Mr. Speaker, at the end of the first part of my speech before oral question period, you will recall that I was talking about the first ministers conference on health that was held in September. I pointed out that we had said we could consider the conference had been successful only in light of the results of the October 26 conference.
As I was saying, the results speak for themselves. Why would we measure the success of the first ministers conference on health in light of the results of conference on fiscal imbalance? Simply because if the government increases health transfers on one hand, but lowers equalization payments or does not increase them significantly enough on the other hand, then clearly the provinces are still stuck with a shortfall. We were therefore very interested to see what would come of the October 26 conference.
As I was saying, the results have not been very conclusive. It started with the sudden departure of the Premier of Newfoundland, who complained that the government had broken an election promise. It ended in an equally glorious departure of the less wealthy provinces, which went home empty-handed from this conference on the fiscal imbalance, because the money destined for equalization had not been increased beyond the amounts announced by the Prime Minister in September. In fact, it would have been better not to have had the October 26 conference, because the result was just what had been announced at the first ministers conference on health.
Quebec, for example, was expecting additional transfer payments of about $3.3 billion from the federal government, in social transfers for health, higher education and social services, as well as equalization. But after these two conferences Quebec still faces a shortfall of $2.4 billion. In brief, there is every reason to be disappointed, in the case of Quebec and a number of other provinces.
Meanwhile, we have learned that the federal surplus will be around $9 billion for the current year. I would point out that the Conference Board estimated the accumulated federal surplus at the end of 10 years at about $166 billion. During this time, several provinces still have deficits and increasing public debts.
Let us return to equalization. What is equalization? As the hon. member for Saint-Hyacinthe—Bagot explained, it is the only federal program enshrined in the Constitution. Section 36(2) of the Constitution says that equalization aims “to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.”
Consequently, the goal of the equalization program is fairness, trying to make sure that the services offered to all Canadians, to all Quebeckers, are at a reasonably comparable level, taking taxation rates into account.
The Conservative motion before us today suggests the implementation of an ad hoc measure that would have very unfair and inequitable effects. To all intents and purposes, they want all oil and gas revenues returned to the governments of Newfoundland and Nova Scotia, but not included in the calculations for equalization payments, or if they are, they want the federal government to compensate for the loss of revenue that would result with respect to equalization.
The purpose of equalization is to have the richer provinces share with the poorer. So, if one province gets richer, then logically there would be an equivalent reduction in its equalization payments.
What they are asking for, basically, is to have their cake and eat it too. They want 100% of oil revenues, but once that money is in their pockets, they do not want to see it affect equalization payments in any way. This is absolutely unfair and therefore absolutely unacceptable.
This Conservative motion boils down to offering a premium to provinces with non-renewable energy sources at the expense of those with renewable energy sources.
This is all the more unacceptable and unfair because the federal government, which includes Quebec, has generously subsidized the development of fossil energies, including non-renewable energy sources, whereas Quebec has developed its own hydroelectric networks on their own, a renewable energy source
From 1970 to 1999, the federal government contributed some $66 billion in direct grants to the fossil fuel industry—in other words, coal, oil and natural gas—compared to a very modest $329 million for any form of renewable energy. It is important to note that there was not one cent for the hydroelectric energy that Quebec developed on its own.
In addition, the federal government, as part of its bad record when it comes to green energy, unfortunately dropped the development of nuclear fusion in Canada, prompting the closure of the only nuclear fusion reactor in Canada, which, incidentally, was in Quebec.
How can we believe this government when it claims it wants to comply with the provisions of the Kyoto protocol when we know that history shows that this government has never been truly concerned about the environment and that nothing has changed recently?
We have to learn from what this government has done in the past in light of the provisions of the Kyoto protocol. Quebec has paid for oil development just by being part of the Canadian federation. It is out of the question that Quebec will continue to do so.
Ultimately, when we take a closer look at what the Conservative Party is proposing, in addition to being fundamentally unfair to Quebec and the other provinces, which are less wealthy or are focusing on renewable energies, the motion could seem disadvantageous or even disastrous for Newfoundland and Nova Scotia.
Let me explain. We have to understand that if we exclude non-renewable resource revenues from the equalization formula this could be interpreted to mean that we should also exclude them from the revenues of a province like Alberta. That would mean that a province like Alberta would become less wealthy, which could translate into a decrease in equalization payments for all the beneficiary provinces, including Newfoundland and Nova Scotia.
Although at first glance this Conservative Party motion seems tempting and interesting for Newfoundland, a closer look shows that ultimately, it would be detrimental to Newfoundland and Nova Scotia.
We do not need patching-up. What we need is a comprehensive reform, a reform from top to bottom of the equalization system. It has been twisted and completely denatured by the current federal government. We must reform it completely and make it much more equitable.
This morning our colleague from Saint-Hyacinthe—Bagot, who is an economist by training and profession and thus can speak much more competently than me in this field, explained some possible ways of reforming the equalization system in depth. It is not enough to stick on a few band-aids here and there depending on the circumstances of one province or another.
The thorough reform of the equalization system would be the first step toward solving the thorny and enduring problem of the fiscal imbalance. Because of the fiscal imbalance, the federal government takes in too much revenue for its responsibilities in comparison with the provinces, which have much greater responsibilities and levels of services to provide to the people, but which do not have the same tax base as the federal government.
That is what we need and that is what we expected of the conference on October 26. We absolutely must move forward with a thorough reform of the equalization system so that we can begin to find a definitive solution to the problem of the fiscal imbalance.
Although I repeat that we are sympathetic and that we understand the indignation of the Government of Newfoundland, we will not be able to support the motion by the hon. members of the Conservative Party of Canada.
Since I would like to make good use of the seconds remaining to me, I will say that the indignation of the Government of Newfoundland is based on the fact that the federal government, and I refer to the Prime Minister, has broken some of his promises. It would not be the first time.
Take the GST for example. In 1990 he declared, “I think the GST is a stupid, inept and incompetent tax—When we come into office in 1992, I will send the GST back to the drawing board.” Far from withdrawing from any tax field, as we can see, he is still there and so is the fiscal imbalance. That is what provokes the kind of reaction and the problem we are facing today and makes this debate necessary.