Debates of March 22nd, 2005

Supply

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I believe the arithmetic that the hon. gentleman is using is arithmetic which, for the purposes of the argument, eliminates the impact of non-renewable resources in the calculation of the figures. This is one of the thorny questions the expert panel will have to grapple with.

In my experience over the last number of years, there have been three issues in particular that have bedevilled the equalization system and have raised questions of equity, not just involving Saskatchewan but involving a variety of other provinces. The first is the treatment of property taxes. That hits in different ways in different parts of the country. The second is the extent to which user fees are considered to be sources of revenue and therefore are or are not included in the formula. The third is natural resources, both renewable and non-renewable.

Because we recognized the complexity of all of this and the issues that cut in such different ways in different parts of the country, we started to reform the equalization system last year. We did this first by making more money available to it, putting a floor under it to try to give every province a leg up while we were going through this period of transition. We also created a panel of impartial, non-partisan, independent experts. I mentioned their names in my remarks. They will do the government, the opposition and the whole country, including all of the provinces, a great service by analyzing these bedevilling questions and giving to all of us the best advice about how to fix this incredibly complex formula and to do so in the interests of Canadians everywhere.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, first, I want to thank my Conservative colleagues for this opportunity to discuss the important issue of equalization.

I listened carefully to the speech by the Minister of Finance. I think some of his information is inconsistent, particularly when he said, “We have taken note, in the past, of problems with the equalization formula. We have started to make corrections, to fix the inequities and to consider all the provinces as equal”. I must tell him that if we are questioning, now, the equalization formula and the special agreements with the provinces and if we are debating the pros and cons of such agreements, it is thanks to the Prime Minister and the Minister of Finance, and I do not mean that in a good way.

During the election campaign, when the current Prime Minister thought the rug was being pulled out from under him, when he felt the power slipping through his fingers, he travelled across Canada making lots of absurd promises and commitments.

One such commitment was to Newfoundland and Nova Scotia. During the election campaign, he promised that offshore oil and gas resources would be exempt. He knew quite well—or if he did not know, he is completely missing the boat—that he would create huge distortions in the equalization formula, if he carried through on his commitments, as in the case of the special agreement of $2.6 billion over eight years he concluded with Newfoundland on January 28, and another one for $1.1 billion over the same period with Nova Scotia.

By doing so, the Prime Minister and the Minister of Finance have created an extraordinary precedent. Obviously, amendments to the equalization formula have been made since 1957. Changes have been made for example to the revenue sources, part of the formula which determined how much equalization each province is entitled to. Some revenue sources were added, others were eliminated. At one point, the formula was based on a 10-province standard, and then on a 5-province standard. However, this kind of special agreement is unprecedented. This generosity of this agreement is also unprecedented.

This agreement totally altered the objectives of equalization as set out in subsection 36(2) of the Constitution. I will remind the Minister of Finance of this, if I may, since I have the impression sometimes that he does not fully understand what the program is all about. Subsection 36(2) of the Constitution says that equalization aims “to ensure... reasonably comparable levels of public services at reasonably comparable levels of taxation.”

The preamble to providing “reasonably comparable levels of public services at reasonably comparable levels of taxation” is to treat each province consistently fairly, based on a single formula. That is the principle of equity.

Parallel agreements that exclude offshore oil revenues, one of the 33 revenue sources used in evaluating the fiscal capacity of each province, that is the wealth of the province and its capacity to provide quality services at more or less comparable levels of taxation, skew the calculation.

This is the case for two provinces in particular, so the whole formula is skewed. The objectives of the equalization formula, objectives set out in subsection 36(2) of the Constitution have been skewed, and we are being told this is a first step to improvement. There has been no first step to improvement. It is a total travesty of equalization and its objectives, so much so that even Ontario is now complaining about it.

A week and a half ago, we were in Toronto in connection with the committee on fiscal imbalance, which I have the honour to chair. Ontario finance minister Greg Sorbara told us that, since this agreement, Ontario has been questioning its participation in the federal tax base and Canada wide programs. It is not that Ontario no longer wants to contribute to these programs, but rather it feels that, in a great gesture of generosity, with a specific agreement like this one, the government has undermined one of the basic principles of the equalization program, which speaks of equity.

There is no more equity. The Prime Minister has gotten us into an unprecedented mess. Such a mess that, instead of lessening the inequities between provinces and reducing fiscal imbalance, horizontal as well as vertical, the Prime Minister and the Minister of Finance have heightened disparities.

Let me illustrate the financial magnitude of this agreement with Nova Scotia and Newfoundland and Labrador. Huge amounts are involved. Equalization is paid per person, that is to say, on a per capita basis. If we take the amount that will be provided to Newfoundland and Labrador, for example, namely $2.6 billion over eight years, including $2 billion immediately from the Minister of Finance's surplus for the 2004-05 financial year, and apply it to Quebec on a per capita basis, the payment—listen to this—would be $38 billion over eight years for the Government of Quebec. That is if the generosity of this agreement with Newfoundland and Labrador is taken into account.

It is so generous and it so upsets the delicate financial balance of the equalization formula and its concern for inter-provincial equity that at the present time—it can be seen and we have heard it from Mr. Sorbara and from Messrs. Audet and Séguin in Quebec City—at this very moment, if this agreement is taken into account, the fiscal capacity of Newfoundland and Labrador has surpassed that of Quebec, of course, but Ontario's as well. The term fiscal capacity refers to the ability to generate revenue from property taxes, individual income taxes, the GST, etc., in short, the 33 sources of user fees and taxes taken into account in the equalization formula.

It is hardly surprising that Mr. McGuinty and Mr. Sorbara have come out saying that this no longer makes sense. One cannot have special agreements like this, which upset and completely mess up a system that the government wants to improve. Instead of the system being improved, it has been messed up even more than it was. It can hardly be said that corrective action was taken when everyone revolts and wants to have special agreements like this.

Is the federal government not teetering on the edge of a slippery slope here and at risk of losing its balance because of this special agreement? Instead, a comprehensive approach to and reform of equalization and taxes and comprehensive reforms of them.

In fact, the equalization debate is actually part of a broader discussion about the fiscal imbalance. Everybody can see it in Canada, from Halifax to Regina. As a matter of fact, we were in Regina just yesterday with Premier Calvert. Everyone knows that it makes no sense for the federal government to have individual agreements like this and pit the provinces against each other in this way. Over the next five years, with special agreements as generous as the one for Newfoundland and Labrador and Nova Scotia, the federal government 's surpluses are expected to total $70 billion.

All provincial governments are staggering under the burden of their responsibility to provide quality services. These services are enshrined in the Constitution as part of the equalization program. Everyone wants to provide quality services, but front-line health, education and social services are the responsibility of each province. They are staggering under the load and do not have sufficient financial resources to be able to adequately respond to these fundamental needs, which rank among the highest priorities of Quebeckers and Canadians.

Meanwhile, the federal government is piling surplus on surplus. In the next five years they may well reach $70 billion. The federal government negotiates individual agreements in order to get the provinces bickering, so that it can ride to the rescue and be lord and master of the allocation of funds.

This approach is unacceptable. It cannot continue.

The minister was talking about equity. Allow me to give an example that disproves his statement. When we talk about treating the provinces fairly, the formulas and the weights for each province are based on very clear and very fair rules.

This special agreement has been reached with Newfoundland and Nova Scotia, which has already added more pressure to the fiscal imbalance caused by the election promises of the Prime Minister and the Minister of Finance.

In addition to this special agreement, another was reached with Saskatchewan. This year, it was decided to give that province $582 million. Even though the province was not entitled to equalization payments, the Minister of Finance, a native of Saskatchewan, found a way to manipulate the figures so that it would receive $582 million.

Since we are talking about equity, let us talk about it truthfully. While special agreements are being signed with certain provinces, the Government of Quebec is being asked to return an equalization overpayment it is claimed to have been paid in recent years, in the sum of $2.4 billion.

Side deals were made in order to exclude sources of significant income, as in the offshore oil revenues in Nova Scotia and Newfoundland. A side deal was reached with Saskatchewan that would pay it more than $580 million, even though it is not entitled to equalization, and British Columbia's equalization debt of roughly $132 million—if I am not mistaken—was forgiven. However, Quebec is being asked to reimburse $2.4 billion. This is fair. That is how the provinces are being treated fairly and according to strict and fair criteria invariable from one province to the next.

The Minister of Finance should be ashamed of the gulf between his actions and words, which he passes off as a solution to the equalization problem. This is no solution. Anything the government has done about equalization from the start simply makes an even bigger mess of it. The formula does not convey the fiscal capacity of the provinces very fairly. I will come back to this later.

There is a double standard when it comes to negotiating with Newfoundland, Nova Scotia, Saskatchewan, British Columbia and Quebec. We call that inequitable, unfair and irresponsible. The Prime Minister made a commitment that has put us in an unbelievable vicious circle where everyone is dissatisfied when they do not get a side deal like Newfoundland and Nova Scotia did.

Yesterday in Regina during a session of the Subcommittee on Fiscal Imbalance, which I chaired, I had the opportunity and immense honour of welcoming the Premier of Saskatchewan, Mr. Calvert. I must say, his presentation was extraordinary. He truly presented things as they are, with perhaps one of the best analysis that has been presented to the Subcommittee on Fiscal Imbalance since it began its work. We were very proud to include him among the distinguished guests of the committee.

Mr. Calvert mentioned the unfair treatment Saskatchewan has suffered with regard to equalization payment clawback rates. The Minister of Finance should show some sensitivity. He also said that his province has suffered as a result of the treatment of the mining sector. Under this miserable equalization formula, which should have been overhauled a decade ago, the mining sector is compared to a national average, which does not take into account specific regional and sectoral differences. This means that the Government of Saskatchewan's mineral resource revenues are unreasonably inflated and so its equalization payments are reduced accordingly.

The panel of experts should have asked to seek a solution to this situation. In passing, the panel members are highly respectable individuals, such as Robert Lacroix, an economist and my university thesis advisor.

Mr. Lacroix is a very competent economist with a great deal of experience. Furthermore, he is a nice person and he was my professor. As a result, I cannot criticize my alma mater, the Université de Montréal, and the economics department, as well as the then department head, who was Robert Lacroix, my professor and thesis advisor. All joking aside, I am extremely pleased that Mr. Lacroix is on this committee along with various other people whom I respect, of course.

However, their mandate is not to review the parameters of equalization or, for example, the treatment afforded mining or property taxes. This is not something Quebec alone is demanding; almost all the other provinces are asking that the parameters of the equalization program relating to revenue sources and fiscal capacity be overhauled.

It is, for example, so easy to introduce provincial property values directly into the formula that some technologists somewhere have found a way to make things so complicated, to develop approximations and to tell us that variables had to be taken into account, ones that were totally wrong. As a result, we end up today with an evaluation of Quebec's property tax capacity for 2002 at $71,400 per capita.This figure is arrived at using a convoluted process that makes no sense and gives some people with some rather original ways of thinking the latitude to complicate the formulas. In fact, with the latitude to come up with just about anything. This figure of $71,400 is supposed to be Quebec's per capita property tax capacity.

The real figure for 2002 was in the order of $30,000. With the formula the government used, it is over twice that. What does this variable end up doing? Inflating Quebec's property tax potential and reducing equalization payments accordingly. Over the years, the government has used a number of similar ruses to avoid having to measure true tax potential and to get away with paying less in equalization payments than the recipient provinces ought to have been entitled to.

As for the yardstick, fiscal capacity is evaluated and there are already problems with the assessment, as we have seen with property taxes. The average is calculated on the basis of five provinces. Why five, when there are ten provinces and two territories? Because, at some point, the arbitrary decision was made to use five rather than ten because this meant paying less to the recipient provinces. The federal government did calculations using the 10 province standard and found the figure too high, so it lowered the number to 5. Why? Had they used the real average, that is the average of fiscal capacity for all of Canada, including all the provinces and territories, they would have come up with a far better figure. That too needs to be corrected.

Yesterday, I also spoke to Mr. Calvert about the mining industry. Corrections need to be made there as well. This is not the mandate of the committee of experts, but it should be taken care of. I will give an example. There needs to be the intellectual honesty and the political honesty to explain the real reasons and to say that reforming the equalization formula would correct a good number of interprovincial inequities and allow us to achieve the constitutional objective of equalization, which is to provide public services of comparable quality with comparable levels of taxation. If this were done, Saskatchewan would receive $364 million more a year. This would be the case if the property tax base—the distinction when it comes to the mining industry—were corrected and if we used a 10 province standard rather than a 5 province standard. This should please Mr. Calvert and my colleague from Prince Albert, who, by the way, does more to defend the interests of Saskatchewan than the Minister of Finance does. I commend him on this. Yesterday, at the committee hearings, he correctly indicated he would work to defend the interests of that province.

True corrective measures need to be taken with equalization that take into account interprovincial equity and the true fiscal capacities of the provinces. The government's divide and conquer approach in making side deals with a given province must end, otherwise the other provinces will rise up against it, as we saw with Newfoundland and Labrador and Nova Scotia.

We must reform equalization payments, but we must also settle the fiscal imbalance issue. That is the mandate of our committee and I hope that the Minister of Finance listens to it today. In the end, part of the federal government's expected $70 billion surplus over the next five years must be redistributed to the provinces through the transfer of tax fields and by changes in the equalization formula to provide equitable benefits to all recipient provinces. In that way, even the provinces which do not receive payments, such as Ontario, could recover some of the room to manoeuvre they once had.

For example, Ontario had a deficit of $6 billion this year and $10 billion the year before. The Government of Quebec is also headed towards a deficit this year and next year. It is not reasonable to be accumulating surpluses here and creating problems of this sort for the provinces.

I hope that the Minister of Finance has understood and that the Conservative Party has realized that we cannot support such a motion. On the other hand, we are prepared to work toward more general and more suitable solutions for all provinces.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I rise on a point of order. I believe there have been consultations among all parties and that you would find unanimous consent for the following motion. I move:

That today's supply day motion standing in the name of the member for Regina--Lumsden--Lake Centre and seconded by the member for Prince Albert be amended to be seconded by the member for Blackstrap.

[The Deputy Speaker]

Does the member have the unanimous consent of the House to present this motion?

[Some hon. members]

Agreed.

[The Deputy Speaker]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

[The Deputy Speaker]

The amendment moved by the member for Prince Albert is in order. Debate is on the amendment.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I rise to address a very critical issue in Canada today and a very complex one too. I wish we were not here today debating this particular amendment because I do not find it particularly satisfactory to the dilemma we find ourselves in.

However, it may be the only way in which we can register our concern and opposition with the government, and the way it has botched a critical matter in Canada today.

We are almost at a crisis point in this country in terms of our federal-provincial relations. I have been in political life for close to 20 years. I have never seen such a divisive situation, such a sour situation with many different agendas competing for attention. I have never seen so much backstabbing and so little leadership to bring parties together to build a strong nation.

I have travelled the country with the finance committee on fiscal imbalance. I have had a chance to see just how deep those divisions are and what angst exists in provinces right across this country. I cannot emphasize enough the seriousness of the situation today in terms of our nationhood, in terms of our ability to build a stronger nation, to keep the federation in place, and to address competing interests between the provinces, the territories and the federal government.

I am worried about how this situation will unfold in the next short while. I have not seen any leadership from the government. I have not seen any leadership from the finance minister, the Prime Minister, or any of his colleagues. I feel nothing but gloom and despair as I see events unfold and feel somewhat helpless about this tragic situation. If I, as an elected member of this place, feel helpless, just imagine how Canadians must feel watching the news day in and day out and wondering what this country is coming to.

We are debating today one of the most fundamental concepts for this nation as a whole, for the preservation of national unity, and for describing our unique identity. Yet, we have heard neither a satisfactory answer from the government nor a clear cut proposal from the official opposition.

As I said at the outset, we may support the motion. It may be the only way by which we can register our opposition to the government which continues to act as if it had a majority and continues to ignore the voices of parliamentarians and the wishes of Canadians. It may be our only way to force the government to address some inequities in the system that it has created. I think in particular of the Minister of Finance's own province of Saskatchewan and the way it has been treated over the course of the last several months vis-à-vis the side deals that the government has embarked upon.

Equalization is about who we are as a nation. It is the glue that holds this country together. Equalization is part of the financial foundation of our social programs. It is part of the collective commitment that we all make to solidarity and social cohesion.

It is a program and a concept that is so important to Canada that it is entrenched in the Constitution. It is a program that has a long, proud history and it must be remembered and revisited at this critical moment if we are ever to find our way through these deep divisions and these dark days.

I do not need to remind the House that we have had equalization since 1957 for the provinces and 1958 for the territories and how it has formed an integral part of our national effort to ensure some semblance of equality across our diverse regions, provinces and territories.

Equalization aims at ensuring roughly comparable services with roughly comparable taxation levels through good economic times and bad. It symbolizes, at the macro intergovernmental level, the positive role that government can and must play in redistributing wealth so all may prosper. As I said, it is so fundamental to the fabric of Canada that in 1982 it was entrenched in the Constitution.

If equalization is so fundamental to the country, why are we here today dealing with a motion that essentially is running around trying to pick up the pieces of the equalization process? Why are we dealing with a motion from a political party that has no more interest in pursuing the notion of equalization than it has of pursuing equality for women?

I do not need to remind members how much this concept has been held in disrepute by members of the Conservative Party and before that members of the Reform Party. I do not think we need to go over the whole history, except to remind ourselves that inherent in the position advanced by the Conservatives in the House today is the notion that somehow equalization is bad because it saps energy and vitality and takes away incentive to overcome the odds and prosper without due regard for the structural issues at the heart of any difficulties a province or a region might face, without any understanding of the historical accidents that occur, which is really the placement of oil and gas reserves and other natural resources. It has nothing to do with the strength of a province such as Alberta with its ability to overcome all odds. It has to do with an accident of history where those reserves are placed.

It is like trying to get through to that party the concept of equality of condition for all individuals. The Conservative Party has no understanding of what it means to help put in place those programs and supports that ensure equality of condition. The Conservatives seem to think that all that has to be done is let people loose and they will do it on their own. They will overcome all odds and difficulties and do not need to have a government that worries about a national child care program, a health program, an education support system, a housing program, an environmental protection program, a transportation program or a social assistance program. The Conservatives do not have any understanding of those programs.

Therefore we obviously approach this debate with a great deal of reservation. If and when we support the motion it will be with a great deal of reservation. It will be because we are left with a government that refuses to exercise its leadership and prevent the kind of dismantling of the country that we are seeing all around us.

Why are we trying to pick up the pieces here in this way? We do not have to look very far. We only have to look to the government benches. The Liberal government bears responsibility for this mess in so many ways.

It was the Liberals, under the current Prime Minister at the financial helm, who brought in the vicious cutbacks of the mid-1990s, which sent transfers for health care, post-secondary education and social services into a tailspin, that has spawned an ongoing series of crises over federal-provincial funding arrangements that continue to this day and goes to the heart of my presentation today.

We are not dealing with a situation that has been fixed by the Liberals. We are dealing with some band-aids, a patchwork of systems, a set of boutique programs over here and some pilot projects over there, to try to deal with the kinds of crises the government has created with its single-minded focus on dealing with the deficit back in 1993, as opposed to balancing the need to restore some balance in the fiscal situation of government while not neglecting the human deficit.

Yes, it was the Liberals and their transfer cuts that downloaded more financial responsibility on to the provinces that added to equalization pressures as the only life raft within sight through which to recover provincial stability. It was the Liberals who followed the Conservative dictum of backing out of their government responsibilities to develop an energy strategy for Canada that has led even more directly to today's debate.

Such a strategy is the proper context for today's discussion but, under the Liberals, the strategy does not exist. During their entire regime, fully conscious of the changes that signing free trade agreements has brought to our energy picture, the Liberals have done nothing. Selling off Petro-Canada for them is an energy strategy.

Even worse, for their entire regime they have also been aware of the energy implications of climate change and the need to act on Kyoto. Again, they have done nothing to build an effective energy strategy for the future sustainability of our economy and our planet, or even to work out these vital issues with the provinces and territories.

As my leader, the member for Toronto--Danforth, wrote in a communication with the premier of Newfoundland and Labrador almost a year ago, Canada needs a national energy strategy that not only corrects such fiscal imbalances regarding resource extraction but also best positions our country for a future under the Kyoto protocol and beyond.

The government has been dithering with a capital D and that dithering has become the Liberal trademark, the real branding of the government. Wherever else we have seen it over the last few days, weeks and months, whether we are talking about the sponsorship scandal and the Gomery file, the budget and its commitment to deal with social infrastructure and urban needs, or any number of issues before us today, that dithering has extended to the whole equalization process as well.

It was the Liberals in 1982 who brought in a system of basing equalization payments on only five provinces' economic performance, Quebec, Ontario, Manitoba, Saskatchewan and B.C., instead of ten. It has created problems over the years but the Liberals have avoided the type of meaningful negotiations with the provinces that could have reached a more lasting solution.

A make do, buy some time agreement in 1999, was an opportunity to move forward, but no. What did we get? We got more dithering. The fundamental issue was so low on the Liberal priority list that by the time the deadline was approaching in late 2003 so little had been done that the Liberals had to introduce Bill C-54 as an interim measure just to ensure that the whole equalization process did not grind to a halt along with equalization payments.

When that died, to enable the Liberals to create an event out of their leadership change, they had to follow up last February with Bill C-18 to essentially buy another year of time.

However, that was not at all necessary. All the provinces, interestingly, at that point in time were in agreement as to the route forward to get equalization back on track with a full 10-province rating system and an all inclusive calculating method. I have the document here and I hope the Minister of Finance refreshes his memory with this important contribution dated September 2003, a paper entitled, “Strengthening the Equalization Program: Perspective of the Finance Ministersof the Provinces and Territories”.

Just a couple of years ago the provinces were in agreement on a proposal that would have dealt with some inherent problems in our equalization system. It would have put us on a solid footing for ensuring that the program continued over the next five years on a fair basis and in a reasonable way. The proposal called for a 10-province standard and the inclusion of all revenues, including non-renewable energy resources. It would have worked and it would have had the support of all the provinces. It would have dealt with some inherent inequalities. It also would have, by its existence, prevented the government from making the foolish mistake it did by not pursuing a good plan and then ending up making side deals with Newfoundland and Nova Scotia.

I believe the Liberals apparently were not interested in actually negotiating a solution. Instead, they came back to the provinces in October with a take it or leave it deal, another Liberal trademark by the way, to which the provinces and territories reluctantly agreed despite some obvious flaws. They put a pot of money on the table and told the provinces that it was theirs to basically do with as they wanted. The Liberals then set up another committee to study a longer process and a panel for which there are deep concerns right now about who is on it, what work it will do and when it will report.

Immediately the Liberals became embroiled in side deals. If we fast forward, today we are being asked to formally recognize side deals as the new way of doing equalization. It is obvious that the Liberal deal from last October began to unravel before the ink was even dry on the page. The danger is that the whole valued equalization process may unravel with it as both have and have not provinces have heightened, not lowered, their dissatisfaction levels. The dilemma should be really no surprise to Canadians. Balkanization has become the Liberal password.

We have watched the Liberal government's consistent abdication of the use of national standards or the national programs that have been part of the great tradition that has built Canada. The current Liberal government seems only qualified to dismantle programs and measures such as equalization.

Social cohesion seems to run counter to the Liberal vision and the corporate interests it represents. Equalization is the fault line in the neo-Liberal agenda in Canada where Liberal cuts and downsizing government services meet government's role as the major agent of equality and the redistribution of wealth head on.

Of course Saskatchewan and other provinces want to protect their future economic stability. They recognize the volatility of the commodity market. Unfortunately, the Liberals have not acted. They have stood by as spectators while our economy has shifted once again back toward a dependence on oil, gas and other commodity exports to the United States.

The Liberal dithering and inaction is stunning to its extent and that is why we end up in this dilemma in the House today debating a motion that is less than satisfactory but one that may be the only way to make the government listen to the provinces, deal with the present concerns and inequalities, as in the case of Saskatchewan, and begin now to put in place a formula that is based on the 10-province standard inclusive of all revenues.

[Ralph Goodale, Liberal, Minister of Finance]

Mr. Speaker, I was taken by the tone in the hon. member's remarks at the very beginning when she sounded terribly gloomy about the future of Canada. It was a very negative message. I contrast that with the news clippings that I have been reading recently in Saskatchewan.

There is one today from the Canada News Wire that says “RBC forecasts healthy economic growth for Saskatchewan”. There is another one from the CanWest News Service that says “Scotiabank bullish on Saskatchewan economy”. There is another from the Regina Leader -Post that says “Saskatchewan has an effervescent economy”. There is another one from The StarPhoenix in Saskatoon that says “Saskatoon finances are world class”. There is another from The StarPhoenix that says “The city and the province benefit from federal largesse”. There is another from that same newspaper that says “Saskatchewan stock index shows strong growth”.

There is lots of indication that the economy of Saskatchewan has turned an important corner and that there is some cause for optimism. That is not to say we take anything for granted, but surely the good news is news should be acknowledged and celebrated.

I note from the position the hon. member has taken today that she directly contradicts the NDP Premier of Manitoba with respect to this matter. Could we have a specific reply on this? Does the NDP in the House support Premier Calvert in his ambitious plan to develop Saskatchewan's heavy oil resources?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I bring to the House a sobering message because I am deeply concerned about what I see unfolding around me. I wish the Minister of Finance would take off his rose-coloured glasses and start to see what he and his government have created and the kind of divisions that exist.

We do not need to go very far to know that Nova Scotia and Newfoundland and Labrador has a deal that Saskatchewan wants to replicate. We do not have to go far to see Ontario hammering at the door. We do not have to go very far to know about Prince Edward Island, which is concerned about the consequences for its situation. We see division all around us. We see the very glue that keeps this federation together coming unstuck and causing enormous problems. I would hope that he is as worried as we are about the future of this great country.

The minister can look selectively at certain statistics, but he also has to look at some other reality around us.

First, we have to look at the country as a whole in terms of how it is standing up as a nation, vis-à-vis other industrialized countries. How does the minister explain that we are 19th out of 26 when it comes to child poverty and dealing with difficult economic and social situations facing the future of this land? How does he answer the fact that we are the only industrialized country in the world that does not have a national housing program? It means that the provinces are having to pick up the pieces because the government off-loaded its responsibilities.

I could go on in terms of statistics, but I also want to quote from studies that talk about difficulties facing Saskatchewan, since the minister raised that situation. I think he has even quoted from some of these studies. I quote from a document entitled “Equalization: Financing Canadians' Commitment to Sharing and Social Solidarity”:

--for Saskatchewan, which for reasons which appear to be irrational, is notgaining protection for 30 percent of its energy revenues, but rather is facing the perverse outcome of having more than 100 percent of its energy revenues ‘taxed back’.

That is from Courchesne in 2004 and it is the problem that the minister has said he is trying to deal with in terms of these one-off payments, which is hardly dealing with the overall situation, nor giving the response that he and his government gave to Nova Scotia and Newfoundland and Labrador.

The Premiers of Manitoba and Saskatchewan want what we in the House. We want the government to finally give some leadership around a new course for equalization and to promote and accept the notion that it advanced so many years ago for a 10-province standard that includes all revenue, including non-renewable resources.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I suppose it is not often that I tend to agree with the member opposite on things, but I do on one thing. I found the tone of the hon. member's presentation to be very negative and critical.

During her presentation it appeared to me she was stating that the NDP may not take a position in support of the motion. I would remind the hon. member that the NDP Premier of Saskatchewan is certainly supportive of this motion. In fact, I have met with the NDP Premier of Saskatchewan and his finance minister and we are all supportive of the removal of non-renewable natural resources from the equalization formula. I got the sense from the member's comments that the NDP, federally, may not be supportive of this motion. I find that confusing. I recall only a few short weeks ago the leader of the NDP stood in the House critical of the government on this very issue and showed his support for the removal of non-renewable natural resources.

What is the NDP's position?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, perhaps the member did not hear me when I quite clearly said that in all likelihood the members of the New Democratic Party would hold their noses and support this motion. We will hold our noses because it is an unsatisfactory way to deal with the problem, but we feel it is the only way to get a message through to this government. We will likely support the motion.

However, we have clear concerns about the intent of the motion, given the history of the Conservative Party, and the Reform Party before it, on the matters of equalization. I want to refer the member to previous comments made by an institute that has served as resources to the Conservative Party, that being the Fraser Institute. It has opposed the redistributive character of equalization. It has called it an elaborate system of bribes, a great pork barrel.

I remind the member that others in his party have over the years expressed great reservations about an equalization program that ensures that everyone in our country, regardless of their province and region, can access relatively similar public services and that their governments are able to provide those services with a relatively similar tax system.

I think my position is clear. We understand the reasons for the motion. We will support it, but it is not drafted in a way that is conducive to a long term strategy.

I wish the Conservatives had mentioned the fact that there are consequences for this kind of proposal and I wish they had mentioned the fact that all provinces want to see immediate action on a 10-province standard that includes all revenue.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I would like to congratulate my colleague on her very eloquent speech. It is important that the terms of reference she deals with is the fact that this will affect all the country. I would like her to emphasize again and expand upon the government's handling of this situation and how it also relates to health care and other issues. More important, how this relates to the structures and pillars we have built as a Canadian society which give us our national identity. The issue of health care is an example. The different standards across the country are eroding our national vision and identity. Could she expand upon that?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, the member makes a very important point, which is the underlying scenario that has led to the difficult position we are in today. We have had a decade of off-loading and deregulation by the federal government. In 1995 alone, $6 billion in cuts were made to the health, education and social infrastructure.

See what that has done? We have a government that takes its cash, cuts it back, off-loads the responsibility onto the provinces without commensurate ability to do it. At the same time, it guts the employment insurance program and moves people off EI onto social assistance, which is interestingly enough covered by and is under the responsibility of provincial governments.

We have this incredible dilemma being created by a federal government that has no commitment to its responsibilities at a national level. It has failed Canadians with respect to the Canada health and social transfer. It has failed Canadians with respect to education. It failed Canadians with respect to the Canada assistance plan by disbanding a program that at least provided for national standards to ensure that people did not fall below a certain level of economic security.

[Garry Breitkreuz, Conservative, Yorkton—Melville, SK]

Mr. Speaker, I will be splitting my time with the member for Saskatoon—Rosetown—Biggar.

I will begin my speech by letting people know watching via television exactly what the agreement is that we are talking about today. This is a federal program. It is in our charter. I cannot understand why the federal government would not treat all provinces equally when this is part of the agreement into which all provinces have entered. The government is cherry-picking in deciding this province gets this and that province gets that.

I will state what the agreement is. Under part III “Equalization and Regional Disparities Commitment to promote equal opportunities”, section 36(1) states:

Without altering the legislative authority of Parliament or of the provincial legislatures, or the rights of any of them with respect to the exercise of their legislative authority, Parliament and the legislatures, together with the government of Canada and the provincial governments, are committed to

(a) promoting equal opportunities for the well-being of Canadians;

(b) furthering economic development to reduce disparity in opportunities; and

(c) providing essential public services of reasonable quality to all Canadians.

It goes on to say:

Commitment respecting public services...

(2) 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.

This is what we are talking about and this is what I will make my remarks on today.

As we read this, equality for all Canadians is the very purpose in the federal government's equalization program. This is provinces rich in resource revenue helping out those struggling to provide their residents with the services to which every Canadian has the right. In theory, the rationale for equalization makes perfect sense. In reality, however, some provinces are being stripped of their resource revenues and, in turn, their ability to provide their population with those adequate services like timely waiting times for surgery and MRIs.

A national program has to be applied equally to all provinces. That is the essence of what I have to say today.

Special deals made by the Prime Minister have left provinces, like Saskatchewan, on the outside looking in and wondering when they too will be treated equally. Saskatchewan has been cheated by the Liberal government when it comes to fairness. This have province, which has seen its agriculture industry devastated by weather and trade issues, does have a bright spot: its natural resources. However, instead of allowing the province of Saskatchewan to support its people using revenues from oil and gas, the federal government instead uses it to provide residents in other neighbouring provinces, like Manitoba, British Columbia, Quebec, with a better quality of life. Saskatchewan is certainly not being treated equally through equalization.

Until very recently, Saskatchewan was not alone in the fight to keep resource revenues. It took a lot of effort by Newfoundland and Labrador, Premier Danny Williams, but our Prime Minister obviously saw a problem with the equalization formula when it came to provinces like Nova Scotia and Newfoundland and Labrador, and from that we saw the signing of the Atlantic accord. Both Atlantic provinces can now keep their offshore revenues and provide so much more for their residents. Why not a similar agreement for Saskatchewan?

The Liberal MP from the province knows first-hand the struggle for daily survival in Saskatchewan, at least he should. Yet all he can offer as support for his constituents and the residents of the province are a few empty words about what the Government of Canada wants. Oddly enough, what the Government of Canada wants is exactly what Saskatchewan wants, and that is fairness. If we all agree on that, why is the province of Saskatchewan being forced to beg the Liberal government for an agreement like the one just signed by Newfoundland and Labrador and Nova Scotia?

The words of the Prime Minister at the Saskatoon airport recently have the people of Saskatchewan outraged. Not only was Saskatchewan not allowed on board in January when the last agreement on equalization was signed with Newfoundland and Labrador and Nova Scotia, but the big deal made six months ago that Saskatchewan reaped so greatly from was actually, if we look at it, money owed to the province.

Saskatchewan has been ripped off by the federal government when it comes to equalization. Just six months ago the federal Liberal government corrected past inequities and the money Saskatchewan was supposed to be rewarded with six months ago was the province's money all along.

The Liberal government and the Prime Minister have said time and again that they all want to alleviate western alienation. Penning a deal with two eastern provinces while denying a western province the right to its resources and a light deal is hardly a step forward.

What it all comes down to is the definition and difference between a have and have not province as outlined within the equalization program. Because Saskatchewan is rich in oil and gas, 2 of the 33 base components used in calculating equalization determine that Saskatchewan is a have province. This dubious honour has been bestowed despite the hardships facing the agricultural industry in Saskatchewan and the out-migration of people. Because of equalization, revenues from the very resources that are keeping the province afloat are being handed to the federal government which in turn distributes the money among the have not provinces.

We are seeing Saskatchewan, which is in absolute distress, supporting its neighbours. By all real indicators, Saskatchewan is far from a have province. It is not a knock to the people of Saskatchewan but to high ranking political officials like our finance minister who knows firsthand the financial struggle of the province's key industry, that being agriculture. At least he should.

Our beef, sheep and other producers have been ravaged by the BSE crisis and grain farmers have had to endure year after year of weather related crop failures, the most recent being the untimely frost last August. Countless farm families have to sell off their machinery, animals, land and homes because their input costs far outweigh their income. Yet, we are regarded as a have province.

I want to go through some statistics. First, the Fraser Institute indicates just how serious the problem is in Saskatchewan. We have the longest waiting times for surgery in the nation at 24.5 weeks. By comparison, Manitoba has the shortest wait time at 7.8 weeks, yet Saskatchewan has to transfer money to Manitoba.

Saskatchewan has the longest wait times for MRIs at 25 weeks. Manitoba's MRI wait is 11 weeks. But this year Saskatchewan will receive only $71 million in equalization transfer payments while Manitoba will receive 20 times as much at $1.433 billion. Over the past 10 years Manitoba has received approximately $800 million more per annum than Saskatchewan in equalization payments.

There is even more evidence of the problems with equalization. Canada's average per capita income for 2003 was $29,341. In Saskatchewan the per capita income was almost $5,000 below the national average. Saskatchewan pays the high cost of educating its kids who then move to other provinces. Saskatchewan possesses the second highest level of net citizen migration. At the height of the Great Depression, Saskatchewan had a population of 930,000 people. Today its population is barely more than that at 995,000, a 14% increase over 70 years. Saskatchewan's population has declined by 24,000 from 1996 to 2004.

Saskatchewan's net debt is nearly $1 billion or almost $10,000 of debt for every man, woman and child living in the province. Saskatchewan has the fourth highest net debt of the 10 provinces yet the province's oil and gas revenues are going to provinces with much less net debt. As an aside, we need to have those resource revenues available so we can pay off this debt.

Saskatchewan is the only province in Canada to not fully fund its share of farm safety net programs. The province's premier claims he cannot afford it, but does no one see the obvious contradiction? On one hand, the government is telling the people in Saskatchewan that everything is great, it is a have province, and on the other hand, the federal Liberals sit by while the province admits it cannot fund certain programs in the agriculture sector.

We want fairness for the province. I will conclude by saying that by removing non-renewable resources from the equalization formula, provinces like ours would possess an incentive to expand their economies around their natural resource base and become a true have province like its neighbours.

The current equalization formula is grossly unfair. I know it, the Premiers of Nova Scotia and Newfoundland-Labrador know it, the Prime Minister knows it, and every resident in Saskatchewan knows it.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I would like to ask my colleague to expand a little on what he was saying toward the end of his presentation regarding the inability of the provincial government in Saskatchewan to fully fund certain agriculture support programs like CAIS.

By my understanding, if Saskatchewan were allowed to keep 100% of its non-renewable natural resources, it would mean an estimated $800 million yearly and perhaps even higher than that. That is an enormous amount of money that could be put to the agricultural sector in our province. That is being absolutely ignored by the federal Liberal government.

I would like our member from Yorkton to expand upon that and let me know what an extra $800 million to $1 billion a year could mean if it was dedicated toward our agricultural sector.

[Garry Breitkreuz, Conservative, Yorkton—Melville, SK]

Mr. Speaker, the member's question clearly indicates one of the serious problems within the province. We have an agriculture industry that has been absolutely devastated. We have the federal government that puts in place a CAIS program which does nothing to address the serious problems within the province.

The CAIS program is a bureaucratic nightmare. The farmers and agricultural producers who are trying to struggle to get enough money to put in another crop or to get over the border closure and the crisis in the beef industry that the BSE issue has triggered are looking for assistance. Yet, that assistance could be right within the province if the equalization formula was fixed. It should be absolutely obvious that we get the resource revenues that our province deserves.

The agriculture industry cannot survive if we do not get programs that work for agriculture and proper funding for those programs. Within the province the agriculture programs are not being properly funded. The CAIS program that has been put in place by the federal government does not do what it is supposed to do. Not a day goes by when I do not receive many phone calls from frustrated farmers who do not understand why the finance minister and the federal government are trying to kill the agriculture industry in the province.

Many people do not see the connect between fixing the equalization formula and the help that we need for our basic agricultural producers in the province. That is one of the key points I was trying to make in my speech. We want fairness for the province. We want something that is going to work. People at home are sitting in agonizing pain as we speak here. They wonder what is going on in Ottawa, what is going on in Parliament, and why the government cannot see the obvious that Saskatchewan should be treated with fairness.

When we look out at the acres of land and all the potential in that province, there is no reason we should be moving from a have to a have not province, back and forth. We have the ability in the province and the federal government has removed the incentive for us to develop.

I appreciate the opportunity to speak up on behalf of my constituents today. Discrepancies within this equalization program are so obvious. The Prime Minister has not allowed the province to reap its benefits. It is a travesty. I appreciate the opportunity that the Conservative Party today has given me to raise these issues.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, I am very proud to rise with my colleagues from the Conservative Party and especially the members of Parliament from Saskatchewan. I want to congratulate my colleague from Prince Albert who has worked tirelessly on this whole issue since the year 2000 when we were elected.

As Canadians know, the concept of equalization is that the provinces that are better off help those that are less fortunate. What Canadians do not know is that the formula used to calculate this is complex. It varies by province and is in need of updating. The nation's economy has progressed, while these equalization formulas have not.

As a result some provinces are more equal than others. It has become a recipe for regional division and tension. Saskatchewan is simply not getting its fair share out of equalization. This situation is made worse by the fact that the province is sandwiched between the oil rich province of Alberta and the generously helped province of Manitoba. It only serves to highlight our problems.

We only want our fair share in order to ensure that our future is as bright and secure as those of our neighbours. I am confident that person to person every Canadian wants equality.

Just last week the Prime Minister visited Saskatoon, but refused to substantially negotiate or discuss the equalization matter with our premier. The premier, the Saskatchewan opposition leader and their parties, along with my Conservative colleagues from Saskatchewan have demanded that the Prime Minister deal with the matter. Our pleas fall on deaf ears.

The one opponent is Saskatchewan's lone Liberal MP, the finance minister. With the skill and knowledge of an ostrich, he has declared Saskatchewan a have province. The finance minister and the Prime Minister ignore the facts. More disturbing, they ignore their constitutional obligations to ensure that all provinces have the fiscal ability to provide equivalent public services.

Currently, Alberta and Ontario are considered have provinces because they are above the established benchmark. Their wealth is redistributed to the other eight provinces in an effort to reduce provincial discrepancies. Saskatchewan is far below the benchmark. Canada's average per capita income for 2003 was just above $29,000. In Saskatchewan it was almost $5,000 below that, over 15% less.

Saskatchewan faces challenges. Its population has increased 14% since the Great Depression, while other provincial populations have flourished. With major industries in crisis, a static population and mounting fiscal pressures, we cannot afford to wait forever for this federal government to attend to this problem. Saskatchewan already has the longest medical waiting times, while next door in Manitoba it has the shortest, one-quarter the length.

Does Saskatchewan receive more than Manitoba to fix the situation? Absolutely not. Saskatchewan receives $72 per person while Manitoba receives $1,600 per person. That amounts to almost $800 million per year for the last 10 years. This is hardly fair.

Now for the details and the reason why. Of the 33 tax bases used to calculate equalization, 13 target Saskatchewan's non-renewable resources such as oil, gas, potash and uranium. We all know about the recent federal provincial wars in Atlantic Canada over this very issue. With months of arm-twisting and public squabbling, the Prime Minister, with the assistance of our finance minister, finally lived up to his campaign pledge. Natural resources were removed from the equalization calculators, but the same does not go for Saskatchewan. Please remember that these federal Liberals have not yet delivered to the Atlantic provinces.

I must admit I was a little more than surprised when NDP Premier Lorne Calvert offered only timid support for the new Atlantic deal. Nonetheless I am pleased he and his party have agreed to work with Saskatchewan Party MLAs and Saskatchewan MPs to get a new deal for our province.

Saskatchewan should receive similar rates to Manitoba. If it did, there would be about $800 million more per year. Just imagine what $800 million would do to help hospitals, schools, roads, public transport, community services and even our tax rates. Not only do we receive less, but we have to pay more to compensate. This is just a plan for digging a hole, not filling one.

Changing the equalization formula could have many positive effects besides the quick infusion of additional cash. By delisting non-renewable resources from equalization calculations we could provide incentive to our business community to expand our economy around natural resources and become a true have province.

We need our NDP government in Saskatchewan to be supportive of our efforts to get a better deal for Saskatchewan. We need a provincial government that wants our province to prosper on the backs of its own industries. At the very least we need a provincial government that will hold the federal government to its constitutional obligations.

We need a finance minister who takes both his province and his portfolio seriously. From across the House, he has said that he does. He is failing on both accounts. I would not be surprised if his constituents sent him that message in the next election.

Bad work has bad results. Once again I stress that Saskatchewan does not want a free ride. We want a fair ride, Mr. Minister. We do not want a special deal. We want a fair deal, Mr. Minister. We do not want extra money. We just want our money, Mr. Minister. We want our fair share.

We do not want special constitutional treatment. We just want the Constitution as currently written to be upheld by the federal government. Quite simply, we not only want a new fair deal, we need one.

Our province cannot continue to dig a hole as those around us get to pile sand. It is only a matter of time before everything caves in.

I plead with the government and the minister across the way to negotiate a fair deal with the province of Saskatchewan and to do it without delay.

[Claude Drouin, Liberal, Parliamentary Secretary to the Prime Minister (Rural Communities)]

Mr. Speaker, I will be sharing my allotted time with the hon. member for Scarborough—Guildwood.

I appreciate this opportunity to speak today in response to a motion of the hon. member for Regina—Lumsden—Lake Centre to the effect that the benefits of the accord on non-renewable resources signed by Nova Scotia and Newfoundland and Labrador should be extended to all the provinces.

This motion raises a question often debated in this House, namely the so-called fiscal imbalance. It is appropriate that I now address it in the context of this specific motion. With all due respect to those who believe that such an imbalance exists in Canada, I say they are wrong, and there are several reasons for that.

First, I think that all our critics have to recognize that there is one fundamental difference between Canada and most federations: the Government of Canada and the provinces have access to the same major sources of revenue to finance their operations. The provinces also have exclusive access to several sources of revenue in their jurisdictions, such as natural resource royalties and gaming revenues.

Second, under the Constitution, the provinces have full jurisdiction over the tax bases under their control. They also have a free hand to develop their own tax policies, set personal and corporate tax rates and decide how to use their tax revenues.

Third, despite the significant progress made in recent years by this government in reducing the debt, the federal debt remains twice as high as that of the provinces. As the father of four and grandfather of five, that is not the legacy I want to leave to my family and to Canadian families. It is important that we reduce this debt.

Finally, we have to take into account that the Government of Canada and the provinces are partners in many areas, including several over which the provinces have full jurisdiction. Take health, post-secondary education, social services, infrastructure and housing for example. The federal government has been contributing more and more in these areas over the past several years. Its contributions are currently at an all time high. That is right, an all time high, and they will continue to grow.

When we factor in the federal transfers, we can see that the provincial and territorial revenues clearly exceed federal revenues. This has been true for more than 20 years, and is not likely to change in the foreseeable future.

Let us look at the benefits derived from this cooperative form of governance. The 10 year plan to strengthen health care is one of the best examples of cooperation involving the various levels of government. In fact, the Prime Minister of Canada and his provincial and territorial counterparts have all signed it. The Government of Canada has promised to spend more than $41 billion over ten years to support the plan, thus acting on all the financial recommendations of the Royal Commission on the Future of Health Care in Canada, the Romanow commission.

An additional sum of $700 million over five years has also been announced for aboriginal health care programs, along with $150 million for health care services in the North.

The Senate is currently studying Bill C-39, which implements the 10 year plan to consolidate health care. Once this bill has been adopted, the provinces and territories will be able to respond to the concerns of Canadians in such important areas as wait times reduction in order to ensure that Canadians have access to essential health care in a timely manner, and they will be able to fund the purchase of essential diagnostic and medical equipment.

Then there is the new framework for the equalization formula and the territorial funding formula or TFF. In October, the Government of Canada established a new framework for equalization and the territorial funding formula, which provides for the transfer of $33 billion in additional funding over the next 10 years.

This additional funding for the provinces and territories will mean that all Canadians will have access to reasonably comparable public services at reasonably comparable rates of taxation, no matter where they live.

This framework includes the five following elements: first, a minimum funding floor of $10 billion for equalization and of $1.9 billion for TFF for 2004-05; and complete protection for provinces and territories against declines in payments in 2004-05 below the amounts estimated in the 2004 budget.

There is also a guaranteed increase in funding for 2005-06, to $10.9 billion for equalization and $2 billion for TFF, and a guaranteed growth rate of 3.5% per year compared to this level over the next 10 years.

Finally, for the first time the government is creating an independent panel to advise on how legislated equalization and TFF levels should be allocated among the provinces and territories. The provinces will be represented on this panel. The legislation establishing the new equalization and TFF framework recently received royal assent, and the provinces have started to receive the amounts allocated. One of the things the provinces and territories had demanded was stable and predictable funding. This is exactly what the Government of Canada has provided.

However, the government did not stop there. I want to mention a few of the positive initiatives in the 2005 budget for Canadians or the communities in which they live.

These funds will be allocated to health care professionals and resources for healthy living, the prevention of chronic disease, flu epidemic preparedness, drug safety and environmental health. These funds reinforce the $805 million the Government of Canada is investing directly in its responsibilities.

The Government of Canada is committed to enhancing its assistance to regional and sectoral development. This year's budget gives priority to strengthening support for innovation and local capacities to meet the challenge of adaptation, investment in northern initiatives, and targeted investments to increase the contribution of certain key sectors of the economy to Canadians' standard of living.

More specifically, the 2005 budget helps to strengthen the economies in the regions through the following initiatives: $800 million more in funding to regional development agencies in Atlantic Canada, western Canada, Quebec and northern Ontario. Having been the minister responsible for this portfolio in Quebec, I can state that this funding will be extremely useful for the economic development of all of Quebec's regions. In addition, $120 million will be allocated to an overall northern development strategy, and there will be additional investments in certain key areas of the Canadian economy, such as agriculture and the space industry.

Hon. members will recall the new deal for the communities which was inaugurated as part of the 2004 budget. With it, the Government of Canada implemented the preliminary measures of the new deal with the reimbursement in full of the goods and services tax, the GST, as well as the federal portion of the harmonized sales tax, the HST, to the municipalities. This initial step will make it possible to provide the municipalities with more than $7 million over 10 years to help them finance their fundamental infrastructure priorities, particularly roads, public transport and water purification.

The 2005 budget takes this still further by respecting the Government of Canada's commitment to share part of the revenue from the federal gas tax in order to support a sustainable and environmentally friendly infrastructure. This commitment will take the form of a new contribution of $5 billion to cities and communities for infrastructure over the next five years.

The new deal goes further than the commitment on gasoline taxes. It is designed to establish new, lasting intergovernmental partnerships and to find new ways of doing things. The governments have worked together to ensure that our health care system has a future, and we have worked together on equalization and the territorial funding formula to establish a detailed plan enabling the provinces and territories to prepare for the future. There is no doubt that all administrations must continue to work closely together in order to achieve real, lasting change.

In short, it is incorrect to say that the government has and jealously guards an unfair financial advantage. In fact, all administrations have the same duty of providing services of the highest quality to all citizens, no matter where they live.

That is exactly what Nova Scotia and Newfoundland and Labrador are seeking to do. The agreement on offshore resources recognizes the special circumstances these provinces are facing. The Government of Canada has seen a need and has intervened to help standardize the rules of the game with respect to other provinces.

After all, Canadians help each other out, right?

Canadians have made it clear that they all want to see their elected representatives cooperating to achieve this goal. Let us set aside these petty quarrels about fiscal imbalance and move on to more positive and more productive debates on practical ways to meet our obligations and on what we can do in the future.

That is how it works where I come from, in the Beauce. When someone has a problem, no one looks for a guilty party; we search for a solution, and that works well. Thank you for your attention.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I listened quite carefully to the hon. member's comments and, unfortunately, I did not hear too much on the motion. He spoke a good deal to other government programs but he did not really speak to the motion, which in effect asks the government to remove non-renewable natural resources from the equalization formula.

The government has already done this with Newfoundland and Labrador and Nova Scotia and, by doing so, it has set the national standard.

The equalization program is a national program that must be applied equally to all provinces. Hence, by consequence, it should suggest that if Nova Scotia and Newfoundland and Labrador have non-renewable natural resources removed from the equalization formula for their provinces, it should be equal and the same for other provinces across Canada. However I hear that member and other members across the floor stating, no, that special circumstances require special deals. This is not what should be happening with a nationally administered program.

I would like the member opposite to explain how he can justify stating that there can be one special deal for a certain region of Canada but not the same deal for other regions of Canada.

[Claude Drouin, Liberal, Beauce, QC]

Mr. Speaker, if the hon. member is criticizing me for not speaking about the motion, I could criticize him for having misunderstood my speech because I did indeed refer to the motion. Furthermore, I said that agreements on health and equalization are measures aimed at helping all the provinces.

Can we agree that Saskatchewan does not have the same concerns as Newfoundland and Nova Scotia? Considering that the unemployment rate is almost 20%—which is not the case in Saskatchewan—do these provinces not deserve special attention? I hope the hon. member agrees and that he will be able to tell Labrador and Nova Scotia that he is in favour of the agreement. If we want to have a balanced budget, we have to work together to find solutions. That is what we are doing on this side of the House.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Speaker, I take great offence to what the member just said. He needs to understand that Saskatchewan needs this agreement. It needs to be treated equally with the other provinces. We do not need to hear any list of excuses as we heard from the finance minister earlier. He said that we do not have 20% unemployment. I guess that is true but the main reason is that our government, for the most part NDP socialist governments over the last decades, has driven our young people out of our province, to the point where we can hardly maintain our population at this point.

It is imperative that the federal government begins to treat provinces fairly by setting up a deal that can easily apply to Saskatchewan, if the government would be willing to do that. The finance minister, who is from Saskatchewan, should be willing to treat his own province equally with others but he does not seem to be willing to do that.

What is it that is so difficult for this government to understand that it will not treat provinces fairly on this deal?

[Claude Drouin, Liberal, Beauce, QC]

Mr. Speaker, on the contrary, we treat the provinces fairly and the hon. member must acknowledge it. I mentioned that in my speech.

Think about the GST rebate or the infrastructure program set up with the gas tax. The purpose of these measures is to keep people in Saskatchewan. That is what we want to see happen. We will continue to work with Saskatchewan and all the provinces and territories in order to help them keep their populations, grow and have a good quality of life. That is the commitment of the Government of Canada.

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, the essence of the motion is that non-renewable resource revenues be removed from the calculations for equalization. I was wondering, as I was thinking about this debate, what Premier McGuinty might say about this particular motion before the House today.

Premier McGuinty has been arguing for the last month or six weeks that Ontario does not get its fair share out of equalization. The number that he has been throwing around lately has been $23 billion. He takes his charts from the national accounts, et cetera. It is a pretty substantial sum of money. While I have some serious difficulties with the premier's analysis given that Ontario is the linchpin of Confederation and it is the expectation that Ontario will, in many instances, support Confederation, I do have some difficulty arguing vigorously with the premier of Ontario when the premier of Saskatchewan says “Me too. Look at us, how badly we are treated”.

For instance, the premier of Saskatchewan presently enjoys a debt to GDP ratio of something in the order of 25% on the way down to about 21%, which is a pretty good number. The Government of Canada is somewhere around 38% or 39% debt to GDP ratio. The Government of Ontario is around 28%, some three points higher than Saskatchewan. The Government of Newfoundland, from my recollection of the numbers, is something in the order of 62% debt to GDP ratio.

I wonder what Premier McGuinty would say about the Saskatchewan premier's claim to a fair share when the debt to GDP of Saskatchewan is actually lower than the province of Ontario and is actually lower than the Government of Canada. I wonder what he might say about that.

I wonder what he might say about Saskatchewan's unemployment rate, which at this point is around about 5% from what I understand the numbers to be.