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House of Commons Hansard #56 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was foreign.

Topics

Fiscal Arrangements ActGovernment Orders

12:50 p.m.

Peterborough Ontario

Liberal

Peter Adams LiberalParliamentary Secretary to the Minister of Human Resources and Skills Development

Madam Speaker, I listened with great interest to what my colleague had to say. I noticed she mentioned at least one of the territories, and referred to the Maritimes and Newfoundland.

With respect to the resources which are proposed to be brought out of the Arctic Ocean and up the Mackenzie Valley, what are her personal views on how the federal and territorial governments, the first nations people and the Inuit should proceed with respect to the extraction of resources in the north?

Fiscal Arrangements ActGovernment Orders

12:50 p.m.

Conservative

Rona Ambrose Conservative Edmonton—Spruce Grove, AB

Madam Speaker, I think that most of the territories believe the territory financing formula does not meet their needs presently to build the infrastructure necessary to develop not only the human capital but the fiscal capability to develop those natural resources.

Right now there is no resource revenue sharing agreement between the federal government and the territories, and 100% of that revenue goes straight to the federal government. This is something that will also be looked at under the panel of experts for the territory formula financing.

While we have seen the federal government work with the aboriginal peoples to advance the issue of political devolution, it is also very important that the federal government put in place immediately the fiscal framework as well to go along with the political devolution for the aboriginal peoples and the territories.

Fiscal Arrangements ActGovernment Orders

12:50 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Madam Speaker, I am pleased to speak to Bill C-24, which is a very important bill. I mainly want to go over the fundamental principles of the equalization program. Then we will be better equipped to review the proposals as well as the agreement on equalization reached last fall between the provincial premiers and the federal government.

Allow me also, for review and evaluation purposes, to take a look at the $2.6 billion agreement that was just signed between the federal government and the Atlantic provinces—Newfoundland and Labrador, in particular. This will also help us to understand the position the Bloc Québécois has taken on Bill C-24.

First, what is equalization? Far too often people speak of equalization and far too often they do not really grasp this formula, which dates back to 1947. The report of the Royal Commission on Dominion-Provincial Relations, commonly referred to as the Rowell-Sirois Commission, painted the picture of a type of federal program geared essentially toward one thing. It would be set up so that from coast to coast in Canada, the provinces and territories would have comparable levels of fiscal capacity in order to provide comparable services to their constituents.

It is a wealth redistribution program reflecting the fact that, at the time—and I hope it is still there today—there was a concern for inter-regional equity in Canada in terms of the services provided to the public.

This program was implemented approximately forty years ago, and it is the only federal program that is constitutionalized, which means that equalization is mentioned in the Constitution, and it is the only transfer program that is actually enshrined in the Constitution Act of 1982.

To determine the amount of the equalization payment for a given province, or to determine, in the first place, whether or not a province is entitled to equalization, the fiscal capacity of each province is established . What is fiscal capacity? It is the capacity of each province to raise revenue from their taxpayers, individual or corporate, either through property taxes, direct or indirect taxes, or personal income tax, naturally. There are 33 government revenue sources included in the equalization formula.

Once the fiscal capacity of each province has been established, an average is calculated using five of the provinces. This average is then used to set equalization standards to decide which provinces will qualify for equalization because their fiscal capacity is lower than the average of the five provinces used for calculation purposes, and which will not receive any, because their fiscal capacity is higher than this five-province average.

Once the provinces that qualify are known, the amount of the equalization payment each one will receive is calculated on a per capita basis. This involves figuring how much a given province needs per capita to reach the average capacity of the five provinces used for calculation purposes, that is, how much it should get in equalization from the federal government to make up the difference .

The fundamental principle underlying equalization is inter-regional equity. That is the first broad principle.

The second principle underlying equalization is fairness to the taxpayers, ensuring that, regardless of where they live, be it Newfoundland, British Columbia or Quebec, they receive essentially the same level of service.

The third principle is the strict and rigorous measurement of each province's fiscal capacity.

For that, regular calculations must be done. Each year, the estimates are recalculated and factual data sought for each of the 33 revenue sources, for each provincial government. As a result, each year, it is essential that this fiscal capacity be assessed. If it is not, our outlook might be off. For example, provinces may have gotten wealthier over the previous year or increased their fiscal capacity, so they probably exceed the established average fiscal capacity based on the five-province standard. If so, they would not be entitled to equalization payments, even if they had been entitled to them that year or during the past two years.

It is perfectly logical and normal, when a province's revenues and fiscal capacity increase, for its equalization payments to decrease. Everyone knows this. When a province gets richer, its equalization payments necessarily decrease. This principle is completely acceptable and accepted across Canada, particularly in Quebec.

It is unacceptable, however, when, first, the annual fiscal capacity of each province is not considered and agreements are negotiated such as the one reached last October, whereby the last payments the provinces received, in 2002 and 2003, would be indexed to inflation, meaning these payments would be increased by an additional factor, each year, without however requiring any recalculations. The last year is used to extrapolate the amounts for the next five years, until specialists can examine this matter and find a better way to allocate or index equalization payments.

This is problematic. The very principle of periodic, meaning annual, calculations has just been trampled. We have just been told that the dynamic fiscal capacity will no longer be calculated on an annual basis for each province. Instead, an amount provided in 2002-03 will be indexed to inflation over the next five years, to determine the equalization payment.

How can the first principle of equalization—determining the actual wealth of provinces in any given year to see if they are entitled to equalization or not based on the five-province average—be respected? We no longer have this annual picture. Already, one of the fundamental principles of equalization has been violated.

I am not sure whether the Minister of Finance is aware of this or not. The Prime Minister should know since he was finance minister for eight years and he had to juggle with the equalization formula. Now we are in a situation where the calculation of the 33 funding sources is ignored year after year and for two years now the government has simply been increasing a predetermined amount. That is the first problem.

Another problem is that the equalization formula is dated. For the past 15 years we have been talking about improving it and correcting the implausibilities in calculating the 33 funding sources. Instead of change, instead of implementing any of the suggestions made in all this time—particularly in the past five years—in order to truly achieve greater accuracy in the annual estimates, at the meeting in October the Minister of Finance together with the Prime Minister preferred, as I was saying, to apply an inflation factor to a previously calculated amount. Nonetheless, he has not understood that the amount that was set two years ago was arrived at through an incorrect formula and does not reflect the true fiscal capacity of any given province.

Rather than take their work seriously, the Prime Minister and the Minister of Finance chose to use a faulty formula to calculate the equalization payments for the provinces for the next five years. This is the second rather hazy aspect of this agreement and its terms.

So they began with a faulty formula and ended up with a faulty result, of course, rather than doing a thorough job and reforming the equalization formula once and for all, with three or four major improvements. It seems to me that is what ought to have been done, rather than coming up with a dubious agreement like this.

I will give just two of the suggestions that have been made over the years to improve the equalization system. First, why use five provinces to establish the national average, so that provinces with a fiscal capacity over and above that figure receive no equalization payments, and those who are under that figure per capita do? Why not use the ten provinces and the two territories? Why not have a proper overview with a calculation of the fiscal capacity of each province and a per capita average for the ten? Then the real average of the ten provinces would be used to determine the amounts and the recipients.

This has been discussed for 15 years. I have seen documentation on it ever since 1993. It is enough to make a person's hair stand on end, although in my case that is just a figure of speech, of course. There are piles of documents explaining why the ten provinces need to be included in setting the standard. It does not take that much paperwork to explain that all of the provinces must be included in the calculation. The way an average is calculated—a basic principle I trust the senior bureaucrats have not forgotten—is to take all the data for each participant, in this case each province. Then you divide by the number of provinces. This gives the average. Why use five rather than ten? I invite you to look into this. Apparently there has always been a great deal of effort expended by senior finance officials not to give in to the obvious: an average is calculated by addition and the use of a quotient that includes all participants in the program, i.e. ten provinces and two territories.

There is also property tax. My interests are not strictly parochial, quite the contrary. Give ten economists the mandate to find a way to measure a measurable event and I am sure they will come up with ten different solutions, each more complex than the other. That is what happened with the calculation of property tax. Instead of using actual figures showing each province's capacity to raise tax revenue from property taxes in each major municipality for instance, a complex calculation—several pages of calculations in fact—is necessary to arrive at an approximation which experts call a proxy. Given that it has to be uniform for all the provinces, this approximation results in a terrifying formula. Even for math fans who enjoy trying their hand at complex formulas, this one is unbelievable. It is up there with the worse horror stories ever produced by the human mind.

Comparing this proxy, this approximation, to actual figures often reveals humongous differences. In property tax revenues, there can be a difference of up to 30% or 35% between the reality and the approximations. A statistician looking at these results would say that the error margin is way too high. A 2% or 3% difference is usually acceptable in approximate calculations, as compared to the reality. But when the difference exceeds 30% or 35%, this means that the calculations are wrong. So, this is one problem among many others with this equalization formula. This fundamental problem actually calls into question this formula's capacity to draw an accurate picture of each province's fiscal capacity.

This is the first criticism that can be made. If you start with a defective formula, take the very defective result of this defective formula, say that, over the next five years, this is how it will be in terms of equalization payments and inflate that amount, this simply means that a defective amount obtained through a defective formula has just been indexed.

Since we already have all this documentation and all the arguments for improving the equalization formula, would it not have been easy in October, to come up with a new formula instead of fiddling around with this one? The result is that in the years ahead they will stop working on the problem and simply index the 2002-03 amounts.

This is one of the criticisms we have with respect to this agreement which, in our opinion, tramples the fundamental goal of equalization, which is really to identify which provinces are richer and which poorer, and ensure that by redistributing the wealth, all the people can be provided with services.

There is another problem. It is clear to see that the provinces are unsatisfied with this equalization formula, as they were with last October's agreement. It is clear that there is a basic, even more fundamental issue involving the Canadian provinces, Quebec and the federal government, and that is the fiscal imbalance.

Not so long ago, the federal government said that some people called this issue the fiscal imbalance, while other people talked about fiscal pressures. The government, and particularly the Prime Minister, forgot to say that they must have got the words “some” and “other” mixed up.

All parties in the House, except the Liberal Party, believe there is a fundamental imbalance between the federal government's ability to get tax revenues from the taxpayers and to fulfill its mandates, but that the provinces are unable to collect revenues to provide services directly to the people, such as health, education, income support, and other services which correspond to their jurisdictions as expressly set out in the Constitution.

We find ourselves faced with an agreement in which the problem of fiscal imbalance has not been solved, and it shows. In fact, despite an agreement which the federal government calls very generous, there are still several billion dollars in the federal government's coffers that could be used for purposes other than accumulating political capital, as the Liberals have done, invading provincial jurisdictions, as the federal government has done, especially over the last seven or eight years, since the surpluses first began.

In short, this agreement does not solve the whole issue of the fiscal imbalance. The taxing abilities of each province are not addressed. More inequities are created, because we still have a formula that was far from perfect. Therefore, only imperfect numbers will come out of it.

More important still, we are also faced with a situation where, after the conclusion of this agreement among the first ministers of the provinces, Quebec and Canada, the federal government and certain provinces reached special agreements. I can name a few of them. I will come back to possible criticism of such agreements.

Following last October's equalization agreement, the first special agreement was reached between the Minister of Finance—originally from Saskatchewan—and the Premier of Saskatchewan. This province was offered $590 million. It owed the federal government $590 million in equalization overpayments. The decision was made to reach a special agreement with Saskatchewan. It was not identified as such. That province was told that it would not have to repay this overpayment. It got this money as a gift.

In contrast, Quebec had an equalization overpayment of over $2 billion. The government tells us that we will have to repay this money, but that it will be nice to us and give us 10 years to do so.

It is the same thing for the agreement with Newfoundland. A special agreement was concluded with Newfoundland, for $2.6 billion. An overall improvement to the equalization formula is dismissed and the waters are muddied.

It is impossible to apply a general equalization formula and not consider certain revenues for some provinces and keep revenues for others. That is not how things work. The system cannot work this way.

If offshore oil and gas revenues are not considered and hydroelectric revenues in Quebec are included, an inequitable situation has been created, which adds to the inequity I mentioned with regard to this imperfect equalization formula. We will have the opportunity to talk about this during questions and comments.

Fiscal Arrangements ActGovernment Orders

1:10 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Madam Speaker, I want to begin by thanking the Bloc Québécois finance critic. I want to ask the hon. member a question about the formula he was talking about throughout his speech.

The hon. member raised something truly very important in the course of this debate and that is the issue of a formula to resolve the real problems with the policy on balance among the provinces.

What I want to know is whether he is in favour of a formula based on a 10 province average? I think this is a formula all the provinces accept. I want to know whether the Bloc Québécois agrees with this proposal.

Furthermore, does the hon. member have any comments on the fact that the federal government has decided not to take part in discussions with the provinces, which would help us achieve a much more positive result for our country?

Fiscal Arrangements ActGovernment Orders

1:15 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Madam Speaker, I want to thank the hon. member, whom I have the honour of working with on the Standing Committee on Finance. She provides an invaluable contribution with her openness and understanding of finance-related matters.

For a long time now we have been talking about making changes to the equalization formula. I think there is a consensus on the 10 province standard, but there is no consensus on what direction to take to improve the equalization formula. Nonetheless, the 10 province average is relatively well received, since this is a logical formula. For one thing, we cannot establish an average with half the participants. All the participants have to be included.

Furthermore, several proposals are currently on the table. Some are acceptable to Quebec, others less so. Some are totally unacceptable, but the fact remains that consensus has been reached among the provinces on the calculation methods. The federal government could have taken advantage of this consensus to change the formula rather than simply index the amounts.

There is a real danger at present of the federal government signing specific agreements with certain provinces. This throws the application of the equalization principle out of kilter. According to this principle, a province becomes richer, exceeding the standard, it will not get any equalization payments. That we realize. It would apply to Quebec too; if its fiscal capacity suddenly went up this year, it would not be entitled to equalization payments. We believe in playing fair so we would go along with that. It might be good news, as it would mean the province was becoming better off and exceeding the standard.

We have nothing against an agreement with Newfoundland, but we do have objections to fiddling with the equalization formula so that it takes all revenues into consideration except offshore oil revenues. In the case of Quebec it includes all revenues, including the revenue-producing potential of our hydro-electric resources. This is not right, particular in the Kyoto era.

In the past 30 years, the federal government has invested very close to $60 billion in the gas and oil sector, directly or indirectly. Now a kind of incentive has been added for non-renewable resources, which is totally contrary to the Kyoto protocol we would all like to see incorporated into this government's concerns. So questions need to be asked.

Fiscal Arrangements ActGovernment Orders

1:15 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Madam Speaker, I am very pleased to have this chance to speak to a very important piece of legislation. Bill C-24 is about one of the fundamental defining features of this country. It is a matter of serious debate for all of us in the House.

One would think based on the parliamentary secretary's presentation that this is just a technical matter, that Parliament is just a rubber stamp and let us get on with the job. Certainly that is the way in which the bill has been handled all the way through the various steps of legislative scrutiny in the House of Commons. It is being presented to us today as a done deal, something the provinces have agreed to and therefore Parliament must simply give its blessing and let us get on with it. That approach would be doing a great disservice to Canadians if we did not elucidate for them the serious flaws with respect to this whole process, and the serious mistakes made by the federal government throughout this process of resolving the equalization formula.

This is not a matter of simply dotting the i 's and crossing the t 's; this is a matter that goes to the very heart of what this country is all about. If we make a mistake at this level and we do not address the root causes of unease and concern that are bubbling away below the surface, then we are asking for trouble. We are asking for serious threats to the very fabric of this nation and to the constitutional solidity of our country.

Today is a most interesting day for us to be debating third reading of Bill C-24, for having Parliament finalize debate on this legislation. Today is the day that our Prime Minister will be officially signing the side arrangements made with the provinces of Newfoundland and Labrador and Nova Scotia. Those deals run in the billions of dollars and were negotiated after the government bungled the entire process around equalization. Interestingly enough, we are here today to finalize Bill C-24 on such an occasion. This draws to everyone's attention just how flawed the process has been and just how wrong-headed our Prime Minister has been throughout this entire sorry saga in the history of Canada.

I want to quote from a CP article which appeared in March 2004 in a Winnipeg newspaper and probably in other newspapers across Canada:

Ottawa's equalization transfers--and its practice of special deals for some jurisdictions--could divide the provinces, says Manitoba's finance minister. “[It] could be perceived as a divide-and-conquer tactic”, Greg Selinger said in an interview. “If you keep doing specific, one-off side deals, even though each of them may have merit, you're really avoiding the overall issue”.

That says it all. That is exactly the kind of dilemma and the problems we are faced with today because of the lack of leadership by the government of the day. Here we are trying to finalize an equalization arrangement that will try to satisfy all provinces while the federal government at this very minute is signing side deals with a couple of provinces because it could not fix the problem at the very outset and deal with it appropriately.

Exactly what was prophesied is happening. Other provinces are asking where their side deals are. Saskatchewan has every right to ask, “How do we get in on this side arrangement dealing with natural resources?” New Brunswick is clamouring at the door. Ontario is questioning the whole process, and rightfully the province of Quebec has said that the whole process stinks and is tantamount to very serious divisions across the country, as if we do not have enough divisions already, as if we do not have enough wounds to heal and enough issues to deal with to ensure that the country is working together on a solid footing in the interests of all of its citizens.

It is a day of irony. We would be remiss in this debate if we did not point to the root of the problem and try to convince the government to use this opportunity in our history in terms of a minority Parliament, with such willingness to cooperate on all sides of the House, to reassess the damage that has been done and to commit itself to a much more positive and productive response to this situation.

As my colleague from the Bloc has done, I would also like to emphasize the importance of equalization. It is impossible to overstate the importance of the equalization process in terms of maintaining the Canadian identity. This is fundamental to who we are. It is part of our philosophy that says from each of us according to our ability to each of us according to our need. It is a philosophy that has permeated many aspects of parliamentary life and federal-provincial decision making over the years. It is at the heart of medicare and our national health care system, which is very much in danger today. There is a great threat to the loss of that fundamental program.

The principle is still maintained and Canadians still remain attached to those fundamental values of cooperation and community, of caring and sharing. That is the essence of who we are as Canadians and it is why the equalization process is so important.

There are many different reasons that equalization is important. I want to make reference to the Constitution and remind everyone of what we agreed to with the changes to our Constitution and the enactment of the Constitution Act, 1982. It states:

Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

Equalization is intended to secure horizontal fiscal equity to ensure that between provinces there is the capacity to generate broadly comparable revenues per capita without recourse to significantly higher than average levels of taxation. That is the fundamental principle of equalization. We need to remind ourselves of all those who fought so hard to get this principle enshrined in the Constitution, and in the way of doing business between federal, provincial and territorial governments.

A very important paper written by Errol Black and Jim Silver was prepared for the Canadian Centre for Policy Alternatives. I recommend it to all members as a very important contribution to the debate. The paper and its authors point out the following developments in our history pertaining to equalization.

First, they remind us that two decades ago the Parliamentary Task Force on Federal-Provincial Fiscal Arrangements reported that equalization was:

--variously described by witnesses before the Task Force as the 'glue that holds Confederation together' and 'a pillar of Confederation'.

The paper goes on to point out that in 2002 the Standing Senate Committee on National Finance stated:

We are united in our belief that this is an important, in fact a defining national program.

Furthermore the paper shows us that a recent academic study of the equalization program found:

The concept of equalization, enshrined in the Constitution Act 1982, enjoys almost unanimous support among Canadian politicians and academics.

Finally, the paper notes that the Economic Council of Canada reported that it considered the sharing of costs and benefits embodied in Canada's system of equalization payments to be one of the major foundations of Canadian nationhood.

This is the case whether we are talking about equalization in terms of nation building, or whether we are supporting equalization because it means citizens from one end of the country to the other are able to participate equally knowing that wherever they live, whatever they make, whatever their circumstances they are treated as equal citizens and are entitled to those resources to help them contribute fully and equally in society today, or whether we are talking about the social justice issues at hand. This reminds us that equalization should also be justified on moral grounds as a question of decency and social justice. That comes from constitutional authority David Milne who has been an outspoken expert in this area.

I could go on with all kinds of references to noted academics and experts in this field who point to the seriousness of the issues we are debating. They remind us of the responsibility we have as parliamentarians to do our utmost to make equalization work. Does Bill C-24 make sure that equalization is on a solid footing and that it works in terms of those broad principles and values that we hold so near and dear?

We have heard enough today to know that there are serious problems with this issue. The government has actually bungled the whole issue of federal-provincial relations vis-à-vis equalization.

The situation is hardly better than it was before the government sat down and forced a deal on the provinces. All the government has done is put off many problems that have to be dealt with at some point. By way of this legislation I guess we will get a chance in five years.

Goodness knows what could happen in five years' time. We may see more side deals struck between the Prime Minister and other provinces. All the more power to any province that can do that because it seems to be the only way that works with the government. The provinces have to fight for every little bit of turf because the federal government only works on the basis of the squeaky wheel.

The Prime Minister seems to bend every time there is a bit of pressure, as opposed to sticking firm to certain principles. His flip-flopping and dithering are becoming well known features of the Canadian political landscape. Nowhere is that more apparent than in the debate on equalization.

When we were debating this matter at committee and some of us were proposing amendments to the bill, it was suggested to us that this matter had been signed by the provinces, that it had been dealt with and that we had no business making any changes. We were told that the matter was over and done with.

It is fair to remind Canadians that in fact the provinces were dragged kicking and screaming into signing this particular arrangement.

Fiscal Arrangements ActGovernment Orders

1:25 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Read the communiqué.

Fiscal Arrangements ActGovernment Orders

1:25 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Madam Speaker, the parliamentary secretary has said to read the communiqué. Many wonderful communiqués have come out of dark rooms at the eleventh hour because there was no other way to move forward. We have seen that with health care. We have seen it now with equalization. Every time the government gets into a jam, it forces provinces to sign on to something that is less than what they wanted because the government says to take it or leave it.

We know how hard it is these days for the provincial governments to keep up with the demands they face when the federal government has spent the past decade off-loading, ditching responsibilities on to the provinces. It is no wonder that provinces feel they have to put their names to these documents and get something so they do not end up with nothing. Except the premier of Newfoundland and Labrador said, “Stuff it. I am not taking it,” and he walked. The rest is history with the signing of a side deal as we speak.

This issue points to a very significant characteristic of Liberal governments when it comes to dealing with these difficult issues. They are bullies. Liberals think they are born leaders, but in actual fact they are nothing but bullies. That is how the Liberals get the job done.

It is important for us to remind the parliamentary secretary and his colleagues that the Liberals have ignored the provinces on this file for years.

I want to go back to other documents to which the provinces had agreed but which the federal government chose to ignore. I refer to a September 2003 document put out by all provincial and territorial finance ministers called “Strengthening the Equalization Program”. What did they recommend? They recommended all the things we heard about today: a significant injection of funds to reflect the needs of the day; and a 10 province formula to ensure that we would not have this silliness now of side deals. If we had achieved some movement on a 10 province formula, we would not be dealing with these side deals on oil and gas revenue.

It is important to point out that as we look at the program before us with this renewal around a five year equalization program, with its limited cost of living increase of 3.5%, provinces will find that in very short order their needs will be again apparent and the government will have to act. It is unfortunate that we do not do things on a timely basis. The government cannot seem to deal with things as they emerge so that problems are solved before they become so much greater.

In this case we have a less than perfect bill. We did attempt to amend the legislation at committee. Unfortunately, any amendment to the bill pertains to money and that is out of order for us unless the government agrees to a royal recommendation. We tried to improve the bill in terms of its financial aspects but it was denied and the government was not willing to accept the proposition and bring it forward with a royal recommendation.

More specifically, the amendments we proposed at the committee level were initiated by ministers in other provinces, such as from my province of Manitoba which has played a significant and major role in this whole debate. One amendment proposed that we have a cost of living escalator built into the bill that would go beyond the straight 3.5% as enunciated in the bill and would move beyond and look at the growth in the GDP. That was a simple solution and it would have cost a bit more money but the money is available if the government is committed to ensuring that the surplus rolling in is put toward the needs of Canadians and not mysteriously disappear into the woodwork against the debt without debate in Parliament.

Parliament could decide how to divvy up this expected $9 billion, $10 billion, $11 billion, $12 billion surplus if government is prepared to come forward and say this is what it is, this is what we want to talk about and this is how we can solve some of these problems. We would recommend that some part of that go toward complying with the provincial demand that the escalator clause in the bill keeps pace with the growth in the economy and reflects the growth in our gross domestic product.

That is a reasonable expectation because provinces need that kind of guaranteed increase in order to ensure that they can meet the demands of the future. It certainly is costly but I want to point out to the parliamentary secretary that we are likely looking at something in the neighbourhood of one-quarter of a billion dollars per year based on Manitoba finance statistics. I know the parliamentary secretary likes to dismiss those numbers and suggest that they are wrong and he is right. However, based on experience, I would say everybody these days who is not in the federal government and the finance department is right and he is wrong, but that is a debate for another day.

I will conclude by saying that regretfully we will be supporting the bill before us because it is all the provinces could get out of the government. We know big challenges are ahead and we will continue to raise those issues. We will continue to fight for fairness in this county and an equalization process and formula that recognizes the inherent importance of such a concept in our constitutional affairs and in the definition of our national characteristic and identity.

Fiscal Arrangements ActGovernment Orders

1:35 p.m.

Scarborough—Guildwood Ontario

Liberal

John McKay LiberalParliamentary Secretary to the Minister of Finance

Madam Speaker, I am pleased to learn that the NDP has to support the bill, this bungled bill, this forced deal where the premiers were kicking and screaming.

It strikes me as more than passing strange that after three or four days of intense negotiation with the Prime Minister where we put into the formula stability, where we put into the formula predictability and where we put in enormous sums of money totalling $75 billion, including the health care, that somehow or another that deal was bungled and that they were kicking and screaming. It seems to me that somehow or another that insults the capabilities of all the premiers who were party to this agreement, that they were again just taken to the cleaners by the federal government.

If hon. members think that $10 billion this year, $10.9 billion next year and a 3.5% escalator is somehow or another getting taken to the cleaners and that this is a bad thing, then I suppose they would take the position of the hon. member that, somehow or another, when the Prime Minister finished with the health care deal of $41 billion and the equalization deal of $33 billion, he then turned to every premier in the room and said that he intended to enter into an arrangement with Newfoundland and Labrador and Nova Scotia before these deals were completed, and that not one of them raised an objection to the Prime Minister's intention to address the particular concerns of Newfoundland and Labrador and Nova Scotia, their difficulties with their debt to GDP and their difficulties with a declining demographic pace.

I put it to hon. members that there was no bungling. This was not a forced deal. It was entered into by the partners in Confederation and there was no kicking and screaming. A deal is a deal is a deal and it was all entered into by adults.

Fiscal Arrangements ActGovernment Orders

1:40 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Madam Speaker, it sounds like the parliamentary secretary is a little defensive in his comments today. I suppose he has every right to be defensive because he knows full well that provinces remain anxious about how the federal government is handling the files. Otherwise we would not have newspaper report after newspaper report, last week and this week, with provinces asking what is going on and asking why the federal government is not considering deals with all provinces that are in similar situations. Why would we have Saskatchewan saying that it wants the same deal as Newfoundland and Labrador and Nova Scotia? Saskatchewan says that it is good news for Newfoundland and Labrador and Nova Scotia and it expects it to mean great news for Saskatchewan.

Saskatchewan says that the difference in the treatment of natural resources between jurisdictions is unfair. A similar deal for Saskatchewan, looking back over the past 10 years, would have realized over $4 billion for the province if the federal government had not taxed back its oil and gas revenues. Saskatchewan said that it has told the federal government that it expects the same treatment for its energy resources as what is being provided to Newfoundland and Labrador and Nova Scotia. It says that it will tell the federal government until it receives fair treatment.

The government had an opportunity to resolve this issue many years ago. It was in the works. We knew that the present agreement was running out. It was time for the federal government to negotiate a new one. There was great agreement among the provinces. The provinces unanimously put forward a request for a 10 province standard that would recognize the volatility around natural resource revenues and the full inclusion of all provincial revenues and the calculation of equalization entitlement, in particular, revenue from user fees. That was all done, signed, sealed and sent to the federal government in September 2003.

A whole year after that, nothing happens within the federal government. Finally, we get down to the wire and it has to be locked away. The federal government put something on the table, for which there is no alternative. The province can take it or leave it. It said that it will do this for five years and renew it. Instead of coming up with a formula that works in perpetuity, the government once again comes up with a band-aid solution at the 11th hour that is not adequate and not fair.

Fiscal Arrangements ActGovernment Orders

1:40 p.m.

Bloc

Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Madam Speaker, I am pleased with the remarks by the New Democratic Party's hon. member for Winnipeg North. I am also very pleased that she is a member of the special subcommittee on fiscal imbalance which I have the honour to chair. The committee will begin its work in Halifax this week. I think she has a very fine understanding of public finances. On the other hand, the parliamentary secretary does not appear to understand all his files, especially equalization.

I have one question for the hon. member. She has proposed an indexation formula for equalization based on growth in the GDP. With her proposal, what would happen in a case where the GDP growth were less than the indexation factor of 3.5% provided in the first ministers' agreement? Would the provinces not be at risk of losing, in fact?

Fiscal Arrangements ActGovernment Orders

1:45 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North, MB

Madam Speaker, I thank my colleague for his question. I am going to answer in English because it is a very complicated issue.

We have presented the government with an alternative formula for ensuring some escalation in the bill that is based on growth in the gross domestic product and in line with economic growth as opposed to a straight 3.5%. We do not believe that would have a deleterious impact on the provinces or that it would cost so much as to be out of the range of federal fiscal capability.

We make our case based on the fact that the government saw fit to include in the bill dealing with health transfers, which is also before the House at the moment, an escalator clause of 6%. That seems to me more in order with the times and more reflective of the reality of the situation. Under no circumstances should it lead to a situation where provinces are getting less.

I think Manitoba has come forward with a well thought out plan. Why there is no support for it is again the federal government's unwillingness to spend properly or to meet the demand on a realistic basis, instead of always shortchanging the provinces, on top of the fact through the transfer payment system in general over the last 10 years we have seen so much money that has been lost in the federal to provincial transfers and where the federal government has off-loaded responsibility without commensurate increases in transfers. Whether we are talking about health, education, social assistance or some other program, we have a government that has created a fiscal imbalance.

It is for that reason that I think the committee, as proposed by my colleague from the Bloc, is so useful and which will be warmly received by everyone across the country.

Fiscal Arrangements ActGovernment Orders

1:45 p.m.

Conservative

Loyola Hearn Conservative St. John's South, NL

Madam Speaker, it is a pleasure to say a few words on Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act.

I listened intently to my colleague from the NDP. I agree with my friend from the Bloc who said that she raised some very pertinent points in relation to the whole matter of equalization. There are a lot of concerns about equalization. When we hear the word equalization, we think of equality and everybody being treated equally. We know this is not the case.

I was intrigued with one of the comments she made. She talked about the disarray leading up to the conference last fall and that a lot of provinces were not pleased with the final outcome. The parliamentary secretary yelled, “read the communiqué”. There is no doubt about the fact that at the end of any federal-provincial conference when an agreement is arrived at, even though it is one into which people might have been forced or even though it is one with which people do not totally agree, everybody comes out singing from the same hymn book. Reading a communiqué at the end of any of these meetings does not paint the picture.

What we should do is roll back the time to the weeks preceding the federal-provincial conference that dealt with equalization. Going into this conference, one wondered whether an arrangement or agreement could be reached at all. It was almost like anticipating what would happen when the NHL Players' Association and the owners got together. We had no idea. Everybody sat there hoping for an agreement so we could get back to some semblance of sanity on Saturday nights in Canada. Of course, it did not happen.

The provinces did get an agreement, but we certainly cannot compare them as apples to apples. The hockey players and the association can afford to push a hard bargain and wait until they get an agreement. The owners can do the same thing. In a case like this, the federal government might be able to sit back, wait and force an agreement, but the provinces could not. They had to accept the best deal that was offered.

Getting back to the communiqué, communiqués are very colourful. They can cover up a multitude of mistakes made during negotiations. That brings me to this morning.

This morning my province of Newfoundland and Labrador signed a very historic agreement, an agreement which will give my province, at least for a while, 100% of its share, not the total benefits from offshore which equates to about 47% of the total. The federal government and the country generally still take over half the benefits that come directly from revenue sharing on the offshore development.

This past fall before the conference on equalization all of us remember the concern expressed by the province of Newfoundland and Labrador. We remember the concern expressed by many members in the House, most of them on this side, that the agreement might never happen, that the signing, which we saw today, might never occur.

During the meetings on equalization and health care funding, the premier of my province, Mr. Williams, had to walk out of them because he was so frustrated with the way the Prime Minister had dealt with the commitments he had made. Not only did he walk out to draw attention to the mistreatment of the province by the government opposite, for a period of time the Province of Newfoundland and Labrador lowered the Canadian flag on all provincial buildings.

During that period, we saw almost consternation from the government opposite. It said to the people of the country that this was terrible. It said that if Newfoundland and Labrador wanted to negotiate a deal on the offshore revenues, the first thing it would have to do was raise the flags. Until then the government would not talk to a province that did not fly the federal flag over provincial buildings. We all listened to that. I thought of my colleagues to the left. They do not fly the Canadian flag over any of the provincial buildings, yet nobody receives more attention from the federal government than my colleagues to the left, the Bloc.

I have no problem with that. The Bloc can do whatever it wants. However, for a prime minister to say to any province that it has to fly the Canadian flag or the government will not talk it, or for him to close his eyes to another province, is not the way Confederation works. We are supposed to be in the Confederation. We are supposed to receive equal treatment from the government.

This brings me back to equalization and this morning, when the Prime Minister had the audacity to stand in front of the people of Newfoundland and Labrador. I will give him credit for coming through, signing the agreement and delivering on the commitment he made. He said, “I made a promise to the people of Newfoundland and Labrador and I have lived up to that commitment”. How hypocritical. The only reason the Prime Minister was in Newfoundland and Labrador this morning, signing an agreement with the province, was he forced into it by the province, first, and second, by the people on this side of the House, not on that side of the House.

The leader of the Conservative Party put into the election platform the commitment to the provinces that they would be the prime beneficiaries of the revenues from non-renewable resources. We are not talking about a promise thrown out in the middle of an election. We are talking about a solid, written commitment in our election document, our platform. That forced the Prime Minister into a corner. There were hurried late night meetings in Newfoundland and Labrador. He was told by his people there that either he made that commitment or the Liberals would be wiped out. At seven o'clock Saturday morning, he called the premier to say that he had accepted his offer.

Then when the Liberals won the election, we saw them back off. They were procrastinating. It was basically blackmail by the Minister of Natural Resources, who came in with an inferior deal and said that the province could either take it or leave it. Today, the people who did everything to keep us from getting that deal were praised by the Prime Minister as he took credit for delivering on his promise. He delivered on it because he had absolutely no choice. That is what is wrong our country, when we talk about equalization.

The member from the NDP is entirely right that provinces accepted a deal simply because there was no choice. It was shoved down their throats, up until now. Today turns things around. Never again will provinces, because they will follow the lead of Newfoundland and Labrador, have the federal government shove fiscal arrangements down their throats. From now on we will look for a fair share and if we follow the policies of this party, we can be sure to get it.

Eastern Ontario Drama LeagueStatements By Members

1:55 p.m.

Liberal

Peter Adams Liberal Peterborough, ON

Mr. Speaker, I rise to recognize the achievements of the Eastern Ontario Drama League and all the amateur theatres that it represents.

Eastern Ontario is a wonderful region, in part because of the work and creativity of this league. For example, the league's One Act Play Festival, an annual event, was held at the Peterborough Theatre Guild last fall. No fewer than 11 plays were presented in three days. These were samples of the fine theatre which enriches communities throughout our region.

Through festivals such as this, the league ensures that member theatres develop by experiencing the work of others. An adjudicator publicly critiques the performances so that everyone involved with the play learns something which they can apply in their home theatre.

The Peterborough Theatre Guild's play, The Lesson , directed by Cheri Verge, received an honourable mention.

I want to honourably mention and congratulate all the theatres and the league which so greatly enrich Eastern Ontario.

Sponsorship ProgramStatements By Members

February 14th, 2005 / 1:55 p.m.

Conservative

Brian Pallister Conservative Portage—Lisgar, MB

Mr. Speaker,

We watched as Judge Gomery said not a peep,While Jean deftly juggled his balls in his hand,The former PM showed the meaning of cheap,A petty and tacky, inelegant man.

Then came the new guy: once Treasury Board Chair,The question, “That money, now where did it go?”“I saw nothing, heard nothing, I wasn't there.”And one never asks if they don't want to know.

Golf Amateurs do it, but Pros never try,The Liberal game is improving your lie.

Jean meddled with BDC loans, we know why,Sacked the president; he would have followed the rules,But now the Shawinigan Street Fighter guyClaims that ad scam was “hands-off” and takes us for fools.

The PM a detail man when things go well,Micro-managed his way to the top of this town,But when leadership's needed, he hides in a shell,Knowing you cannot prove what is not written down.

Golf Amateurs do it, the Pros never try,The Liberal game is improving your lie.

Happy Valentine's Day to Canada.

Wal-MartStatements By Members

2 p.m.

Liberal

Mario Silva Liberal Davenport, ON

Mr. Speaker, last week it was announced that the world's largest retailer, Wal-Mart, had decided to close its store in Jonquière, Quebec.

This action followed the decision by employees to have a union represent their interests. After only nine days of contract talks, the giant retailer is closing its doors. Despite denials to the contrary, it is clear that the closing of this store, the first Wal-Mart outlet to close, directly flowed from the contract negotiations.

It is imperative that workers be protected from this kind of flagrant corporate injustice. When workers choose to be members of a union, they should not do so with the fear that their jobs will be lost in such a punitive manner.

Canadian workers deserve better. They deserve decent jobs with reasonable wages. They have the right to work in unionized environments without having their employers using the back door to avoid having to bargain in good faith.

We should all stand up for these workers in Jonquière and across Canada.

Benoît GaudetStatements By Members

2 p.m.

Bloc

Pauline Picard Bloc Drummond, QC

Mr. Speaker, the most impressive athlete at the Athens Olympic Games, boxer Benoît Gaudet of Drummondville, just turned pro.

Aged 25, Benoît has lived great moments in amateur boxing, achieving every target he had set for himself: participating in the world championships, in the Olympics, in the Commonwealth Games and in the Pan-American Games. He is a 10-time Canadian champion and, during his amateur career, he recorded 121 wins and 48 losses.

In a recent interview, Benoît Gaudet expressed disappointment with his Olympic experience and the corruption in the games' organization. He has now joined the organization run by Eric Lucas. His first pro fight is scheduled for February 19.

The people of Drummond are proud of Benoît, of his determination and success, and we wish him the best upon turning professional.

Réseau des femmes d'affaires et professionnelles de l'OutaouaisStatements By Members

2 p.m.

Liberal

Françoise Boivin Liberal Gatineau, QC

Mr. Speaker, on February 12, 2005, RÉFAP, the Outaouais business and professional women's network, celebrated the excellence of its members by holding its 18th gala, and did me the great honour of asking me to be the honorary president.

Through their magic touch, RÉFAP's president Nicole Boudreau and the members of her organizing committee, which includes Diane Lafontaine and Angèle Lord, made sure this would be an unforgettable gala.

Congratulations to businesswoman of the year Louise Cormier, the co-owner of Richer & Snow Jewellers. Congratulations to professional woman of the year Nathalie Charette, the director of the financial resources department of the Des Draveurs school board. Congratulations to Chantal Binet, a personal and professional coach, the recipient of RÉFAP's first self-employed woman of the year award. Congratulations to Lucie Tassé, who received the good-hearted woman of the year award in recognition of her commitment to Maison Mutchmore and to the Saint Vincent de Paul store.

I salute their vitality, determination and excellence. These women not only juggle work and family, but community as well.

FinanceStatements By Members

2 p.m.

Conservative

Charlie Penson Conservative Peace River, AB

Mr. Speaker, we are witnessing history being made by the Standing Committee on Finance. In response to instructions from the Speech from the Throne concerning the provision of independent fiscal advice for parliamentarians, the committee has launched a new forecasting process. It will be based on the most up to date fiscal and economic data. It will be free of the Enron-style tactics we have seen from the Minister of Finance.

Canadians are tired of the games that Liberal finance ministers have played with the budget estimates and fiscal forecasts. Their history of lowballing federal surpluses has robbed parliamentarians and the public of an informed debate on federal spending priorities. Canadians deserve better. The members of the Standing Committee on Finance are doing their best to ensure this budget debate will be different.

Veterans AffairsStatements By Members

2 p.m.

Liberal

Anthony Rota Liberal Nipissing—Timiskaming, ON

Mr. Speaker, today is Valentine's Day and across this country, Canadians are once again remembering our nation's veterans. As part of the Valentines for Vets program, Veterans Affairs Canada has received more than 4,000 valentine greetings which have been forwarded to veterans in long term care facilities.

This year's selection of valentines include poems and handmade cards submitted by classes in schools, organizations and individuals from all over Canada. Valentines received this year contain messages of deep appreciation such as, “Brave and courageous you were and continue to be after your service. You are the greatest part of this country and your efforts will never be forgotten”. Another wrote, “You fought in defence of a nation and I would like to thank you for that”.

These valentines make the day memorable for many of our veterans. The year 2005 is the Year of the Veteran. If people know a veteran, I encourage them to take the time today to thank them for their service to our country. Let them know that their valiant sacrifices will never be forgotten.

Lise-Florence VilleneuveStatements By Members

2:05 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

Mr. Speaker, I have learned with sadness of the death of Lise-Florence Villeneuve of my riding on January 24.

Ms. Villeneuve was a remarkable person, well known for her active participation in the expansion of the literary life of Laval and the region. She also volunteered for a number of years, promoting writers and poets from all over Quebec. She helped publish the journal Brèves littéraires and contributed to the development of emerging authors.

Her commitment won her the volunteer of the year award in 2000, when the City of Laval showcased her contribution to Laval's culture.

Ms. Villeneuve is mourned by her spouse, Réjean Hinse, her children, Murielle and Christian, and her sisters. I join with her many friends from the Société littéraire de Laval in offering my condolences to her family.

Anjou Peewee TournamentStatements By Members

2:05 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Mr. Speaker, I want to point out the huge success of the 29th edition of the Anjou national peewee hockey tournament.

Year after year, for 29 years, this remarkable tournament has been a gathering point where young people from all over Quebec and even further afield meet in healthy competition and camaraderie.

Quite a few National Hockey League players once skated in this prestigious tournament.

For all those who will not reach the major leagues, this event is still an enriching and unforgettable experience.

Without the dedication of organizers and other volunteers, these young people would not have such an opportunity to take to the ice and demonstrate their talent and energy.

And so, here in this House, I want to express my most sincere congratulations to all the players, organizers and volunteers in this unparalleled event.

Tsunami ReliefStatements By Members

2:05 p.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

Mr. Speaker, early this month I had occasion to meet with about 55 Tamil Canadians in my home community of Barrhaven and committed to take their concerns to the highest democratic chamber in the land: this House. They told me they support traditional marriage, they want the government to give child care dollars directly to all parents, including stay at home dads and moms, and they demanded fiscal accountability.

That is why today I rise to alert the House to growing accusations that millions of tsunami relief dollars have been misspent in Sri Lanka. The country's top aid distributor said government corruption has blocked aid from almost 70% of victims. Three officials have already been fired for mishandling money.

Canada should demand accountability. With nearly a million Sinhalese and Tamil victims, it is not enough to sign a cheque and walk away. I am proud to stand with Barrhaven's Tamil community in demanding accountability and justice for all tsunami victims.

Tim HortonsStatements By Members

2:05 p.m.

Liberal

Beth Phinney Liberal Hamilton Mountain, ON

Mr. Speaker, Tim Hortons was recently named winner of Marketing magazine's Marketer of the Year award.

Founded in Hamilton, Ontario in 1964, Tim Hortons has become a local cultural landmark and a visible symbol of Canada. Tim Hortons has grown to become one of Canada's largest chains of coffee and doughnut shops. With over 2,500 operations, it is firmly entrenched in our society.

The marketing award recognizes the company for its effective branding as a distinctly Canadian product. As Tim Hortons expands into the United States market, it remains grounded in its roots. Among many local initiatives, the Tim Hortons Children's Foundation provides thousands of underprivileged children the opportunity to attend summer camp each year.

On the eve of National Flag Day, let us celebrate all the things, such as Tim Hortons, that are authentically Canadian.

National DefenceStatements By Members

2:05 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, the hon. Minister of National Defence has become Canada's number one cheerleader for participation in star wars. He talks about our international reputation, our international commitments and our international obligations.

I would like him to tell that to the people of the James Bay coast who have been waiting for Canada to live up to its obligation to clean up the contamination his department left behind in the abandoned radar bases in northern Canada.

For 40 years the people of Peawanuk First Nation have been living with exposures to PCBs and chemical contamination. Nobody told them of the risk when DND walked away from those people.

We talk about deadbeat dads. DND is a deadbeat ministry. I am calling on the minister not to be a walkaway Joe. He has the fundamental, moral and fiduciary obligation to clean up the contaminated hunting grounds of the Peawanuk and Mushkegowuk Cree.