Debates of Oct. 28th, 2004

Supply

[The Speaker]

When the debate was interrupted for question period, the hon. member for New Brunswick Southwest had the floor on questions and comments. Therefore, I call on the House for any questions or comments.

[Loyola Hearn, Conservative, St. John's South, NL]

Mr. Speaker, I was listening to my colleague just before question period and I was extremely impressed with his knowledge of what is happening in relation to negotiations between the federal government and the province of Newfoundland and Labrador. I just wish sometimes we could take some of the understanding, some of the concern, and perhaps even some of the intelligence exemplified by members over here and transfer it across the floor to some of those members.

The hon. member is from New Brunswick. Many of the people who are listening and watching us today may not realize that because we hear people say it is great for Newfoundland to be looking for its own share of the benefits, it is all we are asking for, by the way, our share of our resources, but the other provinces do not care.

I hope we will hear more from other members as they speak on this debate today. Other provinces do care. New Brunswick is one of the provinces not really affected by the offshore developments but could easily be affected. Heaven knows when there will be a major discovery off the coast of New Brunswick. Its day will come as ours did.

I ask the member, from his own perspective, is it not about time that we as Canadians stood by each other? When one has the opportunity to move ahead, is it not better for us all if we work together on this because what helps one in this great Confederation, surely God, helps all of us?

[Greg Thompson, Conservative, St. Croix—Belleisle, NB]

Mr. Speaker, that is one of the points that I tried to make. This whole equalization formula was based on fairness and generosity. That is the type of generosity that we would expect from the Government of Canada. However, the government's approach is to divide and conquer, not quite understanding the generosity of this country where every premier and every province will come to the defence of the other province.

In this particular case we are talking about offshore resources in Newfoundland and Nova Scotia specifically. Again, that may apply to New Brunswick in the future and possibly Prince Edward Island.

The fact of the matter is that the Prime Minister made a commitment. That is what we do not want to lose in this debate. He made a commitment during the heat of an election campaign. It was a promise that would allow those provinces to keep those resource revenues. Now he has reneged on that promise, as he has done on a number of promises.

When I sat down in my place prior to question period, that was the point we were on, the litany of broken promises by the Prime Minister.

The generosity that the member for St. John's South—Mount Pearl is referring to is exactly the point of this whole debate. That is what we are talking about, sharing the wealth in this country, rich provinces and poor provinces working together.

It is nice to see the premiers of Canada agreeing on that. The people who are reneging on that promise to share that wealth are the Prime Minister of Canada and his Liberal government. Those Liberal backbenchers, every single one of them, whether from Atlantic Canada or someplace else, should be simply ashamed of themselves.

We support fairness in this system of equalization. We are expecting the Government of Canada to share in the wealth of this country and honour its promises.

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

Mr. Speaker, I want to pick up on the comments made by the hon. member about fairness and generosity. I remind him that the transfers this year alone were $53.9 billion including tax transfers in the form of equalization and in the form of CHST.

Currently CHST, which is to become CHT and CST, is divided on a per capita basis. On equalization, however, there is an argument as to whether it should be divided on a per capita basis or a per share basis. I would be interested in the hon. member's views.

Quebec wishes it to be divided on a per capita basis and the other provinces wish it to be divided on a per share basis. Which formula would he be in favour, for sharing and generosity?

[Greg Thompson, Conservative, St. Croix—Belleisle, NB]

Mr. Speaker, a per capita basis may create a level of difficulty in the smaller provinces. In other words, the more people, the more revenues that would flow to those provinces. There is a problem that has to be sorted out. Premier Binns has expressed that, as has Premier Lord of New Brunswick.

I do not want the member to get this debate off track. This is about the Prime Minister of Canada not honouring a promise that he made in the election to allow Newfoundland and Nova Scotia to keep 100% of all the revenues generated by the offshore.

That is the issue. I do not want them to dodge that bullet. I am sure my colleague who will be on his feet following my remarks will want to expand upon that theme.

[Loyola Hearn, Conservative, St. John's South, NL]

Mr. Speaker, it is a pleasure to speak to the issue that has been brought before the House at a very appropriate time. I thank my colleagues from the Bloc for bringing this motion to the floor for two reasons. First, it gives us a chance to talk about an issue that is currently the centre of attention in Atlantic Canada and perhaps Canada in general, and second, it gives us an opportunity to talk about equalization itself.

I just heard the Parliamentary Secretary to the Minister of Finance talk about all the money the government was giving to the provinces. It is amazing to hear government members say that they have increased the amount, that they are giving the provinces a share and that they have given the provinces above and beyond. I did not say this government because all governments have a tendency to do the same thing.

What government is really doing is giving back to people what they gave in the beginning. Governments use it for their base of operations, to keep them going and to help their friends in some instances. We see examples of that every day here. However, we then decide to give back to the people some of their own hard earned tax money. The thing is, one small clique in Ottawa decides who gets what.

The premiers were brought together last week and within a day they agreed, question mark, question mark, on an equalization formula. However, after reading the press, one discovers that just about every premier expressed displeasure with one part or another of the equalization agreement. One premier thinks the wrong formula is being used, another thinks certain elements should have been included, while others think certain elements should not have been included. It goes on and on. Suffice it to say that even though the premiers have made the best of a bad situation, nobody is really happy with what is happening.

The hon. parliamentary secretary raised two issues: CHST and equalization. He talked about CHST as being distributed on a per capita basis. The unfortunate thing about the Canada health and social transfer payments is that they have been cut so much over the last few years that provinces cannot pay their bills any more when it comes to health care but in particular, education, which has been left out of the loop entirely.

However, because of the total public outcry on health care, a conference was held a while ago which led the government to again committing to the provinces to give them back some of the money that it cut over the last 10 years that it has been in power to try to offset some of their health care debts.

However, as more emphasis is being placed on health care, less emphasis is being placed on education. Are we not smart enough to see that if we do not educate our young people they will be taking out of society for the rest of their lives? They will be taking money from the unemployment fund, the welfare fund and the housing fund. There will be penal costs. Our young people will incur drug costs and health care costs because when people have no money they do not look after themselves physically or mentally. It goes on and on. An educated populace is working, is active, and is contributing. It is a no no-brainer. We are sliding away from that to the point where many of our young people cannot afford to be educated and we will pay the price.

From this quick fix government, we are getting reactions to protests and reactions to pressure. We are getting a quick fix without any vision whatsoever.

With regard to the equalization process, the word itself should answer the parliamentary secretary's question. He asked my colleague which method should be used to distribute equalization payments: the formula presently used depending on need, or on a per capita basis. The parliamentary secretary asked the question so I will answer it from my perspective and the people from Quebec can listen. I know we will not agree on this part.

It would be to the benefit of Quebec, because of its population, to receive the payments on a per capita basis, but it would be to the detriment of most of the other provinces, and certainly to my own province of Newfoundland and Labrador. The reason we are putting so much pressure on the government to get our share of our revenues is to bring up our economy so we will no longer be a have not province.

The population of Newfoundland and Labrador has declined over the last 10 years by over 10%. Almost 50,000 people, most of them young people, have left the province. What does that do? Being the only province in the country with a rapidly declining population, if we are going to distribute equalization funds, which are supposed to equalize us in the light of fiscal capabilities, then we will be the ones getting the shaft. Not only that, with our young people leaving, the population left behind is older and therefore the needs become greater in terms of assistance and health care costs.

If we look at the geography of our province, which I have said over and over again, it is a geography spread over a big island and a large chunk of the mainland, Labrador, and we must try to deliver the same services as people would expect in the middle of Toronto. Some people think we should only get the same amount of money to do so, which is why the word equalization is as it is. It is supposed to equalize things but, as we all know, it has never done that and it is certainly will not do it under any formula the government has.

However, if need and geography were considered, then we would be treated somewhat more fairly than if it were based solely on a per capita basis. Certainly in that regard I have no problem supporting the need to address fiscal imbalance or talking about the need to look at the overall delivery of federal money to provincial coffers. What I do have a problem with is the mechanism of delivery.

In the time I have left I want to concentrate on our concern about the lack of funding coming to our province and how we hope to deal with it.

We have tremendous resources in our province. A number of years ago we developed the Upper Churchill, a power generating facility on the Churchill River that produced a tremendous amount of hydro power. We could not sell the power into the United States where the heavy demand was, or to Ontario, because between us and the market there was a province called Quebec. Unlike some other provinces, it did not feel it could give us free passage or wielding rights through the province.

The government did nothing about it. We were sold out by our own government more so than anybody else. We decided to sell Quebec the power at the then going price. We received about $10 million and Quebec received about the same thing. Somebody on our side forgot to put in an escalation clause. Quebec receives about a $1 billion today and we still receive $10 million. People will now understand why we are saying that we want our share of our offshore resources. We will not settle for anything less than fairness. We have gone through it once and we will not go through it again.

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

Mr. Speaker, I think, in some measure, the hon. member's speech is probably one of the more thoughtful speeches I have heard here today. Newfoundland does have a problem. I do not think there is much disagreement with that on this side.

Newfoundland's population has declined by 10% over the last number of years. We agree with that. That is factually and statistically correct. I come from Scarborough and Scarborough has 550,000 people, so it is basically less than the size of Scarborough. The average age in Newfoundland is, I think, three to four years older than the average age of a person in the rest of Canada. That is not a very happy statistic because essentially what it reflects is that young people are being drained out of the province.

We are not arguing about whether there is a problem or even a problem that does not need special address in the circumstance. We have addressed the issue through the Canada health transfer, through the Canada social transfer, through the equalization payments and now we are trying to negotiate and enhance the Atlantic accord.

I do not disagree on his point about the hydro. In fact, Newfoundland and Labrador did get hosed. It is rather incredible and quite regrettable that the province of Quebec will not open it up again but I do not know if this is the area in which it needs to be done.

I cannot fathom why my constituents in Scarborough should be paying their taxes, being generous and open in sending money to all of the have not provinces, and then find themselves in a situation where their fiscal capacity is effectively less than someone in Newfoundland and Labrador. Therefore, if we can arrive at some formula that brings it to the Ontario average, I think that would be reasonable and fair. I do not think it is reasonable or fair to go beyond the average fiscal capacity of a province, such as Ontario, which is basically the standard for the country.

[Loyola Hearn, Conservative, St. John's South, NL]

Mr. Speaker, I understand where the member is coming from, but it was the way he presented it that people will misinterpret the fact that he is basically saying that Newfoundlanders, or anybody else, should not have more money, regardless of the resources, than Ontario has. I am sure he did not mean that.

With all due respect to yourself, Mr. Speaker, the member and other members from Ontario, the reason Ontario is in that position is that it is the centre of Canada. The federal government is in Ontario and therefore there are spinoffs. I wonder how well Ontario would be doing if we were to move this building and all the associated work that goes into running the Government of Canada to Newfoundland and Labrador or to British Columbia.

I will use Alberta as an example. Back in the 1930s when things were rough in Alberta, before the oil days, Albertans were going through a very rough time. Atlantic Canada at one time, as history dictates, would send fish to Alberta to help the people because they were going through such a rough period. They discovered oil and things turned around. Alberta is now helping us.

Ontario is somewhere near the top of the heap. However if other provinces were to develop their resources they could surpass Ontario. They could be paying equalization payments to Ontario down the road. That is what Confederation is all about. I make no apologies.

What I am saying is that a province should be the prime beneficiary of its resources. Nobody denies that, but what the government is saying is that the provinces should be as long as it does not make them better than somebody else. That is not the way it is supposed to be and that certainly is not the way it will all turn out in the end.

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Mr. Speaker, it is an honour for me to split my time with my hon. colleague from Rivière-du-Nord.

For the benefit of our audience, I would like to repeat today's opposition motion presented by the Bloc Québécois. I think it is important that people know why we are debating this subject and what prompted the Bloc Québécois to present this motion. The motion reads:

That this House regrets the attitude of the Prime Minister of Canada at the First Ministers' Conference on October 26, 2004, and that it call on the federal government to recognize the existence of a fiscal imbalance in Canada and that, to this end, the House ask the Standing Committee on Finance to strike a special subcommittee to propose tangible solutions for addressing the fiscal imbalance, and that its report be tabled no later than June 2, 2005.

In my view, it is important that we talk about each part of this motion and that we explain why we presented it today.

We will recall that the original Speech from the Throne presented by the Liberal government was a speech made by a centralizing majority government wanting to crush the opposition like a bulldozer. However, it hit the wall. The Bloc Québécois and its 54 members made it quite clear that it would not accept a throne speech that challenged Quebec's jurisdiction and lacked a commitment to equality in our society. With the amendment proposed by the Conservative Party and the final amendment that we made, we managed to correct the Speech from the Throne.

At a certain point in the study of the Speech from the Throne, the Prime Minister said that he was willing to consider what some have called the fiscal imbalance. They are the Quebec premier, the leader of the opposition in Quebec, the leader of the ADQ, all of the provinces and all of the opposition parties. Pretty well only the Liberal Party does not recognize the fiscal imbalance problem. However, it still agreed to amend the Speech from the Throne by adding these terms.

We needed a clear indication that the Prime Minister had changed his way of looking at things and would be adopting a different attitude, but no. We had evidence of that at the first ministers' conference on October 26, that is quite recently. The Prime Minister's government has kept the same attitude as the previous one had. So Jean Chrétien and the present Prime Minister are just Tweedle Dum and Tweedle Dee. Same centralizing attitude, same approach that penalizes Quebec.

The best demonstration of this was provided by the present premier of Quebec and known federalist, Jean Charest. He came out of the meeting expressing great disappointment. Even Quebec's Minister of Finance Séguin, also a member of the federalist Liberal government of Quebec, has referred to the federal government's wish to bleed Quebec dry.

Obviously, the Bloc Québécois, with the power it wields in this House, particularly the power to set the agenda on an opposition day such as today, wants to bring the Prime Minister back in line and tell him that when his party agreed to amend the throne speech, more than empty words were required. He needed to adopt a behaviour to reflect them, and in the end we need to see some approaches adopted that we will find satisfactory.

This is, moreover, one of the advantages of minority government. On election night, people were wondering whether having 54 Bloc members elected was going to give us the power to change things. It does not give us the power to make Quebec a sovereign country, and it does not settle that issue once and for all, but it certainly does make it possible for the interests of Quebec to be better defended. The motion today is a very concrete example of what we can do.

The government is so afraid of facing up to its responsibilities that it did not feel necessary for this motion to lay the government open to question. But that is what the vote in the House of Commons will be about. The majority in this House will be calling upon the federal government to recognize the existence of a fiscal imbalance in Canada. When that motion is passed, it will not be using the terminology from the throne speech, “financial pressures some call the fiscal imbalance”, but rather the term “fiscal imbalance” itself. The division on this motion will provide a very clear indication to the government that the House of Commons disavows its present behaviour, hence the importance of making sure as many members as possible support the Bloc motion. This will provide a logical follow-up to the amendment to the Speech from the Throne.

A vote in the House of Commons will remind the current Prime Minister that he made a commitment, in the throne speech, to change his attitude, but has failed to so, thus exposing himself to criticism from the House. That is the message this motion will send.

Furthermore, we are proposing tangible solutions when we ask that:

—the House ask the Standing Committee on Finance to strike a special subcommittee to propose tangible solutions for addressing the fiscal imbalance, and that its report be tabled no later than June 2, 2005.

After this motion of the Bloc Québécois is passed, the Standing Committee on Finance will be mandated. This government may be a minority government, but a majority of members will have asked that the matter be referred to the committee, and this committee made up of a majority of opposition members will be able to carry out the necessary studies and submit a report no later than June 2, 2005, so that the fiscal imbalance can finally be addressed.

There are three main causes for the fiscal imbalance per se. It can be explained several ways: first, by the imbalance between expenditures and access to revenue sources for each level of government. Be it at the federal or provincial level, the needs and revenues of this government are not balanced. There is an imbalance in Canada right now, a fiscal imbalance. It has to be corrected.

The second cause is inadequate federal transfers to the provinces. As a result, the public is left out when the accountability of its government is evaluated. The fact is that the federal government, which is collecting a huge amount of money—$9 billion in surplus again last year—has a responsibility when it comes to distributing this wealth.

We can see how things are done right now. It was very clear in the recent negotiations on equalization. The results were not achieved by consensus. The federal government simply imposed its way, which will become law despite the fact that it is not what any of the provinces hoped for. Judging by the huge disappointment they caused in Quebec, these results are clearly unacceptable.

The third cause of imbalance is the federal spending power; this power widely used by the federal government contributes directly to the fiscal imbalance. The Liberal government is so hungry for visibility that it is seeking to encroach on many areas that are not under its jurisdiction just to gain visibility. This was clear in the original version of the Speech from the Throne.

Even though something might be a provincial jurisdiction, it wants to intervene and pour money in to make sure people know it is the federal government's money that will be spent there. But often, this parallels what the provincial governments are doing. Not everyone is satisfied.

One can see very clearly what that leads to in terms of results in the area of regional development. Often, there is inconsistency. There is a lack of logic between what the federal government and provincial governments are doing. The federal spending power is one of the major causes of fiscal imbalance.

There are also consequences to this fiscal imbalance, in terms of availability in the routine management of the monies needed for the proper functioning of the provincial governments. We find ourselves in situations where citizens judge the Government of Quebec, based on its financial means, the taxes it collects.

However, people do not realize that, all things considered, if there were no fiscal imbalance, the Government of Quebec would have more leeway and could meet needs in a different way. In Canada, a very complicated system has been developed which, at the end of the day, does not satisfy anybody. We saw that again this week, at the first ministers' conference.

We want the report to be tabled by June 2, 2005, at the latest because it is vital that we get out of this situation. The Bloc Québécois has hammered away at this issue and has succeeded in getting the concept of fiscal imbalance included in the Speech from the Throne.

With this motion and the support of the House, we will succeed in getting this debated in committee and getting a recommendation made to Parliament. Thus, before the next federal election, whenever that may be, we will be able to get a tangible result. Quebec will no longer be saddled with a fiscal imbalance which hampers the day-to-day management of the responsibilities entrusted to the Government of Quebec. This is why it is essential that this resolution be passed by this chamber.

[Claude Drouin, Liberal, Parliamentary Secretary to the Prime Minister (Rural Communities)]

Mr. Speaker, I would like to ask one or two questions of the Bloc member.

First, he said that the Government of Canada is not sensitive to the needs of Quebec and the provinces with respect to equalization. I wish he had been honest enough to say, here in the House that, when provincial and territorial premiers met in Niagara-on-the-Lake, they had set the bar at $10.9 billion. Moreover, they wanted stable and predictable funding. This is exactly what the federal government did, at the request of the premiers. However, they decided to change their request when they saw that we had an additional surplus. This is what we are seeing in the newspaper today. The Premier of New Brunswick, Mr. Lord, tells us, “We have an additional amount of $100 million, but we will not overreact; we will act like a responsible government”.

This is exactly what we are doing here: we are acting like a responsible government. If the Parti Québécois had acted like a responsible government, it would not have increased the debt by $11 billion during its two mandates, by trying to introduce all kinds of programs that it could not afford. We are acting like a responsible government.

How can the member tell the public that we did not keep our promises when what the provincial premiers were asking for was $10.9 billion?

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Mr. Speaker, my colleague from Beauce asked a question that is quite relevant. The answer might be as well. The present Quebec premier, Jean Charest, a Liberal premier, came away from the meeting disappointed. We are not talking here about a sovereignist premier being disappointed.

Also, it was the Quebec finance minister, Mr. Séguin, who said the federal government bled Quebec. This is not sovereignists talking here. A federalist Quebec government said that, with a $9 billion surplus on March 31, 2004, it was intolerable and irresponsible for the federal government to keep on this way. It is doing what it has always done, that is raking in as much money as possible and spending it in areas--

[An hon. member]

Oh, oh!

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Mr. Speaker, I let my colleague ask his question. I would like him to let me answer.

For a number of years, the federal government has been raking in as much money as possible, and spending it to get visibility, no matter in whose jurisdiction, while neglecting its own jurisdictions. That is why the present federalist government in Quebec returned home saying, “The way the federal government treats us is intolerable”.

This is not the former Parti Québécois government. We are talking here about the federal government and the judgment passed by its own federalist allies on its unacceptable centralization that is hurting Quebec.

[Guy Côté, Bloc, Portneuf, QC]

Mr. Speaker, once again we have a situation where the Liberal government seems to be the only one who is right. It has a habit of presenting itself in that light.

I know that our daily agenda is very full. I would simply like to draw your attention to an article in today's issue of Le Devoir under the byline of Jean-Robert Sansfaçon. I will not read the complete article, just a little extract:

An entire day of discussions turns out to be pointless: the Prime Minister has not changed his decision to distribute $10 billion in equalization payments for this fiscal year. That is an increase of $800 million over the forecast in the last budget—that is agreed—but the amount is still almost $1 billion less than the $10.95 billion transferred in 2001-02.

For Quebec, this unilateral decision by Ottawa adds $400 million to the province's revenues this year but that is still less than two years ago and much less than the $2.8 billion in finance minister Yves Séguin's dream budget.

But considering Prime Minister Martin's priorities, most of which invade provincial jurisdictions--chances are very slim that anyone will convince the government that such a fiscal imbalance exists. In short, the September health agreement was likely the first and last manifestation of this mysterious asymmetrical federalism that some were so proud of just a month ago.

I do not have as much experience as others in this House, but it seems to me that the current Prime Minister's attitude is the same as that of the former prime minister—just take it or leave it.

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Mr. Speaker, I thank my colleague for his comments. Indeed it does show that the Bloc Québécois is doing its job today.

Today, we put forward in the House a motion that will force the minority government to recognize the existence of a fiscal imbalance, if we can convince the majority of members in the House to support the motion. It will be an important contribution indeed. Hopefully—and I will conclude on this—the adoption of the motion will make it possible to make practical recommendations before June 2, 2005, to put an end to the fiscal imbalance.

[Monique Guay, Bloc, Rivière-du-Nord, QC]

Mr. Speaker, my first comments will be for my constituents in Rivière-du-Nord who decided to put their trust in me for the fourth time. I want to thank them for that.

I think the motion put forward today by the Bloc Québécois is very important and quite original. I believe it can help fix a situation which continues to be unbearable in Quebec.

I would like to point out that the Liberal government had forecasted a $1.9 billion surplus and that, this year as every single year for the past 11 years, my colleagues who have successively occupied the position of finance critic have always been able to forecast the surplus more accurately than the government itself. The surplus is now estimated at $9.1 billion. It is a lot of money. It does make sense then that the provinces, which are currently in a stranglehold, ask for more. They cannot make ends meet. They cannot pay for everything they need in the area of health care, among others. The costs are humongous, and the provinces are now fully responsible for all health care expenditures.

If the federal government will not give us the money we pay in taxes, then clearly we will not be able to deliver services. As you know, there are serious problems throughout Quebec and the rest of Canada. We will only be able to resolve them when the government gives us the money we need to provide the necessary services to all our constituents. This is a priority.

I would also like to remind this House that on March 17, 2004, the Quebec National Assembly unanimously passed the following motion, which I will read, since it is very important. It was unanimous, which means that all the parties, the ADQ, the Liberal Party and the Parti Québécois, all voted in favour of the motion:

That the National Assembly demand that the federal government recognize the existence of the fiscal imbalance and that on March 23, 2004, it adopt budget measures to counter the effects on provincial finances.

This motion was passed unanimously in the National Assembly. We are very aware of the existence of fiscal imbalance. Recently we moved an amendment to the Speech from the Throne to add a few words about the fiscal imbalance, which have since been included. We are making some progress.

In our motion, we are now asking that:

—the House ask the Standing Committee on Finance to strike a special subcommittee to propose tangible solutions for addressing the fiscal imbalance, and that its report be tabled no later than June 2, 2005.

That should be enough time to truly do some research and open the possibility of having a discussion on the fiscal imbalance, so that the government can realize it indeed exists and we can find solutions to this problem.

After all, it is our public money that ends up here in Ottawa. It is money that belongs to Quebeckers. It is our taxes that are sent here. It seems to me that we should get a say in this and that the money should go where it is needed, not to programs that are being promised to us. We have been promised investment in jurisdictions that belong to Quebec, such as education. We do not need overlap. Education is entirely a Quebec jurisdiction. The same is true for health. We do not need an overlap in programs that already exist.

We do, however, need money to improve these programs. That is all we need. The federal government need not boast about doing things in our jurisdiction. It is not. Duplication is of no benefit to our citizens; it is causing a problem of another sort. Instead of trying to put another system in place, it should respect what Quebec is already doing. It should respect its jurisdictions and put money in the right place.

I want to address another important point. The Bloc Quebecois has set up a committee, the Léonard committee. This committee was not named after just anybody, it was named after Jacques Léonard, who was the finance minister for many years in Quebec. He is a very smart and very knowledgeable man. This committee set up to examine federal programs demonstrated that the fiscal imbalance has three fundamental consequences for Quebec.

First, the federal government has too much money for its responsibilities, which means that the taxes paid by Quebeckers are not being used to respond to their priorities. These taxes have been used in part by the federal government to spend more on its bureaucracy and to squander more, while the Government of Quebec lacks money for health, education, family policies and economic development. Speaking of family policies, once again, we are unable to get the government to promise it will not meddle in our areas of jurisdiction where our child care centres are concerned. We have a program that is working very well in Quebec.

In international fora, people ask us about it. Other parliaments want to know how this program works. They say it is extraordinary and they want to establish similar programs in their countries. Meanwhile, the federal government is telling us that it is going to interfere in our program. That is unacceptable.

That is why we are asking for the right to opt out. We are also asking for money that the federal government would be spending elsewhere, so that we can operate the program we already have in Quebec. Quebec needs money to continue to operate the program already in place.

As for the Léonard committee's second point, the federal government is taking advantage of its surplus position and of Quebec's tight fiscal situation to invade even more, as I was saying earlier. In doing so, it forces made in Canada decisions upon Quebec in areas where the people of Quebec should be making them.

Third, as the Canadian government grows stronger and pays down its debt, the Quebec government grows weaker and falls deeper into debt with each passing year.

I can understand that Canada's debt must be paid down. We see this as the responsible thing to do in the case of Quebec's debt also. However, not all taxpayer dollars should go solely toward paying down the debt. We have to be reasonable and do the calculations right. When we do our budget, we do not use our whole salary to pay down the mortgage. What about groceries and many other necessities? That has to be taken into account. With the present government however, this does not seem to be a possibility.

And what about money which is idle elsewhere? The employment insurance fund has racked up a $45 billion surplus. What is being done with this money when it should be reinvested where it is needed, given back to jobless people or used to improve the employment insurance program? What is being done is quite the opposite. The number of hours of work needed to qualify for employment insurance has been increased, and because of this women and young people, who often work part time, are heavily penalized. They never manage to accumulate enough hours to take advantage of the employment insurance program.

[Claude Drouin, Liberal, Parliamentary Secretary to the Prime Minister (Rural Communities)]

Mr. Speaker, I do not know if my colleague has skipped a few of the things that happened in the House or if she voluntarily chose not to talk about them, but there are some important aspects that need correcting and that other new Bloc members should learn.

The equalization formula is calculated on the basis of five provinces—excluding the Atlantic provinces and Alberta, the richest province—to make an average and guarantee that the population is not be penalized, or as little as possible. Quebec has received equalization payments since the beginning of this program in 1957.

Very often, the Bloc tries to make Quebeckers believe that Quebec contributes more to the program than what it gets out of it. However, through equalization, the federal government redistributes money to make sure that wealth is distributed as fairly as possible.

The hon. member is telling us that we are interfering and that we are getting involved in provincial jurisdictions. I would like to hear what she has to say about manpower training. We are transferring $600 million annually to Quebec, and we did it with the Parti Québécois. We, Liberals, agreed to transfer $600 million annually and we are negotiating a parental leave agreement with a Liberal provincial government, because we recognize that Quebec is in a better position to provide that service. This is a responsible government that takes action.

The hon. member talked about the debt. She said that we should not use all the money to reduce the debt. We are not doing that. We have our current accounts. We meet our budgets year after year. At the end of a year, there may be surpluses. So, far, we have paid $61 billion toward the debt. Out of the $9 billion that was mentioned, $3.5 billion is interest saved, thanks to our sound management.

If there is money left at the end of a year, after all the expenses have been paid, a wise father or mother may apply the money to the mortgage. This sound investment will result in less interest to be paid.

I hope the Parti Québécois will take note of that and, if it ever takes office again—something we hope will be a long way down the road—it will reduce the debt, instead of increasing it.

The hon. member is telling us that we do not want to transfer powers to Quebec, when in fact we are negotiating a parental leave agreement and we gave money for manpower training. As for day care services, we recognize that Quebec has implemented a very good program. We will transfer the money and we want to develop this program across Canada, because this is what people need, and we federal Liberals recognize that.

[Monique Guay, Bloc, Rivière-du-Nord, QC]

Mr. Speaker, I am very happy to see they are finally going to give us the money for child care and stop sticking their noses into our business. I am very happy that this promise has been made here in this House today. We will remember it; do not worry.

There would be no need for equalization payments if the government had not been strangling us. That is the real problem. We were being strangled financially and that is why we need the equalization. Quebec would greatly prefer—

[An hon. member]

Oh, oh!

[Monique Guay, Bloc, Rivière-du-Nord, QC]

I would like them to listen. I was polite and I listened.

There would be no need for equalization payments if the federal government had not been strangling us. That is the real problem. Health care was slashed for years. When the parliamentary secretary talks to me about manpower training, it took 15 years to negotiate an agreement. Negotiating agreements with the federal government takes a long time. It does not go quickly.

And so we have reason to be dubious. I say to you, “Stop strangling us financially” and you will see that we can survive much better than we are constrained to do now. We just get things in dribs and drabs and then they tell us we are getting equalization payments. We would greatly prefer not getting them.

It is our money; it is our income tax; those are our tax dollars we send to Ottawa. We want to take back what we need to live on and get what is owed us.

It is entirely untrue to say that what we are doing is not right. I think it is abominable that they say they are doing things properly, when it is perfectly clear that things do not work that way in practice.

Yes, there is interference. It is unacceptable because money is being wasted although we already have the programs in place. Give us some respect, and give us back the employment insurance fund that was stolen from the unemployed. We would like to have that $45 billion. We would know what to do with it.

[Claude Drouin, Liberal, Beauce, QC]

Mr. Speaker, the member has just said that something was stolen. That is unparliamentary. Moreover, she knows full well that we had to transfer the surplus at the request of the Auditor General. She is not going to mention the period when the EI fund had a deficit. She cannot use those words in the House.

[The Deputy Speaker]

I believe that is an issue related to the debate and not a point of order.

The hon. Parliamentary Secretary to the Minister of Finance.

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

Mr. Speaker, I do not think I have had an opportunity to congratulate you on your elevation to that chair. I know you will make a fine and fair Speaker over the course of your term there.

I may mention at the outset that I am splitting my time with the member for Don Valley East.

This is a debate about fiscal imbalance. There has never been a fiscal imbalance. There never can be a fiscal imbalance. It is an intellectual conceit perpetrated by those who wish to somehow or another not take responsibility for their areas of jurisdiction and the raising of funds while trying to get into another area of jurisdiction and take funds from that area. This is a completely misleading debate and it is a misleading phrasing of the debate. As I speak, I hope I will be able to demonstrate to Canadians, when they see sober facts as opposed to the rhetoric on the other side, that this is a resolution which is ill-founded and is an intellectual conceit.

Given the importance of the issues at stake and their complex nature, I would like to take a few moments to establish some fundamental guideposts for the benefit of hon. members and do a comparison for the purposes of the record.

In the fiscal year 2003-04 federal government revenues were $186.2 billion. Provincial revenues were $170.2 billion, an imbalance some would say. The $170 billion includes tax points which account for about $16 billion. Already the federal government has indirectly transferred $16 billion to the provinces. Then there is the cash transfer, and that amounts to $37.4 billion. That reduces the federal government's revenues to $148.8 billion and increases the provincial revenues to somewhere around $207 billion: $148 billion for the federal government and $207 billion for the provincial governments.

However, it does not end there because the federal government has to pay a fairly significant debt. It was a debt that was run up over quite a number of governments and it was ultimately arrested in 1997. We have been paying down some debt since that time, but it still takes up $35.7 billion of the federal government's revenues. Those are moneys that are not available for anything else other than to service the debt. That brings the federal government's useful revenues down to $113 billion. Meanwhile the provinces, which do not have nearly the amount of debt the federal government has, only have to pay something in the order of 10¢ out of their dollars to service their debt.

Out of that $113 billion, there are transfers to those who are unemployed and for pension moneys in the amount of about $29 billion. That leaves approximately $84 billion available to the federal government for use in other programs. So much for fiscal imbalance. At this point, before the debt for the provinces, they have $207 billion, and as I have just demonstrated with the numbers, available for the federal government for all of its other responsibilities is $84 billion.

If there is a fiscal imbalance, it is that the provinces have all the revenues and the federal government has all the debt.

The provinces have argued that vertical fiscal imbalances exist in favour of the federal government. Essentially, they have argued that all the money is in Ottawa while the provinces and territories have all the spending responsibilities. I hope that my going through the numbers enables Canadians to understand that that is basically not true and that the underlying assumption of this debate is incorrect.

Although fiscal imbalance to date is not new, hon. members might be interested to know what the provincial position was a few years ago. Now it has taken a 180° turn in the opposite direction. More to the point, I note that in the early 1980s there was considerable debate as to whether there was an imbalance in favour of the provinces. Eventually these claims were dismissed, largely due to provincial arguments against the existence of a fiscal imbalance.

Hon. members will no doubt be interested to know that in support of this case against the existence of the fiscal imbalance, Ontario's 1982 budget quoted a study by the Economic Council of Canada which said:

In order to say that there is a “structural” economic problem relating to fiscal imbalance, it must be argued that one of the levels of government does not have access to the revenues required to fulfill its obligations.

We have heard that over and over again from the side opposite. It went on to say:

The mere existence of deficits at one level of government does not indicate the existence of such a structural imbalance nor does it mean that such deficits have to be rectified at the expense of another level of government.

We adopt that view, although that view was put forward by a provincial government when the federal government was arguing the opposite case 20 years ago.

Simply put, the Ontario provincial budget was stating that a vertical fiscal imbalance could not exist in the context of this confederation. That is because in Canada, unlike most other federations, the provincial governments have effectively the same access to the same major tax bases as the federal government.

The Leader of the Opposition has quoted favourably the notion that Belgium should be a model to be looked at. I do not think that my friends in the Bloc Québécois members would be quite so enthusiastic if they knew that only 8% of subnational governments control and access their own spending. Ninety-two per cent of the money comes from the senior level of government, as opposed to Canada and the United States where states and provinces have access to their own funds and decide how those funds are to be distributed. If they looked at it for very long, I do not think they would think that was such a great model to be followed.

Both orders of government are therefore at liberty to decide the degree to which they levy personal income taxes, corporate income taxes, sales taxes and payroll taxes to deal with the spending pressures related to their responsibilities, even in Alberta. Moreover, the provincial governments have exclusive access to some of the fastest growing revenue streams, resource royalties and lottery revenues. Alberta does very well out of resources royalties, and the federal government does not realize much at all out of those resources, revenues to which the federal government does not have access.

Thus, when federal support for provincial social programs is included, total provincial-territorial revenues have substantially, as I demonstrated previously, exceeded federal revenues as a share of GDP for more than two decades. At one point the provinces generated something in the order of 19% of the GDP of the nation and the federal government was down around 17%. Both have declined over a period of time so that now the provinces generate something in the order of 17% and the federal government has 15.4% of the revenues of the nation.

If the provinces really wish to generate their own revenues, they are in effect walking away with something in the order of 2% of the nation's GDP on an annualized basis. That is something in the order of $24 billion on an annual basis.

On the expenditure side, the federal debt continues to be much larger than the combined debt of the provinces and the territories. This affects all Canadians and makes the Government of Canada more vulnerable to unexpected fluctuations. As the Minister of Finance said earlier in question period today, with the new deal in the order of $74 billion over 10 years to the provinces in equalization in CHT and CST, we are in fact assuming some of the risk that the provinces appear to have forborne.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Mr. Speaker, I listened with some interest to the discussion about the fiscal imbalance. With all due respect, I think my colleague is misstating the principle.

He says that cumulative provincial revenues are roughly the same as cumulative federal revenues. I do not think the fiscal imbalance is about that. When we look at the different levels of government in Canada, and I would like to introduce municipal government as well, we actually have three levels of government. When people talk about the fiscal imbalance they are saying that each of those three levels of government have tax levers available to them and each of them have responsibilities for things for which they need to pay.

As time goes by there seems to be a mismatch between their taxing powers, not in the taxing powers of other levels of government. That is not the comparison. The comparison is between the taxing powers they have and their funding responsibilities.

I will take my home province of Ontario as an example. There are more than 440 municipalities in Ontario. All of them are under a crunch. All of them are complaining that they do not have access to sufficient revenue to pay for the services they need to provide locally. These municipalities are looking to the province and saying that there is a fiscal imbalance between the provincial and municipal government, which is similar to the same discussion that is going on between the provinces and the federal government.

We are not looking at the revenue generating capacities of the three levels of government to see whether there is an imbalance. We are looking on the other side. We are saying that the federal government is the only level of government that seems to spend time sitting around thinking up new ways to spend money, while provincial governments of all parties are having a hard time balancing their books. I presume leaders of all levels are having a problem. The fiscal imbalance is between the money the federal government raises and the responsibilities it has compared to the responsibilities of the provinces.

The fact that neither the local nor provincial governments are stepping into federal jurisdiction, but the federal government is doing it to the provinces is proof positive. I would like to hear the member's comment on that.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I agree with part of his comment, which is that municipalities do have some degree of difficulty in raising revenues. He and I would probably agree that is true. I know my own city of Toronto has limitations on its revenue raising capacities. It has been somewhat restricted by the previous provincial government, under Mr. Harris, over its ability to tax property and use other leverage to gain other revenues, such as perhaps a hotel tax and things of that nature.

The motion is not about an imbalance between the provinces and the municipalities. It is about the so-called imbalance between the federal government and the provincial governments. I put it to the hon. member that there cannot be an imbalance between the constituent elements of the federation. All of them have the same access to the same revenues. It is logically and intellectually inconsistent to argue otherwise.

However, that cannot be argued with municipalities and provinces. Clearly, municipalities are creatures of the province and they have limitations on their revenues. I agree with the member, that there is a fiscal imbalance there. That is because it is structural.