Debates of Nov. 29th, 2004

Food and Drugs Act

[Colin Carrie, Conservative, Oshawa, ON]

moved that Bill C-420, an act to amend the Food and Drugs Act, be read the second time and referred to a committee.

Mr. Speaker, it is a pleasure today to reintroduce Bill C-420, an act to amend the Food and Drugs Act.

As we know, the bill was originally introduced by the member for Nanaimo—Alberni in the 37th session of Parliament. In the last Parliament, the bill passed second reading by a vote of 124 to 85, with support from all sides of the House. It was sent to the Standing Committee on Health where the bill was enthusiastically debated. It ultimately died when the House recessed for the last election.

Bill C-420 was a response from Canadians to Health Canada's attempt to regulate natural health products under a drug directorate. Approximately one million Canadians voiced their displeasure toward having natural health products being regulated as drugs. Health Canada has a long history of bias against natural health products. The response to natural health products has been called “bureaucratic obstructionism” by some.

In the 36th Parliament, the minister of the day called on the health committee to look into this. The committee tabled its report, “Natural Health Products: A new vision”, in November 1998, now over six years ago. “A new vision” brought forth 53 recommendations, including:

1. Natural health products be allowed to make health claims, including structure-function claims, risk-reduction claims and treatment claims.

2. Health Canada immediately initiate a review of the diseases listed in Schedule A to ensure that only appropriate diseases are included and, where relevant, specific diseases be exempted by regulation from the broad terms found in Schedule A.

3. Health Canada, subsequently, conduct a study with the participation of representatives from consumer groups, the food, natural health products and pharmaceutical industries, and health practitioners to determine whether subsections 3(1) and (2) of the Food and Drugs Act or all of the diseases listed in Schedule A should be deleted.

In the opposition's minority report, drafted by Dr. Grant Hill, Reed Elley and the member for Saskatoon—Wanuskewin, it was stated that the committee's overall report recommends a continuation of the existing situation of a paternal federal government that must protect Canadians from the unknown evils of natural health products. This is inconsistent with Canadians' experience that shows overwhelmingly an incredibly safe historical pattern of use of natural health products.

Canadians universally recognize natural health products as basically foods, certainly not drugs, especially when consumed in the dosage and form recommended. The existing overemphasis on government control, licensing and regulation of mostly benign consumer products could be greatly simplified.

By regulating natural health products under the purview of Health Canada's Food Directorate, the opposition believed we could ensure that these substances are viewed within the culture most familiar to them and thereby never again fall victim to the intimidating practices and procedures of the Drugs Directorate.

The opposition still believes Canadians deserve and will continue to demand much more freedom of choice over natural health products. The opposition, the Reform Party at the time, “believes an informed Canadian consumer will always be a better judge of what is best for them and their loved ones than some distant bureaucrat in Ottawa”.

The NDP minority report also expressed concerns about the reclassification of herbs as drugs, the inability of the Health Protection Branch to regulate in a fair and balanced way, and the need to respect the expressed wishes of Canadians for freedom of choice and access to natural health products.

Minister of health Allan Rock accepted the report's recommendations on March 26, 1999. The government then set up an office of natural health products transition team and accepted their clarification and expansion of the 53 recommendations of the health committee. In its final report, the transition team stated:

Sections 3(1) and 3(2) and Schedule A of the Food and Drugs Act are no longer relevant. They do not serve any purpose that cannot be accomplished adequately by other sections of the legislation or regulations.

More importantly, the schedule does not reflect contemporary scientific thought. The weight of modern scientific evidence confirms the mitigation and prevention of many diseases and disorders listed in Schedule A through the judicious use of natural health products. It is time that the legislation and regulations reflect the prevailing science.

Section 30(1)(m) of the Act grants the authority to add anything to, or delete anything from, the Schedule of Act.

The transition team recommended that subsection 30(1) of the Food and Drugs Act should be invoked to remove all diseases listed in schedule A, and that subsections 3(1) and 3(2) should be revoked through the legislative renewal initiative.

All Canadians are concerned with the safety of herbs, dietary supplements and other natural products, and all Canadians want to ensure that there is accountability in any health claims made by the sellers of natural health products. These safeguards already exist in the Food and Drugs Act:

1. No person shall sell an article of food that

(a) has in or on it any poisonous or harmful substance;

(b) is unfit for human consumption;

(c) consists in whole or in part of any filthy, putrid, disgusting, rotten, decomposed or diseased animal or vegetable substance;

(d) is adulterated; or

(e) was manufactured, prepared, preserved, packaged or stored under unsanitary conditions.

1. (1) No person shall label, package, treat, process, sell or advertise any food in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety.

Similar clauses exist for both food and drugs and devices.

By bringing herbs, dietary supplements and other natural health products under the umbrella of food by definition, consumers are protected from false or misleading claims, and product safety is ensured.

While the Department of Health stated that “the regulatory regime for drugs under the food and drugs regulation is viewed as far too rigorous for these products, given the history of safe use that most of these products have enjoyed”, it still chose to regulate natural health products as a subset of drugs. This was contrary to the opposition's minority report and the wishes of many Canadians.

The bill is basically taken from the committee's recommendations and further work done subsequently. As I previously stated, the bill seeks to bring herbs, dietary supplements and other natural health products under the purview of Health Canada's Food Directorate by amending the definition of both food and drugs in the Food and Drugs Act and to implement the recommendations of the office of natural health products transition team by repealing subsections 3(1), 3(2) and schedule A of the Food and Drugs Act.

Section 3 and schedule A of the Food and Drugs Act were adopted in 1934 when there were no known treatments for many diseases. Things have changed a lot since 1934 and it is long overdue that these changes take place.

The diseases listed in schedule A include alcoholism, arthritis, asthma, cancer, depression, diabetes, diseases of the prostate, heart disease, liver disease, et cetera. This means that there is an outright ban on advertising, even if there is scientific evidence supporting the claim.

ASasThe act unintentionally restricts the dissemination of information to the public. Is it beneficial to the consumer and in the interest of good health?

It is generally agreed that natural health products have minimum to no risk associated with them. In the absence of scientific evidence to the contrary, a long history of human usage is generally sufficient evidence to suggest a product's safety.

For example, most people consider aspirin to be safe. When it was first introduced to the public in the late 1800s, little was known about it and there was no standardized testing for safety. Still today every year patients die from taking aspirin, often in the correct doses for the correct ailment. In 1998, 45 people died from reactions to aspirin.

Does the House know that aspirin was originally manufactured from white willow bark, a natural health product commonly used by the country's aboriginal peoples? White willow bark is still a popular natural health product used today. Does it make sense to restrict information on a natural health product but not on the drug made from it when the natural health product is cheaper and safer?

In the standing committee's report of 1998 it was stated:

Although we feel that the government has a responsibility to protect public health and safety, this should not be applied in a way that unreasonably denies consumers access to products that they perceive to be necessary for their well-being.

Health Canada has a history of enforcing and regulating these harmless products as if they were strong and often dangerous drugs. There are already too many enforcement officers barging into health food stores, raiding shelves, escorted by the RCMP. Why do we need to spend so much time and so many of our resources taking harmless products, such as melatonin and stevia, off the shelves? Does the Government of Canada not have better uses for Canadian taxpayer money?

Let us take, for example, a product developed in Alberta: Empower Plus. This product has been helping patients with bipolar disease and manic depression. People with these problems are at a high risk of suicide and are sometimes not very productive in their lives. There are over 3,000 Canadians finding a benefit from this product.

The Province of Alberta initiated a scientific response to this product and the Alberta Science and Research Authority approved and funded a $544,000 study. Preliminary results have already been published in at least four peer-reviewed psychiatric journals. Amazingly, Health Canada interpreted news of this success as a subsection 3(1) violation and shut down the study. Last July, Health Canada, while accompanied by the RCMP, raided the company's offices and began obstructing access to the product. This makes no sense at all.

Many of my colleagues here today are aware of Bill C-420, as it has had a great deal of discussion. I am specifically making reference to the 1998 report to the Standing Committee on Health.

Most Canadians recognize natural health products as low concentrations of foods and, recognizing this, Bill C-420 would regulate them as such. For example, garlic has been used for centuries not only to season foods but for its health properties. Garlic has a number of health promoting benefits, including being recognized for having well known antiviral properties. It would not be far off to say that most people would consider garlic a food.

Another example is the purple coneflower, more commonly known as echinacea. This readily available herb is vastly popular, especially during flu season. It is known to decrease the duration and severity of colds.

Last night I took a well known and researched sleep aid, melatonin. This product cannot be sold in Canada, but it is allowed into this country for personal use. It is ludicrous that this product can be imported for personal use but cannot be sold here.

Because of the way our present laws are written, we cannot advertise or label the effects of well known, researched products.

Bill C-420 is designed to rid us of antiquated laws that were made in the 1930s when little was known about natural health products. It is time that our laws reflect this new reality of the science we now have.

Bill C-420 was also designed to bring Canada into the 21st century. In my own career as a health care practitioner, I saw first-hand the benefit of natural health products.

John L., a patient who suffered from arthritis for years, relied on Aspirin to take away his pain. After years of taking Aspirin, his liver and kidneys were damaged and he developed an allergy to Aspirin. What could he take then? The answer for John was a common natural health product, glucosamine sulphate. This product worked well for John and helped him maintain a reasonable quality of life.

Another patient, Martin K., was told he would have to take cholesterol lowering drugs for the rest of his life. After reading about the serious side effects and the possibility of death, he decided to research an alternative. After several months on an exercise program and a vitamin and mineral regime, he was happy to report that he no longer required the commonly prescribed dangerous drug and his cholesterol levels were normal.

Patients like these deserve the right to have access to information and products to make educated decisions in regard to their own health. Canadians need to be able to make informed choices when it comes to their own health.

I encourage all members to support this bill because Canadians are demanding better access to natural health products in a number of ways. We want better access and more comprehensive information and labelling so that Canadians will know how these products can make them healthy and keep them healthy.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I am very pleased to rise today to congratulate my colleague on presenting Bill C-420. It is a very important bill for Canadians.

In the 37th Parliament a similar bill made it to second reading with the help of members from all sides of the House. It was at committee stage when the House folded for the election, but during that interval we have already had over 150,000 signatures on petitions in support of the bill. We are still receiving signatures in favour of the bill, which would change the way natural health products are regulated.

I think it is important for Canadians to understand that the bill would still allow for good manufacturing practices and for office and site inspections. We want to make sure that what is on the label is in the bottle and that the appropriate part of the product is still in the product, that is, the active ingredients and so on. That is part of the bill.

Because the member did not have time to bring it up in his speech, I want to draw attention to a study done by the Fraser Institute on this very thing. They discussed Canada's proposed regulatory framework on natural health products in light of international evidence. The study was called “A Cure Worse than the Illness”.

The report talks about the safety of natural health products and points out, as the member has, that the risk factor is so low with natural health products. With the some 60,000 natural health products that Canadians consume, there are fewer serious adverse reactions than there are to Aspirin or Tylenol alone.

The member mentioned melatonin. I know that with his experience as a health care practitioner he would be aware of the benefits of chromium picolinate for diabetics and folic acid for cardiovascular disease. Would he care to comment on the safety of natural health products and some of the benefits that he has observed in his own practice as a health care practitioner?

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, safety is of utmost importance to all Canadians. Many of these products have been researched to death.

For example, my colleague mentioned folic acid. Not only is it beneficial for heart disease, but for pregnant women it is very important in preventing neural tube defects. This is something that is commonly known and is spoken to among health professionals and patients; however, claims cannot be written as such because of the way the regulations are made.

We even have items like calcium, which we know is good for the bones. Why should these well known effects be regulated as such and why should they be so stringently regulated as if they were drugs? It does not make sense. These health products are inherently safe. When we look at all the different adverse reactions, they appear to be less than 1% of reported adverse reactions.

I mentioned Aspirin. In 1998, 48 people died from reactions to Aspirin. Every year, I believe, over 100,000 people in North America die from taking the right drug at the right dose at the right time.

With natural health products, these risks are almost negligible, so to regulate them as drugs makes no sense for the consumer, and it will unnecessarily shut down many quality corporations and companies that make these products.

In my own practice, I have had great results with natural health products, not only for the management of disease states but for maintaining a person's health, their optimal performance and health. Everyone from the elderly to bodybuilders have used these products and used them well.

If we can have Aspirin and Tylenol over the counter, which we know have inherent dangers and cause reactions and allergies, it makes sense to me that we give the same recommendations for natural health products.

[Robert Thibault, Liberal, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I am fully aware of the Empower Plus situation. I know of a number of people who have successfully controlled their afflictions with that product.

It bothers me, as it does the member, that there would be difficulty getting this to the market. I understood from the explanations I have heard that one of the elements would be the question of being able to patent it, as it is a natural compound; there is patenting intellectual property. I have a little discomfort with what he is saying in suggesting that, because there are larger risks, which I will deal with in my speech. But has the member considered going about other means so that products like Empower could get to the market without changing the whole system of the schedules, as he is proposing in his bill?

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Speaker, I really do not know of other means to get this product out to the general public. The way the regulations are written now, because this is under the drug directorate, Health Canada has interpreted this to be a violation of subsection 3(1) and has actually shut down the company. In many cases people who are relying on this product and have had wonderful results are now worried about not getting it anymore.

There was even talk of making a third category. In other words, there would be food and drugs and then a third category for natural health products. This was not done. It was decided instead to make natural health products a subcategory of the drug category. This has had inherent problems as far as people actually having access to these products is concerned. Many times these products, which people have relied on, have enabled them to get off the drugs they were told they would be on for a long time, certain drugs that had horrible side effects.

I do not know of any other way of handling this, but I am happy to listen to the debate today and I look forward to the comments of my colleagues here in the house.

[Robert Thibault, Liberal, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I rise to address the House on the subject of this private member's bill, Bill C-420. The bill requests that the Food and Drugs Act be amended to classify dietary supplements, herbs and other natural health products as foods.

Furthermore, the bill seeks to revoke section 3 of the Food and Drugs Act, which prohibits the advertising to the general public of any food, drug, cosmetic or device for the treatment, prevention or cure of any of the diseases listed in schedule A of the act.

The bill attempts to use a very simple approach in dealing with a very complex issue and does not consider all the ramifications which would result. This bill would not ensure the safety, quality and efficacy of natural health products to the same degree as the current regulations.

The current natural health product regulations came into force on January 1, 2004. These regulations were developed after extensive consultations with Canadians, consultations which demonstrate that Canadians want a regulatory framework that ensures an appropriate level of safety and provides accurate information upon which to make informed choices about products. The natural health products regulations meet these demands.

Furthermore, these regulations support consumer confidence in the natural health sector and provide an appropriate and safe regulatory framework for natural health products.

Furthermore, revoking section 3 in schedule A without completing a comprehensive review and analysis of its impact would not be consistent with this government's commitment to ensuring the health and safety of Canadians in a manner that respects their views and opinions.

If this bill is passed, the regulation of natural health products in this country will be worse than at present. At the moment, there are more than 50,000 natural health products on the Canadian market covered by regulations which make them easily accessible and safe, effective and of optimum quality while at the same time providing for freedom of choice and cultural diversity.

Bill C-420 would result in natural health products, which are now regulated as subsets of drugs, being regulated as foods. However, natural health products are taken for therapeutic reasons and not for purposes of caloric intake or hunger. For this reason, natural health products are more appropriately regulated as a subset of drugs, but with their own set of regulations appropriate for products of this class.

The reclassification of natural health products as foods would not ensure the appropriate regulation of these products. Treating natural health products as foods, as proposed by Bill C-420, would not address the true differences between therapeutic products and food products and would not ensure the safety of Canadians in the same manner as the natural health product regulations.

As members are aware, foods, with very exceptions, are not subject to pre-market review and food labels do not provide treatment, dosage or warning information. The natural health products regulations require products to receive pre-market review and market authorization for sale in Canada. They also require site licences and adherence to good manufacturing practices for the manufacturing, packaging, labelling and importation for sale of natural health products.

Equally important, the natural health product regulations contain provisions regarding clinical trials and adverse reaction reporting. Bill C-420 does not address these safety requirements.

The regulations as they stand guarantee that such products are manufactured in keeping with strict safety and quality standards. They also allow natural health products to make numerous health claims, provided these are substantiated.

Pre-sale assessment and good manufacturing processes are measures aimed at ensuring that pertinent information is included on the labelling as well as stipulating exactly what must be on the label. In short, the regulations ensured that natural health products are both safe and effective.

This bill will, for all intents and purposes, eliminate the natural health products regulations, as well as product licences already issued under those regulations, not to mention the ten thousand or so drug identification numbers attributed to products now to be classified as natural health products.

As written, Bill C-420 does not meet the needs of Canadians and would require the development of a new framework for natural health products as foods. This would come at considerable cost for government and industry alike. Indeed, as members have seen, this bill does not ensure the same degree of safety and access to product information as the current natural health products regulations.

The passage of this bill would also not fulfill the manner in which Canadians and the Standing Committee on Health have requested these products be regulated. The natural health products regulations were developed based upon the 1998 recommendations of the Standing Committee on Health that a new and appropriate regulatory framework be developed for natural health products.

Canadians have asked that natural health products be regulated in an appropriate manner that ensures the safety of these products. In developing this framework, extensive consultations were undertaken in order to ensure the regulations take into account the full range of input provided by consumers, industry, practitioners and stakeholder groups.

Just as the natural health products regulations were developed only after extensive review and consultation with stakeholders, any changes to section 3 in schedule A should only be undertaken after considering the views of Canadians.

Section 3 in schedule A was introduced into the act as a mechanism to prevent fraud in advertising and labelling, to prohibit the advertisement and sale of treatments for conditions where self-treatment was not considered safe, and to encourage Canadians to seek medical attention for serious conditions.

In this area science and medicine are evolving. While there is still no known cure for many of the diseases listed in schedule A, such as arthritis and diabetes, modern therapies allow these chronic conditions to be successfully managed.

For example. a product could reduce the discomfort resulting from a specific health problem or slow down the progression of a disease. It is possible as well that new products might successfully treat diseases against which today's medicines have not been effective, without in any way diminishing the importance of the role played by the diagnosis , treatment and medical management of serious illness.

In its 1998 report “Natural Health Products: A new vision”, the Standing Committee on Health concluded that the present provisions of section 3 and Schedule A might unduly restrict health promotion advertising from which the consumer might benefit, and prevent self-medication where this might be justified.

However, the committee also found that many Canadians felt that section 3 in schedule A of the Food and Drugs Act still served a useful purpose, but needed to be modernized to reflect current concerns. Canadians continue to express these views.

Health Canada has undertaken significant efforts to review this issue in order to find solutions to ensure the health and safety of Canadians. In 2003 Health Canada initiated a review of section 3 in schedule A through an external working group consisting of representatives from academia, industry, media groups, government and consumer groups.

Consistent with the Standing Committee on Health recommendations, the working groups unanimously agreed that section 3 in schedule A needed to be amended to meet the needs of Canadian society. However, there were differences in opinion as to what would be the best manner to make such changes.

From the outset, the working group recognized that the issues before it were many faceted and would encourage much debate. Health Canada continues to move forward on this issue. The department is currently considering all proposals made by the external working group. For the reasons mentioned and many others, the Government of Canada cannot support Bill C-420 as proposed.

[Nicole Demers, Bloc, Laval, QC]

Mr. Speaker, I would like to thank the hon. member for Oshawa and my colleague on the Standing Committee on Health for having presented so much evidence to back up this new bill before us today.

As we very well know, many people would like to have natural products become more accessible. I am very keen on them myself. I am convinced that four years ago, when I found I had breast cancer, the use of natural health products helped me, not to cure the cancer, but to receive the treatments I needed to cure it. Therefore I think it is very important to see natural health products be made readily accessible to the general public.

I do think, however, that certain amendments should be made to this bill. We must be very careful and prudent. At present, natural products are classified as a sub-category of drugs, under the Food and Drugs Act. This classification causes certain problems for the natural products industry, because it is necessary to carry out obligatory and very complex clinical studies, just as for medicines. These clinical trials cost natural health product companies a fortune and thus cause increase the cost of these products.

Moreover, it should be noted that an average of 12 years may elapse between the first laboratory tests and the marketing of medicines. Thus it is clear that natural products must be tested to verify their harmlessness and their real beneficial effects on health.

Nevertheless, it would be a good thing to simplify the verification procedure, so as not to submit a product known to be harmless to a series of tests that would only delay its entry into the market.

I should also add that some experts have told us that the drug approval schedules of the drug regulations would exclude some natural health product already on the shelves.

What this bill proposes, classifying natural health products as foods, would not permit the monitoring of certain products with respect to good manufacturing practices, since the law governing foods does not require that good manufacturing practices be applied to ensure that the products actually contain what is indicated on the label. Thus, natural health products cannot be considered drugs, but we cannot and do not want to recognize them as foods.

Earlier, my hon. colleague said that we have to be careful with products like Aspirin and Tylenol, but there are warnings. Some natural products, such as essential oils can be very dangerous, if misused or used improperly. But there are more and more essential oils on the market. We really have to ensure that the legislation we pass will take these aspects into account. That is very important.

In fact, my hon. colleague from Rosemont—La Petite-Patrie has indicated that an amendment to that effect would be welcome. Such an amendment would create a third category exclusively for natural health products, as recommended in the report of the Standing Committee on Health in 1998. This third category for natural health products only would ensure that these products are controlled so that consumers can be sure that they are using safe and efficient products without their having to be subjected to screening that would deny the public access to them.

We are also in favour of keeping the current labelling regulations contained in the natural health product regulations. They allow consumers to know the product's name, the quantity, and the conditions of use and storage exactly. They ensure that consumers are informed about the product and its possible side effects, as well as the recommended dosage.

Clearly, Schedule A has to be reviewed, particularly subsections 3(1) and 3(2), because it is obvious that, when a natural health product meets the scientific inspection requirements, one should be allowed to list on the label what conditions it is good for. In addition, given the current problems in our health system, the time has come to focus on prevention rather than remediation.

In fact, we know that, in China, family physicians are paid only as long as their patients remain healthy. This means that bad physicians do not have much of a clientele.

Given the prohibitive costs of health care, we should promote not only preventive measures that include healthy eating, exercise and recreational activities, but regulations that provide access to natural products of high quality.

Of course, we have to take care not to put up too many barriers to natural products, but at the same time, we should not overdo it. The current natural products regulations look like they were custom made to prevent some natural products from competing with pharmaceuticals. We cannot stop people from looking after their own health the way they want to and from buying natural products. What we can do however is ensure that the products are of high quality and meet the required standards.

We will be voting for this bill, but we do hope that our hon. colleague who introduced the bill will remember the tacit understanding concerning the amendments my colleague from Rosemont—La Petite-Patrie had brought forward to create a third category of natural products and ensure control over the manufacturing, scientific safety and labelling of the products, because we feel the labelling requirements found in the Natural Health Products Regulations are important and justified.

Creating a third category specifically for natural health products would dispel any doubt about the application of the regulations and assure consumers that good manufacturing practices were used to make the products they are buying.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I am pleased to rise today to participate in the debate on the private member's bill introduced by the member for Oshawa. I want to congratulate him on bringing it forward, following up on the work for the member for Nanaimo—Alberni.

The member for Oshawa and I graduated from the same high school. That is a matter of some pride for the former principal of that school who spoke with my parents not so long ago. It is something we have in common.

We also have in common a background in association with chiropractic. My father was a chiropractor who practised for many years in Ajax and Whitby. I know he would be pleased that I am speaking in the debate today.

I also have mentioned to both the members for Nanaimo—Alberni and Oshawa that if there are not three or four New Democrats on the health committee, I am happy there are three or four chiropractors on the committee. That brings a really important perspective to the work of the health committee and to the work of Parliament. I see that as a very positive development.

As I said, I grew up in a household where there was great respect for natural health products and alternative medicine. I bring that healthy respect to the debate today. In fact, this morning I am suffering from the effects of a cold. I think it is the effect of sharing lots of recycled air on airplanes back and forth across the country. It is ironic that the echinacea and vitamin C which I prefer to take are not as well known or as readily available as many of the over-the-counter medications in many pharmacies. There is an unfairness and a risk associated with that. I think that a lot of the over the counter medications, indeed, a lot of drugs, have more risks and a larger history of concern then many of the natural health products, which we are discussing today. I would welcome greater knowledge, availability and appreciation for natural health products.

Back in the 1997 election campaign, when I ran in the riding of Vancouver Centre as the NDP candidate, this was a major issue. I remember at many all candidates meetings the issue came up, and there was a lot of activity. I remember visiting many natural health food stores and meeting with practitioners of Chinese medicine. It was a huge issue for Canadians who knew the benefits of natural health products and wanted access to them. They wanted to ensure that the government recognized that need.

People appreciate the importance of alternative medicine and preventive medicine. I see natural health products as fitting very well into understandings of both of those categories of health care.

We have seen over the years many of the difficult and problematic effects of drugs on people, such as death, allergic reactions and side-effects. Yet we continue to use them and prescribe them in large numbers. We need to examine our reliance on those. They are very important in the treatment of many diseases, but there are other alternatives. I do not know if we as a society and as parliamentarians give appropriate attention to those.

The NDP welcomes this legislation. We want to see it get to the committee where we can have a very thorough discussion. We realize that has happened before, but clearly it needs to happen again because of the concerns which have been raised by the member for Oshawa and others. We want to see that it gets that full discussion at committee, and we will certainly support getting it there.

We want to ensure that there is access to natural health products, that they are safe and that appropriate product information is available for people who choose to use those. I know that the NDP health critic, the member for Elmwood—Transcona, will be anxious to follow up on all of those issues in committee.

Back in 1998, when this issue made it on to the parliamentary agenda, the then health critic for our party was the current member for Winnipeg North. She did a report at the time which was very supportive of the availability of natural health products. I want to quote from her report. One of her central statements was:

Canadians want access to natural health products at affordable prices. They want their government to play a pro-active role to ensure safety and quality and in advancing research and knowledge about natural health alternatives.

That was made very clear at the time, and it is being made clear again today. Canadians want that kind of access. They want safe access and they want to know about these products. Back in 1998, literally thousands of Canadians contacted members of Parliament saying that they wanted to ensure that this important route for pursuing wellness, disease prevention and a holistic approach to health care was available to them. I know it is as true today as it was back in 1998.

That is why members of the NDP are committed to reasonable access to herbal products and natural health care alternatives. That is why we will continue to work to ensure that happens in Canada.

Back in 1998, our health critic raised a number of issues which were crucial in this discussion. She raised concerns about the Health Protection Branch and the amount of legislation which related to this area. She indicated that we needed to have confidence in the work of the Health Protection Branch. She was not convinced that Canadians had that confidence. She wanted to ensure it was there.

She was also concerned about a number of other things, including the loss of the national health products research laboratory, the elimination of the drug research bureau, attempts to gut the food research lab, threats and intimidation of scientists, cost recovery policies, the influence of the pharmaceutical industry, the double standard for drugs and natural health products and the general lack of openness, consistency and accountability. Those were all very serious concerns. Some might have been addressed in the meantime, but some continue.

We need to talk about the kind of framework that Canadians want when it comes to health products and herbal remedies. We want to ensure that the appropriate research and information is made available, and that safety standards are significant. We also want to ensure that Canadians have trust in the branch of government responsible for ensuring those things. That is a concern of ours, as we discuss the current bill. We want to ensure that a system is in place which will ensure confidence in the system so Canadians will know that the products they choose are helpful to their health.

The NDP also wants to ensure that what is on the label is actually what is in the bottle. Labelling is a crucial issue in this whole debate.

The health critic made some general suggestions in 1998 that were important to all of this. She suggested a national institute on alternative health care that would conduct in-depth research into the benefits of alternative health care and the integration of traditional and non-traditional approaches to wellness and disease prevention. We see this discussion in that context.

She also wanted to acknowledge the contribution and expertise of health care professionals, including homeopaths, naturopaths, herbalists, traditional Chinese and ayurvedic practitioners and aboriginal healers. She urged initiating discussions with the provinces and territories about professional recognition and educational possibilities. That is increasingly important in Canada, as more and more Canadians look to those professionals for care and for information about their ongoing health and well-being.

Our critic also asked that Canada show leadership internationally to ensure that the development and marketing of national health products was based on the rights of indigenous people and environmental standards. That came out of concerns about how some of the natural health products were harvested and how they came to market. She wanted to ensure that was done in the context of respect for both the environment and for aboriginal peoples around the world.

The NDP is very supportive of getting the bill to committee where it can be discussed fully. As a consumer of natural health products and someone who was raised in a context of appreciation for alternative medicine and natural health products, I strongly support having that further and thorough discussion. I am pleased to have participated in the debate this morning.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I congratulate the member for Burnaby--Douglas for his contribution to this debate, and the member from the Bloc for some valuable contribution, as well as my colleague from Oshawa who introduced the bill.

I have to take exception to some of the remarks made by the parliamentary secretary in his debate a few moments ago. He has mentioned that there are some 50,000, some would say 60,000, natural health products, that are used in Canada today, and that if we do not examine them all before we make them available, we will fail to protect Canadians.

In one issue that the Fraser Institute raised in its analysis, it called Canada's proposed regulatory framework for natural health products “a cure worse than the illness” in light of international evidence. The very fact is we have rules about when regulations should be necessary for government. There has to be a demonstrated need for these rules. There has to be some sort of cost benefit analysis. When the adverse effects of the natural health products, from which the minister would protect Canadians, are lower than Aspirin or Tylenol, I have to question why we need such a monstrous regulatory regime that would characterize natural health products as drugs when they are natural components.

He has mentioned that a committee is looking at what should be done with schedule A. I wonder if Canadians realize that when we are talking about this schedule of some 40 diseases, it goes back to, as far as we can determine, 1934. We have clauses 3(1) and 3(2) in the Food and Drugs Act that say, “they shall not label or advertise that a vitamin, mineral or herb or a natural product will influence anything on the schedule of diseases”, schedule A. Schedule A concerns some diseases like cancer, diabetes, arthritis and heart disease. How is it that in 1934 Canada was so advanced in our science and research that we already knew that none of these products could possibly influence anything on this schedule? Why are we looking at this in a new century, in 2004, whether we should change some of these antiquated clauses that came into effect way back in the 1930s?

The explosion of scientific information on the benefits of natural health products is astronomical. For example, heart disease is on the list. The hon. colleague from Oshawa mentioned folic acid. There are a thousand articles in the last five years alone, in scientific literature, on the benefits of folic acid, in particular with cardiovascular disease. That is our number one killer. We are concerned about the cost of health care, but Canadians are dying because of heart disease and stroke, and there is compelling scientific evidence that one of the best things they can do to lower the risk is take a simple folic acid supplement. I hope members in the House are listening today because we should all be taking folic acid. I took it this morning and I take it every day.

We now understand the biochemistry. It has more to do with heart disease than cholesterol for example. We are spending hundreds of millions on trying to diagnose cholesterol levels when we know now that there are people who genetically have very high levels of cholesterol all their lives and never develop serious heart disease. Then there are others who have very low levels of cholesterol, but who develop very serious heart disease. Therefore, there has to be another factor. Researchers at UBC were saying, at least six years ago, that we should test for homocysteine. We now understand this simple amino acid, which damages the lining of the vessels, allows cholesterol to be deposited. However, we are not supposed to tell Canadians that because of these stupid and antiquated clauses in the Food and Drugs Act.

Arthritis is on that list. This perverse regulation, which still exists and which Health Canada seems determined to maintain, has the effect in clauses 3(1) and 3(2) of having Health Canada prosecute some of our most effective natural health product companies in Canada. For example, Strauss Herb Company has 219 charges against it. It is based in British Columbia. Mr. Strauss, an old-fashioned European-style herbalist with very good quality products, has been charged with some 219 charges recently by Health Canada under this antiquated act, over a half million dollars in legal charges.

After harassing the company and pushing the legal process as far as it could, it dropped the charges. Guess what? They will not stand a constitutional challenge. Health Canada will not win this case in court, but it can try to kill the company with a half million dollars in legal fees. This is unacceptable. Now Health Canada has gone and used GST and decided natural health products should be charged GST. It has backdated this retroactively and has come up with another half million dollars to try to squeeze the company that way because it did not charge GST on the products that were sold.

There is another company on Vancouver Island called Biomedica. It produces an excellent product called Recovery Medicine. There are people on the Hill whom I know are taking Recovery Medicine. It really helps with arthritis. This product won international recognition for the benefits in the racehorse industry. Frankly people in that industry spend a lot of money on their charges. A valuable animal could earn a lot of money for the owner. Recovery Medicine, was rated number one in the world for the improvement in horses with ligament and tendon injuries. Some would say that those are horses and we are people. Guess what? Ligaments and tendons are made out of the same stuff in horses as they are in people.

This product was tested on dancers in Denmark and they had phenomenal recovery rates. Yet, Health Canada says this company is violating subsections 3(1) and 3(2) because in 1934 we were so advanced in Canada. We already knew that recovery medicine, a simple natural health product, would not help people with arthritic problems.

The parliamentary secretary mentioned that, after all these years of research into arthritis, we know there is no cure, but it can be managed with drugs. Frankly, with that type of attitude, it will be another 40 years and we will still be managing these things. It is time to let science back into the debate and look at all avenues of approach in solving some of these problems.

If they are low cost, non-threatening, and there is no risk to the patient, why is Health Canada worried about over-regulating them? I would encourage all members to look at this subject seriously. We had agreement to take it to second reading the last time. In the last Parliament it was in committee and evidence was being heard.

A couple of members mentioned Empower Plus. We had principally women come here who had been impacted by bipolar disease, as well as many men. An 11-year-old boy was here. He came with his mother from Nova Scotia. He had only been able to go to school for a year and a half because prior to that he was trying to hurt himself all the time. This product has had a phenomenal effect on people with bipolar disease in particular.

Why is it that Health Canada would send in the police to raid this little company, with no evidence of harming anybody and tremendous evidence of benefit, steal its computers, and contact 3,000 Canadians to tell them to get back on their psychiatric drugs and off this natural vitamin and mineral based compound?

We have tremendous health costs in this country. It is time to let science back in. Science is not threatened by looking at something from a different angle. Science itself would say, “It looks like there is a benefit here. Why don't we research it?” It is time to open that envelope and look at all avenues of approach. I believe Canadians would appreciate that. Those who use these natural products will appreciate the freedom of choice and being able to access the natural products that they know benefit them.

I hope all members will take this matter seriously, stand with us, and amend it if we need to. Let us find a way to get these natural health products out to people without an unnecessary bureaucratic obstruction that limits their freedom of choice and freedom of information in such an important area.

[Marlene Jennings, Liberal, Parliamentary Secretary to the Prime Minister (Canada—U.S.)]

Mr. Speaker, I am very concerned about this bill.

I believe, having read Bill C-420, that it does not, as it is written, meet the needs of Canadians and would in fact require the development of a new framework for natural health products as foods. This would come at a considerable cost for government and industry alike, but also for the consumers.

Indeed, as the parliamentary secretary who spoke before me mentioned, this bill does not ensure the same degree of safety and access to product information as the current natural health products regulations.

Passing this bill would go against the wishes of Canadians and the Standing Committee on Health, which, in 1998, held sessions on how to regulate such products.

The Natural Health Products Regulations, which came into force in January of this year, are the result of recommendations made in 1998 by the Standing Committee on Health which identified a need to draft a new regulatory framework just for natural health products.

Canadians have asked for suitable regulation of natural health products that are used for therapeutic purposes in order to ensure safety. Comprehensive public consultations were held in preparation of the current regulations, and more than 150 witnesses appeared before the Standing Committee on Health. Health Canada held its own consultations by handing out more than 21,000 workbooks, responding to 2,300 phone calls and visiting 11 towns from one end of the country to the other, giving some 2,100 participants the opportunity to express their opinion on this matter.

The current regulations reflect the opinions and concerns expressed by Canadians during this process, and these regulations take into account the various points of view expressed by consumers, industry representatives, doctors and specialists in the field and other stakeholders.

The regulation has only come into effect in January of this year. That regulation is the result of extensive consultations, both by the health committee in 1998 and by Health Canada. I would ask the members of the House not to support this private member's bill, and to allow the regulation the time to show its worth.

[The Acting Speaker (Mr. Marcel Proulx)]

The time provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

Federal-Provincial Fiscal Arrangements Act

[Raymond Chan, Liberal, for the Minister of Finance]

moved that Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other Acts (fiscal equalization payments to the provinces and funding to the territories), be read the second time and referred to a committee.

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

Mr. Speaker, my challenge this afternoon is to keep members awake while we talk about equalization. It is an arcane piece of legislation and an arcane concept which is watched by quite a small number of very interested people because it affects how budgeting takes place, both here at the federal level and at the sub-national levels.

This has nothing to do with the offshore accord. That is entirely a separate negotiation. Bill C-24 has to do with the direct results of the first ministers meeting that occurred in September between the Government of Canada and the provinces, where they announced fundamental changes to Canada's equalization program and the territorial formula financing arrangement.

The framework was announced in response to concerns raised by equalization receiving provinces about the funding of equalization and the planning difficulties they have experienced in recent years caused by the swings in equalization payments. A number of finance ministers made the point as we travelled across the country that it was very difficult to make up a budget on the basis of equalization payments if in fact it is not known what it will be year to year.

The government heard that concern and has tried to address that concern through this bill by effectively setting floors and ceilings and a predictable stream of money for each equalization receiving province. This new framework represents probably the most important change in the program in its history. The legislation before us today is integral to effecting that change.

The intent of the changes to the equalization program and the TFF, the territorial funding financing arrangements, is to bring stability, predictability and growth to the overall level of funding for these programs, and to have third party advice on the best way for the Government of Canada to allocate payments among the provinces and territories. As the Prime Minister and premiers negotiated this formulization, it in fact achieves that. I hope this bill will enjoy the support of all hon. members in the House.

Bill C-24 proposes to provide these issues of stability, predictability and growth. I will outline shortly the legislative proposals contained in Bill C-24. However, first, it is important to present some background to the equalization and TFF programs in order to provide some context so that we can say this is where we were yesterday, this is where we are today, and this is where we hope to be tomorrow.

The program was put into effect in 1957 and the territorial program was put in place in 1985. The equalization part of the program has certainly been with us for quite a while and in part is how Canadians see themselves in terms of sharing the wealth of this great country. Both of these programs have been largely successful in providing support, while reducing regional disparities.

The intent of these programs is to ensure that all Canadians, no matter where they live, have access to reasonably comparable public services, that is the key phrase when we are looking at measuring the test of whether this program succeeds, without having to resort to economically damaging levels of taxation to fund the provision of these services. Those are the two ideas that we want to achieve here, having reasonably comparable public services without having resort to economically damaging levels of taxation.

The idea that Canadians should have access to the same high quality of health and social services regardless of where they live is fundamental to the fairness and integrity of the Canadian federation. This is so much so that it is protected by the Constitution in the form of equalization.

In short, the equalization program transfers money to the less prosperous provinces and territories in accordance with a formula based on the revenue raising capacity of each province. This means that as a province becomes more prosperous, its equalization entitlement declines. In effect, equalization is there to fill in the gap to ensure that all Canadians have access to high quality health and social services that they have come to expect and demand, regardless of where they live in Canada.

Moreover, it ensures that less prosperous provinces do not have to resort to economically damaging levels of taxation to fund the provision of these services.

Again, we are working on a balance here. In the less prosperous areas, they have limited ability to raise taxes, yet, simultaneously, Canadians, wherever they live, are entitled to a certain base of services. Hopefully that base will be achieved in part through the distribution of moneys under the equalization program.

I would like to return to the funding arrangements to the provinces and territories. The changes to these programs encompass three important elements: first, the new framework for equalization and territorial financing starting in the fiscal year 2005-06; second, an independent review of the programs by a panel of experts; and third, complete protection for provinces and territories against overall and individual declines in payments in 2004-05.

I would like to expand on each of these three elements: first, the new framework for equalization; second, the independent review; and third, the protection that is afforded in this fiscal year.

I will begin with the new framework for equalization and territorial financing. Starting in 2005, the government will establish a legislative financial framework for both equalization and territorial financing. The new framework will establish fixed payments levels, which will provide predictable and growing funding for provinces and territories. Funding levels for 2005-06 will be set at $10.9 billion for equalization and $2 billion for the territorial funding. These amounts thereafter will grow at a rate of 3.5%.

When we talk about the stability of predictability, there we have it. We know exactly the floor that we would be starting from. We know exactly the amount by which the program would increase.

The government is committed to reviewing the overall funding levels of equalization and TFF after five years. If appropriate, the government will make adjustments in 2010-11, taking into account evidence based measurements of the evolution of disparities and costs to the territories.

Let us hope, Mr. Speaker, that neither you nor I is talking about equalization in the fiscal year 2010-11.

The second point has to do with the expert review panel. The second element of the changes to the equalization is the establishment of an independent expert review panel. Our government recognizes that simply pumping more money into the system is not enough. We need to take a hard look at how the current level of equalization and territorial financing allocates moneys to the provinces and territories. That is why the new framework calls for a review to be conducted as to how the legislated equalization and territorial financing levels should be allocated for the provinces and territories in the fiscal year 2006-07 and beyond.

We start with a legislated amount of $10 billion in 2004-05. Then we move that up to $10.9 billion in the next fiscal year, and it is 3.5% thereafter. Hopefully the panel of experts will be able to tell us the best way in which to distribute that money among the provinces.

This review will, among other topics, look to the following priorities.

First, to evaluate the current methods for measuring fiscal disparities among the provinces and territories.

Second, to examine alternate ways to distribute equalization and territorial financing, including the possibility of bringing these allocations on economic indicators, such as GDP or disposable income, or based upon the expenditure needs of the province or territory.

Third, to review how fiscal disparities between various provinces developed over time, and to look at the costs associated with providing services in the territories.

Finally, to advise the government on whether it should set up a permanent independent body to advise the government on the allocation of the equalization and territorial financing payments.

I would like to stress that although the panel's role would be advisory in nature, our government is committed to listening to its recommendations and making decisions based upon that advice in consultation with the provinces and territories.

If this framework is adopted by Parliament, the panel would be asked to report back to the government by the end of 2005, which would be within a timeframe to have an effect on equalization and territorial financing allocations set for the fiscal year 2006-07.

This brings me to the third element if I may of the changes to the equalization and territorial formula financing arrangements providing fiscal protection for the provinces and territories. In order to provide greater stability to provinces and territories in 2004-05, the Government of Canada will ensure that equalization payments total a minimum of $10 billion.

As I said, we set a floor of $10 billion. Next year it is a ceiling of $10.9 billion and each year thereafter it is $10.9 billion multiplied by 3.5%. The territorial financing payments will have a minimum of $1.9 billion in 2004-05 which will go up to $2 billion in the years thereafter.

In addition, each province and territory will be guaranteed that its equalization or territorial financing payments for 2001-02 to 2004-05 will not be lower than was estimated in the February 2004 budget and included in the budget for those years.

With respect to the financial impact on the new framework, over the next 10 years, and subject to a review after the first fiveyears, the new framework for these programs will be $33.4 billion more in equalization and TFF payments to provinces and territories than the amounts in the 2004-05 estimated at the time of budget 2004, $9.5 billion for equalization and $1.8 billion for territorial financing.

That is $33 billion over 10 years on top of what already exists. This is no small change. In fact these proposed changes to the equalization and territorial financing formula framework amount to about $33 billion. This represents the most significant increase ever to these programs.

It is also important to point out that equalization and territorial finance payments are not the only sources of federal assistance for the provinces and territories. We have the Canada health transfer, the Canada social transfer, the equalization payments and then we have a number of other direct programs where the federal government provides assistance to the provinces in the delivery of services to all of our citizens. This money is in addition to that.

Indeed, hon. members will certainly recall that the Prime Minister and all the premiers recently signed the 10 year plan to strengthen health care, which will provide $41.3 billion in new health care funding. Therefore, we have the $33 billion in equalization and the $41 billion in new health care money.

The health plan includes key elements of systemic reform and the best terms ever for reporting and accountability. By meeting and surpassing every financial standard identified in the landmark report, known as the Romanow report, it turns the corner on the annual intergovernmental feud about health funding.

The health accord puts everyone's focus where it should be: on shortening waiting times; getting more health professionals and better equipment; improving primary care, home care and drug coverage; better services in the north and for aboriginal people; more health research and innovation; and improved public health and wellness.

It is important to note that the $41.3 billion health accord, when combined with the $33 billion for equalization and territorial financing, will result in a cumulative amount of 74 billion additional dollars expected over the next 10 years. It is new money transferred from the federal government to the provinces over that period of time.

By any stretch of the imagination this is a huge sum of money and it illustrates our government's commitment to ensuring that Canadians are treated fairly and have access to reasonably comparable levels of service no matter where they live in the country.

Our government recognizes the need to ensure that all provinces and territories can offer the best possible services to their citizens. The equalization and territorial funding formula programs are clear evidence of our commitment in that area.

To sum up, under the bill, $33 billion will be allocated for equalization payments over the next 10 years, $41 billion to the Canada health transfer allocated over the next 10 years. We have a commitment to an expert review panel so that it will know whether there is a better way in which to provide the program.

We have put forward a program where we think we have met a number of the stability and predictability concerns raised by the premiers and finance ministers with respect to them trying to set their budgets. They now know that they have a fixed base and that their base will increase on a regular annual basis.

There is no doubt in my mind that the commitment of the government, in partnership with the provinces and territories, is to continue to work toward improving the standard of living of Canadians from coast to coast to coast.

As I mentioned earlier, the legislation I outlined today reflects the most significant investment ever in the equalization and territorial financing framework. The legislation is vital to ensuring that Canadians, no matter where they live, can count on comparable levels of health care and other essential services.

I encourage hon. members to support the legislation as it was negotiated by the Prime Minister and premiers. I hope all members of the House will find themselves supporting the legislation and the work of the Prime Minister and the premiers.

[Paul Forseth, Conservative, New Westminster—Coquitlam, BC]

Mr. Speaker, the member has just announced another study. Well here we go again. He then talked about the parameters. The parameters of that study are already well-known.

I want him to say several things to the House. He knows what the issue is relating to misleading the House and he has to choose his words carefully. Could he state in the House that he knows for sure that the technical decisions are based on a formula and that the formula will prevail and not politics in the end?

Second, will it be separate from natural resource revenue?

Third, will the formula, the data inputs and the process and product, as well as some analysis, be published on a website and be totally transparent so that a first year university student could go to that site and really understand what is happening? This is because in times past it has been almost incomprehensible?

Transparency has been claimed by the government and it has been repeated over and over again. I would ask the member, in the spirit of that theme, to respond to these three points. Does he know for sure about technical formula over politics in the end? Will it be separate from natural resource revenue, the big brouhaha in Newfoundland? Will it be fully published in a comprehensible form so that a first year university student could understand what is going on?

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

Mr. Speaker, he really has three questions. The first is on the formula and whether it will be subject to politics. I would like to say that nothing is subject to politics around here, but we all know that is not true. I would draw the hon. member's attention to proposed section 4.1 of the bill, which pretty well circumscribes the ability of any level of government to play politics, so to speak, with this amount of money. On fiscal equalization payments, paragraph 4.1(1)(a) states:

--for the fiscal year beginning on April 1, 2005, shall equal $10.9 billion;

That does not say “may be $10.9 billion” or “if we feel like it, it is $10.9 billion”. It is $10.9 billion.

The next paragraph states:

--for the fiscal year beginning on April 1, 2006, shall equal the product attained by multiplying $10.9 billion by 1.035;

For the hon. member and myself, let me say that this means a 3.5% increase. Again, I do not see where we could play politics with that amount of money.

Just to bring further clarity and further certainty to this, proposed subsection 2 actually sets out the specific amounts of money:

The fiscal equalization payment referred to in paragraph (1)(a) shall be allocated to the provinces as follows:

(a) to Quebec, $4,798,070,000;

Plus another $70 million is thrown in there. These are very large numbers and I am not used to reading numbers this size. For Nova Scotia, there $1,343,527,000, for New Brunswick, $1,347,993,000, and this subsection goes on and lists each of the equalization receiving provinces. For the hon. member opposite, who is from British Columbia, that number is $589,698,000.

Thus, on his first question, I cannot see it, even if there were a desire to play politics with the amount of money. The floor is set, the ceiling is set, and we will take advice as to the distribution among the equalization receiving provinces.

As to the natural resources issue, as I said at the beginning of my speech and should have said at the end of the speech, that equalization has nothing to do with the current discussions with respect to the natural resource sector. That will be the subject of another debate.

As to our website transparency, et cetera, I am not familiar with the Department of Finance website, but I think it is fairly good from what I am told. The bill is presumably posted on the website and these calculations presumably exist on the website, so it would be fairly transparent and readily calculable for a province or an individual Canadian to calculate how much money would be received by a province in any given year.

I hope I have answered the hon. member's questions.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, I direct a question specifically in relation to Saskatchewan. For a good number of years Saskatchewan has lost over $1.08 in aid to equalization payments for every $1 it got due to the sale of non-renewable resources. Will the formula ensure that Saskatchewan's non-renewable resources like oil and gas will not be taken into account in considering or determining the amount of equalization payments that may be made into the future?

I realize that Saskatchewan has the status of a have not province, but over the next number of years it may not. I know that in the past it has lost millions and millions of dollars with respect to the formula that then existed. I want to know if this formula has taken care of that problem.

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

Mr. Speaker, the hon. member asks a specific and technical question and I want to caveat myself a little on the answer. The general parameters of the bill do not address the specific question that he has raised.

However, within the concerns at the back of the briefing notes, which I hope he has received, there is a special recognition of the adjustments that apply to Saskatchewan. I look at page 36 of the general briefing notes that have been received by all members. There is an individual protection of $582 million that Saskatchewan is to receive in the fiscal year 2004-05. That is, I believe, designed to address the very concern the hon. member raises.

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

Mr. Speaker, I was listening to my colleague, the Parliamentary Secretary to the Minister of Finance, talk about the agreement on equalization as though it were the deal of the century. According to him, it would create a harmonious agreement and help stop the unending squabbling between the provinces and the federal government.

I want to ask him the following question. Considering that the federal government has imposed an equalization formula, imposed its owned conditions and forced reluctant provinces to toe the line, does he call it a harmonious agreement between the federal government and the provinces?

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

First of all, Mr. Speaker, equalization moneys are moneys that are obligated by the Government of Canada pursuant to the Constitution of Canada. It is, however, the obligation of the Government of Canada to provide equalization moneys to the sub-national governments. In previous instances this has been subject to a fair bit of acrimonious negotiations; some might say imposed, some might say forced.

However, with the passage of this bill it seems to me that a lot of the points of conflict that have existed heretofore prior to the bill in fact would be mitigated, because we will now have a floor. We will now have a floor and a ceiling. We will now have a floor, a ceiling and a formula to determine the difference between the two. We will now have a situation that provides predictable and stable funding.

I do not know how negotiations with the premiers and the Prime Minister over the course of several days, which of course were led up to by a lot of intense negotiations by officials, are in any way forced or imposed on any level of government. These are the moneys that are available pursuant to equalization and they are negotiated amounts. They are now fixed, they are now predictable and they are now stable.

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

Mr. Speaker, as this House knows, the Conservative Party supports the equalization program as an important and necessary means of building our nation. It is responsible for creating, or at least attempting to create, the conditions for relatively equal social services for Canadians regardless of where they live.

We also support the intent of the equalization program to, in conjunction with other federal fiscal structures, help provinces create the conditions that can lead to stronger local and provincial economies.

Over time, the formula calculating the amount of equalization paid to each province has changed. For example, as I told the House earlier this month, when Alberta was a have not province from 1957 to 1965, the oil and gas revenues the province earned were not clawed back by Ottawa under the equalization program. This allowed Alberta to build its oil and gas industry by using the profits to reinvest in the industry.

As we all know, that arrangement does not exist today for provinces like Newfoundland and Labrador, Nova Scotia and Saskatchewan, nor does it exist for the territories. I will talk quite a bit about the treatment of non-renewable natural resource revenues within the equalization formula today, because I think it is an issue that must be examined as we move forward with the renewal of the program.

Over the past several years, Conservatives have argued in favour of moving from the five province standard to a 10 province standard and for the removal of non-renewable natural resource revenues from the formula. We also believe that it is essential to provide for a phase-in period if any such changes are made to the existing formula to ensure that no province is hurt in the transition period.

We are disappointed that the government is not dealing with these issues head-on when there is such a wide consensus among territories and provinces on the changes necessary, but we support the review process that is under way and look forward to hearing from the panel on these very important issues.

The bill makes basic changes to the act, which were necessary to ensure certainty within the equalization program and to allocate the necessary payments over the next year. For that reason, we support it.

The bill sets a minimum funding floor of $10 billion for equalization and $1.9 billion for territorial formula financing for 2004-05. This is something that provinces and territories have called for as a means of protecting provinces against overall and individual declines in payments in 2004-05.

It also ensures that no province or territory receives less than the levels forecasted in the 2004 budget, thereby setting $10.9 billion for equalization and a total level of $2 billion for territorial formula financing in 2005-06.

In the middle of all this, a 3.5% per year escalator has been created for equalization and territorial formula financing, going through until 2009-10.

Finally, the bill offers a breakdown of provincial equalization allocation for 2005-06 and a breakdown of territorial financing allocation for 2005-06.

Very clearly, the bill recognizes, finally, what the provinces, territories and the Conservative Party have called for, that is, greater certainty for payments. However, there are many outstanding issues that need to be addressed and are not reflected in the bill.

The bill does not specify how the equalization in territorial formula financing levels will be allocated among the provinces and territories from 2006-07 forward. The federal government has launched a review by an independent panel of experts, on which the provinces and territories have been provided with two seats. However, we remain concerned that the federal government has retained final decision making authority as to how future levels should be allocated.

Most important, the bill does not remotely address the long-outstanding concerns the Conservative Party and the provinces and territories have had with respect to the inclusion of non-renewable resource revenue in the current equalization formula. Under the current formula, provinces that benefit from non-renewable resource revenues are subject to a clawback that results in lower equalization payments.

The bill also does not deal with non-renewable resource revenue-sharing outside of equalization, which means that the bill does nothing to solve the Prime Minister's ongoing broken promise to Newfoundland and Labrador and Nova Scotia.

Equally as important, the bill does not deal with non-renewable resource revenue sharing outside the territorial financing formula. The territorial financing formula is an important and necessary grant mechanism to address the present needs of the territories. The Conservative Party supports it, but we also believe it is imperative that the federal government take steps to develop a resource revenue sharing agreement with the territories to facilitate their desire for control over their own economy and movement toward economic self-sufficiency.

Non-renewable natural resources and how they are dealt with under the current equalization formula has become a major concern, an economic inhibitor for provinces and territories that wish to have full access to these revenues to develop their resource sectors further and to have control over their economic future. Equalization can and should be restructured to deal with non-renewable natural resources like oil and gas in Newfoundland and Labrador, Nova Scotia, Saskatchewan and the territories.

Newfoundland and Labrador presents a timely and interesting case study for this policy. We and many Canadians watched the equalization meeting in October very closely, and were disappointed at the Prime Minister's refusal to honour the promise he made during the election to both the Premier of Newfoundland and Labrador and the Premier of Nova Scotia. The Prime Minister attempted to use the equalization program as leverage to water down the commitment he made to these premiers during the election. The premier of Newfoundland and Labrador was not going to let that happen, and he rightly walked away from the equalization talks.

As I have told the House before, our party supports Newfoundland and Labrador's position with regard to its offshore resources. We will continue to advocate for the Prime Minister to keep his word to Newfoundland and Labrador. Put simply, the Conservative Party supports the efforts of Newfoundland and Labrador and Nova Scotia to receive 100% of their offshore oil revenues outside of the current equalization formula, with no cap and no restrictions.

I have raised this issue because, again, the manner in which the formula accounts for non-renewable natural resource revenues is one of the main points of contention regarding equalization in Canada. While this party believes that it is ultimately good that the government bring more certainty regarding aggregate amounts to the equalization program, we remain clear that we support the demands of the provinces and territories to see changes in the way that non-renewable resource revenues are accounted for within the formula.

I have also raised this because it highlights the neglect of the government on this issue. This is an issue that has been ongoing and needs to be dealt with immediately. Because the government has not addressed this issue, it has become a crisis in places like Newfoundland and Labrador. Other provinces and territories are watching closely to see what kind of deal the Atlantic provinces may receive.

If Newfoundland and Labrador is successful in achieving a deal, then other provinces and territories will ask to receive a similar deal, and for good reason. They are experiencing similar economic clawback due to their resource sector revenues. Of course, changes to the formula of this nature would mean less money in the federal coffers and more money in provinces. Therefore, provinces would have a better chance of providing social services and creating conditions for economic development on their own without the interference of the federal government.

This is a political non-starter for the government, which has for the past 11 years used the fiscal imbalance and the relative poverty of provinces and territories compared to the federal government to push its own agenda in areas of provincial and territorial jurisdiction. If the government were to amend the formula to remove revenues and royalties from non-renewable natural resources, the provinces in question would have the opportunity to use those revenues to further build their industry and infrastructure. The province would take income from taxes paid by companies and employees, which would be accounted for in the equalization program.

The federal government would still benefit from the personal income taxes that workers pay to provinces and to the government. The federal government would also benefit from corporate income taxes paid to the provinces and the government. Under the sort of change about which I am talking, it is not just the local province that benefits; all of Canada benefits.

When we consider economic development, then we start looking down the road, we can open the door to working with provinces to develop economic potential in those provinces and can realize that everyone benefits from a strong and economically vibrant and diverse Canada. By looking at provinces as places of potential, we have the opportunity to see what we can do through economic development to increase quality of life, social services and economic opportunity for young people in every region of our country and help provinces and territories realize their goal of becoming economically self-sufficient.

When we talk about equalization, equity remains the main perspective, but I would argue it is only part of the picture. Talking about equity, especially within the context of the equalization program, has taken on a form of a static conversation. Conversants assume that provinces will remain relatively the same in relation to one another. Ontario and Alberta are the have provinces, Saskatchewan and B.C. flirt between have and have not status and Manitoba, Quebec, and the Maritimes are the less well off provinces.

Taking this arrangement as a perennial constant, those who talk only from an equalizing perspective need to assume that this ranking of provinces in these groups will remain constant, which on the flip side assumes no changes in economic performance. We know this to be untrue. We know that every province works toward developing its economy and we know that all provinces and territories are making successful gains in economic diversification and the raising of quality of life within provinces.

This being the case, equalization program reforms need to be done with an eye toward economic development as a means of raising the quality of life of all Canadians. After all, the end goal of every province is twofold: first, to be able to provide increased and efficient services so that citizens have a better quality of life; and, second, to do it themselves, that is to become so successful that the province in question will not need a federal equalization payment.

It is within the context of an equalization formula, which is cognizant of economic development, that I raise concerns over the place of non-renewable natural resource revenues in any reformed formula. We are not there yet and it will take a Conservative government to get us there.

We also need to have a better sense of how non-renewable resources are accounted for with regard to Canada's territories as well. Bill C-24 does not address the outstanding concern that the Conservative Party and territories have in the need to develop resource revenue sharing agreements between the territories and the federal government. The territorial formula financing is an important and necessary grant mechanism to address the present needs of the territories.

We support the territorial formula financing, but also believe it is imperative that the federal government take steps to develop a resource revenue sharing agreement with the territories to facilitate the desire for control over their own economy and move to economic independence. Yukon has a devolution agreement with the federal government which would make it more independent and give the territory greater freedom in the management of its own affairs. The Northwest Territories is working toward a devolution agreement, and Nunavut is doing what it can to bring the federal government to the table with regard to a devolution agreement as well.

Part and parcel of devolution is greater control over natural resources found on territorial lands. Agreements such as these are important for practical reasons. If we talk to representatives from northern Canada, they will say that most of the money that goes north is actually spent in the south. For example, consider health care. As of now, if a major surgery is required, the northern government will pay for the patient to fly south, receive treatment, stay overnight, perhaps in a hotel, purchase food and then fly back. While a northern government foots the bill, it is the provincial economy in the south that benefits.

A different side of the same problem exists when it comes to resource extraction. Companies are often based out of a centre in the south. Workers often come from the south. These companies pay taxes in the south, as do the workers who do not claim official residence in the north. Likely, many of the workers are supporting families that live in cities like Edmonton, Ottawa or Quebec City, among others. They fly north, work as long as their rotation is in and likely fly home to be with their families or send cheques home regularly. The money is not spent in the north. The taxes are not paid in the north.

It is thus very important for northerners to have a greater say over their resource sector so the government can retain more money and so more year round northerners are working in the sector, thereby giving the government a stronger tax base. With that tax base, northern governments could attack their key priorities: economic development, stronger northern health care, a better education system and affordable housing. This is where they need to go and to get there they need certain adequate territorial financing, as well as an agreement regarding natural resource revenue sharing.

It is disconcerting for me when the Prime Minister goes overseas and muses about territories becoming provinces, when he is not engaging in the proper steps necessary to help territories with their most pressing concerns. That is to secure a resource sharing agreement to create the conditions they need so they can build a strong economy which will create more jobs in the north for both indigenous northerners and southerners and lead to greater self-reliance for northern governments.

One of the other concerns I have with the bill is around the new equalization floor. The bill introduces a new equalization floor which provides certainty for have not provinces that are attempting to create budgets and would like to know in advance roughly the amount of money they will receive from the equalization program. In terms of creating certainty, this is important. A floor protecting have not provinces from drastic changes in the economy already exist. However, while introducing a new equalization floor that better shields have not provinces from potential downturns in the economy, it provides less protection for have provinces and the federal government.

For example, situations may arise where the minimum equalization payments agreed by the federal government are higher than the payments dictated by the formula. In this instance, have not provinces may actually be equalized to a greater fiscal capacity than the national average. This belies the equality that stems from the equalization formula. Further, the equalization floor created in the agreement is based upon the largest federal payout in the past decade and then is escalated.

Looking at this from purely an economic perspective, we know that Ontario accounts for 50% of the economic activity measured by the equalization formula and a significant portion of federal revenues. As the province with the most exposure to the U.S. economy, Ontario faces economic risks created by increased U.S. deficits, risks created by the amount of U.S. debt held by China and Japan and economic shocks created by global uncertainty. These risk factors could conceivably add up to slow Ontario's economic growth to a point where the equalization formula would dictate that payments should be lower than the floor agreed to by the federal government. At the same time economic trouble in the Ontario economy would have a drastic impact on federal revenues.

In this scenario the federal government would have to make up the difference between the formula payment and the floor payment out of shrinking general revenue. By building in such a generous floor, the federal government effectively detaches have not provinces from potentially adverse economic realities.

Placing a fiscally imprudent floor in equalization payments, coupled with other significant fiscal commitments in health care, raises the risks associated with economic downturns. Certainly, these commitments limit the ability of the federal government to respond to a fiscal slowdown with measures such as tax cuts or targeted investments. Governments cannot rely on blind economic optimism when creating fiscal policy, especially in the face of current global volatility.

I want to return to another aspect of our policy, which is that no provinces should receive less money simply because the formula has changed. This is an important point. Provinces that need equalization need it to provide important social services to its citizens. A simple change in a formula does not change the overall economic picture of a province, but it could change the amount a province receives.

The shock of receiving less money is usually followed by the result of providing less services. Therefore, when the government makes these changes, it ought to be careful that provinces are treated fairly and do not end up with the short end of the stick. This side of the House will be watching very carefully to ensure that this problem does not exist and if it does, we will work to correct it.

However, we know the numbers involved are more certain and we look forward to the ideas that will be put on the table in the course of the review process. It is our hope that the end results of these ideas will ensure an equalization system that both fairly and adequately provides funds to provinces and at the same time does not hinder economic development as the current formula does.

We will have to wait for the panel of experts to present its recommendations before we say conclusively whether we fully support the process which the bill sets into motion. However, we agree there needs to be a step toward a system that is predictable. At least in perception, the bill is a good beginning.

As I noted earlier, we would have liked to have seen greater provincial involvement. Given the importance of the equalization program for the efficient functioning of provincial governments and the certainty of provincial economies, their voice would have been welcomed. I am sure they would have welcomed greater opportunities to express their views.

While the government did bow to pressure from the provinces for greater provincial involvement, in my mind it was not enough. If there is a chance that we could see greater involvement from provincial governments, we believe that would be appropriate and we would support such a move.

One thing missing in the reforms, which were implemented in the 2004 budget, is a reform that would have allowed provinces that which were overpaid a longer period to pay back their overpayment. These provinces, which are struggling to provide social services and infrastructure needs to their citizens, should not be forced to redesign their entire budget because the federal government has made an accounting error.

As for predictability, we also would like to see a moving three year average used to calculate payments. This would help to smooth out situations where provinces are over or underpaid and at the same time it would provide greater predictability to the provinces.

Finally, we are glad to see the government is now committed to a five year renewal schedule. Remaining committed to the five year renewal, again provides provinces with greater predictability and certainty and also gives the federal government the opportunity to utilize medium term economic forecasts when considering changes.

By moving to a 10 year plan or commitment, we see greater risk within the program's payment schedule and we are also concerned that the government's flexibility in administering the program is negatively affective.

In the end, our party will support the bill because it is the beginning of much needed changes to the equalization formula. It is an admission by the Liberal government regarding the problems that have plagued equalization in the past and it is a step in the right direction toward making the equalization program a better program. In this light, we anxiously await the report of the expert panel, and hope to see our recommended changes included.

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

Madam Speaker, I thank the hon. member for her support for the legislation. With the exception of a few pointed jabs at this side of the House, I thought her speech was quite good.

I want to direct her attention to two or three points, the first point with respect to the expert panel. She raised an issue with respect to natural resources. If she directs her attention to page 30 of the briefing book, she will see that the expert panel will be asked to examine and provide advice to the Government of Canada on the allocation among the provinces of the annual equalization allotment, et cetera, and the treatment of various provincial and local revenue sources, such as natural resources, property taxes and user fees. Each province has a different gripe about what should be in the formula and how the formula should be weighted.

I suggest that the terms of reference deal with the very issue that she raised as to whether natural resources will in fact be counted and how they would be counted. I look forward to her comment on this.

The second issue she raised dealt with the possibility of no agreement. I direct her attention to subclause 4.1(3) which states:

3) The fiscal equalization payments referred to in paragraphs (1)(b) and (c) shall be allocated to each province in the same proportion as the fiscal equalization payment referred to in paragraph (1)(a) is allocated under subsection (2).

In other words, it is kind of a stop loss provision. If the expert panel does not report for whatever reason, or if Parliament dissolves for whatever reason, the provinces will know that the next fiscal year, following the fiscal year upcoming, they will have a steady stream of money. Does she think that is an appropriate way to go in anticipation that things occasionally go off the rails?

The third thing she mentioned had to do with the Ontario economy. I agree with her that the Government of Canada has bought down the risk for the provinces. Ontario is the greatest source of revenue for the federal government and if it were to tank, or if the economy were to tank, then the equalization receiving provinces would be cushioned from that economic downturn. It has been a significant concession on the part of the federal government to buy a cushion so that the equalization receiving provinces are in some measure protected.

I would be interested in her comments on those three points, but generally speaking I think her speech was quite supportive.

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

Madam Speaker, with regard to the expert panel, as I suggested in my speech, the Conservative Party is supportive of the striking of this panel and the review process underway to look at some of these really important issues. However, specifically on the issue of non-renewable resource revenues within the equalization formula, I agree with this and am glad to see that the expert panel will be addressing it.

One of the things the hon. member across the way might like to acknowledge as well is the wide consensus among the provinces and territories for quite some time that non-renewable resource revenues are a major issue in the current formula. This has been a long outstanding issue that not only the Conservative Party has raised but also the provinces and territories.

I would much rather have seen the finance minister and the government deal with these issues head on as opposed to advocating them to an expert panel that, as the hon. member rightly pointed out, may not actually come back with an answer in the next year. The provinces and territories want an answer on this immediately.

With regard to the member's second question with regard to certainty, I understand that reference has been made in the bill about dealing with this issue if the House perhaps dissolves. This does not provide the certainty for which the territories and the provinces have been asking for at least the last five years in dealing with this issue specifically.

As I mentioned in my speech, we have what I would consider to be a crisis situation in Newfoundland and Labrador, and many of the other provinces are just as worried about this situation. They want to have some control over their own economies, particularly on this issue.

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

Madam Speaker, earlier, I was listening to the Liberal member, the parliamentary secretary to the Minister of Finance, who talked about an almost historic agreement on equalization, about rediscovered harmony between the provinces and the federal government, and about how this would help avoid the numerous disputes that arise every year between the provinces, the Quebec government and the federal government as regards equalization payments and the formula itself.

It takes some nerve to present that agreement as a harmonious accord between the provinces and the federal government. Indeed, the Liberal member forgot to mention that this is not an harmonious agreement. It is an agreement that was shoved down the throats of the provinces and Quebec. The federal government told the Quebec government “Now that we have starved your province for the past ten years or so, have made cuts to the Canada social transfer for health, education and income support, have dipped into the employment insurance fund, have questioned consensus achieved in Quebec on many occasions on social and economic policies that could enable the province to move forward, improve the plight of the poor and create an environment that fosters investments and economic growth, you will take what we will give you. You will shut up. It is a take it or leave it deal”.

That is exactly what happened this past October 26. That was when the first meeting of the premiers on the subject of health was held here in Ottawa. The federal government's offer on equalization was tabled there for the first time and rejected unanimously by all provinces and most particularly by the Government of Quebec. A few weeks later, the government came back with exactly the same lousy agreement. This time they forced the Government of Quebec to accept, telling it “take it or leave it”. The sizable figures may seem all well and good when presented as one overall sum, but they do not match the total that would have been forthcoming to the Government of Quebec and the provinces of Canada if the equalization formula had been thoroughly reworked.

Making in-depth changes to this formula does not require a whole series of conferences to go over it with a fine toothed comb. We have been introducing the same arguments in favour of improvements for ten years now, such as making calculations based on all ten provinces and not five as at present. Why, in a system that is representative of the fiscal potential of the provinces, would only five of them be used to calculate an average, with all provinces under that average entitled to equalization payments and those above not entitled? According to the basic rules of mathematics, if comparisons are to be made, an average is calculated from the whole set.

It would have been easy for property taxes, too. It would have been very easy. All we have been asking for all these years is that Quebec's true property wealth be taken into account, and not estimates by economists and experts, using what they call proxies, which never succeed in adequately reflecting the property tax potential of Quebec, or the rest of Canada, either. These changes could have been made with just a little goodwill. But no, just as in all federal-provincial negotiations, the government is arrogant and imposes its will. Imagine that Ottawa believes it knows the provinces' needs better than the provinces themselves. Ottawa believes it knows health, education and income support better than the provinces, who were clearly given those powers in the Constitution.

Moreover, the Auditor General has just given us a good example of the federal government's good management of veterans' and first nations' hospitals. It is a fiasco. It is a catastrophe. If responsibility for the health and education systems were given to the federal government, there would be a disastrous situation in all provinces; but Ottawa knows best, as they say. And they dare to call this a “cooperative agreement”. People can only be laughed at for so long: there is a limit.

There is also a big problem with this agreement, and it is all the individual agreements. It has been arranged so that Saskatchewan and British Columbia come out ahead after this conference. Apparently, in order to avoid the shock of disparities between the equalization payments that are now planned and those foreseen in the 2004 budget, there would be a kind of formula, a special agreement with the provinces. Unfortunately, the base line is the 2004 budget.

Saskatchewan received that bad news that, for the period from 2001 to 2004, it was overpaid $590 million. To cushion the shock, in a side deal, on October 26, it was forecast that Saskatchewan might receive equalization. But in early October, it was told that it might lose.

Given that, in the last budget, Saskatchewan was told it might receive equalization, to cushion the shock, the federal government decided to let it keep the $590 million it should normally have had to pay back.

Unfortunately, in the case of Quebec, the bad news came before budget 2004. Quebec was told it owed $1.2 billion, if I remember correctly. Quebec will have to repay, because the federal government forecast that, in 2004-05, it would be paying a tad more than previously agreed to.

Quebec is forced to pay back this $1.2 billion. But just months later, to cushion the shock caused by the budget and the latest review, in early October—and because the budget is the basis for assessing transitional payments—Saskatchewan was told, “While we originally said, in budget 2004, that you could expect a fair amount in equalization, a review in early October showed that you were overpaid $590 million by the federal government, but because we do not want to cause a shock, you can keep the money”. This is a double standard.

Saskatchewan will not have to pay a $590 million debt back to the federal government. It will be paid the additional amount of $590 million for 2004-05, as planned. But it does not matter if Quebec's $1.2 billion overpayment causes an economic shock. It will have to pay it back over the next 10 years.

We know that equalization is established on a per capita basis. Given that the population of Saskatchewan is 1 million, this means that the side deal made with Saskatchewan, which Quebec cannot take advantage of, is providing on average $590 per person in Saskatchewan.

If we apply this $590 per person to the seven million Quebeckers, it follows that this adjustment could have been worth about $4.5 billion to Quebec. This is not peanuts. This amount is obtained by taking into consideration the per capita amount given to Saskatchewan, and the fact that we will continue to pay $1.2 billion over the next 10 years to repay last year's overpayments.

It is always sad to see that, whenever a federal-provincial conference ends, there are always people in Quebec who are entirely or partly unsatisfied. This time, the federal government starved the Quebec government so much over the past seven years by cutting payments to it, that the latter has no choice but to accept what is on the table. The Quebec government is very upset, but it will accept the proposed amounts.

It is always the same thing. There is not one federal-provincial conference on specific agreements at the end of which Quebec is not frustrated. Every consensus reached in Quebec is ignored whenever we ask the federal government to participate and to do so in a fair and equitable fashion.

Take the example of day care. Everyone in Canada and here in this Parliament agrees that the Quebec model is the example to follow. People like Quebec and they think it has a good program. It is well structured. day care spaces at $5 and then at $7 per day have been in place for five years in Quebec.

Because parents pay $5 and $7 per day, this government pocketed the federal tax credits or tax deductions that these parents used to get in the past, when they were paying $30 or $35 per day to put their children in a day care. No agreement could be reached, even though the Quebec day care program was presented as a great example. It is a progressive measure that is mentioned everywhere and that gets rave reviews here. It is nice to get praised and to be congratulated for our good initiatives, but in the meantime the federal government is not doing its share.

Last year alone, Quebec parents lost $250 million in federal tax deductions, precisely because there is in Quebec a progressive system that is the envy of everyone, a system that the rest of Canada wants to copy down to the fine details.

In the past five years Quebec families have saved the federal government $1 billion in tax credits and tax deductions, because it has not had to pay them out.

The same goes for parental leave. We have been pleading for it for years, while there is consensus in Quebec. The Employment Insurance Act allows for the transfer of roughly $600 million or $700 million to fund parental leave programs. The Government of Quebec parental leave policy is much more generous and consensual than the federal government policy, which can be extremely complicated. When a person becomes a parent they get a two-week penalty under the employment insurance system. You are so proud to be a parent and the federal government penalizes you.

If Quebec were sovereign we would have had a parental leave system a long time ago. We would have used our tax resources—the more than $40 billion in tax we have been paying to Ottawa all these years—a long time ago for our child care program, to increase the number of spaces in child care, rather than come here to beg for our share of the taxes we pay to the federal government to solidify the consensus in Quebec. It makes no sense.

It is the same thing in the agriculture sector. Do you think that if Quebec were sovereign, and $40 billion were paid to Quebec City in taxes, that we would let our farmers suffer as they are right now? Do they think we would not have come up with a way to help them? They are receiving roughly 20% of what they were getting for cull. They are also victims of U.S. subsidies on grain crops. When it comes to mad cow the federal government says it has tried and that it is still trying, but nothing works. We would have taken measures a long time ago to help farmers in Quebec.

Over the weekend, I read that Air Canada Jazz is moving out of Quebec City. Everybody was surprised and wondering why. Do you think that a sovereign Quebec would have let Air Canada Jazz leave? No, because the national capital of a sovereign Quebec would have been Quebec City. And unlike the federal government, a sovereign Quebec would not see Quebec City, its national capital, as just any other region of the country. Therefore, we would have ensured that the airport facilities in Quebec City were worthy of a national capital. I think Quebeckers are realizing that it does not make any sense for a people with such national pride to see the federal government use our tax money to stick it to us and frustrate us every time we negotiate agreements concerning the allocation of our own tax money.

To my fellow countrymen, I say that we have to realize it no longer makes any sense to live in such a system. Even at the international level, we are considered a nation and referred to as the Quebec state. We have a national assembly. We are being robbed by agreements like the one on equalization and the long-delayed parental leave accord. We have a highly praised day care system, but for the past five years, as Quebeckers, we have been working on a fund to develop a day care network outside Quebec.

According to the federal government, the first year of operation of this Canada-wide day care network would cost $1 billion. And guess what, these last five years, it has saved money from the tax credits and tax deductions it would give parents in Quebec, which is the money we, in Quebec, are investing in day care. What this means is that Quebeckers will be footing the $1 billion bill for the first year of operation of this Canadian child care network in Ontario, Prince Edward Island, New Brunswick, Saskatchewan, Alberta, etc.

So, we are being used as an example, but the federal government never offers any funding or truly harmonious arrangement. It always tries to impose things. It always makes us fight right to the bitter end to get the least cent, while we hand over $40 billion to the federal government in taxes every year without protest.

With the war on poverty, it is the same thing. How many years have we been demanding a real social housing policy? Despite the fact that the Government of Quebec has been struggling with public finances, falling behind, and will have problems in coming years because the federal government has cut its funding, the fact is that the Government of Quebec is the one investing heavily in social housing.

If we had the share that we send to Ottawa for it to waste and spend on their cronies—because with the sponsorship program there was real, systematic corruption—if we had all these resources, we would be able to build more social housing units. However, we must go begging to the federal government and buy into the policy of subjugation, because the federal government imposes its point of view and because it is not the federal government's priority. The same is true even if it is a priority for Quebec, even though parental leave is one of Quebec's priorities and responsibilities. There is an incredible consensus in everything to do with the work-family balance as it is called. Even in agriculture—we would give aid tomorrow morning if we could, in Quebec—we must always wait. Even when we ask the Minister of Agriculture and Agri-Food to set a floor price everywhere for cull cattle—it costs him nothing—he hesitates, he consults, he does not know if Alberta will agree, does not know if it is a good plan for all of Canada.

As for the mad cow in Alberta, the source of the problem, at one point the federal Minister of Agriculture and Agri-food was asked whether there was not some way to divide the country into specific regions as they do for trade disputes, so that Quebec, with its tracking and inspection systems, which are superior to those in all the rest of North America, might be considered a region, and the western and maritime provinces as two other regions. But no, the Minister of Agriculture and Agri-Food stood up and said “No, from east to west, we are all Canadians”. So the mad cow became the symbol of Canadian unity. It makes no sense to do things that way, particularly when we know that they are doing this with our money.

If Quebec acquires its status as a sovereign state, that will put an end to the squabbling, and to the bogus negotiations that end with Ottawa imposing its opinions on us regardless of the priorities and consensus we have defined for ourselves.

How long has fiscal imbalance been a topic? The Séguin report dates back three or three and a half years, if I remember correctly. Everything is totally clear. There is too much money in Ottawa for the federal government's mandate as set out in the Constitution and for the other mandates it has given itself in recent decades. There is, on the other hand, not enough in Quebec and in the provinces to fund such basic things as health and education, income support, highway construction, regional development and so on.

As far as fiscal imbalance is concerned, even if the government has agreed that there may be certain fiscal pressures, this is scarcely remedied at all by the equalization agreement. If we go by the revised calculations the Séguin Commission came up with three years ago, there would appear to still be a shortfall of close to $2.4 billion annually in the payments to Quebec that would be required to remedy the imbalance. This is even taking the agreement on health and equalization payments into consideration, the figure is $2.4 billion. The Government of Quebec may make it through this year all right, but next year there is nothing preventing it from ending up with a deficit.

There are huge surpluses at the federal level, and apparently in some provinces as well. The federal finance minister himself commissioned a study from the Conference Board a few months ago, to review the federal and provincial governments' financial situation for the next 10 years. He was surprised to learn that, over the next 10 years, a surplus of $160 billion would pile up in the federal government's coffers, while the provinces would run deficits of more than $60 billion. That makes no sense for the few, like the Minister of Finance and the Prime Minister, who believe in federalism. That is not how a federal system works, with some provinces lagging behind and running deficits, while the federal government has loads of money and invests in every area of provincial jurisdiction, not even bothering to respect the Constitution anymore.

That having been said, we have to say that this is not just a bad agreement, it is a very bad one. But to Quebec and the provinces in the rest of Canada, it is worth a few million dollars they desperately need because the federal government has starved them. It has cut transfers and forced the provinces into situations where the fiscal imbalance is creating an incredible number of victims. We saw what happened in Ontario this year. The same could happen in Quebec within a few years. Only Alberta, really, can manage pretty well thanks to its petroleum.

But where the others are concerned, we absolutely have to use this example as the basis for a serious debate on fiscal imbalance, so that it can be resolved once and for all. I hope that the subcommittee to be struck at the Standing Committee on Finance to address this issue of fiscal imbalance will produce a report that will effectively eliminate this imbalance for good and ensure that the members opposite stop saying that there is a harmonious agreement, when in fact agreements that the provinces do not want are forced down their throats.

[Robert Thibault, Liberal, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I was listening to the hon. member and the issue of sovereignty kept coming up. According to him, sovereignty would make everything alright. Mad cows would be healthy, smiling and walking around. Everything would be alright and there would be lots of money. That is fine and dandy, but we have to be realistic.

Money paid in taxes by Quebeckers and all other Canadians is used for services for Quebeckers and all other Canadians. This includes the surpluses that have been used to pay the debt for the services that were provided to them in years past when we ran deficits.

Now we are looking after the economy. We have surpluses. We can repay those old debts. In other words, we can provide even more services to Canadians from all the provinces, because we are no longer making payments on debts to other countries.

Let us take a look at these revenue sources. The hon. member talked about imbalance, about starving Quebec, but I remember that, not too long ago, some federal transfers to the Province of Quebec were put in reserve funds for future referendums, instead of being used to provide medical services and equipment.

If we look at the provinces' revenue sources, we can see that they, like the federal government, have the personal income tax. The provinces have the same capabilities as the federal government. They also have the revenues from corporate profits, sales taxes and employers' taxes. Only the provinces can tax resources: the federal government cannot do so. The provinces can impose a tax on games and alcohol, and they can collect property taxes. The federal government can only impose a tax on non-residents and for customs and excise purposes.

We can make a comparison between Canada and other jurisdictions to see who decides where the money is collected and spent. In Canada, the provinces, as is the case for the states in the United States, make absolutely all these decisions. Not long ago, Belgium was used as an example. There, only 8% of the decisions are made by the provinces, whereas in Germany it is only 0% or 2%, because everything is decided at the federal level.

The hon. member again talked about the imbalance, but let us not forget that the federal government must be able to make its payments, its equalization transfers, and it must also increase funds for health. We help the provinces a lot. We redistribute the money when we are able to do so. I think the system works very well.

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

Mr. Speaker, my colleague is very kind, and we thank him for all his generosity, but it is absolutely abhorrent to hear such a speech, particularly his comparisons of how things are in other places in the world, how we have a decent share of the decisions that have to be made. What we want is not a share, but 100% of decision-making, shaped by the needs of Quebeckers and not by the needs of Toronto and the rest of Canada. We will not have anything to do with that. That is what sovereignty is all about.

How is it that Canadian sovereignty is so important, yet when we raise the issue of Quebec sovereignty, we hear “You know, there are arrangements”. That is not true. Any time a consensus was reached in Quebec, it has been a real grind to obtain anything. Things never change.

We do not want just part of the decision; we want to make the entire decision. Take the example of our faculty of veterinary medicine. How is it that all four other faculties of veterinary medicine in Canada are fully accredited, and the only one with just partial accreditation is the one in Saint-Hyacinthe. The only francophone veterinary medicine faculty in North America is in Quebec, in Saint-Hyacinthe, and the Liberal government is still thinking about whether or not to give it the $25 million it needs to get full accreditation back.

And what about parental leave, how long has that been under discussion? How long have the discussions been going on with the federal government to find arrangements that are not hard to find, because the Employment Insurance Act allows us, for comparable programs such as parental leave, to transfer some hundreds of millions of dollars to Quebec to allow it to develop its own parental leave program?

Yet it was simple enough to invest $500 million into the Ontario automotive industry. They did not even have to make demands or to negotiate. In the full flush of the election campaign, the Ontario automotive industry gets given $500 million. We ask for similar treatment for the aerospace industry, concentrated mainly in Quebec. But no. We get peanuts. We get equalization payments.

All the structural spending goes to Ontario, while Quebec gets equalization payments. What a shameful thing to say. We have heard it from the lips of the Liberal MPs from Quebec, “You have equalization and Ontario has investments and jobs”. That is the current reality.

If Quebec had that $40 billion in taxes, we would use it to create more wealth, more wealth for Quebec and the regions of Quebec. I never said it would be the best country in the world. We are not making that claim. It is shameful, in fact, that successive prime ministers here, in Canada, could tell the world to its face that Canada was the best country in the world. That is an incredible diplomatic insult. We have never made such a claim.

Still, making 100% of the decisions on 100% of our matters of consensus; choosing what we think is good for us, ourselves; and not being dictated to by Ottawa about what would be good for all of Quebec—that is sovereignty. If it is important for Canada, it is important for Quebec, too.

I am convinced that, next time, Quebeckers will decide to leave this system, because we have things to build. It is not because we want to be acrimonious. We have things to build in Quebec. For some time now, we have been putting all the pieces of the puzzle together to build Quebec: regional Quebec, agricultural Quebec, industrial Quebec—