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.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, as the leaves turn colour and fall from the trees, so do we have another Liberal proposal to deal with the surplus. Just as the leaves turn colour and the Liberals talk about the surplus situation, an election is in the wind.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Exactly. The question today should be, where are the Liberals? Perhaps we should have a quorum call. There are no Liberals in the House as I speak.
Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC
This is absurd, Mr. Speaker. there is not one Liberal in this House to hear our grievances.
Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC
Well, there is one. But where is the Minister of Finance who wanted to hear our suggestions for improving his bill? That is shameful.
Unanticipated Surpluses ActGovernment Orders
The Acting Speaker (Mr. Marcel Proulx)
Am I understanding correctly that the hon. member is asking for a quorum call?
David Anderson Liberal Victoria, BC
On a point of order, Mr. Speaker. The hon. member who just spoke said there were no Liberals in the House. He did not look hard enough, because I was in the House. I was next to you, and we even shared a few words. I was here the whole time, and I do not want it said that I was not in the House at that time.
He might say so of others, perhaps, but if what he said was that there were no Liberal members here, he was wrong.
Unanticipated Surpluses ActGovernment Orders
The Acting Speaker (Mr. Marcel Proulx)
I thank the hon. member. We have checked, and there is indeed a quorum.
The hon. member for Winnipeg North.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, I am very grateful to my colleague in the Bloc, the finance critic, for drawing attention to the fact that there were no Liberals in the House at the moment of my—
David Anderson Liberal Victoria, BC
Mr. Speaker, I rise on a point of order. I have explained to the hon. member from the NDP that I was here. I sit quite close to her. She could see me. She heard me speak. To repeat such an untrue statement, which she knew was not accurate, particularly after being corrected on the floor of the House, is not the type of courtesy to members that we would expect in the House.
Unanticipated Surpluses ActGovernment Orders
The Acting Speaker (Mr. Marcel Proulx)
I appreciate the help from the hon. member for Victoria.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, I apologize to the member who I missed. He must not have been in his seat when I was speaking because there was not a person to be seen on the Liberal benches.
This is a Liberal government bill. We are talking about a proposition put forward by the Minister of Finance and not a single Liberal is in the House to talk about it, to hear our concerns and to address the matter.
This is a very important issue for all Canadians. We resent the fact that the government once again thinks it can toy with Canadians, that it can play with them in terms of their concerns about the future. We resent the fact that it has put forward another gimmick to deal with the surplus as opposed to a meaningful constructive suggestion that gets money into the hands of Canadians who need it most.
Let us be clear. As I said when I began my remarks, we are talking about a gimmick on the eve of an election. Just as the leaves turn colour in the fall, we hear another Liberal surplus promises an imminent election. That we find absolutely abysmal and appalling.
Every time there is an election we hear from the Liberals about some miraculous cure to deal with the problems vis-à-vis their ability to be fiscal managers. They compensate for the fact that they cannot run the store. Every year they keep disappointing Canadians with their inability to forecast and budget properly and, by consequence, to ensure that the priorities of Canadians are met. They do this every year.
That is the essence of the debate today. It is about some newfangled structure or model that someone on the Liberal benches thought up as a way to appease the concerns of opposition members or Canadians in an attempt to redirect attention away from the fundamental issues. This is about a Liberal attempt to obfuscate and deny Canadians the right to have a say in this place about where budget dollars should be allocated.
For years we have been raising this issue. We have been calling upon the government to come clean with Canadians about the dollars it is sitting on, all of which end up going to the debt because there has been no open discussion in this place.
If we listen, we will have heard members from all sides of the House say clearly that we want a balanced approach to fiscal forecasting and budgeting. No Liberal can stand in this place, as they are, and ask what is so wrong with having a surplus, as if anyone ever said there is something wrong with having a surplus. We have heard this in committee and we have heard it in the House. It is a deliberate attempt to distort the debate and to minimize the concerns of the opposition and Canadians, whose concerns are very legitimate and must be addressed by the government.
Time and time again we have come to the House to ask the government to stop its practice of deliberately low-balling the surplus. We have asked it to come clean with the numbers, to be transparent and upfront in its fiscal approaches so this place can have a serious debate about the economic and fiscal priorities of the country and represent the views of Canadians as we were elected to do.
The government has denied us that opportunity for all these years through a practice of manipulating the numbers to suit its political agenda. The government has very carefully stashed away $85 billion over the last decade without allowing for parliamentary debate and input by Canadian in terms of the allocation of $85 billion. Through that deliberate approach of low-balling and manipulating the numbers, it has allowed itself to decide on its own, in the most undemocratic way possible, where that money should go.
In this case it has come in handy when the government has needed to deal with a few projects. Most important, it has allowed it to cave once again to the corporate agenda of putting all of our eggs in one basket without concern for the needs of Canadians and their responsibilities.
Of that $85 billion, close to $65 billion has automatically gone to the debt. Nobody on this side of the House in the NDP, and I am sure any other political party, objects to some money going against the debt and meeting our obligations on that front. We know it is important to present a balanced approach to Canadians and to ensure that we pay down the debt and at the same time invest in the needs of Canadians. That would in effect grow the economy and thereby bring down the debt.
Members will recall that statisticians and economists, those who the government and others use, have shown that if the government took the surplus money and invested it in Canadians, invested in the deplorable housing, in the inadequate education arrangements, in poverty, in the deplorable situation of aboriginals on reserves, in the environment and in health care, it would create jobs, the economy would grow and we would pay down the debt in the same period of time as if the government took this money and put it directly into the debt which has been its practice and its habit.
This debate is about priorities, balance and addressing the reality of Canadians.
We have a bill that would allow the government to take the surplus money and automatically set aside $3 billion supposedly for contingencies. There is no debate on what is an appropriate contingency and prudence fund. That is part of the Liberal scheme to deceive Canadians. Here is the rest of it. First, it sets aside $3 billion. Then the government takes the leftover surplus and divides one-third, one-third and one-third. One-third goes against the debt, one-third is for tax cuts and one-third is for spending.
That arrangement tilts the balance automatically. It means $3 billion in contingency that goes against the debt, plus another third of the surplus. If there were something like a $10 billion surplus, as is forecast to be the case for this coming fiscal year, we end up with about $5 billion or $6 billion that would go against the debt and the rest would divided between spending and taxation.
Is that balanced? Does that address the needs of Canadians? Does that deal with the imbalance in the system created by the Liberals ever since they took office in 1993? Does that deal with the fact that the government, rather than have a balanced approach, decided to cut the heck out of health, education and social programs in the country? This created the most devastating consequences for people everywhere in our community. Is this what the Liberals mean by balance, keeping the burden on Canadians, telling them to tighten their belts because all that matters is its priorities and not the priorities of Canadians?
Today the government comes to us and says that it will work on this commitment to Canadians for a balanced approach by heaping more misery on misery, by making it more difficult yet again for Canadians to make ends meet?
Goodness gracious, all we have to do is look around us today to see what this 10-year legacy of the Liberals has meant for Canadians, this 10 years of investing in strictly tax cuts for corporations and debt reduction without investing in those things that build a country. We would not have a Kashechewan today. We would not have this kind of absolutely deplorable situation that is worse than Third World country conditions in the wealthiest country in the world. We would not have people with sores all over their bodies, or rashes or poisoning by E. coli if the government had done what it was asked to do back in 1993 and 1994.
The government was asked to start investing in aboriginal communities, on reserves, to help them deal with fundamental issues. This is about access to decent drinking water, decent housing, food, clothing and education, the basics that so many Canadians at the upper end of the income scale take for granted.
We should not have this situation today in Manitoba. Using pre-tax low income cutoffs, Statistics Canada shows that in 2003, 22.1% of Manitoba children lived in low income families. It remains virtually unchanged from the 22.5% in 1989 when the House passed a motion by my colleague from Ottawa Centre to eradicate poverty by the year 2000.
How many times do we have to recap that for the sake of the Liberals? How many times do we have to remind them of their obligations and of their cooperation with that 1989 goal, that vision of trying to eliminate child poverty in a country as rich as Canada? How is it possible that we are still talking about this? We are not talking about the situation simply remaining static. We are actually seeing poverty increase. The situation is becoming worse.
I would like the government to talk about Bill C-67 and its little magical formula of making surpluses appear and disappear, and having these one-third, one-third, one-third divisions. I would like it to take that to the family of Kathleen Beardy in my constituency, the young 11-year-old girl who committed suicide just a few weeks ago.
I would like the Liberals to talk to Kathleen Beardy's parents who have six children and are struggling to make ends meet. They are trying to find work. They are trying to be good parents with so many odds stacked against them. They would desperately like to be able to share in a bit of that vision of Canada, to live in decent housing without mould growing around them, without the plumbing backing up, without having to put three kids in one little bedroom, without water coming through the ceiling and without the foundation crumbling around them.
I would like the Liberals just for one minute to put themselves in the moccasins of the family of Kathleen Beardy, not to judge them or make generalizations, but to simply understand the realities of that life and decide that it is important to start addressing the real people in this country, the people who built this country and the people who want to make a difference in this country. The government must start to address their priorities.
I would like the Liberals to talk to Brian MacKinnon in my constituency, a teacher at R.B. Russell school. He has been trying desperately to gather some funds, to grab the interest and attention of the government for a program as simple as helping teenagers in the inner city and the north end go to the downtown Y so that they can benefit from some sort of a recreation program. In fact under the Liberals' legacy of cutbacks, the Y in the north end is gone. All of the recreation opportunities have been basically cut back to nothing. There is no opportunity for young people to be themselves, to stay away from gangs, to be part of a loving environment and to feel that they are part of a community.
Ten years ago Winnipeg's north end community was struggling, but it had all kinds of hopes and ambitions. Community groups were working to turn things around. However, the Liberal government dealt our community a blow the likes of which we have yet been able to recover from. That blow set us back a good couple of decades.
The housing stock was already old but people wanted to renovate, to build, to construct, to clean it up. They wanted to have beautiful neighbourhoods, but the government came along and killed the national housing program. It took away any opportunity for people to get the much needed funds. It took away the opportunity to actually beautify neighbourhoods, to stop the erosion.
The government is complicit in allowing the degradation to continue, which people in communities like the inner city and north end of Winnipeg are still struggling to overcome, and they will do it. We will do it, but not with the help of the Liberals. It is too late for them, just like it is too late for the banks which have all left our community. We will do it on our own. We will fight for a better day. We will fight for a time when government takes the needs of ordinary people seriously. Our day will come.
The bill seems to be nothing more than a gimmick. I have outlined the reasons. It is not a genuine balanced approach. We have seen the past behaviour of the Liberals when it comes to the surplus. When it is convenient for them to pile up the surplus without reporting to Parliament, they do so and they let it go to the debt. When the political heat gets too much, then they say, “Oh, we had better do some quick spending, make sure that the surplus disappears”. They wave the magic wand, as they did just this past month, and suddenly the $8 billion surplus that was there and which was acknowledged by all independent forecasters, becomes $1.6 billion.
The Liberals were able to find some programs that had been sitting around for a while but suddenly this year they needed attention. Suddenly they decided that there were a number of five year funded projects that had to be collapsed into one year. Suddenly they found a way to take an $8 billion surplus and make it $1.6 billion. It is interesting that it is much lower than the $3 billion they feel is necessary to keep on a contingency basis.
Let us go back one more step to a previous attempt by the Liberals to address the surplus issue. Let us go back to the 1997 election campaign when the Liberals suggested that they would be operating on a fifty-fifty formula, not a one-third, one-third, one-third formula. Fifty per cent would go to program spending and 50% would go the debt and to tax cuts.
Did anyone here see that fifty-fifty formula take place? It did not happen by all accounts. Guess what? It was a 90:10 split. There was 10% for Canadians and meeting their needs, like the reserves, the Kashechewan First Nation and the aboriginal people in the north end of Winnipeg. There was 10% for all those folks and 90% for the government's corporate allies, for its buddies in the banking world and the corporate world to give them $100 billion in tax cuts over five years and to put the rest against the debt.
That is anything but a balanced approach. This proposal is not a balanced approach. We will look at the bill more carefully and study it. We look forward to the bill going to committee. I will not comment on our final disposition pertaining to the bill at this moment. I am anxious to see how much willingness the Minister of Finance and his parliamentary secretary have in terms of making this a proper, balanced fiscal framework for future surplus situations. I am anxious to hear how the government is prepared to address the real needs of Canadians to ensure that everyone in this country is able to live with decency, dignity and with some semblance of justice and fairness.
John McKay LiberalParliamentary Secretary to the Minister of Finance
Mr. Speaker, I actually did listen to the hon. member's speech, unlike frequently when members stand and say that they listened carefully. I actually did listen and I thought her speech was long on rhetoric and short on substance, no pun intended.
There is hardly any program that the NDP does not fall in love with, want to have a long term relationship with and spend taxpayers' money. I cannot quite get over this whole misunderstanding of how the budgetary process works. This is a bill that deals with surplus. We on this side of the House admit to a bias of balance. We want to have balanced budgets. We have had eight balanced budgets in a row. We want to have five more balanced budgets in a row.
Because we have that bias to balance, whenever the year end comes, the greater likelihood is that we will be in surplus rather than in deficit. We will be in surplus. If we are going to be in surplus and we are biased toward surplus and toward balance, then we should have some plan to respond to that surplus. That is what this bill is all about. It is a response to anticipated surpluses. It is not the budget process. The budget process is entirely different. The budget is presented by the Minister of Finance and it is debated here in the House. It is debated at committee. It comes back to the House.
The hon. member mischaracterized the whole thing. I do not understand what the hon. member has against balance. I do not understand what she has against transparency. I do not understand what she has against accountability. I do not really understand why she hates taxpayers. I do not know why she wants to burden future generations with debt. The speech, frankly, was incoherent.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, I am only too happy to respond to the comments of my hon. colleague the parliamentary secretary.
He can describe the approach by the NDP any way he likes, but he ought to at least check the facts and be at least truthful in his presentation of our position. He knows that the NDP has been very clear from day one, very clear on the public record and very clear in practice that we believe in balanced budgets. We believe in putting money against the debt. We believe in ensuring that we spend within our means.
I would suggest to the parliamentary secretary that he look at the only two governments in this country that have had a tradition and practice of ensuring balanced budgets. The NDP governments in Manitoba and Saskatchewan stand out from all other Liberal and Conservative governments for a record of practising balanced budgeting and responsible fiscal practices.
The member ought to understand that this bill is about the budget. If he does not think it is about the budget, then maybe he could explain to Canadians how the Liberals decided on their own what to do with $85 billion over the last decade. That is what we are talking about. We are talking about the Liberals' practice of carving off money for their own agenda without Canadians being involved, contrary to the democratic values of this country.
As long as there is that kind of Liberal gimmickry, that kind of Liberal deceit, that kind of Liberal hanky-panky, then we will debate this as a budget bill.
Brian Jean Conservative Athabasca, AB
Mr. Speaker, it is not often that I have an opportunity to stand in the House and actually agree with any policies or position of the NDP, but in this particular case I can say that I am prepared to do so because this bill is in large part a farce.
Some comments have been made about Alberta being in perfect shape and how wonderful Alberta is, yet we have a similar situation there. Our premier is planning to refund $400 to each and every taxpayer in a vote-buying scheme similar to what is anticipated to be taking place here. I would like her comments on that.
I live in an area in northern Alberta which has one of the most dangerous highways in Canada. We have been asking that it be twinned but it is not going to be twinned for some time. I do not think it is even planned on the books. We have a water treatment centre that has enough capacity for 50,000 people and yet 75,000 people depend on it. We have some water issues. Alberta has 15% growth per year, but no land has been issued for people to put houses on because the Alberta government controls that. I see what the Liberal government is trying here with Bill C-67 to be a similar situation.
The Conservative position is to lower taxes and to put more money back into the hands of Canadians, but to do so in a way that will not cost money. I know from a previous job I held that it would cost the college I sold to more than $100 to issue a cheque for whatever amount. This seems very similar. Instead of giving tax cuts and leaving the money with the people who know how to spend it best, the government takes the money and decides to roll it back in the form of vote buying. I would like to hear my NDP colleague's comments on that as well.
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, there are certainly some areas in this bill where the Conservatives and the NDP can see eye-to-eye. In fact, I would suggest that the Conservatives, the Bloc and the NDP are of one mind, in terms of dealing with this bill generally.
The member is absolutely right. This bill, like other Liberal gimmicky approaches, has caused the kind of devastation that we see from one end of this country to the other. I would refer, in particular, to the reference the member made about highways and infrastructure. The Liberals, over the last 12 years, have left us with a legacy of gimmicks and poor fiscal management. They have put all their eggs in one basket. They have allowed the infrastructure deficit to reach $60 billion.
How is it okay, on the one hand, to allow for that kind of deficit and, on the other hand, to put all the eggs in one basket and deal with the debt?
Canadians do not want that. When their house is falling apart and their roof is leaking, they are going to deal with that problem. They are going to fix it and they are going to ensure that they have some money for their kids' education. They are going to try to balance. They are going to mortgage the house, so they can fix the roof and allow for their kids to go do to school.
While we may agree on some things, I hope that I can persuade the Conservatives, today, to look at the possibilities. Together, we should look at this budget process, a democratic process, where we truly agree on what the proper formula should be, not this kind of act foisted upon us with already a set agenda but something that would allow for a meaningful exchange in terms of what should be spent on tax cuts, what should be spent on debt reduction, what amount should be set aside for contingencies, and what we need to do in terms of investing in those critical programs, like education and health care.
Gérard Asselin Bloc Manicouagan, QC
Mr. Speaker, I must commend the hon. member for his excellent speech. Allow me to make a brief comment before asking a question.
I am lucky enough to represent a very large riding in Quebec, the remote riding of Manicouagan. I find it somewhat disastrous that the minister has to introduce a bill on behalf of the government to set out a way to spend the surplus when this same government does not even maintain its own infrastructure and equipment in the regions.
On the North Shore, and the Mid North Shore as well as the Lower North Shore, there is equipment belonging to the federal government, to Transport Canada and the Department of Fisheries and Oceans. I am mostly referring to the piers.
The fishing industry on the Mid North Shore and the Lower North Shore rely on significant infrastructure. In the 12 years the Liberals have been in power, the only investment they and the Department of Transport have made in these piers consists in installing gates and signs that read, “Dangerous pier. No trespassing”.
My question is for the hon. member from the NDP. Before putting surplus money toward the deficit, should the federal government not only maintain its own equipment, but at least respect its maintenance programs for its own infrastructure, namely the ports and airports since these are very important for the regions of Quebec?
Judy Wasylycia-Leis NDP Winnipeg North, MB
Mr. Speaker, I thank the hon. member from the Bloc for this very important question. This is indeed one of the things we should be talking about now in this House.
It is true that the Liberal government has twiddled its thumbs and done nothing on a number of issues, like those related to infrastructure, protecting the health insurance plan, privatization, the environment, education, training and protecting our pensions, etc.
By all accounts, the government has neglected these issues in order to come up with a plan to win the next election and grab votes, and not in the public interest or for the good of the country.
David Anderson Liberal Victoria, BC
Mr. Speaker, when I first looked at the bill and thought about taking part in this debate, I was somewhat hesitant. I am no economist, but this morning has persuaded me that I am in good company in that regard.
I would like to agree with the hon. Minister of Finance on his list of economic successes of the last 12 years. This is one of the most remarkable performances by any economy anywhere in the world and certainly every member in the House has reason to be proud of it. Every Canadian taxpayer has reason to be proud of it.
We have done well and the reason is, of course, that we had a Prime Minister who supported the Minister of Finance of the day and the other cabinet ministers who were required to cut their departmental activities, personnel and budgets. It was not easy. It meant that Canadians also did not receive what they had sometimes been receiving before and sometimes provinces did not receive what they had been receiving before.
I would simply remind people that we never cut any program to provinces any more than we cut federal programs. We always made sure we maintained that balance. In fact, the balance was tipped, so that we had to do more than they had to do, but it was necessary. It was necessary because of the economic circumstances we faced at that time. From today's debate and comments from the opposition parties, it appears that the memory of the battle we fought to get our finances in shape has been forgotten.
While I congratulate the minister and his predecessor, now the Prime Minister, and indeed John Manley, the former finance minister between them, and while we can all take pride in what has taken place, that does not necessarily mean that the bill the minister has produced is therefore automatic and obvious, and should be accepted by the House without questioning some of its provisions.
Indeed, I was almost persuaded by the minister's speech, but when he turned to the member for Medicine Hat, the chief financial critic of the official opposition, and said that the member for Medicine Hat said almost exactly what is in his bill, that is when I had serious doubts about whether the minister might have gotten the bill right, giving credit for its authorship or at least its paternity to another member of the House. I think we have to look at it quite closely.
What does it do? I have a copy of the bill and it has been explained. It is essentially to split any unanticipated surplus three ways. One-third is for tax relief, tax cuts. One-third is for spending programs related to the previous budget or, as the minister mentioned today, that I thought was an interesting comment and I checked the bill to find out whether it is there, anything he might like to bring into the House and put forward as he might identify. It could be a statement tabled in the House of Commons by the Minister of Finance. In other words, it might indeed not even be in the budget presentation. Then of course one-third is for the reduction of the national debt, which currently stands I believe at approximately $505 billion.
I would like to re-emphasize to the members of the opposition, on a per capita basis, on the basis of actual ability to generate revenue, the federal government has about twice the debt or accumulated deficit in that $505 billion figure that the provinces have in theirs. That is to be born in mind when we talk about transfers from the federal government to the provinces or transfers from the federal government elsewhere. The fact is we have double the debt burden, double the problem of interest rates to be paid, and double the problem that the other levels of government may have.
We have then the proposal put forward by the minister. I was a little uncertain, and I hope the minister or the parliamentary secretary in summing up this bill will explain this, whether or not the minister was actually saying that the government was going to wait until the end of the fiscal year, March 31, and then if there is a surplus, it would bring in a proposal for expenditure and that would be confirmed, I think he said, in September when the books for the year are finally closed.
I am not sure whether he can bring in any expenditure proposal for an anticipated surplus before March 31. I would like that explained because this would be quite an interesting variation, if in fact what I thought I heard turns out to be the case. I checked the bill in the hour I have had since the minister spoke, but I have not been able to determine that myself from the bill.
The proposal is to make this in fact law. Why I have concerns and why I raise them at this time is this. As pointed out by the previous speaker, we have had a substantial paydown of the national debt, which is a good thing. She seems to think that when the debt is paid down, it sort of disappears, it is gone, it is money that cannot be spent and it is gone forever. That is not so. In fact, it simply gives us borrowing power, so that in the future, if we want, we can spend the same amount of money again and still not exceed our debt level. I think everybody understands that who has ever had a credit card and found difficulty paying it at the end of the month.
If we pay down, we have the opportunity of course of doing it again, so it does not just disappear. If we pay down the debt, we are doing good things for Canadians. It gives them flexibility, so that if there may be some change of circumstances, that flexibility, that cushion, is available to them. So let us get away from this idea that paying down the debt is somehow money that disappears, is gone, is useless, and somehow is to the detriment of Canadians. It is very much in their interest to pay down the debt.
What has happened in the past seven years is that we have had these unanticipated surpluses which is a good thing and it is in everybody's interest. That should be understood. All three finance ministers who made these decisions made the right decisions to use that money for debt retirement and debt reduction. We should continue to ensure that this is high on our agenda.
I do not really like the word surplus, although it is used and it is even used in the bill, because it refers to something that is extra and in excess, something that is not really fundamental. In this so-called surplus, every dollar that comes in, in other words a dollar not spent or transferred to someone, immediately goes to ensuring that the debt goes down.
That keeps interest rates low in this country. That allows the private sector to have a bigger capital pool at lower interest rates for its expansion than would otherwise be the case, so it is not a bad thing. It is a good thing and I hope the point that I am trying to make is well understood by Canadians and in fact by others in this House who have spoken or who may be speaking in this particular debate.
I do not like the word surplus. Let us call it automatic debt reduction, or even better, let us look at that word debt and recognize what it is and which the bill itself explains. The bill talks about this as an “accumulated deficit”.
The bill talks about the accumulated deficit. That is what is important. They speak about debt as if it were something very different, something we do not need to worry about. But the deficit, that is really important. A lot has been said over the last 12 or 13 years about the word “deficit”, but not much about the word “debt”.
I think that really is important to stress and underline. The fact is, as is pointed out in clause 5 of the bill, that it is “accumulated deficit”, and that is what we should continue to pay down. It is just as bad for us as a deficit in a current year. It is just as damaging to our overall accounts, our overall ability to handle the national accounts or, indeed, for the private sector.
That is how we should be regarding this. It is not something apart, something that happened in the past that we can forget about. We are responsible for debts run up in the past, just as every Canadian homeowner understands a mortgage and understands the importance of paying it down.
Coming back to the bill specifically, it only gives one-third of any so-called surplus, any unanticipated surplus, to debt reduction. I am not sure if we can determine at this time in advance that this is the split that makes the most sense for next year, the year following or the year following that.
Setting in legislation that this is exactly how it will be broken down forgets certain things. What does it forget? It forgets that interest rates may rise. We have had two interest rate increases in the last two months. The Governor of the Bank of Canada spoke to the Senate Standing Committee on National Finance yesterday. It is clear that in his mind there is a possibility that at some time in the future, under certain circumstances, yet more increases could take place. We have this issue, where it may be very important to pay down the debt at a greater rate.
On the other hand, at some time in the future we may have a hurricane on the coast of Nova Scotia, with devastation. We may have another ice storm, with devastation. We may have a tornado on the Prairies, with devastation. We may have an economic problem such as mad cow. We may have a problem with softwood lumber. At that time suddenly we will realize that we need more federal help, federal assistance and federal expenditure. That is a time when we may want to look at this so-called surplus or excess and determine that this year is the appropriate place to put it.
It is no good then saying that we passed legislation two, three or four years before and we are restricted to only using a third of it to help the farmers, a third of it to help the lumber industry or a third of it to help the people who have had their houses destroyed by weather and climate problems. This legislation takes away that flexibility.
On the issue of tax cuts, there are times when tax cuts are vital. There are times when the economy is slowing, we want to use the tool of taxation to increase economic activity in the private sector and tax cuts make a lot of sense, and we want big tax cuts. Yet in this particular bill, only one-third will go to tax cuts, because of course the bill divides it up in this firm way of 33 1/3% for each one of these three areas. It may be that we will have different circumstances in the future which will require an adjustment of that type.
People can easily say that it can be done under the normal course of events, that we would allocate the money before the surplus was determined so it would not affect the surplus. That is wrong, because as the minister said today, the books close on March 31, and it is between then and September that we will be analyzing what to do with the surplus. What happens if we have one of those conditions that occur in that period of summer and fall? If that is the case, we seem to be handcuffed with this legislation.
I wonder if the minister or his parliamentary secretary would like to offer me some enlightening, convincing, and comforting responses to this concern that I have expressed.
It is clear that in the discussion we have had in the House--I almost feel like mentioning that there is no NDP member present, but I will not--people have assumed that we are going to have good times and they are going to continue. The minister talked about anticipation, and I think he used the term from now until 2010, but things go wrong. We have had unanticipated and better than expected times. Equally, we could have less than expected economic conditions, less than booming tax revenues and more than low unemployment.
We could have a change in economic circumstances, and let us face it, we are so dependent on the American market and we are now becoming so dependent on a secondary economy to the American market, the Chinese economy, which is dependent on its $180 billion surplus to the United States. We are getting so dependent on that kind of economy that conditions elsewhere could cause us trouble.
Let us look at the American deficits, the phenomenal deficits of a neo-conservative government, the model for the Conservative Party of Canada, which does not know how to run the economy and is having major concerns with enormous deficits, ballooning deficits and a declining dollar.
That is the Americans' choice. If they want Reaganomics or neo-conservative economics, that is their choice. We are not that kind of people. We see that there may be trouble in that kind of economic approach and we know that it could have reverberations in Canada, when 85% of our exports go to the United States.
Sure, we are going great guns now, but to a certain degree it is based on American deficit financing. When that stops or we get a major economic problem in the United States, wow, we are going to have to watch it because we will not have the same good economic circumstances that we have now.
It is no good pointing the finger at the Americans. I am trying not to do that. It is no good to say simply that they are wrong and we are right. It is not that. We are dependent on that economy and we are benefiting from what they are doing, but it is not sustainable. It cannot continue. When the changes come, we are going to have reverberations on our revenue side here in Canada. That is why I do not think we can assume that things are going to forever be so great.
It is similar to the China market, based on resource exports, on coal, the coking coal for iron and steel, and based on other exports. We hope our lumber exports in the future will increase as well. We have a substantial resource based export market and it may not--
Unanticipated Surpluses ActGovernment Orders
An hon. member
Are you going to put the rates in B.C. back to a civilized amount?
David Anderson Liberal Victoria, BC
The hon. member simply should listen closely, because there is at present in China a massive construction boom and when it has finished building the factories, apartment buildings, office towers, dock facilities and railroads, then it is likely to go back to a more stable state. The current situation is not necessarily a graph line which goes straight up into the future and he should understand that well. If he does not, he is not serving his constituents well, which of course is meant to be his major responsibility here. In particular, a British Columbia member should know better than to make the kind of remark that he just made.
We have the possibility of changes in revenues to the government and we have the changes in the economy that could take place, yet in this particular legislation we have that kind of restriction on what can be done.
I can see that people, after seven years of this so-called forecasting error, which we have heard a lot about today, think that it is going to go on forever, but why has this occurred? It has occurred because in every year the government took the average of the private sector forecasters and used a private sector forecast. This is not something on which the government itself made the mistake. We shared the mistake of everyone who is an expert in the field. Of course they are all economists and it may be that those who are not economists would say that proves they must be wrong.
David Anderson Liberal Victoria, BC
I hear the hon. member over there, whose knowledge of economics is a trifle shaky, shouting once more in his usual way.
The issue is that this was a miscalculation right across the board. The banks, the insurance companies, the investment houses and the private companies in manufacturing or transportation made those same kinds of miscalculations in general. Many of course beat the odds and did better and of course were very successful.
Still, there has been a generally surprising graph line, which is why the government forecasts are in error. They are in error because the private sector was in error. Let no one be mistaken on this point. The reason we are having this issue of surpluses is because of better circumstances than were expected, and by everyone, and the same could happen in reverse.
That is what happened to the Conservative government, which kept on making calculations that were wrong and wrong in the wrong way, that is, in the negative sense. That is why year after year the Conservative Party raised taxes and reduced benefits to people. It constantly got the economy wrong and created this fantastic accumulated deficit load that we are trying to do something about today.
I am putting forward to the House the importance of the minister or his parliamentary secretary answering some of these questions. Are we creating too much of a straightjacket and destroying some of the flexibility we need? Are we getting away from the automatic reduction of debt, which is in the public interest under all circumstances because we can always borrow back that amount that has been paid down if necessary? That is the second question.
Would they also perhaps talk about some of the other issues with respect to the limitations on tax policy to accommodate different economic circumstances or the limitations that they are placing on fiscal policy when it comes to the different economic situations we can expect in the future? Resource prices will not always continue to skyrocket. Those who have lived in British Columbia long enough know that we always have boom as well as bust. We have both.
The assumption of the Conservatives that all is well on coal, that it will go on forever, as it has, let us say, in the last three or four years only, is of course wrong. All they have to do is go back 10 or 15 years on coal and they will see the error in what they have been talking about today.
I have put these questions out in the interest of having a useful and intelligent debate on the issue of whether this bill makes sense and whether we should vote for it. As I say, the minister almost persuaded me that it was a good bill, but when he told me it came from the member for Medicine Hat, I had my doubts. Then, when I heard the comments of other people here, I went back to thinking the minister might be right.
The point is that this type of bill must clearly show that it can in fact allow us to be lean, mean and able to take advantage of opportunities that might come to us in the future.
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Mr. Speaker, that was really something. I know that the hon. member is an experienced member in this place and certainly he has been an experienced member of government, but he is simply all over the map. I will be asking him a couple of questions.
How does the government have an unanticipated surplus? How does that happen? If a person has some business savvy, understands how the country is being run and has a good handle on the money coming in and the money going out, how does that person have an unanticipated surplus? We are talking about a major surplus, such that we are going to have to pass a bill through Parliament to bring in additional spending to somehow get rid of it, instead of simply putting it on the debt, which would give us an immediate return and give future generations an immediate return.
I am going to suggest to the member that perhaps Bill C-67, an act respecting the allocation of unanticipated surpluses and to amend the Income Tax Act, could be changed. I would suggest that it be changed to state that it is an act respecting the anticipated election--not the anticipated surplus but the anticipated election--and an unashamed, bald-faced attempt to buy the votes of Canadians.