Debates of Oct. 28th, 2004

Supply

[Some hon. members]

Oh, oh!

[An hon. member]

Or we accept.

[An hon. member]

We resist when we can't buy everybody off.

[Jean Lapierre, Liberal, Outremont, QC]

My colleague, the Minister for the Environment, is under huge pressure. All across the country, people would like him to spend more on parks. Once again, he says no, because we have to honour our current priorities, to which we are committed.

We made a commitment to health care. We also made a commitment to day care. We committed to equalization. We committed to municipalities, and we deliver on our promises.

However, it goes without saying that each time we deliver in those areas and commit to substantial amounts, we have less leeway in our own departments. We are so disciplined that we are presently revising our expenditures in view of reducing them by 5% in our own departments to better accommodate the provinces. Just think, everyday, I have to look at my department's expenditures and wonder if I could cut this or that. We really want to help Quebec, Ontario, the Maritime provinces, western Canada. We have to do that everyday. This is what fiscal discipline is all about.

If at the end of the year, after having managed irreproachably, we have surpluses, then our children and grandchildren will be better off! We will make no apologies for having surpluses, on the contrary. We will make no apologies for good management. We will make no apologies for paying off the debt. I will never be ashamed to say to my children and grandchildren that, under this administration, more that $60 billion has already been applied to the debt. Paying off your debts is not a sin, it is a quality.

When we look at the current state of our relationship with the provinces, if we put the rhetoric aside, when we look at the facts objectively, we must say that, in general, we are doing a darn good job. We must say that no government has ever been as mindful of the needs of the provinces, and as generous. This government is currently creating a trademark for itself. It is an attentive government, but above all a government that fulfils its promises, and that is what is annoying the opposition.

Indeed, we know that people are aware of the tenor of our promises, and of what we will deliver. We are currently delivering. It is true. This being said, I know that the opposition will have little to attack the government on. Indeed, the opposition will look at the electoral platform, the accomplishments, and then Canadians and Quebeckers will say: “What a good government in Ottawa!” When they have a chance, in the next few months, in the next few years or perhaps in the next few weeks, people will be able to look at our promises and our accomplishments, and we will have nothing to be ashamed of. We will not be ashamed to go back to the people at any time, because we are building an extraordinary record of accomplishments.

I know that this bothers the opposition. Even as a minority government, in an even more difficult context, we still deliver. When they look at what is happening, when they look at upcoming agreements, not in the distant future but in the coming months, provincial governments will realize that they have an ally here in the person of the Prime Minister. Provincial governments will realize that every commitment made during the election campaign is going to be fulfilled.

Incidentally, I can quote a more neutral and objective source than myself. This morning, André Pratte wrote the following in the daily La Presse :

However, the substantial improvements to the amounts and operations relating to federal transfers are making the theory of a tax imbalance much more questionable.

He added, in reference to various agreements signed by our government:

For the Quebec government, this represents an increase of about $3 billion per year.

This is from a credible source, namely Mr. Pratte, who took a close look at the whole issue. He is making these comments very objectively. He also added:

More importantly, the federal government has undertaken to correct the most serious flaw in the equalization system, namely the fluctuations in the payments, which was driving provincial finance ministers crazy. From now on, the program will simply be indexed, to the tune of 3.5%.

It is obvious that outside observers are pleased by what they are seeing. The only ones who have not congratulated the Prime Minister on the health accord, the only ones who are not pleased about our agreement with municipalities, the only ones who are not happy to see that we will have a national daycare program with the necessary flexibility, while respecting the Constitution, are opposition members, because they know that the well-being of the public and the success of this government are closely intertwined, and that they will eventually look like real fools.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, as an introduction to my question, I will quote a statement made by a member in the House and with which I agree entirely:

Make your own country. Concentrate all powers in Ottawa. Form an economic union that will turn your provincial governments into municipal governments. Go ahead, but don't expect us to get involved.

These words were spoken by the member for Outremont on February 6, 1992, and I fully agree with him.

What we witnessed the day before yesterday was an attempt to transform provincial governments into large municipalities. The lack of agreement on the issue of equalization illustrates this point. What the federal government and in particular the current Prime Minister and his Liberal government prefer to do is deliver federal equalization transfers a drop at a time.

I would also remind the member for Outremont, the Minister of Transport, of the statement made by Mr. Séguin—who does not seem to approve of what M. Pratte said in La Presse : “The federal government is thirsting after our blood, like Dracula.” And he went on to say: “The next time, I will fill up my suitcase with garlic before I come”, to avoid seeing his own blood and the blood of Quebeckers being sucked up by this government.

I would like to know what the transport minister and member for Outremont thinks about the fact that each Quebecker receives three times less in equalization payments than the people of the Atlantic provinces, less than the people of Manitoba, and less than the people of Saskatchewan. I would like to know what he thinks about the fact that, on average, 25% of the Canadian provinces' revenues come from federal transfers, while only 23% of Quebec's revenues come from federal transfers. I would like to know what he thinks about the fact that there are 12 public servants for 1,000 Ontarians, but only 10 for 1,000 Quebeckers, which represents a loss of 70,000 jobs in the federal public service for Quebec. That represents a 93% advantage for Ontario. All these facts amount to a fiscal imbalance in Quebec, an economic imbalance that the federal system is not helping us resolve.

I would like to ask him this. In the amendment to the amendment to the throne speech put forward by the Bloc Québécois, instead of writing that the federal government committed to alleviate “the financial pressures some call the fiscal imbalance”, would it not have been better to write that the federal government should address the fiscal imbalance which the Liberal Party of Canada is the only one to call financial pressures? In the House, the Conservative members, the Bloc Québécois members as well as the New Democrat members all agree on one thing: the existence of a fiscal imbalance, which means that the money is in Ottawa while the needs are in the provinces.

In the Quebec National Assembly, the Liberal Party of Quebec, the Parti Québécois and the Action démocratique all agree on the existence of a fiscal imbalance. Can the member explain why the federal Liberals are the only ones who believe it does not exist?

[Jean Lapierre, Liberal, Outremont, QC]

Madam Speaker, we certainly can agree on one thing. Why is this party talking about financial pressures? Why is this party talking about responsible government? Because we are the only truly national party that really cares about the country as a whole and that intends to still be in power after the next election.

Bloc Québécois members can promise anything they want. They can espouse any cause they want, they will never be in power, and that is why they are totally irresponsible. In his lifetime, the member for Joliette might have a chance to be elected to the National Assembly and govern. Currently, he has nothing to govern. He says yes to any request. He will never have to sign a budget. The only thing he can do is make speeches. He only commits to things he never will have to do. That is why he looks like Santa Claus. People know full well that every time the member for Joliette stands in this place, his speech is not worth the paper it is written on. He will never form the government.

On this side, we act responsibly. We govern responsibly because we have a responsibility to the electorate. Moreover, we are the only true national party. As such we recognize we have a responsibility. We must look out for the country as a whole.

As a result, when we make a statement, we commit ourselves. As for the member for Joliette, his statements are of no consequence whatsoever. This is why, when we look at what we do here, I am convinced...

[An hon. member]

That is not very flattering for people who voted for the Bloc Québécois.

[Jean Lapierre, Liberal, Outremont, QC]

People who voted for the Bloc Québécois knew their members would not control anything here. People who voted for them knew full well they would never be in power. That was very clear.

They can blow all the hot air they want. They can make all the speeches they want, they will never have to follow through on anything. Every time we make a statement here, the very next day we must act on it, and that is what we do. We are responsible. We provide good government to Canadians and we will go before Quebeckers without any shame because we will have delivered the goods.

[Bev Desjarlais, NDP, Churchill, MB]

Madam Speaker, there is no question that the transport minister's responses and comments tend to inflame Quebeckers. They also probably create a bit of antagonism for other national parties here in the House.

His colleague, the member for Scarborough—Guildwood, mentioned in a response to the member from the Bloc that somehow the additional dollars that must be transferred to the unemployed are like extra money that must go into those particular provinces.

Does he think it is acceptable for the government to use, as general revenue, the dollars that workers and employers pay into EI? Does he not think that there should be a more transparent and honest use of the dollars that go into EI to provide benefits to workers and employers?

[Jean Lapierre, Liberal, Outremont, QC]

Madam Speaker, it is at the request of the Auditor General that EI is part of the general revenue. In the past, we had a special fund.

We had a special budget. However, the Auditor General asked that it be included in the general revenues. We adopted the Address in Reply to the Speech from the Throne. There is a parliamentary committee which will look into this. All members will want to see if other formulas can be used in order for our statements to be more transparent and consistent.

In that context, I am looking forward to the results of the parliamentary committee's work about whether there is a way we can have a calculation of revenues and expenditures—an actuarial calculation—while abiding by the parameters of sound management and, above all, by the opinion of the Auditor General. In my view, this is what members will set out to prepare. We can look at whether this is feasible and can be implemented. We will see over the next few months. However, that was part of the amendments which were adopted by this chamber in connection with The Speech from the Throne. Thus, I look forward to the members' work with great interest.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I found the comments by the hon. member for Outremont very interesting, especially his claim that there is only one national party in this House.

If we look at the NDP, we can clearly see it is also present across the country. We do not have two faces like the Liberal Party shows in the provinces. All across the country, the NDP has always respected the French fact and the official languages. It was an NDP government in British Columbia that set up the francophone school board to respect the rights of francophones. It was the NDP in Saskatchewan and Manitoba that passed official languages legislation to represent French-speaking minorities better in those two provinces. It was an NDP government in Ontario that augmented rights for francophones in that province.

New Democratic members like Léo Piquette, Alexa McDonough and Elizabeth Weir have worked in the provinces—Nova Scotia, New Brunswick, Alberta, for example—to promote the rights of francophones.

As a national party—a party that exists all across the country—we do not speak with one voice in Ottawa and another in the provinces. We are united, we are consistent and we are upholding our principles of promoting both official languages and the rights of both English- and French-speaking minority groups across the country. We respect the official languages.

It is interesting to be here today to debate the fiscal imbalance. We know very well that it is because, in the current make-up of this House, two thirds of Quebec's representatives are in the Bloc Québécois. We know that the Liberal Party's bad management has led us to the point we are at today, facing the same sort of quarrels and arguments that prevent the real needs of Quebeckers and all Canadians from being represented and respected.

We know there is a crisis of homelessness, a crisis in health care, a crisis in post-secondary education, a crisis in the fiscal imbalance. This is my question for the hon. member. Faced with all these facts, how can he claim that the Liberal government has advanced the cause of national unity and made Canada stronger than ever?

We know very well that in communities across this land, Canadians are suffering more than ever, that there are crises in many fields because of a lack of federal funding, and that all provinces have problems with the fiscal imbalance, which means that the immediate and urgent needs of Canadians are not being met.

[Jean Lapierre, Liberal, Outremont, QC]

Madam Speaker, first of all, I would like to congratulate the hon. member on his question and comments.

I have to tell him the NDP contribution on certain issues is quite fine, but its members seldom have the opportunity to put their words into action in this Parliament, since they have never been in office. It is always easier to uphold great principles and be generous when you do not need to put these principles in practice.

I think all Canadians benefit from our government's good management. Our unemployment rate is relatively low, although it is always too high, and our interest rates are extremely low, so that consumers can buy homes, for example. When you look at the level of satisfaction of Canadians with this government, you can tell good management gives good results for the general public, who truly appreciates it.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Madam Speaker, I will be splitting my time with the member for St. John's East. As the member for Saint-Hyacinthe—Bagot and members of the House know, the Conservative Party believes a fiscal imbalance exists in the country, and we support the motion. We also know the Liberal government caused this fiscal imbalance. The fact that the very existence of the fiscal imbalance is up for debate shows the arrogance of the government.

I will begin my remarks by suggesting that the first thing the government should admit is there is a problem. It should recognize fully that there is a fiscal imbalance and that it should be addressed and fixed.

Simply put, the fiscal imbalance results from the fact that the federal government is collecting more taxes than it needs to fulfill its obligations. This results is recurrent budgetary surpluses at the federal level and deficits at the provincial level.

While the federal government is raking in surpluses that are always larger than anticipated, the provinces have a hard time providing essential health and social services.

This widening gap between the federal and provincial budgets prevents the provinces from making long term planning and forces them to always depend on federal transfers for their programs.

This is too little, too late. And this assistance is often tied to conditions such as the achievement of federal objectives. If the provinces do not achieve these objectives, or if they wish to pursue other important goals, they do not get the funds that they were promised.

Thus, the provinces find themselves in a situation where they cannot refuse to contribute financially to new federal initiatives. They are then forced to implement programs that do not meet their local priorities.

While it is enjoying huge surpluses, the federal government's only solution is an increase in provincial taxes to pay for social programs. However, collecting new taxes and accumulating deficits are not the solution.

It is clear that the current tax structure no longer meets the needs of the provinces and territories.

The motion itself raises the arrogance of the Prime Minister at the equalization meeting on Tuesday and I would like to address this for a minute.

The meeting on October 26 was supposed to come to a new arrangement on equalization. At the first ministers meeting on health in September, the provinces asked that a separate meeting be held to address the issue of fiscal imbalance as well as equalization. The Prime Minister told the Premier of Quebec and the other provinces that such a meeting would take place before the next budget and would address the fiscal imbalance.

The Prime Minister did not keep his word. He continued to deny the existence of the fiscal imbalance and refused to have a specific discussion about the fiscal imbalance at the October 26 meeting.

At the meeting, it became apparent that there would be no give and take between the provinces and the federal government. The meeting was a take it or leave it offer and there was no discussion about solving the equalization concerns of the provinces today. There was also no addressing of the fiscal imbalance. There was also no greater conversation of the larger fiscal climate in which federal-provincial-territorial fiscal arrangements are operating. There was no flexibility from the Prime Minister. In fact he was so inflexible that he reneged on a deal he made with Premier Danny Williams to give the government and the people of Newfoundland and Labrador 100% of their resource revenues with no equalization clawback.

Those are nice words to say and promises to make during an election, but they are a little harder to follow up, especially when one has built one's career as a finance minister by saying no to the aspirations of Newfoundland and Labrador and other Canadian provinces.

As the Leader of the Opposition asked on Tuesday, what is the rationale for not allowing the provinces to have full access to their resource revenues and why is the Prime Minister holding back Newfoundland and Labrador?

There are other problems because the government knows that a deal with Newfoundland and Labrador would only be the beginning. If it exempted natural resource revenues from Newfoundland and Labrador, it would have to do the same for Nova Scotia and Saskatchewan which have the same concerns. At that point, northern territories would ask for the same, as would resource economies in every other province. Instead of using an equalization program as a means of taking back resource revenues out of the provinces, the federal government would have to let them prosper.

Then I ask, what would the government do if it stopped interfering in provincial jurisdictions? Would Canadians maybe turn their attention to things that are truly a federal jurisdiction? Would the lack of respect the government has shown to our military become a bigger story? Would our abysmal trade record and the growth-stifling policies of the Liberal government become perhaps a more pressing concern?

The government is holding provinces back in two ways. The most obvious this week is the way it claws back resource revenues from provinces. The second is in its persistent denial of the fiscal imbalance. The fundamental problem with the Liberal government is that it does not respect provincial jurisdiction with equalization, resource revenues and the fiscal imbalance.

The government will suggest that it has corrected the fiscal imbalance by providing equalization top ups and by seeking to bring more stability to the equalization program. It will also suggest that equalization and transfer payments are what corrects this fiscal imbalance.

Equalization and transfers do not correct the fiscal imbalance. These transfers are part of federal revenues that are used really to coerce provinces and force federal priorities on to provincial areas of jurisdiction.

This is the key issue. Instead of allowing provinces to meet local priorities, we have situations where the federal government alters the priorities of provinces by dangling more money in front of them. Of course, as the provinces have been starved by the federal government for cash, they cannot help but say yes to these federal conditions. Again, I stress that these conditions rarely meet local priorities.

As well, the federal government is hooked on the fiscal imbalance because it is addicted to its large surpluses. The government does not want to give up the surplus because it needs it to pad its own books. The government again and again uses the surplus as a carrot to dangle in front of the provinces for health care, equalization and now for cities and child care.

The fiscal imbalance goes deeper than a simple distortion in financial accounting. It provides the basis for the government's entire way of operating. The government knows that the more it holds provinces down economically, the more it can push them around and worm its way into their budgets and distort their priorities.

It is pretty clear why the federal government will not allow Newfoundland and Labrador the freedom to prosper from its offshore oil revenues. It is exceptionally clear why the Prime Minister will not hold meetings on the fiscal imbalance and why he will not finally correct the fiscal imbalance. If the Prime Minister were actually to give provinces the promises he made while he was struggling in the polls, he would be unable to hold the provinces hostage at health care meetings or equalization meetings.

When I first addressed the House early this month, I mentioned that addressing and correcting the fiscal imbalance would be something very difficult for the government to do. It has no faith in other governments or in individual Canadians. This lack of faith is even more apparent after yesterday and after the dyslexic surplus of a few weeks ago. The government has no faith in provincial governments and services and Canadians are suffering. The government has no faith in individual Canadians and it feels the need to control every aspect of their lives, even in those areas that are not in its constitutional jurisdiction.

Canadians deserve better and they deserve two orders of government working together, each competent and successful in their own jurisdictions. They do not need the federal government duplicating the work of provinces and they do not need the federal government to keep playing the role of big brother.

It is time to correct the fiscal imbalance.

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I listened to the hon. member's speech. There never has been nor can there ever be a fiscal imbalance. It is an intellectual conceit which has been perpetrated particularly by the Bloc Québécois in order to destabilize the fiscal discipline of the government.

The hon. member talks about provincial governments and the fiscal pressures that they are under. In British Columbia the NDP government ran up quite a debt. The voters decided that that was enough and replaced them with a Liberal government to deal with the debt. In Ontario the provincial Conservatives ran up quite a debt, all the time pretending to be fiscally responsible. The voters decided to replace them with a Liberal government. In Quebec the PQ ran up a huge debt and the voters decided to replace it with a Liberal government. It seems to me that on some level or another the voters have spoken.

Fiscal discipline, which this government has taken upon itself since 1993, is a good thing. Possibly fiscal discipline should apply to some of the other provinces. For instance, members will be interested to know that provinces have access to personal income taxes just like the federal government does. It is the same thing with corporate income taxes. They have access to that kind of a tax just as the federal government does. It is the same thing with sales taxes and payroll taxes. Uniquely, provinces have access to resource revenues, to gaming and liquor profits and to property taxes, none of which are available to the federal government.

At one point the federal government generated about 16% of revenues vis-à-vis GDP. That was back in 1993. At that point it was about 19% for the provincial governments. At this point it is now 17%, so the provinces have access to 17% of the nation's GDP, going from 19% to 17%. Roughly, one point is $12 billion, so in some manner or another the provinces have walked away from about $24 billion worth of revenues. Then they have the unmitigated gall to come to the federal government and say that they have not been fiscally disciplined and because the federal government has been, they want to take its money. I do not know, but It seems to me that that underlies the premise of the hon. member's speech.

I put it to her that in there is no fiscal imbalance. It is an intellectual conceit. If the provinces were more fiscally disciplined, we would not be having this debate.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Madam Speaker, I have a hard time understanding how the member can claim the fiscal imbalance does not exist when we have a $9.1 billion surplus and we are living in a country made up of mostly have not provinces right now.

My problem with the way the federal government deals with this issue is that it has its own agenda and its own policy objectives when it deals with the provinces and, as I said earlier, it is very rare that those policy objectives actually coincide with the objectives of the provinces and the municipalities to that extent.

When the federal government brings its priorities to provincial matters it ends up setting priorities on behalf of the provinces. This shifts provincial authorities away from the local needs of the provinces, the municipalities and the citizens toward the political programs and policy objectives of the federal government. It is clearly not in its own jurisdiction.

All provinces have different needs. Provincial governments are the ones that are closest to their citizens. It is their jurisdiction. They deserve the respect of the federal government. It is their constitutional obligation to deliver services to their own citizens and set their own policy objectives and priorities.

I would also like to point out to the hon. member that in the Speech from the Throne amendment the government went at least half way to agreeing that some people say that a fiscal imbalance exists. I look forward to the day when the government actually admits that the fiscal imbalance does exist.

[Norman Doyle, Conservative, St. John's North, NL]

Madam Speaker, I too want to say a few words on the Bloc motion on Canada's fiscal imbalance, a motion which I do support. It has also been said that Newfoundland and Labrador has been the victim of too much money; too much money in Ottawa and not enough back home.

I think we all realize that over the last couple of days this whole business of the fiscal imbalance, as it applies to Newfoundland and Labrador, has been driven home quite well. Over the last few days we heard the Prime Minister of the country say to Newfoundland and Labrador “here is the deal, take it or leave it”, an offer that does not see the province get 100% of its resources. It is an offer that breaks, in a very significant way, the Prime Minister's promise to the people of Newfoundland and Labrador during the election campaign.

The people of Newfoundland and Labrador were offered, as all hon. members are aware, a $1.4 billion deal over an eight year period. If we failed to take that kind of a deal we were to have 100%, up to a $234 million cap, neither of which, incidentally, is 100%.

Given the current price of oil, which is more than $50 a barrel, the province's minister of finance has said to the people of Newfoundland and Labrador that if we were to sign that kind of a deal we would be leaving on the table billions and billions of dollars each year. I am given to understand that the people of Nova Scotia have rejected this offer as well, saying that it falls far short of what the federal government promised to the people of Atlantic Canada.

I want to give the House some idea of how far the deal falls short of what the Prime Minister actually promised to the people of Newfoundland and Labrador. For instance, in a year when the province takes in say $500 million in oil revenues, it would get to keep $234 million. That is less than 50%, which is a far cry from the 100% that we were promised.

Right now, after pumping oil for 10 years in Newfoundland and Labrador, the province only receives 14% of the revenues from its offshore oil while the Government of Canada and the oil companies get a whopping 84%.

Yes, what has been offered is an improvement in the current situation because wherein the lion's share of the offshore revenue is clawed back by Ottawa through reductions in equalization payments, but it is not 100%. Let us make no mistake about it, 100% of the offshore oil revenues is what the Prime Minister promised during the election campaign.

What happened between the Prime Minister's election promise and his very different written offer of October 14? Rising oil prices is what happened; rising oil prices and the unwillingness of the federal government to let any cash windfall accumulate in the economy of Newfoundland and Labrador.

The federal government is somehow of the opinion that if Atlantic Canada is kept dependent upon the federal government then come election time it will have a lever to use against the people in these areas. Somehow it is a positive and the government will be the recipient of the seats in Atlantic Canada by keeping Atlantic Canadians dependent on the federal government.

In his public statements during the election campaign, the Prime Minister talked only of Newfoundland and Labrador receiving 100% of its offshore oil revenues. However, with oil at more than $50 U.S. a barrel right now, the Prime Minister saw fit to introduce a few constraints on his election promise.

We are talking about a very complex issue here. I am convinced that the minister who represents Newfoundland and Labrador does not really understand the offer that has been made by the federal government. If the minister understood what the federal government was trying to do to Newfoundland and Labrador he would not be considered today, back in his home province, as the Benedict Arnold of Newfoundland and Labrador politics.

If the minister is listening, let me explain to him in 60 seconds what the federal deal is all about. The Prime Minister said that we can get 100% only until our province's fiscal capacity equals that of Ontario, but Ontario's fiscal capacity is based entirely on the performance of its economy. If the fiscal capacity of Newfoundland and Labrador were based only on the performance of our economy, we would be getting 100% of our offshore oil revenues forever and a day. It would never kick in.

However, what the Prime Minister has done in his offer, is he has artificially jacked up Newfoundland's fiscal capacity by adding in our current equalization payments and the modest offshore revenues that we get right now. He has added all that to our fiscal capacity to try to bring our fiscal capacity up closer to Ontarios. It artificially puts us closer to Ontario's fiscal capacity. It takes only a modest gain in offshore oil revenues to bring us up to Ontario's fiscal capacity, at which point the clawback provisions of the equalization act would kick in again and all our revenues would be flowing right back to the federal government.

Ontario's fiscal capacity is based on its actual revenues. However when the Prime Minister artificially jacks up our fiscal capacity by adding in our equalization payments and adding in the modest revenues that we receive in offshore oil revenues now, then our fiscal capacity comes very close to what Ontario has right now.

The Prime Minister made his offshore revenue promise at a time in the election campaign when things looked pretty bleak for the Liberals, when even our seven seats in Newfoundland and Labrador meant a whole lot to the Prime Minister of Canada.

Today I am calling upon our five Liberal MPs from Newfoundland and Labrador to take their lead from the provincial Liberal Party of Newfoundland and Labrador and the NDP of Newfoundland and Labrador which have both come out behind the Premier of Newfoundland and Labrador in his quest to get a fair deal for our province.

I give full marks to the Liberal Party provincially but I give zero marks to Newfoundland's federal MPs who do not have the courage of their convictions, do not have the courage to stand up for the Province of Newfoundland and Labrador.

We were never in a better position. We now have a minority government in the country. Before this time our seven seats meant nothing to the federal government because it always had 170 to 180 seats. Today, however, our five seats from Newfoundland and Labrador mean an awful lot to the federal government. The five Liberal MPs representing Newfoundland and Labrador can make or break the government if they want to use their clout effectively.

I am calling upon those five Liberal MPs to do what is right for the people of Newfoundland and Labrador. We have been the victim of the government for far too long. It has ruined our fishery and it has broken its promise on custodial management. Ten per cent of the people in Newfoundland and Labrador have moved out in the last six year period.

This is our only chance to get a fair deal in Confederation. How dare the Prime Minister of this country tell the people of Newfoundland and Labrador that they can get 100% of their offshore revenues, and then turn around and do something different. This is not fair to the people of Newfoundland and Labrador. The five members will pay if something is not done to make this deal a fair one.

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

Madam Speaker, I thank my colleague from the Conservative Party of Canada for his excellent speech. I, like him, share the outrage of the people of Newfoundland at their cavalier treatment in connection with the election promises made by the Prime Minister. I do not know what is going on with this government, but in recent days it has shown considerable insensitivity to the regions of Canada. We share our colleague's frustrations.

I have heard what the parliamentary secretary has had to say, listing every defect in the world that the Bloc Québécois and Parti Québecois could possibly have, and coming out with a pack of falsehoods. I do not know if that is the standard approach of that party, to try to convince the public through falsehoods, but I think this time they have gone a bit too far.

According to him, the Liberal Party in Quebec took over the finances of Quebec when they were in a lamentable deficit state. When the Quebec Liberal Party, Mr. Charest's party, came to Quebec City, the Parti Québecois had already set Quebec's finances straight, and there was a balanced budget. When the Parti Québecois came to power in 1994, after the Liberals had been in government for two mandates, the deficit was $5 billion, so that deficit was in fact a legacy of the Quebec Liberal Party.

So the situation is the exact opposite of what he says. It would be a good idea to get the facts straight before coming out with just anything, or with out and out lies.

Speaking of good management, I would like to ask a question of my Conservative colleague. The Liberal Party boasts of its good management of public funds. If we look at the figures for the last five years, there has been a 39% increase in operating expenses, the whole sponsorship business and other things. Does he share the opinion of the secretary of state and the member for Outremont? The latter has just spoken about good management, but his approach was a bit rusty. He has been out of politics a bit too long. He also took a wrong approach altogether, and that too is the standard Liberal approach.

I would like to hear what my honourable colleague has to say about this.

[Norman Doyle, Conservative, St. John's North, NL]

Madam Speaker, I must confess that I am not fully versed on what was said before I came to the House today, but I can easily understand where the Bloc is coming from on this particular issue.

Quebec is a lot like Newfoundland and Labrador in that regard. It has been the victim of the fiscal capacity for quite some time and it, like us, has been the victim of threats from the federal government. When we speak of threats, I am appalled at what I am reading here today and what was passed to me a few minutes ago.

I am totally appalled that the Prime Minister's Office would stoop to the level that it is stooping with regard to this offer that is on the table for Newfoundland and Labrador.

The Prime Minister's Office is warning that Newfoundlanders will be the real casualties in the anti-Ottawa crusade that Premier Danny Williams launched this week when he walked away from the first ministers' meeting and accused the Prime Minister of lying.

He is making a mistake of historic proportions and he is doing it on the backs of Newfoundlanders and Labradorians, the Prime Minster's spokesman Scott Reid said yesterday. He may get some short term gains, but he will pay for this, he said, in the long run. At stake, said the Prime Minister's Office, is the billion dollar plus deal that languishes on the negotiating table, and the problem that the premier will have eventually is that the truth will get out and he is going to pay for what he has done to the Prime Minister.

Can you imagine, Madam Speaker, in this day and age, is that not a sad commentary on federal-provincial relations? We have the premier of a province working hard, passionately for the people of Newfoundland and Labrador, to get the people to the point where at least they are staying home and that the province is not losing its population in such a very real and serious way.

Can you imagine, Madam Speaker, the Prime Minister's Office today issuing that kind of a release, warning the people of Newfoundland and Labrador that if they do not kowtow to what is being promised, they will pay for it in the long run? Is that the state of federal-provincial relations to which we have come to in the country, where the Premier of Newfoundland and Labrador is not free to hold the federal government to the promises it made to the people in the election campaign without being the victims of a threat from the Prime Minister's Office?

How dare the Prime Minister of this country and his office use the office of Prime Minister in that way, to threaten Newfoundland and Labrador. This is a sad day for the people of Newfoundland and Labrador and instead of the people of Newfoundland and Labrador paying, let me assure the Prime Minister that he will pay in the long run.

[Jack Layton, NDP, Toronto—Danforth, ON]

Madam Speaker, the New Democratic Party will be supporting the Bloc Québécois motion. It is an excellent initiative, and we congratulate the Bloc on the introduction of this motion.

Liberals keep denying any fiscal imbalance, but the average citizen knows it exists, because he can see it in everyday life. It is obvious to the homeless on the street, and it was even more obvious when homeless people died in our communities because the federal government stopped building public housing. Waiting lists in hospitals are another sign. Citizens are affected in their daily life by the fiscal imbalance. This is not a discussion for professionals only; it concerns the average citizen.

Setting up a special committee to look into this matter is a good idea. We will want to contribute and help find the truth and suggest the viable and specific remedies we need now.

It is not the first time that such a committee has been established. I have with me the committee report on federal-provincial fiscal arrangements which was established in the early 1980s and reported out in 1983. All of the documentation is here. My colleague from Elmwood--Transcona represented our party on that committee at the time. That investigation came to some very important conclusions, the first of which was that the fiscal arrangements between the federal and provincial governments at the time needed some fine tuning but were working reasonably well. The committee concluded that the task force did not interpret current challenges to the system as calling for fundamental change in existing arrangements nor did it consider dramatic innovations necessary or appropriate at present.

About 10 years later the Liberals came to power and ignored the study's recommendations. Through the 1990s they engineered the most fundamental transformation of the financing of services to Canadians that has happened in several decades. The Liberals exercised what I would call cruel brilliance.

Under the guise of defeating a growing deficit and attacking the debt, the federal government passed responsibilities to the provinces and the municipalities at a rate that had never before been seen in this Confederation. In fact, the consequences are still being felt in our communities today, and that is the very reason why we are having this debate and why we are facing a critical situation.

The Liberals managed, through unilaterally transforming the entire structure of federal-provincial financing relationships without consultation, to leave provinces with, on the one hand, more responsibilities, and on the other hand, fewer resources available to attend to those vital responsibilities.

Some provinces, intent on implementing exactly the same ideological position that the federal government and the finance minister of the day in particular was pursuing, simply passed on exactly the same kind of fiscal transformation to the municipalities.

As a result, over the last decade we have seen a growth in indebtedness at the municipal level across the country. We have seen the provinces struggle to manage the responsibilities that have been left to them by the federal government with inadequate support. Mostly though, Canadians have experienced in their daily lives a deteriorating quality of life because of those very decisions. We must take a look at some of the examples and I will get to those in a moment.

The Liberals in power took the whole concept of the trickle down philosophy of economics and transformed it into force it down their throat economics. The provinces in this federation and the municipalities in our country had never asked to be charged with the responsibilities left to them by the federal government. That is why we have a growing crisis at the municipal and provincial level.

I salute Quebeckers for having brought this issue forward in such a forthright way. I salute the people of Newfoundland and Labrador who are now standing firm for their rights, calling for the crisis that they are facing with the federal government to be attended to.

Before I go further into the issue of the fiscal imbalance and the impact it is having on people's daily lives, I want to draw to the attention of the House remarks concerning the crisis in Newfoundland and Labrador. I was shocked to read the following statement about the Premier of Newfoundland and Labrador in today's newspapers:

He may get some short-term gains but he'll pay for it in the long run.

It went on to say:

The problem that the premier will have eventually is that the truth will get out. And $1.4-billion or twice that perhaps will not end up in the pockets of Newfoundlanders for the sake of his ego and his political ploy.

What an outrageous statement for a spokesperson from the Prime Minister's Office to make about a premier of the country. This is bully politics. This is arrogance at the highest level. This is a slap in the face to a whole community which is trying to come to grips with the fact that there are resources offshore that could help take the communities of Newfoundland and Labrador out of the terrible situation in which they have found themselves for so many years. They are suffering under an economic maldistribution that leaves their citizens in a troubled situation.

Much of this applies to other provinces in Atlantic Canada. Right now we are singling out the situation in Newfoundland and Labrador. We have seen similar consequences in provinces such as Nova Scotia or New Brunswick, where fully one-fifth of the population now lives below the poverty line. Why? As the member for Acadie—Bathurst has mentioned to me, because the federal support and transfers for the social programs, the social infrastructure that gave us a high quality of life relative to other countries, has been decimated.

Let us come back to the consequences of these cuts. First, let us talk about education and finance.

The federal government unilaterally, without any agreement from the provinces, has withdrawn funding from post-secondary education financing at a horrifying rate. Approximately $7 billion has been removed. The results end up on the shoulders of our students, our youngest and our brightest. They are the people who we are trying to send forward into our economy, our communities and our society with some sense of optimism and hope and with the capacity to use the education they have just received. Instead, because of the federal government's unilateral actions, students are arriving in the workforce with a debt on their shoulders which is absolutely crushing.

The Prime Minister and his team may be proud of the fact that they have transferred debt from the nation as a whole, which resides on the shoulders of each and every Canadian and our great assets, to the backs and shoulders of the youngest and the brightest students. This is placing a millstone around their neck as they move from their educational career and training into trying to become contributors in our society.

The federal government may be proud of that. It may want to trumpet on a day in and day out basis, especially tiresomely during election campaigns, that it has wrestled the deficit to the ground. However, the cost of that effort was transferred to the shoulders of young people. It is now transforming our society into one where we have to seek out trained and skilled labour because our young people are increasingly becoming incapable of responding to the needs of the modern economy. This is short-sightedness at its worst.

When we turn to the issue of education, we see that the consequences of the fiscal imbalance has ended up affecting our youngest, our brightest, those to whom we should be giving as much hope, enthusiasm and support as possible. Instead, as a result of this situation, we are doing the opposite.

Second, let us turn to child care. Great hope was put in the minds of Canadians from coast to coast to coast in the election campaign of 1993, when after years of New Democrats being the only ones to really talk about child care on a pan-Canadian basis, we finally had the Liberal Party promising Canadians that it would initiate a program. In fact the candidate for prime minister at the time put considerable emphasis on this campaign promise. Little did Canadians know that he would turn right around and ignore that promise for 11 years and leave them in the lurch.

As I have mentioned before in other commentaries, I spoke to a young man who answered the phone when I called for a cab. He described the situation where he and his wife were very excited about the promise of a national child care program in 1993. She decided to study early childhood education. They had decided to have a family because they thought they would have access to child care.

Eleven years later he said that I should do whatever I could do to hold the Liberals to their promises because they had let his family down. His wife was unable to work as an early childhood educator, as she was trained to do, and ended up having to stay at home to look after their kids. They could not afford child care.

This is the kind of impact the failed promises, the broken promises and the transfer of responsibilities or leaving the responsibilities to the provinces and the municipalities, without the additional financial wherewithal that is required, has had on thousands of lives. It is not an academic exercise. This is not something for debate only between economists as though it is too esoteric for the average person to understand. The average person understands this very directly.

Let me turn to another example, the investment in communities and their infrastructure, such as public transit.

In the 1993 red book there was fanfare about the investment programs and infrastructure that would follow. Indeed, there were a number of programs. They would be announced in one election and would be delivered just before the next election so there could be some ribbon cuttings for the various members who wanted to take credit.

What we saw at the municipal level over the years was a steady decline in the size of those infrastructure programs. Meanwhile, there were rapidly increasing requirements for infrastructure across the country as our cities grew. The consequence of this was that people's property taxes had to go up. The federal government might have been claiming credit for wrestling a deficit to the ground and it might have been very happy announcing the largest tax cuts to the affluent and the large corporations in the history of the country. However, on the backs of ordinary Canadians, it was building up a property tax burden that it could not sustain.

In addition to that, what communities began to face was a deteriorating infrastructure, sewers, potable water, public transit systems and roads, housing and other forms of infrastructure, so much so that our cities began to be removed from the lists of the prime places to invest, the prime places to have conferences internationally and the best cities in the world. We began to fall off of those lists.

Did the federal government pay any attention? Did it reverse the trend? Absolutely not. What we saw once again was a fanfare, an election promise, 5¢ per litre of the gas tax. I know quite a bit about this 5¢ per litre. I was the president of the Federation of Canadian Municipalities at the time the promise first began to be made. We demanded it. What we have seen is a steady erosion ever since election day on the 5¢ per litre of the gas tax. We are now down to some small portion of the gas tax that may flow at some point in the future once agreements and talks are finished.

For heaven's sake, that sounds a lot different than what we heard from the Prime Minister during the election campaign. He gave Canadians his absolute word that they would receive 5¢ per litre of the gas tax. That is only half of the excise tax. Let us remember there is a GST on top of that which the federal government is pocketing and using for its tax cuts for its friends or misspending, as we have seen in so many ways this government do. No wonder Canadians are coming to grips with this and saying, “Something has to change”.

The investment in the cities has to be transformed and that can be done in collaboration with provinces. It should address issues like housing, water, other forms of pollution to cut back on smog, transit systems, et cetera.

In the investigation that this committee conducts, we will be ensuring that the voices of communities will be heard, as well as the voices of provinces. That is absolutely vital. It can be done in the context of the responsibilities of our provinces without difficulty. We saw that happening, precisely, around the issue of housing when finally we were able to extract a few pennies from the federal government after a long effort at the municipal level and provincially. We were able to come to a workable relationship, including a very creative approach that was adopted in Quebec, which then became the leader on the production of social housing using the federal moneys.

Anyone who says that federalism stands as an obstacle to the achievement of these kinds of goals involving asymmetry to recognize and salute the achievements and possibilities in Quebec and anyone who says that we cannot accomplish such things is not looking at our best examples of achievement.

I hope that in addition there will be some attention paid to the way in which the federal government has stolen the employment insurance surplus year after year, billions of dollars of money that were there to protect workers when they fell on hard times and lost their jobs. If we look at the fiscal imbalance, a big part of it is represented by the way in which those funds, instead of being made available to workers and their families when they needed them, were stolen by the Prime Minister. They were stolen in a metaphorical sense by the government, placed against the deficit and the consequence of this was very severe.

First, people fell into poverty much more rapidly. They were unable to feed their kids. Second, provinces had to come back in with welfare and social assistance programs to backfill the funds that were not available because employment insurance payments were not available. That drove up the costs facing the provinces.

I remember this well because I served on the council of Metropolitan Toronto at the time. It was responsible for making out these payments. The consequence of the unilateral action of the federal government on employment insurance, by cutting off the benefits to which workers were entitled therefore generating a surplus that it could lift and put against the tax cuts for their affluent friends, was that welfare bills rose dramatically and people suffered. We had to raid the account that we had put aside to get new landfill and new waste management facilities to pay welfare. This is the kind of consequence that the downloading, the ramming down the throat approach to fiscal management the government, has produced.

I could mention a number of other areas. Certainly, we could focus on the issue of health. The government adopted a particularly cynical approach. Cut back the funding of health so dramatically that people will begin to notice the consequences in their daily lives and wait until the hue and cry has risen to a point where people demand that it be fixed and then come in and offer some cash to attempt to fix it. This is the most cynical manipulation of public opinion in Canadian history. Cutting the funding of these essential services, creating the waiting lists, creating the pressures and problems, only to come back and offer a solution later. Create the crisis, offer to solve it. This is not the way to go.

The New Democratic Party of Canada will be there, active on the committee. I hope the House will decide to adopt the recommendation of the Bloc Québécois. We certainly intend to do our share to raise these issues and others and generate the reforms that are required.

[Shawn Murphy, Liberal, Parliamentary Secretary to the Minister of Fisheries and Oceans]

Mr. Speaker, I listened to the remarks of the hon. member for Toronto—Danforth who indicated, first, that the NDP would support the motion. I listened to his rationale and I did not get anything in it that gave any reasons why the motion would be supported. It is my understanding that the motion calls for a transfer of moneys from the federal government to the provincial government. Each level of government would have its own responsibilities and would have the capacity to tax basically on the same levels.

To give an example, the federal government over the last five years reduced taxes by approximately $100 billion. Every provincial government could have filled the vacuum if they had wanted to so. In the province that my learned friend comes from, Ontario, what did it do? It lowered taxes. How would the pass of this motion five years ago have any effect? My learned friend does raise a very good point. There is a fiscal imbalance in Canada between the provincial and the federal governments on the one hand and the municipalities on the other. That goes back to our history. Municipalities do not have the taxing power to fulfill the needs that they are required to do.

If we pass the motion, if money were given to the provinces, how would it help homelessness, or students, or the environment or child care? I listened, but I do not understand the rationale behind the member's argument.

[Jack Layton, NDP, Toronto—Danforth, ON]

Mr. Speaker, one thing that is for sure is that leaving things as they are is not going to solve the problem.

The House of Commons must take control of this issue, conduct a systematic and thorough investigation about what has happened and propose some solutions. We are certainly not getting solutions from the government. Promises, yes, I will grant that; we have had a list of promises as long as my arm from the government, only then to see those promises broken time after time. Sometimes it was over a period of years, even decades, as in the case of child care.

Our approach on this committee will be to get to the bottom of the fiscal imbalance that exists, which has been created as a result of the policies of the government. We will dig down and find out exactly what is required at the provincial and municipal levels. Then we will construct recommendations about how the House of Commons and ultimately the Government of Canada can take the sort of initiatives that will solve the problem.

We do not share the view that there should simply be a transfer of absolutely massive amounts of sums from the federal government without any requirements whatsoever so we are left with virtually nothing to do at the level of a nation such as we have here in Canada.

We believe it is important to have some objectives for our country. These would be objectives like being the leader of the pack when it comes to the environment and pollution control. These would be objectives like having a larger percentage of our citizens adequately and properly housed than is found in other countries. There should be an objective to get us in the front of the pack when it comes to early childhood development. The OECD has told us that we are way at the back of the pack. There should be an objective for us to be at the forefront on issues like Kyoto, instead of at the back of the pack, again as identified in the OECD report.

We want a status where we have the best quality of life as the Prime Minister once upon a time used to crow about. We have lost that under the custodianship of this particular administration and its predecessors.

We want to get to the bottom of how we can get back into the game and make Canada work again. That is the objective of the efforts of this committee. It will involve taking a look not only at what the provinces are facing and what they require but also those of the municipalities.

I hope the member will now understand that doing nothing would not be a solution.

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

Mr. Speaker, I thank the leader of the NDP for supporting the motion of the Bloc Québécois concerning the subcommittee on fiscal imbalance. We appreciate his support and are prepared to work seriously with the member representing the NDP on the Standing Committee on Finance.

I am less thrilled by the reaction of my Liberal colleague to the remarks of the leader of the NDP. As we have said repeatedly to the Minister of Finance, the Prime Minister and all Liberal members, it is totally irresponsible to suggest that the provinces should raise their taxes to deal with the fiscal imbalance. It is irresponsible, and it is collective blindness on the part of the Liberals. We are among the most highly taxed in the world. If $9 billion was accumulated in surplus during the previous fiscal year and another $11 billion or $12 billion will be during the current fiscal year ending on March 31, 2005, it is because there is only one taxpayer being overtaxed.

To suggest, like the Liberals, that provincial taxes be raised in Quebec and in the rest of Canada is irresponsible and incompetent. What we need to do is to restore balance. At present, the tax base is predetermined. Balance needs to be restored in favour of the provinces, which are ultimately responsible for delivering the services.

There are not that many ways to go about it. Cash transfers will not do; that time is past. Tax fields need to be transferred and provincial autonomy has to be ensured, so that the provinces can exercise their constitutional jurisdiction in health, education and income support, among others; they have to be autonomous. Predictability is also essential. We can do without having to deal every year with an uncompromising Prime Minister who laughs at people's expense, as he did with the people Newfoundland, has no respect for taxpayers and tells them any odd thing about the annual surplus. We have to move away from that and ensure that revenues are sufficient, predictable and stable. This will spare us two or three first ministers conferences a year ending in failure, like the latest one, two days ago.

[Jack Layton, NDP, Toronto—Danforth, ON]

Mr. Speaker, I thank the member for his question and comment. There will be not only good debates in this committee, as the Bloc motion proposes, but also important debates to find the solutions that we need now.

I particularly want to indicate that we will be very active on this committee when it is set up, and I hope it will be as a result of this motion. There will be some disagreements, no question about it.

For example, it is unlikely that we would support massive reallocations of tax points from one level to another. We believe that as a country we need to have some broad objectives that we pursue together.

In fact that philosophy of flexibility in our federalism, the use of the financial capacities of the federal government merged with the provincial competencies for delivery, and even the local and municipal abilities to deliver solutions in so many areas, is the place where we find the best solutions to the problems facing Canadians. One could mention the medicare system. One could certainly mention affordable housing and many other examples.

We look forward to those discussions. We think that they could help to renew our federation in a way that needs to take place. We will be very active in that process.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I am pleased to ask a question of the NDP leader. Our colleague from Prince Edward Island told us that federal transfers to the provinces are not solely the federal government's responsibility. However, what is the federal government's responsibility? What responsibility does it have?

I give you an example. Currently, New Brunswick holds a record in the sense that 111,000 people out of a total population of 720,000 live below the poverty line. In the meantime, the federal government has surpluses totalling $9 billion and, every year, steals $270 million from New Brunswick as well as Prince Edward Island in employment insurance. The provinces are tired of this. This is what is happening now. The provinces are tired of the stealing that occurs at different levels, and people are paying the price.

I would like to get comments on this, because it does not happen only in Ontario, Quebec or Alberta. There are other provinces in the country, and people feel that they are being abused by the federal government.

[Jack Layton, NDP, Toronto—Danforth, ON]

Mr. Speaker, I want to thank the member for Acadie—Bathurst for his comments.

It is true that the consequences of the decisions of the last decade have ended up on the backs of ordinary Canadians. The hon. member described the impact on the constituents of New Brunswick, and the fact that such a high proportion of them are now having to live in poverty. This is a direct result from the decisions that were made that created the fiscal imbalance, the decisions to shift the resources that belong to Canadians to those who already have, the people at the top, to take it from employment insurance, out of programs that Canadians relied on, out of support that should have been there, and put it on the backs of--