Debates of Nov. 29th, 2004

Federal-Provincial Fiscal Arrangements Act

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Madam Speaker, I happened to be reading through the report of the Auditor General of Canada. It seems we might classify this as a report card on the fiscal responsibility of the government. I made some notes: a billion to two billion dollars shot on the gun registry; a billion dollars wasted on the HRDC boondoggle; and goodness know how many hundreds of million of dollars on the sponsorship program. Mr. Justice Gomery will get to the root of that and we will get a total picture eventually, if we do not get any more interference from the member opposite.

There are two things in the report. The gap between aboriginal children on the reserves and the rest of the population has widened. The indicators of drug abuse under the drug plans are serious. The problem is triple what it was in 2000. The government is spending more money, but the results are poorer.

The thing that really takes the cake is $46 billion put into a fictional account, the EI fund. I say fictional because it does not exist. The government has taken that money from overtaxed Canadians, from workers and their employers and I do not know, but perhaps it has blown on the gun registry or the HRDC boondoggle or some of these other events. It is not there. It shows up in papers as an account, but there is no money in it. If the country heads into a recession or a slowdown where the unemployment figures go up, the government does not have a fund to take care of that.

The report card by the Auditor General is not a very good picture. In grade school I think most people would probably grade the programs I have just identified as an F minus.

The towns, cities and rural municipalities with which I deal are much more fiscally responsible with the dollars they manage than anyone in the government, by a mile and a half. I would even say the NDP government, which is an awful admission for me in the province of Saskatchewan, is even more fiscally responsible than that outfit over there.

I do not think any province or municipality has to take lectures from anyone on that side of the House about fiscal responsibility. There is a damning indictment of the government and its mismanagement of our finances from the Auditor General. What I find really amazing is this. Of all the government departments we have in Ottawa, what department did Treasury Board propose to reduce by 15%? The Auditor General's department.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Why would that be?

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I do not know. I wondered about that. Why would the government want to cut that one? When the judges independence was threatened, the government could not get there fast enough to pass legislation to set up a mechanism to ensure that judges would get increases. The judges got an 11%. increase. However, with the Auditor General, someone who needs independence just as much as the courts do, the government has no problem with a 15% reduction for the Auditor General.

I guess the government does not want to hear any more about EI funds, or HRDC boondoggles, or the gun registry or goodness knows what else is in this report. If it restricts the funding, the report will be shorter and we will not know what is going on in government. That is accountability? That is fiscal responsibility? Shame on that kind of comment. The government is not close to being fiscally accountable or responsible.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, the member has a right to raise those points but I would like the opportunity to respond.

The Auditor General provides a report card from time to time on certain selected issues, not the entire government at any point in time. I was referring to report cards at each level of government because we are all in the same boat. We are all trying to build a country. It is called nation building.

The member mentioned four or five items that he would like me to address. Let me start with the gun registry.

Why is it that over 90% of the applications to register guns were incomplete? Why is it that human beings had to be hired to process all of those applications, which should have been done by computers? It was a protest organized by gun lobbyists. Why was it that the website for the gun registry was tied up by the National Rifle Association of America?

There was a significant protest against the registration of guns. As a member of Parliament and a backbencher, I consulted with my constituents. Over 75% of the people in my community said that they wanted guns to be registered. It was like the riots in Los Angeles where they went ahead and trashed their own communities. What is the point of sabotaging the system? It cost a lot of money.

With regard to the so-called $1 billion boondoggle, the member knows that the Auditor General reported on that and, after everything was said and done, the net loss to the Government of Canada was less than $100,000, not $1 billion.

The Gomery commission is still going on. The member said that it has cost $100 billion. I do not know where the member got his numbers but the entire sponsorship program was $250 million. How can we have a $100 billion loss. Why does the member not get his facts straight?

Justice Gomery is looking at the issue. Some people have already been charged. It is a very serious matter. Justice Gomery has the tools to get to the bottom of this thing and get all of the information. He will report. We are committed to totally cooperating with the royal commission's findings. If there are any allegations of wrongdoing, charges will be laid. If moneys are to be recovered, they will be recovered. If changes are to be made in our programs, they will be made. That is responsible government. However we will let Justice Gomery come forward with his report when he is done doing the job that he should do.

With regard to aboriginals, I cannot argue with the member. If we have a problem in other areas of Canada, the problem in aboriginal communities is always ten times worse. Whether it be abuse, or substance abuse, or fetal alcohol syndrome or economic well-being, our aboriginal communities need our support and our help.

The EI fund was the last point the member raised. There is a notional surplus. The member knows that under the Mulroney government there was a $12 billion deficit in the notional EI fund. It was a real fund at the time though being funded by the Government of Canada. The Auditor General said that the government was running a deficit on the EI program and that was a real cost of running government. The Auditor General said that we now had to include and report that within the accounts of the Government of Canada. What a shame.

Since 1993, not only did we clear up the $42 billion deficit that we inherited from the Conservative government, but we brought in fiscal responsibility. There have been surpluses. This country has not been in a recession since the government was taken over by the Liberals in 1993. Based on the requirements of the Auditor General, in one of her reports that the member is waving, the moneys must be included there. EI premiums have been reduced year after year, right down from $3.20 every year for ten years. That again is responsible government.

[Ted Menzies, Conservative, Macleod, AB]

Madam Speaker, it is an honour to rise in the House today to talk about Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act. It speaks to one of the most fundamental elements of Canadian character. This legislation is a step toward the modernizing the way Canada operates as a nation and one that is typical of the Liberal government: overdue and incomplete.

For context, it is important to note that section 36 of the Constitution reads:

Parliament and the legislatures, together with the Government of Canada and the provincial governments, are committed to the following three things:

(a) promoting equal opportunities for the well-being of Canadians--

A Conservative priority if I ever heard one.

--(b) furthering economic development to reduce disparity in opportunities--

Again an idea I could get behind.

--and (c) providing essential public services of reasonable quality to all Canadians.

I believe all Canadians and parliamentarians should strive for these objectives.

Further, subsection 36(2) reads:

Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

There is no question that the Liberal government has not lived up to this commitment. Year after year the premiers have been forced to tell the Prime Minister that they are not receiving sufficient funds. We cannot make this country stronger if we accept that citizens in one region are less valued or eligible to receive services than another. Enactment of this bill will increase equalization payments by 42% from 2004-05 until 2009-10. This means $8.9 billion in 2004-05, increasing to $12.5 billion in 2009-10.

Again I go back to overdue and incomplete. While the increase in payments is needed, the Liberal government has had to set the total level of equalization on TFF for years to come. It is clear that the Liberals have not set the total levels of payments because their formula has been ineffective in setting the total levels of payments.

Also, the bill does not spell out how these payments will be divided among the provinces and territories in the future. Instead, 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 the federal government has retained decision making authority on how future levels should be allocated.

While the Conservative Party of Canada has repeatedly called for a panel, we must be conscious of Liberal manipulation in this endeavour. The panel could be used as another Liberal delay tactic at best, or simply a ploy to fool stakeholders into thinking that they had input into the process. This also gives the Liberal government one of its favourite escape hatches. When things go wrong, it will now have a fall guy to take the rap. “It is not our fault we got it wrong”, the Liberals will scream, “the experts made us do it”.

It is also important to note that the bill does not deal with non-renewable resource revenue within the current equalization formula. The Conservative Party has long sided with the concern expressed by the provinces 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. This is unfair and unacceptable.

I come from a province that has prospered enormously from its natural resources and it is inconceivable that the same opportunities and potential for economic growth are not available to Nova Scotia and Newfoundland and Labrador. The Conservative Party, along with the majority of the provinces, have long advocated for the removal of non-renewable resource revenues from the equalization formula. This would ensure that the spirit and intent of the program remains intact and to encourage the development of economic growth in the non-renewable resource sectors all across Canada.

I am proud to stand with my Atlantic colleagues to say in the House that the Conservative Party supports the efforts of Newfoundland and Nova Scotia to receive 100% of their offshore oil revenues outside of the current equalization formula, with no cap and no restrictions.

I believe that all regions of the country should benefit from changes to the equalization formula to encourage the development of natural resources and economic growth. Therefore the Conservative Party of Canada would remove non-renewable natural resources from the equalization program and change the formula.

The territories are an important element to consider as well. Bill C-24 does not address the outstanding concern that the Conservative Party and the territories have in the need to develop a resource revenue sharing agreement between territories and the federal government.

The TFF is an important and necessary grant mechanism to address and present the needs of the territories. The Conservative Party supports the TFF but also believes 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 move to economic independence.

It is important that no province or territory suffer financially under the new formula, and I do not say this lightly. The Liberals portray themselves as the only national party but they stake that claim on the smallest of toeholds in many provinces, and after this summer's election they could not even secure a majority of seats in the House.

Nonetheless, they govern with the arrogance of a Liberal government of the past. I have seen it over the years, especially on the issues that face the agricultural industry. The Liberal government loves to divide and conquer. Whether it is region against region or commodity against commodity, the Liberals are almost automatic in their rush to create a domestic squabble to distract Canadians from their inability to get the job done.

The Conservative Party supports the equalization program as an essential component of Canada's nation building efforts. In order for Canada's provinces to grow and prosper, it is important that an effective equalization program be in place. Equalization is a difficult issue to address. By even using the language “haves and have nots”, this is inevitably causing discord and rancour.

As Canadians we have chosen to govern our country as a Confederation. The balancing of regions and provinces has historically proven a challenge. Some governments have managed the project better than others but citizens across the nation have felt the benefit in many small and subtle ways.

As I stand in the House today, I would like to leave the members across the floor with a final message. It is not just the Canadians who voted for them that deserve the respect and commitment to their best interests. It is not just their friends and cronies who should benefit from the power of governance. This issue, this act, is only one element of ensuring all Canadians prosper. The Conservative Party of Canada is proud to stand with every one of them to demand better.

[Gary Carr, Liberal, Halton, ON]

Madam Speaker, I was in the provincial legislature for 13 years. I go back to the early nineties when the government of the day was NDP. I sat there as a member and watched while the NDP government of the day did nothing but criticize the Conservative government under Brian Mulroney for the same thing. In fact, I went on to become Speaker and some members in the NDP used to remind me that I used to call what they were doing whining. That government went out in 1995 and in came the Conservative government, which did the same thing, complained about the Liberal government there.

When I look back on it, the Ontario government had a program called who does what, where it said that it would be revenue neutral but that we had to find 4%. The caucus used to laugh at that. They have what they call the MUSH sector: municipalities, universities, school boards and hospitals. In Ontario, both the NDP government and the Conservative government had to cut those sectors dramatically. So everybody passed them down.

Is it not a pastime in this country for one level of government to blame all of the evils on another level of government, and that includes the four levels because we have regional government in my area? The local governments blame the provinces and the provinces blame the federal government. Quite frankly, when there is a fiscal problem like that, all governments have to make the tough choices.

Therefore is it not true that every government of every political stripe has complained about the federal government of every political stripe not having enough money?

[Ted Menzies, Conservative, Macleod, AB]

Madam Speaker, I guess the one comment I would make in answer to that question is that the buck stops here. The taxes come to the federal government. The federal government distributes them back to the provinces

As I mentioned in my speech, the provinces continually have had to come hat in hand looking for funding for our education systems which have had their budgets slashed.

Those that are closest to the people are the ones that seem to take the brunt of the criticism. The member talked about criticism. It is the criticism received by our municipal administrators that have had smaller budgets because our provincial governments have had smaller budgets to work with. That blame should be laid at the feet of the federal government.

The federal government is the one that made the decisions where the spending priorities are. The spending priorities have not been on education and shortening the lineups in our health care system. It is unfortunate that the premiers have had to come begging for more money.

We see this equalization as perhaps a better method of stopping the buck from just stopping here, but let us equalize it out across the country so it is fair to all.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Madam Speaker, there are many things I could comment on. I would like to congratulate the member for his presentation.

I would ask him to comment on the position taken by so many of the members opposite when they come out and criticize the Ontario provincial Conservative government for cutting taxes. Those members criticize other governments that have cut taxes and believe in that tactic.

Then they brag about the fact that the federal government has taxed people tens of billions of dollars too much, to the point that there is a surplus in the range of $10 billion a year, and that there is this huge surplus in the employment insurance fund because of overtaxation.

There are those of us on this side who believe in taxes, but believe our taxes are simply too high. Then there are many on the other side who believe in taxes, who believe that more is better and believe in fact that they are not to a level that is going to provide everything they want to spend taxpayers' money on.

Would the member comment on this difference in views of taxation? The Liberals believe in taxation to a point that many families have difficulty buying appropriate food for their children, paying utility bills, coming up with the basics of life because of overtaxation. The Liberals think that is fine. I do not. I would appreciate the hon. member's comments on that.

[Ted Menzies, Conservative, Macleod, AB]

Madam Speaker, it is an interesting comment that we hear about taxation. Our Conservative Party was criticized when we came out with our policy platform saying that we need to cut taxes. In my mind that is a tough thing to criticize.

Our party believes that structured taxes, taxes that are spent wisely are an effective tool. In fact, we need that to run our country properly.

However, when we see the inventive budgeting that has gone on across the floor with these kinds of surprise surpluses, that is very difficult for me to explain to families that are having a difficult time buying food for their children, buying clothing, paying for education, running their businesses.

When we see this sort of a budget and this sort of a surplus it goes far beyond any projected expenses. People do not mind paying taxes. However, when they see that sort of a surplus left over, there is not that kind of a surplus left over in their budgets at home. In fact, if families budgeted the way the federal government does, they probably would be out on the street. It is unfortunate that the government can get away with doing that and we cannot in real life.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Madam Speaker, I have listened to the hon. Conservative member's arguments concerning equalization. As a former municipal councillor, I can say that equalization operates the same way when it comes from the federal government. The federal government sends money to the provincial government—when it does—and equalization is calculated the same way by the provincial government when it sends it on to the municipalities. So, if the provincial government does not receive any money from the federal government, the municipalities do not get any either.

I also listened to the hon. member talking about health. In 1970 the federal government funded about 50% of health care. It has been declining ever since. The federal government boasts that it is giving the fine sum of $41 billion. But 16% is rather far from the 25% that was received prior to the Liberal Party's taking office.

The hon. member also said that what they paid on the debt was truly frightening. They stole $45 billion from the unemployed, but that was not a problem, because they paid off the deficit.

He also said that if things were going all that badly in the municipalities, one solution would be to raise taxes. Whether municipal taxes are paid out of the right pocket, the provincial taxes out of the left and the federal from the wallet, there is still only one taxpayer. When there are crises like that of the mad cow, when people are losing their farms and everything, it is a bit hard to raise tax rates.

The Liberal member asked what mark I would give him on his report card. I would give him an F and if there were an F -minus, that is what I would give him.

That is why, if I were in the Liberals' shoes, I would not be boasting about my wonderful performance—that is just too tough to take.

[Ted Menzies, Conservative, Macleod, AB]

Madam Speaker, I was not sure if that was a question or just a comment. If there was a report card, I certainly think that the F minus would ring true. We have heard that a couple of times today.

It raises a lot of concerns with my constituents. During the campaign a lot of people asked what we would do with their taxes and how we would make sure that their taxes were spent more wisely.

I represent the southwestern part of Alberta. The people in Alberta understand the issues in the rest of this country. We live in a wealthy province. We are very honoured to be part of that province, but we are also very honoured to be part of a bigger country. We also want the contributions that we make to this country to be spent wisely.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Madam Speaker, I am here to talk about the new fiscal framework for equalization.

To ensure that all Canadians received the same level of government services in every province, the federal government introduced a system of transfers called equalization in 1957. Equalization was introduced because not all provinces enjoy the same level of wealth or tax base.

The purpose of the program is to prevent a horizontal imbalance among the provinces and to make sure that a Canadian in one end of the country has access to the same level of services as any other regardless of where he or she lives.

Equalization is highly complex. The discussions that have been going on indicate that people really do not understand the formula. Equalization is formula driven. It ensures that any member of the Canadian Confederation is entitled to a transfer from the federal government if its ability to generate revenues using its own taxation power falls below a national standard. Essentially, provincial equalization entitlements are determined by the strength of a province's tax base in comparison to other provinces.

While the concept of equalization is relatively simple, the formula has grown increasingly complex as the program has evolved in size and scope. For example, in 1957 the equalization formula took into account three sources of provincial revenues: 10% of personal income tax; 9% of corporate income tax; and 50% of provincial duties. Provinces were then equalized to the average of the two wealthiest jurisdictions at that time, Ontario and British Columbia.

At present there are now 33 sources of provincial revenue that are used in calculating equalization. All provinces, with the exception of Ontario and Alberta, are currently entitled to equalization.

Equalization is formula driven and it is being reviewed every five years. However, over the 47 year history of equalization, there have been a number of ad hoc changes that have had to take place in response to changing market conditions.

For example, the energy crisis in the 1970s created a situation where Alberta's soaring oil and gas revenues completely distorted the program. Although only 50% of the oil and gas revenues were taken into account at that time, it was enough to push the threshold so high that all other provinces, including Ontario, qualified for transfers.

In response, Alberta as the wealthiest province, and Atlantic Canada were excluded from the equalization formula, leaving us with the five province standard that we have today.

In November 2001 the Senate Standing Committee on National Finance concluded a series of public hearings as part of its study on Canada's program of fiscal equalization. The goal of the committee was to assess the effectiveness of the program and to recommend improvements to ensure that equalization would continue to meet its constitutional mandate objective, which is to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public service at reasonably comparable levels of taxation.

The constitutional commitment reflects the importance to Canadians of evening out horizontal imbalances across the country. In the Canadian context, horizontal imbalance refers to the fact that some provinces are wealthier than others and their provincial governments thus can generate more revenues at comparatively lower levels of taxation. If left unchecked, these imbalances could result in a wide gap in the quality or level of provincial government services across the country.

How is equalization calculated? Determining a province's equalization entitlement in any given year is a long process subject to numerous revisions. It is perhaps easiest to think of the calculation as a four step process.

The first step is establishing a common set of tax rates for all provinces. This is necessary in order to create an appropriate frame of reference against which to compare each province's revenue generating ability. Since provinces calculate their taxes in different ways at different intensities and do not share access to all revenue sources, no single province's tax system can be considered representative of the remaining nine.

The second step is to apply a representative tax rate, hypothetically, to each province's tax base, to see how much provincial government revenue it would generate per person.

The third step is to determine whether or not a province is entitled to receive equalization for that income category.

The fourth and final step is to repeat the process for each of the 32 remaining revenue sources.

All positive and negative entitlements are then summed up. If a province's overall entitlement is positive, that is, if its total revenue generating capacity falls below the five-province standard of the have provinces, then that province will receive equalization payments equal to the difference between the two. If a province's ability to raise revenue exceeds the FPS, however, it receives no equalization payments.

Now as I mentioned, this is due for review every four years, so on October 26 the Prime Minister met with the provincial premiers and territorial leaders to discuss the changes. But before I go there, I would like to talk about what the equalization payments mean for provinces like Alberta and Ontario.

Equalization is the Government of Canada's most important program for reducing these fiscal disparities. Since the program's inception in 1957 until 1964-65, Alberta did qualify for equalization payments totalling about $92 million. Alberta receives significant federal support through health and social transfers, which are allocated on a per capita basis. In 2004-05, Alberta will receive $4.2 billion through the Canada health transfer, the Canada social transfer and the health reform transfer.

In support of the 10 year action plan to strengthen health care, signed by the first ministers on September 16, the Government of Canada is committing an additional $41.3 billion for health. Alberta will receive some $3.7 billion in additional health transfer funding over the next 10 years, plus its share of the wait times reduction fund.

Ontario receives significant federal support through health and social transfers, which are also allocated on a per capita basis. In 2004-05, Ontario will receive $16.4 billion through the Canada health transfer, the Canada social transfer and the health reform transfer.

In addition, in support of the 10 year action plan to strengthen health care, signed by the first ministers on September 16, the Government of Canada is committing an additional $41.3 billion for health. Ontario will receive some $14.1 billion in additional health transfer funding over the next 10 years, plus its share of the wait times reduction fund.

Now, coming back to some issues that members opposite have raised, they have raised issues around the federal government and its surpluses and have said that they would like the surplus to be used for other means, but in my riding of Don Valley East my constituents have implored us to be prudent and not to go back to the deficit spending era of pre-1993.

Members opposite have talked about a fiscal imbalance, but it does not exist in Canada for the following reason. The Government of Canada and the provincial governments have access to all major sources of tax revenues: personal income tax, corporate income tax, sales tax and payroll taxes. In addition, the provinces have exclusive access to some rapidly growing tax bases, such as natural resources in their jurisdictions and gaming.

International companies' comparisons show that Canada is one of the most decentralized federations in the world. The provinces have complete autonomy in setting their tax policies to address spending pressures related to their responsibilities. In fact, total provincial revenues, that is, their own source revenue plus federal cash transfers, have substantially exceeded federal revenues for more than two decades and are expected to continue to do so.

The reality is that both orders of government face significant spending pressures and limited resources. In addition, the federal debt burden is large relative to that of the provinces, which limits federal investment in new programs. Despite these constraints, the Government of Canada recognizes the growing fiscal pressures on the provinces and is cooperating closely with them.

On September 16, the Prime Minister and all the premiers signed the 10 year plan. Furthermore, over the 10 years, the framework for equalization and territorial formula financing will provide $33 billion more to provinces and territories than the annual amount for 2004-05 estimated in the budget.

If we look at the overall picture, the provinces are getting $74.3 billion extra from the federal government. I believe that is very fair. I believe that the Prime Minister, in coming up with the framework for equalization and territorial formula financing with the premiers, met with them and discussed or put forward the federal government's strategy.

The key strategy, if we look at the changes taking place which the government has proposed for the equalization and TFF, is that it will provide predictable, stable and increased funding. The new framework will play an essential role in ensuring that all Canadians, no matter where they live, will have access to comparable public services.

The new framework for equalization will increase the support to provinces and territories over 10 years by $33 billion. This increased funding will assist Canada's less prosperous provinces and the three territories in meeting their commitment under the 10 year plan to strengthen health care as well as fund other important social and economic developments.

That we are moving ahead with these improvements underlines the spirit of cooperation shown by everyone involved. The new partnership will be essential to our success as we move forward together on other key policy issues outlined in the Speech from the Throne, such as child care, cities and communities, and the environment.

The highlights of the new framework are that over the next 10 years, and subject to review in 2009-10, the new framework will provide $33 billion more in equalization and territorial formula financing payments to provinces and territories. To achieve this rate of growth, the government will establish a legislative financial framework for equalization and TFF starting in 2005.

In 2005-06, funding levels will be set at $10.9 billion for equalization and $2 billion for TFF, the highest levels ever achieved by these programs. Both amounts will grow at 3.5% a year, starting in 2006-07. Equalization payments will increase from $8.9 billion to $12.5 billion over the first five years of the new framework, a 42% increase.

The Government of Canada will also launch a review by an independent panel of experts on how the legislated equalization and TFF levels should be allocated among provinces and territories in 2006-07 and after. Provinces and territories have been invited to appoint two members to the panel. The expert panel will report back by the end of 2005 in time to provide advice on how equalization and TFF should be apportioned among provinces and territories in 2006-07. The government is committed to having any changes in allocation for 2006-07 and future years in place by April 1, 2006.

The complete framework provides protection to every province and territory to ensure that entitlements for 2004-05 are no lower than the levels forecast in the 2004 budget. I hope that members opposite and members of the House will support the new framework.

[The Acting Speaker (Hon. Jean Augustine)]

I would like to remind the member that in the next round of debate she will have 10 minutes for questions and comments.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Madam Speaker, I rise today on what is perhaps the most important issue in my constituency, and that is health care.

My riding is largely served by a community hospital, the Queensway Carleton Hospital. It has a catchment area of 400,000 and growing. It is one of the oldest populations in all of Canada. I believe it is the oldest in Ontario. This catchment area is not only large but it is aging and it is putting enormous pressure on what is a relatively small community hospital. As such, it is my job to do everything I can to fight for that hospital and its interests.

However, obstacles have been put in its way. The National Capital Commission owns the land upon which this hospital operates and charges tens of thousands of dollars every single year to this community hospital in rent. At the end of this decade that rent is predicted to rise dramatically. There is a renewal option that says that the new rent rate will be 6.5% of the current market value of the land. In other words, we could be talking in the millions of dollars, that is millions of dollars that would otherwise go to patient care, to beds, warm hospital rooms and advanced equipment, would instead be going to another level of government. Imagine that. The federal government transfers dollars to the provinces for health care, the provinces transfer those dollars to the hospital for delivery and then the hospital has to pay that money back to the federal government in rent. How outrageous.

I have asked the government if it would instruct the NCC to sell the land to the hospital for the price of $1. This would not only relieve the financial pressures and uncertainty related to this rent quagmire, but it would further give the hospital control over its entire campus, allowing it to construct new buildings that could then be sub-leased out to family doctors, cancer specialists and other health care practitioners at a discounted rate to entice the best professionals to come to the heart of my community. At the same time, that could raise some extra dollars in revenue for the hospital while building synergy right on the hospital campus with these health care professionals.

I made this case to Liberal members of Parliament, to the NCC and, of course, I have been working with the hospital to advance that position. So far the government has been unwilling to bend. As a result of the public pressure that we have built in my constituency, the NCC has been forced to sit down with the hospital and discuss the matter face to face. The hospital has put forward four proposals on how this dispute might be resolved as I understand it.

I wonder if the hon. member across the way would be willing to stand in the House and tell us which of those four proposals the NCC supports.

[Sarmite Bulte, Liberal, Parliamentary Secretary to the Minister of Canadian Heritage]

Madam Speaker, I welcome this opportunity to address my colleague, the hon. member for Nepean--Carleton, on his concern regarding a rent increase for the Queensway Carleton Hospital, a hospital in Ottawa that sits on lands owned by the National Capital Commission.

The hon. member is concerned that there will be a massive rent increase and the hospital has stated that it could cost jobs for as many as 40 nurses.

He would also like to know why the government does not resolve this problem by selling the land to the hospital for $1.

I will answer both those questions at this time.

First, on the matter of the rent increase, I would like to assure my colleague that while the National Capital Commission is a crown corporation that is responsible for its own day to day management, it calculates its rents in accordance with Treasury Board guidelines.

The Queensway Carleton Hospital currently pays an annual rent of approximately $23,000 per annum based on the leasing policies in effect when the 40 year lease was negotiated in the early 1970s. The rent is set well below market rates and will continue for another nine years, until July 12, 2013.

The lease provides for a renewal term of 35 years and stipulates that the annual rent is to be determined by mutual agreement between the National Capital Commission and the hospital and will be based on the appraised value of the land at that time.

A recent newspaper article stating that the revised rent beginning in 2013 would be $3.4 million, was wrong. It was based on the incorrect assumption that the annual rent in 2013 would be a percentage of the assessed value of the 114 acre property, including all buildings, improvements and grounds. In fact the annual rent will be negotiated based on the value of only 50 acres of land actually occupied by the hospital and its facilities, not on the value of the entire property.

It would not prudent for me to suppose what the new amount of rent will be but I understand, as the hon. member has said, that the National Capital Commission and the Queensway Carleton Hospital have already begun discussions and will actually review a variety of options for the lease of the land. I have tremendous confidence that these two parties will reach a suitable agreement before 2013.

Now I would like to address the hon. member's second question as to why the National Capital Commission does not simply sell the land to the Queensway Carleton Hospital for $1.

The 50 acres of land upon which the Queensway Carleton Hospital is situated are owned by the National Capital Commission on behalf of the people of Canada. The land is part of the national capital greenbelt and the national interest land mass.

The national capital region greenbelt was designed in 1949 to prevent urban sprawl and to provide open space for the future development of farms, natural areas and government facilities.

Today the greenbelt's 200 square kilometre crescent of farms, forests, natural areas, recreational facilities and public and private research complexes provide the capital with a rural landscape unequalled in any other North American city.

The NCC and national capital region greenbelt includes national interest land mass properties which, as the name implies, are held in the national trust.

These lands that the Government of Canada, mainly through the National Capital Commission, has gathered together over the past century include monuments, public places, heritage buildings, shorelines and large areas of green space. They combine to create a capital that will inspire Canadians with pride and be passed on as a legacy for future generations. Therefore to sell the people's land for $1 would be inappropriate.

However, once again I thank the hon. member for presenting me with this opportunity to respond to his questions.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Madam Speaker, the fact that the government continues to portray the Queensway Carleton Hospital as some sort of threat to the greenbelt is at best absurd and at worst ludicrous. Selling a parcel of land to a community hospital would not imperil a massive body of property which we know as the greenbelt. As such, I do not understand the logic behind refusing to do for this hospital what municipalities and other levels of government, on a regular basis, do for other hospitals.

The Riverside Hospital bought its property, a similar piece of land, for $1 from the City of Ottawa. Why can the federal government not be similarly reasonable and allow this community hospital to do the exact same thing, or does she really believe that this hospital is a threat to our greenbelt?

Finally, when will the people of Nepean-Carleton--

[The Acting Speaker (Hon. Jean Augustine)]

The hon. Parliamentary Secretary to the Minister of Canadian Heritage.

[Sarmite Bulte, Liberal, Parkdale—High Park, ON]

Madam Speaker, let me begin by saying that at no time did I state that the hospital was a threat to the greenbelt. With all due respect for the member opposite, what I talked about was why we could not dispose of those lands for $1. As they are part of National Capital Commission lands, they belong to all the people of Canada and to sell that land for just $1 would be to violate the fiduciary trust.

I have noticed with interest that the Riverside Hospital had an arrangement made with the City of Ottawa, but again these lands were not held by the National Capital Commission. What we are talking about is why the National Capital Commission was created, why it has acquired lands and why it holds those lands in trust for the people of Canada.

I just want to reiterate that the article that appeared in the paper which speculated the amount of the rent was absolutely false. As the hon. member said, the two parties are in negotiations and we should let them arrive at a suitable and mutually acceptable agreement.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Madam Speaker, on May 26, 2003, the 37th Parliament gave direction to the government to express its support for the admission of Taiwan as an observer to the World Health Organization and called upon the government to actively engage other member states and non-governmental organizations to support this goal. That was an explicit direction from the House with a vote of 163 to 67. The majority of Liberal members present at that vote supported the motion, yet when the government dealt with this issue at the WHA a year later, it did not follow Parliament's instruction. Why?

The United Nations established the World Health Organization in 1948. The WHO's stated goal is the attainment by all peoples of the highest possible level of health. The 1999 Taiwan earthquake initially energized the Taiwan WHO campaign. More than 2,400 people perished in the disaster and roughly 10,000 people were injured. The earthquakes also left some 100,000 of the island's inhabitants homeless.

The outbreak of SARS in Taiwan in March 2003 re-energized the WHO drive because authorities in Beijing, who had allowed the virus to fester while they covered up the extent of the infection for months, initially blocked all efforts by Taiwan to secure assistance from the WHO.

As had happened after the 1999 earthquake, the PRC insisted that all aid must be filtered through the Chinese bureaucracy and suggested that Taipei, in turn, turn to its government, its central government they call it, for assistance. Two months after the initial outbreak, Beijing finally relented and grudgingly agreed to permit the WHO to send a team to Taiwan to investigate the island's deteriorating SARS situation.

We should note that Taiwan seeks only to join the WHO as an observer. The Holy See, Palestine, Sovereign Military Order for Malta, the International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies all enjoy observer status. Taipei is willing to sidestep the thorny statehood issue by applying as a health entity.

Clearly the approved motions of Canada's Parliament do not interfere with Canada's one-China policy but the House has already dealt with this information and passed judgment with 70% of the members voting to instruct the government to urge other WHO member states and non-governmental organizations to admit Taiwan as an observer to the World Health Organization. Canada's Senate also voted in favour of an identical motion. I restate that both chambers of Canada's Parliament spoke unequivocally and the government wilfully ignored explicit direction by Canadian parliamentarians.

In response to my question on October 12, the Minister of Foreign Affairs answered:

Mr. Speaker, it is very important that Parliament express itself. The government has to take its responsibilities and govern the country. This is exactly the kind of democracy we have.

Really? Well what kind of democracy do we have? What is the point of parliamentarians speaking wilfully to a deaf cabinet?

We know PRC officials argue that Taiwan cannot join the WHO because it is not a state, which of course is a specious argument because Taiwan is not seeking to join the WHO as a state. It seeks only to participate as a health entity. Consequently, Beijing's opposition on these grounds makes no sense.

What is it going to take for the Canadian government to reject the bullying by Beijing and reflect the will of Canadian parliamentarians?

[Dan McTeague, Liberal, Parliamentary Secretary to the Minister of Foreign Affairs]

Madam Speaker, the issue of Taiwan and of Canada's support for its bid to participate in the WHO as an observer has been debated repeatedly in this House.

Issues of health, especially given our experience with SARS, are understandably of great concern to Canadians and those who represent them in this Parliament.

Some members, however, are of the view that Canada has not lived up to the resolution on the issue passed by this House last year and that Canada somehow is not doing its part to ensure that the people of Taiwan have access to the health information they desire.

First, let me speak to the matter of the WHO. As has been the case for a number of consecutive years, Taipei's allies and supporters raised the Taiwan issue on the World Health Assembly's agenda at the general committee. The purpose of the committee is to meet and gain consensus regarding any additional proposed items for the assembly's agenda.

Once this has been achieved, the committee submits a report containing the agenda to the plenary which is comprised of all WHO member states. Although Canada was not a member of the committee and therefore did not take part in these discussions, the issue of adding Taiwan to the agenda was debated at length.

Finally, after monopolizing what was supposed to be a functional meeting, the chair noted a lack of consensus and concluded that the committee's report would not include an agenda item on Taiwan.

When the committee's report was submitted to the assembly, several of Taiwan's supporters once again raised objections and debate began anew. After what amounted to nearly a full day out of a total of five, the WHA agreed by consensus to suspend further discussions and call a vote.

The question posed to members was whether or not they supported the agenda as proposed by the general committee. Canada, along with 133 other members, such as the European Union, voted yes.

It is thus incorrect to state, as the hon. member has, that Canada voted against Taiwan as this was never the question that was asked. The question was a matter of procedure with the purpose of ending debate on an item where consensus could not be reached. This allowed the membership to get down to the business at hand, which was to discuss health issues affecting their populations.

I should point out that Canada's voting behaviour was guided by our tradition of strong emphasis on multilateralism. Canada supports the integrity of the WHO system which requires that issues be decided by consensus or vote among members. Canada believes that the substantive and important health matters being discussed remain the focus of the WHO's deliberations. We are a member of the WHO first and foremost and are there to address the health interests of Canadians and we acted in the best interests of Canada.

Following the vote, member states were invited to deliver for the public record an explanation of their voting behaviour. Although not obligated to do so, Canada recognized the importance of the Taiwan issue and felt that it was necessary to make very clear to Canadians and the membership in the WHO the reasoning behind our actions.

I should point out some of the compilations from the document that was set forth. Canada has voted to support the report of the general committee. A solution to Taiwan's desire for status at the WHO should be achieved through a pragmatic and non-politicized process that does not detract from the core mandate of the organization. Canada would support a formula for Taiwan's participation, as long as this formula was in accordance with WHO organizational constitutional rules and procedures and received broad based approval of WHO members.

I should point out that we are very interested in continuing with this process. It is important to know that Canada has always been there to assist Taiwan in developing its national health insurance programs. We will continue to do so in the days to come.

I want to point out to all members that it would be inaccurate to state that the position taken by Canada was not faithful to the record. There is a procedural problem that has to be taken into consideration. I think that in terms of how I described it, the member could not but conclude that indeed the government was faithful to that position.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Madam Speaker, I say shame to the member for trying to subvert the whole purpose of the motion.

To actively urge other member states and non-governmental organizations to support this goal was the motion that was passed in the House. The member simply parroted the speech on behalf of the bureaucrats at the Department of Foreign Affairs.

On May 23, 2003 he voted in favour of this motion, along with the government whip, the House leader and his deputy, the President of the Treasury Board and his deputy and the following current ministers: justice, international trade, veterans affairs, natural resources, Canadian heritage, labour and housing, infrastructure and communities, Indian and northern affairs; and the parliamentary secretaries to the following ministers: industry, national defence, public works and government services; and the ministers of state for family and caregivers, federal economic development, infrastructure and communities, and foreign affairs.

In spite of the support that, as backbenchers, the member and those other people who are now in the federal cabinet showed this motion, they are somehow silent. Why?

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Madam Speaker, I think I have just explained it to the member. Rather than casting epitaphs of shame, he ought to take into consideration very clearly that Canada did not vote against Taiwan, and this was really not the question that was raised.

I ask the hon. member to put this in its proper and appropriate context. I understand there are political issues that compel the hon. member to make his misstatement, but no member on this side or that side of the House of Commons would conclude that after the argument I just made. It is not just something the department would put together. What we see is that Canada made every attempt. Not only that, I should point out that it was an opportunity at the time. Canada's own WHO director, during his recent visit to Ottawa, concurred that Canada had a desire to do exactly what was said in the House of Commons.

Let us be clear. If there is a resolution and an opportunity for us to debate it, we will do so. We cannot govern or be set by the rules that are established by the assembly. We have to be faithful to Canada. If given an opportunity, we will reflect the concerns raised by the member and the House of Commons, and we will not detract from that at all.

[John Duncan, Conservative, Vancouver Island North, BC]

Madam Speaker, I am here to talk about the question I asked the Minister of International Trade with regard to the softwood dispute.

When I was scheduled to speak tonight on the adjournment proceedings in relation to my question about Canada-U.S. relations and the concern I had about our $3 billion in softwood cash deposits being at risk because of the government's behaviour and the posture of the trade minister, I had no idea I was agreeing to schedule this the day before the visit by the U.S. President. That makes it slightly more foretelling.

At the time I asked the question, the minister's posture was basically that there was a window of opportunity to negotiate between November 3 and December 15, after the U.S. election and prior to the end of the year. I have been involved in the softwood file longer than any minister on the government side and longer than most. I could not find anybody who could figure out why the minister was coming up with the idea that there was this window of opportunity to negotiate. As a matter of fact, it sounded like a dumb idea.

We all know that after every election in the U.S., there is a change of administration, whether the president changes or not. That is exactly what has happened. We now have a President in his second term. The secretary of the department of commerce will change. The secretary of trade will change. This is not a very good window of opportunity for us because everything is in flux. Indeed, things really will not settle down until next year.

The gist of my question really dealt with why the minister was making these kinds of statements, when the real question was when would he get all the stakeholders together on the Canadian side and come up with a consensus position because he had not done so. Besides all that, the government has bungled Canada-U.S. relations. Let us get our act together. Rather than put our cash deposits at risk, which are now over $3 billion, let us get our act together and call a stakeholders meeting.

I understand that there finally was a stakeholders meeting just last week. We have a major concern now with the rising Canadian dollar against U.S. currency. Many in the industry now will be looking at very bad results in the first quarter of next year. I want to know where the government is headed with this whole file.

[Mark Eyking, Liberal, Parliamentary Secretary to the Minister of International Trade (Emerging Markets)]

Madam Speaker, I thank the hon. member across the floor for bringing this issue forward. Whether he thinks it is in a flux or he thinks we should slow down for a short period of time, we are going to continue to work hard on this file.

I am pleased to have the opportunity to respond to the question asked in the House of Commons by the hon. member. As he mentioned, the federal government has worked closely with both industry and the provinces seeking a resolution to this long standing dispute. We share a commitment with the provinces and industry to defend the interests of Canadian lumber companies, the people they employ, and all the communities right across this country.

The U.S. department of commerce imposed 27% countervailing and anti-dumping duties on imports of Canadian softwood lumber in May 2002, following the expiry of the softwood lumber agreement. Our governments and industry have mounted a strong defence against the U.S. trade action since these duties were imposed in 2002. We continue to do so through challenges and together we have pursued a two-pronged strategy for resolving the softwood lumber dispute.

We are engaging in discussions with the United States to find a durable resolution to this dispute and we have taken no fewer than six challenges of the U.S. duty actions before NAFTA and WTO.

As the hon. member may be aware, NAFTA and WTO panels have ruled in Canada's favour in every one of those challenges, finding the U.S. duties to be inconsistent both in U.S. international trade obligations and U.S. law. As the Minister of International Trade stated on September 10, this U.S. international trade commission determination supports what the Government of Canada has been saying all along. Canadian exports of softwood lumber products do not threaten the U.S. domestic industry with material injury and there is no basis for U.S. countervailing or anti-dumping duties.

As the hon. member may be aware, on November 24 the United States requested establishment of the extraordinary challenge committee, the ECC, under article 1904 of the North American Free Trade Agreement to review the proceedings of the NAFTA panel in this case. The Government of Canada believes that the U.S. allegations and the request for this ECC are without foundation and that the U.S. claims will be dismissed.

The government will be mounting a strong case in defence of Canadian interests with the ECC challenge. If the U.S. claims are rejected, the U.S. department of commerce will be required to revoke the duty orders and refund the duty deposits paid with interest. We know the U.S. will use every litigation tool available to it in this dispute. We have always maintained that the U.S. industry is not injured by imports of Canadian softwood lumber and our position will not change.

We are working with our provincial counterparts and industry. As recently as October, our minister met with Canadian industry representatives to explore whether there was a basis for a resolution of this dispute. We have also repeatedly raised concerns with the U.S. Trade Representative Robert Zoellick and Commerce Secretary Donald Evans to further the discussions with the United States to resolve this dispute. In the meantime we have continued our dialogue with the Canadian industry over the past several weeks. We encouraged them to develop a united Canadian approach.

I would like to reassure the hon. member that the government is well aware of the impact that the softwood lumber dispute is having on our Canadian industry, our workers and our communities.

Our government will persist in defending Canadian interests in this dispute to get every cent back. We will continue to work toward a durable resolution to this dispute. We are going to use the panels, whether it is WTO or NAFTA, to get our money back.

More importantly, I would like reassure the House that our government is committed to working closely with the provinces, with the industry, and other stakeholders toward a resolution of the softwood lumber dispute.

[John Duncan, Conservative, Vancouver Island North, BC]

Madam Speaker, I can say with some clarity that I did not learn anything I did not already know from what the parliamentary secretary just reiterated in the House.

It would be nice to elicit some new information. Basically, right now we are in this period under NAFTA where we have an extraordinary challenge. The industry wants nothing to do with any negotiations prior to the extraordinary challenge being exhausted. It is fine and dandy to talk about negotiations, but why not say it the way it is?

I think some principles to guide the government, and to let the public and our trading partners know where we are coming from, are useful from time to time and we are not hearing that. The parliamentary secretary said nothing about the Byrd amendment and what we are going to do about that. That is an integral part of the whole dispute so I am still waiting for clarification.