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.