective application of those funds in the delivery of the health care system so that we all have a timely and quality system there when we need it.

We also need to understand the impact of Canada's fiscal system. For example, let us consider a province that reduces economic freedom by increasing taxes. This is a uniquely Canadian problem:

This will likely have a negative impact on the provincial economy, as both the following results and international testing show. However, the weaker provincial economy means the province will receive an increase in federal payouts (or a reduction in the fiscal outflow if the province in question is a “have” province). The greater the reduction in economic freedom, the greater the negative impact on the economy and the greater the amount of money the province will receive from the federal government.

On the one hand, we have the province increasing taxes and reducing economic freedom and then getting money from the federal government, in which case we have the two things working one against the other:

This inflow of funds will, at least in the short term, partly offset the negative impact on GDP and mute the impact of the economic freedom, or its loss, on the economy. (In the longer term, the inflow of funds will also weaken the economy but this impact is likely beyond the time horizon of the tests conducted--

So there is a caveat in this whole thing. Nevertheless, the principle has been established:

On the other hand, if a province increases economic freedom, for example by reducing taxes [which Ontario and Alberta did]...the result is an increased outflow of government revenues to other jurisdictions and a heavier tax burden, given the progressivity of Canadian taxes, which in turn suppresses increases in economic freedom and economic growth. In other words, fiscal federalism mutes the impact of economic freedom in Canada.

It has done that. We can ask the finance ministers of Ontario or Alberta and we will find that this is exactly what they have experienced:

Economic growth itself, because of Canada's fiscal structure, reduces a province's economic freedom and thus brakes further growth [in the economy]. Despite the problems created by Canada's fiscal structure, economic freedom still proves to be a powerful stimulant for increasing prosperity in Canada.

What this really means is that both the provinces and the federal government should be looking at economic freedom and giving their respective constituents and residents greater freedom. One of the best ways to do that is to reduce government spending and to reduce taxes and to do that in such a way that the individual is granted greater freedom to apply the funds that they want to apply in the endeavours that they have for the goods and services that Canadians want and need.

The end result of all of this is that Canada's fiscal federalism seems to harm both rich and poor provinces. The discussion we have just gone through shows that:

...fiscal federalism frustrates the ability of some provinces to improve their economic freedom and, thus, their prosperity. However, the effects are at least as unfortunate in the poorer provinces, where a rich menu of government spending pushes out other economic activity and politicizes the economy. As a result, the rate of convergence of Canada's poorer regions is about a third to a half the rate of convergence of poor regions in the United States, Europe and Japan.

The incentives created by fiscal federalism are also damaging. Because fiscal federalism mutes the ability of provinces to move towards economic freedom and thus weakens the positive impact of economic freedom, the incentive for provinces to increase the freedom of their economies weakens.

Even worse, the elites--

I want to make it absolutely clear that these are the words of the authors of the study. This is their conclusion, their observation. They go on:

--the elites in “have-not” provinces have incentives to limit economic freedom. Low levels of economic freedom reduce economic activity and increase the flow of federal transfers. These transfers are predominantly captured by the political and business elites, meaning they face incentives to keep economic growth low.

That is exact opposite of what we want to achieve. It goes on:

As well, Canada's Employment Insurance system alters the incentives facing many voters, since they can benefit from the structure of the EI system, which also weakens economic growth by removing large segments of the population from the year-round workforce so long as the economic activity remains weak.

We have had all kind of debates on that particular one in the last little while. It goes on:

While all segments of the population would deny being influenced by such incentives, there has been no significant economic reform movement in Atlantic Canada, even though there is much evidence from around the world that the region's policy mix damages growth.

Those are harsh realities.

In review, “The Importance of Economic Freedom” is:

...why economic freedom is so clearly related to growth and prosperity, a finding not just of this paper but also many other empirical explorations of economic freedom.

In many ways, this debate goes back to the beginnings of modern economics when Adam Smith famously argued that each of us, freely pursuing our own ends, create the wealth of nations and of the individual citizens. However, the twentieth century was much consumed by a debate about whether planned or free economies produce the best outcomes. The results of the experiments of the twentieth century should be clear. Free economies produced the greatest prosperity in human history for their citizens. Even poverty in these economically free nations would have been considered luxury in unfree economies. This lesson was reinforced by the collapse of centrally planned states and, following this, the consistent refusal of their citizens to return to central planning, regardless of the hardships on the road to freedom.

I do not think I have to detail the names of the countries that we are talking about here. It goes on:

Among developing nations, those that adopted the centrally planned model have only produced lives of misery for their citizens. Those that adopted the economics of competitive markets have begun to share with their citizens the prosperity of advanced market economies.

That is their observation and I am sure that the observation of many members in the House. It goes on:

While these comparisons are extreme examples, from opposite ends of the economic freedom spectrum, a considerable body of research shows the relationship between prosperity and economic freedom holds in narrow ranges of the spectrum. While sophisticated econometric testing backs up this relationship, examples are also interesting. So, for example taking two peripheral European nations, the relatively free Ireland does much better than the relatively unfree Greece. In the United States, the relatively free Georgia does much better than the relatively unfree West Virginia. In Canada, an unfree Quebec does much worse than its free neighbour, Ontario. As with anything in the real world, exceptions can be found, but overall the strength of the statistical fit of this relationship is remarkable.

While this is hardly the place to review several centuries of economic debate, the mechanics of economic freedom are easy to understand. Any transaction freely entered into must benefit both parties. Any transaction, which does not benefit both parties, would be rejected by the party that would come up short. This has consequences throughout the economy. Consumers who are free to choose will only be attracted by superior quality and price. A producer must constantly improve its price and quality to meet customer demands or customers will not freely enter into transactions with the producer. Many billions of mutually beneficial transactions occur every day, powering the dynamic that spurs increased productivity and wealth throughout the economy.

Restrictions on freedom prevent people from making mutually beneficial transactions. Such free transactions are replaced by government action. This is marked by coercion, in collecting taxes, and lack of choice, in accepting services. Instead of gains for both parties arising from each transaction, citizens must pay whatever bill is demanded in taxes and accept whatever service is offered in return. Moreover, while the incentives of producers in a free market revolve around providing superior goods and services in order to attract consumers, the public sector faces no such incentives.

Members know this is the case. It goes on:

Instead, as public-choice theory reveals, incentives in the public sector often focus on rewarding interest groups, seeking political advantage, or even penalizing unpopular groups. This is far different from mutually beneficial exchange although, as noted earlier, government does have essential protective and productive functions.

In some ways it is surprising the debate still rages because the evidence and theory favouring economic freedom match intuition. Intuitively it makes sense that the drive and ingenuity of all citizens, harnessed to better outcomes through the mechanism of mutually beneficial exchange, will surely do better for themselves than will a small coterie of government planners, who hardly have knowledge of everyone's values and who, being human, are likely to consider their own well-being and the constituencies they must please when making decisions for all of us.

That is the problem of central planning in many ways. It should be left largely to the individual. They should be given the freedom to apply their funds, to make their decisions, to buy those goods and services that they want.

In conclusion:

The worldwide evidence on economic freedom suggests that Canadian provinces are poorly positioned to take advantage of economic opportunity. The provinces are clustered near the bottom of the ranking in all three areas, indicating that their governments have consumed and transferred more resources, imposed higher tax rates, and created more rigid labour markets than the governments of the US states.

We had witness on that here not long ago. In fact it is now currently upon us. I believe there is a province in Canada that is thinking of threatening to take the government to court. In Newfoundland and Labrador there is a very major issue, and this is exactly what the issue is about. It goes on:

The regression analyses [that is done by this particular study] indicate that growth in economic freedom and the level of economic freedom have a significant impact on the growth in per-capita GDP and the level of per-capita GDP. Since Canadian provinces have relatively low levels of economic freedom, Canadians likely are to continue to experience lower standards of living relative to the American states. Only two provinces, Alberta and Ontario, have high levels of economic freedom in the Canadian context, and the residents have seen the benefits of this.

That goes into the real basic fundamental of how to build a budget in Canada: provide economic freedom for the provinces, provide economic freedom for Canada as a nation and, in particular, to individuals to be free to choose.

There are a couple of things we really have to look at in some detail. I want to look at the air tax which the government has imposed upon Canadians.

A big point was made about the fantastic reduction from $12 to $7, a 44% reduction. That is true, that is a reduction and it is 44%, but it is still $7 per flight and $14 for a return flight. The research behind all this suggests that before the $12 tax was introduced, which is now $7, it cost the airlines $1.10 each way to screen a passenger. If it cost the airlines $1.10 to screen a passenger, why is the government imposing a $7 tax?

I will now go to the gasoline tax. The federal government collects 10¢ on a litre of gasoline and 4¢ on a litre of diesel fuel. The federal gasoline tax cost motorists $4.3 billion in 2000-01. On last year's average of, say, 64¢ per litre of gasoline, the government collected roughly $1.9 billion in GST. This went up when the price of gasoline went up, a windfall for the federal government.

In the United States the money that is collected for gasoline tax is contributed to the infrastructure of highways. In Canada a pittance is devoted to that particular expenditure.

While this is a great and wonderful announcement with regard to the infrastructure program, and a major part of it is for highways, a small proportion of those tax dollars collected on gasoline and diesel fuel go to that. The time has come for us to recognize that this tax, which is collected on a designated basis, perhaps should be spent on a designated basis.

In principle, for years in some of the positions of management I have held, I have never been a supporter of a designated tax. However the time has come to ask ourselves if we collect the tax on a designated basis, should it not be spent on a designated basis. It is a very real question. There are very sound reasons for putting it into general revenues but there are also some very sound reasons to recognize this and say that we have to be practical.

Right now, highway No. 1, the Trans-Canada Highway, in many areas is in a serious state of disrepair. It needs major improvement and yet the money that has been designated to do that is a pittance compared to what is necessary. That is a very serious indictment on the government. It goes directly to the whole idea of the economic freedom I talked about just a moment ago.

I want to go one step further on the point that the EI premiums have been reduced. That is true, they have been reduced. However I want to put this in the context of payroll taxes. It is very interesting what has happened. I want to compare only two years, 1993 and 2003. In 1993 the EI rate per $100 was 3%. Now it has dropped down below $2.10. The total spent in 2003 for EI premiums $819 for every $100. In 1993 it was $1,100. One might say that it is a big reduction, and it is.

Now let us look what happened to the CPP, which is the other payroll tax. The CPP tax was $752.50 in 1993 and in 2003 it was $1,810. Therefore, the total payroll tax has moved $817.20 higher than it was in 1993. It is all very well for the government to talk about what is has done with EI premiums and to say that it has reduced and slashed them but it then increases the CPP tax. Therefore the individual who is buying into this is paying more than in 1993. Such is the legacy of the budget making process across the way.

These are very serious issues and I think we have to come to grips with them in a very real way. There are good things about this budget but there are also some very serious shortfalls.

I would like to really endorse the fact that the government get serious about a plan to pay down the debt. It is time the government have a serious plan to reduce the capital tax totally. I know there is a plan to do that over five years but that is too slow. It is too little too late.

There are expenditures in goods and services areas, subsidies and things of that sort which have increased the expenditures of government well beyond the increase in population and well in excess of the increase in the inflation rate in Canada.

There are some serious shortcomings in the budget and we should change those shortcomings into positives before we approve Bill C-28.

[The Acting Speaker (Mr. Bélair)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Peterborough, Insurance industry; the hon. member for Davenport, Fisheries and Oceans; the hon. member for Renfrew—Nipissing—Pembroke, National Defence.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to speak today on Bill C-28, the budget implementation bill. In speaking on this bill, I truly feel I am doing what the Bloc Quebecois was sent to Ottawa to do, which is to defend Quebec's interests.

What most observers and commentators have stated is that this bill will implement a nondescript budget that is more of an exercise in propaganda for Canadian federalism and for the Liberal Party of Canada. This budget is a budget of many measures. I counted them. There are 74 different spending initiatives and 14 tax measures.

Of the 88 measures in total, not one manages to capture the imagination of Canadians or Quebeckers. Why? Because none of these measures resolves a single problem presently facing Canada and Quebec.

And there is worse to come. We had hoped that the new Minister of Finance would not follow in the footsteps of the member for LaSalle—Émard whose reputation for lack of transparency in public finances was well deserved by the time he left the finance portfolio. When the estimate of future surpluses is sometimes off by 300%, that is not a coincidence. It is simply one way the federal government hides the true state of public finances from the people, in order to use the taxes paid by Canadians and Quebeckers for purposes other than those for which they were levied.

Thus, it is sad to see that the budget tabled on February 18 fits so well into the pattern of budgets we have grown used to ever since the Liberals regained power in Ottawa. The true figures have been disguised, especially since the surpluses began, which would be in 1997. This is a budget we must describe as non-transparent, particularly with regard to the issue of surpluses.

First, I remind the House that the new Minister of Finance has invented a new category in order to try to artificially reduce his surplus. During the previous finance minister's tenure, we saw the invention of a contingency reserve. It was about $3 billion. So, that was one part of the surplus camouflaged. Year after year, this contingency reserve, which had no real purpose, was supposedly used—and I shall come back to this—to pay down the Canadian government's debt.

This contingency reserve has now been joined by a new invention from the new Minister of Finance, a reserve for economic prudence. We might wonder what the difference is between a reserve for economic prudence and a contingency reserve. The answer probably is that a contingency reserve is created out of economic prudence, while a reserve for economic prudence is just in case there are any contingencies.

But no one is fooled. This is simply creating accounting categories in an attempt to camouflage the size of the surplus produced, year after year, by the federal government, on the backs of the provinces, and Quebec in particular, and on the backs of all the taxpayers, in Canada as in Quebec.

Of course, it is pretty obvious. For example, in his October 2002 budget statement, the Minister of Finance announced for fiscal year 2002-03 which just ended a $4 billion surplus. For the following year, he forecast another $4 billion surplus. But as I indicated, because of the contingency reserve and the economic prudence reserve, in both cases, there was no surplus in the end. For 2004-05, the forecast was for a $5 billion surplus.

Naturally, like the Bloc Quebecois, all commentators denounced this massaging of figures. It was clear that the surpluses would be much larger, not only this year but also in coming years.

In the budget tabled on February 18, the Minister of Finance had no choice but to change his tune somewhat. For example, for the fiscal year that just ended, he announced a $6.4 billion surplus. For 2003-04, it will be $8.2 billion. The forecast has increased from $4 billion to $8.2 billion. We are slowly getting a more realistic picture, but there is still a long way to go.

For 2004-05, a $10.7 billion surplus was forecast in the budget, while in the budget statement, as I said, it was $5 billion. The amount has more than doubled. Between October and February—we are not talking about several years here, just a few months—the surplus forecast has doubled. But that is not quite the reality yet.

In October 2000, we had come up with figures of our own; we stand by these figures, and we stood by them in February. For 2002-03, our forecast was $10.9 billion; for 2003-04, $11.6 billion; and for 2004-05, $11.5 billion. It is pretty simple to do the math. All one has to do is take a look at the economic growth, rate of inflation and historical figures to come up with similar figures.

Of course, the figures I am quoting here, our estimations, we have come up with before the accounting reform. This year—and we totally agree with the new approach—we will be moving to full accrual accounting.

So, taking this full accrual accounting into consideration, for 2002-03, the fiscal year just ended, the surplus will be not the $6.4 billion announced by the Minister of Finance, but $14 billion instead. For 2003-04, the figure will be $12.3 billion, and for 2004-05, $12.4 billion.

So, before the measures announced in the budget, the surplus for the three years I have just mentioned, that is the one that has just ended and the next two, totals $38.7 billion. We can see that this allows the federal government an absolutely phenomenal amount of leeway. With it, the true problems of Canada, Quebec and the provinces could have been addressed, But no, they preferred to announce a whole series of propaganda measures, a flurry of measures that, as I have already pointed out, have not attracted the attention of either observers or the public.

As I said, our estimates put the figure at $14 billion. It is interesting that the new Quebec finance minister, Mr. Séguin, has also come up with more or less the same figure. I will quote from an article in the Wednesday February 19 La Presse , that confirms the approach, or the analysis, of the Bloc Quebecois.

According to Mr. Séguin:

If we consider that the increase in projected spending up until 2005 is higher than the average for past years—

Obviously, this is one way the federal government, that is the Minister of Finance, has of camouflaging the surplus.

—and if instead we calculate the surplus based on the historical average of spending growth—

As the Bloc Quebecois does.

—we realize that the surplus for 2005 will be not the $5 billion stated in the budget but instead $15 billion.

This is the same Mr. Séguin who headed the commission on fiscal imbalance in Quebec, and is now Quebec's Minister of Finance. We are not, therefore, the only ones not to be taken in by the subterfuges of the Liberal government's Minister of Finance.

This year, as I mentioned, taking this full accrual accounting into consideration, there will be a $14 billion surplus before the measures announced in the budget. After spending for these measures, there will be $9 billion. This means that even with the $6 billion in measures announced in the February 18 budget, the federal government will end up with a $9 billion surplus, a surplus that it will say it is putting toward paying down the debt. This is not the whole truth, and I will come back to this later.

However, given that there is no shortage of money in Ottawa, the Minister of Finance is able to solve problems. The main problems that Quebeckers and Canadians want to see solved have to do with the fiscal imbalance, the employment insurance fund and a whole series of social measures.

Instead of solving these issues using the financial leeway available to him, as I mentioned, he fudged the numbers. How did he do this? It is interesting. First, he forecast revenues based on growth that was lower than nominal GDP growth. For the benefit of those following, it is important to understand that when we pay our taxes, we do not pay our taxes based on the real growth of the Canadian economy. We pay our taxes on real growth—the actual increase in wealth—and on the increase in prices. For example, if I get a 5% increase in pay and there is 2% inflation, the real growth in my purchasing power is 3%. The federal government, like other governments, will not tax me on my 3% increase, it will tax me on the nominal increase of 5%, which includes inflation.

What the Minister of Finance is doing is not very complicated. He underestimates the growth in revenues and underestimates the rate of inflation. When we look at the department's documents, we see that the inflation rates, that is, the nominal gross domestic product, are systematically underestimated.

And conversely, the federal government, through the Department of Finance, inflates its expenditures. They are talking about $6.4 billion in the budget. But everyone who has seen how the federal government operates expects this $6.4 billion to turn out to be $5 billion. It is easy to reduce these expenditures.

As I was saying, Mr. Séguin, in his article of February 19, has explained this operation, as we have.

The federal government underestimates its revenues, overestimates its expenditures and, year after year, accumulates surpluses which are not subject to public debate and therefore not available to solve the real problems faced by Canadians and Quebeckers.

They say that these surpluses, which are basically not forecast, must be used to pay down the debt. On October 31, 2002, in this House, the Prime Minister said that, under the acts of Parliament, at the end of the year, the surplus is automatically applied to debt reduction.

The next morning, the Auditor General took him to task saying, “That is not so; that is not true”. The Prime Minister was wrong. He should have said that, by virtue of the acts of Parliament, or simply by virtue of accounting practices, at the end of the year the surplus automatically reduces the debt. I will explain it very simply.

If you have a $100,000 mortgage on your house, then you have a debt of $100,000. If, over the years, you have been lucky enough to accumulate $10,000 in your bank account, at the end of a year, when your net worth is calculated, we will not say you have a debt of $100,000, but that your net debt is $90,000, that is, the $100,000 mortgage minus the $10,000 you have in the bank. But you have not used that $10,000 to pay down your debt. It simply reduces your liabilities because you also have an asset.

It is exactly the same thing for the federal government. When, at the end of the fiscal year, we look at the picture, all the assets of the federal government—including reserves and foreign currency—all these assets are counted toward reducing its liabilities. Thus, the debt is not necessarily paid off. Simply, it is clear that all surpluses and assets go toward reducing the debt.

This is why, for example, in 2001, the surplus was $8.9 billion, much more than the Minister of Finance had estimated. Only $6 billion of this amount was used to pay down the debt, and that is already too much. The remaining $2.9 billion was put into the contingency fund to support the Canadian dollar during difficult times, which is not currently the case, and a good thing.

What the Prime Minister was telling the House is not quite true. I know that he went to law school. In all likelihood, it has been a long time since he has taken any accounting courses, but it is easy enough to understand.

The federal government, with its unforeseen, artificial surpluses—and I explained all this earlier—could very well decide, as it has from time to time, to use this money to resolve the problems that Canadians and Quebeckers want resolved, such as the fiscal imbalance, the employment insurance fund and various other measures that I will come back to shortly. The federal government has the necessary leeway to do something about these things.

Now, the money is there. This would allow the problems to fixed. But, in order to have a real debate, the real figures are needed. Unfortunately, this is not the case with this budget. I must stress this point, because there can be no real debate on the budgetary choices made by the federal Liberal government as long as the true financial picture is unknown.

This transparency problem was once again raised by Mr. Séguin, as I was saying earlier. He was the president of Quebec's commission on fiscal imbalance.

In the La Presse article of February 19 already referred to, he said two other things of note. To quote:

In fact, the federal government is announcing for the current year, ending this March, an excess of revenues over expenditures of more than $6 billion. Taking into account the usual overage noted at the end of each year, the surplus can be estimated at close to $10 billion.

This is Mr. Séguin writing on February 19, 2003. I have said that the Bloc Quebecois estimate before the accounting change was $10.9 billion. So we are both at around the same number, a number that is very far from the underestimates of the Minister of Finance.

Later in the article, Séguin goes on to say this:

Accountability with respect to public funds requires the government to table a budget, get an appropriation act passed, and collect taxes accordingly. A systematic announcement in advance of a surplus, the use of which is never made clear by the government, creates a serious transparency issue and is obviously contrary to the interests of the taxpayers, the ones who will be paying.

There is a problem of transparency, of democracy, in the way the Liberal Government of Canada is administering public funds. Part of the situation is being concealed from us, which prevents Canadians and Quebeckers from being able to give any clear indication to this government of how they want their taxes to be used.

The reality, as I have said, and continue to say, is that there is money in Ottawa. What is lacking is the political will to solve problems, and the reason it is lacking is that the Liberal government's view of how Canada should be built and of the role of the provinces is incompatible with the 1867 Constitution. I will be coming back to this point later on.

We have carried out a very serious analysis. I have spoken of our estimate of the surplus for the next three years. In the Minister of FInance's budget statement, I took his own figures for the surplus. I complemented these with Conference Board studies carried out for the commission on fiscal imbalance and the provinces a scant few months ago. Over the next 10 years, using extremely conservative estimates addressing simultaneously economic growth, interest rates and inflation rates, the accumulated surplus is going to be around $162 billion at least.

This is $162 billion the federal government will be using in large part to pay down its debt or impose its priorities.

With this money, we could easily solve the problems that I mentioned earlier. For example, the Bloc Quebecois proposed a gradual reimbursement of the Government of Canada's debt toward EI contributors and the unemployed, who have been cut off in recent years. It is important to remember that only four in ten people who contribute to EI are eligible for benefits, based on the new rules the government adopted. These benefits are lower than before and are of shorter duration.

So, with this $162 billion we could very well reimburse the EI fund gradually, with $45 million over ten years. This would allow the fund to grow a reserve and increase access and the benefit rates for income replacement. It would also help stabilize the premiums. So, that is $45 billion that could go to toward the employment insurance fund.

We could correct the fiscal imbalance. By my reckoning, this would take $67.5 billion, not just for Quebec, but for all of the provinces. Remember, four out of ten provinces are already experiencing very serious financial problems, and this year, that number is expected to rise to six out of ten.

In fact, there is only one province that is not experiencing financial problems right now, and that is Alberta. The reasons for this are obvious; they have to do with oil. However, all of the other provinces are having financial problems, or are on the verge of them. A slower economy or an increase in unemployment would wreak financial havoc.

So there is money, then, to correct the fiscal imbalance. Once we have paid back our debt to the EI fund, once we have corrected the fiscal imbalance, the federal government would still have a budget surplus of $50 billion with which it could solve a number of problems for which it is responsible. I am not talking about interfering in the jurisdictions of Quebec or the provinces, but it could solve problems that come under its jurisdiction. I will touch on this later.

Clearly there is a transparency problem with the Minister of Finance's budget. There is also a problem of democracy. There is a democratic deficit. When we are not given the necessary information for debate, then the debate is based on false premises. The public is also given inaccurate information. For example, when we are told that, by statute, an unanticipated surplus must be used to pay down the debt, this is not true, according to the Auditor General.

The government should therefore start by making a special effort to provide the public with accurate information so that good discussions can take place.

As I said, the federal government would still have $50 billion over 10 years to solve a number of problems for which it is responsible.

I will start with employment insurance, because it is important. Over the years, $45 billion was misappropriated. The one making this statement is not me but the Chief Actuary of Human Resources Development Canada, in a September 2002 report. It had reached approximately $42 billion in 2002. When we look at the surplus forecast for this year—nearly $3 billion—we can truly say that, in recent years, $45 billion in contributions to the employment insurance fund designed to cover the income security plan for those who lose their jobs we misappropriated.

So, $45 billion has been used for purposes other than what it was intended for. One of this government's ministers said so himself. The money was used to a large extent to pay off the debt, but this is still money owed.

If I owed income tax to the federal government, the fact that I chose to use the money to buy groceries or a car would not justify my telling the government, “I am sorry, I did earn the money, but I spent it and now I cannot pay you because I have no money left”. The federal government would not go for that, and neither would any other government. It would tell me, “You owe us money; you must pay. We will make arrangements”. As far as the EI fund is concerned, payments may be spread over a certain time period, but this is still money owed. The money may have been spent, but that is not the problem of those who contributed, the unemployed. The money must be paid back. We are open to arrangements; I mentioned a 10-year term to pay it back.

Now is a good time, because the Minister of Finance can see clearly that it was not a good idea to grab that $45 billion. Year after year, month after month, week after week, people write to him. I saw a letter from the Canadian Federation of Independent Business that said that for two or three years the government has been promising to correct this situation, that there is still nothing happening, that the contribution rates are much too high in comparison with what is needed. The minister has decided to undertake a consultation on the contribution rates, and he even announced it in the budget.

Of course, contribution rates mean nothing on their own. Contribution rates are related to the coverage people want from the EI program, what type of EI they want, what kind of reserves are needed to stabilize rates, and what kind of rates are required. Thus, it is absolutely unthinkable to have a consultation, as the minister thinks he can, about the mechanisms for setting contribution rates, without broadening the debate. And everyone has understood that.

At a meeting on May 6 in Gatineau, Quebec's social action groups came to tell him that they want a debate on contribution rates, the level of reserves needed to stabilize contribution rates in the event of an economic downturn and increasing unemployment, and the kind of coverage wanted.

Therefore the debate must be broadened. Contribution rates are much too high. I know that the government regularly boasts about reducing the rates. Let us look at that. I will not go too far back, although I could go back to 1993, when the Liberals came to power, but that might bore you, Mr. Speaker. I will just go back to 1999.

As you know, the term “worker contribution rate“ , means that it comes from wage earning employees. In 1999, the EI contribution rate per $100 of insurable earnings was $2.55. This allowed the federal government to get its hands on a surplus of $6.8 billion. The rate that would have been needed at that time to provide coverage, again according to the HRDC actuary, was around $1.69. Hon. members can see therefore that the contribution rate was far too high compared to what was needed to sustain the program, which was $1.69. At that time, I would remind hon. members, the accumulated surplus was already in the order of $20 billion. That was back in 1999.

The government, through its finance minister of the day, announced in its budget that it would be reducing the contribution rate, and boasted for months about this. It brought it down from $2.55 per $100 of insurable income to $2.40. I am not talking about the present Minister of Finance; it was one of the candidates for the leadership of the Liberal Party of Canada.

At that time, still according to the HRDC actuary, what was needed was a contribution of $1.43. This means that, the government's boast of having lowered the rate notwithstanding, it had not been lowered enough.

It continued to amass surpluses from the worker and employer contributions and at the expense of the unemployed. That year, the result was a surplus of $6,8 billion, making the total $26 billion.

Obviously, this led to complaints. “How can it be that no one, or just about no one, is entitled to EI? We pay at the set contribution rate and the government accumulates a surplus and announces it will pay off the debt with the money”.

Of course, the Minister of Finance of the day again lowered the contribution rate. He took it down from $2.40 to $2.25 in 2001. But, according to the actuary, the contribution rate that was needed to cover the cost of the EI fund was $1.66. This means the figure was still far too high.

Last year, it was lowered to $2.20, and the contribution rate needed for the system was $1.87. Now, we are being told that the rate will be lowered to $1.98, when the rate actually needed tis lower still. So, there will be another surplus.

The government can brag all it wants about lowering contribution rates, but it has not lowered them enough, and it has not used these surpluses to improve the employment insurance fund. It will pay, I hope, the political price for this misappropriation of funds.

Now, this must stop. I hope that, in consultation with the Minister of Finance, an ideal situation will be found, where accounting for the employment insurance fund will be done outside the federal government's general accounting.

The deficits were eliminated a long time ago. The last deficit was in 1994, almost ten years ago. So, we do not want to hear that it is because there were deficits to deal with and pay off. Now, these deficits have been eliminated, and the surplus is over $45 billion.

The debate must be broadened. In consultation with the minister, I hope that common sense will prevail, which is rare for the government side. If common sense does not prevail, I am very happy to know that the Confédération des syndicats nationaux and the Fédération des travailleurs et des travailleuses du Québec have started proceedings. Since I was the secretary general of the CSN, I was a signatory, in 1998, to the first proceedings against the federal government to recover the funds stolen from the workers and contributors to the employment insurance fund.

The proceedings started a few days ago. It is quite likely that, in the end, the courts will force the federal government to correct this situation. It would be a terrible shame for the courts to have to ensure compliance with the spirit of the Employment Insurance Act.

There is momentum for the federal government and the Minister of Finance to correct this situation and to commit to refunding the $45 billion—the money is there—to look, along with the labour market partners, at the type of coverage we want for people who lose their job.

As I mentioned, the Bloc Quebecois, along with the human resources development committee, made several proposals regarding accessibility and the income replacement rate in particular. The rate is now set at 55% and everyone agrees that it should be at least 66%.

We need to ensure that almost everyone who pays premiums is eligible for benefits, and that they receive them for long enough to avoid the problem of the gap that currently exists in the regions. This is a glaring problem, especially with the crisis in the fisheries. Many people's employment insurance ends before they start their jobs, and they are obviously not eligible for social assistance because they have assets from having worked hard all their lives. We cannot ask these people to liquidate everything they have saved, especially when it comes to providing for their children.

We must ensure that we eliminate this problem with the gap. The federal government has money to correct this situation.

Earlier, the parliamentary secretary said—and the minister repeated it in the House—that revenues this year would be almost at par with benefits. I have no idea where these figures come from. As far as I know, this is probably another attempt at covering up reality.

Let me quote figures from the finance minister's October 30 budget statement, in which he announced that the contributions or revenues would be about $18.081 billion, while expenditures would be $15.284 billion. The figures speak for themselves. I did the math, that was not very hard. The surplus is $2.797 billion.

The budget announced a 2¢ cut per $100 of insurable earnings. The budget statement had already announced a reduction in contribution rates from $2.20 to $2. So by the time the budget came around, the big news was not a reduction in contribution rates from $2.20 to $1.98, but from $2 to $1.98. No one was fooled by the finance minister. I hope he does not think he fooled anyone. This measure will come into force in 2004; it has no impact this year. It means that, this year, the surplus will be around $2.797 billion.

Next year, in 2004-05, based on the figures provided by the Minister of Finance, there will be $18.307 billion in revenues and $15.883 billion in expenditures for benefits administration. The estimated surplus is therefore $2.424 billion. These figures date back to last October; they are not that old.

Adding the 2¢ reduction announced in the budget brings the shortfall in the EI fund to $53 billion. I therefore subtract $53 billion. Also, so-called compassionate measures were announced for workers who may want to use their EI to care for a seriously ill relative, to be financed to the tune of $86 million. That is in the budget.

If we subtract the funding for the measures announced in the budget brought down on February 18, the surplus decreases, from $2.424 billion to $2.285 billion. It does not melt away, it decreases very slightly. We are talking about $130 million or $140 million less than what was forecast in October.

Let us do the same for 2005-06. The minister tells us there will be $19.129 billion in revenues and $16.685 billion in expenditures, leaving an estimated surplus of $2.44 billion. I will run through this again: let us say that the contribution rate is kept at $1.98 per $100 of insurable income; there will be a revenue shortfall that year of $178 million. As for compassionate care measures, the program will be well established. So we are talking about $221 million, but there is still a surplus of $2.045 billion.

Thus, we see that if there is not a major course correction, a change of direction, surpluses will still be accumulating and the federal government's debt to EI contributors will soon reach $50 billion, it having once more victimized the people who lose their jobs and need insurance.

This is part of the federal government's responsibilities. If it wants to be of use to the world, to Canadians, to Canada, to Quebec, to Quebeckers, let it take care of its own jurisdictions, let it settle this employment insurance problem, let it reimburse the $45 billion it owes, let it set contribution rates based on reality, with a $15 billion reserve perhaps, and let it improve employment insurance benefits. That is within its jurisdiction.

There are people working in the softwood lumber industry who are losing their jobs. I think it is sad that a year has passed since the second phase was announced. In particular, I can see the face of the Minister for International Trade, who is sad because the government is incapable of respecting its commitments to the softwood lumber industry and its workers.

True, negotiations are ongoing and we will have a decision by the WTO. But people are losing their jobs. A number of them are in that gap situation I was talking about earlier, where they have no money whatsoever coming in. Some of them have gone on welfare. Some communities are threatened with closure.

In terms of softwood lumber, the federal government is responsible for announcing a second phase and seeing, along with the Minister of Human Resources Development Canada, to protecting seasonal workers in particular.

In terms of the crab fishery, the government could do something. But no. It prefers to interfere in provincial jurisdictions, in particular Quebec's judgments. Adélard Godbout must be turning over in his grave knowing that, through a constitutional amendment, he let the federal government have jurisdiction over employment insurance. I am certain that he is extremely unhappy about that, poor Adélard.

Unfortunately, instead of fixing the problems, the federal government prefers to interfere in areas of provincial jurisdiction, in particular Quebec's jurisdictions.

I already mentioned in another speech that we had made a list of all the new intrusions, not ones that already exist, by the federal government in Quebec's areas of jurisdiction in the latest budget; there are 28 intrusions, meaning 28 measures that infringe on Quebec's jurisdiction, for a total of $4.476 billion. This amount is proof of the fiscal imbalance.

If the federal government had only the money needed for its own areas of jurisdiction, it would not have enough money to meddle in those belonging to the provinces; the provinces and Quebec would then be able to levy the taxes needed to assume their responsibilities.

Rolling in surpluses, the federal government has been able not only to pay off the debt, because it is not putting this money toward solving problems that fall under its purview, but also to use some of the money to encroach on provincial jurisdictions, in Quebec in particular, and to enhance its visibility—it is not fooling anyone with that trick either—in an attempt to stifle sovereignist sentiment in Quebec. It has been at it for several decades, but that did not prevent the sovereignist movement from growing, with some ups and downs. Such is the history of an entire people, but at the same time people will not be bought with this kind of measure. The bottom line is $4.476 billion to encroach on Quebec's jurisdiction.

Yet, money could very well have been put into the infrastructure program to ensure that municipalities could solve a number of problems, with the provinces and Quebec, of course, remaining in charge. What was announced instead? An investment of $1 billion over 10 years in infrastructure. That is $100 million a year, including $25 million for Quebec. That is ridiculous. Across Canada, municipalities scoffed at the measure. Twenty-five million merely pays for 25 kilometres of highway. The municipalities condemned the measure. Greater things could have been done regarding the infrastructure.

As for the special tax of 1.5¢ per litre of gas introduced by the Liberals to fight the deficit, while the government has been rolling in surpluses since 1997, the tax continues to be collected and to generate surpluses that go to paying down the debt, at least that is what we were told. This tax of 1.5¢ per litre of gas could very well have been abolished, especially in the current context of volatile gasoline prices.

As for the air security tax, this morning Air Canada announced a first-quarter deficit of $354 million. The situation is a very serious one. A tax is imposed without anyone being able to explain its usefulness, to such an extent that the Minister of Finance has in fact reduced it. It should have been simply done away with altogether. Perhaps that would have helped. While certainly not the only measure the airline industry needs, a minimum of common sense would have indicated that it ought to be abolished. Probably the next budget of the Minister of Finance—who knows if it will be this one or another—will abolish it. The damage has been done, however, and it is going to end up costing the Canadian public purse dearly.

As for the excise tax on microbreweries, the Standing Committee on Finance recommended that, for microbreweries producing 300,000 hectolitres or less per year, there be a 60% reduction on the first 75,000 hectolitres. The Minister of Finance did not take this into consideration at all, and this sector is going through serious problems as a result.

As for the disability tax credit, the budget contains absolutely nothing. In fact, access to this tax credit has been restricted. It is ridiculous. The government is asking for doctors' reports that sometimes cost more than the credit itself. The tax credit is worth about $960 and sometimes people are asked to provide reports from psychiatrists that cost more than that. People are not making money off of the DTC. I saw a man who was having problems walking who was denied the disability tax credit by the federal government.

I also must raise the issue of the GST and school busing. I find it unacceptable that despite everything the parliamentary secretary and the ministers involved say, the principle of the authority of a final judgment is being ignored. I hope that common sense will prevail before this bill is passed. I hope it is not passed. We are talking about $18 million. This will not jeopardize public finances, far from it. However, it will violate a sacrosanct principle. The authority of a final judgment must be respected. Of course, cases that are pending can be overridden, but not cases that have already been determined.

In health, there has been much bragging from the federal government. They finally handed over $6.5 billion in new money, but there were $21.6 billion worth of needs.

This falls completely short of the mark.

In closing, I would like to quote a Quebec premier, who said:

We absolutely cannot sit idly by and watch the federal government introduce initiatives that would prevent us from exercising our provincial powers, even on apparently secondary matters. We believe that true respect for the legitimate autonomy of the provinces, and everything this entails, presumes that the provinces have what they need to effectively meet their responsibilities in areas under their jurisdiction.

Who said this? Was it Lucien Bouchard, Bernard Landry, Jacques Parizeau or René Lévesque? No. It was Jean Lesage, in 1963. I am happy to see that the Bloc Quebecois is continuing his fight to ensure that Quebec's jurisdiction is respected.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I am pleased to participate in the debate on Bill C-28, the budget implementation act. Lest anybody be surprised, members of the New Democratic Party will be standing in clear opposition to the Liberal budget of 2003.

The Liberal spin doctors, and they have many of them across the way, have tried to portray this as a social spending budget. In fact, the government did try to do two things in the budget.

First, Ottawa tried to replace some of what it hacked and slashed over the past decade, but it is worth remembering that program spending in the budget taken as a percentage of our gross national product is far below historical levels. It is roughly at the levels that it was at in the 1940s, the years of Mackenzie King, Babe Ruth and Rocket Richard. Our level of spending is stuck there and for that we can thank in large part the former finance minister and the man who would become the next Prime Minister.

Social historians will note that the changes after the second world war were very profound. When Johnny came marching home from the war, he wanted to ensure that there were significant changes made in the way the country would function in the future after battling and defeating Hitler and Nazism. We had the growth of the welfare state in the fifties and sixties. What we are seeing subsequently is the pull back from that and it is impacting negatively on our society as a result. It is not just New Democrats who are saying that.

Yesterday Statistics Canada published its final report on the census data for the year 2001. The headline in today's news media says, “1990s a good decade for the rich: Statistics Canada”.The lead paragraph said:

The rich got richer in the 1990s, while everyone else's before-tax income stayed just about the same, as did the number of children living in low income families, Statistics Canada said on Tuesday.

According to Statistics Canada there are more than eight million families in Canada and their average income went up over the decade by the magnificent sum of $500 on average, about $50 a year. Members opposite are congratulating and patting themselves on the back about what a wonderful job they are doing. But, on the other hand, families in the top 10% of the income pyramid made 28% of all the money earned in the year 2000, and that was up from a decade earlier. Hence, the rich get richer headline.

The poorest 10% of families accounted for a mere 2% of the income. They remained in the same rut they were in a decade ago. Many of the poor people are single parents and 17% of seniors live in low income situations. They are the people who built the country and one in six of them is forced to live below the poverty line. That is a shame and something that none of us should accept. Even more shameful is that 18% of children in Canada were living in low income families in the year 2000.

We all heard the bold promises from the previous Conservative government of Brian Mulroney and of the current Liberal government about how they were going to do away with child poverty by the year 2000. The Ed Broadbent amendment was introduced and passed unanimously in November 1989, yet the number of poor children in Canada is almost exactly where it was 20 years ago in 1981. We are simply treading water.

Food banks are the only ones in the country where the branches are growing rapidly. We see them from coast to coast. With the resources that we have, it is an abomination that it continues to be the case in a country as rich and diverse as Canada.

The New Democratic Party believes the true test of any economy is how well it distributes the benefits of citizenship and by that measure the government and the budget do not pass the test.

In the 1940s there was somebody who said it slightly differently and much better than I just said it and that was Tommy Douglas. He said that the true test of a society is not the height of its skyscrapers but how it treats its most vulnerable citizens. I repeat again that on that basis the government and this budget do not pass the test.

I am not alone in my observations. The Catholic bishops of Quebec released their annual statement a couple of weeks ago expressing concern about the number of jobs in Canada that are part time, short term and insecure.

The bishops of Quebec said that insecurity in the lives of workers erodes their dignity and turns the human person into just another marketable commodity. The bishops added that the rights and dignity of workers would be better protected if more of them were able to belong to trade unions. I wholeheartedly concur with that.

What has the government and the budget done for workers? I acknowledge that it does reduce very slightly the cost of employment insurance premiums. This is a small measure when we consider that the government has accumulated a surplus of almost $50 billion in the EI fund over the years. We all know that the government has fought the deficit and paid for its massive tax cuts by raising money through workers' employment insurance premiums and the payroll taxes of employers. Both of those groups pay into the fund but the government does not. It just directs where the money will go.

Let me turn to the issue of students and post-secondary education. We used to call them the workers of tomorrow. In many cases they are not that any longer because they are working at part time jobs as they continue with their studies to try and help defray the high costs and the growing costs of post-secondary education.

The Canadian Association of University Teachers predicts that the funding available for post-secondary education will fall dramatically from $2.8 billion in the current fiscal year to $1.8 billion next year. That is placing significant strain on students and their families.

The federal cutbacks in post-secondary education in recent years have had the effect of driving up both tuition fees and student debt levels. Average student debt when the government came to power in 1993 was $13,000. Today it is over $21,000. Tuition fees in short have exceeded inflation six times between 1991 and 2001.

As I indicated, it is not just the students, but their families as well. The Canada student loans program requires parents to contribute a portion of family income, if they earn over a certain level, to their children's education until four years following graduation from high school. That amount is deducted from the student's assessed loan amount.

The required parental contribution is based on a moderate standard of living, determined by a formula that includes family size, income and the province in which the student resides. By way of example, a Saskatchewan family of three with an income of $50,000 would be expected to contribute between $220 and $230 a week to their child's education, or about $5,500 for a 24 week school year.

Obviously, moderate income families have to make large sacrifices to help their children through school. Some students simply do not go on to school or they delay their education. In fact, the Canada Millennium Scholarship Foundation published a study recently which stated that only 3% of Canadian families are able to provide the level of funding that is required under the Canada student loans program.

This is clearly not working. It is bad public policy and it is certainly inequitable. In talking with some university presidents, they have indicated to me that they are concerned about whether or not children from low and moderate income families will indeed be able to continue their education, or whether we are going to revert to the 1940s and earlier when it was only the children of wealthier families who had the wherewithal and were able to go on to a post-secondary education.

For our part, the New Democratic Party believes that we need to reduce the cost of post-secondary education by reducing tuition fees and relieving student debt by having the federal government assume interest costs on student loans throughout the life of the loan.

We should certainly eliminate all taxes on scholarships, grants and bursaries. As I have said before in this place, if we can eliminate taxes on lottery winnings, surely to goodness we can do it on scholarships, grants and bursaries.

As the agriculture critic for my party, let me turn for a moment to that issue and say how next to impossible it is to critique the government's budget when it comes to agriculture. It is not because it is a great budget. It is for another reason and let me explain.

The Department of Agriculture and Agri-Food has requested about $1.3 billion for the current fiscal year, but the Minister of Agriculture has told us that he will be seeking another $1.4 billion during the year to implement the agricultural policy framework. This is absolutely astounding. There is $1.3 billion in the budget, but we already know from the Minister of Agriculture that he is going to come back and ask for more money than is currently in the budget. How in the world can we debate and discuss a budget like that? Try to run a household or a farm in that kind of scenario, and one would not last very long.

Looking beyond all of that, let us say it is $1.4 billion plus $1.3 billion equals $2.7 billion. The amount of $2.7 billion in agriculture in this current fiscal year represents about one-half of what the federal government spent on agriculture just 12 years ago. Let the spin doctors try to turn that dross into gold. Spending is $2.7 billion this year. It was $4.3 billion in 1991-92. Spending on agriculture as a percentage of total government spending has dropped by half, from 2.8% in 1991-92 to just 1.4% this year.

Agriculture Canada reported last month that realized net farm income will fall by a full 19% this year and by more than 50% in Saskatchewan. Saskatchewan farm leader Terry Hildebrandt describes this as devastating. At a time of great difficulty on the farm, one would think that Ottawa would help out, but it is clear that the new agricultural policy framework has been designed to limit what Ottawa spends on agriculture.

It was with great fanfare that the Prime Minister announced the new agricultural policy framework just south of here last June. It was to include new safety net programs to protect farmers against sharp drops in income.

We are now a month and a half into the new fiscal year and there are still no new programs in place. It is absolutely unbelievable. Farmers rely on a clear policy framework as an informal collateral to take out spring operating loans from banks and credit unions. This year, incredibly, they are going to these financial institutions with empty hands.

Quite simply, at a time when farmers' incomes are under severe stress and they need a safety net, the federal government is proposing a new set of programs designed to reduce its commitment to farm families in perpetuity. We have to ask why the income of Canadian farmers is taking such a hit. One reason certainly is the massive American and European subsidies that are driving down international prices for farm products. That has a direct impact on our own products.

Canadian farmers are suffering trade injury. It is estimated to be worth about $1.3 billion a year. Although the agriculture minister basically accepts that figure, he went out of his way last June when he was unveiling his new policy to say that this new APF did not relate to trade injury. He knows it is a problem but stubbornly insists that the Canadian government will not do anything about it.

The government, in our opinion, must protect the incomes of Canadian farmers and that means acknowledging the impact of those subsidies. Ottawa needs to consult openly with farm organizations and provincial governments to provide new safety net programs, safety net programs that work and are acceptable to the producers and the industry overall.

Housing and infrastructure is something the parliamentary secretary boasted about. The Federation of Canadian Municipalities said that it needed about $2 billion a year in infrastructure investment and we got the magnificent sum of $150 million in new money. It is simply not enough.

I want to talk about another issue related to the state that Canadian families and working Canadians find themselves in. It is the whole issue of work. There was an astonishing article recently. I spoke earlier about part time work and insecure work, but full time employees are literally working themselves to death. In fact, North Americans now work 1,978 hours on average annually, which is 350 hours more than western Europeans work. If we do the math, we will find that 350 hours means that North American workers who are employed full time generally are working nine weeks more than their counterparts in western Europe.

It is no wonder parents do not have time to look after their children, to help out in the community or perhaps to take care of older parents. Work and consumption have become the focus at the expense of everything else in our society. Surely all of us here need to find ways to encourage Canadians to lead more balanced lives.

Today when productivity is several times what it was in the far-off 1940s, workers find themselves unable to complete the work in less than 40 hours per week. Of course, the Ontario government has fixed that by saying that it is not allowing any overtime until someone has worked 60 hours a week. As a result of this, the poor are earning less in real terms.

Working long hours has many other effects besides the impact directly on families. It impacts our health care system to a significant extent. Stress is the leading cause of heart disease and overwork impacts and causes stress. The consumption of fast foods results in greater obesity and the onset of adult diabetes.

In fact, tests show that the productivity of a worker declines dramatically in the final hours of a very long work shift. With regard to the 12 hour shifts that nurses put in, I think studies show that those individuals are not nearly as productive in the last two or three hours of the shift as they were in the first two or three hours.

In this wonderful job of being a member of Parliament, I have had the opportunity to travel a little with committees. When I am in Europe I do notice that Europeans seem to live a simpler, more balanced life. They do that because they work fewer hours. People who happen to be in a city in Europe on a Sunday will notice that most of the stores are not open. People are not seen running around to supermarkets to do their shopping. The staff are enjoying a day off, a day with their families, a day to hang out. For example, 29% of Norwegians spend less time at work than their North American counterparts, but their average income is actually only 16% less on average.

This issue is going to be of greater concern as we go along. Canadians are feeling very tired with the rat race they are in. They recognize it is leading to debilitating family relationships and is having an impact. I think we are going to hear more about people taking back their time and trying to lead a more balanced life.

The parliamentary secretary said he does not like personal debt or government debt. However, he did not have any comment about the debt that families in the country are facing with credit cards and things like high tuition fees which have an impact.

We in the New Democratic Party acknowledge and celebrate Canada's wealth and promise, but we insist that the government employ that wealth and our many advantages in the best interests of all citizens. We submit that this budget simply does not do that and consequently, we are opposed to it.

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

Mr. Speaker, I am not surprised to hear the doom and gloom from the NDP. Again the NDP is trying to educate the public by saying that on the national infrastructure program somehow we have not fulfilled our obligations, that somehow we have not done the job.

I do not know if that member has spent any time in municipal politics. I spent 12 years in municipal politics and, as president of the Federation of Canadian Municipalities, I can tell him that there would not be a national infrastructure program today; there would not be a 10 year program; there would not be a strategic infrastructure fund; there would not be the relationship on climate that we have, the 20% club, with the FCM and cities across the country; and there would not be the investment in cities, in colleges and in universities had this government not come to power to deal with those issues.

How do I know that? I know that because I was with the FCM in the days when the Tories were in power and the Tories, of course, never paid any attention to cities. They, like the NDP, are johnny-come-latelies to this issue.

The member said that we were not doing anything about student loans. I beg to differ. I would suggest that putting more money in the hands of students is part of this budget. I would point out that I agree with him on the issue of rising tuition fees. Unfortunately, that is provincial, not federal. Putting more money in the hands of students and merit based scholarships are part of this budget. Broadening the eligibility for debt reduction and a repayment program are part of this budget.

We were listening to those stakeholders, which is very important. I would have at least liked the member to have acknowledged some of the work we did, particularly on the national child benefit, improving the situation for poor and low income families in the country.

Yes, there is more we can do. There is always more we can do but from the left we hear we are not spending enough and from the right we hear that we are spending too much. I would rather be a Liberal and be in the middle and be able to say, no deficit, cut down on the debt, reduce taxes and invest in health care and social programs. I think that is what it is all about.

I would ask the hon. member to at least acknowledge the fact that we could do a lot more by working together. Maybe he does not think we score a 10 out of 10 on one item or another item but he could at least acknowledge what we have done. Surely the role of the opposition is to be constructive. All I ever hear on the budget is negativity. My good friends across the way will get up and tell me that we are just spending too much money. However the fact is that we are making responsible investments. I ask the hon. member to comment.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I did take a couple of notes during the member's speech to start this debate during which he bragged about health care, child poverty, cities, tax cuts and the homeless.

What are we talking about on health care? Is the government proud of the fact that the federal contribution to health care has gone from 13¢ to 14¢? The government is still the junior partner. It is no wonder Ralph Klein thumbs his nose at the health care system in this country. It is because Liberal members are not paying their freight.

On the child poverty issue, I have to refer the member to the stats. Statistics Canada has said that child poverty has remained relatively stable over the past 10 years. The government may think it is doing great things in terms of its various programs, but those things are not being borne out by statistics from its own departmental officials. The $150 million in infrastructure that the Federation of Canadian Municipalities have would build about four meters of highway in Saskatchewan.

Does the member want to know where I would save some money? I would save money on tax cuts. If the $100 billion that was announced on the eve of the 2000 election campaign had been directed to some of the social programs that it should have been directed to, it would have done a lot more, but it was a response to the Canadian Alliance at the time and an issue with which to go to the Canadian public.

What has happened on the homeless file, aside from the fact that the government has recently changed ministers in that area? We do not see any improvement. One need only take a walk in the Bytown area and look at the number of people with their caps out and their hands out looking for a donation to buy a cup of coffee. This used to be quite foreign. This was not something we encountered in larger cities but, unfortunately, it is becoming much more common. I think the parliamentary secretary needs to acknowledge some of these shortfalls.

Yes, a lot more should be done. I hope the government will do that in a future budget. The New Democratic Party, like other opposition parties, does participate in budget consultations. We hear what Canadians have to say when we go across the country. We are often disappointed when we see how little of that is reflected when the following February rolls around and the budget is introduced.

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Mr. Speaker, while listening to the speech from my colleague from the NDP, it reminded me of a saying that my father always had about the NDP. I would apply it to the Liberals as well because it is only kind to share sometimes. He used to say that the motto of the NDP was “I don't have anything, but I am more than perfectly willing to share half of what you've got”.

It is always easy to be a member of the NDP because the NDP is in favour of everything. If someone wants that party to spend more, it will spend more. If someone wants that party to cut taxes, it will cut taxes. The NDP never make any hard choices at all.

At the end of the day, if the New Democratic Party were ever anywhere close to coming into power federally, or if there were a minority Parliament, it would actually have to think pragmatically rather than taking half of what everybody else has to finance whoever it is it is trying to please.

In order to finance all the programs that the NDP has in mind for everybody under sun, specifically what taxes would it raise to pay for the myriad of programs it has in mind? Those members want more money for softwood. The member for Sackville--Musquodoboit Valley--Eastern Shore wants more money for the military, more money for roads, more money for Air Canada, more money for rail and more money for health care. How will that party pay for all of that? If the member could tell us it would be very helpful.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I partially answered that question but let me try it again in another way.

Had I been in a position to do so, I personally would not have implemented the $100 billion in tax cuts that the member's party wanted to make because I think they were very unfair tax cuts. They went to a demographic group in our society that did not need it as much as folks at the bottom needed it. I would not have done that. I believe $100 billion would have gone a long way toward correcting some of the other ills that I spoke about earlier in my response to the parliamentary secretary.

There are other areas I could comment on but I will leave it at that.

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, I always enjoy listening to the remarks of my neighbour from Palliser. He does not have to stay to listen to mine. We will not put him through that kind of agony.

I am pleased to speak to the budget implementation bill, Bill C-28. The interesting thing is that when the Minister of Finance brought down his budget in February, he was very optimistic. Things were going along pretty good. We knew there would probably be a war in the gulf, but some of the things that have happened I guess none of us could predict.

However one of the things the now finance minister did suggest about 12 months ago was that Canada was coasting in terms of its competitiveness and that we were relying solely on the weakness of the dollar to compete. He is now saying that it is fundamentally wrong and suggesting that we have to pay attention to detail because we cannot rely continually on a weak dollar to compete internationally. That is the message that we have been preaching for a number of years.

In all fairness, it is a tough message to articulate in such a way that it will be understandable and accepted by the marketplace. Given the fact that 85% of our exports go to the United States, a 62¢ dollar comes in handy from time to time.

Obviously the Minister of Finance will not comment on the dollar. An historical fact is that finance ministers seldom do. However, I think the point the finance minister, who was the minister of industry at the time, was making was that he knew we were headed for trouble with that 62¢ dollar. His argument was that if the dollar were to go up in value in relation to the American dollar that we would be in trouble because we rely solely on the weakness of the dollar to compete, that we have not addressed things like competitiveness or productivity, that we are letting productivity slide because we are again relying on a weak dollar.

He did not mention things like research and development. He paid slight attention to that. He did not mention the education or re-education of our workforce, our capital cost allowances that would allow our companies to compete on a level playing field with the Americans, and other tax treatment issues, including income tax issues.

Those words were somewhat prophetic, although the minister will not admit to that. I did put that question to the minister in his absence. It was actually answered by one of the junior ministers the other day in the House. In fact, I wanted to put that question to the finance minister today but I did not have the opportunity.

The point is that in the few short months from the February budget to today a lot of things have changed and some of those statements that the minister made a year ago are now coming back to haunt the government. An example of that was last month where we had 19,000 job losses in Canada. Now the question would be why.

We also have the SARS issue, which I guess in a sense is a budget issue as well because in dealing with that it will cost the Government of Canada and taxpayers something. However there is no question that the mishandling of that issue has cost the Canadian economy and has cost us dearly. We could argue that some of those job losses were not a result of the increased value of the Canadian dollar but were a direct result of the SARS issue, or the SARS crisis. Transportation took a heavy hit. The hospitality industry and entertainment business took a heavy hit. Therefore at the end of the day 19,000 jobs were lost. Next month's figures, May's figures, I think will tell the story as to how much of an impact this has had.

I think the dollar has also had an impact on that. As the Canadian dollar rises, our ability to ship goods to the United States diminishes because we have not addressed those productivity issues that we should have. In other words, we squandered our opportunity through those days of continued growth knowing full well that when an economy slows down we have to be prepared for the tough times. That is exactly what we are in. I think our salad days are behind us. The government has not prepared us for those tough times where we actually have to get out and compete in the marketplace on the basis of a Canadian dollar that is a little higher than 62¢.

That is something that I think the government should have addressed and did not. I would like to hear the minister's response to that when he comes back to the House.

More specifically in terms of the budget, we have to go through some of the realities that are out there today. One of the things that the government has been very good at in the 10 years that it has been in office is its management of the economy. I think the government is giving itself more credit than it deserves, because a lot of that success is based on initiatives that were taken by previous governments, which spent political capital to do what was right for the Canadian economy. One of them, of course, was the dreaded GST. I can remember when I was in the House, on the government side at the time, having the opposition accusing us of creating a cash cow. I can remember that argument very well. Of course the Minister of Finance at the time was saying that it was not going to be a cash cow but that it would noticeably increase revenue, because otherwise why would the government bring it in.

The truth is that it has been a cash cow. Some of those surpluses that have been generated simply would not be there without the GST. I guess in terms of a budgetary measure it is probably one of the best unkept promises in the history of civilization when the present Prime Minister of Canada campaigned in 1993 on a promise to rid us of that dreaded tax. The fact that he did not is probably the thing that has basically saved the government, although we will never get the Prime Minister to admit that. I think the only cabinet minister who did admit that at one particular point is no longer here with us. It was Mr. Tobin.

The other thing we spent a lot of political capital on and which has created a lot of wealth in the country is the free trade agreement. It generates about $2 billion of trade per day between Canada and the United States, and there are all the jobs that go with that.

I think those are two examples which show that when we spend political capital on issues that are controversial and obviously difficult to implement if we are doing it for the right reasons it will pay dividends down the road. They may not be political dividends, but the truth is that we will prepare the country for the future in the way it should be prepared. I think those two initiatives have worked well, better for your government, Mr. Speaker, than the one I was in. I am not going to use the word “caucus” here again which would get me into trouble with you, Mr. Speaker.

The fact is that the government has been very negligent in paying down its accumulated debt. I think it is important to recognize that the deficit has been eliminated, that is, the year to year deficit in terms of spending. In other words, the government is bringing in enough to pay the day to day bills. At the end of the day there is a surplus and the government is not adding to the accumulated debt. However, the accumulated debt that we have today is greater than what it was when the Liberal government took office in 1993.

The Liberals paid scant attention to paying down our accumulated debt. As long as that debt is there, it is taking more than money than need be out of our pockets and every Canadian paycheque to simply pay the interest on that accumulated debt, which is $507 billion as we speak. The government has paid little attention to that.

In fact, the little bit of bookkeeping magic that the Liberals have been able to generate is the huge surplus that has been accumulated in the employment insurance fund, which is approximately $45 billion. That is $45 billion that they have taken out of the hind pockets of Canadians, more than was necessary to sustain the fund. Where did that money go? It is hard to say where it went, but certainly none of it went to paying down the debt.

Let us talk about some of the areas the government has completely mismanaged. One of them is the long gun registry. The government has now spent over $1 billion on a failed registry. That would be $1,000 million. I listened to someone speak about that the other evening back in my home province of New Brunswick. He pointed out that $1,000 million divided by 10 provinces would generate $100 million in each of those 10 provinces for things like health care and education, which of course are two areas that the present government has ignored over the last number of years. In fact, when it went about balancing its books, it did it at the expense of the provinces. It was better to download on the provinces than take a look at some of its own expenditures; the government has failed to do that over the years.

I do not want to sit down without talking about defence. I just want to put some of the defence budget into perspective in terms of how much attention or lack of attention the government has devoted to this issue in terms of dollars. The defence budget in 1993-94 was $12 billion. In 1998-99 it was down to $9.4 billion. That was a reduction of 22% in five years. The current budget is 1.1% of GDP. It is the third worst in NATO, better only than Luxembourg and Iceland. The committee wanted 1.6% of GDP and a one time investment of $4 billion. It got far less than that. The money that is in the budget simply would not pay for the equipment that is needed, for example, air lift equipment and sea lift equipment. The government simply has not addressed that in its 10 years in office.

On Canadian Forces strength, let us take a look at the number of people in the military. In 1991 we had 87,600 persons. In the year 2003, that is down to 57,000. The defence committee wanted manpower up to around 60,000. The Conference of Defence Associations thought it should be up somewhere around 75,000. With the navy it is the same situation. Specifically on the navy, there are 9,000 regular forces and 4,000 reserve forces. There are 16 destroyers and 12 coastal vessels. Of those submarines that were delivered, I believe only two are serviceable. The problems are so serious with the other two that it looks like a complete waste of money by the Government of Canada.

The story goes on with other examples of mismanagement by the government and issues it did not address. One of the things the government is good at is taxing the poor. The government taxes the poor and then gives the money back to them as tax credits.

I will give an example of what we might do. We propose to stop taxing the first $12,000 for Canadians and to stop taxing the first $24,000 earned by single income families. We do not believe in taxing the poor. The fact is that a family of two earning $24,000 is not exactly rich.

These are specifically some of the things that could have been in the budget but were not, and here is a clawback example of how the government is capable of taking back money that people earn. I will step through this very specifically.

A Nova Scotia widow has four children and an income of $33,500. She works overtime, as an example, to earn an extra $1,000, for whatever reason, let us say for graduation for her son or daughter. She faces the following clawbacks in taxes; this is what would come out of that extra $1,000 this person would earn in overtime. Federal income taxes would chew up $220 of it. The clawback of the GST credit would take an extra $50 from her. The clawback of the national child benefit would be $321. The clawback of the Canada child tax benefit would be $50. The CPP and EI, net of tax credits, would be $52, and Nova Scotia tax would come in there as well, because that is a percentage of federal, in all fairness. Then there would be the clawback of the low income tax credit in Nova Scotia as well. In total, after earning $1,000 in overtime this particular person in Nova Scotia would pay back $892, with $108 to be netted by this individual. This is an example of the unfair tax treatment of individuals across the country.

I have the same example with a family of three in Manitoba with an annual income of $29,000. Again, if they worked overtime and earned an extra $1,000, after all the various taxes, some of them provincial there as well, the total of all the taxes in Manitoba would be $702. Out of that, the federal government would take $160 in federal tax. The family also would lose on the tax credit of $50 and the national child benefit clawback of $321 for a total of $702 in taxes.

When we are talking about tax reform in this place and addressing those real issues, I think there is more that the Government of Canada can do and I think it has an obligation to do that. There has to be an incentive to work. When the Government of Canada takes too much money out of our hind pockets, it simply kills that initiative. There is no reason for people to get out of bed and do it for themselves. We do reach a point where we are overtaxed and I think we have reached that point in this country. The government has had 10 years to do something about it and it has not.

One of the things we do support is the federal government's infrastructure program, which I think has been very successful in many parts of the country. In fact, we have a couple of projects in my hometowns--I am using the plural--St. Stephen and St. Andrews, about $9 million in two projects, water works and sewage projects, which are very important. We completely support them, with the help of one-third from the federal government, one-third from the provinces and one-third from those local communities.

That was an initiative by the federal government which we support, but we are not supportive of the Liberal government's past record and ability to deviate from that funding core in terms of infrastructure, where it winds up spending money on projects that have basically no merit at all. I am talking about some of what we call boutique infrastructure projects, like the famous monkey pavilions, canoe museums and NHL hockey arenas. That is just another example of how sometimes the government loses sight of why these programs are implemented in the first place.

The government has had 10 years to do it. It has had some success but the fact is there is more it can do. It is time it started to at least listen to some of the arguments that we put up on this side of the House and maybe consider some of those in its future planning.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I listened with great interest to the member speak, as I always do. It was interesting that he talked about the government doing little about the accumulated debt. As I think most people are aware in the House, we have made significant contributions toward paying down the debt over the last few years.

It was interesting he said that there should be more paid down on the debt and in the next breath he talked about not collecting as much tax and increasing massive defence expenditures, which of course would make the debt payment even less. He talked about spending more on air and sea lift, and tens of thousands of employees for the military. Once again they are incongruous concepts.

My question is related to the comment the member made on competitiveness and the very real challenge we have with our rising dollar, which was a good point. He said that with our rising dollars, companies needed to be better able to compete.

Where the member may have gone slightly astray though was in suggesting that the government had done nothing and had no plan. We have a very aggressive plan and policy in that area. One of the biggest initiatives of the government, present and new exciting initiatives, is the innovation agenda. It is split between two departments, the HRDC with the learning part of the agenda and the innovation part of the agenda in Industry Canada. The employees and government have worked very hard on having a very comprehensive program there.

The government has a plan to increase productivity to deal with such the situation of the dollar going up. What would the member's party plan be to deal with such a situation? What is its suggestion to make our companies more competitive to deal with the situation of the higher Canadian dollar?

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, the member asked some very valid questions and I hope I can answer them to his satisfaction. In terms of trying to have it both ways, I guess that is a legitimate concern. How would we manage it?

We want on one side the government to spend more money but on the other side to pay down the debt and so on, and that is a pretty good argument. However we have to be competitive. For the economy to grow, we cannot be overtaxed because we have to be competitive with those other jurisdictions. Overtaxation is not the way to grow the economy.

We could call it trickle down economics if wanted, republican economics, but the fact of the matter is those economies that have the greatest rates of growth are those economies that have controlled their desire to tax their citizens. Therefore there is a relationship there which I think most of us would understand does exist.

In addition to that, capital cost allowance is something the government has to address so companies can retool and refocus on markets. One of the reasons they do not do it is because we do not have attractive capital cost allowances as they do in the United States. That means if the companies have to bring in new equipment and technology to grow their business, provided there are the tax incentives to do it, they will do it and in the process they will create more jobs, more wealth and a bigger tax base. That is exactly what we are talking about.

On more investment in research and development in Canada, we are one of the worst countries, one of the poorest countries, in that area. We do not devote a lot of money to research and development.

As I mentioned in my opening comments, the other thing is training and retraining of workers on the educational side of it. It is important that we address the future and that means an investment in our young people so they are trained and will be able to compete effectively when they do enter the workplace.

Those are some of the areas the government could address to increase productivity and wealth, growth of the economy and so on. They are quite specific and I think the government has been negligent in some of those areas.

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

Mr. Speaker, I thank my hon. colleague across the way for his comments. I realize the role of the opposition is not to be positive about a budget, no matter how good it is. They are not standing and saying that we are back under a deficit, because we are not. They are not standing and saying that we are not paying down the national debt, because we clearly are. We are down on the national debt from 71.5% in 1996 to 44.5%, and the hon. member across the way should be congratulating us for that.

However my colleague in the corner knows that government is about making choices. I would ask my colleague just a quick math exercise. I give my colleague one dollar. I would like my colleague to tell me how he would spend that dollar in terms of all the issues he has raised. What portion would he put toward debt reduction? What portion would he put toward tax reduction? What portion would he put toward the military, the cities, the homeless and child poverty. The list goes on.

The fact is we have outlined clearly, as a government, where we are going. We have outlined clearly our spending priorities within a strong fiscal framework, and yet I do not hear from any opposition party any real credible alternatives. I hear a lot of rhetoric, I hear a lot of cheap shots, but I do not hear how they would spend it.

Fortunately my friend in the corner over there is a thoughtful individual, and I know he will respond by telling me how he would spend that dollar, because it is important. I certainly would like to know what the priorities would be of his party in terms of how that dollar would be spent, and I ask my friend to comment.

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, sometimes one just accidently steps into it in this business. I want to give an example of how we would spend more wisely. That would more appropriately answer the question. Remember when I talked about that billion dollars wasted on the long gun registry? That would be a start. That would be a billion dollars the taxpayer would not have had to pay out, which may have remained in our hind pockets.

Another example is this. Remember the cancellation of the helicopter deal? The Government of Canada spent $500 million dollars cancelling a contract with not one helicopter being built. The Prime Minister, in the 1993 election, said, “I will write, 'Zero helicopters'”. Well he did exactly that. Zero helicopters cost us $500 million.

That is a billion and a half and I could go on but I see my time is up. I love those kinds of questions. The parliamentary secretary stepped into it on his own free will and accord.

[Val Meredith, Canadian Alliance, South Surrey—White Rock—Langley, BC]

Mr. Speaker, thank you for the opportunity to speak on the budget implementation act, Bill C-28.

I find the dialogue we have had very interesting. The Liberal government feels it has done a really good job and we in opposition have been challenging where it has been spending Canadian tax dollars. It gets down to the original premise of what is government for and on what criteria does it collect money from taxpayers.

Basically, one has to start on the premise of should government be all encompassing and huge, or should government be as small as it possibly can be and provide the necessary services to Canadians and, therefore, have a need for less money to do that.

There have been many debates. In the House we heard another debate on what the role of the federal government should be. In Newfoundland and Labrador some people feel the federal government should no longer be controlling the fishing off the east coast because of the poor policy decisions that have been made, which have cost Newfoundlanders and Labradorians their fishing industry.

People on the west coast feel the federal government has not done an adequate job in international trade in protecting our softwood lumber industry or, for that matter, our salmon industry, our fishing industry on the west coast.

As Canadians, we have to decide what is it we expect from our federal government that we are willing to pay taxes to support. The message I hear and have heard over the last 10 years from my constituents is they expect the federal government to decrease its size, not increase its size. Canadians would like to see smaller government and getting out of their lives in a meaningful way, rather than the government growing and becoming more involved in the ordinary day to day operations of taxpayers.

It grieves me to acknowledge that what we have seen in Canada over the last 10 years is not a decrease in government size but an increase. There has been a 20% increase of senior management in the federal civil service over the last number of years. That is not decreasing the size of the federal government. That is increasing the size.

Why does the government do this? Because the federal government is getting into areas where it does not belong. It is getting into areas of providing programs for Canadians where quite honestly it should not be. Then one has to ask why is the government doing this? The government is doing this to get credit for it from the taxpayers. A more cynical person would say that the government is buying votes because often it does these sorts of things right before an election.

One of my federal Liberal colleagues asked an opposition member where he would spend the dollar if it was up to the him. That is a question the one has to address. Where are the priorities? Where does the federal government accept the responsibilities given to it constitutionally and where are its priorities?

I think Canadians are starting to feel that the priorities of the government are very misplaced. We have a gun registry that will cost upwards of a billion dollars by the year 2005. I can talk about the fuel rebate program which the Liberals introduced just prior to the 2000 election. That cost $1.2 billion. Three years later we are still paying individuals, even though it was established as an emergency fuel cost rebate.

It is those kinds of programs. It is Groupaction. It is the problems that we had with money that was not very well managed in HRDC. It is the federal Liberal philosophy I guess of bigger government, more government, more civil servants, more programs and spending more money, and that money comes from the pocket of each taxpayer.

Day in and day out I hear taxpayers saying that they want less government. They want the government to get out of their lives and let them get on with looking after themselves.

The federal government does not belong in babysitting. The federal government does not belong in some of the programs it finds itself in. I call it photo op. It wants the credit. It wants ordinary Canadians to recognize the federal government is the one that is giving them money. Ordinary Canadians will have to realize that it is their own money. It is just going from one pocket through the Liberal government back into the other pocket. This realization has to come to Canadians in order for them to understand what it is that we in the opposition are trying to bring to their attention.

A colleague across the way said that the Liberals have paid down the national debt substantially. Percentages have been used. It is like an accountant. One can use figures to support any position one wants to take. Perhaps as a percentage of the GDP it has come down, but the net debt was revised up $27 billion to $563 billion from $536 billion in last year's budget. It is not that the amount has been decreased. The amount is actually being revised upward.

We talk about priorities again and managing the money that the federal government really should have. What we have heard from Canadians recently is that they want to see the federal government recognize its responsibility for national defence. In order to accommodate defending our country and our sovereignty and fulfilling the roles that we have internationally, more money has to be designated to it. That does not mean that it taxes us more. It means that it takes money from somewhere else and puts it into defence.

The Liberal government is the one that cut health care so substantially that it put our health care system into crisis. Yes, now it is putting the money back in, but is it being managed properly and is it sufficient? Should it be putting more money into health care and taking it away from some other field, like fuel tax rebates or some of the other programs where it is questionable that the federal government should even be involved? Canadians recognize that the federal government should be involved in national defence, immigration, international trade and foreign affairs, but I think a person could argue constitutionally whether it should be involved in all the other day to day operations that Canadians find the federal government involved in.

Having said that, one has to also look at what is the role of the national government. Quite honestly I think it is to concentrate on growing the economy of Canada. Part of that is making sure that our business community is in a position of not only competing internationally but of growing its business and creating more jobs. Anyone will tell us that the more cost to businesses through taxation, through government regulations and government fees for bureaucracies that they do not want in the first place, the greater taxation that businesses pay means less money that they have for growing their operations, for creating more opportunities and creating more jobs.

There is a relationship, whether or not the government agrees or wants believe it, between high taxation and Canadian companies leaving Canada and going into the United States or other countries, China or wherever, in order to be more competitive. If the Liberals do not think that is happening, I invite them to my constituency. Daily I see businesses that can no longer compete because of the high cost of doing business, the high taxation, high land costs, again taxation through a different form of government. They simply cannot remain in business and compete with their competition in the United States, Mexico or wherever under the circumstances they find themselves operating. The government needs to recognize that there has to be a reduction in taxation in order for the business community to grow, to grow our economy, to hire more people, to provide those jobs.

It is also a question of whether or not the government knows better than ordinary Canadians what to do with their money. I would suggest that ordinary Canadians would love dearly for the government to get out of their lives and give them more tax money to spend themselves. Let them set the priorities of who looks after their kids. Let them decide in what institution they want to be educated. Let ordinary Canadians have the ability to look after themselves and their families.

It can be done. The government can reduce the taxes for ordinary Canadians and still have enough money to use on the programs deemed necessary but there is not enough money to lower taxes if the federal government is going to get into all these spending programs it has gone into. In the budget the Liberals increased their spending by 20%. The interesting thing is that taking that extra spending, 22% of it goes to major transfers to people. That would be pensions, child tax credits and that sort of thing. Some 26% was for major transfers to other levels of government. That would be health care, education, welfare transfers to the provinces. And 52% of the increase was for direct program spending.

I find it interesting that the majority of that money can go for the federal government to increase its own spending programs. I do not remember specifically, but I think defence only got a very small increase this time around. I think the infrastructure program received a small increase from what was in the first program. Where is all the money going? It is going for those photo op programs so that the federal government before the next election can say “See what we have done for you. Here is the cheque. Look how good we are. Re-elect us”.

I hope Canadians will be smart enough to realize that the money that is being passed to them is their own money. It came out of their pockets and they have to do without in order to give the government their money in order for the government to give it back to them in specific programs.

When we talk about child tax credits and all the other programs for low income individuals, why not have anyone making $18,000 or $20,000 or less not pay income tax? Why not recognize that people making that amount of money are going to have a hard enough time paying the rent and buying food that they should not have to pay taxes? Why would we take it away from them on one hand and then give them a child tax credit on the other hand? Photo op politics. The government wants recognition for being the good guy.

It is time to stop that nonsense. It is time for the federal government to look at what are its responsibilities under the Constitution. It must look at what are the priorities of Canadians. It must stop giving corporate welfare. It must stop picking one company as a favoured child and giving it billions of dollars in contracts or billions of dollars to compete against some other company that does not get any of it. How fair is that? It is time for the government to stop this nonsense. It is time for the government to pick its priorities based on what Canadians are concerned about, not about getting re-elected in the next election.

It is time for the federal government to start being a good manager of money. I sit on the public accounts committee. I cannot tell members what it is like to sit there and hear the horror stories about how things are not recorded properly, how the rules of the game that Treasury Board has established for contracting and bidding processes are not followed through on, how the administration of the tax dollars is not being done in a forthright way with good management practices.

The gun registry is only one example. We could get into how the government has transferred land and released its obligations without any protection for the taxpayer dollars that bought that land in the first place. We can talk about all the different circumstances of where contracts have been let, looking at Groupaction, where there was nothing received for the money that we paid. We are talking about $500,000 one time, the second time $500,000 with nothing to show for it and a third time it was $500,000. We are talking about $1.5 million with very little to show for it. Not only was it badly managed, but the results were not there for the money.

That is just one example. There is a bunch of them. It is frightening to see how much of the taxpayers' hard-earned dollars fritter away and cannot really be touched.

The government has decided it is going to use third party entities for some of the program delivery. I am concerned that there is not any reporting mechanism or auditing mechanism written into it. When the government set up this arm's length organization it removed the auditing function from the Auditor General. Therefore we lost control over how that money is going to be spent or whether the rules are properly followed.

The government has to start dealing with the responsibility of spending tax dollars. It is one thing to collect more money than, I would suggest, the government should be collecting. However when it does not have proper controls and cannot go to the Canadian taxpayer and say “We have looked at how this money is being used and we can in good faith say it is being managed well”, we have a real problem in our country.

Not only is the federal government spending more money than it should, it does not have a vision for the country in growing our economy, in growing the jobs and being responsible for the spending of tax dollars. It is time that the government was replaced.

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

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, my question was about a perceived crisis in the insurance industry across Canada. I asked it on behalf of constituents, private citizens, business people and elected officials.

Insurance is one of the foundations of our business and financial systems. Our peace of mind and the viability of our economy depend on a sound insurance system.

The events of 9/11, the wars on terrorism and in Iraq have had a great impact on the insurance system. My constituents know this. However there is a widespread belief that the ripples from global crises are being used as an excuse for excessive increases in premiums, reductions in coverage and refusal of coverage.

Why for example should the village hall mentioned in my question face such a huge increase in premiums for reduced coverage? Why has insurance for MPs' offices tripled in recent years?

It was good of the Secretary of State for International Financial Institutions in his answer to let my constituents know that he, like them, has learned that insurance is, in the narrow sense, a provincial jurisdiction.

He should also know that Canadians look to their federal MPs and ministers for national and international leadership. They rely on us as the level of government with an overview of national affairs. They do not expect us to wait until a provincial government detects serious problems in its insurance industry resulting from events and decisions overseas. They expect us to be involved in decisions like the merging of banks and insurance companies.

The secretary of state meets regularly with his provincial colleagues on matters affecting financial institutions which have interests in insurance. I suspect he is on national councils that regularly discuss such matters. Also, he is part of the federal Department of Finance which plays a critical role in determining the strength of the Canadian economy. I would be surprised if there are not officials in that department who have at least a watching brief on something as fundamental as the insurance industry of Canada.

The insurance industry has a distinguished history in this country but there is real concern that it is increasingly concentrated in a few offshore corporations. There is concern that insurance coverage is uneven across the country. Ontario, for example, appears to have dropped the ball on auto insurance. There is anxiety about relationships between banks and insurance. In rural areas, with the departure of banks, a fine network of insurance brokers provides critical financial expertise, yet their training and qualifications vary widely across the country.

All of these issues and more merit national inquiry. The secretary of state has access through the House of Commons to our standing committees. One or more of these could easily conduct valuable hearings, not witch hunts, into the current state of the insurance industry, calling witnesses who could reassure Canadians in these difficult times.

Now that the secretary of state and his department have had time to get up to speed on this matter, I hope that the parliamentary secretary can provide a more useful reply. I hope that the answer will include the thoughts of the secretary of state on and plans for monitoring a healthy, prosperous insurance industry in Canada.