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House of Commons Hansard #143 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was surplus.

Topics

Unanticipated Surpluses ActGovernment Orders

10:45 a.m.

Liberal

Ralph Goodale Liberal Wascana, SK

Mr. Speaker, I first want to thank the hon. member for his words of congratulation to me on my common sense. I appreciate that.

With respect to the $9 billion in the surplus from the previous fiscal year, when that was announced was exactly the time when I indicated that Dr. Tim O'Neill would be invited to examine the fiscal forecasting process. He has made 14 recommendations. We are in the process of implementing those very recommendations.

The only one of his recommendations that we did not agree with was the one where he said it would be okay from time to time to run a deficit. We do not think that is consistent with the views of Canadians. We do not think it is consistent with the views of members of the House. We think the budget should be balanced or better every year.

Dr. O'Neill anticipated that we might not agree with his point that it would be okay every now and then to run a deficit, so he said that if we are going to stick to the no deficit rule, we have to have a mechanism to transparently deal with those extra surpluses. That is exactly what we are doing with Bill C-67.

On the aboriginal evacuation that is taking place in Ontario right now, I would point out that the responsibility for that evacuation is in fact under provincial jurisdiction. The Government of Canada's responsibility is to pay for it and in fact we are picking up the entire bill for that situation.

With respect to the issue about farmers, I am happy to tell the hon. member that during the time that I have been Minister of Finance, since December 2003, the Government of Canada over and above all of the normal safety net programming has invested an additional $2.8 billion to support agriculture in this country. We will stand by our farmers every step of the way.

On hepatitis C, the House discussed the process and the hon. gentleman, I am sure, is very aware of that process. It involves a court controlled fund that we are in the process of negotiating with the relevant parties. We are hopeful we can achieve the kind of solution that will in fact allow those revenues to flow.

Unanticipated Surpluses ActGovernment Orders

10:50 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

Mr. Speaker, it is my pleasure to address Bill C-67, the surplus allocation bill.

I know the minister would not want to mislead Canadians about the true facts regarding either the history of his own government's performance or even the history of other governments' performances, so I just want to start by addressing some of the issues that he raised in his speech and then I will say a little more about the bill in particular.

First of all, the minister said a number of times that his government balanced the budget, but that is not true. In fact the taxpayers balanced the budget and they paid a very heavy price to do it.

As the minister knows, first of all his government cut health care. It made the deepest cuts in Canadian history to balance the budget. It did not cut all the transfers to spending for grants and contributions. It did not cut them at all. In fact those stayed steady through that period, but the government certainly cut health care. In other words, Liberal friends were well looked after during that period but health care had the deepest cuts ever in Canadian history. It really was not the government that balanced the budget. It was health care workers, patients and Canadians.

During that time, we saw a number of tax increases, 67 tax increases, typically small, sneaky tax increases through that period. Who bore the brunt of that? It was the taxpayers. It was not the government that balanced the budget. It was the taxpayers who balanced the budget.

I also have to point out that GST revenues were very important in helping to keep that budget in balance, and that is the government that said it was going to get rid of the GST. Last time I checked it was still there. We are still paying that 7%. I see it every time I purchase something. The government certainly counted on the GST to balance the budget, even though the Liberals said they would get rid of it.

I noted another thing, and the minister partially touched on this. He talked about all the revenues coming in. I note that many of them are resource revenues and in fact revenues from companies that do business in the United States all the time. They are bringing in lots of revenue. The Liberals said they were going to get rid of the free trade agreement. They were going to rip up NAFTA but thankfully it is still there and it is providing a lot of these revenues.

Therefore, I just reject the premise of the minister's argument.

Unanticipated Surpluses ActGovernment Orders

10:50 a.m.

Liberal

Ralph Goodale Liberal Wascana, SK

Herb Gray would disagree with you.

Unanticipated Surpluses ActGovernment Orders

10:50 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

Mr. Speaker, I know I sound like the Hon. Herb Gray but I have to point out that the minister is simply wrong when he says that the government balanced the budget. It is absolutely untrue. Of course it was the Canadian taxpayers who balanced this budget. The hospital workers balanced it. Patients balanced this budget. The minister is absolutely wrong to take credit for balancing the budget.

There are so many things I could touch on. The minister talked about the government's economic performance and I have to take issue with some of the things he said. He painted a pretty rosy picture of the economic performance, but a lot of people would disagree with that. I want to provide some evidence in the form of the report of the governor of the Bank of Canada who appeared before the finance committee just two days ago. He pointed out in his monetary report that productivity growth in 2003 in this country was zero. In 2004 it was zero. At this point in 2005 it is only 0.7%.

Productivity growth is critical to our ability to raise living standards in this country. If we do not improve our productivity as a nation then our standard of living cannot rise. We cannot defy gravity because when we talk about productivity, really we are talking about the ability of every person in the country to produce goods and services, to keep increasing the number of goods and services that they can provide. That is not done by working harder. That is the wrong way to do it. It is done by investing in education and by investing in technology. When we do that, we ultimately raise living standards.

Who pays the price when living standards keep falling further and further behind? It is certainly not Liberal friends. It is the people of Canada and their living standards are mired where they were a long time ago.

In January, Don Drummond, the former deputy minister of finance, produced a report showing that take-home pay in Canada has only gone up 3.7% in the last dozen years or so which amounts to less than $60 a year more in take-home pay. However the take for government has gone up about four times that amount.

When it comes to who is reaping the benefit of any increase at all in the output of Canadians it is not Canadians. They are not getting that money. It is going to the government and the government is keeping that money.

The minister argued in his speech that tax relief was not a panacea but for the people who need the money it is tremendously important. People want to raise their families and have enough money to send their kids to school.

My colleague across the way talked about jobs, and job creation is important, but it is also the types of jobs. In Ontario we have seen 100,000 manufacturing jobs disappear in the last little while. These are high value jobs that are being lost because the government has refused to act in important ways to ensure we can keep those jobs.

There is another thing the government has done, which the minister somehow failed to point out. I would think as a major economic initiative he might point to these things. I am sure he is very proud of his record. It is a little odd to me that he would not talk about things like the NDP budget deal that he cut, where for many weeks he argued against the very things that the NDP were proposing, only to adopt them in the end and raise spending by $4.6 billion. In his speech he criticized the NDP for always asking for more money and spend, spend, spend but that is what he did. In fact, spending last year went up 15% under the government, the largest increase since 1974.

That is not all. The finance minister also took out the tax relief for large employers. This goes to the point I was making a minute ago when I was saying that we are trying to preserve manufacturing jobs. The minister has reneged on his commitment in the budget to provide tax relief for large employers, manufacturers, to keep those jobs in Canada. How regrettable is that? He has flip-flopped on it about three times. He said that he would bring it back in the fall and then he said that he would not. Now he is floating it again. I do not know if we will ever see that.

However we need tax relief if we are going to preserve jobs in Canada. I am truly sorry that the finance minister has not followed through on that commitment in the budget. In fact, I am very surprised that he did not mention the deal that he cut because I am sure he is very proud of those kinds of things.

I could probably talk about all the things the minister raised in his speech that were a little misleading during the entire 20 minutes but I will not do that.

Unanticipated Surpluses ActGovernment Orders

10:55 a.m.

Liberal

Ralph Goodale Liberal Wascana, SK

Try talking about the bill.

Unanticipated Surpluses ActGovernment Orders

10:55 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

I will talk about the bill.

Unanticipated Surpluses ActGovernment Orders

10:55 a.m.

Liberal

Ralph Goodale Liberal Wascana, SK

Good.

Unanticipated Surpluses ActGovernment Orders

10:55 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

The minister is urging me to do that so I will. I want to explain why the Conservative Party is very much opposed to Bill C-67.

Bill C-67 is indicative of a government that is out of gas and out of ideas. When the minister raised the fact that Canada is facing a productivity crisis, he brings in legislation that economist after economist has criticized as being absolutely antithetical to the idea of solving our productivity challenge. I want to explain what I mean by talking a little bit about the particulars of the legislation.

Bill C-67 would take unanticipated surpluses and divide them into three. One-third would go toward paying down the debt, one-third toward a tax rebate and one-third toward increased spending. Let me tell the House why that is unbelievably simplistic when we are facing this great productivity challenge. It is wrong for a number of reasons.

The government has used its ability to manage the size of the surplus a number of times to get around the normal parliamentary scrutiny that should be brought to government spending when we are talking about spending billions of dollars.

Since 1997, so-called unanticipated surpluses have amounted to about $90 billion. Independent forecasters knew these surpluses were coming. It is the finance department that claimed it did not know these surpluses were mounting. As a result Canadians have had no input on where the money should go.

What happens is that very often at the end of the year the government would go on a year-end spending spree. Sometimes the money would go to important things but a lot of times it would go to things of questionable value. I can think of one year, on the last day of the budget year, when the former prime minister bought two Challenger jets for his own travel at the same time that the Canadian military was looking for all kinds of equipment to move our troops around.

It is a dangerous when we have a government that manages the numbers so it can lowball expectations about surpluses and then use those surpluses at the end of the year for its own ends. We are concerned about that.

As members will know, at the end of last year Parliament's own independent forecasters projected a surplus of over $6 billion but the government engaged in a bunch of accounting tricks at the end of the year to reduce that surplus down to $1.6 billion.

When the government maintains the ability to manage the size of the surplus by introducing a bill to divide the surplus into equal parts, where Canadians think they will get a rebate at the end of the year, it is not going to happen because the government can eliminate the surplus if it suits its ends, which is what happened last year. We had a surplus at the end of the year of only $1.6 billion, which means there would be nothing to divide up. Canadians would see no tax relief, no debt repayment and no increased spending.

As long as the government maintains the ability to spend more than it said it would spend and manipulates the size of the surplus, having a bill that divides the surplus up is meaningless.

However it goes beyond that. We have other criticisms beyond that. One of the great criticisms that has been levelled against the government is the fact that it has not taken any steps to enhance our productivity. I touched on this a minute ago. The problem with Bill C-67 is that if one-third of the surplus were given back to Canadians in the form of a rebate, it would not do anything to enhance productivity.

One of the great arguments for tax relief is that lowering particular types of taxes provides an incentive for taxpayers to engage in certain types of behaviour. If taxes are lowered on investments, then people invest more, which, obviously, is something that enhances productivity. If personal income taxes are lowered, then people tend to produce more because they are not so heavily punished when they earn more money.

Economists have argued, and they are absolutely right, that instead of providing this one-third formula the government should just lower taxes for middle class Canadians. I know the government always pleads poverty but we have seen spending go up 52% since 1999. Money has gone to public service, Liberal friends and to David Dingwall. We have seen it go to the NDP.

Unanticipated Surpluses ActGovernment Orders

11 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Say that outside.

Unanticipated Surpluses ActGovernment Orders

11 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

Mr. Speaker, when did it go to Canadian taxpayers, the people who earn that money and who need that money to look after their families? It has not gone to them.

My colleague across the way said that the government cut taxes. If that is true, why are Canadians not seeing it on their bottom line? Canadians need some tax relief so they can look after their families and their future. No one can look after their families better than they can themselves, certainly not the Minister of Finance and not a bunch of bureaucrats either. It is time for tax relief for Canadians. Why are we not seeing it?

My friend across the way said, “Say that outside,” when I said David Dingwall's name. He raised the issue so I will address it. I do not think one Canadian believes he or she can quit his or her job and get a king's ransom in a severance package from the employer. That is exactly what is going on today because the government has not changed its stripes.

The Liberals did not learn anything from the ad scam. They said that they would clean up government and quit rewarding their friends but the first chance they had to prove they would not be the same way, they blew it and defended David Dingwall. They defend their practices of featherbedding and looking after their friends.

All that tells me is that the Liberals have not learned a thing. And, guess what? No surplus is safe from Liberal friends, which is why we are opposed to Bill C-67. Liberal friends will always be rewarded first and it will always be taxpayers who get looked after last. In fact, if we were to use the formula last year, Canadian taxpayers would see zero for a rebate. That is one of the primary reasons that we oppose Bill C-67.

I want to point out that it was the Conservative Party that moved an amendment to the throne speech asking for independent forecasters to be hired by the finance committee so we could provide a different opinion of where government surpluses were going. I should say taxpayer surpluses because they are the ones who provide them. This was passed on, I think, December 1, 2004. The point of that exercise was this. All three opposition parties agreed that the government had been manipulating the surpluses and the books for its own ends. I mentioned a minute ago that the unanticipated surpluses, or the surpluses the government would not admit to, amounted to about $90 billion.

We moved our amendment back in 2004, which passed, and the government reluctantly went along with it. We now have a situation where these independent forecasters come to the finance committee every quarter and provide independent analysis of the size of the surpluses.

Last year the government said in the budget that the surplus this year would be $4 billion. The independent forecasters just came to the committee and said that was absolutely wrong, that the surplus would be well over $10 billion. This comes on the heels of a situation last year, which my friend from Wild Rose has already pointed to, where at the end of the last fiscal year the government said that the surplus would be $1.9 billion and it turned out to be $9.1 billion.

We cannot allow the government to continue manipulating the books to come up with numbers that suit its ends. One of the great flaws in Bill C-67 is that it does not commit the government to live within its budget. Therefore it can, at the end of the day, manipulate the size of the surplus and ensure there will be no surplus to divide up. I think the amendment was one of the great triumphs of the Conservative Party. I should acknowledge that it was the leader of the Conservative Party who brought this to Parliament, that we can at least hold the government to account to some small degree for this manipulation that goes on at the end of every fiscal year.

I urge all members around the House to oppose Bill C-67. It is clearly a bad move for Canada and it is simply a cynical attempt to buy votes as we get into an election campaign.

Unanticipated Surpluses ActGovernment Orders

11:10 a.m.

Wascana Saskatchewan

Liberal

Ralph Goodale LiberalMinister of Finance

Mr. Speaker, I was interested in the hon. gentleman's remarks. They were fascinating if not fanciful in both his analysis of the economic situation and his depiction of the relative position of the Conservative Party and others on economic affairs.

He was very critical of year end spending decisions by the government over the last number of years. However, I look at those spending decisions on things like: assistance to farmers to alleviate the burden for mad cow disease; special measures to deal with the SARS outbreak; money to the provinces for health care; a trust fund to launch the child care initiative; special money to British Columbia to help fight the mountain pine beetle; measures to deal with national security after 9/11; measures to deal with foreign aid and so forth. I wonder in all of this criticism which of those things the hon. member would have chosen not to do.

The hon. member also talked about the tax relief measures in Bill C-67. He implied that the tax relief in the bill is only in the nature of one time annual rebates. That is not true.

I would point out first and foremost that our government has already implemented $100 billion in tax reductions; two-thirds of that going to individuals. There was another $13 billion in tax reductions contained in budget 2005. About half of those have already been implemented and the other half are still in the process.

I would point out to him that it is the government's intent in future budgets, just as has been the case in every budget since we balanced the books, that there will be positive steps taken in the main body of the budget to reduce taxation, especially personal taxation. Bill C-67 provides not just for rebates on an annual basis but in fact for permanent ongoing tax reductions to improve the disposable incomes of Canadians.

The member said that taxpayers would have seen zero in benefit under this legislation last year. That is not true because there was $13 billion worth of tax reductions in the main body of the budget itself. That is what the hon. gentleman tends to ignore.

I quoted the hon. gentleman from the National Post of about a month ago where he was in fact supporting a mechanism like this. I would point out to him that at the finance committee in June in the debate on Bill C-48 the hon. member himself moved an amendment that was virtually identical to Bill C-67. He has just swallowed himself whole and I ask him, what will he do about his gross indigestion?

Unanticipated Surpluses ActGovernment Orders

11:10 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

Mr. Speaker, the difference between the Conservative Party and the Liberal Party is pretty fundamental on this issue. My friend just spoke and said that we had some money left at the end of the year, so we gave some of it to farmers and people in health care.

However, the difference between the Liberal Party and the Conservative Party is that those things are not afterthoughts for the Conservative Party. We believe they should be priorities and they should be part of a budget. That is the big difference.

We would not say, if we have a few dollars left over after we have rewarded our Liberal friends, we will throw some crumbs to farmers, to people who are in the provinces for health care, and to foreign aid. No. Those are priorities for Canadians and we would put those things ahead of Liberal friends, waste, mismanagement, and all the things that have come to characterize the government.

My friend has spoken a little about tax relief. He is perpetuating the myth about Liberal tax relief. He said $100 billion in tax relief. That is absolutely untrue. What the government did, and it has been very successful I admit at convincing some journalists that it has actually reduced taxes, is it cancelled future tax increases. That is not a tax cut. All that does is basically ensure that the Liberals are not going to pick our pockets some more.

We want to absolutely reduce taxes for Canadians to ensure that they can look after their families and look after their futures.

Unanticipated Surpluses ActGovernment Orders

11:15 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, the member wanted to talk a fair bit about productivity and those conditions which might improve Canadians' productivity which I agree is extremely important. He talked about one element being corporate tax cuts. In the summation of all of his initiatives he basically came back to what we need which is significant cuts for middle income tax payers.

My question is very specific. I have been on the finance committee before and I know how difficult it is to work the mechanics. How would the member propose to target a tax cut only to middle income Canadians and not make it across the board for everyone at a prohibitive cost? How do we target it to low or just middle income Canadians, and leave lower and higher income Canadian alone? Why does he think that all Canadians do not deserve a tax cut?

Unanticipated Surpluses ActGovernment Orders

11:15 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

Mr. Speaker, all Canadians deserve tax relief. The reason why middle income Canadians are suffering the most is because they have the highest effective tax rates of anyone. When we combine the tax rates they pay, plus the clawbacks on different programs, the marginal tax rate for middle income Canadians in some cases exceeds 60%. It is the highest tax rate that we have in the entire system.

My friend shakes his head no, but it is an absolute fact. If the Liberals want to do someone to give incentive to the greatest chunk of the population to continue to earn more and do better, cut those middle rates.

Unanticipated Surpluses ActGovernment Orders

11:15 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

How?

Unanticipated Surpluses ActGovernment Orders

11:15 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

My friend asks, how? Well, I urge him to be patient because we will be laying out in the upcoming election campaign our own specific ideas for reducing taxes for middle income Canadians because we believe in standing up for middle income Canadians, not picking their pockets.

Unanticipated Surpluses ActGovernment Orders

11:15 a.m.

Bloc

Gérard Asselin Bloc Manicouagan, QC

Mr. Speaker, Bill C-67 concerns the allocation of surpluses. Why are there surpluses? It is because the Minister of Finance inaccurately forecasts his budget. He inaccurately forecasts the surplus. Each year, the Bloc Québécois proves that the Minister of Finance never fails to underestimate the anticipated surplus.

Why is there a surplus? First, $4 billion is taken each year from the EI fund. Now, we wonder how the surplus will be allocated. Given that fact, the minister should at the very least have improved EI and returned to seasonal workers the $48 billion he has taken from the fund over the past decade.

Today, the minister has had to introduce a bill setting out how the surpluses will be allocated, knowing full well that, every year, $4 billion is being taken from the unemployed, seasonal workers, women and the jobless. He is increasing the poverty level in the world and especially in Canada.

I want to ask the following question of the Conservative Party member who just spoke. Would it not be logical, in his opinion, for the government, which has taken $4 billion each year from the EI fund, to improve the EI program and give back to the workers the money—$48 billion according to figures provided by the Auditor General—that it has taken over the past decade?

Unanticipated Surpluses ActGovernment Orders

11:20 a.m.

Conservative

Monte Solberg Conservative Medicine Hat, AB

Mr. Speaker, the best option for the unemployed, of course, is a job. That is what a Conservative government would provide for them, but I do not want to be flippant.

One thing that should happen is that EI premiums should be reduced and I am glad the member has raised this issue because the minister spoke a minute ago about the debt reduction. When we take out the bookkeeping adjustment that was made when the government switched to accrual accounting and add up the surplus that came from EI, over $45 billion, it almost exactly equals the debt pay down that the government has undertaken.

In other words, the debt has been paid down basically by workers. It has been paid down through this overtaxation in the EI fund. It is highway robbery approaching $50 billion in premiums that were taken out of the EI fund over and above what the government needed to provide benefits to workers.

Unanticipated Surpluses ActGovernment Orders

11:20 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, it is a pleasure for me to rise and speak about Bill C-67, which at least gives us an opportunity—because this is the only benefit of the bill—to debate the question of whether or not there are structural surpluses in the federal coffers.

We have been estimating the surpluses since 1998 and we know that there is an imbalance between the financial capabilities of the federal government and those of Quebec and the provinces. On the other side of the House they have always denied the existence of the fiscal imbalance. Today, though, they confirm it for us through Bill C-67. It is a bill spread over the next five years. They anticipate, therefore, that there will be surpluses over this time, just as there always have been since 1998.

I would like to be very clear. The Bloc Québécois is totally opposed to this bill and will not support it. It is unacceptable in regard to both its arrangements and its substance concerning the existence of the fiscal imbalance. Nothing is corrected, and although the federal government recognizes the existence of the fiscal imbalance, it shows no desire to fix it.

So now the government says, “This is a bill for distributing the surpluses, but there will not be all that much in the future. There will not be any windfalls”. I am quite willing to think that there will not be any windfalls, but when we look at the tax cuts—and we will return to this in a minute—we see that the surpluses will generally be quite large.

Over the last few years, or at least since 1998 when the federal government has been taking in surpluses, about $75 billion in surpluses have been accumulated at year's end. But every year the government says: “There will not be a surplus or it will be minimal if there is one. We need to tighten our belts. We must be careful. Even if the post-secondary education system is collapsing and health care waiting lists are very long, the surplus will not be large enough for us to meet the demand”. And then every year, especially since 1997-98, the federal government's annual surpluses are a big surprise, like a rabbit they pull from a hat. We could not see it coming. It was unanticipated. What good government that gives us these surpluses at the end of the year thanks to its perfect management.

Perfect management it was not; it was a sham. Every year since 1998, some $75 billion of the surplus has been kept out of public debate. We could have been able to discuss allocation of those surplus funds, to focus even more on the matter of fiscal imbalance, and to find remedial measures precisely to enable the provinces and the Government of Quebec to fulfil their mandates duly set out in the Constitution, such as health, education and support to disadvantaged families.

But instead, they have concealed the surplus from us year after year. Not only had some $75 billion accumulated since 1998, but as well $160 billion had been allocated to new federal government initiatives. Not bad, that; it means that the government's margin of manoeuvrability, taking into account all that money since 1998, was in the order of $230 billion or $235 billion.

Unanticipated Surpluses ActGovernment Orders

11:20 a.m.

An hon. member

Incredible.

Unanticipated Surpluses ActGovernment Orders

11:20 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

That is not too bad for a government that claimed it was on a tight budget and could not meet the basic needs of its citizens in the areas of health, education and support to the disadvantaged. Not too bad for a government that claimed it had to tighten its belt because the public purse was in a bad state.

This year again—as my colleague from Medicine Hat has said—we in the opposition parties have retained the services of a group of independent experts so that there will not be the usual criticism that the Bloc Québécois, which has been within 3% in its estimates of the surplus at the beginning of the fiscal year ever since 1998, is exaggerating. In fact, the Standing Committee on Finance has hired independent experts who come and report to us every three months on the changes in public finances and provide us with their estimate of the surplus.

This year again, the Conference Board predicts a surplus of $10.2 billion, and Global Insight $12.4 billion. We ourselves estimate it to be between $10 billion and $11 billion, yet the government says it is in the $3 billion to $4 billion range.

That is utter nonsense. Since 1998, they have been hiding a margin of nearly $235 billion that could have been used for something other than enhancing the government's visibility. We will come back to that.

Not only has the government been hiding its considerable margin from us since 1998 and continues to do so, but it also continues to deny the fiscal imbalance and future structural surpluses, even though it acknowledges their existence through Bill C-67.

Despite this large margin, there have been some unbelievable inefficiencies in the machinery of government since it has been posting surpluses. When you are swimming in someone else's money and you have the authority to spend it, it is only human nature to waste it. I am referring to the numerous scandals. In fact, the sponsorship scandal is one of many. For example, we are still looking for the billion dollars that Human Resources Development Canada lost a few years ago, when the current Minister of Foreign Affairs was in charge. We are still looking for an explanation for the shameless waste of $1.5 billion in the gun registry, a program that was supposed to cost between $10 million and $20 million.

As you can see, the Bloc Québécois cares about sound fiscal management. Since the beginning, since 1993, we have been concerned about the sound management of the taxes paid by Quebeckers and Canadians, especially the $40 billion Quebeckers send to Ottawa. Nonetheless, we have noticed that since there have been surpluses, the federal government spending machine has been set in motion. In other words, it has taken the bit in its teeth.

Two years ago, the Bloc Québécois set up a committee that we christened the Léonard committee, after the former president of the treasury board of Quebec, Jacques Léonard. He wanted to get involved, as did my colleague, the hon. member for Joliette, my colleague from Drummond and myself. My colleague from Portneuf—Jacques-Cartier also joined the committee.

We conducted an in-depth examination of all bureaucratic spending by the federal government, and the results are disgraceful. From 1998 to 2003, when cumulative annual inflation was approximately 9.6%, federal government spending increased by 39%. We have verified these figures for the past two years. We discovered that during that period, while cumulative inflation hovered between 4.5% and 5%, federal spending increased by 20.4%. This is an outrage.

Yet, everyone was asked to tighten their belts before 1998, in order to eliminate the annual deficit. People have made sacrifices. However, the government has been hiding surpluses since 1998 and is therefore preventing the governments of the provinces and Quebec from fulfilling their fundamental mandates in health and education, and helping the most vulnerable members of our society.

Other people's money is being frittered away on operating budgets and bureaucratic spending in Ottawa. This is money that would normally go to the unemployed whose EI fund surplus is being stolen year after year. These surpluses correspond to employer and employee contributions; the federal government does not contribute one red cent. These are contributions from sick people who are waiting for treatment. There is not enough money for health care. The accord reached over a year and a half ago, thanks to which victory was declared and the federal government could appear to be a great saviour, was only enough to run the health care system in Quebec and the provinces for nine days. In the meantime, bureaucratic spending went unchecked.

The Léonard committee provided another important statistic. From 1998 to 2005, in other words from the time they started to generate surpluses using other people's money, on the backs of the unemployed, the sick and students drowning under student debt, payroll expenditures increased by 55.6%, an annual increase of 6.5%. This is more than double the inflation rate. This makes no sense whatsoever.

The government made major cuts to social programs, particular from 1995 on. They changed the criterion for social transfers for welfare, post-secondary education and health from needs-based to population-based. “They” means the present Prime Minister, and former finance minister, that man of great compassion. He is the one responsible for the drastic cuts since 1995. During that same time, the government's increasing revenues were being added to the savings achieved at the expense of our society's most vulnerable members.

Since 1995, federal revenues alone—not the savings in expenditures—have gone up by $76.6 billion. Over that same period, transfer payments to Quebec rose by $794 million, 1% of that figure. One per cent of the additional $74 billion has gone to increase transfer payments to Quebec since 1995. Disgraceful.

The Prime Minister, and former finance minister, achieved those budget cuts at the expense of the least advantaged members of society, including the unemployed excluded from EI because of tighter eligibility criteria. Otherwise, if the surplus had been reinvested in broadened accessibility, none of them would need to be on welfare now. The government is responsible for people having to move from EI to welfare, the latter being the responsibility of the Government of Quebec and the provinces.

At the same time as the provinces and the unemployed were being deprived of funds, the provinces' expenses were being increased, since they had to support people who had been literally thrown out on the street. This is the work of the Prime Minister, he who is so full of compassion for Canadians, whom he says he wants to help out of poverty. Come on, now, he is the one who has been putting them in it up to their necks since 1995.

If the transfer rate had been maintained for funding health and post-secondary education—that is to say colleges and universities—and to help the most disadvantaged, an additional $16.1 billion would have been transferred since 1995 to the governments of Quebec and the provinces for them to carry out their basic responsibilities.

This morning I heard the Minister of Finance talking about incredible tax cuts. In reality, Bill C-67 provides for the allocation of the “surprise” surpluses that the government might realize over the next few years. We call it a “surprise” even though we know about it a year in advance because we can figure it out with a little pocket calculator bought for $ 2.49 at the corner store. But for him, these are surprises. I do not know what they like about surprises; it is more fiddling with the figures.

Under this bill, if surpluses are anticipated at the end of each fiscal year, one third will be allocated to paying down the debt, one third will be allocated to tax cuts for taxpayers, and one third will be allocated to programs, but according to the government's priorities. These priorities could change along the way though, still according to Bill C-67, if the government so desires.

In reality, the government will continue doing over the next few years exactly what it has been since 1998. It will use its discretionary power to choose its own priorities, not those of Quebeckers and Canadians. That is what it has been doing since 1998. So what has changed?

In regard to these fantastic tax cuts, I would like to provide a small example of what they could be. Suppose that the surplus is $9 billion this year. Three billion would have to be set aside in a contingency fund. This has been automatically allocated to the debt since 1998. So we can forget this first $3 billion. There would be around $2 billion for new expenditures. These would not be the next expenditures but expenditures already included in Bill C-48 passed last June before the House adjourned for the summer. That is what would become the priority.

Therefore, $4 billion in surplus will remain after the reserve fund and the commitments under Bill C-48 have been satisfied. Let us suppose that if the surplus were just over $4 billion, $2 billion could be used for personal tax cuts. Do you know what that would mean for the 15.5 million taxpayers in Canada? That would represent $129 for one year. That is wonderful! We must applaud the government. A tax cut of $2 billion for 15.5 million taxpayers in Quebec and Canada would give them each $129. It is a joke to talk about whopping tax cuts; it is sheer visibility.

In reality, the federal government has sacrificed the economic and social development vision a government should have for visibility alone.

We have become accustomed to this government's finery: Canadian flags everywhere, cheques for fuel, etc. They are looking for visibility. You cannot run a society and make progress with visibility, you need a vision for development to do so.

We have just toured through several regions in Quebec. We have seen this government's lack of vision. Despite the billions of dollars in surplus it is been amassing since 1998, this lack of vision is killing entire communities, especially in the outlying regions. The remote regions have been totally abandoned.

All this visibility for a measly $129 cheque or a personal exemption for the same amount at the end of the day. This is a lot of talk for so little money.

We are talking about $2 billion for 15.5 million taxpayers. If the government was thinking about a vision instead of visibility, it would see that this money represents half the new investment the underfunded colleges, CEGEPs and universities have needed over the years. Last week's demonstration by students calling for $4 billion more did not come out of nowhere. It came from the fact that for the past 10 years, the Liberal government's savage cuts have not made it possible to give the colleges and universities the funding they should have received.

This too is the result of another of the Prime Minister’s promises which he has not kept and which has bit the dust. In the election campaign, when he was on the ropes, he was offering things to everybody. He promised students in the colleges and universities of Quebec and Canada to invest $4 billion in the education system, which is now suffering from underfunding. Fine words in an election campaign, aimed at saving his skin. They talk about the future of our children. They say the future of the Canadian economy depends on the education of our young people, on their knowledge, since ours is a knowledge-based economy. But when the time comes to act, there is no follow-up. They say that enough money has been invested in education. What lack of vision. So that every taxpayer can be offered an annual cheque for $129, we are in the process of sacrificing the education system of Quebec and Canada.

A sum of $2 billion, that is also what Quebec is lacking in equalization. If they corrected the formula and used real figures, a real method of calculating the pan-Canadian standard—that is, taking the ten provinces into account—and property tax, Quebec could obtain $2 billion with the equalization adjustment. That is the very amount we are scattering on needs of visibility and electioneering, that is, needs of very little importance which testify to this government’s lack of vision.

I listened to the Minister of Finance when he presented his bill. He said it was in line with what the opposition had asked for. What demagoguery. We made our request last spring, before the budget was tabled and before the revelation of the surplus figures for the last fiscal year. What we were asking for in the short term was to start correcting the fiscal imbalance by increasing transfers to the provinces for education, health and disadvantaged families, as priorities. We said that later, in the intermediate term, the government should sit down with Quebec and the provinces to work out a lasting solution for the fiscal imbalance.

We did not ask it to amass surpluses and plan a long-term distribution, but to correct the fiscal imbalance through a transfer of fields of taxation, such as the GST, and by correcting equalization. That would have ensured stability in Quebec and the provinces. But there is nothing in this bill that will correct the fiscal imbalance. They do not have the will, even though they recognize, by the very existence of Bill C-67, that there will be structural surpluses in the years ahead. This is testimony to the ongoing fiscal capacity of the federal government to generate surpluses, even though it does not need them to carry out its core mandates, and to the undercapacity of the governments of Quebec and the provinces to carry out their own mandates and provide direct services to the population, for lack of money, because that money is being siphoned off by Ottawa.

So we are going to oppose this bill. We will attempt to amend it so that there is a permanent and lasting solution to the fiscal imbalance. However, we cannot support the fact that, on account of the fiscal imbalance, it may be necessary to distribute in the coming years, at the rate of one third, one third, one third, the surpluses that the government will continue to outrageously accumulate.

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11:40 a.m.

Conservative

Brian Jean Conservative Athabasca, AB

Mr. Speaker, on the face of it, this bill of course seems very attractive. I think it is appropriate that we are speaking to this bill at this time because it is a lot like Halloween: it comes to us in the form of Prince Charming and when we take off the mask we have Lex Luthor, the arch-enemy of Canadians.

In a situation like this one I look at five questions: what, when, where, how and why. In this particular case, and I would like my friend to comment on it, I see that we have a situation under this legislation where we will not receive anything, even if it is possible, until March of 2007.

In fact, the most interesting part is that we have had a huge surplus of late. Of course the papers have been covering it and everybody has been talking about a $6 billion surplus, but the reality is it that it was spent down to $1.6 billion. Taxpayers would have received absolutely nothing, even with that large surplus, because of the discretion involved in this particular case.

Indeed, I think the most obvious part of this particular message from the Liberal government is that it has missed those Canadians who are most in need, such as the low income earners who actually do not pay taxes, homeless people, and seniors, the most important group of people in our society because they built this country but are not receiving anything back. In fact, we know that after the tax cuts from the former finance minister, now the Prime Minister, over the last 10 or 12 years, this is the part of society that lacks most and needs the most help.

I am wondering if my friend could comment on that and on how in this particular case there is absolutely no guarantee of any tax relief to Canadians, because the Liberals can fritter it away and spend it on absolutely nothing, as they have done over the last 12 years. They have spent it on things of no substance, things that obviously anger most Canadians, such as the sponsorship scandal and the many other scandals that have taken place.

They continue to do this and yet they come forward, as I have said, with a mask of Prince Charming that turns out to be Lex Luthor in disguise.

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11:40 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, staying with the Halloween theme, the government appears to be trying to offer some goodies to the public, a rather seasonal approach. That is what I wanted to say just now when visibility was raised, rather than a vision of development and improvement of the general well-being of the population. The greater good must be kept in mind. This bill is aimed at the greater good of the Liberal Party.

There is a suggestion of major tax reductions, but if looked at more closely—the breakdown I gave a few minutes ago—if the surplus is $9 billion, or even $10.5 billion, there will be at most a $2 billion tax cut. That means $129 per taxpayer, based on 15.5 million taxpayers. The colleague is right in saying that even those $129 are at risk. If we have understood the bill correctly, with those $129, the government has every freedom to announce that, if other priorities arise, and if it sees fit, they will be dealt with before the others.

In reality, the government has tabled this bill just to look good. Even the Prime Minister was talking about the public receiving dividends as if the state were a private business. I know that his family business is of far more importance to him than the future of the state of Quebec. I am speaking of his international shipping business. Moreover, he has made that clear by his actions since 1994 in changing the tax rules for international shipping companies. In short there is far more concern with looking good. But as I have said, those $2 billion could have been put to better use.

The hon. member has referred to seniors and homeless people. Since 1995 there have been considerable cuts made to transfer payments to the provinces to finance income enhancement initiatives, so that the homeless can improve their lot and so that social programs can ensure that seniors do not end up the way they were in the 1970s. A large proportion of seniors were living in poverty at that time.

The government did not do that. My colleague from Saint-Maurice should be consulted on this matter. He has been fighting tenaciously to have the government pay the guaranteed income supplement to those seniors who were unable to get it. In fact, the existence of the program had practically been hidden from them. That is what is shameful, when we look at everything that has taken place. The government was rolling in surpluses, but hid the existence of the guaranteed income supplement. The forms required were not accessible to seniors with decreasing independence because they could not read the fine print, for example. That is the kind of form that was produced.

Thousands of individuals were ripped off that way. While surpluses were piling up, the most disadvantaged were being ripped off. Seniors were picked on. This has been going on since 1993, since this government has been in office.

The same thing happened to the unemployed; instead of them getting help to re-enter the labour force, they were put down and suspected of cheating the system. We have seen examples of that in our ridings, as the hon. member probably has in his riding. The moment there was a mistake or incorrect information on a form, the unemployed individual would receive a letter indicating that he or she had cheated. Once your name is on the black list, try to see the process through to get benefits.

That is what this government does. It picks on the most disadvantaged to make itself look good. Then, it wants to ride in like a white knight waving cheques to compensate for the hike in energy costs, and with minuscule bogus tax cuts which are likely to be even smaller once all is said and done. The government seeks visibility to distract from the sponsorship scandal.

The Gomery report will be released next week. The government wants to take the focus off the sponsorship scandal. See how good the wonderful Liberal government is to us: there will be tax cuts in the years to come. I have to tell my hon. friend that I find that sad.

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11:45 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, the member has been here a long time. I have come to know that he is a very skilled debater. It depends on whether or not we are talking about a piece of legislation on the revenue side or on the expense side, because if it has to do with an issue on spending, his is always the argument about a provincial jurisdiction staying a provincial jurisdiction. However, when there is money or revenue on the table, it is that the government has to do this and get the province the money, as the member laid out, for post-secondary education, for health care and for social assistance. In other speeches, I have heard him argue exactly the opposite about staying out of provincial jurisdiction. He cannot have it both ways.

It is an excellent argument, even on behalf of the Bloc itself, as to why the federal and provincial governments have to continue to cooperate to ensure that we deal with the priorities of Canadians.

The final comment I want to make before I pose my question is with regard the fact that a balanced approach to priorities is simply necessary. It is not going to be good enough to say that Canadians who live in Quebec should not have tax reductions. They are entitled to tax reductions. They are entitled to have debt being paid down so that we have the interest savings and so that there will be more money. They are also entitled to program spending, which also includes transfers to the provinces so that provinces can exercise their discretion with regard to the priorities for the people within their provinces.

My question really has to do with the importance of having a balanced approach, but first with how we must not assume that Bill C-67 replaces a budget. The bill only has to do with surpluses in excess of $3 billion at the end of the year. There is a budget, however, which will address a whole host of the important priorities that have been debated in Parliament and with Canadians in a consultation process, in which the hon. member participates, in the finance committee. In addition to that, there is the process under Bill C-67 which will give Parliament the tools to fine tune that and to do it in a balanced way.

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11:50 a.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, this is not a balanced approach that we are being presented with today. It is so little balanced it is Kafkaesque. People are paying too much income tax and other taxes to the federal government. We are creating surpluses year after year. Where is the balance in this?

With this bill, public servants receive the money, immediately convert it into a cheque, and send that cheque back to the taxpayers. Balanced? This is totally unbalanced. If they admit that there are structural surpluses, that is because people pay too much income tax to the federal government. So we need to have a redefinition of the fields of taxation. That is what we have been asking for from the start.

This is not the first time this has happened in the history of this country. In 1964, Mr. Pearson and Mr. Lesage sat down together at the Quebec conference. Both were very intelligent. They agreed at that time that, in order to finance new initiatives—notably in education—the Government of Quebec needed of fiscal resources. This was offered to the other provinces as well, but only the government of Quebec took advantage. So there was a transfer of tax points to finance post-secondary education, among other things.

Prior to 1995, the agreement permitted three separate transfers for the Canada Social Transfer. This was before the Prime Minister made his savage cuts. This did not just come out of the blue. It was a federal-provincial agreement, in fields of Quebec jurisdiction, of course, but it was an agreement to transfer money from the federal government to Quebec. There was no question of the federal government interfering in education, social assistance or support to the most disadvantaged families: it was an agreement to transfer financial resources.

We have fallen from 50% to less than 18% in a few years. This has destabilized everybody. The result has been that the governments of Quebec and the other provinces have not been able to meet their core mandates. It is the Liberals who have destabilized the public finances of Quebec, and even of Ontario, which is in difficulty at the moment. Virtually the only province in this country with no problems is Alberta.

So don’t tell us that this is balanced. Don’t tell us we are saying the opposite. We have never said the opposite. If there is one consistent party in this Parliament, it is surely us.