House of Commons Hansard #48 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was saskatchewan.

Topics

PetitionsRoutine Proceedings

3:15 p.m.

Liberal

Rose-Marie Ur Liberal Middlesex—Kent—Lambton, ON

Mr. Speaker, pursuant to Standing Order 36 I wish to present a petition on behalf of the constituents of Lambton--Kent--Middlesex. They are calling upon Parliament to protect the health of seniors and children and save our environment by banning the disputed gas additive MMT as it creates smog and enhances global warming.

PetitionsRoutine Proceedings

3:15 p.m.

NDP

Alexa McDonough NDP Halifax, NS

Mr. Speaker, I have the privilege of tabling a petition signed by Canadians in three provinces, Ontario, Saskatchewan and Alberta, in support of the continuing campaign to press the government to increase our overseas development assistance from the current shameful level of .28% to 0.7% of GDP.

It is a very important petition at any time, particularly on the eve of a budget.

PetitionsRoutine Proceedings

3:20 p.m.

NDP

Alexa McDonough NDP Halifax, NS

I wish to table another petition with many hundreds of signatures. The petitioners urge that Canada finally take a clear stand in saying no to any Canadian participation in Bush's missile defence madness and instead to concentrate on working with our partners in peace toward better arms control and an end to the production and sale of weapons of mass destruction and any materials used to build them.

Questions on the Order PaperRoutine Proceedings

3:20 p.m.

Beauséjour New Brunswick

Liberal

Dominic LeBlanc LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, a revised version of Question No. 57 will be answered today.

Question No. 57Routine Proceedings

3:20 p.m.

Conservative

Pierre Poilievre Conservative Nepean—Carleton, ON

With regard to the potential move of National Defence Headquarters: ( a ) has the government completed a business plan for the purchase or lease of the JDS Uniphase campus in South Nepean; ( b ) if so, for which departments; and ( c ) what are the specifics of this plan?

Question No. 57Routine Proceedings

3:20 p.m.

Kings—Hants Nova Scotia

Liberal

Scott Brison LiberalMinister of Public Works and Government Services

Mr. Speaker, PWGSC, as the custodian of the lands and buildings located at 101 Colonel By Drive, presently being occupied by National Defence Headquarters, developed a document entitled “Department of National Defence Accommodation Strategy in the National Capital Region”, in March 2004 which included a potential relocation of NDHQ functions presently being carried out at 101 Colonel By Drive, to the JDS Uniphase complex at 3000 Merivale Road. The Department of National Defence DND ultimately advised PWGSC that they did not need the building. PWGSC did not purchase this building because we have no client requirements to support this type of acquisition at this time. As long as the property remains vacant, however, we will continue to consider its availability in the analysis of accommodation needs of other federal departments.

Question No. 57Routine Proceedings

3:20 p.m.

Liberal

Dominic LeBlanc Liberal Beauséjour, NB

Mr. Speaker, I would ask that all remaining questions be allowed to stand.

Question No. 57Routine Proceedings

3:20 p.m.

The Speaker

Is it agreed?

Question No. 57Routine Proceedings

3:20 p.m.

Some hon. members

Agreed.

Motions for PapersRoutine Proceedings

3:20 p.m.

Beauséjour New Brunswick

Liberal

Dominic LeBlanc LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, I would ask that all notices of motions for the production of papers be allowed to stand.

Motions for PapersRoutine Proceedings

3:20 p.m.

The Speaker

Is it agreed?

Motions for PapersRoutine Proceedings

3:20 p.m.

Some hon. members

Agreed.

The House resumed from November 29, 2004, consideration of the motion that Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other acts (fiscal equalization payments to the provinces and funding to the territories), be read the second time and referred to a committee.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

3:20 p.m.

Conservative

Brian Fitzpatrick Conservative Prince Albert, SK

Mr. Speaker, this is a timely topic. Before I get to my speech, I want to give some kudos to the premier of Newfoundland, Danny Williams, and the premier of Nova Scotia, who have put up a good fight on an issue of principle.

Being from Saskatchewan I was very disappointed when listening to the Minister of Finance's comments and reaction to questions today that he is not going to extend this principle to all provinces right across the country. If we are going to fragment our country into pieces, and that is the way we are going to carry out equalization programs, we are heading for trouble. That is not the way to do it.

That is not the first time the minister has let the province of Saskatchewan down. He has let us down on farm programs. They are an absolute failure in the province. On the junior hockey issue, I heard the Minister of National Revenue today say that he is for fairness and for treating all Canadians equally. Well, tell that to the 10 or 11 junior A hockey teams in Saskatchewan that have been shafted by the Liberal government. The minister has not been a good news story for Saskatchewan.

The Minister of Finance said that Saskatchewan is a have province. I do not know what kind of wonderland paradise the minister of words lives in because I have a lot of problems with that categorization. The equalization plan as it is presently set out is full of major defects. It is a very poor instrument with which to measure true fiscal capacity. That is the very issue about which Newfoundland and Nova Scotia were fighting.

Academics have been extremely critical of the formula. They have been very critical of a formula that emphasizes in 13 out of 33 tax bases non-renewable natural resources. In Saskatchewan with uranium, potash, oil and gas, that is a good part of the province's tax base or revenue. The academics are from all regions of the country and their condemnation of that formula as being very defective has been almost universal.

The Minister of Finance must realize it himself. He is setting up a panel to study the issue and come up with some recommendations on it. I am amazed that he would not understand that problem, but he does not.

I want to make some points about Saskatchewan's fiscal capacity and the categorization by the Minister of Finance that Saskatchewan somehow is a have province. The best indicator of fiscal capacity is per capita income. Statistics Canada records show that the average per capita income in Canada, rounded off, is about $30,000. What is it in Saskatchewan? It is $25,000, which is $5,000 below the national average. The Minister of Finance says that Saskatchewan is a have province.

Manitoba, our sister province right next to us, has a million people, give or take a few thousand. It has about the same population as Saskatchewan. Under the current equalization formula Manitoba in the current year is to receive $1.433 billion in equalization. Saskatchewan will receive $71 million. The amazing thing about that, if we look at Statistics Canada statistics, is that Manitoba's per capita income is $1,500 higher than Saskatchewan's, but the Minister of Finance says that Saskatchewan is a have province.

This is a huge deficiency between two provinces that are quite comparable. We are talking about a difference in financing in the neighbourhood of $1.3 billion. I am not begrudging Manitoba; I am just saying the formula has to work for all provinces in the country and it is not.

Let us look at a few other indicators. The Fraser Institute just completed a study on health care and waiting lists. The average wait time in Saskatchewan from the time a person sees a general practitioner until seeing a specialist and to get a first treatment is 30 weeks. That is almost eight months. If a person's car broke down and the garage mechanic said to bring it back in eight months, the person would be very dissatisfied.

Manitoba's average wait time is 15 weeks, half the wait period that in Saskatchewan. Saskatchewan has the longest wait list for MRIs in the country, 25 weeks. Manitoba is 11 weeks, and there are other provinces in Canada where the wait list is as low as 5 weeks. We are the highest in these matters. That is another indicator. We are dead last when it comes to wait lists for health care, and it does not stop there.

Every time we have a farm safety net program in Saskatchewan, the provincial government pleads poverty. It says that it does not have the fiscal ability or capacity to pay its 40%. It goes on every year. It comes up with a whole lot of explanations why it cannot do it, but it basically boils down to the fact that it does not have the money to pay for those programs. I can see why. Look at the equalization plan.

This is another thing about which we should be concerned. Saskatchewan is very similar to Newfoundland and Labrador in other categories too. If we look at the net out-migration of people from provinces, Saskatchewan is second in the country for people leaving the province. Only Newfoundland and Labrador is higher, although I read a report which said that out of 22 year old people in Saskatchewan, we were the leader in the country. That just happens to be the year that most students graduate from the University of Regina and Saskatoon. Most of them, and I do not think I am saying anything out of turn here, move to provinces like Alberta, British Columbia and Ontario or cities like Calgary. In their minds, the province does not offer them opportunity in the future, not unlike Newfoundland and Labrador.

In many respects I reiterate what I said before. The Minister of Finance is letting the people of Saskatchewan down in a serious way. He knows better. He knows that the equalization formula has to be a national formula. It is in the Constitution. However, the intent of that is to provide all provinces with the fiscal ability to provide essential public services to the population. The records show that in health care, in agriculture programs, in highways and a whole lot of areas, the situation in Saskatchewan is deteriorating. It all boils down to a province that does not have the fiscal ability to meet those challenges.

Many people in Saskatchewan are viewing Danny Williams as their champion and their premier on this issue. They see the importance of this issue. I must confess that when I heard the announcement as a Saskatchewan person, I thought that was good news and that we would get that kind of treatment in Saskatchewan as well.

However, all I get is a bunch of bafflegab from the Minister of Finance. He comes up with all sorts of arguments. If I heard him today, he said that we were getting $600 million on this and $140 million on that. I have read the Department of Finance releases on documents on this matter. In this current year, we are getting $77 million. That is the Department of Finance figure. Manitoba is getting $1,433,000,000 this year. On a per capita level, that is $77 per person in Saskatchewan and in our sister province, Manitoba, which is basically I think in the same fiscal boat as Saskatchewan, it is $1,433 per person. When we look at it on a family basis, it is something like $6,000 in Manitoba and $280 in Saskatchewan.

No wonder the wait lists in Saskatchewan are the highest in the country. No wonder the highways are falling apart. No wonder the agriculture sector is in a disastrous state of affairs. Quite honestly, we have been using creative financing in Saskatchewan. I am quite sure if truth were known, we have run up huge fiscal deficits in the province over the last two or three years. We are running out of money. The province has a $12 billion accumulated debt, not unlike the problems that Newfoundland and Labrador has.

I would think the Minister of Finance would understand the strongest argument for removing the clawback on the development of non-renewable resources. Why would he not want Newfoundland and Labrador and Saskatchewan to be like Alberta, which has developed a very strong economy around its non-renewable resources? In every other fiscal measurement, personal income, property taxes, corporate tax capacity, growth in the economy, employment and all the other indicators of fiscal capacity, it has built its economy around that. It has a very prosperous economy and is a have province. It is not dependent on the federal government for anything. It is a net contributor to Confederation.

Why would we not want to set in place a formula that encourages Saskatchewan, Newfoundland and Labrador and other provinces to follow that same path, to become prosperous, self-reliant contributors to the Canadian mainstream, and to become a destination point for investment, people, jobs and all the other things? Because the Liberal equalization policy says that this is dangerous. The government wants to keep them under its thumb. It wants to keep them dependent on it. It wants to punish them for trying to create jobs and having people become self-reliant and independent people in the country. It is a dangerous concept.

The Liberals believe in this big Ottawa bureaucracy where they like to keep people under their thumbs. I guess for political reasons too they like to use their fear tactics to try to scare people into becoming more dependent on their programs and approach to things.

I am profoundly disappointed with the Minister of Finance. I would have thought, given his background and his knowledge and given he was born and raised in Avonlea, Saskatchewan, he would have a real appreciation of the problems Saskatchewan faces and the problems of the equalization formula. I would have thought he would be the champion of this issue. He is in a position, as Minister of Finance, along with the people who make the rules on this thing, to take the bull by the horns, to use a Saskatchewan phrase, and get this problem fixed. However, he is not doing that.

The Minister of Finance has given us the same answers he has given us on the junior hockey issue. We have 10 junior A hockey teams that have been punished by the revenue department, which has imposed taxes on those teams, but not on 120 other teams across the country. He has done nothing to rectify that problem. Ten communities have appealed to him to address the issue. I hope he will do it in this budget, but I am not optimistic. We have a private member's bill on this, but he has given no indication he will support that. I am not enthusiastic about his approach to nation-building.

I would like to make another comment on the whole topic. We talk about building a strong, unified Canada from coast to coast. The equalization concept is a part of our Constitution. It was intended to be national in scope and to treat Canadians fairly from one end of the country to another. What the Minister of Finance has done with his concept is chop it up. He has an equalization formula that is unique for one area and an equalization formula that is unique for another area. Nobody can really look at any basic principles across the country and say that this is the formula, that it is fair and a true measure of fiscal capacity and that it is fair for everyone. These are the sorts of things people look for from the Liberal government.

Another point is, why during the heat of an election, would a prime minister go into the province of Newfoundland and Labrador and make a firm commitment to the premier, acknowledging that the clawback on non-renewable resources, on oil and gas is wrong, that if he becomes prime minister, he will totally eliminate the clawback? He made that firm commitment, but then the premier had to fight and use everything in his tool chest to try to get the Liberal government to live up to the commitment. It is a disgraceful way to run a country. The only reason the government has accommodated Newfoundland and Labrador and Nova Scotia on this is because the bulldog tenacity of Danny Williams forced it to live up to its promise, and I commend him for doing that.

When the Prime Minister made that promise in Newfoundland and Labrador during the election, he not only made that commitment to the province but, as Prime Minister of Canada, he made that commitment to every province. If he is going to change the rules about equalization, he is changing them for all the provinces, not just one.

I am thorough disappointed that the government has apparently decided to change the formula for Newfoundland and Labrador and Nova Scotia, but yet tells a province like Saskatchewan that the changes made in the formula will not apply to the province. That is a very disappointing approach to fiscal federalism in the way the government deals with things.

I want to point out the disparity also between different provinces. I like to use Manitoba because Manitoba and Saskatchewan are quite similar. I know both provinces. I do not want in any way to construe this as being a negative against Manitoba. It has its own challenges as well.

Going back over the last 10 or 11 years and looking at the Liberal equalization formula and how the government has dealt with those two provinces, the average discrepancy in equalization payments between Manitoba and Saskatchewan is $800 million a year. That amount over a 10 year period works out to something like $9.6 billion. That is a difference between two provinces that are relatively the same in fiscal capacity. Saskatchewan has a $12 billion deficit. When compound interest and everything else is factored in, it could have virtually eliminated its public debt if the equalization formula had been a fair formula and the clawback on non-renewable resources had been there.

To show how crazy this formula is, I will point out some calculations under the equalization formula. For every $1 of revenue that Saskatchewan received from oil and gas, the federal government clawed back $1.50 under equalization. If the political masters in Saskatchewan look at the merits of equalization, they will ask why should the province develop its natural resources? Why should the province create jobs in that sector and try to build its economy when the federal government clubs it over the head on equalization? It is a losing proposition for a province to try to develop its natural resources.

Saskatchewan has other non-renewable resources on which an economy can be built. Saskatchewan has probably half of the world's uranium. I actually do believe that uranium has a major place in this energy starved world, a world dominated by air and water pollution. Atomic power will be part of the equation, whether the chattering class agrees with me or not. Saskatchewan has the world's largest deposits of potash.

Another thing I disagree with on targeting non-renewable resources is the fact that they are non-renewable. They will run out some day. If the provinces that have non-renewable resources do not build the right kind of economic climate and foundations, then they are in trouble when those resources run out, whether that province is Newfoundland and Labrador, Alberta or Saskatchewan.

Anybody in government who decides that we should target non-renewable resources as the foundation for our equalization formula should put on their thinking cap. It is a bad approach. There are a whole lot of people who are a lot smarter than me who have looked at this topic and they condemn a formula that emphasizes non-renewable resources to the extent of this current formula.

I guess the folks back in Saskatchewan will be very disappointed with a Minister of Finance who says that this new accord with Newfoundland and Labrador and Nova Scotia will not apply to them or to any of the other provinces in Canada.

The farmers in my area are desperately looking to federal and provincial governments for some increased fiscal capacity to address their challenges. They are up against the wall. This will not be good news for anybody in Saskatchewan. I am supremely disappointed with the minister's words and his approach to this whole matter.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

3:40 p.m.

Bloc

Guy Côté Bloc Portneuf, QC

Mr. Speaker, I thank our colleague for his presentation. If there is one thing this government is particularly good at, it is creating general discontent in all of the provinces. They are very adept, in fact, at stirring up discontent just about everywhere in Canada.

The hon. member has given a very good explanation of the past and future effects of the new equalization agreement with Saskatchewan. The government refuses to acknowledge the fiscal imbalance.

Does the member think that finding solutions to the fiscal imbalance might improve the situation, for Saskatchewan in particular, in the context he has just described?

Federal-Provincial Fiscal Arrangements ActGovernment Orders

3:40 p.m.

Conservative

Brian Fitzpatrick Conservative Prince Albert, SK

Mr. Speaker, I have to agree with my Bloc colleague's comment about the fiscal capacity. The programs, which governments deliver to the people, the ones that really count in my area, are things like education, health care and highways. Those are the bread and butter programs that are delivered to people. There are a whole host of areas such as social services, environmental protection and game management.

When people think of government, they generally think of their provincial governments but these are very expensive programs to deliver. In a province like Saskatchewan we do not have the fiscal ability to really deal with these matters, which is why we have the longest wait list for health care in the country. It is disgraceful and, in my view, it is almost a violation of the Canada Health Act.

We do not have the fiscal capacity but Ottawa has lots of money. The government had $4 billion to spend on a Kyoto study but does not even have a plan for implementing it. It blew billions of dollars in the HRDC boondoggle. It has squandered goodness knows how many billions of dollars on the gun registry. It almost boils down to corruption. The sponsorship program would be one that comes to mind.

We have all this money in Ottawa and it is being squandered and wasted on low priority items while the provinces have to struggle with real problems and real demands from the Canadian public. I totally agree with the member.

I also want to portend an argument for my friends from Quebec. I know right now Quebec does not have a lot of these non-renewable resources but I know the province has a lot of potential. A lot of mining activity is going on in the province that is looking very promising, such as diamond mining. In the Gaspé area, a lot of people in the oil and gas industry are talking about the potential of that province having a great deal of oil and gas in the future.

It is not just something for the present for provinces like Saskatchewan that have resources in this area. It could very easily be that Quebec could be sitting on a whole lot of very valuable non-renewable resources and it will be its turn to be punished under this formula as well. It is something that every province in the country should be thinking about. It is bad policy and it definitely creates a huge fiscal imbalance. I agree with my Bloc member 100% on this issue.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

3:45 p.m.

Bloc

Guy Côté Bloc Portneuf, QC

Mr. Speaker, Bill C-24 implements the results of the conference on equalization held on October 26, 2004, results that were imposed upon Quebec and the provinces by this federal government. We are going to vote against this bill.

Why are we going to vote against it? For a number of reasons. First of all, Bill C-24 does not in any way correct the fiscal imbalance. The funds available, considerable though they are, will not solve the problems, as they are still far from enough.

Second, there is no in-depth reform of the equalization program, so the problems that have been pointed out, by Quebec in particular, are still there and will continue. Worse yet, the proposed changes to the equalization program will potentially worsen the fiscal disparity between the provinces.

Certain specific agreements have been negotiated by the federal government, with Newfoundland and Nova Scotia for instance, but these are not covered by the bill. As a result there is a major problem of unfairness and the very spirit of equalization is being violated.

The very essence of this bill is flawed. Indeed, this agreement includes, among other things, an allocation formula between the provinces that is unchanged. This bill includes an individual threshold provision to guarantee that no province will get less than what had been estimated at the time of the 2004 budget. While this may seem interesting at first glance, it is always difficult—and the Minister of Finance is an expert when it comes to underestimating—to come up with accurate estimates.

In fact, under Bill C-24, Saskatchewan and British Columbia are the only ones that benefit from this measure, to the tune of amounts estimated at $581 million and $191 million respectively.

For the second year of its implementation, the bill sets out the equalization payments to be made to receiving provinces under the program. In the case of Quebec, for example, we are talking about $4.798 billion, or 44.2% of the total amount. What is rather peculiar is that the allocation between the provinces has already been definitely determined—and the term “definitely” is key here—for a fiscal year that will end in March 2006. However, we all know that the relative economic situation of the provinces does not necessarily evolve in accordance with the forecasts.

In light of the lack of accuracy of federal budget forecasts, how can this government claim to do better when it comes to the provinces? Once again, we are dealing with a federal government that claims to know the affairs of the provinces and of Quebec better than its own jurisdictions.

Third, under this bill, overall funding will increase by 3.5% for the year 2006-07, and for each subsequent year. I should point out that this is by default. A group of independent experts will conduct a review to re-examine the allocation and determine if adjustments should be made.

This committee will give advice to the government, but will not have the authority to change the overall amount. It will merely be consulted. It is the federal government which will continue to make all the decisions. When it comes to equalization, we are far from stable and predictable funding. Again, this government will make unilateral decisions, and that is very unfortunate.

As I mentioned earlier, the bill is far from solving the fiscal imbalance issue. Yet, during the last election campaign, the Prime Minister said he would launch a new era of cooperation with the provinces. The bill before us does not fulfill that objective.

The government had even agreed to amend its Speech from the Throne to include a part on the fiscal imbalance, as we call it. They call it financial pressure. Everyone but the government calls it fiscal imbalance. In its Speech from the Throne the government agreed to correct it. Bill C-24 fails to do so.

The Prime Minister has proven it. The election is over and there are no more fine speeches. He has imposed his priorities, choices and methods on the provinces despite some serious resistance. The Prime Minister did not take any account whatsoever of the true needs of Quebec and the provinces.

No change was made to the calculation method that penalizes Quebec and results in unstable and unpredictable payments.

Furthermore, the Prime Minister not only did nothing to resolve the fiscal imbalance, he still refuses to acknowledge it. Yet, a few moments ago, the Conservative colleague made reference to it: Ottawa is up to its neck in surpluses. We are talking about $60 million in surplus since 1997-98. According to the Conference Board, these figures have been raised often in this House. Bear in mind we are talking about some $166 billion by 2015. I am sure that if we updated these figures, the amount would be even higher.

In the meantime, the provinces—except Alberta—are no longer able to pay for their public services properly. A very large portion of funding in the provinces and Quebec goes to health, a very important sector, and the provinces and Quebec have great difficulty funding their other obligations.

Again, the Conference Board estimates that by 2015, the combined deficits of Quebec and the provinces will be $68 billion, another good example of the democratic deficit the Prime Minister talks about .

The democratic deficit is also a political imbalance because the government does not look after its own areas of responsibility. It can barely handle its own as it is. It is busy interfering more and more in areas under the jurisdiction of Quebec and the provinces.

From 1997-98 to 2000-01, we estimate that Ottawa spent nearly $16 billion on new initiatives in areas under the jurisdiction of Quebec and the provinces. That is outrageous. In 2003 alone, intrusions represented $81 billion, or 44% of federal spending and 55% of the government's operating expenditures. Nearly half of the spending of this government, which claims to be a federal government, was directly in areas under the jurisdiction of the provinces and Quebec.

How could we support this bill after all that I have just demonstrated?

Not only is Bill C-24 inappropriate, but the government itself is indirectly acknowledging it. How? It is acknowledging it by signing specific agreements with other provinces. Following a basely election-minded promise and an inappropriate agreement on equalization, the government had no choice. So, on January 28, the government entered into an agreement on oil revenues and equalization with Newfoundland and Labrador and Nova Scotia.

Even that agreement recognizes that Bill C-24 does not work. Under it, Ottawa will reimburse the two provinces for any loss in equalization due to offshore oil revenues until 2012. It represents a huge amount. Naturally, we are delighted for the people of Newfoundland and Labrador and Nova Scotia. We wish them all the best.

Still, we are talking about approximately $2.6 billion for Newfoundland and Labrador between now and 2012, of which $2 billion will be paid immediately in 2004-05. As for Nova Scotia, the amount involved is $1.1 billion, of which $830 million will be paid immediately. For 2004-05 alone, the amount paid to Newfoundland and Labrador will represent $3,868 per capita. For Quebec, this would mean $29 billion.

If Bill C-24 were really great, there would have been no need for an agreement on equalization. Moreover, it is an unfair agreement. Equalization was designed as an equity measure, to ensure that the provinces could provide comparable services. As they becomes more prosperous, equalization declines, and that is how it should be. The principle of equity is thrown into question by this agreement.

While Newfoundland and Labrador and Nova Scotia can get rich without having their equalization payments cut, Quebec's equalization payments are cut whenever it receives hydroelectric revenues. Is this normal? I think not. We have said it a number of times in this House: the solution lies in resolving the fiscal imbalance.

I cannot wait for June 2, when the Standing Committee on Finance's Subcommittee on Fiscal Imbalance will issue its report.

There are ways to resolve these problems. One of them is to abolish the CHST; in other words, transfer responsibility for the GST or personal income tax to the provinces.

That way, the provinces could secure more stable funding and pick their own priorities. Consequently, they would not be driven by the federal government which can change things almost at its own discretion.

However, since the reality is the equalization program does exist, it has to be improved. Bill C-24 does not meet these objectives. Why does this bill not take into consideration the fiscal capacity of ten provinces, commonly called the ten-province standard, instead of just five, as is currently the case. Why are the floor and ceiling provisions not eliminated in this bill. It would be much fairer.

The government must fully respect the representative tax system approach. This means that measurements of fiscal capacity must be based on reality and not on current estimates that can change over time. Otherwise, we end up in situations where overpayments might be made and then Quebec and the provinces have to make repayments.

Of course, this does nothing to foster balanced budgets in Quebec or any other province. This is exactly the situation in Quebec City, where the finance minister, Mr. Séguin, is trying to square the circle and, unfortunately, he will find it very difficult to make ends meet.

Many of the problems of Minister Séguin in Quebec are the direct result of the actions of the federal government, which does not take into consideration the real needs of the citizens who benefit from services provided by the provinces, specifically Quebec in the case that I am referring to.

Earlier, I mentioned the ad hoc agreement reached with Newfoundland, which also opens the door to injustice. Since revenues will be assessed by using a different formula from one province to the next, we can only arrive at results that do not accurately reflect the tax resources of each of them. Consequently, we are making equalization payments that do not meet the objective of equalization. Yet, this objective is simple: it is to ensure, through taxation, that the quality of public services is at a comparable level from one province to the next.

The Bloc Québécois, like the Séguin Commission, feels that ad hoc solutions create problems of fairness between receiving provinces and that they go against the spirit of the program. This program should normally smooth out the relative disparities between the provinces, not increase them.

As I mentioned earlier, the agreement proposes to arbitrarily exclude certain revenues, but not others. On what basis? We are not quite sure. The provinces have their own sources of revenue, including natural resources, energy, income tax, property taxes and commodity taxes. In order for the equalization program to be fair, all of these revenues must be taken into consideration. They also include royalties from mining or oil activities, and revenues from hydro dams.

Under this agreement, when it comes to calculating equalization payments, offshore oil revenues are not taken into consideration, but revenues from mining or hydroelectricity continue to be taken into account. This is not fair to Quebec. This is not a good agreement for Quebec which, incidentally, is not the only loser. Earlier, an hon. member mentioned that Saskatchewan also has problems with this agreement.

Bill C-24 does not at all alleviate the concerns that we are expressing in this House. This is unfortunate. Despite the fact that this is a minority government, all too often we feel that it is not listening to the other parties in this House.

This is unfortunate. However, we remain hopeful. We repeatedly tell them what Quebec's needs are. We repeatedly tell them what the real concerns of Quebeckers and Canadians are. We remain hopeful that, one day, they will understand.

We must not forget that this agreement gives subsidies to the oil-producing provinces. We have talked a great deal about the Kyoto protocol and its implementation. It is an example of misrepresentation by this government that, on one hand, claims to promote the Kyoto protocol and its implementation and, on the other, through special agreements, gives subsidies to the oil-producing provinces. As a result, the bill is paid by those provinces that generate hydroelectricity, a much cleaner energy source. So, once again, we come back to the polluter-paid principle and not the polluter-pay principle.

This agreement is not satisfactory for any of the provinces. Bill C-24 does not work. What do we have to do to get them to open their eyes? This agreement does not resolve the real problems of the equalization program. The current equalization formula is inadequate in terms of both its objective and its operation because the standard is inadequate. Ottawa does not take into account the revenue of all ten provinces. Thus, the average revenue is artificially lowered.

As a result, the recipient provinces have $297 less per capita than the average of the ten provinces to deliver public services. Equalization is, however, supposed to make things essentially comparable. The widest gaps are not taken into account, so the average is skewed.

Ottawa does not gauge revenues properly either. To take property tax revenues as an example, rather than measuring the tax base according to property values, the federal government has arbitrarily invented a complex formula that takes into account a whole set of economic and demographic variables.

For example, in Quebec in 2002 the residential real estate wealth per capita was $30,621. Using the federal formula, which is complex, convoluted and all but obscure, Ottawa assesses it at $71,406, 133% higher. Naturally, equalization payments are reduced accordingly.

The Minister of Finance has the nerve to tell us “Oh my, we have an unexpected surplus. We did not see it coming”. Yet when we look at calculation methods like those, we should not be surprised that the federal government has money coming out of its ears, so much so that it does not know what to do with its revenues and so takes it upon itself to interfere in areas that are the provinces' and Quebec's jurisdiction.

It is the same thing for other types of revenues, so much so that Ottawa's creative calculations no longer reflect the provinces' fiscal capacity in any way. What is more, the overall amount is clearly inadequate. In fact, calculation of the amounts of equalization does not reflect the reality of provincial tax revenues. Ottawa leaves half the provinces out of its calculations, as well as not taking all revenues into consideration, and assesses them wrongly.

This is the recipe for a financial catastrophe, and unfortunately that is just what is shaping up in the various provincial legislatures and in Quebec. Bill C-24 is badly put together and does not meet the needs of the provinces and Quebec. I will be very pleased to vote against it.

Committees of the HouseRoutine Proceedings

4:05 p.m.

Liberal

Don Boudria Liberal Glengarry—Prescott—Russell, ON

Mr. Speaker, on a point of order.

Earlier today, I tabled a report by a parliamentary committee concerning changes in the membership of certain committees. Unfortunately, I did not obtain leave for concurrence at that time. With leave of the House, I move that the 23rd report of the Standing Committee on Procedure and House Affairs, presented to the House earlier this day, be concurred in.

Committees of the HouseRoutine Proceedings

4:05 p.m.

The Deputy Speaker

Does the hon. member have the consent of the House to move the motion?

Committees of the HouseRoutine Proceedings

4:05 p.m.

Some hon. members

Agreed.

Committees of the HouseRoutine Proceedings

4:05 p.m.

The Deputy Speaker

Is it the pleasure of the House to adopt the motion?

Committees of the HouseRoutine Proceedings

4:05 p.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of the motion that Bill C-24, an act to amend the Federal-Provincial Fiscal Arrangements Act and to make consequential amendments to other Acts (fiscal equalization payments to the provinces and funding to the territories), be read the second time and referred to a committee.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

4:05 p.m.

Bloc

Mario Laframboise Bloc Argenteuil—Mirabel, QC

Mr. Speaker, I want to commend my colleague from Portneuf—Jacques-Cartier for his excellent speech on equalization and I want to ask him a question.

Earlier, on the calculation of equalization, my colleague referred to the value of Quebeckers' properties and the fact that the federal government has overvalued them. It is a terrible situation. Quebec has not always received equalization. For a long time, Quebec was not among those receiving equalization.

How did this happen? I want my colleague to clarify this a little. One of the reasons—and I want to know if he agrees—is that far too often the federal government has allowed Quebec's natural resources to be processed outside Quebec, in Ontario for the most part, which is terrible.

Now, when it comes time to discuss equalization, the Premier of Ontario washes his hands of it. He says Ontarians pay a great deal. In any event, he is not the one who pays. It is an equalization system that was established in the Canadian Constitution. It was set up at the time to get the provinces to accept the Constitution. That is how this happened.

Unfortunately, Quebec has now been drained of all its good jobs. Although Quebec is one of the largest producers of aluminum and magnesium in the world, the auto industry is disappearing from the province. The GM plant in Boisbriand closed, as did the parts manufacturing companies, what with the industrial cluster being set up in Ontario.

I could go on about other sectors where Canada allowed Quebec's natural resources to be processed elsewhere, often with support from federal aid programs. Just look at the latest instance, before the election, when $500 million was granted to the auto industry just after the GM plant closed in Boisbriand.

Now there will be a dispute over the fact that Quebec wants its fair share of equalization and its wealth to be calculated on true values. A problem is brewing in Canada. We can try to pass bills to solve it, but many Quebeckers know that the only way to get justice is to separate from this country.

Federal-Provincial Fiscal Arrangements ActGovernment Orders

4:05 p.m.

Bloc

Guy Côté Bloc Portneuf, QC

Mr. Speaker, I thank my hon. colleague for his excellent question. Sadly, I am forced to agree with him. We have been witnesses for a very long time—and I believe this sincerely—to a weakening of the Quebec state for the sake of promoting federalism.

Forgive me for not remembering the exact quote but, in our party, we all recall a federal minister saying, “We are going to hurt them. They will not vote for sovereignty”.