Debates of Feb. 1st, 2005

Finance

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I am pleased to ask a question of the Parliamentary Secretary to the Minister of Finance.

The issue of infrastructure funding has been a big one in my community. Our crossing at the Detroit River in Windsor, Ontario by tunnel and ferry has 42% of the nation's trade. There already have been repercussions in terms of lost plants and a number of different investments. In fact, a recent study showed that $18 billion was lost last year from border tie-ups and backups because the proper infrastructure was not in place in this corridor. That is twice the surplus.

The city has come out with the Schwartz report, which is a comprehensive report. Will the city get the approximately $1 billion funding that it deserves to fix this problem?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, the hon. member raises a very good issue. We are very aware on this side of that issue. Windsor is a critical point where our infrastructure needs to be addressed.

I do not think there is much argument on any level of government that this needs to be addressed. The real question is how. I know there is a tunnel proposal which seems to get some residents politically. There are several bridge proposals which seem to get some residents politically. However, we are dealing with three levels of government. As far as I know, at this point there has not been a consensus achieved.

The government will support what the consensus is. I know the Government of Canada is extremely interested in this issue. We will be there with the money once that deal is struck.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, I am intrigued with the justification that the parliamentary secretary gave for these totally and erroneous projections of the surplus every year. In the last round we were told the surplus would be $1.9 billion and it turned out to be $9.1 billion. That is an awfully large difference.

The fact is--

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I rise on a point of order to correct the Parliamentary Secretary to the Minister of Finance. A comprehensive report has been endorsed by city council and the county council on the border.

The two private proponent--

[The Deputy Speaker]

I believe that may be a point of debate. I do not think that is a point of order as far as the rules of the House go. I do appreciate that point of view. Returning to the member for Edmonton—Sherwood Park.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, the fact of the matter is that during and leading up to the last election our party also used independent sources and came up with a projection on the surplus that turns out now to be very accurate. We did it. The Liberals could not.

They brag about the fact that Canadians gave them another mandate. The fact is they misrepresented the facts to the Canadian electorate while they were in the election campaign.

I really am puzzled by that this member, whom I consider an honourable and honest member, would perpetuate this myth that they are doing it correctly, when year after year we have found those projections erroneous.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I am touched by my hon. colleague's endorsement of my honesty.

I have been in the Department of Finance something in the order of about 14 months. The more that I am exposed to it the more I realize that the business of projections seems to be far more art than it is science. Certainly, as one gets further out it is way art, and in the near term it is way more science.

The other political parties brag about how they got the numbers right. After everybody else went over the numbers and time had elapsed, they got the numbers right.

A 1% swing in the GDP is a swing of about $2.5 billion in the government's revenue. A 1% change in inflation is something in the order of $800 million. It is an extremely complicated exercise of predicting what a $1.1 trillion economy will do, going out over one year, two years, three years or five years.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I appreciate the opportunity to participate in this prebudget debate. I would like to state at the outset that I will be splitting my time with my friend from Edmonton—Strathcona.

Members of the Conservative Party for years in opposition have tried to hold the government to account. There are two members in particular whom I want to highlight for their efforts over this past 11 years. The member for Medicine Hat, our finance critic, before the last election, and not after as the member just suggested, very closely identified what the surplus was. The second member I want to highlight is the member for Peace River, who is the vice-chair of the finance committee, who has done an excellent job in trying to hold the government to account.

I have to digress from my speech a little. As my colleague just mentioned, during the last election we in the Conservative Party presented a budget plan to Canadians that relied on a surplus figure that was larger than what the government said of the $1.9 billion. What did the finance minister say in response? He said that the Conservatives would drive the government into deficit, that they would lead it into economic ruin, that humpty dumpty would fall off the wall, that Chicken Little would say the sky was going to fall and that the sky would fall because there was no way it could afford that.

As my colleague correctly pointed out, lo and behold after the election and when the dust had settled, it was not $1.9 billion but $9.1 billion.

I echo my colleague's comments as well about the parliamentary secretary. I know him to be a fine parliamentarian. Quite frankly, with his knowledge of the Department of Finance, he should stand up in his caucus and say that it is time for the government to be completely transparent with Canadians about the surpluses, particularly before an election when it makes that decision.

To return to the substance of what I was going to say, I want to highlight two large issues in my speech. One is the issue of disposable income of Canadians and how it has not grown under the government. The second is the whole issue of productivity and the increasing productivity gap, particularly with our American counterparts.

With respect to the whole issue of disposable income, a recent Toronto-Dominion report was done by Don Drummond who as members of the House know is a very well respected economist. He found that for the past 15 years average Canadians received little or no increase in their take home pay. That is on page 2 of his report. The inflation adjusted GDP after tax incomes on a per worker basis real GDP per worker rose by 22% while real after tax incomes per worker squeaked out a cumulative 3.6% gain over the entire 15 year period. That is completely unacceptable and needs to be addressed.

With respect to the whole issue of businesses, a C.D. Howe report was released this month. It found that corporate tax rates were destructive to our long term growth and productivity and needed to be addressed. This is something our finance critic and our finance committee members have said for months and for years, that the tax rates need to be addressed and brought down.

We can read the headlines across the country which state that productivity growth slumps and StatsCan warns of the threat to our standard of living. Another states that Canada dives in economic ranking. We dropped from ninth to sixteenth on the competitiveness scale.

A lot of this can see abstract to Canadians. What does productivity mean? That means the rate at which we produce goods and services. What does that mean in the long term, productivity to disposable income? It means, will the children and grandchildren of Canadians have a better life than what they have? That is the hope of every generation, that their kids and their grandkids have a better life. That is what addressing productivity and disposable income means.

The fact is that individuals and businesses alike have suffered under the government's inability to address these major economic issues such as high personal and corporate income tax rates. Individuals and businesses have been struggling, but our major competitors across the world have begun to take over jobs and our customers because of this.

As he alluded to in his speech, our finance critic outlined the Conservative Party's perspective on the measures that should be included in the 2005 budget. He argued specifically for a reduction in taxes. He wrote a letter to the Minister of Finance. I hope the Minister of Finance takes his recommendations into account.

I also want to refer to another group, the Canadian Manufacturers and Exporters. It is a very responsible group that is concerned about manufacturers across Canada. It sent a letter to the Prime Minister shortly after the election.

I want to quote from that letter:

As you and your colleagues develop your priorities, it is important to recognize that, unless the highest possible priority is given to ensuring a strong and healthy economy, Canadian family incomes will fall further behind those of our neighbours to the south.

The fact is since the election the Liberals have spent time on everything but the economy. They have spent a lot of energy on areas of provincial jurisdiction, have invaded provincial jurisdiction, but they have spent very little time on economic and fiscal policies. They have been pushed aside by the government which is a dramatic mistake.

On behalf of my party I would like to propose some things the government should take a serious look at. We are trying to be very constructive. We have not said for certain whether we will support or oppose the budget. We will look carefully at what is in the budget and then decide.

First of all, we would like the government to look at reducing personal income tax rates. Referring to the report from Don Drummond again, I want to relate one of these facts:

The tax burden on individuals must also be reduced. The top marginal federal-provincial personal income tax rates is over 45%, which is nearly equivalent to sending half of a worker's earned income to the government, not to mention that it kicks in at relatively modest income levels.... And, more modest income levels get hit with a combination of taxes and clawbacks in benefit payments that can raise the effective marginal tax rate to 80%. It simply does not create sufficient incentives to work, save and invest.

That was very well said.

Personal income taxes need to be reduced. We hope the government will look at something we proposed in the last budget, a prepaid tax plan. Canadians could put away $5,000, pay the tax up front, allow that money to grow into a nest egg so they could use it for their children's education, their retirement, or to build or renovate their home. For a big project like that, when the money was taken out, no tax would be paid at the end. It is an inverse of an RRSP. This would be in addition to their RRSP. It would not replace their RRSP but it would be another alternative for Canadians to save for their major projects.

We need to reduce corporate income tax rates. The fact is we are simply falling behind our major competitors in this area.

The government should eliminate capital taxes. The Conservative Party has been recommending this for years. The finance committee has been recommending this for years. I think it was two budgets ago when the Liberals said they would eliminate them over a five year period, which is what the government often does in the fiscal arena. The fact is those capital taxes should just be eliminated.

We need to review our investment tax credit regimes. We need to review capital gains taxes. In our view and in my view specifically, a tax on capital gains should certainly be reduced if not eliminated. The people who invest are the people who create the jobs. Obviously jobs and economic growth are what we are after. We should reward those people, the entrepreneurs who take the initiative and take the risk.

Capital cost allowances should be reviewed particularly for the manufacturing sector. The member for Edmonton--Strathcona and I met with the manufacturing council of Edmonton. This was one of the issues it raised. This issue has been raised across the country.

We need to revamp our venture capital policies. To give the government some credit, its investment in R and D certainly has improved over the last 10 years. The fact is that while investment in R and D may be at a sufficient level, the rate at which we commercialize and how we commercialize is simply not up to speed. We need to revamp our venture capital policies to allow that.

We need to have a more competitive financial services sector, especially for small and medium size businesses. A group I was talking to in Victoria last week told me that access to capital is a major issue for small businesses. Obviously reducing taxes on small businesses is important as well.

We need to cut wasteful spending on things like the firearms registry and Technology Partnerships Canada which I raised in the House yesterday.

We need a debt repayment plan. We also need investment in infrastructure, which I believe my colleague will be talking about. Regulations in this country need to be streamlined particularly in areas which relate to our major sectors . The auto sector has raised constant concerns about disharmonious regulations between Canada and the United States.

We need to invest in labour training and education, and apprenticeship training like the programs that Sam Shaw is doing at the Northern Alberta Institute of Technology.

We need a different vision in Canada. We need one which says that those who invest, those who take risks, those who are entrepreneurs, who are willing to put their savings on the line to create jobs need to be respected and need to be rewarded for the risks that they take. This is the path to economic growth in this century. It is not a path of more bureaucracy, more government, more taxes and more debt. I encourage the government to listen to these suggestions, adopt them and if it does so, we will certainly constructively support the budget.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, I really enjoyed the presentation by my colleague, one of my fellow Edmonton members of Parliament now that my riding has changed.

I would like to ask him a question with respect to this $100 billion tax cut that the Liberals like to crow about. It is my view that this is a real mess in communications because of the fact that the budgets are always annual budgets. We are talking about a 12 month period, yet the Liberals like to spread the myth that there is this huge $100 billion tax cut. Then they say in a wee small voice or print it in wee small letters that it is over 10 years. It is really only $10 billion per year and not $100 billion as they are implying incorrectly. It is part of the Liberal communications spin which they are so good at. The bottom line is that they deceive Canadians on it.

I would like to know whether my colleague agrees with me when he objects strongly and takes great umbrage at such miscommunication on the part of the government. The government is supposed to be the manager and the steward of Canadian taxpayers' money.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I would certainly agree with my colleague. Although he is known to be one of the more polite members of the House, I am not sure I would be as polite as he was in saying it is a miscommunication. As he pointed out it is a practice the government often does; in fact the Liberals always do it.

In the budget they say there is going to be a $100 billion tax cut but it is going to be over a five or 10 year period. Two budgets ago they were going to eliminate the capital tax over five years. They were going to eliminate personal corporate income taxes over a 10 year period. There is always an addendum that realizes it is actually not the amount they are talking about. The economist who actually reviewed the $100 billion figure revealed it was $47 billion. At the same time that they reduced taxes by $47 billion, they actually increased the CPP premiums.

One of the things that small businesses across Canada raise is the payroll taxes that they pay. The member for Edmonton—Strathcona, as a small business owner, knows well the payroll taxes they pay through EI premiums and Canada pension plan. The Liberals say that it is an investment.

When a person retires, if he or she gets the full benefit of CPP, it is $9,000 a year. This is a tax we impose on small business owners, on employees and employers and people get $9,000 a year when they retire. That is simply unacceptable. That is not even to mention the employment insurance premiums on which all opposition parties have shown leadership in saying that we are demanding some accountability. The amount that is taken in for EI premiums should be the amount that is paid out.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, my colleague is very good on the industry committee and is very adept at looking at a lot of issues in different ways. He was in my community to look at the border recently.

The city of Windsor and the county have come together with a resolution to fix the border problem. Unfortunately there have been those who have been trying to push private proposals through and ram them through the community's interests as opposed to solving the problem. It is creating a lot of conflict.

I know that the member from the Conservative Party has a number of border caucus members who actually have public crossings in their communities. How does the member's party stand on public versus private crossings? Of some 24 crossings between Canada and the United States, bridges or tunnels, 22 are in public hands. The next two that are going to be built in Conservative members' ridings will also be publicly built. The community is calling for a new solution. Will his party support that?

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, the member has worked very hard on the board. I would in a very friendly way advise him that it may be a little more difficult than what he is presenting to the House. It may be a little more complex.

I know that the member for Essex has endorsed one particular proposal. He has shown some leadership on this issue. I should say though that his endorsement of that proposal does not negate any other proposals from being advanced as to whether something should be publicly owned or privately owned.

As he knows the main bridge going across Windsor is owned by an American. Would he mandate that the American government or Canadian government take that over, expropriate it and make it public property? I think the Conservative Party's position would be that we would not mandate that it be public or private, but we would say that there is a role for the Canadian government to invest in that infrastructure to make it happen.

He has pointed out very well in the past the problem there. He can correct me on the exact number, but the problem is that between the 401 and Mexico there are 18 stoplights, and 17 of them are on the Canadian side. That obviously needs to be addressed. How would we in the Conservative Party address it if we were the government? Frankly, we would make a minister, possibly even the Prime Minister, responsible for getting all the proposals on the table, including the one that was recently produced, the Detroit river tunnel project, and have the federal government show some leadership first, by engaging the community and second, by making a decision.

The reality is that any one of these decisions will upset someone in the community at some level. I think the member knows that because he is from Windsor. It will upset some people.

[Rahim Jaffer, Conservative, Edmonton Strathcona, AB]

Mr. Speaker, it is a pleasure to speak in this prebudget debate session. I was pleased to hear from my colleague from Edmonton—Leduc who highlighted many of the systematic problems that we still see with the government in the way that it forecasts numbers and in the way that it approaches budgetary processes. He highlighted some of the tax issues very well.

I would like to follow up on some of those issues, namely the issue of small business from my experiences and the experiences still of my family. I will then focus specifically on some of the infrastructure challenges, which were just talked about, because there are some huge critical challenges not only in Windsor and other parts of this province but right across the country. We need to have a systematic approach on how we can fund some of these critical challenges that we have in infrastructure across the country.

We have heard from a number of members in the House, not only from our side in the opposition but from a number of members who do agree that Canadians are taxed too heavily. This is a continuous problem. Regardless of what tax cuts have been implemented, through regulations or through other forms of increases, Canadian families still have a huge burden, especially middle and lower incomes families. They have huge challenges in making all their commitments and making ends meet and yet we still have not seen any effective tax relief come forward from the government, especially in light of the surpluses that continue to grown.

Many of my colleagues have talked about the fact that the finance minister had challenges in reading what surplus numbers were going to be coming down, especially when there can be such a huge mistake made: a forecast of $1.9 billion when in fact it was a $9.1 billion surplus, which is just outrageous. It clearly indicates that we need to do something when it comes to reducing the tax burden on Canadian families.

We in the opposition were glad we were able to include some of our thoughts in the Speech from the Throne when it came to putting a focus on what is hopefully the government's mandate to reduce overall taxes on middle and lower income Canadians.

As my hon. colleague from Edmonton--Leduc mentioned, we know that high taxes reduce growth, which happens at all levels of the economy, whether it is small, medium or large businesses. We have seen that continuously where the economy is not growing at the pace that it should, especially because of the fact that taxes continue to choke the productivity in this country.

As I mentioned, with my background in small business I remember working long hours trying to meet all my commitments when it came to payroll taxes, to paying my suppliers and when it came to ensuring I was paying my employees effectively. I remember that at the end of the day, if nothing else was adding up, I was the one taking the pay cut. I, as the business owner, made sure that I met all my commitments.

I can look at my parents today who are working as hard as ever. They have been in this country now for over 30 years, and very thankful to be in this country, but as small business owners they work from early in the morning until late at night, especially when there are changes in the economy and people are not spending as much money on some of the items that they sell through their retail businesses. They are not having coffee or other things that they work so hard to produce and provide. They are the ones who take the cut but the taxes remain the same. There is no break for them when it comes to the obligations that the government puts forward, especially when it comes to taxes and when it comes to regulations.

Those are the things that governments can do something about, especially when it comes to encouraging these people who work so hard. My family is a perfect example of that, as I was not too long ago, with some of the challenges that we had to continually face.

I will be addressing that in a little while, but the EI surplus is something that continues to irk especially small business owners who work so hard. They have to pay the EI tax and contribute on behalf of their employees and then they look at the surplus that exists. I believe it is over $40 billion and the government still has not made any effort to give that money, which rightfully belongs to the employers and the employees, back to those people who work so hard.

We argue that this high tax position is both unfair to Canadians whose take home pay has barely grown over the last 15 years and dangerous to our long term economic growth and therefore to our ability to fund our social safety net. I continuously travel and speak especially to people who are approaching retirement. They are concerned about making contributions to their CPP and yet they know that in the long run that program will not be there for them in the way that they had been promised and had hoped for.

Some of those people may have been fortunate enough to put extra savings aside but the government has done nothing to encourage that sort of retirement savings, especially in the way that we should be because we are facing a huge crisis when it comes to the working group that will be out there. The number of employees versus the people who will be retiring is a huge problem.

The budget should include a longer term standard of living strategy that starts at the process of strengthening Canada's competitive position through a program of targeted tax relief, reduction of burdensome regulations and strategic spending and measured debt repayment. Some of my colleagues talked about measured debt repayment. We have not seen any clear vision when it comes to the government and paying down debt. We continue to push the government to hopefully make some sort of legislated effort to pay down debt. We would be more than happy to provide some of the details for the government if it wishes.

I have talked about the long term strategy of raising the living standard for Canadians. During the past 40 years Canada's productivity has remained relatively unchanged compared with that of the United States. It remains stuck at about 85% of the U.S. level. This productivity gap is relevant because it accounts for an income gap of just over $6,000 per Canadian compared with Americans.

When we look at unemployment rates we see that they are set well above those in the United States and this has persisted for a quarter century. I think it was in the 1970s, in looking at some of the figures, that Canadian and U.S. unemployment rates were the same. We have obviously continued to slip and I think that is really affecting, as we know, the productivity gap. If we had some prudent fiscal management by the government I think it would have a huge impact on the way that our productivity gap would be dealt with.

I also mentioned the EI surplus. This is still something we have not dealt with. It is about a $46 billion of surplus. The government should stop overcharging Canadians. EI premiums should be lowered immediately and stakeholders must be given a say in the benefit and premium levels.

I now want to talk about the infrastructure and the critical problems that we have. We have been very disappointed with the way the government has come forward. As we all know, it talked about the new deal for cities over the course of the election. It has been close to six months since the government took power and yet we have seen nothing come forward when it comes to any new deal for cities, nor any idea of how the fuel tax money will be transferred to the communities. I think the minister has been dragging his feet. No new information has come out on how that will work. I take it that we will be forced to wait for the budget to see how that money will be transferred and what sort of criteria will be placed on that new deal when it comes to transferring the money.

This is an issue that goes way back. We know that the fuel taxes being collected on gasoline were supposed to be invested into critical infrastructure, namely highways and other forms of infrastructure in our municipalities, but we know that the government took the fuel tax, put it into general revenues and spent it on things like the sponsorship program or other things that did not give value back to Canadians when it came to problems in infrastructure.

Hence, today, whether, as I mentioned, it is in the area of Windsor or all the way out to B.C. or even in my own backyard in Edmonton, we see huge problems with the bridges, roadways and pot holes. Canadians see that on a daily basis. We have to figure out how we are going to proceed in order to actually bridge that gap in critical infrastructure.

We on our side have proposed ways to identify what critical infrastructure means and how to coordinate a strategy with the provinces and municipalities to ensure that sort of infrastructure gets funded. We have not seen any form of direction from the government. We hope to see some sort of announcement on whether or not it plans to impose some sort of conditions on the fuel tax transfer, but also to look at a long term strategy. Is there a plan in place to actually fund infrastructure in a strategic way, working with stakeholders, to be able to plan on a long term basis so that we can start attacking the infrastructure deficit that is in the billions of dollars and continues to rise?

As many of my colleagues have said, we would like to see a real effort on the part of the government to get its fiscal house in order. It seems to have fallen by the wayside, especially in light of all the surpluses that the government is continuously collecting.

We need to give Canadians a break but we also need to make those strategic investments. Infrastructure is something that communities have been calling for, whether it is rural or urban, and we need to see some clear criteria that government is going to bring forward hopefully in this budget.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, my colleague made the point of mentioning the $46 billion that have been taken from the EI fund and used toward what the government refers to as the surplus. I know the position of the Conservatives, previously the Alliance and Reform, has always been that the premiums should be cut. Part of the concern we have had is certainly that the government is using the $46 billion for other things, such as saying that it has a surplus and then cutting corporate taxes.

However one of the things the Conservatives seem to forget about is the fact that benefits to unemployed workers have been cut so much that 40% of unemployed workers no longer qualify for EI. I am wondering why the Conservatives would not see that as an answer to improving the situation with poverty and improving fairness to employers and employees. Maybe those EI dollars should be there to benefit the unemployed and make improvements to the EI program.

The Conservatives have indicated that we need to pay down the debt, and we are all in agreement with that, but I am wondering whether they have a position on whether all these dollars should be used to pay down the debt or whether there should be some balance with more dollars going into health care to provide the universal health system for which Canadians are so proud.

[Rahim Jaffer, Conservative, Edmonton Strathcona, AB]

Mr. Speaker, when we talk about balance on our side and speak specifically to the issue of the surplus being as large as it is, there is a lot of wiggle room for governments to provide effective tax relief while still making debt payments and strategic investments into social programs.

On the issue of the EI surplus, we have always argued that the benefits should be there. Obviously it is the workers and the employers who are paying into it and therefore the benefits should be there and there should be ample benefits when they are required. However what is happening is that the government is collecting far more than it should be collecting. From the amounts that are being paid out, we are looking at amounts that are obviously much less than what the government is actually collecting.

The argument we have been making is that if that surplus is there it should be returned to the rightful owners, the employees and employers who are working so hard to make ends meet. Outside of that, of course, there is enough to pay out the proper benefits in cases where people are falling on hard times or requiring the benefits to be paid out.

It is a myth, and I know the NDP often perpetuate the myth, that in order to balance effective tax relief or debt reduction, social programs are going to be sacrificed. There is no reason that should happen with a prudent fiscal management plan. We have been putting that plan forward, a plan that has often been endorsed by many actuaries and people in the accounting world. We have thought it through and we can make it balance but we need to be honest with the numbers, as many of my colleagues have said, and that is something that we still have not seen from the government.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, I am pleased to participate in this prebudget debate. It is a fairly valuable exercise.

In previous parliaments, there was certainly a perceived need among members to participate in debate leading up to the budget to help the government focus. In this Parliament things may have changed a little. Some of the paradigms have shifted. I would not be surprised if there were informal consultations more directly between the Minister of Finance and others in the House, not with a view to knowing what is in the budget, but sensing where Canadians and the political parties may want the budget to focus.

In the debate today we are attempting to give the Department of Finance and the minister some focus, and I welcome the opportunity to speak on behalf of my constituents in Scarborough—Rouge River.

Most budget speeches and debates deal with pledges in the future. The view I want to share with the House today is based more on a focus of promises kept. When one looks at where our government has placed itself, the commitments it has made and what it has been able to deliver so far, I am confident we have a very solid foundation.

The budget we will have in just a short amount of time will focus on building from our Speech from the Throne commitments. They were generally grouped into four categories. One is that we wish to build a stronger economy. We want a more secure, prosperous and inclusive society. We want a healthier, safer environments. We want Canada to have the resources to meet global challenges.

It is an agenda that one could argue was both idealistic and practical, but we are confident as Canadians that we can achieve these goals, that we can get to where we want to be. We will draw on our economic strength, our fiscal strength and we are able to do that now in a way that was not possible previous to when we balanced the budget in 1997-98. That was a very important benchmark.

I want to emphasize that one of the real accomplishments of the current government, which is an evolution of the government that was there for Canadians in 1997-98, is that we have kept those financial promises. We have put an end to 27 consecutive years of deficits. I am confident, and I sit here on this side of the House, that we will honour our current commitments. Those will be reflected by positive action flowing from our budget.

It is not just rhetoric. Two envelopes of huge social investment have been embarked upon over the last many months. First is the historic $41 billion tenure agreement that the federal government entered into with the provinces and territories to bolster health care.

I and all of us around here accept that the proof will be in the pudding. It is one thing to put money aside and another thing to spend it properly. It is another thing to get the results for which we aim. However, our objective is to get the product that Canadians want in health care. This government has done its part by setting aside the resources now and into the near future so the provinces and territories, in collaboration with the federal government, can achieve those health care objectives.

All the governments have signed on. It includes key elements of systemic reform and the best terms ever for reporting and accountability. By meeting and surpassing every financial standard identified in the landmark report of Commissioner Roy Romanow, this initiative will turn the corner on the continuing intergovernmental feud that existed for many years, which Canadians will remember. It puts it behind, and we now can embark on an agenda where everyone is in general agreement as to where we go.

The health accord puts the focus where Canadians want it. Lord knows there have been millions of dollars on consultations and politicians talking, consulting and working to get us to this point. However, what they want is shorter waiting times in health care, more health care professionals and better equipment. They want improved primary care, home care and access to drug coverage. We have better services for our aboriginal Canadians and people in the north. We are investing more in health innovation and research. We will have improved public wellness and health.

The second major social investment was entered into to help alleviate the fiscal disparities between the provinces and territories.

The government has launched the most far-reaching improvements ever undertaken in the equalization area since it first was initiated in 1957. Through two years of transition arrangements, which have already been agreed upon by the first ministers, the available federal funding to assist Canada's less wealthy jurisdictions will rise initially to meet the highest level equalization has ever generated, and then will continue to grow at a rate of 3.5%.

The territorial funding formula will benefit the territories in a similar fashion. The best expert advice about future distribution issues will be sought with provincial and territorial collaboration. With a new approach and with incremental federal funding of approximately $33 billion over 10 years, we are directly addressing prime provincial and territorial concerns about their need for clarity, predictability and adequacy of funding to maintain their role in these envelopes.

Our action on these two fronts, health care and equalization, represents a $74 billion investment over the next 10 years. Just as important, it is an investment that is sustainable. It will not jeopardize our fiscal track. It will not put us back into deficit. That is an important element.

Beyond these upfront agenda items, our government will focus on delivery of other key commitments it has made to Canadians in the Speech from the Throne. They include productivity and economic growth and high quality, universal, affordable, developmental child care. We have a new deal for cities and communities based, in part, on a share in the federal excise tax. We will build on support for seniors. We will invest in producing more opportunities and reduction in disparities that are there currently for aboriginal Canadians. We will invest in protection of our rich natural environment. We have committed to improve our investments in national defence and national security, and generally will be pursuing an objective that secures for Canada respect and influence in global affairs.

There is no question that is a lot of agenda, but the government is committed to pursue it. Maybe the most important component of all that is our growing economy, without which we could not accomplish these national roles. Our growing economy will provide the resources for these increased investments in health care. It will encourage workers to want to work here and investors to want to invest here.

I am not in a position to predict exactly what will be in the throne speech. We all know that. We will hear from the Minister of Finance, on the appointed day, in the budget speech. However, there is one other thing that I am pretty sure will be in that speech, but it should not be a surprise to anyone.

The approach of the government in planning our future spending will be prudent and disciplined. This is something that the government will not forget as long as the government is the government. No matter what is said in the House, no matter what the opposition parties say, I am certain we will stick to that commitment of prudence and discipline in our spending.

For 27 years prior to 1997, we were caught in a vicious circle of chronic deficits. We on this side of the House know that because for many of those years we were the government. We know about chronic deficits and about the 27 years. It caused higher taxes, rising debt, higher interest rates, job loss and many negative things on the economic front. We ended up with a huge national debt, one which we did not believe was at an appropriate level. We were forced to take steps, and Canadians had to take the steps. Frankly, the government could never have accomplished this fiscal discipline without the support of Canadians.

Looking back, we spent approximately 38¢ on the dollar supporting the debt load; 38¢ of every dollar that was taken in taxes was allocated to finance the debt that Canadians had borrowed. However, that is behind us now. We have made steps. The debt has gone down and Interest rates have gone down. I stand to be corrected, but we spend less than 25¢ on the dollar now sustaining our debt load. That is substantial progress, but we want to go further and we will. I hope there is support in the House and among Canadians to continue to reduce our debt to GDP level.

In addition to making major social and economic investments and in addition to the recently concluded $100 billion tax cut, our relatively robust fiscal position has also enabled us to deal with some rather nasty external surprises like the arrival of SARS and the outbreak of BSE, which is not a huge outbreak. The existence of those things can throw a government's fiscal position out of kilter. In doing our budget, we have ensured that we have planned for contingencies that can throw our fiscal house out of order.

We have also managed to secure for Canadians a AAA credit rating. I cannot imagine anyone in the House would object to that. That is an asset for all Canadians when and where and if we have to borrow. We of course continue to borrow to cycle and reduce the current debt load, but with a AAA credit rating our standing and ability to pay is enhanced. That also produces lower interest rates. Lower interest rates for Canadians means that when they want to make purchases as consumers or when they want to borrow money, the interest costs are much less. That means when they are buying homes, cars, appliances and making major purchases, they are better off. Our farmers and small businesses are better off, and the economy then generates growth. Those are some of the benefits of having improved our fiscal position.

I also want to note we will be working to sustain an increase in our living standards. Now that Canada is in a surplus position, we rank first in the G-7 for growth in living standards. Living standards is where Canadians are. They are not that interested in looking at a financial balance sheet, but living standards is where it hits home. The average standard of living of Canadians has increased more in the past 7 years than in the previous 17 years. That is a tangible benefit to my home and to the homes of all Canadians no matter where they live.

We do not want to take this progress for granted. As the Minister of Finance so often hammers home, to continue these benefits we need to continue to respect the principles that we plan our spending by. We must live within our means. We must plan carefully. We must behave prudently and we must always work to stay in the black.

I should say that I am one of those who would not lose too much sleep at night if by some strange occurrence we ended up with a small unplanned deficit, but I have to say that I have worked with the Minister of Finance, the previous minister of finance and the one before that, who happens now to be our Prime Minister, who are so religiously committed in planning that I do not think I am going to have to worry about a technical deficit. Our planning, our contingency plans and our budgetary allocation for prudence mean that not only are we going to avoid the deficit but also that we are going to end up with a surplus.

I heard earlier today, as we are always hearing from the opposition, about this alleged problem of the government overshooting and obtaining more revenues than it had planned for. That is not a terribly bad thing when we end up avoiding a deficit and with more money than we planned for. If we build in prudence of $3 billion, or if we build in a contingency of $3 billion in the budget and then something is added for prudence, we are going to end up with extra money. We are going to end up with a surplus just because we put the contingency and prudence allocations there.

In planning our economy, in trying to calculate where we will end up 18 months down the road, our government does its own financial calculations, but we also go to the best private sector forecasters. There are several of them out there. They grapple and work with the same numbers. They do the number crunching; there are computers running all the time.

I have attended relatively faithfully the policy and economic analysis program at the University of Toronto. For years it has been doing micro and macro computer crunches on our economy and projecting what our government finances are going to be and what the whole economy is going to be.

Simply, we cannot predict with absolute accuracy in science. When we have an economy that is over a trillion dollars in GDP, it is very difficult to know with precision how much money a particular business is going to make, how much money it will pay in taxes, how much someone is not going to pay in taxes, or when there will be a bankruptcy and when there will not.

There are millions of these little economic decisions going on all the time in our country, so trying to predict 18 months in advance where we are actually going to be on the bottom line is very difficult. The one principle we follow in all of that, though, is that wherever we come out on the bottom line after the 18 months it is going to be above the bottom line. It will be in the black and not in the red.

I have never been one to criticize the government for not being able to predict because in fact rarely has any private sector economic forecaster been able to predict with any more accuracy than the government itself has.

I am very proud of what the government has been able to do on the economic and fiscal front. There is more to do. The proof will be in the pudding on health care and on equalization, but we are committed to delivering these things in a financially sustainable way.

The budget will build on the Speech from the Throne and address the concerns of Canadians and my constituents. I look forward to budget day.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I want to key in on two specific items that my colleague happened to mention.

One item was how much better the service is for aboriginal Canadians. On two counts in that area, in the last month we have had Liberals come into the Churchill riding and announce $27 million in expenditures to go to aboriginal communities. But the reality was that it was a re-announcement of money promised in 2003. Along with that announcement is the fact that $42 million for a water infrastructure project had been promised to one aboriginal community in 2000 and no dollars have flowed to that community.

Therefore, we had $42 million from 2000 that never went to the community along with a re-announcement of 2003 dollars in 2005. And somehow this is providing better service to aboriginal Canadians?

Along with that, the member talked about how we need equality, how we need to have no disparity among communities. We have a situation where asbestos-contaminated Zonolite insulation is in first nations homes and the government has said that it is not going to pay to have it tested or removed. It has said to first nations that it is too bad and they should just deal with it under the budgets they already have, this when the government does not give them enough money to fund their communities. Meanwhile, and rightfully so, $2 million is being used to remove it from the homes of military people.

How is that fairness without disparity in regard to who we are as Canadians? I would like the member to comment.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, those are two instances of, how shall I say it, projects which are planned but which, as the member indicates now, have not yet been executed.

I was looking through a document just last week. It was a list of government projects and allocations. I was surprised that the money for those allocations had not yet been taken up and we had drifted down through one or two fiscal years. What happens is that the money is allocated, the project is planned, and for reasons such as the Ottawa bureaucracy or the local bureaucracy, perhaps, things get in the way of the orderly execution of some of these programs.

I do not for a minute doubt that the insulation problem the member referred to has to be addressed. I am delighted that the money has been set aside. Whatever the impediments are I wish that they were not there, but someone has to grab the bull by the horns and make those projects fly.

That is true across the whole aboriginal community, but it is not just aboriginal Canadians who have this problem. I have just described the list I mentioned. It happens in the big cities too. We would think that if people had $10,000 or $20,000 for a project they would grab it and run with it, but no, there are elements missing in the orderly spending of that money, so the government does not let the money go and it carries on from year to year.

[Marcel Gagnon, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, what I have to say is along the same lines as my colleague's question about the will to restore some justice. In the same vein, with regard to aboriginals, I would like to know from the Liberal member who just spoke whether he is aware of the poor treatment given to aboriginals in the northern part of my riding, for example.

Their housing is not even housing. There are homes in which as many as 15 people live. The humidity level in these homes is very high this winter, while outside it is 30 or 35 degrees Celsius below zero. The conditions in which aboriginals live are deplorable.

The hon. member just mentioned that he notices sometimes that funds are not spent.

I ask him whether the government is prepared to do everything it can to really meet the crying needs of aboriginals. We do not need any commissions of inquiry in this regard. The state of aboriginals' housing in the northern part of my riding is pitiful. It must be similar in the riding of the member for Churchill, who just spoke.

That having been said, I would like to know whether, in this year's budget, the government will not only invest funds but also ensure these funds are expended to relieve the misery among aboriginals in the northern part of the Mauricie.

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, I can tell the hon. member that the government clearly recognizes the demands of investment in the aboriginal community. I know there are many aboriginal communities across Canada, principally in the northern areas, where there is substandard housing.

Last night I caught a short film on television about the Davis Inlet community as it was. That community does not exist anymore. It has been moved. The investments have been made. Perhaps that is a successful conclusion for Davis Inlet, but there are dozens of communities across the north with aboriginals living in substandard housing.

While there is a lot of federal money being spent in the envelope, sometimes the aboriginal communities just do not have the infrastructure available to take the money and fix the problem. We all have to take responsibility for this. I am pleased to see progress, but just because we have progress does not mean we have accomplished all of those goals.

Yes, there are aboriginals living in very substandard and unhealthy housing. Somewhere between what they do and what we do in government to make resources available, we have to solve that. We rely on people and systems to do that and I accept the member's representation that we have a lot of work to do in that envelope.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, the member talked a lot about budget surpluses, which has certainly been a bit of an issue here today. We have talked about the experts hired by the government and how they cannot seem to get it right. I might suggest, then, that we have hired the wrong experts and we need to do a little shopping for others.

If the member walked into a local business and was charged twice as much as the suggested selling price of the item, would he be willing to pay it just so that business could be in the black at the end of the year? In his commentary he stated that the Liberals will always err on the side of the black so that they do not get into a deficit situation. I will give him that, but they have erred on the side of huge surpluses to the point of deceiving Canadians. The budgets have purposely been set to take more out of Canadians' pockets than we need to run this country.

How does he feel? Is he finally admitting to the House that Canadians have been deceived and budgets are being set in order to take more money out of the pockets of Canadians?

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, the member opposite is articulating the frustration that we cannot run the government like we run a business, that we cannot run the government like one might run a household, where there is a budget and we plan. But when running a household, one can predict reasonably how much money is going to come in the front door, at least over the next few months.

The government starts budgeting for the fiscal year in the autumn of the preceding year. It takes 18 months before we get through the whole thing. We cannot predict major bankruptcies. We cannot predict the failures of businesses. If a business does not make any money, we do not get any taxes. What if someone defaults or leaves Canada or there is some catastrophic event where we have to spend money? It is very difficult to predict all of those things, and when dealing with a trillion dollar economy, a few million bucks is really just pocket change in that envelope.

We do not just hire people to predict; we actually rely on independent third party non-governmental agencies to make these predictions and they are as good as it gets. That is the financial industry we are looking at. They say we cannot get it right but do not seem to mind at all that we err on the side of not having a deficit. They like that, Canadians like that, and we are going to stay there until we find a better way to predict what our bottom line is going to be.

[Gordon O'Connor, Conservative, Carleton—Lanark, ON]

Mr. Speaker, I will be splitting my time with the member for Macleod.

If the tragic events in Asia prove anything about our military capacity, it is that Canada's must be boosted immediately. The Conservative Party wants to see a firm commitment on the 5,000 frontline troops financed immediately in the budget. The Conservative Party wants to see the heavy lift capability of our forces put in place. No longer should we be waiting to rent aircraft from others to meet our commitments.

There are five elements needed for an effective military force: clear policy; appropriate personnel levels; effective training; proper and well-maintained equipment; and infrastructure. These five elements must progress together, otherwise the result is a less effective or ineffective military.

Canadians are still waiting for the new policy from the government and so are the armed forces. Until the policy is approved and the necessary funding is in place, the department will continue to spin from one crisis to another.

Canadians are being led to believe through leaks in the press that the new policy will be forthcoming soon and that the Liberals will embark on another 10 year plan like the one for health care, only this one will be for the military. This is reminiscent of other political regimes whose five year economic plans went nowhere except to keep bureaucracy busy and confuse the people.

Similarly, if the rumoured modest funding increases for defence are accurate, then the Liberals' plan will lead to a downward spiral of force capabilities. Meanwhile their public relations machine will try to make Canadians believe quite the opposite. It is almost certain that every answer to every problem will be the mantra “it is in the 10 year plan”.

A 10 year plan is a cop-out to avoid government responsibilities and tough decisions. The government does not want to commit the funds needed to restore the military and it is hoping that the public will forget the promises in the mists of time.

Through leaks to the media we have been informed that the government will commit about $3 billion extra to defence over the next four to five years. This amounts to an average baseline increase of $600 million to $750 million per year. This is far too little to stop the ongoing decay of the forces and the Prime Minister, the finance minister and the defence minister know it.

The previous Liberal government cut $20 billion in purchasing power from DND while the current Prime Minister was the finance minister and vice-president of the Treasury Board. The Prime Minister has never cared about or fought for defence. His track record is of one who provides the military with lots of rhetoric but minimum funding. His neglect of the military and its needs continues.

Currently Canada spends about 1.2% of GDP on defence, which is far below the NATO European average of 2%. This is true even with the recent claims of the government that it has committed $7 billion for future equipment.

According to the strategic capability investment plan, otherwise known as the SCIP, the current defence department needs a capital investment of $27.5 billion in equipment over the next 15 years. This means that the government has only approved about 20% of what the department needs.

The Australians, who have a smaller population and economy than ours, have committed to financing a $50 billion capital plan over a 10 year period. They know that diplomacy and aid must be backed up by an effective military to ensure that pious words turn into deeds.

As a G-8 country and a NATO country, we have allowed our military capabilities to wither. When the Prime Minister, the foreign affairs minister or the defence minister go to international meetings, I am surprised that they do not hang their heads in shame.

If the department stays on its current and predicted course, the present force structure of air, land and sea combat elements cannot be maintained at their current size and shape.

The Conservative supply day motion of October 21 last year put pressure on the government to ensure that the 5,000 troops promised during the election campaign would be combat capable. We are pleased that the minister has recently said that the new troops will be added to existing units, not a one dimensional peacekeeping brigade.

Although the government has expressed an intention to add 5,000 regulars and 3,000 reserves to the military, the recruits will have to be processed through the constipated Canadian Forces recruiting and training system. Currently about 10,000 regulars are tied up in the system where the normal numbers should be between 4,000 and 5,000. The extra 5,000 that are lost in the training system are there essentially because the current regular force effective strength of 53,000 is not large enough to provide the required personnel levels to both the operational and the training units.

The forces are in a classic catch-22 situation. Because there are not enough instructors, the forces cannot maintain sufficient personnel to fill under strength units. In turn, under strength units cannot afford to send their experienced personnel to be instructors in the training system. Many regular recruits are lost in the system for up to 18 months. Similar problems are faced by the reserves who are also processed through the same system.

The situation is serious enough that the Auditor General is starting an investigation of the Canadian Forces recruiting and training system. Unfortunately it will take 18 months until Canadians see her report.

We in the Conservative Party are hoping that the military will find a way to process the needed 5,000 regulars and 3,000 reserves without losing them for extended periods in the system. The Conservative Party also believes that absorbing the increase at only 1,000 per year is not an adequate goal for the department. What would the government do if there was an international crisis requiring dramatic increases? It is just not acceptable.

As mentioned earlier, revitalizing the military involves more than just increasing personnel. Every person who is a member of the Canadian Forces uses equipment in one form or another. If 8,000 people are going to be added, then substantial equipment must be added or restored to operational condition. The current effort to re-equip the forces is woefully inadequate leading to rust-out in all environments. As equipment is operated beyond its predictable life, maintenance costs start to balloon because many more spare parts are required and much more technician time is needed.

A classic example is the 40-year-old Sea King fleet which requires 30 hours of maintenance for every hour of flight. Beyond the challenging costs of maintenance, the risk of safety of the crews increases each year. It will take another four to eight years before new helicopters appear, a delay caused by the political interference by the previous prime minister and the inaction of the current one. Hopefully the forces will get through this period without any serious incidents.

Another example is the army's 2,500 logistic trucks which are literally rusting out. According to an internal analysis, starting in 2008 hundreds of trucks will have to be scrapped each year because they have reached the point where they cannot be repaired for safe operation. As the army loses hundreds of trucks each year, the operational part of the army will quickly reach the point where it cannot carry out its tasks because it cannot move its supplies.

The failure to recapitalize is dramatically demonstrated in what has happened to the air force during the Liberals' time in office. In 1994 the air force had about 700 aircraft with an availability rate of 85%. This means that nearly 575 aircraft were available to fly on any one day. Today the air force has about 300 aircraft with an availability rate of 50% so that only 150 can fly in any one day. The air force has gone from a performance level of 575 aircraft to about 150, a huge drop in capability.

The Liberals' long term under financing in the military really hit home with the public during the horrific disaster in Asia. For years the government has touted the disaster assistance response team, or DART, as something Canada could dispatch within 48 hours. The deployment of the DART to Sri Lanka was delayed for two weeks as it had to be done commercially with available Antonov aircraft rather than our own transport fleet.

It is the state of the current air transport fleet that has caused the problem. It is very old and it is overcommitted. On any one day about one-third of the Hercules fleet of 32 aircraft is committed to search and rescue, leaving about 20 to 22 aircraft available for airlift, but because of their advanced age the availability rate is only 50%. In any one day only 10 or 11 Hercules are available for tasking. The DART we are told by the defence department requires 24 to 26 Hercules flights to lift the manpower and equipment. The available Hercules fleet would have had to travel to Asia and back three times to deliver the humanitarian assistance to Sri Lanka. Meanwhile the forces would not have any other lift available to meet other demands.

If the Liberal government is going to increase the regulars by 5,000 and the reserves by 3,000, it will also have to look at our challenge in infrastructure, which has a bow wave of demands. When DND constructs buildings or other structures, it plans that these buildings will last for 50 years. On that basis about 2% of replacement value must be spent each year for upkeep and replacement of infrastructure. This level of support has never been achieved. As a result a large number of base buildings and married quarters are in very bad shape. To properly implement the planned personnel increases, the government must provide the military with additional funding for infrastructure.

During the last election the Liberals painted members of our party as warmongers because we advocated increased spending on the military. Ironically, an analysis of our defence proposals by DND military planners just prior to the election showed that our proposals were feasible, affordable and achievable, quite the opposite of the false propaganda perpetrated by the government.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, it is my pleasure to rise in the House to express to the wandering aimless government the priorities that should be addressed in the coming 2005 budget.

I do not use the words “wandering” or “aimless” lightly, but the never ending parade of ministers on walkabout throughout the world over the past six months has convinced me that the old U2 lyrics live on because they still have not found what we are looking for. It is called leadership and without it the government has lurched from crisis to crisis since the beginning of this minority session.

Along with my colleagues I have watched and waited breathlessly for the transformative change all Canadians were promised, but let us be honest. It has not happened yet and if the truth be told, it probably is not going to happen under the Prime Minister. We see the lack of leadership in the flailing Gomery inquiry, the mismanagement of the BSE file and the clear bungling of the tsunami crisis. Yet we stand here today to help the Minister of Finance to do his best to plan for the next fiscal year.

If leadership cannot be expected from those on the other side of the House, the Conservative Party of Canada stands ready to shine the light of common sense on the pathway to federal governance.

I address my remarks to the Minister of Finance today from the perspective of overseas development assistance. The recent tsunami disaster in southeast Asia highlighted the importance of Canada's overseas development strategies, or lack thereof as proven in this tragic case.

When reflected against the overwhelming generosity of individual Canadians, the anemic penny ante response from the Liberal government was at best piecemeal and at worst an international embarrassment. After being shamed into a series of hastily called press conferences, the government relief package grew grudgingly from $1 million eventually up to a twice announced $425 million over five years.

No long term relief reconstruction strategy for these funds has been announced. Where the money came from has not been revealed. What other CIDA projects will have their budgets stripped to pay for these promises? That has not been detailed.

Finally, how this ties into Canada's existing foreign aid policy or the upcoming integrated foreign policy recommendation has not been considered. The challenge comes when answering the following question: How does the finance minister allocate the appropriate funds to overseas development?

There is no legislated mandate for the Canadian International Development Agency. There are no clear accountability measures in place. As we saw over the Christmas period, funding priorities can shift dramatically from moment to moment, stretching and pulling the bounds of fiscal credibility to the edge.

The upcoming international policy review provides the finance minister with an unparalleled opportunity to send a strong signal in the budget. For the first time the overseas development envelope of spending must come with milestones and expectations clearly outlined for the disbursement. It is time to level with Canadians about how and why their foreign aid dollars will be spent.

There is a temptation for the Liberal government to further blur the lines between the departments of foreign affairs, defence and CIDA caving into the rattle and hum of ministerial greed. While we strongly agree that Canada's international policies must be integrated and complementary in their objectives, what we cannot allow is the unregulated $3 billion overseas development assistance funding to be used as a slush fund to restore the long overdue offensive and defensive capacity of our military.

As my colleague the member for Carleton—Mississippi Mills so eloquently pointed out, funding commitments must be made to bring the essential function of the military back to a combat ready force. Too often Liberals take the easy way out and try to sell Canadians a trumped up vision of benevolent peacekeepers.

The harsh reality is that in order to credibly back up Canada's diplomacy and aid efforts around the world, Canada's military must be sufficiently supported at home before acting as peacemakers, security builders and as a separate and impartial entity, to allow humanitarian efforts to succeed. It is the exception rather than the rule where military delivery of aid is preferred.

This government has a responsibility to meet its commitment to the three Ds in a separate but complimentary fashion. We will fight to ensure that in the Liberal rush to be all things to all people, Canadians are not misled with a shell game worthy of a cheap, street-side hustler.

Nations around the world are moving toward a formalization of their foreign aid strategies through legislated mandates and annual accounting to parliaments. It is time for Canada to rise to this challenge. Developed nations, such as Canada, reap the benefits of their prosperity at home. Enlightened leaders know this prosperity comes with responsibilities. Unfortunately, our Prime Minister believes that pretty words, repeated promises, and speeches filled with soggy rhetoric about bold international policy is even better than the real thing.

The overseas development budget is scheduled to increase by 8% a year. This is the least this Liberal government could do after a decade of slashing Canada's foreign aid to record lows. In fact, a more aggressive approach to restoring the needed funding would enable Canada to truly fulfill its potential on the world stage. However, I fear that this Liberal government cannot be trusted to plot the course to achieving the Pearsonian objective for foreign aid budgets of .7% of GDP.

I guess this explains why Canadians are no longer shocked when reminded of the broken promises from Liberal red books one, two and three. The Liberals are still trying to live up to commitments made in 1969.

In the meantime, changes must be made to the practices of our foreign aid delivery. Liberals must learn to untie aid. This government ties our donations of emergency food so tight that it squeaks. We are in danger of destroying local economies of recipient countries and in the long run in our rush to deliver Canadian food as short term food aid.

Tied aid depresses world prices for commodities and undercuts the few local producers left in recipient countries. Tied aid is an insidious tool used by developing countries to make themselves feel generous as they answer the call of hunger in time of crisis.

By making untied aid a condition of future funding for Canada's ODA envelope, the effectiveness of our aid could increase by as much as 30% to 50%, and this is according to the Canada Food Grains Bank.

The time has come to focus on real solutions for poverty reduction. Let us marshal our resources to fight the fight we can win. There are many problems in the world. The ineffectiveness of Canada's foreign aid is not an enigma for the ages, but it will not be solved with photo ops with rock stars. It requires that rarely found in a Liberal quality, leadership.

Leadership in Canadian international development can begin with financial discipline. It will unravel with bold and determined choices and Canadians should be able to watch it flourish in the bright light of public scrutiny. That indeed would be a beautiful day.

The finance minister can start his government on the right path. He can make good on the spirit expressed in speeches from the throne over decades filled with good words and pledges to secure for Canada a role of pride and influence in the world.

If this finance minister is chafing under the mantle of indecision, he can break free. He can declare to the Minister of International Cooperation that he is prepared to commit the resources needed and establish the disciplines necessary for effective foreign aid.

I invite the Minister of Finance to consider these recommendations. I would be more than open to discussing these issues further with him.

[Michael John Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I will be splitting my time with the member for Northumberland—Quinte West. I thank you for the opportunity to speak to the House about some of the priorities important to the people of my riding of Dartmouth—Cole Harbour, priorities I believe all Canadians share.

I will not take up all of my time boasting about the government's record in the last 10 years, but I do want to say how proud I am to be part of this Liberal government, a government that takes a balanced approach in dealing with the challenges of our country. It is a government that has achieved great things over the past decade. We have a strong and vibrant economy, millions of jobs have been created, we are alone in the G-8 with respect to our surpluses, and we have eliminated the deficit.

The official opposition will argue that we did not cut enough taxes. It makes some wild claims about our success as a government. It would probably say we did not cut enough programs either. On the other side, the NDP will probably complain that we have not done enough. I probably agree with much of what it has to say, but the fact is that our government is balanced and moderate.

We believe that government can and should play a key role in the lives of Canadians. We believe that Canadians expect us to spend their money on their priorities and they expect us to live within our means.

When we took office in 1993, we inherited a massive deficit of $42 billion. It was a Liberal government that made the tough and painful decisions to bring some order and stability back to government. Now the Liberal government is even balancing provincial budgets.

The recent agreement with the province of Nova Scotia and the federal government on offshore revenues has resulted in a significant and immediate infusion of federal money to Nova Scotia. It was not a gift; it was the right thing to do. It was a commitment that the Prime Minister made. With the great support of the member for Halifax West and his Newfoundland counterpart that commitment was fulfilled.

Our premier, Mr. Hamm, has indicated wisely that he will take this $830 million and apply it to the provincial debt, a provincial debt that was created solely by a Tory government over the period of 15 years, from 1978 to 1993, arguably the worst provincial government in the history of the country. It is certainly one of the worst, after eight years of consecutive Liberal balanced budgets in Nova Scotia from 1970 until 1978 under the leadership of Gerald Regan, Peter Nicholson, Allan Sullivan and Scott MacNutt. Between 1978 and 1993 we had 15 consecutive deficit budgets. This decision and this money will free up close to $50 million a year for my province of Nova Scotia. I applaud the premier for making that decision.

With the new equalization agreement, Nova Scotia gets another $151 million this year and $1 billion over 10 years in new health care money. It is clear the Government of Canada has stepped up and shown its commitment to Canadians, but for me particularly, to all Nova Scotians, including the people in my riding of Dartmouth—Cole Harbour.

We are now fully engaged in the budget discussion and I want to commend the finance minister for his leadership in seeking input as he constructs a living document that will reflect the values of Canadians. However, I want to share a few thoughts that I think are important to Canadians.

First, the recent events in Asia have given us pause. The devastating situation has moved our country in a profound way. As the death toll continues to mount, it becomes more and more important that the government and Canadians not forget the great needs. It reminds us that while we have issues here in Canada, they pale in comparison to the needs of the developing world. We would do well to have our discussions about budgets within the context of the enormous wealth of our nation and that by being born in Canada, we are privileged people. I believe we owe something to those who were not.

I would like to acknowledge the efforts of the Minister of International Cooperation who has brought strength, sensitivity, seriousness and a sense of urgency to the issues, not only in Asia, but those issues related to Africa, particularly her efforts on behalf of Africa in the HIV pandemic.

In that light, I was interested that the previous speaker from the official opposition spoke about hitting our UN target of .7% of GDP. I hope all the people in his party feel as strongly about that. It is an issue I support. We are a generous country and I believe that most Canadians understand that we have a responsibility to the rest of the planet.

At home, our good government and sound fiscal management has given us the capacity to further invest in key priorities. Some of those other people have spoken about child care, our health care system, for me particularly, the importance of promoting a national wellness strategy to keep people well, home care and palliative care, and the very important issue of caregiver support that we need to make our health care sustainable. I had the opportunity on Friday, with the Minister of State for Families and Caregivers, to host a conference on caregiving in my riding.

Post-secondary education, for me, is second to none. We have seen great things accomplished with the money that we have invested in research over the past five years. Canada is a leader now in the world of research. However, there is more we can do and there is more we must do.

It is fair to say that students and universities suffered while we got our fiscal house in order and while we got our health care system in order. In Nova Scotia, we have the highest tuition rates in the country. While we have taken steps to address some of those issues, it is perhaps time we focused more comprehensively on education.

I would like to see our government give serious consideration to establishing a dedicated Canada education transfer that would address some of the serious issues facing our students, universities and colleges. We can do this with appropriate and agreed upon national standards. We can reverse the trend that has seen students taking more of the burden of the post-secondary education costs.

Another issue is ACOA. I would encourage the government to reinvest in Atlantic Canada and, in particular, ensure that ACOA is able to continue its work in support of economic development in the Atlantic region. ACOA is a beacon of light and we should provide adequate funding and support of the “Rising Tide” report, a report that maps out a plan for strengthening economic prosperity in Atlantic Canada.

I had the opportunity in the last two weeks to visit a number of businesses who credit ACOA for helping them develop new technologies, for finding new markets, and for employing thousands of Atlantic Canadians.

National defence and the Coast Guard is another issue. I live in a military riding and I believe we have to reinvest in our military. I am glad we are starting to do that. Five thousand is a good start. We must do more. Our military families are the heart and soul of our armed forces. They need continued and further support, and I will certainly support that effort.

Our Coast Guard does wonderful work under difficult circumstances. It is the front line for our coastal security and for protecting our sovereignty. Two recent parliamentary reports identified the difficulties facing the Coast Guard. We need to inject significant dollars in order to ensure that our vessels are able to do the job they are asked to do. The Coast Guard is important, not just to my riding, but for the entire country.

All Canadians can be proud that we live in a great country. Despite our differences, we share some common values, we are generous, we understand the importance of supporting each other, we believe in collective responsibility, and we believe that our country is truly just when each of us has an equal opportunity to be successful and to live with dignity. I believe our government has done much for Canadians. I believe we can do a lot more, and I believe that we will.