Debates of March 30th, 2004

The Budget

[Dennis Mills, Liberal, Toronto—Danforth, ON]

Mr. Speaker, I celebrate. I am shocked. I am without words because we now have a shift in NDP policy. The NDP is now saying it wants a fair tax system. I would like to hear the specifics about this fair tax system. However, the reality is that the leader of the NDP, Jack Layton, for the last three months has been pounding our Prime Minister and pounding our Minister of Finance. I can show clip after clip where he is against stimulating the small businessman and small businesswoman economy of this country. If he wants to convert and change, I celebrate that.

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Mr. Speaker, we have just witnessed a very interesting debate in which a Liberal member has actually suggested we eliminate personal income taxes.

[Dennis Mills, Liberal, Toronto—Danforth, ON]

No, corporate.

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Federal corporate taxes. I am glad he clarified that.

I appreciate the opportunity to address the budget today. Mr. Speaker, I should mention at the outset that I will be splitting my time with the erstwhile member for Portage—Lisgar.

I am the Conservative critic for industry, science and technology. As such, I would like to review mainly the initiatives in this budget that affect industrial policy.

As an industry critic, I have had the opportunity in the last two years to travel across this country and to see many of the industries we have in Canada, whether it is the auto industry, fisheries on the east coast, softwood lumber, the beef industry, the high tech industry across the country, initiatives like the nanotechnology institute at the University of Alberta or the synchrotron institute at the University of Saskatchewan.

I am amazed at the potential this country has and at some of the good things that we are doing. I have to say that what really saddens me is the fact that we need a national industrial policy that recognizes that potential, that unleashes that potential and grasps it. We do not have this because what the federal Liberals continue to do is follow down a path of corporate welfare as their industrial policy. Instead of focusing on genuine research and development through the granting councils, instead of focusing on lowering taxes or putting into place an overall industrial framework that encompasses a big science policy, they insist on following the path of corporate welfare.

The fact is that most Canadian companies are innovative. They put new products on the market or introduce new processes. The problem is that compared with other G-8 nations, we do not innovate at the same pace. It is not our fault as Canadians, but in my view, it is a sense of national policies put in place that have resulted in this.

The fact is our productivity has fallen in comparison to other OECD nations, particularly in relation to that of the United States. Canada has fallen from sixth place in the world competitiveness ranking in 1997 to ninth place in 2001 and now to 16th place in 2003. Canada in fact ranks 14th in per capita research spending of the top 15 industrialized nations.

With respect to Canadian businesses, productivity and innovation, I would characterize budget 2004, with all due respect to Clint Eastwood, as being comprised of the good, the bad and the ugly. To be fair, I will begin with the good.

Government financial support for university research and research training is predominantly made available through federal granting councils: NSERC, the Natural Sciences and Engineering Research Council of Canada; SSHRC, which covers social sciences and humanities; the Canadian Institutes of Health Research; and the largest one, the National Research Council. These councils collectively provide peer reviewed funding for more than 18,000 researchers across the country in many disciplines.

For the most part, these granting councils, particularly NRC, NSERC and CIHR, have had a good track record in science and research investments. We in the Conservative Party want to applaud their work. Therefore, we support the $90 million increase in the budgets to these granting councils, including the CIHR, which falls under the health portfolio.

However, I want to remind the government in a very constructive way that these science and technology investments cannot stand alone in the effort to improve productivity and innovation in Canada. We must ensure that these grants are transparent. They must be made in combination with a broader science and technology policy framework and they need to be made in combination with tax cuts in order to create and encourage innovation in the commercialization of research.

Now let me address some of the bad in budget 2004. Frankly, I consider the venture capital section of the budget to be bad. I would also like to raise some concerns I have over the government's new push to commercialize research in universities.

It pains me to call it bad, but the budget's intention of creating a venture capital fund of $270 million to enhance access to venture capital financing and to be administered by the Business Development Bank of Canada and the Farm Credit Corporation should raise red flags across the country. In my view, the government should not make the BDC the venture capital outlay that it is in this budget and we should in fact rely more on private sources.

The Conservative Party of Canada would like to see more venture capital in Canada. According to Canada's Venture Capital & Private Equity Association, investment activity in Canada's venture capital industry declined in 2003 with disbursements totalling $1.5 billion, down 41% from 2002. However this decline is paralleled in the U.S. which has a much larger venture capital tool than Canada.

The federal government has previously employed other tools other than direct subsidization to encourage venture capital growth in Canada and we urge them to use those tools. For instance, budgets 2001 and 2003 included tax measures that removed impediments to pension fund investments and venture capital markets through limited partnerships, a vehicle that pension funds prefer for such investments.

We could also restore the capital gains exemption to what it was or even beyond that. Frankly, that would enable middle aged people who have paid off their homes to start using some of these investments. We need to invest in people starting up small businesses and who need it.

I would like to finish this section with a quote from Larry O'Brien, a well respected chief executive of Calian Technologies. He says that while it is easy for Ottawa to say it will support early stage development, consequent programs get “...so screwed up in execution that it never works that way and you're better off not doing it”.

The bottom line, from our point of view, is that taxpayers should not replace shareholders as a main source of capital.

Let me move on to the ugly section, and I should warn members that it is truly an ugly section. The fact is that the Liberal government refuses to acknowledge the failure of its own policies to encourage innovation and productivity in Canada. It has had 10 years to improve industrial policy and now it is asking for 10 more years under its so-called innovation agenda. This was the agenda that was so prominent under the former industry minister and now we hear nary a word about it, except that the Liberals want 10 more years to do this.

The reality is that Canada does have the potential, and I have seen it firsthand across the country. We have the potential to be a world leader in innovation, entrepreneurship, science and technology. However this will require the government to make a fundamental policy shift away from policies of corporate welfare.

Before I go into that, I want to quote my friend and a policy expert in Canada, who we should be listening to much more, Jason Myers, the executive vice-president of Canadian Manufacturers and Exporters. He says, “At best this budget was balanced. Anything else is of marginal, minimal impact on Canadian industry”.

In addition to that, a recent C.D. Howe Institute report stated that Canada's effective 31.5% tax rate on capital is leaving the country unable to compete with U.S. companies which face a substantially lower rate of 20.1%.

In combination with an increase in program spending, government expenditures on its own programs will jump 7.6% from last year, and will further increase another $12.7 billion over the next two years. Obviously the government, and the Liberals in particular, have a problem in managing the finances.

Despite these record levels of spending, total gross domestic expenditure on research and development has declined. According to the government's own documents, this drop is largely the result of a decrease in about $729 million in business R and D performance.

Big gains in productivity and research can only be achieved when capital, money and labour, is free to go where the market offers both profits and new and exciting opportunities to workers. The government should be freeing up more money through tax cuts and it should revamp the SR&ED tax credit program, something it has been promising to do for years.

In terms of finishing off this ugly section of the budget, the budget fails to eliminate the terrible policy of corporate welfare. One example is the federal government's program, Technology Partnerships Canada, also known as TPC, which was created in 1996 to replace DIPP, the defence industry productivity program.

We do not question the need for a defence procurement strategy, but we do question corporate welfare and the government's policy of selecting certain companies within certain industries to favour for what it calls investments, what we call grants, or what it sometimes calls non-repayable contributions.

[Judi Longfield, Liberal, Whitby—Ajax, ON]

Can I have a copy of that for my folks?

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

For the member opposite, let me give her some facts. Since 1996 TPC has made 591 grants for a total value of $2.4 billion. How much of that money has been repaid to date? According to figures we obtained on February 3, 2004, $47 million out of the $2.4 billion has been repaid. What is that? That is 1.9%. In eight years the cumulative repayment rate is 1.9%. It is absolutely shameless that the government would continue to dole out money to corporations of its choosing and only gets back less than 2% of taxpayers' money.

Our view is that we need a new industrial policy. The Conservative Party favours an industrial policy that lowers taxes, increases spending on research and development and finally ends this terrible policy of corporate welfare.

[Rick Casson, Canadian Alliance, Lethbridge, AB]

Mr. Speaker, my colleague understands the industry file very well in speaking about corporate welfare and other issues that we certainly see as problems. His last comment about the amount of money that has been forked out compared to the little bit that has been returned, clearly is corporate welfare, and there is nothing else to call it.

I would like to focus in on a comment he made earlier about research and universities and the private sector being involved in research in our educational institutions. The research going on in my riding at the University of Lethbridge is second to none in the world with people working on spinal cord injuries and brain disorders. They have done some remarkable things and that needs to continue.

I would like the member to explain a little further how he feels about the combination of university research and private sector funds. What kind of mix needs to be there or does there need to be any at all?

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Mr. Speaker, I know the University of Lethbridge does excellent work. We should mention as well that it is not just universities but all post-secondary institutions. Institutions like NAIT and SAIT in Alberta do excellent work as well.

In terms of combining the private sector with university research, I think a good format is at the University of Saskatchewan. The University of Saskatchewan has set up something called Innovation Place where it has all the researchers working but it also has people from companies who can come in, assist and work side by side. Researchers can approach them for venture capital. That gets people working from the early stages of the project.

In terms of protecting intellectual property and commercializing research, the University of Alberta is probably in the top five in the country in doing that. It needs to be done in a multi-layered way. If we look at the National Institute for Nanotechnology at the University of Alberta, it needs funding from different sources. It needs it from the Canada Foundation for Innovation, which funds mainly capital projects; and the Alberta Heritage Foundation for Medical Research, which funds a lot of the salaries.

At that level, even if it had something like Innovation Place, which the University of Saskatchewan has, then it would get the private sector funding right at the beginning. The people from the various companies or the small business people could see what researchers were doing and then could get involved in that research at the very early levels.

[Brian Pallister, Canadian Alliance, Portage—Lisgar, MB]

Mr. Speaker, it is a pleasure to respond to the federal government's budget, a Seinfeld budget: much ado about nothing. However that is understandable given the circumstances faced by the government, a government that is under attack for its ethical challenges and for the largesse it has dispensed for self-serving motives at the expense of Canadians at large. It means that the government is not in a position to try to buy goodies just prior to election time, as is its custom. That has resulted in a budget that we have not seen from the government before, a budget that plays around the edges of talking about issues but does not do much about addressing them.

One of the key issues that should be addressed and was not addressed by the government, an issue lost in the culture of corruption of the government, is a scandalous issue. It is an issue far bigger and far more important than the $100 million that was given to Liberal friends in the sponsorship scandal. It is far bigger than the $2 billion gun registry fiasco and far bigger than the hundreds of millions for Challenger jets. It is enormous. That scandalous issue is the EI overcharge which, as the Auditor General pointed out in her most recent report, is now at a level of about $44 billion.

Just to be clear, the present Prime Minister when he was finance minister, Paul Martin Senior's son when he was finance minister, set the EI rate and politicized it. He took it away from an arm's length agency, the Canada Employment Insurance Commission, which was a partnership agency that worked in a multilateral manner to set EI rates. He politicized those rates three years ago and he has kept them artificially high. In so doing, he has enlarged the surplus. He has used the EI program as a cash cow. He has taken money from working Canadians under the auspices that it would be coming off their cheques and going into EI when in fact that is not the case and has not been the case for 10 years. The EI account has a surplus of $45 billion and has grown during this last fiscal year to a level approaching $50 billion. This is money the government has taken from working Canadians and small business people.

I listened to the member opposite earlier trying to wrap his arms closely around small business and the small business communities but it is those small businesses that have been fleeced by the government on the excessive EI premiums that have been taken from them.

The EI program itself is a subject for much larger debate. The program has never fulfilled its mandated objective properly, which is to provide temporary benefits to workers who are temporarily laid off. Instead, it has been criticized repeatedly by royal commissions, policy groups, think tanks and in the last five Auditor General's reports for the way in which it mismanages labour force management.

The fact is that this is a working tax. EI premiums are the most regressive form of tax. They are a payroll tax. When they are unnecessarily high, they punish the engine of growth in our economy, which is small businesses and working people. They punish it unnecessarily and the government has done that.

All this talk about compassion and caring, and the attempts to create the impression that this is a government that does care for Canadians, rings hollow and stands quite false in the graphic evidence that out of each and every Canadian household $6,000 has been taken under false pretences in unnecessary and excessive EI premiums. It has been used by the government for its own priority purposes. Let us not pretend that it has gone to EI. It has not been used to support the employment insurance program at all. It has been used to subsidize steamship companies. It has been used to hand out money to Liberal friendly advertising firms to do little or no work. It has been used for purposes not germane whatsoever to the employment insurance program. That is wrong.

When the finance minister stood last week and told us and the Canadian people that he had balanced the budget for seven consecutive years, that was not an accurate statement. If truth were an island, it would be an island uninhabited by that finance minister. The fact remains that the government has not balanced the budget in arguably three of the last seven years because the only way it could create the impression it had actually balanced the budget was through lifting EI premiums off the paycheques of working Canadians and throwing it into general revenue.

The Auditor General said that the government was breaking its own rules and that it should do something about it. The Auditor General is getting red in the face trying to convince the government, after five consecutive reports saying the same thing, that it should do something about it.

It has not. The reason it does not is simple. For every dime the government gives back to working people on their paycheques in reduced EI premiums, it loses $870 million in general revenue that it can throw toward unnecessary and wasteful expenditures. The government takes that money and parades around as if it could actually manage when the reality is quite the contrary. The fact of the matter is that the government cannot and does not manage effectively.

What is the cost of diverting funds from a dedicated program, which the EI program is? What is the real cost? What analysis has it done? When the government dishonestly diverts money from a dedicated program to other purposes, who pays for it? It is not just the payer. What is the impact on the payer?

What about a working couple? Let us say that they each make $30,000. They have lost $6,000 out of their household budget. That is money they cannot spend. That is money they cannot save for their child's education. That is money they cannot use to take a little trip with or to do home improvements with.

What about the small businessperson who has paid that extra 140% of $6,000? What about them? How much have they lost? They have lost the opportunity to expand, to invest in capital investment, to do research, or to hire other people.

The Organisation for Economic Co-operation and Development tells us that Canada's unemployment system is structurally unsound and creates artificially high unemployment rates. The government likes to say that unemployment is lower than it was 10 years ago. Well, alleluia. Unemployment around the world in most western democracies is lower than it was 10 years ago. We were in a worldwide recession at that time.

That is not the point. The point is that our unemployment rate is now 7.5%, which is higher than that of many of our competitors. Part of the reason is that we pay people to be unemployed. Part of the reason is that we punish people who pay into EI, so they cannot employ more people.

The sooner the government comes clean on this issue the better we will all be, because families suffer as a consequence. Family members work longer hours, take more overtime and are away from each other more than they should be. We work for half the year in this country to pay taxes. We are overtaxed by the government. Families suffer as a consequence. The money the government has taken out of my riding and out of the constituencies of other members here would be far better left in the hands of the people who earned it than it will ever be managed by this government opposite that is taking it from them.

The fact is that this budget presents this EI money as revenue, but it is actually money borrowed from working people and small businesspeople across Canada. It is borrowed from them. It has been taken under false pretences and borrowed from them. The fact of the matter is, it should be repaid.

The Prime Minister claims, when we raise questions concerning his association with Liberal ad companies and his closeness to them, that he is not close to them at all. He points to rogue bureaucrats or other people. He says he did not know. He says he was otherwise occupied. But he cannot point the finger at anyone else on this issue, because the fact is that he was responsible. It was he who set those rates and kept them artificially high. The fact is that he, as finance minister, removed the arm's length mechanism that was in place to make sure that we had fairer EI premiums established in this country.

Frankly, I have a lot more faith in the people of my riding to earn money and to manage it well than I do in this government. The fact remains that when the government takes the money off a working person's paycheque in that little box that says EI, it should have the dignity and decency to use it for employment insurance and not throw that money to its own petty projects.

There are many other things that I think are missing from the budget. In particular, there are issues of concern in terms of crime and public safety that are not addressed. Aboriginal policies are not addressed. Many serious concerns face the people of this country. They were looking for leadership. The fact remains that they did not see it. They did not get it.

I understand that the government is fearful. I understand the likelihood that it is in close proximity to the next election. I understand also that the Prime Minister has jumped up and down like a little boy in the back of the classroom saying “pick me, pick me” for 10 years, but the fact of the matter is, when we pick him to give us an answer to a question about an important policy issue, he does not have the answer. He is full of style but is missing substance. He has picked the pockets of taxpayers instead. I do not think the taxpayers of this country are going to be picking this man, based on what we have seen thus far from him. Making a lot of vague references to high priorities just does not cut it when it comes to providing leadership for the people of this country.

We have a political organization called the Conservative Party of Canada that is ready to go and ready to govern, with a leader of integrity who has demonstrated that integrity, a leader with ideas who has demonstrated his faith in those ideas. We have a team of people that I think is quite ready to demonstrate we can manage this country far better than it has been mismanaged by that group opposite us.

[Rick Casson, Canadian Alliance, Lethbridge, AB]

Mr. Speaker, I thank my colleague from Portage--Lisgar for his comments today. He has been making an issue of the EI surplus for a long time, especially since his time as our party critic in that area.

Before he was our critic in this area, he was also involved in aboriginal affairs for our party. He did mention the fact that there were things missing from this budget. He would have liked to see the budget address some of the discrepancies or some of the shortcomings in that department. I would like him to expand a little more on the aspect of the budget dealing with aboriginal affairs.

[Brian Pallister, Canadian Alliance, Portage—Lisgar, MB]

Mr. Speaker, this is an area of particular importance to me and I think to all of us, because the budget allocates close to 10% of the discretionary dollars, the non-debt servicing dollars, to aboriginal-specific programs. That is 10% for about 1% of the country's population. However, the government has not demonstrated a willingness to pursue any kinds of initiatives that depart from the failed policies of the past. It continues to throw money in the direction of dealing with the symptoms of problems. It is not addressing the solutions for those problems.

For example, on property rights, a number of bands in this country have instituted systems whereby their members have the right to own their own homes. This has resulted in better neighbourhoods with far less property crime and better maintained properties. Investment in houses in those areas has paid dividends; the houses last much longer. These are changes that bands are making on their own, but the federal government has not shown any initiative in advancing those kinds of ideas.

How about the fake barrier that the Indian Act puts around the ability to repossess chattels off reserve? Let us say that we have a retail business that sells appliances or automobiles and sells them onto reserve. If payment is not made, the property cannot be repossessed. What that does is penalize the honest aboriginal person who wants to get credit.

We have to take down these barriers. They are antiquated barriers that are 130 years old. The government has shown no initiative in these areas.

How about matrimonial property rights for aboriginal people? The only place in Canada where there are no matrimonial property rights is on reserve. Aboriginal women get the raw end of the deal and many of them unfortunately stay in damaging, painful and risky relationships because they fear they will lose everything if they leave. That is not right and it is not fair.

These are the kinds of things that do not cost a ton of money to do, but they certainly can pay major dividends in increasing the freedom and equality of people for aboriginal people.

We can talk about the Canadian Human Rights Act. Unbelievably in 2004, that act does not apply on Indian reserves.

These are the kinds of changes the government should be making. It strikes me that the government is afraid of the status quo Indian industry in this country, which benefits by the preservation of dependent people, when what we need are ideas and enthusiastic projects, which many bands have embraced on their own. We need them adopted nationally. They can bring aboriginal people to a position where they can be not only self-sustaining, as many already are, but in a better position where they can, as equal Canadians, pursue their goals with the rest of us.

These are not expensive proposals but they take courage and they take forward thinking in dealing with them. The government missed the boat on these issues, both in its throne speech and in its budget. It continues to throw good money after bad in the same, old, failed approaches of the past. As for this idea, this Victorian era thinking, that we can somehow help people by bestowing money upon them, by largesse, by failed old welfare systems that basically steal the souls of many aboriginal people, it is one of the government's failed approaches.

These are failed approaches and they continue. The government continues to insist on following them for no good reason. Welfare reform and many other initiatives are being undertaken around the world, yet here in Canada we still follow the same, old, antiquated, backward view that is too often illustrated by the government, not just in its ideas but in its lack of ideas.

[Claude Drouin, Liberal, Beauce, QC]

Mr. Speaker, first, I want to inform you that I will be sharing my time with my colleague from Dufferin—Peel—Wellington—Grey.

I take pleasure in speaking today to all Canadians, to tell them how we, the Government of Canada, have adopted a budget that demonstrates sound financial management.

It includes provisions for responsible and prudent financial management. It talks of improving accountability and integrity with respect to public expenditures and of continuing to present balanced budgets or better.

In the field of health, the budget promotes effective policies that will preserve and reinforce our health care and public health systems. With respect to learning, it is important to provide young people with the tools for success, while encouraging lifelong learning for all Canadians.

Of course, communities must not be neglected. We must ensure that solid and sustainable foundations are laid to create a new deal for communities. And to that we add knowledge and commercialization, in order to increase productivity through investments in research and development.

Canada's relations with the rest of the world are also a high priority and require the creation and strengthening of Canada's international ties.

Relative to economic and fiscal prospects, Canada’s economy was hit by a series of shocks in 2003, ranging from the SARS outbreak, a case of bovine spongiform encephalopathy and the Ontario power blackout to forest fires in British Columbia and Hurricane Juan in Nova Scotia. All this, combined with the rapid increase of more than 20% in the value of the Canadian dollar, pushed Canada’s economic growth down to 1.7% last year, well below the 3.2% forecast by private-sector economists at the time of the last federal budget.

For 2004, private sector economists forecast an average growth rate of 2.7% for Canada’s economy, reflecting solid domestic fundamentals, low interest rates and a stronger economy. In 2005, growth is forecast to rise to 3.3%.

With respect to responsible and prudent financial management, the Government of Canada is committed to balanced budgets or better in each of the next two years. This commitment to fiscal discipline means the government will maintain its annual $3 billion contingency reserve which, if not needed to deal with unforeseen circumstances, will be used to reduce the federal debt.

Moreover, the budget restores $1 billion in economic prudence for 2004-05 and 2005-06. This kind of prudence is what enabled us to address some extraordinary burdens, as I mentioned earlier, and also allowed the government to provide $1 billion in direct assistance to agricultural producers to help offset the severe hardships caused by recent disease outbreaks and sudden drops in farm incomes.

This budget also sets the objective of reducing Canada’s debt-to-GDP ratio to 25% within 10 years. I would like to point out that 50 years ago there were eight workers for every one retiree. Today, it is five workers for every one retiree, and in 25 years in Quebec, it will be two workers for every one retiree, which is why it is important to decrease the debt to ensure that our children and grandchildren have a promising future and the health care that they deserve.

An investment of $665 million this fiscal year and over the next two years includes $165 million to assist in creating the new Canada public health agency and to fund its main activities, including increasing emergency response capacity, and enhancing surveillance. It also includes some $100 million to be invested in Canada Health Infoway to develop high quality, real-time public health surveillance systems.

We need only think of SARS, West Nile virus and other diseases where rapid intervention is essential.

In addition, this budget provides an additional $400 million to the provinces and territories to support a national immunization strategy and to assist in enhancing their public health capacities.

This is in addition, of course, to the $2 billion that the Canadian government is transferring to the provinces this year, building on the 2003-04 agreement for $34.8 billion, for a total of $36.8 billion.

In terms of learning, budget 2004 includes a comprehensive package of measures to make post-secondary education more accessible to all Canadians and promote lifelong learning, including the following.

There will be a new Canada learning bond of up to $2,000 for children born after 2003 in a family entitled to the national child benefit supplement. An initial $500 bond will be provided, with subsequent $100 annual instalments for children, until age 15, in each year that the family is entitled to the national child benefit supplement.

Next, the Canada education savings grant matching rate for low-and middle-income families will be significantly enhanced.

A new upfront grant of up to $3,000 for first year post-secondary dependent students from low-income families is also being introduced.

The budget also raises the weekly loan ceiling under the Canada student loans program to $210 from $165.

In addition, this budget will be accelerating implementation of the agreement with the provinces and territories to improve access to affordable, quality early learning and child care programs.

Finally, this budget will extend the education tax credit to employees who pursue career-related studies.

A new deal for communities is announced. Budget 2004 takes the first steps on the government’s commitment to forge a new deal for communities of all sizes.

Municipalities will receive an estimated $7 billion in relief over the next 10 years with respect to the GST and the federal portion of the harmonized sales tax.

As an example, for the year 2004-05, which is said to have started on February 1, the municipalities of Quebec will receive $129 million. I can tell hon. members that several mayors have written to us, and others have spoken to us personally to thank us for this measure taken by the Government of Canada to support them in meeting their great need to upgrade their infrastructure.

The $1 billion for infrastructure will be spent over the next five years instead of the previously announced 10-year period, again because we know how many municipalities are in urgent need. We had a duty to do something, and this is excellent news.

Regarding the community-based and non profit sector, Canadians depend on a wide range of organizations to contribute to the well-being of individuals and families. We are going to improves the tax rules for charities; extend small business programs and help establish capital funds and other sources of lending to benefit social economy enterprises; and provide additional funding over two years to the voluntary sector.

This has been very well received by stakeholders in the social economy and by the entire Canadian public as well.

Unfortunately, I see that time is moving along quickly, so I will just say in conclusion that we have an excellent budget. There are things we will still need to do. There are things that are not included. For example, in 2000, we adopted a five-year plan to reduce taxes by $100 billion, and this year—that is the one about to begin—2004-05, Canadians will benefit from $31 million in tax reductions.

This shows the Liberal government's awareness and the importance it places on this budget, a budget of which I am very proud.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

Mr. Speaker, I would like to ask my colleague from Beauce what he thinks of our political mores and the integrity of our institutions with respect to the situation today and that which prevailed in 1993, at the time the Liberals took power.

In fact, we know that, as a result of the sponsorship scandal, the government is trying to change its image and give itself a makeover. As for integrity, the government has announced certain measures in the latest budget speech in order to establish the Office of the Comptroller General of Canada, for example. It will appoint professionally accredited comptrollers to sign off on all new spending initiatives in every government department. Moreover, it will try to reorganize and strengthen the internal audit function on a government-wide basis.

Nevertheless, it is interesting to see what was said in the red book of 1993, which, it appears, has been tossed out the window by the supposedly new leadership of the Liberal Party and the government. In the introduction to the chapter entitled, “Governing with Integrity”, it says, and I quote:

Yet after nine years of Conservative rule, cynicism about public institutions... is at an all-time high.

They are referring to the voters, the Canadian public, the people of Quebec.

—cynicism about public institutions, governments, politicians and the political process, is at an all-time high. If government is to play a positive role in society, as it must, honesty and integrity in our political institutions must be restored.

The most important asset of government is the confidence it enjoys of the citizens to whom it is accountable. There is evidence today of considerable dissatisfaction with government and a steady erosion of confidence in the people and institutions of the public sector.

That is how we see it. This was written by the Liberals in 1993. Later, speaking about order-in-council appointments, the Liberals add:

The Conservatives made a practice of choosing political friends when making thousand of appointments to commissions and agencies—

Here, I think that the government took its inspiration from that nasty habit of Canadian culture when it named—for example—André Ouellet to Canada Post, David Dingwall to the Royal Mint, Jean Pelletier to VIA Rail, as Paul Tellier's successor.

Therefore, I would like to hear from my colleague, the hon. member for Beauce, what he thinks of the real changes that may have happened between the Conservatives' fiasco—which was about integrity—and the public fiascos we have just been through, to the point where it has become an international embarrassment to see this government acting like the government of a banana republic, as I am sure he will agree with me.

Therefore, I would like to know what my worthy colleague from Beauce thinks of all this.

[Claude Drouin, Liberal, Beauce, QC]

Mr. Speaker, I thank my colleague for his courageous question. I did not think he would dare ask such a question. However, it is a pleasure to answer him.

Unlike the Parti Quebecois, which, a few years ago, had a major problem with commissions, the Quebec Liberal Party called for an inquiry. All the former thought to do was say, “Listen, we will amend the legislation on lobbyists, and voila, problem solved”.

The Government of Canada, on this side, recognizes that there was a problem. A small group of people improperly used taxpayers' funds, and measures were taken—

[An hon. member]

Oh, oh.

[Claude Drouin, Liberal, Beauce, QC]

I am sorry, but it seems that the Bloc does not want to listen to the answers. It only wants to listen to the questions. However, we are going to answer anyway.

Measures were taken, which no previous government had ever done. We quickly asked the Standing Committee on Public Accounts to get to the bottom of things. Furthermore, a judge will investigate. He will conduct a full investigation and get to the bottom of this. We introduced legislation so that public servants could speak out against irregularities and systemic fraud.

We allowed cabinet memorandums, normally accessible only 30 years later, to be made available so that people can get to the bottom of this situation and ensure that taxpayers' money is being used properly.

However, what the Bloc member is forgetting is that the Canadian government must be judged on its entire record and, on that score, this government has reduced the debt by $52 billion. We are saving $3 billion in interest.

We reduced taxes by $100 billion over five years and increased transfer payments to the provinces, as a responsible government should. We increased the Canada child tax benefit as a responsible government should.

We are working together with the provinces—I know that it hurts the Bloc to hear that—to ensure that Canadians have access to the best possible services. That is how a responsible government acts.

[Murray Calder, Liberal, Dufferin—Peel—Wellington—Grey, ON]

Mr. Speaker, this is a bit of déjà vu for me today. The first time I rose in the House to speak on a budget was the 1994-95 budget when this government first came in. In 10 years a lot has happened, and it has been very positive.

When I spoke at that point in time, our country had approximately $580 billion worth of accumulated public debt. We were running a $42.5 billion deficit. Unemployment in the country was over 11%. The interest rates were over 11%, and everybody was worried about their jobs, their paycheques and their houses, if they could even afford to have one.

Today, with the 2004-05 budget, it is like night and day. Unemployment is down around the 7% mark. Interest rates are at a 40-year low. We are the only country in the G-7 and the G-8 that is consistently running surplus budgets. The people at home now are not worried about their jobs. They are not worried about their paycheques. They probably have a house now because interest rates are so low they can afford one. That is what has happened.

What I am saying is each budget is a building block. We started in 1994-95 on a good direction and we are on that same path now with the 2004-05 budget. I ask any Canadian to make a comparison of where we were and where we are. Of course this budget is set in the direction of where we want to go.

From that, we have to take a look back to where we were. Debt is a huge expense within a budget. At that point in time, accumulated public debt versus GDP, that would be one's mortgage versus one's paycheque, was over 68%. Today it is sitting at 42%. We have made a commitment that in 10 years time it will be at 25%.

When we were first elected to the House and crafted that first 1994-95 budget, we were also spending almost 37¢ on the tax dollar taken in to service the debt, not pay it off. We are now down to around 21¢ on the dollar, and still dropping. That means, as we keep lowering the debt and lowering the service costs on that, we automatically have savings. We have had savings on $52 billion paid off in accumulated public debt in the last couple of budgets alone of over $3 billion.

Surpluses happen when the economy is good. However, if the economy ever turned bad, surpluses very quickly disappear. However, once our debt is under control, savings within the budget on debt reduction happens every year. If the economy does slow down, we still have those savings. Those savings can then be put into programs to make Canada more competitive and a better place to live.

When I was chair of the national rural caucus, one of the things we argued for and received, and it has actually been enhanced in this budget, was money for rural Canada, in rural infrastructure. We must remember that in Canada today approximately 20% of the population lives on 80% of the land and 80% of the population lives on 20% of the land. If we take a look at the infrastructure within cities compared to the infrastructure of rural Canada, it is approximately the same. We just do not have a lot of people on both sides of the road. However, we still have roads to build, repair and maintain, along with bridges and any other infrastructure that goes along with them, such as water, sewers, whatever. Rural Canada needs an injection of cash just the same as urban Canada needs.

There was an injection of cash within this budget amounting to $1 billion, which was originally to be over 10 years. That has now been accelerated to $1 billion over five years. This is almost like a 100% increase.

Municipalities across Canada have been given relief from the GST. We have given them a rebate. That, in essence, gives those municipalities that normally would have transferred this money to us, an extra $7 billion to work with over the next 10 years.

What does this mean to those municipalities? Smaller municipalities of 250,000 people and under could receive anywhere from $300,000 to $500,000 a year. That would build a lot of roads and put in a lot of infrastructure. Toronto has a lot of problems right now with its public transit system, and it alone will benefit by over $50 million a year from the GST rebate.

We have seen a lot happen in that 10 year period. However, we have to build on our future too. Our future lies with our upcoming youth, and from that our education system. The government has allowed $20 million to offset the individual costs of research by universities and research hospitals. If Canada, as an exporting nation, is to be cutting edge, we have to have R and D. If not, then we definitely will end up with a major problem.

Canada's relationship to the world is important. As the former parliamentary secretary for international trade, I found it was important for the country to expand its relationship and trade with other countries, such as APEC, the Asian-Pacific Economic Council, and Caricom, the Caribbean countries.

An additional $250 million has been provided in the budget to cover Canada's costs in peacekeeping initiatives within Afghanistan and to fight terrorism. When I was at APEC, that was one of the things about which countries were talking. Canada's decision not to go to war with Iraq impressed those countries. Canada, as a peacekeeping country, has to keep putting a strong position forward on this, on a multilateral basis.

With regard to trade, $1.9 billion Canadian crosses over the U.S. border each day. Over the last two years, we watched with a lot of interest the United States in a recession. Normally, Canada exports 44% of what we produce. Of that, 85% goes to the United States. It used to be if the United States got a sniffle, we had pneumonia. In the last two years when the United States had a recession, Canada did not. We have to ask ourselves why? If this happened in the past, why did it not happen this time?

One reason is because we have our debt under control and that gives our economy stability. That has helped us out because it has actually stabilized the value of the Canadian dollar, and low interest rates have given Canadians a lot more economic flexibility than what they had in the past.

I would be remiss if I did not mention the environmental aspect within the budget. When I was chair of the national rural caucus, I pushed very hard for ethanol production in Canada. I now see, with the budget's building blocks, that we are beginning to establish an ethanol industry, and I think that is excellent.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, it is a pleasure to take part in the budget debate this afternoon. I want to indicate at the outset that I will be sharing my time with the member for Vancouver East.

I have been amused to listen to members on the government side say that this must be a good budget because the opposition and Canadians do not want to talk about it. It is kind of like a grey, overcast day. There is really not very much to be said about it. It is a conservative budget that focuses very much on debt reduction and not on urgent social needs, such as health care. I want to focus on some of that during the time that I have available.

At the outset, I recognize and applaud the government for stepping in and providing some additional assistance to farmers who have been so badly affected by the BSE crisis. It has been desperately needed, and it is a good thing the money was provided a week ago Monday, the day before the budget was introduced.

People who I spoke to in my riding and across the country were looking for changes in issues like health care and reducing wait times for elective surgery. As members know, wait times across the country are up to 18 months. These people will get no comfort from the budget of last week. There is no reduction because there is no significant additional money to reduce waiting times. The $2 billion announcement was made yet again, and there was a commitment about first ministers meeting later on this year.

I note that the government of Manitoba expects it will require another $106 million in order to keep abreast of health care issues in that province. The premier of Manitoba, Gary Doer, has said that if the federal government has money, let it spend it now. He has said that the province needs it now, not in August or September. There is a crisis now, and I am sure premiers across the country would echo the statement of the premier of Manitoba.

People are beginning to wonder whether the Prime Minister is starving the health care system in order to create a crisis, allowing him to bring in the corporate side with the public-private privatization plan. It is still on the radar screen.

Yes, there is a bit more money for infrastructure this year, but again it is tied to the P3 investments, the public-private partnerships in water, transit and highways. We think that is basically a licence to print money for those private entrepreneurs.

Yes, there was a GST exemption for the cities, but why was there not one for schools, universities, hospitals and indeed for social services? In the throne speech in February promises were made to patients, parents, students and aboriginal Canadians. We expected, reasonably, to see some of those details rolled out in the budget. We know throne speeches are an opportunity to create a good feeling without needing to put a lot of data to it. However, we saw none of that for those groups in last Tuesday's budget.

What there is, though, is a fixation on the debt. As many other noted economists have indicated, Canadian debt is already among the lowest of any major economy in the world. However, the budget of the newly minted finance minister from Saskatchewan, and kudos to him, focuses on reducing the debt from 42% of gross national product to 25% over a 10 year period. We can remember that there used to be a commitment by the government to have a fifty-fifty arrangement on any surpluses, that 50% of the additional surpluses would go to social spending and 50% would go to debt reduction.

[Libby Davies, NDP, Vancouver East, BC]

What happened to that promise?

[Dick Proctor, NDP, Palliser, SK]

What happened to that promise, indeed? It is gone and now the focus is very much on driving that debt down as quickly as possible. That means Canadians will have to wait for spending on some of the social deficit issues that are so important to them.

I do not think Canadians were impressed at all with last Tuesday's budget. They wanted to see recognition of the Romanow report. They wanted money built it into the base for health care. They wanted to see a national drug agency and national home care. Instead, we heard the re-announcement of the $2 billion. There was no increase in the base funding. We now are in a situation where funding from the federal government for health care, instead of the fifty-fifty funding formula which we used to have for health care, is 16% with the remaining 84% to be found by the provinces.

It is interesting to note that virtually every province in Canada, with the sole exception of resource-rich Alberta, is really struggling and having problems coming in with any kind of a balanced budget because of the emphasis that has been placed on health care; the need to find additional funds to ensure that health care is available for all. The federal finance minister has said that sustainability must be our focus, but in my opinion the budget has not done a thing to ensure sustainability in the health care field.

Let me turn to another area that deserves some focus, and that is employment insurance. Prior to the budget, Canadians called for investment of full federal fiscal surplus in programs to create a fairer society. They wanted to see a more productive economy and job creation to offset an economy now struggling with slower growth and rising unemployment. Instead, a budget appeared that was obsessively focussed on fiscal prudence.

The problem with employment insurance is not that the premiums are too high, as the members of the Conservative Party say. The problem is very few people are eligible to receive employment insurance. This is a universal program where every Canadian who works pays into an EI program. Yet according to the numbers, less than 40% of people are actually eligible to receive employment benefits. Some do not work enough hours. It depends where one lives. In some provinces and territories it takes 910 hours of work and in others 410 hours. It is a makeshift operation, and it simply is not meeting the needs of Canadians in a changing work life. People who are adversely affected by being ineligible for employment insurance are woman, younger workers and immigrants.

Something is very askew when only 38% receive employment insurance benefits. Since 1994, the government changed the rules on employment insurance. It used to be that more than 75% of people would apply for EI. That is now down to 38%, and $50 billion has been taken out of the EI surplus. It has essentially paid for all the surpluses that the government has been running for the last several years. The leader of the New Democratic Party, Jack Layton, calls it theft, and he is absolutely right. Employers and employees have paid into that fund, and it has simply been taken over by the government and driven into its bottom line to pay down debt and deficit. It is leaving part time workers, particularly women, seriously shortchanged.

These are two of the areas that I wanted to talk about today; the lack of money for health care as well as for employment insurance. There are a number of other issues, but I am confident that my colleague from Vancouver East will deal with these in the time that is allotted to her.

Suffice it to say, this is not a budget that will gladden the hearts of Canadian working men and women or their families, certainly not in the region of the country where I have the privilege of representing constituents.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I listened to what the member was saying. He talked about EI and the fact that so many people who pay into EI are not eligible for benefits when they need them. This is a matter of considerable concern to me as well.

EI should be set up in such a way that for example students who have jobs in the summer or whenever and pay into EI should at least get their premiums back if they go back to school, for which there is no EI eligibility.

The other thing which is very offensive to all of us, and I am sure to the member opposite as well, is that the government year after year rolls billions of dollars from the EI fund into general revenues for which it was never intended.

I would like to say by way of comment that it is one area where I certainly agree with the member. We should insist that the government follow the rules that were intended for EI.

[The Deputy Speaker]

Before I give the floor to the hon. member for Palliser, let me remind other colleagues in the House that to ask questions, members must be in their own seats before they can be recognized by the Chair.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I appreciated what the hon. member for Elk Island had to say. I am glad that he too is interested in the fact that so few Canadians actually qualify for EI, even though we all pay into it when we are working.

This gives me an opportunity to expand on that. The member mentioned students and people who go back to school. There are 900,000 Canadians who are in the low paid economy and are trapped there. They are not getting out of that trap. They tend to be older women, people who have generally not received a high school diploma. Almost all of them are not working in a place that is organized by a trade union. They tend to be care workers, nannies and recent immigrants. It is a very bad situation.

I will use the example of Alberta and specifically Calgary which is a booming metropolis as we all know. The minimum wage in Alberta is $5.90 an hour. For a family of four with two adults working it would amount to a little over $28,000 a year. It certainly does not meet the low income cut-off. We do not have a poverty level in this country but we do have low income cut-offs. The average rent in Calgary is some $804 a month. We can see how difficult it would be for a family of four in a city like Calgary. I am not picking on Calgary; it could be any number of cities in this country. That is the reality. With a low minimum wage and a booming economy it is very difficult.

We need training programs. The member for Elk Island is absolutely right. If we could take some of that employment insurance money and drive it into training programs, it would help families like the family I described. It would be to the benefit of this country. It would certainly be to the benefit of families like that one.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I am very interested in the comments that my colleague has made about employment insurance.

In my community of Dartmouth we lose $20 million a year that was coming into our community to pay workers who had lost their jobs. They lose their jobs and the money is no longer coming into our community. Furthermore they are leaving the community. They are having to move to other parts of the country. Then our population declines and our equalization amounts then decline. There is this vicious circle of people leaving the community which makes the community weaker.

I would like the member's comments on that. I believe it might be the same kind of phenomenon that he experiences in Saskatchewan.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, my colleague from Dartmouth is absolutely right.

I would like to pay tribute to a gentleman by the name of Kevin Hayes who works at the Canadian Labour Congress and who is focused very much on this whole issue of EI and what has happened with the changes in EI. He has documented what my colleague from Dartmouth is saying about money that has been taken out of local economies as a result of the withdrawal and the ineligibility of so many people for employment insurance.

It is absolutely the same in Saskatchewan. Millions of dollars have come out of my riding of Palliser, as in her riding of Dartmouth and everyone else's riding in the country. Money that used to be available is no longer available. We need to make that money available again.