Madam Speaker, I am pleased to take part in the budget debate because, as the Bloc Quebecois leader said yesterday, this budget is truly scandalous.
It is scandalous because the federal government is once again playing its little game of fiscal hide and seek to hide the true state of public finances. We must condemn this game and this lack of transparency by this government. In this regard, this Liberal budget is the Prime Minister's tenth budget. Indeed, this budget is very much in line with what the Prime Minister did when he was finance minister, which is to hide from Canadians and Quebeckers the true state of federal finances.
For the second time in a few months, we are the victims of the sponsorship scandal. The first time, all of us, parliamentarians, citizens and taxpayers, were the victims of a major misappropriation of funds. As we know, the Standing Committee on Public Accounts is currently looking into this issue. There will be an independent inquiry, but this will not prevent the Bloc Quebecois from continuing to ask questions.
Now, we are the victims of the sponsorship scandal for a second time. Indeed, on the eve of an election, the Liberal government, the Liberal Party and the Prime Minister wanted, through this budget, to create an impression of integrity, prudence and rigour. However, this is not what we are getting with this budget. This budget is not about prudence, but about irresponsibility, considering the needs of the provinces, particularly Quebec. This budget is not about integrity either, because it plays with numbers. I will get back to this later on. This budget is definitely not about rigour, because it includes a series of intrusions in Quebec's jurisdictions, not to mention the fact that federal bureaucratic spending is maintained at its current level.
With this budget, the government is trying to buy votes. However, many observers have not been fooled by this attempt. The federal government would have us believe that it runs a very tight ship, that it does not have much leeway and, therefore, that it could not transfer to the provinces, and to Quebec in particular, any money for health. If we look at the numbers, we can clearly see the figure zero for 2004-05 and 2005-06.
Nor was there sufficient leeway to transfer money to education. There is absolutely nothing allocated under the new Canada Health and Social Transfer. However, about $500 million was found to create a Canada public health agency. But when the frontlines face problems and epidemics, the provincial agencies—Quebec has the Agence de santé publique—are responsible for managing these crises.
Granted, a small committee or coordinating body could have been struck, but certainly not to the tune of $500 million. We know how things work with the federal government. We are told it will cost $500 million this year. But what will this new Canada public health agency really cost? We are talking about an agency, a new bureaucratic elephant created by the Liberal Party. No one can predict the end result.
The former justice minister, the hon. member for Outremont—I am not sure if he still represents that riding today—told us that the gun registry would only cost $2 million. I repeat that we agree with the principle of the gun registry. First, this program has cost over $1 billion. I hope that everyone in this House will agree on this. According to some observers, the cost will soon reach $2 billion.
We have similar concerns about this new Canadian public health agency. Not only is it an intrusion into provincial jurisdictions, but it is also a dreaded bureaucratic elephant.
Consequently, instead of being about prudence, integrity and rigour, this budget is, as I said, about irresponsibility and manipulation, and it provides for numerous intrusions and high levels of bureaucratic expenditures.
I want to come back to the issue of the concealed surplus. I know that some people are sick of hearing about this. Unfortunately, just because a problem has been around for over ten years and people are sick of hearing about it, does not mean that not talking about it will make it disappear. We have a moral obligation to be truthful and to inform the public that the Liberal government is once again underestimating its surplus.
I will not go back over last year, when the government altered its estimates several times. Nevertheless, we have been told for some months that the surplus would scarcely reach $2.3 billion. And what did we learn yesterday? That, from April 1, 2003 through January 2004, the surplus had already reached the $5.4 billion level. The fiscal year was not yet over for another three months. Likely the figure will hit $6 or $7 billion, if not more. We reckon it will be around the $7 billion mark.
So there we have the year end surplus. It was used to pay the so often promised $2 billion to Quebec and the provinces for health care. Some of it also went in one-time assistance—and I emphasize its one-time nature, nothing recurring here—to farmers, particularly cattle farmers. Some of it went to create that bureaucratic monster, the Canadian public health agency, and a number of other initiatives. And still after all that there is $1.9 billion left, which will be used to pay down the debt.
We are two weeks away from the end of the fiscal year. We know the Canadian economy is in good shape, that there is an upturn in the U.S. , that Canadian exports are now picking up as well, that corporate profits are on the rise. So there is not, to my knowledge, much likelihood of any disaster in the next two weeks that would lead to any major reversal of the situation.
So, from that $1.9 billion, without any jeopardy to the federal government's public finances, a certain amount could have been found for additional transfers to the provinces. But that is in the past.
Now for the future. For 2004-05, the Minister of Finance is talking of a surplus of $4 billion, that is $3 billion for his contingency reserve fund and $1 billion for economic prudence. This is a joke. We will generate a surplus of $5.4 billion for the current year, a figure on which every one agrees, despite SARS, the mad cow crisis, a major blackout in Ontario, the worst ever fires in British Columbia, and a marked strengthening of the Canadian dollar. All this despite the fact that we have generated three times the surplus announced by the federal government.
Now that we will no longer have to deal with SARS or the mad cow crisis, and probably no major blackout in Ontario—let us hope not for Ontarians—or any other disasters such as the ones that occurred in British Columbia, the government is announcing that although there will be increased growth and renewed exports to the U.S., the surplus next year will be less than this year's. What do they take the public for? They take them for fools, to say something so absurd.
We cannot accept this. The government's biggest hypocrisy is not giving the real picture on public finances. Without the real picture, the entire debate is flawed. It is truly anti-democratic and this has been going on for 10 years. It has become a farce. Journalists no longer believe these figures. The public does not believe them. This is certainly not the way to fix the democratic deficit the Prime Minister is so fond of talking about.
It is very clear that the federal government's leeway is much greater than what we were told yesterday. It is probably more in the order of $9 billion. That is what we are predicting, $9 billion for next year, and we are not alone. The members of the Conference Board of Canada are neither sovereignists nor overly progressive. They are people who are probably trying to do careful and honest work.
In a study dated February 2004, the Conference Board of Canada predicted a $10 billion surplus for next year. We are not far off. Most reliable financial observers will say that $4 billion is a big joke.
If the government had wanted to do some serious work, with integrity and prudence, it ought to have told the truth to Canadians and Quebeckers. It ought to have told them that our surplus would be around $8 or $10 billion, for example, and that out of that $8 or 10 billion, a reserve would be set aside, perhaps not $4 billion as the government has announced, but a reserve of perhaps $2 to $3 billion for contingencies. It is quite true that we do not know what might happen during the year. Then we would have a margin of around $8 billion for investments in health, education, social housing and infrastructure.
That is not what they told us yesterday. Once again, they have disguised the truth.
Probably, later on, or perhaps very soon, during an election campaign, for example, someone will finally notice that growth is continuing, that interest rates are low, and that the Canadian dollar is doing well. They will say that they did not foresee that a few weeks ago, and now, with that money, they will fulfil their election promises, because they have a healthy surplus in the federal treasury. That is the operation now under way.
This government is trying to mask its true face but no one is fooled. We know very well that, with the room to manoeuvre that the government has, election promises will be made during the campaign and then, after the election, if this government should happen to be returned to power, it will use this room to keep a certain number of promises.
Or perhaps—probably in addition—they will do what they did after the 2000 election. They will promise to invest half the surplus in social programs and transfers to provinces and the other half in lowering taxes and paying down the debt. Overall, about three-quarters of the money will go towards paying down the debt.
I want to remind the House that all the so-called unexpected surpluses of the past ten years, starting in 1997-98, went in large part to paying down the debt. We are talking about approximately $45 billion to $50 billion, money that should have gone to the provinces, including Quebec, for health and education to rectify the fiscal imbalance.
However, the federal government preferred to conceal the truth to avoid a public debate, continue to strangle the provinces, particularly Quebec, and impose its rules when it reinvests, as with the paltry $2 billion promised once, twice and finally delivered to the provinces.
This is totally unacceptable, and we will continue to speak out against it. Nevertheless, we are not alone. In fact, Quebec currently has a government with which we do not necessarily see eye to eye. As the House knows, it is a Liberal and federalist government, but it still tries to defend the interests of Quebeckers insofar as its vision for Quebec's development allows.
Yesterday, for example, as Quebec's Minister of Finance, Mr. Séguin stated the following in a press release—and I think it bears repeating:
Despite the urgent needs of the provinces, the budget contains no new money for health.
Only the federal Minister of Health believes—I said it yesterday, he is Canada's resident optimist—that there is new money.
At the very least, I expected that the $2 billion announced over and over again for 2003-04 would be recurrent. Clearly this will not be the case, although the federal government's surplus, very conservatively estimated at $4 billion, would have easily allowed this.
Quebec's Minister of Finance, a federalist and a Liberal, is the one saying this, not us. We are, in fact, saying it too but it is clear that, in Quebec—and I noticed this in the statements by the leaders of both the Parti Quebecois and the Action démocratique—this vision is shared by all Quebeckers. Only the federal Quebec Liberals fail to see reality for what it is.
I do not know if it is because they have been in power in Ottawa too long, are living in a bubble, can no longer see and are out of touch with reality, but they are the only ones who claim that there is no fiscal imbalance.
Quebec's finance minister points out that the federal contribution for health is currently 16%. The minister was referring to last year. Indeed, after the budget brought down yesterday by the Minister of Finance, the federal government contribution is no longer 16%, but 14.5%. While the Romanow Commission suggested a 25% investment by the federal government through health transfers, this year, to our surprise—I am not really surprised—or rather, to our disappointment, the investment is dropping from 16% to 14.5%. This is unacceptable when the Prime Minister of this government says that health is his priority.
Luckily health is his priority. If it were not, there would probably be disinvestments in health transfers right now. In fact, that is what we are experiencing and it is driving the provinces into debt.
As I mentioned, the federal government is raking in a surplus this year. I am using the Conference Board figures so that I will not be criticized for being subjective. I will try to use figures from a body whose objectivity is beyond reproach.
This year, as I mentioned, the Conference Board predicts that the federal government's surplus for 2004-05 will be $10 billion. The surpluses and deficits for all the provinces combined results in an accumulated deficit of $4 billion. This year, we are looking at a $5 billion deficit for all the Canadian provinces, including Quebec.
So there will be a surplus of $10 billion, and a deficit of $4 billion. The next year, more or less the same situation is forecast by the Conference Board. For the year after that, that is 2006-07, they are talking of a federal surplus of $9 billion and combined provincial deficit of $7 billion, and so on. I will not take it 20 years on, as I could with the Conference Board study. I will stop at 2009-10, when, if there is no change, the provinces will have a combined deficit of $10 billion, and the federal government a surplus of $13 billion.
Where is the logic in the taxpayers' eyes for the federal government to conceal its surpluses, to pay off the debt rapidly by putting the provinces into debt, while the provinces not only have an obligation to deliver health and education services, but also have to pay a higher interest rate? Where is the logic for the taxpayers' debts to be paid off at the level charged the lowest interest rate, while debts are being run up elsewhere at a higher rate?
It is just like an individual deciding to pay off his mortgage as fast as possible. Mortgage rates, as we know, are usually the best interest rate a consumer can get. So, while paying off his mortgage as quickly as possible, the individual goes to a credit union or a bank to borrow for his children's education, at a 9% interest rate instead of 5%. If you were to do such a thing, Mr. Speaker, which I know you would not because you are an informed consumer, you would be truly irresponsible. That is exactly what the federal government is doing.
The federal government has decided to pay off its debt quickly. As the Minister of Finance and the Prime Minister have said, their objective is to achieve 25% of GDP within 10 years. But this will be done by saddling the provinces with debt, making the taxpayer pay heavier debt service fees, because the interest rate the provinces pay is higher than the federal rate. Nothing could be less financially logical.
Yesterday, our resident optimist, the Minister of Health, was walking around talking to journalists, saying that Quebec had made great gains through equalization. I can even say that he was quite convincing. His optimism is probably contagious because some of the journalists said it was true, that it appeared Quebec would benefit from equalization. When one reads the budget documents, it does indeed appear that the government listened to Quebec and the provinces, and that changes will be made that correspond to their demands.
Still, the fact of the matter is that, when one looks at the bottom line, the budget talks about $1.5 billion more for the provinces over the next five years. Looking at this year's figures, it is $175 million, of which $70 million goes to Quebec. Over the last two years, the equalization formula has cost Quebec $1.4 billion. That means that, even if Quebec received the entire additional amount the federal government plans to invest in the equalization formula, it would barely compensate for the loss we have suffered. They are laughing at us.
All that the equalization formula does is soften the losses that are already planned. I can provide the numbers. For this year, the equalization payment made to Quebec will be about $3.802 billion. Next year, with the bonus being touted everywhere yesterday by the optimistic Minister of Health, the amount would decrease from $3.802 billion to $3.761 billion. The amount decreases. Certainly, the amount of the decrease is a bit smaller, $40 million smaller than with the other formula, but it is a decrease nonetheless. Therefore, let no one come and present us with a new equalization formula that, contrary to what we were told yesterday, has not been negotiated with the provinces. It was imposed unilaterally as part of this budget.
Thus, equalization is not only far from meeting the demands of Quebec and the provinces, but also far from solving the problem. It is a band-aid on a cancer, and in that I am speaking very kindly.
Moreover, the Quebec finance minister is not fooled by this operation. I will read from his press release of yesterday. I remind the House that Mr. Séguin is a Liberal and a federalist, as are many MPs on the government side. This is from Mr. Séguin's press release:
With respect to the renewal of the equalization program, Mr. Séguin indicated that the federal budget did not provide satisfactory responses to the demands of Quebec and the provinces.
That is not what I heard the Minister of Health say on television. He seems to have been misinformed. Mr. Séguin said:
The proposed reform is inadequate. While the equalization payments to Quebec decreased by $2.3 billion in 2003-04, federal reform will provide only a $70 million gain for 2004-05.
This is in relation to a decrease that was already substantial.
The press release from Mr. Séguin's office also said the following:
The minister pointed out that the reform proposed by the federal government does not respond to the unanimous demand of the provinces to correct the program's standard and to ensure comprehensive revenue coverage.
I see that this budget does not say anything about transfers for health and education. Equalization is lacking, yet the government is trying to pass this off as a rigorous and respectful budget. As I mentioned, this is an utterly irresponsible budget in that it will cause the provinces to get into debt.
I ask the Chair to please inform me when I have one minute left, because I want to be able to move my amendment to the amendment.
There is another aspect that I would like to address, and that is the manipulation of figures. I will give two brief examples.
Social housing is mentioned, but nothing new is being provided. A short sentence was included, saying that the government will find a way to give Quebec the $80 million it is entitled to, but that is not much of a guarantee. It will insist that it is new money, but that is not true.
With respect to infrastructure, $1 billion over 10 years was announced last year, and now, we are being told it is over 5 years. It is still the same money. Furthermore, it has practically all been spent.
For all these reasons, we cannot support this budget.
That the amendment be amended by deleting all the words after the words “affront to” and substituting the following:
“the budget priorities of Quebeckers and Canadians such as increased health care transfer payments, funding for social housing, assistance to softwood lumber workers and industries, improvements to the employment insurance program, and full retroactivity for the guaranteed income supplement.”.