Debates of Feb. 27th, 2004

Petitions

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, I have the honour to present a petition from constituents and other citizens calling for the release of five Cubans who have been held in detention in the United States since September 1998 and were sentenced in 2001 to lengthy prison terms ranging from 15 years to a double life sentence. Their trials and the conditions under which they are being detained violate the American Constitution and international law. Also, more than a hundred committees around the world have been set up to demand the release of these five Cubans and a new trial.

[Paul Forseth, Canadian Alliance, New Westminster—Coquitlam—Burnaby, BC]

Mr. Speaker, I have a number of petitions to present.

The central theme of the petitioners' request is that Parliament take whatever action is required to maintain the current definition of marriage in law in perpetuity and to prevent any court from overturning and amending the definition.

[Paul Forseth, Canadian Alliance, New Westminster—Coquitlam—Burnaby, BC]

Mr. Speaker, I have a petition on a separate topic. The petitioners pray that Parliament take all necessary measures to protect the rights of Canadians to freely share their religious and moral beliefs without fear of prosecution.

Questions on the Order Paper

[Sue Barnes, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, I would ask that all questions be allowed to stand.

[The Speaker]

Is that agreed?

[An hon. member]

Agreed.

The House resumed consideration of the motion that Bill C-18, an act respecting equalization and authorizing the Minister of Finance to make certain payments related to health, be read the third time and passed.

Federal-Provincial Fiscal Arrangements Act

[The Speaker]

Before question period, the hon. member for Joliette had nine minutes left to conclude his remarks. He has the floor.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, a mere nine minutes is not much to criticize this bill, although I have to admit I had a chance to begin my remarks before question period.

I was telling members that Bill C-18 is a vote-getting ploy. Their first stunt was to combine two separate items in this bill. The only common denominator is money. The first item deals with extending the current equalization program. We oppose that because it penalizes Quebec and Atlantic Canada in particular. The second item is the $2 billion for health that has been promised repeatedly.

Obviously, we agree with the second item. There is a great deal of confusion because both items are included in the same bill. But like I said, nobody will be fooled.

The second stunt is that combining two items, they give the public the impression that, even if they lose a little in equalization, they will have a net gain, with the $2 billion. That is wrong. I explained how, with reference to both the federal government's estimates as well as Quebec's expectations. This applies to all provinces that receive equalization payments. However the figures are compared, Quebec must pay back the sum of $1.4 billion. Thus, it loses, in terms of being able to pay for its needs, particularly in health care.

In fact, the federal government is seeking to recover that $2 billion by lowering equalization payments. The problem is that each transfer formula has different objectives. The CHST is based on population percentage. Thus, out of this $2 billion, Quebec will receive about 25% or $472 million. But if this $2 billion had been paid out in equalization, more than 50% of the money would have come to Quebec. Therefore, we lose in this process and we cannot agree to it.

Once again, it does not matter much which angle we look at these things from, the sum of $1.4 billion that we lose in equalization is not offset by the $472 million we receive out of the $2 billion. Thus, for Quebec, Bill C-18 represents a net loss of about $1 billion. In fact, the amount of $2 billion for health covers only one third of Quebec's losses suffered because of the extension of this equalization formula.

Those were the first two stunts I referred to. There are a few more. The third has to do with Ottawa's claim that there is no money. The finance ministers—past and present—have always used the same non-transparent tactics to cover up the real state of Canadian public finances in the federal government. They told us for months that they were going to have to dig deep to come up with $2 billion and that they were not sure they would be able to.

This is untrue. We realize it now, when everyone agrees that the federal surpluses for this year will not be $2.3 billion, as the Minister of Finance said, but $7 billion to $8 billion.

We can see also that federal operating expenditures have increased by 40% in recent years. These are not transfers to individuals or provinces; it is the federal bureaucracy that has gotten bigger. If the government seriously wanted to reduce operating expenditures, it could easily find $3 billion or $4 billion.

There is the money for foundations, and the Auditor General mentioned this in 2002. There is $7 billion to $8 billion sitting in foundations, whether it is the millennium scholarships, the Canadian Foundation for Innovation or the other foundations. All this money would provide enough leeway to quickly solve the fiscal imbalance problem, in particular through reviewing the equalization formula.

I would add another element that proves to us that the federal government has the means to solve the problem in the short term, and that is that, this year, it announced a $10 billion increase in spending. This is a substantial amount. This is another 6% increase.

So the money is there, the means are there, but there is no political will. The fact that there is no political will has meant that the Liberal government, whether under Mr. Chrétien or the new Prime Minister, does not want to quickly solve this issue.

They have been dragging their feet. This is the first time we have seen a bill like C-18, which proposes to extend by one year the equalization Bill with all the problems this entails for public finances in the provinces, Quebec in particular, as I explained earlier.

The federal government has been dragging its feet and wants to continue doing so because there is nothing in this bill that would allow us to pressure the federal government to move forward in negotiations. We therefore cannot support it.

As I just said, this is the first time we have been required to have a bill to extend the equalization formula by one year. In the past there has always been agreement with the provinces by the March 31 deadline.

This time, the government has been dragging its feet, and is still dragging its feet, and will continue to drag its feet because by extending the formula by a year, there is no pressure on the federal government to resolve this in the short term, especially—and this is the fourth stunt—since there is no guarantee of retroactivity.

Why would the federal government be in any hurry to negotiate if, in any case, it can wait a year until the March 31, 2005 deadline to find a solution with the provinces?

The Minister of Finance has twice said, “Yes, I promise there will be retroactivity”. I want to believe him, but then why, at the Standing Committee on Finance when I introduced an amendment asking for retroactivity to April 1, 2004, did the Liberals turn it down? There is no real guarantee. We have no guarantee that the agreement will be retroactive to April 1 of this year.

They may say, “Yes, but the Minister of Finance gave his word”. What good is the word of the finance minister when it is so difficult to get answers from the government about the sponsorship scandal?

There is a fifth stunt. All this is a strategy to put off serious discussions with the provinces about the equalization formula until after the election. What this government and this Prime Minister want is a blank cheque to decide unilaterally what amount they will transfer to the provinces.

We will not be part of it. We will not support this election-oriented strategy that will deprive Quebec of $1.4 billion this year, because there is no guarantee of retroactivity if an agreement is reached during the year.

However, what the provinces are asking for is not all that complicated, and I will leave it at that. The provinces are asking that the formula be changed to take into account the fiscal capacity of all ten provinces and not only five. They are asking that the payments be more predictable. There have been wide variations between the October and the February equalization estimates. They also ask for more transparency. When some 3,000 variables must be taken into account to calculate the size of the equalization payment, that causes problems.

For Quebec in particular, we ask that property value be based on the real value of lands and properties and not on the revenues received by owners. This deprived Quebec of $400 million last year.

We do not need the government to push through Bill C-18 but rather to give clear indications with respect to the equalization program. As I said before, we agree on the $2 billion. However, the government has to give clear indications on what it intends to do in the upcoming budget. What are the expectations?

The finance minister has said already that there was no question of all 10 provinces being taken into account. The government should make it clear, before the election, so that Quebec voters in particular will know what they are voting on.

We would also need to know if the budget will acknowledge the fiscal imbalance between the federal government and the provinces, the fact that the federal government has far too much money compared to its responsibilities, that the provinces are short of money, and if there is a political will to solve this fiscal imbalance.

There was no sign of openness on the government's part in the debate on Bill C-18. This is not acceptable. We are no fools and we will not support Bill C-18.

[Mauril Bélanger, Liberal, Deputy Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. During question period the question put to the government by the member for Renfrew—Nipissing—Pembroke was answered by the Minister of Agriculture and Agri-Food, who confirmed that no one accompanied the Minister of Finance during a trip to China to promote trade. For the purposes of total and absolute clarity and transparency, there should be a complement to that answer.

I would like to inform the House that there was a video prepared in three languages, in Mandarin, English and French. However, it was prepared in advance of the mission in support of the mission's objective to promote Canadian leadership and innovation and especially that of the natural resource sectors. The research and production for the video were carried out by an agency selected through an established bidding process.

[The Deputy Speaker]

I know that some members have already decided that this it not a point of order. Technically, of course, the Chair allows this clarification. This is because it can happen during question period, in my opinion, that certain things must be clarified in a unbiased way. In so doing, the Chair prefers giving the opportunity to both sides to take corrective action.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I believe you are establishing a precedent. Question period is there for us to ask questions and get answers.

If, after question period, members of the opposition or of the government did not get answers and wish to obtain a clarification, they can, in my opinion, ask for that during the next oral question period. Liberal members can also ask questions, and that would be the time to do it.

However, if we allow a point of order on this, we will end up with points of order after every question period to clarify questions that were asked. It is the government that has to give answers during question period.

With all due respect, Mr. Speaker, I believe it is a mistake to do this, and I wish you would take my remarks into account.

[The Deputy Speaker]

As usual, I take very seriously the intervention made by the hon. member for Acadie—Bathurst in the House of Commons on this issue. However, everyone knows that, when a point of order is raised, we have to wait a while before we know exactly what the remarks are about.

If some members think that the Chair has been too generous, I plead guilty. However, I hope that in the long run, I will show the same generosity toward members on both sides of the House, especially when the remarks deal with issues that were raised during question period. That being said, I respectfully accept the criticism.

We will now proceed to questions and comments with regard to the ongoing debate. The hon. Parliamentary Secretary to the Minister of Finance.

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

Mr. Speaker, I listened to the hon. member's speech, which I thought was quite a good speech. He was wrong, but it was a good speech.

He indicated that he was mystified by this bill. Then he went on to demonstrate that he was far from mystified by this bill. He thought it was for election purposes.

I put it to the hon. member that March 31 will come regardless of whether there is an election in this country or not. If the Government of Canada is to have legislative authority to pass this bill by March 31, then it will have to move through the House. I am puzzled by his opposition.

He seems to wish to put the bill at risk. He seems to wish to deny all the provinces the $2 billion that has been promised by the Government of Canada to the provinces as a supplement to the normal requirements of the CHST. He seems to wish to put at risk the equalization formula.

He then goes on and says how his province will be deprived. It seems to me that his understanding of equalization is seriously flawed. He seems to think that equalization should only go one way, which is up. He does not seem to understand that equalization can equally go down.

Mr. Speaker, you and I are from the Province of Ontario. Who would have thought this time last year that we would experience something such as SARS? Similarly, who would have thought that we would experience the blackout in August, which basically shut the province down for a day and a half or two days? Who would have thought that in January or February of 2003 the Canadian dollar would appreciate something in the order of 22%?

All of those have significant economic and fiscal impacts on the Province of Ontario, and probably determine whether it is a 5 province formula or a 10 province formula.

Ontario's fiscal capacity was reduced. When Ontario's fiscal capacity is reduced, those provinces that receive equalization have a much narrower gap. The consequence of which is that he is right. The Province of Quebec, the Atlantic provinces, Saskatchewan and Manitoba, would receive less money in equalization.

However, the underlying theory of his speech is that equalization should only go up, regardless of how the economy performs and how fiscal capacities are calculated.

I would ask him in all seriousness, does he believe that equalization should operate in an independent bubble, independent of all the fiscal capacities of the provinces, including those provinces such as Alberta and Ontario that are the primary sources of the equalization payments?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, we just had a nice illustration of the fact that this government is not prepared to face the reality. There is a fiscal imbalance. Everyone in Quebec agrees on that. Federal Liberals are the only ones who do not agree. Because of this fiscal imbalance, the provinces, which have responsibilities in areas where costs pose very significant problems, including in health and education, no longer have the means to deliver the services that the public is entitled to.

On the other side, there is the federal government, which generates surplus after surplus and which is wasting our money. It is not just the sponsorship scandal. There is the 40% increase in operating costs, which is double the increase in Ontario and Quebec over the past five years. There is also the $10 billion in additional spending, including $1 billion for defence, when we do not even know what the Canadian army is used for. This is evidence of the fiscal balance.

So, we must find ways to correct this fiscal imbalance. Of course, one of the simplest solutions would be for Quebec to withdraw from the Canadian federation, to take its marbles and to go it alone. Let us not forget that Quebeckers send 60% of their income taxes to Ottawa. As far as we are concerned, this is the preferred option in the longer term.

In the meantime, we will try through every possible means, including the Canada social transfer and the transfer of tax points to Quebec, to correct this fiscal imbalance. We cannot give our support to the federal government for dragging its feet regarding the equalization issue.

At the end of October or in early November, the government already had a bill to extend the equalization program for one year. Back then, there was plenty of time to negotiate with the provinces and quickly reach an agreement. Are we going to support the fact that Quebec will lose $1.4 million, an amount which is not at all compensated with the $2 billion? We are talking about $472 million. We cannot do that.

If the government could give us some guarantees, maybe we could look at things differently, for example, on retroactivity, which is a minimum. Presently, since there is no retroactivity guarantee in Bill C-18, the federal government is under no pressure to solve the issue. Consequently, it will drag the issue until 31 March 2005. In 2005, maybe they will come back with a bill to extend the equalization formula for one more year.

If we were guaranteed that the agreement would be retroactive, that would put pressure on the federal government which, if it played for time, would not be able to unduly penalize the provinces. However, it penalizes them anyway because, when the finance minister will prepare the budget, the provinces will not know how much their equalization payments will be the following year. But they will realize that they will be getting less money than what they got for the current year and less than the year before. Consequently, they will find it very hard to deliver the same services in health care and education.

I have already explained this to you, Mr. Speaker, and I am sure you remember. When we look at Quebec's budget as a whole, if we take out health care and education, there is a mere $9 billion left.

Consequently, it is impossible for a government like Quebec's to balance its books without touching to health care and education, if there is no increase in the federal government's transfer payments through equalization, the CHST or otherwise.

It is in this context that equalization payments must be increased. We must get guarantees that the money will be given to the provinces, particularly Quebec and the Atlantic provinces, which will be facing serious difficulties.

It is clear that the reality of fiscal unbalance has not been recognized. The government is trying to buy time before the election. It wants to get a blank cheque to do whatever it wants after the election. We will denounce that throughout the election campaign.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, it is hard to know how to deal with the underlying thesis of the hon. member's speech. It seems to indicate that fiscal imbalance should be redressed, regardless of economic circumstances, and that it does not matter what formula is used, the federal government should only pay out one way on a formula .

A few years ago there was a happy little surprise in equalization because primarily the Province of Ontario, along with some of the other provinces as well, did very well and so there was a $2.2 billion unexpected surplus in the way in which equalization moneys were calculated.

Does the hon. member think that when that happens, for example, one province enjoys a particular level of prosperity and is prepared through the formula to share with the rest of the provinces, that it should not happen?

I do not understand the hon. member's basic thrust here. He seems to only think that equalization should go up rather than being what it is, truly a formula which has been redressing the fiscal imbalances in this country for 20 years and actually narrowing the fiscal balances over the past 20 years.

Regarding the point that the government is dragging its feet, as was said, there were 47 meetings. Sometimes we end up just talking to the wall.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I think that the parliamentary secretary just proved that the equalization formula is not working. It is not only a matter of amounts. It is great that we could enjoy $2 billion more in equalization payments because the economy was doing well at that point. However, when $1.4 billion or more is subtracted the following year, it makes it difficult for provinces, and particularly for Quebec, to plan.

Not only should the amount be higher, but it should also be more predictable. If the equalization system cannot ensure a proper degree of predictability and appropriate federal transfer payments, a new system will have to be devised. Let us not forget that there is money at the federal level. There is a surplus. There is waste in the bureaucracy. There is an additional $10 billion in spending and $7 or $8 billion are sitting in foundations. There is enough money to increase the transfers. If this cannot be done through equalization payments, let us turn to another system.

The amounts should be sufficient to cover health care and education spending in Quebec. Moreover, the amounts should be predictable and government interventions should not be on an ad hoc basis as is too often the case. A modest $2 billion is given out, but there is no guarantee that we will have it again next year.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I am pleased to be sharing my time with the member for Acadie—Bathurst. Together we are going to be talking about the impact that the equalization program has on Atlantic Canada.

I wanted to start by saying it is a pleasure to speak to this bill but I find that any optimism I once had that the Liberal government was willing to be fair in its dealings on equalization has been sorely shaken by the latest figures on equalization released by Treasury Board. Unfortunately, since November 2003, when I last spoke in the House on equalization and the effects on the Atlantic provinces, the situation has become much worse. I will outline what I mean by that.

Between 2000-01 and 2004-05 total major transfers to the provinces, and that includes the Canada health and social transfer, equalization and tax points, increased by almost 18%. That is up from 15% in October 2003. That is the good news and that sounds not bad. However, in Atlantic Canada, total major transfers dropped by almost 4% during the same period, so the news only gets worse for the poorest provinces.

When I spoke to this issue in November 2003, the Treasury Board estimates indicated that of the $6.4 billion increase in major federal transfers, the Atlantic provinces received minus $200 million. The latest estimates show that out of a $7.6 billion increase in total major federal transfers, the Atlantic provinces received minus $240 million. What a difference four months makes. The have less provinces continue to get even less.

Since Bill C-18 seeks to maintain the status quo on equalization from one year to another, I have to wonder how the government believes it is helping the have less provinces. Apologists for the government will say that the Atlantic provinces should not complain, that we have offshore oil and gas and that our ship has come in. There may be those who say that we should be proud because we are less dependent on federal transfers.

First of all, there is no oil and gas off the shores of New Brunswick and P.E.I. Why have they seen increases in federal transfers that are just one-quarter and one-sixth, respectively, of the national increase? I will tell members why. It has nothing to do with oil and gas. It is that the system of federal transfers is defective. The system is based on population and our region is losing population.

Federal policies are driving people out of our region so our provincial governments are losing hundreds of millions, even billions, in federal transfer money. That is a great system, is it not? Federal economic policies, or lack thereof, drive people out of those have less regions and the government responsible pockets a windfall.

Take equalization payments to Nova Scotia as an example. Last February the Department of Finance estimated that between 2001-02 and 2003-04 Nova Scotia would get $3.72 billion in equalization payments. This February we found that Nova Scotia would only get $3.55 billion. This is a shortfall for Nova Scotia of $170 million, but a windfall of $179 million for the Liberals, almost enough to pay for another Groupaction fiasco.

With an unexpected shortfall of $170 million, there is not enough revenue left to meet the needs of the remaining population in Nova Scotia, let alone to bring forward the economic and social policies we need so that our people will not have to go down the road. It might not be so bad if the Liberals put the money they are clawing back from the Atlantic provinces into the policies we need in order to turn around our outmigration, but they are not doing that. If they are not wasting it on some boondoggle, they are recycling it and claiming it is new.

Over the last two years the government has saved over $3 billion in equalization payments to the provinces. That is roughly half of the “new money” that has gone into health care over that period.

More money for health care, even though it is nowhere near enough, is a good thing, but when half of it is clawed back in equalization, it is like robbing a bunch of Peters, Johns and Garys to pay Paul. When we consider that most of the new health money will go to the provinces with the larger populations, the have provinces, then we have something worse. It is Robin Hood in reverse, taking from the have less to give to the have mores.

The Minister of Natural Resources talked this week about changes to the offshore energy agreement with Nova Scotia and Newfoundland. Please let me emphasize that P.E.I. and New Brunswick do not benefit from offshore energy agreements at all. I am pleased to hear that the Liberals are finally ready to consider that the offshore agreements were not fair to begin with. I recognize that it was the Mulroney Tories who came up with the original deal.

The news about this offshore industry has not been good and many doubt that we will ever have a production boom such as Alberta had. The fact is that getting oil or gas from below the ocean floor is more expensive, more dangerous for workers and the environment, and more uncertain in its values than any land based operation.

People in Nova Scotia and Newfoundland should not be penalized through an equalization program that expects a payoff in the future. Until the offshore industry is guaranteed and long term, instead of a series of underproducing operations, potential offshore royalties should not affect the equalization formula at all.

I want to echo something my colleague, the member for Halifax, said in a previous debate on equalization. The provinces have asked for a 10 province plan, one that considers all the provinces, not the middle five that the federal government uses now.

That would make the payments more equitable and would better reflect the economic situation of the majority of provinces. It would also prevent a huge loss in equalization when one province has a bad year, as was the case last year with Ontario.

The status quo simply is not adequate when it comes to the equalization plan. I fear that giving the federal government another year's grace to renegotiate equalization will result in an even less equitable program as provinces get more desperate for funds. In the end it is not the provinces that suffer, it is Canadians.

I will now turn to the second part of the bill, the payment of an extra $2 billion to the provinces for health care. The intent of the equalization program is to allow every province to offer reasonably comparable services to other provinces and to their citizens.

I was horrified to hear Lorne Calvert, the premier of Saskatchewan, quoted in the papers this week as saying that without immediate aid from the federal government, we can expect to see the Canadian health care system as we know it disappear within 10 years. What is going on for one of our premiers to be saying that?

When I look around, I see how the wealth of Canada has increased many times since medicare was first proposed and implemented. We have more money now than at any other time in our history, but the government chooses not to spend that money where Canadians want to see it spent. Canadians want a health care system that they can depend on. We want the money to be there and we know the money is there with the federal surplus, $7 billion to $8 billion this year.

Why are the Liberals letting the health care system fail when there is money available to sustain and improve it? It is like a homeowner who decides never to repair the leaks or pay for upkeep so that the mortgage can be paid down sooner, but when the mortgage is finally paid off, there is only a pile of wood and tar that can never be put back together.

A payment of $2 billion is a small start in helping the provinces improve health care. However, the way the Liberal government agreed to provide the money was stingy in the first place. It put debt management ahead of sustaining our health care system. Then it did not offer more money when it became clear that there would be a much larger surplus than was expected. This does not give much hope that the Liberal government takes Canadians' concerns seriously.

In conclusion, the NDP will support this bill to ensure the provinces continue to receive their money, but the system itself is flawed. There needs to be a more equitable equalization formula. The NDP will continue to push the government to work with the provinces for a formula that benefits Canadians in all provinces.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, my question to my colleague from Dartmouth is about the problems we do have. We talk about equalization and how it went up, but in one place, the Atlantic region, we have seen it go down. We see our youth leaving the region, not only in Halifax but in my riding too and all across the Atlantic provinces. They leave for other areas of the country.

Maybe she could explain for us and for Canadians the big effect this is having on the region where she is from in Nova Scotia. In a great country like ours, are we not supposed to look after each other? Right now are we not doing the wrong thing by not looking after each other?

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I would be glad to address that. I am astounded to hear the depopulation figures for Nova Scotia. Recently I heard that for Cape Breton the number of people leaving is astounding. It is losing 10% of its population even in one year. They are seeing young people leave.

For New Brunswick and Nova Scotia, we are not seeing the infrastructure, the health care system and the post-secondary education system that we need. We are seeing young people who have to leave their province. The cost of our infrastructure is so high that our tuition fees are higher than they are anywhere else in the country. We are being penalized to live in the region. We are not seeing the same level of health care or post-secondary education and education available for our people as might be available in Ontario or Alberta.

That goes against the idea of our Constitution, the idea that we live in a Confederation where there is a reasonably equal access to all services that we deem acceptable for Canadians.

To base an equalization formula on population and at the same time not safeguard that the population can remain more or less stable in a region by sensitive economic policies for that region, regions where people want to live, we are setting them up for failure and we are setting up our families for the inability to maintain their lives and children in the communities that they love.

It is a tragedy that we are able to sit in this chamber and talk so clinically about this situation when in fact we are talking about Canadian families that want to build their lives in certain regions and are finding it impossible to do so.

[Brian Fitzpatrick, Canadian Alliance, Prince Albert, SK]

Mr. Speaker, I noted the member's comment quoting Lorne Calvert, the premier of Saskatchewan, about the serious problems in Saskatchewan. I can concur with that. I can see a health care system in that province dying before my eyes. Doctors are leaving en masse. It is taking 22 weeks on average to get an MRI scan done.

As well, the roads are in very serious shape. Everything I look at in that province is virtually crumbling before my eyes. I know that equalization is not the cause of all of these problems; a lot of them are internally imposed because of bad policy decisions in that province.

I would like to ask the member a specific question on equalization. As a Saskatchewanian, I think the formula really punishes severely provinces that have developed their natural resources. Saskatchewan's income level is very comparable to those of Manitoba and the Atlantic Canada provinces of Nova Scotia and New Brunswick, but it receives on a per capita basis only roughly one-quarter of what those provinces receive in terms of equalization payments because Saskatchewan developed its natural resources back in the 1950s and 1960s. Saskatchewan basically gets hammered over the head for having developed its natural resources.

I wonder if the hon. member and her party are in favour of removing natural resources as a component in the equalization formula.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, as I was saying about Nova Scotia and Newfoundland, at this time the federal government is saying that it is going to cut some kind of a deal with those provinces to try to give them some fairer return on their offshore. I can only speak for that situation at the present time.

I feel that in fact until we have a sustainable industry, one that can withstand the vagaries of this exploration that is going on right now, it is impossible to start changing our equalization situation based on possible pie in the sky later. I think we need to be cautious about that. We have to make sure we are not making changes that are going to have a negative effect down the road.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I am pleased to speak about Bill C-18 on equalization and about the effect it may have on our regions.

The agreement was supposed to be signed at the end of March. Now we have to pass a bill to extend it for another year. That is too bad, but our party will vote in favour of this bill anyway for the simple reason that transfers must be made to the provinces.

We must think about people in the provinces and this is why we will vote in favour of the bill, because the Liberal government has put us in this position. However, is this right? I do not think so. Does the equalization system work? I do not think so.

Today, the equalization system has increased by 18% in Canada. However, if we look at transfers to the Atlantic provinces, it has decreased by 4%. This is not right. As I said earlier to my colleague when I asked her a question, should we not help each other? If we cannot help each other, what are we doing in a country? We live in a country where there are more opportunities, more chances of succeeding. We must be able to share with others. This is what a federation is all about. This is what I think it should be.

The cuts will be drastic for us. The provinces and New Brunswick will not have the means to do things the way they should be done. We always come back to health.

As I said in the past, the federal government will provide transfers to the provinces. It will make the announcement in the next few days. With the left hand, it provides $2 billion in transfers to the provinces for health care and, with the right hand, the hand that always likes to take from the poor—the right side, the side of big business—it takes $2.2 billion from the provinces, from the most vulnerable people. This is unacceptable.

In our area, the government is currently looking at the possibility of closing down emergency departments in communities where they are so needed. One need only look at the whole matter of planned emergency department closures on the Acadian peninsula. This is why it is important for the federal transfer payments to go to the right place, for the good of all the provinces of Canada.

We are beginning to feel the affects in our area. As I said, on the one hand the government says it is going to give $2 billion for health, while on the other it is going to take $2.2 billion away from transfer payments to Canadians. At the same time, they are talking about a $4.4 billion cut to corporate taxes for big business. Imagine what a difference that could have made to the provinces to help them survive what they are going through at present.

The Atlantic provinces are not having an easy time of it. People have had to manage with seasonal work for several years, and still do. I have raised this matter often in the House of Commons. The industries with these seasonal jobs produce things Canadians want and like to have, for instance fish and 2x4s. Yet these industries are being hit so hard that they can no longer survive.

According to the Conservatives, the solution is cut and dried. They will close down Atlantic Canada and that will be the end of it. The former leader of the Progressive Conservative Party, and now leadership hopeful, made that clear. If he comes out on top, it will be a matter of “It's not needed any more. If you folks can't survive on your own, just move somewhere else.”

I have a surprise for him. Not everyone in the Atlantic region wants to move somewhere else. Some have had to, but they do not all want to. There is a surplus of $7 billion; the EI fund has a $3.3 billion surplus, and the major corporations have had a tax cut of $4.4 billion. So I can say that the federal government is not managing our money properly. It could be put to other uses.

The Liberal government prefers handing out money to the big banks to make sure managers and chairmen will be glad that some money is being used to pay down the debt. Of course, we should use some money to pay down the debt, but not all our money. We must look after the communities in regions where health services are inadequate. In the throne speech, the Liberal government avoided mentioning the Romanow report.

In 1969, the federal government was paying up to 50% of health costs in Canada. In recent years and especially in 1994, when this Prime Minister was the finance minister, we had drastic cuts in health transfers to the provinces. The transfers were as low as 14%, and they have now inched up to 16%.

Our health care system is sick. In this day and age and with our technology, when we can send rockets to Mars and the Moon, we are not even capable of maintaining a viable health care system

The other day, I read a story in Le Devoir , if I am not mistaken, about a lady or a gentleman taking their small dog to the veterinarian. A little later, the veterinarian called to say the animal would be operated on. During the operation, the owners of the dog received another phone call telling them the operation was under way and that everything was fine. After the operation, there was another phone call to tell them everything had gone well.

In a hospital, people are being parked in hallways. Elderly people have to live in hospital hallways. This is degrading. It is degrading when men and women have to share a hospital room. Were are we heading?

When we see all the scandals that have plagued the Liberal government in recent months, it is a disgrace to our country. It is unfortunate for the institution of parliamentary. That is what is going on at this time.

Where education is concerned, by the time students graduate from college or university, they owe $40,000 in debt. Let us take a look at the daycare system. In 1940, around 5% of Canadian women were on the labour market. These days, as many women as men are working. Our society needs to adjust. We have to meet the needs of the people but not only by throwing billions of dollars at big companies.

We are heading toward a society where people will be either very rich or very poor. That is not what Canadians want. They want roads. They want health care. They want their children to be able to afford to go to college or university. They want a better education system based on modern technology. They want infrastructures to try and keep people close to home.

Transfers will not do it. My hon. colleague said earlier that the government wanted to extend equalization for another year because of the upcoming election. I am not so sure. It could be, but I think it would be wrong because we have never granted a one-year extension before.

I really do hope the government will review its equalization formula in order to help the provinces stimulate their economic growth and development. I also hope we will find some way to support regional development so that Canadians feel comfortable where they are and do not feel the need to see what the rest of the country has to offer.

To conclude, I would urge the federal government to reconsider Bill C-18, because, as all Canadian provinces have pointed out, transfers are not the answers.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, it is with mixed feelings that I take part in this debate. In fact, I am outraged because the government is putting in the same bill a promise made by Prime Minister Jean Chrétien in February 2003, more than a year ago, to invest $2 billion in health care. That was supposed to be part of what the federal government was going to do for health care. So, in this bill, we have, lumped together, the $2 billion that was promised more than a year ago, and an extended equalization formula that the provinces do not want.

The government has taken a promise, something owed us and made it conditional on the extension of the equalization formula, which will do Quebec out of $723 million this year.

In other words, with respect to the $2 billion, of which Quebec's share is $472 million, members are forced to say “yes”, but if they say yes to the first measure, they have to say yes to the second. Yes, we want $472 million more for health care, but we also agree to get $723 million less in equalization.

This bill is a sham. My colleague from Joliette called it a stunt. We could have a contest to find which synonym best describes the kind of deceit practised by this government.

At first, the Bloc Quebecois wanted to have this bill split so that we could say yes to the proposed health transfer. It is not enough, but it was promised a year ago, so let us have this money before the election. But we are not even sure that it will happen before the election; it could also happen after the election. They will talk about it some more. They have been talking about it for a year, and they will talk about it some more.

Should we say yes to that? The problem is that, if we do, we will have to say yes to the second part of the bill, with which we totally disagree. That is why my colleague asked that the bill be split. And, amazingly enough, our Liberal colleagues, who form the majority and do whatever they want, decided to vote against splitting the bill. They voted in favour of this sham, to try to pull a fast one on us.

We think that Quebeckers will understand the fact that we are opposed to this bill. We will not try to filibuster this legislation, or to take any other action. We are not stupid. We want the money allocated for health to be paid to Quebec and the other provinces as quickly as possible: an amount of $472 million is better than nothing.

However, we want to stress the fact that, by allocating this money, the government is not giving what was anticipated for 2003-04 alone, which is $723 million. For that reason, we will oppose this legislation.

Moreover, we are rather upset at this supposedly new, supposedly transparent and supposedly democratic government. This is some democracy.

The equalization formula must absolutely be changed. Under the act that was passed, the current equalization formula was to end in March 2004. That formula was adopted for a period of five years, from 1999 to 2004. Normally—and this was done, since negotiations were undertaken—the provinces want major changes, so that things are more predictable, because right now the amounts are not predictable, and so that the process is more fair and also more transparent, because there are 3,000 different elements that come into play, thus making it difficult to anticipate the results and to verify them. So, a major reform is in order.

Some work was done. However, instead of using its energy to quickly negotiate and reach an agreement with the provinces before the deadline, this so-called new government came up with a bill that extends the program for an additional year. The former government did that, but the new government maintained it and made it worse. The Liberals want us to agree to extend the old equalization formula for one year.

I will just mention two figures. If we extend it for a year, we can be sure that there will be a difference of $1.4 billion between the forecasts made by Quebec and those made by the federal government. The numbers are there. An amount of $1.4 billion is indicated in the estimates for Quebec. The equalization formula must be changed and it could be changed quickly.

Unfortunately, this new old government has not followed up on the provinces' desire for change, at a time when there is a surplus. We must not forget that when the new Minister of Finance was sworn in, he immediately copied his predecessor, now Prime Minister, in saying, “There will not be a surplus this year; things are tight. If we want to allocate $2 billion to health, there must be changes and cuts”. However, the federal government, in large part, has spent twice as much as Quebec and Ontario. We will not get into that.

How much is the current surplus? It is $7 billion, and we know that another $7 billion of surplus money from previous years has already been put into various foundations. The government would have us believe that it is not able to negotiate a new equalization agreement at this time. This makes no sense.

For these reasons, we will vote against this bill. We cannot help saying that what they are doing is unacceptable. No one knows what will happen to the $7 billion surplus. Will it once again be used to pay down the debt without anyone deciding? What will be done with this $7 billion is not decided democratically. Half of that money comes from the surplus in the employment insurance fund, once again, paid by businesses and workers. Will it go into foundations and then come back in the form of presents come election time? No one knows.

The Bloc Quebecois will vote against Bill C-18.

In conclusion, I will read a paragraph that struck a chord with me from an article by Michel David in yesterday's Le Devoir . It reads:

Someone should perhaps have suggested that federal finance minister Ralph Goodale might wait a few days before announcing the downward revision to the equalization figures. If he wanted to put the provinces' backs up right before the Vancouver meeting, he could not have found a better way. What we heard from the first ministers was a carbon copy of how each of these meetings ended during the Chrétien era.

So here we have this independent writer's corroboration of our own conclusion: this new government is just a rehash of the old one, with faults that are becoming more and more visible with each passing day.

We are opposed to this bill. We want the money for health, but we want to make it clear that the refusal to negotiate equalization, when the government has the money, is an outrage. It has a serious impact on the future, not only for the people of Quebec, but also for those in the Atlantic provinces.

[The Deputy Speaker]

Is the House ready for the question?