Debates of Nov. 4th, 2004

Supply

[R. John Efford, Liberal, Avalon, NL]

Madam Speaker, let me say what I know about the Newfoundland and Labrador deal. In Newfoundland and Labrador, one oil well will be coming into production next year, White Rose. That is included in this deal. That will give Newfoundland additional revenues and royalties, all the same things it is receiving from Terra Nova and Hibernia.

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

Madam Speaker, I thank the Conservative Party of Canada for providing us with this opportunity to discuss fiscal relations between the federal and provincial governments. This is an important issue.

As members know, with the cooperation of the other two opposition parties, to which we are grateful, we launched the debate on what we call the fiscal imbalance. The federal government did not want to recognize the existence of an imbalance, but it is becoming increasingly part of the parliamentary culture. A special committee was even set up, with the support of the parties, following a motion by the Bloc Québécois, which I had the honour of presenting.

That motion called for the establishment of a special committee on fiscal imbalance. The committee must report by June 2 of next year on this whole situation, whereby the federal government has way too much money in its coffers, in light of its responsibilities, while provincial governments, including the Quebec government, do not have enough tax resources and tax room to fund public needs and priorities. These include health, education, income support for the poor, social housing and others.

We understand the outrage of the people of Newfoundland and Labrador, and of Nova Scotia. We sympathize with them. We also share the frustration of the premier of Newfoundland and Labrador, and we understand it. I think that an increasing number of Canadian provinces understand the frustration felt periodically by Quebec, because the federal government is not fulfilling its commitments. We have experienced that on many occasions with the Liberal Party of Canada, regarding the numerous promises and commitments made by the government, and it has left a sour taste in our mouths.

However, we feel that the motion of the Conservative Party is not the solution to achieve greater harmony in fiscal relations between the federal and provincial governments. It could even create more unfairness and more injustice than the problem that it seeks to correct for Newfoundland and Labrador and for Nova Scotia.

What is the situation? The whole debate is on equalization. In fact, what little was said during the election campaign on this issue dealt with as to whether, despite the oil revenues of Newfoundland and Labrador, the payments received by that province would be reduced under the equalization formula. Newfoundland and Labrador wanted the assurance that even if oil royalties were to increase in the future, this would not impact on the equalization payments that the province is getting.

Of course, a prime minister who is on the ropes, who fears that power is slipping out of his grasp, is ready to promise anything at all. That is what the Prime Minister did during the election campaign. His words were in the newspapers and on television. He promised that the issue of royalties would not affect the equalization payments of Newfoundland and Labrador and Nova Scotia.

He made that promise. He made a series of promises; he was casting them in all directions, and found himself empty-handed at the first ministers conference where he could not keep his word.

The problem, fundamentally, is the issue of equalization. We must understand what equalization is, and what it involves. We must understand what a negative effect a motion like this one by the Conservatives could have on the whole system, if the government were to implement it.

First of all, what is equalization? Equalization is the only program enshrined in the Constitution. It is the only income redistribution program that—since 1982—has been part of the Constitution. What equalization means is simply this: to ensure that, from sea to sea, provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

This means that the richer provinces contribute, through the federal government, to lessening the disparities that may exist between themselves and the poorer provinces. The essence of equalization is to reduce these disparities and inequalities in order to better serve the population.

There is no other way to look at equalization. But now there is talk of differentiated equalization, in which the royalties obtained by a province would be set aside.

This would mean carrying on business as usual with an equalization formula that does not take into account this source of income, changing the very essence of equalization and creating the type of inequity that a constitutionalized equalization program is designed to correct. I repeat, this program is one of a kind.

How is equalization evaluated? The amount of money that each Canadian province is able to raise from taxpayers in the form of income tax, corporate tax, various other taxes like sales tax and property tax, revenue from natural resources in areas such as mining, hydro power and oil, is determined. Based on this, the fiscal capacity of each province, their respective ability to generate revenue from various categories of activities and taxpayers, is evaluated. Each province is evaluated using the same tax base, that is to say, the same revenue items. On the basis of this evaluation and of a standard corresponding to the average capacity of five out of ten Canadian provinces, it is determined whether or not a given province is entitled to equalization payments.

If a province is very rich and has a potential for revenue equal to the five province average, it will not be entitled to equalization. But a province whose capacity is lower than the five province average capacity to raise revenue from the taxpayers will receive equalization payments of an amount equal basically to the difference between the revenue it can raise per capita and the average of this per capita revenue for the five provinces used for calculation purposes. That is the amount that will be transferred to Quebec, Newfoundland and Labrador and other provinces.

For this plan to work, as I mentioned earlier, the same tax base absolutely must be used for each province. In other words, the same revenues have to be calculated for each province. This brings us to the Conservative Party motion. The Prime Minister made a promise during the election campaign that he did not keep, like so many of his promises—but we will come back to that later. The situation has changed. A source of revenue has just been taken out of the equalization formula that applies specifically to Newfoundland and Labrador. As a result, in calculating the fiscal capacity of Newfoundland and Labrador and comparing it to that of Quebec or Ontario we are no longer comparing the same thing since we do not have the whole picture.

Through an ad hoc agreement, we are creating unfairness right from the start. A mockery has been made of the spirit and the letter of the equalization program. We are no longer talking about equalization at all since differential treatment exists. An injustice has just been created.

What would justify taking away oil revenues from the tax base equalization calculation, which represents the fiscal capacity of each province, but leaving the revenues generated by hydroelectricity, for example? That is what the Conservative Party proposal is getting at. In Quebec, what right would they have to keep in the equalization formula things like income tax, corporate tax and so forth, including the dividends paid by Hydro Quebec to the Government of Quebec, while next door, in Newfoundland and Labrador, they would take away the oil royalties paid to the government of that province?

There is something inequitable here as well as a travesty of the equalization formula, and results in treatment that is unjust compared with that of the other provinces of Canada.

This would seem to be like giving a kind of premium to the oil-producing provinces, or in other words a premium for non-renewable resources, one paid for by the provinces that produce clean energy, renewable energy. Sort of like Hydro-Québec subsidizing oil exploration in Newfoundland and Labrador.

There is something rather illogical about all this debate, which creates a link between the particular needs of Newfoundland and Labrador and an equalization formula, which today's motion totally distorts. Either there is equalization in Canada, or there is no longer equalization in Canada.

This being a program enshrined in the Constitution and one of the principles of fiscal federalism, proposed in 1947, if I remember correctly by the Rowell-Sirois Commission, which addressed fiscal federalism, redistribution of wealth, and equitable treatment, for example for both east and west, I think that it would be worthwhile maintaining it.

However, if we want to look at reforming equalization, there are ways of doing so. There have been discussions on this for close to a dozen years, federal-provincial conferences, meetings between civil servants. No one knows where we are at now, because there are 33 variables in this pesky formula. There are all sorts of ins and outs, ups and downs. As the saying goes, why make something simple when you can make it complicated? One might say the equalization formula has evolved this way over the years. There has been talk of correcting it for 12 years, but no success. There are ways, however.

I would like to point out three problems that exist at present.

At the beginning of my remarks, I explained that an average is taken of the revenues of five provinces. This five-province average is used as a standard to determine whether or not a province should receive equalization payments. The potential tax revenues of Ontario, Quebec, British Columbia, Saskatchewan and Manitoba are taken and added together and then divided by five. It is a simple arithmetical average. Then the potential revenue of each province is compared to this five-province average, and the provinces with revenues less than the average are entitled to equalization payments.

Still, what is the logic behind it? Only five provinces are used in this exercise, but there are 10 provinces in Canada, and the territories, of course, but equalization only counts the provinces. Why take five provinces and not all ten? It would be a much more representative, Canada-wide standard of wealth than taking only five provinces. A number of the recipient provinces have been asking for this modification for a long time. It would give a much more accurate picture of each province's ability to generate tax revenues.

Why too are revenues not measured correctly? As I said, why make it simple, when you can make it complicated? This is a case where the economists at Statistics Canada and the Department of Finance have shown true originality in recent years to do intellectual backflips lending at econometric heights that are so difficult and so technically complex that the ordinary person is quite discouraged.

Why not, for example, evaluate the actual real estate taxes in Quebec and in the other provinces? Well, no; they used what is called in economic analysis a “guesstimate”. I would not want to speak ill of economic analysis; that would be shooting myself in the foot and cheering for the other side, but there are things we do well and things we do not do so well, and this is one we do not do well.

Therefore, they use what is called a “guesstimate”, which is an estimate of the potential real property taxes each province could raise, even though it is easy, by simply looking in a Statistics Canada catalogue, to find the real value of property taxes in Quebec, Ontario, or anywhere.

That correction alone would change the whole thing and would provide an accurate picture.

I will just give one example regarding property taxes. Based on these guesstimates or approximations that are so convoluted and technical that they are beyond most people's comprehension, in Quebec, the per capita real estate wealth is a surprising $71,406. This is the assessment of the per capital real estate wealth, as calculated under the equalization formula. However, the actual wealth figure for 2002 is around $30,621. So, the amount calculated is more than twice the actual figure. Do members see my point?

This has the effect of increasing Quebec's fiscal capacity. Moreover, the difference between Quebec's capacity and the five province average is inaccurate, because revenues are artificially inflated. The fiscal capacity in terms of property taxes is the figure I mentioned, the real capacity. However, under the formula, this capacity is more than double the actual figure.

There is also the unpredictability factor. We have been talking about it for years. It is not normal to be told, “Over the past three years, you received overpayments totalling $800 million. You must repay that money”. In fact, all the provinces would have to give back money. We doubt that Saskatchewan had to repay its $590 million, but we will get back to this later on. We are taking a close look at the issue.

In my view, Quebec is being pushed to pay back its $1.2 billion equalization overpayment. Reimbursement can be made over 10 years. How nice. Nonetheless—this is where we have our doubts—how come Saskatchewan, which owes $590 million to the federal government because of an equalization overpayment, would appear not to have to pay and may have its debt forgiven?

The amounts fluctuate from year to year. One year equalization might be positive: an additional $400 million. The following year it could be a whole different story. Two years ago an overpayment was made because our income tax estimate changed and GDP growth also differed from our estimates. It constantly varies like that. There are ways to correct this.

If all these major discrepancies—and a few others that I will not get into—were corrected, Newfoundland and Labrador alone would receive an additional $168 million in equalization payments for 2004-05. Simply correcting equalization would give it $168 million more. Nova Scotia would get an additional $291 million. I am talking about a lot of money: some $323 more per capita for Newfoundland and Labrador and $311 more per capita for 2004-05 for Nova Scotia.

No injustice or preferential treatment would result. The spirit and the letter of the equalization formula would not be distorted. By correcting the positive aspects of equalization and the imperfections I just described, additional money could be given to Newfoundland and Labrador and Nova Scotia. It is a question of the equalization formula and maintaining the spirit and the letter of equalization.

During the election campaign, we read the agenda of the Conservative Party of Canada. It was very clear. For this reason, we are worried about this going beyond excluding the oil revenues of Nova Scotia and Newfoundland and Labrador.

The Conservative agenda states that non-renewable resource revenues should be excluded from the equalization formula. Would that apply across Canada and would that mean that supporting a motion such as this would basically open the floodgates even further and keep potential hydroelectricity revenues in the formula, as I mentioned earlier? It makes no sense.

We want to change the equalization formula. We are prepared to work with all the parties in this House, but, for the reasons I just mentioned, we cannot support this motion.

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

Madam Speaker, I listened to the hon. member's speech and thought it was actually quite an interesting discourse on the vagaries of the equalization formula. I do not dispute with him that it picks up some unintended consequences and some disparities that are almost a necessary by-product of formularization. I would agree with him that when we are using 33 standards across 10 provinces and 3 territories, we are going to have a degree of complexity which would cross the eyes of a rabbi.

Having said that, that is not what this debate is about. This debate is about whether Newfoundland and Labrador in particular, and Nova Scotia as well, should continue to receive equalization payments while their revenues generated from offshore funding sources are continuing to come up. The issue is whether they would in fact achieve an Ontario standard which is really beyond the five province standard.

I take it, therefore, from the hon. member's comments that he will not find himself able to support this motion before the House today because it will create another level of inequity, another level of complexity and discrepancy in that we will have one or two provinces which have particular arrangements with the federal government which will in effect entitle them to moneys beyond the Ontario standard.

Does the hon. member feel that this is appropriate in the case of Quebec?

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

Madam Speaker, the parliamentary secretary got part of our message. As far as the conclusion is concerned, I agree with him: we cannot support this motion. In fact, I have repeated it often enough that it should have been pretty obvious.

Our point is that equalization is designed to help those provinces with a capacity to raise revenue through taxes lower than that of other provinces. From the moment that a province reaches a level of wealth allowing it to catch up to the standard, currently a five province standard, it should no longer be entitled to equalization payments.

Do not think that Quebec is proud of receiving equalization payments. I can tell the hon. members that, the day Quebec's tax capacity is strong enough to do without equalization, we will all be very relieved and we will celebrate. It is not fun to receive equalization payments. We are happy that such a program exists, but it is no fun to know that our tax capacity is lower than the five province average.

We would far prefer it if the federal government would provide Quebec with equitable treatment in its structural spending, in R and D, in the purchase of goods and services on Quebec territory, and in the operation of major research laboratories. There is one on the Outaouais side, and all the others are on the Ottawa side. We would also like equity as far as the number of public servants on the Quebec side. If just all those items I have mentioned were adjusted to reflect the demographic weight of Quebec, 40,000 public service jobs could be created in Quebec tomorrow morning. Then perhaps we would not need to bother about equalization. If we had the same treatment per capita that Ontario does as far as structural spending is concerned, we would long ago have exceeded Ontario's fiscal capacity and performance. In six of the past eight years, Quebec's economic growth was, moreover, higher than Ontario's.

I would like to add that we are in the present situation because, during the election campaign, when the Prime Minister was on the ropes and did not know how to avoid losing, he went around making commitments all over the place, knowing full well that he could not meet them. So this is the situation we find ourselves in today. There are others I could mention as well. A ton of impossible promises were made and will not be kept in the years to come. That is what happens when people say anything at all with no intention of keeping their word.

[Gary Schellenberger, Conservative, Perth—Wellington, ON]

Madam Speaker, I have been listening very intently to the hon. member. I have a simple question but I must elaborate a bit before I ask it.

I have seen the government involvement with affordable housing in my riding in the County of Perth. We were allotted $2.5 million for affordable housing. Then we looked a little deeper into some of the clauses. This was for 100 units and they had to be sustainable for 20 years. When the whole package was put together, the 100 units were not affordable for the community to accept that $2.5 million.

Sometimes the government says one thing and then when it adds some clauses, the government makes it complicated. The more complicated it gets, the money is clawed back or the deal cannot be accepted. That is what happened to our municipality with respect to affordable housing. We could not accept the $2.5 million that was allotted to us and we did not get any units.

It seemed to me that the promise made by the Prime Minister was a very simple one, 100% of the royalties. I do not care about the equalization payments. That was not what was said at that particular time. That is a whole other issue than what we are dealing with today.

Does the member feel that the promise made by the Prime Minister of 100% of the royalties for Newfoundland and Labrador and Nova Scotia should be honoured by the Prime Minister?

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

Madam Speaker, I thank my colleague for his question. We have to refer to the substance of what the Premier of Newfoundland and Labrador said and look back to the election campaign.

According to the Premier of Newfoundland and Labrador, the promise made by the outgoing Prime Minister of Canada, that is the current Prime Minister, was the same he had made during the election campaign. That was a rather straightforward promise.

On the telephone, the Premier of Newfoundland and Labrador had received the assurance of the Prime Minister and member for LaSalle—Émard that his province would not be penalized in terms of equalization, in spite of the royalties. That is why the Premier of Newfoundland and Labrador expressed outrage.

That is how we have looked at his remarks. We sympathize with the outrage of the Premier of Newfoundland and Labrador, especially given the totally arrogant and somewhat lofty attitude of the people across the way. We in Quebec are used to it because that is the attitude they have had with us for eons. They think they have a monopoly on the truth, and make all sorts of commitments they cannot meet.

My colleague was speaking earlier about social housing. It is true that it has been a long time. Since 1989 the current Prime Minister has been saying it is important to have social housing. Since 1993 they have not put one cent into the construction of social housing. Money has been put into maintaining existing stocks.

And it is the same for tax fairness. We have been talking about it since 1989. We have quotes from the Prime Minister saying that it was not right that people in a certain tax bracket did not pay income taxes because they could take advantage of tax havens. He was indignant about this practice. And what is the Prime Minister doing now? He has a family firm in Barbados. In 1998 he introduced a bill himself, C-28, which enabled him to avoid paying $100 million in income taxes in Canada.

This is the same man who talks out of both sides of his mouth. He did the same thing with Newfoundland and Labrador and he has done the same thing on many issues. When people speak disparagingly about the credibility of politicians, it is because this kind of people do pretty much the opposite of what they say in election campaigns. They make promises that they do not keep, unless they are made in writing or in front of witnesses.

It is serious and it is bad for everyone, for all members of Parliament and for the credibility of the democratic process. We should be angry with them; not only for Newfoundland and Labrador, which has been treated arrogantly and in cavalier fashion, but also for the negative effect they create in the public as to the credibility of the parliamentary process and the democratic process, too.

[Jack Layton, NDP, Toronto—Danforth, ON]

Madam Speaker, I am pleased to participate in this debate. The New Democratic Party of Canada is pleased to read into the record the commitment that we made to Premier Williams in the run-up to the last election.

The premier had requested the party leaders to respond in writing to the situation facing Newfoundland and Labrador, and we were very pleased to respond. We may very well have been the first to respond. I simply want to read into the official record what we said at the time. It is a position that we continue to hold today:

The NDP supports Newfoundland and Labrador receiving 100% of its offshore oil and gas revenues to make it the ‘principal beneficiary’ of these resources based on the principles set forth in the Atlantic Accord. As I will repeat later in this letter, this view is part and parcel of the NDP's strong view that Canada needs a national energy strategy that not only corrects such fiscal imbalances regarding resource extraction, but also best positions our country for a future under the Kyoto Protocol and beyond.

Certainly, the people of Newfoundland and Labrador should have an ownership stake in offshore oil and gas developments as equity partners. We would expect that an ownership stake would be a pre-condition of all future developments. The Government of Canada, as an equity partner in Hibernia, has already recouped its investment and should transfer its 8.5% equity share of the Hibernia project to the Province.

We were the only party to make that commitment. We were responding to the very persuasive arguments put forward by the leader of the New Democratic Party in Newfoundland and Labrador, Jack Harris.

When it comes to equalization, I will quote further from our letter dated April 25 to the Premier of Newfoundland and Labrador:

Newfoundland and Labrador has the lowest personal per capita income, the highest unemployment rate, and the lowest labour participation rate in Canada. Federal government transfers to the province are shrinking. The NDP supports a renewed equalization formula that is based on a ten-province standard that would increase fairness and provide for greater equality across Canada.

The elimination of Established Program Financing and the Canada Assistance Plan was extremely destructive to health care, post-secondary education and social service programs across the country and has led to greater inequality between individuals and provinces. We agree that restoring transfers to the 1994-95 levels, adjusted for inflation, would be an extremely important step in restoring federal funding to these important national objectives.

There are a couple of aspects of this position which I would like to speak about today. First of all is the importance of making a commitment and then sticking to it after we have asked the voters to judge us on the basis of what we promised. That is why we put our commitment in writing in detail.

The people of Newfoundland and Labrador in particular have a reason to be skeptical about the positions taken by national leaders, particularly given the experience of the last number of years under the Liberal government. All kinds of promises were made at election time, then only to be broken. We have seen a list of broken promises from the Liberal Party which is so long that if we were to try to enumerate them, it would consume not only the remainder of my speaking time but probably the speaking time of most other members in this debate today.

What we are speaking about today is a broken promise, a promise made in the desperate rush to try to secure votes by the Prime Minister during the election, a promise to which he did not commit in writing, despite the request of the premier for him to put his commitment in writing. We now see why the commitment was never made in writing. There was never any intention to follow through. There was an intention to leave the impression that the Prime Minister was making the same commitment that, for example, our party was making, so that the voters would be confused or lulled into a false sense of security that if only the big red machine were elected, the various commitments made in the election would be honoured.

In fact what we have seen here is a case of false advertising of the worst and most disgusting kind. It elevated the hopes of people with the lowest incomes, people who are dealing with desperate situations, a province which is struggling with a huge financial challenge with the resources that are unavailable to some other provinces.

It elevated their hopes so that they would cast a ballot hoping that there would finally be some redress for their province and that they would finally be able to secure some of the benefits from the resources that lay offshore. A tragic slap in the face has been administered to them for the trust that they offered in the election with their votes. That in many ways is the most egregious element of the issue we are discussing today.

On the question of equalization, I spoke this morning with Jack Harris, the leader of the New Democratic Party in Newfoundland and Labrador. He made a number of very simple and straightforward points. He told me that if Newfoundland and Labrador were ever to be able to achieve or exceed the five province average or any other multi-province average for this federation, there would be dancing in the streets in Newfoundland and Labrador.

There is this notion that somehow we have to protect ourselves against the eventuality a number of years down the road that Newfoundland and Labrador would suddenly be wallowing in billions of dollars of resources and would simply sit on it and never even consider the issue of equalization adjustments in the future. That Newfoundland and Labrador would never participate in any discussions and would adopt some sort of arrogant attitude with regard to that is completely inconsistent with what we know about the people of Newfoundland and Labrador, their community spirit and their desire to play a role in Canada. Frankly, it stands as an insult. It is a profound insult particularly taken against the fact that they were made a promise and now that promise is being broken.

No wonder there is anger among the communities right across Newfoundland and Labrador today as we debate this matter. They are simply looking for fairness and justice and to be a full part of this federation in every way, so that the quality of life of their children and seniors can be addressed in the same way as it is addressed elsewhere in the country. Right now that is denied and all the evidence points to that fact.

What we need to do in Parliament is address inequalities that exist in our country. We need to take a look at the nature and extent of those inequalities and propose solutions. That is what we in the New Democratic Party did. We sat down and looked at the situation being faced by Newfoundland and Labrador. We looked at its resources. Just by virtue of the fact that they are offshore, the federal government is able to take 70% of the royalty revenue from those resources. What is fair about that?

Elsewhere in Canada if the resources are underneath the land mass, of course there is a much more significant revenue flow. It is for that reason the Atlantic accord was put together: to recognize these geographical facts and to try to insert some level of justice that could also allow us to achieve greater levels of equality in our country. That is why there was a fundamental commitment to shift the way in which those resource allocations were going to be made.

The premier and all of the parties at the time, in fact the whole population of Newfoundland and Labrador, called on those of us who were running for election to make a commitment. The premier wanted us to make our position absolutely crystal clear as to whether we were going to honour the needs and obligations that we have in a federation that is going to have some level of fairness associated with it. The consequence was that we put our commitments in writing and made them absolutely clear.

Voting for the motion today is one way in which we can acknowledge that we were serious when we made these commitments. We have full confidence that once those resource revenues start to flow, and we hope they start to flow soon to restore some hope to those communities, there will be a transformation in Newfoundland and Labrador. Then the can do attitude of the people of Newfoundland and Labrador will be unleashed because finally they will have available to them some of the resources from the natural wealth that lies offshore beneath the ocean.

They have been denied their way of life by virtue of the collapse of the cod stocks. We know that the people of Newfoundland and Labrador have been struggling with enormous adversities. We have a chance to right the balance. The question is, are we going to do it? Are we going to make a statement? Are we going to put pressure on the promise breaking government to do the right thing?

Our party will be standing with the people of Newfoundland and Labrador, saying that it is time for justice. It is time for some equality and it is time for promises to be honoured. That is where the New Democratic Party of Canada stands.

Let me address in a little more detail the issue concerning the whole question of the relationship between resource revenues, royalties, taxes, et cetera. I do not think it has been communicated well enough that even after this so-called 100% situation is fully rectified, the federal government will still be receiving enormous revenues from the oil and gas fiscal situation by virtue of corporate taxation.

According to Mr. Harris, the leader of the New Democratic Party in Newfoundland and Labrador, fully 53% of all revenues generated by the offshore, even after the 100% is guaranteed, will actually arriving at Ottawa's door.

Let us not try to pretend that somehow the federal government or the people of Canada would not be adequately protected or would not share in the revenues coming from Newfoundland and Labrador. The people of Newfoundland and Labrador are doing nothing more than asking for a fair share. Our position is that they are entitled to that fair share.

If we take a close look at the conditions of life in Newfoundland and Labrador right now, we would see that by most indicators the communities and individuals are struggling. The province is losing its young people. It is in deficit. It has a very large debt by comparison with its population. Surely the idea that some day there might be enough revenue that the province could actually address these issues should not be used as an excuse to not even provide it with the revenues in the first place. That is essentially the line of argument that we are hearing.

It is time that we took a look at problems that exist today and the solutions that are available today and that we are committed to, instead of looking off into the future and imagining scenarios that might or might not unfold and assume that no Parliament or group of provinces sitting down with goodwill in the future, if there were changed circumstances, could sort things out. That is a very pessimistic strategy that does not solve problems. We have problems right now that need to be addressed.

In closing, it is time for us, first, to honour the commitments that we made. The Prime Minister is in the process of breaking his promise. That is not acceptable. It is time for us to honour the right of Newfoundlanders and Labradorians to have a fair share of their offshore revenues so that they can build the kind of community in society that they have been desperately yearning to do and they will have that capacity if we provide them with the resources that are rightfully theirs.

[Gerry Byrne, Liberal, Parliamentary Secretary to the Minister of Intergovernmental Affairs]

Madam Speaker, I have spent countless hours, days and weeks trying to coalesce a coalition to develop a consensus around this issue to get broad based support for the principles behind something which I think is essential. It concerns the economy of Newfoundland and Labrador in terms of its opportunities, but also in terms of its needs.

One of the things that we have learned in this House in a very short session of Parliament so far is that these motions have impact. These motions are gauged and judged by the words that make them up.

We have seen in this House already some contentious motions put forward about the fiscal circumstances and transfers in our country. In fact, one of the very first motions to come forward was put forward by the Bloc Quebecois and was perceived to give certain preference, during the course of the equalization conference, to one province over the other. I am not going to judge or prejudge that, but many premiers had a very specific point of view about that. They felt that the language of the motion put them at a disadvantage.

One of the things that I know about this, and the leader of the opposition will agree, is that this motion calls on the federal government to immediately implement its pledges and to allow the provinces of Newfoundland and Labrador and Nova Scotia to keep 100% of their provincial offshore oil and gas revenues.

As I said earlier, the details of this are very important. The wording of motions is not without consequence and is not mundane. The wording is very important. We have heard in this House from the Minister of Natural Resources and others that currently Newfoundland and Labrador keeps 100% of its provincial offshore oil and gas revenues.

Would the leader of the NDP agree to and support, and help develop an amendment with the mover to actually articulate the technical language that is required to enact the Premier of Newfoundland and Labrador's wishes?

If there were an economist or a public policy analyst that would come forward, the very intelligent people of Newfoundland and Labrador would attest to this because they have been following this for quite some time. They know that this language is not fully subscribing to what is required in that equalization is not an offshore oil and gas revenue. It is a transfer from the federal government to the provinces. Equalization is a transfer and is not encompassed in the provincial offshore oil and gas revenue scheme. Therefore, if we were to define this after the fact, we could come to the conclusion that this actually does not necessarily fulfill the wishes of the provinces of Newfoundland and Labrador and Nova Scotia.

What we really need to do, and I think the hon. member would agree with me, is to clarify the centrepiece of the issue here in that there is a disagreement on technical language and what that language means. I want to clarify that. I want to get to the root of this. I want to put forward a very clear, succinct and straightforward principle which honours the commitment, and actually enacts and does that which was intended, not only through the accord but through other commitments. Will the hon. member assist me in doing that?

[Jack Layton, NDP, Toronto—Danforth, ON]

Madam Speaker, it appears to me that the question is actually asking the members of the opposition to do the work that the government is supposed to have done. Where has the government been since the Prime Minister made the promise to the people of Newfoundland and Labrador?

It is now being suggested that we should develop the technical language so as to give effect to the proposals. What was going on during the months of July, August, September and October? What was the government up to during that period? Taking a holiday and contemplating which promises it was going to be able to break?

This is a completely unacceptable proposition. It is being suggested to the members of the opposition, who intend to support the motion, that we should be sitting down and revising the motion to come up with the technical wording, so as to do the job that the government was supposed to be doing.

It is very clear that the government had no intention of honouring its promise. The Prime Minister had no intention of honouring that promise. If he had, he would have put it in writing.

It is clear that the Leader of the Liberal Party at the time and now the Prime Minister was simply prepared to say whatever it took to secure votes and then did absolutely nothing in order to put together the kind of proposal in detailed, technical language that would have given effect to that promise. The consequence was that a premier felt that an entire population of a province had been slapped in the face. We share that view; we have the same analysis.

As it happens, the cap that has been proposed in the government's offer to the people of Newfoundland and Labrador will cost in this upcoming year $100 million in forgone revenue to the people of that province. By the year 2007, it will be $600 million.

If the House were to ask what is my source for that information, I would refer members to any one of the political parties in the province of Newfoundland and Labrador. They will provide exactly the same analysis. I happen to have received mine from Jack Harris, the Leader of the New Democratic Party in Newfoundland and Labrador.

I have received a lot more time for a three party consensus analysis of the impact of this from the people of Newfoundland and Labrador than I have from the government. The government has not presented any details. It has not even operated with what could be described as a modest amount of good faith. We have simply seen inaction, dragging feet, broken promises, and the unfair treatment of the people of that province, and we should add Nova Scotia as well, as the hon. member did in his question to me.

It is frankly the kind of strategy and behaviour on the part of the government that causes many people to lose faith all together. They really begin to lose faith in the political process when they see fundamental promises broken time and time again: promises on child care, broken for 11 years; promises on stopping the privatization of our health care and then doing absolutely nothing about it; advertising campaigns launched so that people would vote for the Liberals in order to avoid a George Bush agenda, and then we find discussions about implementing missile defence; and breaking all of the promises once again. It is a non-stop list. We could add Kyoto and the protocol to reduce emissions which is another broken promise. The list is so long that I am not going to consume the time of the House of Commons.

It is important that we move toward a vote on this issue and show the people of Newfoundland and Labrador that there are at least some members of the House of Commons, and the New Democratic Party members stand proudly among them, who are ready to honour the commitments that were made during the election because that is a fundamental element of a well-functioning democracy.

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

Madam Speaker, I know time is short so I have just a brief question for the hon. member.

Let me thank the hon. member on behalf of the people of Newfoundland and Labrador for standing up for our province and for coming to our province and making a commitment. Along those lines, I would like to ask him a question. He was expected to put his commitment in writing, which he did. Our leader was expected to put his commitment to the province in writing, which he did. In the view of the leader of the NDP, why is it that the Prime Minister did not or would not put his commitment in writing?

This I ask particularly in light of the fact that just a week ago, after a long period of negotiations, discussions and commitments, the Minister of Finance gave what he knows is a half-hearted offer to the province, which has been rejected but was pushed by the Minister of Natural Resources with a take it or leave it comment. As the member has outlined, the effect would be disastrous for our province.

Why the discrepancy in what he was expected to do, what our leader was expected to do and what the Prime Minister should do?

[Jack Layton, NDP, Toronto—Danforth, ON]

Briefly, Madam Speaker, the member's question requires me to attempt to penetrate the mind of the Prime Minister. I do not intend to do that and I will not go into the reasons why.

I will simply say this. Those of us who were running as leaders of political parties in the last federal election were requested respectfully by the Premier of Newfoundland and Labrador to put our comments in writing. I consulted very extensively with Jack Harris, the leader of the New Democratic Party in Newfoundland and Labrador, in developing my response, because he knows so well the needs of that province and he shares our values and our philosophy in how things should be approached. We put our answers in writing.

I cannot speak for the Prime Minister. He will have to speak for himself in the next election when it comes to the support of Newfoundland and Labrador.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Madam Speaker, I have been following this debate and have certainly attempted to listen closely. I have listened very closely to the government members and their discussion over the language of the motion.

I would like to put the motion on the record:

That this House deplore the attitude of the Prime Minister of Canada at and following the First Ministers' Conference of October 26, 2004, and that it call on the federal government to immediately implement its pledges of June 5 and 27, 2004, to allow the provinces of Newfoundland and Labrador and Nova Scotia to keep 100% of their provincial offshore oil and gas revenues.

To talk about language is sheer lunacy. This is not a bill. This is not something that the government takes tomorrow and turns into cold hard cash and then revenue flows into Atlantic Canada. This is a motion that could become a bill. The government gets to manipulate and change the wording of the motion if it cares to implement it. Do not give me this trivial foolishness and excuse that somehow this motion cannot be accepted by Liberal members on the government side. That is absolute sheer lunacy.

This offshore accord for Newfoundland and Nova Scotia is a greater tragedy than the Ocean Ranger.

[An hon. member]

Oh, oh!

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I was working in the offshore. I was there. I don't know where the member was, but I was there. I worked on the rigs in Nova Scotia and I worked on the rigs in Newfoundland, and I saw a rig jacked up in the middle of the night so it could get an air gap so that the waves would not hit its bottom.

This is a huge tragedy. This is the future of Nova Scotia, this is the future of Newfoundland, and it is a tremendous tragedy.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

That is not an appropriate metaphor. Eighty-four people died.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Let me tell you something. If you want to call me out of order, you try. I was there. I do not know where you were, but I was there.

Newly minted Liberal statisticians: that is what I have been listening to. As we know, a statistician is someone who often, when working with the numbers, first looks at what is required for an answer and then finds the means to manipulate the numbers to come to that answer. I would say that we have a newly minted group of Liberal statisticians in the House, because they have looked for the answer first and now they are attempting to find a way to get to the answer. I can tell members that is what I have been hearing from the government benches. We cannot do it. We owe more to the future of Nova Scotia and more to the future of Newfoundland and Labrador than that.

Madam Speaker, I should say that I will share my time with the member for New Brunswick Southwest.

It would be my sincere and heartfelt opinion that all government members in this debate, and especially the Minister of Natural Resources, should follow the sage advice of our elders that one really should not deliver a speech if one has no intention of improving on silence. Silence is what we are used to hearing from the Liberal members on this issue. Suddenly today some of them found their feet underneath them, but we have a series of Liberal cabinet ministers and parliamentary secretaries we have not heard from in this debate.

I will give the Minister of Natural Resources credit that at least he showed up. There are more in the series: the Minister of Fisheries and Oceans, the Minister of Public Works and Government Services, ministers from New Brunswick, ministers from P.E.I., and the parliamentary secretaries in all four Atlantic provinces. All of them do not deem this debate important enough to participate in. That is a real travesty of their right to be a parliamentarian.

Beyond the silence, we have heard excuse after excuse from the Minister of Natural Resources as to why he is not fighting. He is not fighting for the prosperity of Atlantic Canada. During the election as late as June 27, the Prime Minister assured Atlantic Canada--and won seats in Atlantic Canada based on his assurance--that he would deliver 100% of the offshore royalties.

I can tell members what we get today and I do not need to be a statistician to manipulate the numbers, because these are the facts. The Province of Nova Scotia receives 19¢ of every federal dollar from offshore revenue. The federal government receives 81¢. The Province of Newfoundland and Labrador receives 27¢ of every federal dollar. I do not think that is a fair cut. I do not know if these guys are card players or mathematicians or what they are, but if that is called equality, it is not equality based on the premise that I understand equality to be based on.

Why is it that the moment someone becomes a cabinet minister in this government he is suddenly emasculated and silent? Why is it that these ministers no longer understand the reason they were elected to this House, which is to stick up for the part of the country that they come from regardless of where that part of the country is?

Let us not mix this up with this convoluted equalization formula. This has nothing to do with equalization. This has everything to do with fairness and there is certainly no fairness here.

In 1987, when Nova Scotia signed the final Canada-Nova Scotia offshore accord, there was no offshore, so it was easy for the government of the day, and with good intentions, I would say, to say that Nova Scotia would be the chief beneficiary of any revenues flowing from the offshore.

Let me tell members, though, that Nova Scotia is not the chief beneficiary of the offshore. This is not about changing the language. This is very simple. This is all about fairness.

Let us take a look at what we in Atlantic Canada actually receive from the offshore. This agreement would be a baby step, a very important first step for the region, because excepting the royalties there is not much else in Atlantic Canada coming from the offshore. Most contracts that supply the rigs are with foreign-owned industry. Offshore resources are taken elsewhere. Refining, processing and petrochemical industries are not located in the region. Even with the agreement, the Atlantic provinces will not be getting the full benefits of their offshore resources. Places like Norway--where the industries are set up at source and around the coast and the jobs stay at home--get the royalties plus the benefits from the infrastructure.

How is one able to build infrastructure? By keeping the royalties and by having the wherewithal to build the infrastructure that puts those extra jobs in Nova Scotia and Newfoundland and Labrador.

If we look at the press releases and if we are following this closely, as I am sure all members in the House are, the Prime Minister committed to reforming the equalization system under which the richer provinces support the poorer provinces. He has not been able to do that, and on top of that he has not been able to even deliver to Newfoundland and Labrador and Nova Scotia the royalties that they deserve from the offshore. He made an election promise of 100%. I would expect and I would be certain that he would intend to respect his pledge and deliver 100%.

I have one minute left and a lot to say. It is almost criminal to think that to this government 100% means an eight year limit to a deal and then a clawback of royalties should Nova Scotia and Newfoundland and Labrador, heaven forbid, become as wealthy as Ontario. Could we imagine another province in this country as powerful and as wealthy as Ontario? Absolutely scandalous. Ontario is the breadbasket and the heartland of this country, but we should not link other provinces to being as wealthy as Ontario nor should we say shame on them if they are wealthier than Ontario. I do not think there is one person in Ontario who would think that is a fair formula, not one. I ask members to try to find one and get the person to state that publicly. It is ludicrous.

In my opening remarks I referred to statisticians. I would like to apologize to any and all statisticians if any of my comments caused hurt or cast aspersions on that very dedicated and illustrious group. However, I have no apology at all for the Liberal members opposite.

[Scott Simms, Liberal, Bonavista—Exploits, NL]

Mr. Speaker, I want to begin by saying that I was insulted by my hon. colleague's comment. For him to say that this is a greater disaster than the Ocean Ranger disaster undermines the situation and, as a Newfoundlander, I am completely insulted. More than 80 lives were lost in that disaster. I will not listen to any member undermine the greatest disaster in the offshore that Newfoundland and Labrador has ever seen. I ask the member right now, in front of everybody, to retract his statement.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, I think I understand, probably better than the member opposite, but I certainly did not want to cause grief to anyone related to those lost on the Ocean Ranger. However, unlike the member opposite, I knew people on the Ocean Ranger and I worked in the offshore. I understand exactly what happened out there that night.

However, if the member thinks it is not a tragedy for Newfoundland and Labrador to sacrifice its future, then you have it wrong.

[The Deputy Speaker]

I remind the hon. member to address his comments through the Chair.

[Gerry Byrne, Liberal, Parliamentary Secretary to the Minister of Intergovernmental Affairs]

Mr. Speaker, I think there are certain concerns. The Ocean Ranger was indeed an absolutely terrible disaster and we never want to undermine that. I will not put it in any other context than that.

I would also say that we are trying to rectify an important piece of public policy which is a matter of a completely different nature. What the debate is all about today is to get to the grassroots, to the bottom of this in order to do what is in the best interest of Newfoundland and Labrador, Nova Scotia and Canada.

When I say that my preoccupation is on the language, it is because it is the tool of the House and the tool of public policy. Language is the essence of law and so it is very important. We need to examine the controversy and circumstances that surround the Atlantic accord and the fiscal transfers that would occur to be able to build up Newfoundland and Labrador and Nova Scotia to a point where we would all be exceptionally proud. It is the same point that we are at. We are very proud of it right now.

We are proud that a coalition of a non-partisan nature is building but to simply say that this has nothing to do with equalization, echoes my point that we must seek clarity on language. That is why I am asking hon. members opposite to provide, in an all party way, clarity to that language. If we can speak with one voice in this House, then the will of Parliament must and should be imposed on the government. That is why I am asking for that clarity. There is no other motive other than that.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, this is not about language. This is about fairness and the future of Nova Scotia and Newfoundland and Labrador. This is about honesty and about keeping promises. This is an opportunity for Atlantic Canada to share in the wealth and contribute to the wealth of this great country.

The hon. member tries to say that this motion is somehow law and somehow a bill. This is the first step on the journey. There is nothing in the language of the motion that should stop any member of the House, who supports Atlantic Canada, who supports Newfoundland and Labrador and Nova Scotia keeping 100% of their royalties, from supporting.

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

Mr. Speaker, I want to pick up where the member for South Shore left off.

In my mind the importance of the debate is to remind Canadians of a promise that the Prime Minister of Canada made and had no intention of keeping. When we get lost in the minutia of the equalization formula and the detail, I think we lose focus on what this whole thing is about.

The Prime Minister went to Newfoundland in the heat of an election campaign, with the bottom dropping out of his campaign, both going south in a panic mode, making a promise that he had no intention of keeping. What famous humorist came up with this expression: “We have lies, we have damned lies and then we have statistics”? The fact is that the Liberal Party of Canada wants to refocus the issue. It simply wants to get into the minutia and the details of an agreement.

However, as the member for Central Nova, our deputy leader, mentioned this morning in his remarks, what is it about 100% that the Liberals do not understand. The issue is that the Prime Minister made a promise that the province would keep 100% of the offshore revenues and that the revenues would not be clawed back in the equalization formula. It is that simple. As soon as we deviate from that we are playing into the hands of the Liberal Party of Canada because it has made so many outrageous promises over the years. In fact the leader of the NDP pointed out some of those.

Mr. Speaker, you and I have lived through some of those. I just want to remind the listening public of some of the promises made in the past that the Liberals did not honour. This is just one more, the promise made in the heat of an election in Newfoundland in terms of the offshore revenues.

Everyone will remember the GST. The Liberals said they would eliminate the GST. How many members over there got elected in 1993 because of that outrageous promise? They had no intention of keeping that promise. They did not keep that promise and yet they were elected on it.

That was the same party that said it would tear up the free trade agreement, if hon. members remember that one. That goes back to the 1988 election, the first election in which I was elected. The Liberals were demonizing the Americans at that time and said that they would rip up the free trade agreement if elected. Of course in 1993, along with the GST promise, was the promise that they would renegotiate the NAFTA agreement. They did not change a comma in the NAFTA agreement.

We talk about the success of Alberta, the oil patch in Alberta and how much wealth that has generated. We want the same level of fairness applied to Newfoundland. That is an argument that the member for Central Nova brought forward this morning, so I will not go through that.

I do want to touch on the national energy program. Prime Minister Trudeau at the time saw an opportunity to go out and rob Alberta of its revenues. The national energy program was all about bringing all that wealth into Ottawa so the Liberals could redistribute it at will. It took a Conservative government to unravel that program. The fact is that I think it will take a Conservative government to unravel the promise that the Prime Minister made.

The Prime Minister is used to getting up in the House and making outrageous promises or of pretending he knew nothing about nothing. It sounds like Tony Soprano to me, “I know nothing about nothing”. That is exactly what the Prime Minister does in this place, day in and day out. It is like the ignorance he enjoyed in the House in regard to Canada Steamship Lines and how much revenue was generated by contracts from the Government of Canada, which he said was just a few hundred thousand dollars. It turned out to be several hundreds of millions of dollars of revenue generated by his company under contract to the Government of Canada when he was finance minister.

The Prime Minister cannot be believed, and the election last June pretty well proves that. What the motion is all about today is forcing the Prime Minister of Canada to honour the commitment he made this past June in the middle of an election.

We are saying that the provinces of Newfoundland and Labrador and Nova Scotia should be allowed to keep 100% of their provincial offshore oil and gas revenues. It is that simple. We simply want the Prime Minister of Canada to honour a promise made in an election simply for the purpose of gaining public support and winning enough seats to come back here as Prime Minister of Canada.

I guess the strategy worked as a clever political strategy but I believe that time has caught up with the Prime Minister and with the Liberal Party of Canada. As I have mentioned, the Liberals have a history of doing this.

Let us do the right thing. Let us support the motion that is before the House today, let us keep the heat on the Government of Canada and let us give Atlantic Canada its fair share of the prosperity that the rest of Canada enjoys.

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

Mr. Speaker, what many people who are watching today may not know is that the member who just spoke is from New Brunswick. We have heard already from the leader, who represents Alberta. We have also heard from members from Nova Scotia and from members from my own province of course. During the day we will hear from members from other provinces who support our province in this because this is a fairness issue.

From my colleague's perspective as a New Brunswicker, what does he think about fairness? What does he think about broken commitments to Atlantic Canada? Is this the way to build a nation?

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

Mr. Speaker, that is a very good point. Canada building should be about sharing the wealth and honouring commitments made. Unfortunately, the Prime Minister of Canada takes this very lightly.

The truth is that members from all parts of Canada, all provinces and territories, are getting up and speaking about this level of fairness because what is good for one part of the country is good for the rest of the country. That is really what it is all about, sharing the wealth, is it not?

The issue back home, back home in the sense of Atlantic Canada, is that we do not enjoy that level of prosperity. This whole debate is about sharing that prosperity. We do not know when there will be the same types of discoveries made in the Bay of Fundy which might, for example, benefit P.E.I., or possibly New Brunswick, or the Northumberland Strait, but the fact is that we would expect the same type of treatment. That is why we are standing in this House in support of Nova Scotia and Newfoundland and Labrador and telling the Government of Canada that, it is just as simple as that. We are asking the government to honour the promise and the commitment it made in the heat of an election campaign.

All I can say is that the Prime Minister's words are pretty empty. I believe the government had no desire to honour that commitment.

[Scott Simms, Liberal, Bonavista—Exploits, NL]

Mr. Speaker, I listened with particular interest to a couple of my colleagues across the way concerning this issue. Certainly over the past two months I have been talking with many people in the federal government and in the provincial governments, and have spoken to many experts in the field. I am getting a good grasp of the equalization formula and everything that it involves.

I would like to ask that particular member, who seems to have a genuine interest about providing what is just and what is right, to explain to me how this deal falls short of expectations in the sense of fiscal capacity and also in the sense of the clawback itself. Perhaps he would like to explain it to me in detail because I would like to get his take on it.