Mr. Speaker, this morning, in the Standing Committee on Finance, we hosted the Finance Minister. I heard our Liberal friends rejoicing, naturally, over budgetary surpluses. They were rejoicing particularly over the unexpected surpluses.
It is my intention, soon, to pay a brief visit to Laval University to meet with some of my former professors. Indeed, I feel that I could ask for a revision of some of my marks, because some of my mistakes were on the positive side, not on the negative side. I don't know, though, whether that will be allowed.
Fiscal imbalance has very significant consequences, on both democracy and accountability. What are the effects of fiscal imbalance? One of them, among others, is to put us in a situation where the federal government no longer knows what to do with its money. We are looking at more than $60 billion since 1997-1998. These are numbers often repeated in this House, but I think it is important to repeat them. I hope that one day, our colleagues in government will finally understand them.
The Conference Board talks about $166 billion over the next 10 years. If they were to be revised today, these numbers would continue to increase in light of the unexpected surpluses, which we had in the last budget year.
I spoke about democracy and accountability. The federal government has so much money that it does not know what to do with it. Instead of fully assuming its responsibilities in its own jurisdictions, the federal government invests in jurisdictions that come under Quebec and the provinces.
What is the result of this? During the years 1995-96, the federal government was making cuts everywhere in joint programs, with the result that all the provincial governments, and particularly the Quebec government, were blamed by their population, because they lacked money for health, municipalities and infrastructures.
To a large extent, the problems were not caused by how the Quebec and provincial governments were managing things; they were caused by the drastic cuts made by the federal government. This is really a lack of democracy. It was mentioned earlier that the taxpayer is the same one at every level. Our fellow citizens should know who deserves to be praised and who should be blamed. This is important.
The fiscal imbalance has a significant impact on the provinces' shortfall, particularly Quebec's. The most recent evaluation of the shortfall caused by the fiscal imbalance, and Quebec's most recent demands are presented, along with the dollar figures, in a document entitled “Correcting Fiscal Imbalance”. That document was released when Quebec's most recent budget was presented, in March 2004.
The demands relating to equalization or social transfers are quite similar to those of the Séguin commission. However, while advocating the transfer of tax fields as a basic solution to the fiscal imbalance, the Quebec finance department proposed, as an interim measure, to significantly increase transfer payments for health and education, and equalization payments. In total, the Quebec finance department proposed a $7.2 billion increase in federal transfers across Canada.
As regards equalization alone, the federal government should invest over $5 billion. This is taking into consideration the restoring of the 10 province rule, and a number of other amendments to the formula, to restore some tax fairness between Quebec and the provinces.
For Quebec, these proposals would amount to an additional $3.3 billion for 2004-05 alone. This is, in essence, the shortfall caused by the fiscal imbalance in Quebec, as calculated by its government.
What we are proposing is relatively simple. We did not reinvent the wheel. First, as the Quebec government is requesting, there has to be a significant increase in funding, in the CHST, for example. It is indeed an option, but it is a short term one and it is far from perfect.
The best solution would be to stop the transfer of tax points to the Quebec government. This would give us a much better choice. Such a solution would enable the Quebec government to better predict in it budget planning, because it would have its own revenues. This formula would help to balance the ability to generate revenues for the two levels of government.
These propositions would result in a global return of 26.7 tax points on the personal income tax. Quebec would then have an effective hold on the personal income tax field. The Quebec government would control 57.5% of personal income tax rather than the 42% it is controlling now. It is a very nice solution, but additional measures complement that.
We continue to say that it would be important to adjust the equalization payments calculations. Transfer of tax points alone would not do any good for some provinces, particularly for the Atlantic provinces. This is why we suggest that the increase in the ability to generate revenues created by a transfer of tax points not penalize the provinces by reducing the equalization payments. Those provinces have to have access to additional revenues to be in a better position to meet the challenge of growth and increase in the public expenses.
Myths about equalization abound. Unfortunately, it is often said that Quebec is the one benefiting the most from this program. True enough, Quebec gets 31.5% of federal transfers to the provinces, 43.7% of equalization payments and 24% of transfers for health, higher education and welfare, but when you figure out the per capita payment, it is about $500, which is, as mentioned this morning by Michel Vastel, much less than what the Atlantic provinces, Manitoba and Saskatchewan are getting.
Although 24% of total federal spending is in Quebec, which reflects Quebec's demographic weight in Canada, we are not as elated when we look at the nature of this spending. Quebec does not get its share of job and wealth creating spending. For example, it does not get its share of grants to businesses. It is far from getting its share of federal spending on goods and services. Research and development spending generates jobs and knowledge and brings quality jobs and wealth to the communities. I will not even mention federal jobs, which are concentrated in the Ottawa and Ontario area.
Those policies have made Quebec poorer, and we are now receiving more equalization. If the federal government had implemented other policies, Quebec would not be getting as much equalization and I, for one, would be very pleased.
For instance, if the number of federal public servants in Quebec were in accordance with its demographic weight, $812 million more in salary would be paid to about 15,500 civil servants in Quebec. Those are good jobs. I would not call equalization what is grudgingly granted to us at a conference where such figures are used despite important consensus in Quebec on this issue.
In research and development, the federal government has set up 57.7% of its research centres in Ontario, compared with a mere 19.6% for Quebec. The difference is $800 million. Ottawa needs to change those policies if it truly wants to be fair to Quebec and the provinces.
Quebec companies are receiving 18.5% of federal assistance to businesses, that is $3 billion less than what is granted to Ontario companies. We are not talking about peanuts here—and I am sorry if that expression is unparliamentary—but about $3 billion. So, it comes down to a $200 million shortfall for Quebec also.
These policies have to change. Quebec must gain control over all its economic and fiscal policies and its programs to help businesses and constituents alike.
Tax point transfers were mentioned earlier, and I said that we had not reinvented the wheel. Canada faced a similar situation at the end of the second world war. At the time, the fiscal imbalance issue on which Ottawa and the provinces disagreed led to the 1956 report of the Tremblay commission. It is nothing new.
That commission proposed to the federal and provincial authorities that it agree to a new division of tax fields better suited to the present needs of the public and the public administration, and more respectful of the spirit of federalism and the Constitution. That was 48 years ago.
Unfortunately, even then the government did not always heed commission recommendations. For a number of years, rather than follow that direction, the government began to set up a number of cost-shared programs. It did not take long to realize that the solution did not lie in injecting funding on a cost-shared basis.
This led to the 1964 federal-provincial conference, where at the insistence of Quebec, which once again—with the credit going to Jean Lesage—demanded more access to income tax, tax points were indeed transferred. This solved the problem for thirty years or so. Now for the situation we find ourselves in today.
I believe that one of the major causes of fiscal imbalance is the federal spending power. The government has used that power for several decades to interfere in jurisdictions belonging to Quebec and the provinces. For evidence of this, one need look no further than the Speech from the Throne.
Where do the priorities of the representatives of this government lie? They tell us often enough, and delight in doing so. I do not delight in hearing them; they are a disappointment to me, but not to them. These are all areas over which Quebec has jurisdiction: municipalities, early childhood services, health, education. Even without our signature on the Constitution it seems to me that, if there is one area of jurisdiction that clearly belongs to Quebec and the provinces, it is education.
This federal government absolutely must take action on the fiscal imbalance, must start transferring tax points so that Quebec and the provinces are able to properly administer the services for which they are responsible and properly serve their citizens, within a system that is both more transparent and more democratic, one where people can see whom to praise and whom to blame. Unfortunately, that is not the case at present.
I am not at all used to giving 20 minute speeches in the House, so I must admit that I have rather lost track of time. I have no idea how much time I have left. I believe I may have quite a lot.