Debates of Dec. 12th, 2006

The House resumed consideration of the motion.

Prebudget Consultations

[The Speaker, Liberal, Peter Milliken]

Before question period, the hon. member for Markham--Unionville had the floor and he will now be recognized so he may resume his remarks.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, as I said before question period, I had three themes concerning the government's fiscal and economic policy and the first one, which I have already completed, concerned its meanspirited nature.

The second theme, which I will mention now, concerns what could be characterized as a deceptive, gimmicky or perhaps sometimes bordering on dishonest approach to economic and fiscal matters.

We all know in this House, for example, that the government raised the income tax at the lowest rate for Canadians, even though for some reason it persists in characterizing that as an income tax cut. We all know that it blatantly broke its promise not to tax income trusts, resulting in a $30 billion meltdown of the hard-earned savings of Canadians.

Let me turn now to the fiscal update. My text for the more recent cases of gimmicky behaviour comes from an article that appeared in the press only today by one John Williamson, president of the Canadian Taxpayers Federation. Mr. Williamson, generally speaking, is no great friend of Liberals, at least when we were in government. He tends to be on the small “c” conservative side. His article characterizes the gimmicky approach by the government quite well. The article is entitled “Canada's Minister of Gimmick”. If anyone has a doubt, the minister of gimmicks is the Minister of Finance.

Mr. Williamson gives three examples of why the Minister of Finance is the minister of gimmicks: first, gimmicky behaviour on net debt; second, gimmicky behaviour on the so-called automatic income tax reductions; and third, deceptive behaviour on control over government spending.

On the net debt issue, as I said to the finance minister in committee, if we have a debt of $480 billion and we pay down $3 billion a year, one does not have to be Sir Isaac Newton to figure out that it will take 160 years to pay down that debt. By throwing out some arcane statistic, the minister seeks to deceive the Canadian public into thinking that he is doing more than he really is. John Williamson refers to this as “phantom debt relief” and “a political gimmick”.

In the second case mentioned by Mr. Williamson:

The proposal to pay off $3-billion in debt each year will save taxpayers approximately 10 bucks annually -- a trivial amount.

Again we have a gimmick. Much is made of this automatic reduction in income tax as the debt is paid down. I am not saying that is a bad thing but, as John Williamson, president of the Canadian Taxpayers Federation, points out, it amounts to 10 bucks a year, a trivial amount and not all that the finance minister would trumpet it to be.

The third and final point mentioned in this article, and I quote Mr. Williamson here again, is that the policy “to keep spending under control” is “a policy already in tatters”. He goes on to say:

But the ink on the update wasn't even dry and the Conservatives already betrayed the commitment to keep spending "below the growth of nominal GDP”.

This is supposed to be the low spending, frugal government but what did it say in its first fiscal update? it projected an expenditure increase of 7.1% in 2006-07. That is a rate significantly and substantially in excess of the growth rate of nominal GDP, thereby breaking this other promise about keeping government spending growing at a slower rate than the economy.

In addition to the meanspiritedness, I would emphasize the gimmicks or the lack of honesty, whether we are talking about an income tax rate that is in fact going up and the government says that it is going down, the huge broken promise on income trusts, or this gimmicky behaviour that tries to deceive Canadians on the subject of net debt income tax and the control of government debt.

Having dealt with meanspiritedness and deceptiveness, my third theme would be the lack of productivity. On this point I would suggest that the government talks a good game on productivity, prosperity and competitiveness, all those good words, but its actions do not correspond with its words. I will give two primary examples of that point.

First, if a government really cared about Canada's productivity and competitiveness, the last thing in the world it would ever do is cut the GST. Yes, put money in the pockets of Canadians, but do it in a way that enhances productivity, prosperity, investment and savings, not through reducing consumption taxes. I do not think there is an economist on the planet, with the exception of the Prime Minister, who would disagree with this statement.

It is not a trivial sum of money. It would cost $12 billion a year if the government were to cut two points off the GST and $60 billion over five years. That is a huge chunk of the government's margin for manoeuvre over the last five years. All of that $60 billion over five years would be committed to something that does absolutely nothing for Canada's productivity and competitiveness. The money could still have been put into people's pockets through income tax or other measures that would have increased people's spending power and, at the same time, enhance the productivity and prosperity of the nation.

The second reason why the government's words ring hollow is that not only has it given the worst possible tax cut from the standpoint of productivity, but it has cut all the previous government's investments in those things that really matter for productivity and competitiveness, things like innovation, research and education. The $7.4 billion in cuts, which the government chose not to identify, were mentioned in question period today. The government clearly has cut in areas of maximum impact for the productivity, prosperity and competitiveness of the nation, things such as access to post-secondary education, research and innovation, all of which are keys to Canada's future prosperity.

The Conservatives are totally out to lunch on the productivity and longer term prosperity of our country, both on the tax side where they chose to make the consumption tax cut the least conducive to productivity of any possible tax cut, and on the investment side where they slashed critical investments in post-secondary education and innovation.

All in all, I am sad to say that the government receives a high grade on meanspiritedness, deceptive behaviour and on the lack of clear focus on the productivity and growth of our country. I am pleased that these points were made very well by the hundreds of Canadians we heard from across the country in the business of the finance committee. Once again, I thank all of those Canadians for taking the time to visit us.

I am also pleased that we on the opposition side of the House were able to work together to overcome, at least in part, the meanspiritedness, the deception and the lack of productivity of the government. We, as the majority in the House of Commons, were able to come together on many motions involving the GST, investments in post-secondary education and innovation, as well as reinstating the meanspirited cuts that the government has imposed on Canadians.

[Diane Ablonczy, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I read a quote this week stating that what politics has become is both sides trying to demonstrate that the other is unfit to govern. I thought of this when I listened to the member's speech because the measures that the government has taken in the plan it has put forward in Advantage Canada are common sense. It has been widely recognized as being a very sound budget for Canada. It has been given high marks and yet we see the Liberal Party opposite doing nothing but mischaracterizing it and using negative buzzwords to describe it.

I wonder if the member could tell the House if there is anything in the budget and in the government's plan that he approves of and thinks would be good for Canada. It would be good to have a little balance from the opposite side.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, usually I am quicker off my feet, but that is a really difficult question. Can I think of anything at all in those hundreds of words and thousands of pages that I think is good for the country? It beats me.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I listened to the member's speech with great interest. I found it quite remarkable that he came away from the same hearings that I did with a very different take. I speak of the Retail Council of Canada that specifically remarked that the GST cut was responsible for the single largest increase in real disposable income in 15 years. My goodness, how could he come away from that and think that this was not good for Canada?

I find it remarkable that he speaks of being meanspirited, yet he is from the government that cut $26 billion from health care and education and now wants to pretend it did not happen. That was meanspirited.

I find it absolutely remarkable that following the Liberals' shameful record of spending increases of 14.4% in 2004-05 he would stand before this House and suggest that we are being irresponsible in spending.

Perhaps the member might want to talk about why his government campaigned in 1993 to axe the GST entirely and now thinks that by cutting it by one percentage point we are somehow working against productivity. I would love to hear that explanation.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, actually the hon. member reminds me of an important development that I had forgotten to mention when he talked about the GST. It is not terribly surprising that retailers like a low GST, is it. They are retailers after all. But every economist who we heard, the IMF, the OECD, all of the experts agree that the GST cut does nothing for productivity.

The hon. member and his colleagues may remember that when we were in several cities in the country, St. John's, Vancouver and others, I did an informal poll of our witnesses. I asked the question of all of our witnesses, “Do you agree with the government that it is a good idea to proceed with the cut in GST from 6% to 5%, or can you think of other things you would rather do with this money?”

I remember the witnesses in both Vancouver and St. John's were particularly perceptive because to a man, to a woman, they voted unanimously that the GST cut was a bad idea, that there were far better uses for the money. In the other places, I do not remember a single person defending the GST cut, but there were others who, not wishing to go against the government , were agnostic on the subject. Certainly on both coasts there was unanimous condemnation of the second cut to the GST, as compared with far more productive uses to which that money could be put.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I appreciate the opportunity to ask a question of my colleague who sat on the finance committee with me. During his presentation he talked about honesty, which I thought was very interesting.

My question is very simple. I looked at what the Liberals have added in terms of their supplementary submission. We agree on a number of the 45 or so things that are in there in terms of recommendations that we had supplementary, but honestly, I do not think you were planning on supporting this budget no matter what recommendations were coming from here. Based on what you said in your speech, you are opposed, period.

If the finance minister takes on some of the Liberal dissenting opinion, how many of those before you support the next Conservative budget, or were you ever going to support a Conservative--

[The Speaker, Liberal, Peter Milliken]

Order. The hon. member for Burlington knows he has to address his remarks to the Chair and not to the hon. member for Markham—Unionville, who now has the floor.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I guess it is a fair statement that the more of those wise Liberal recommendations the government chooses to accept, the less likely it is that we would vote against the budget

This is a very long, steep hill that the government has to climb, because having pointed out that the budget and the subsequent fiscal update are not only meanspirited, not only deceptive, they are actually counter to the need for Canadian economic growth and prosperity, productivity and competitiveness. It would take a really radical change in his whole philosophy, I think, for the finance minister to produce a budget that would likely be acceptable to our side, but I can say in all honesty that the more he goes along with the Liberal recommendations, the more likely it is that we might support the budget.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member may be able to assist the House in understanding what latitude the government has in terms of making changes which affect the fiscal position of the nation.

For instance, allowing pension income splitting will, as the member knows, benefit only high income earning seniors who make over $35,600 a year. It provides no benefit to those who make less or have no partner. All of a sudden we are changing the balance in terms of the progressive nature of the income tax system by making major adjustments without even going through the budget process.

I wonder if the member could advise Canadians how dangerous it is to make significant decisions outside the purview of the budget process.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, that is a perceptive comment by my hon. colleague.

One gets the impression that the government does tend to make policy on the fly, and I do not think it is limited to economic policy. My colleague raised a very good example. It seems the Prime Minister likes to make his policy literally on the fly, that is, when talking to reporters in airplanes. One thinks of his rather amateur approach on China where he ignored all professional advice, or his rather startling statements on the Middle East over the course of the summer.

It seems to me that my hon. colleague has chosen a very good example in the financial domain but one could look in many, many other areas and would find a somewhat amateurish policy on the fly that has become a typical characteristic of the government in many different areas.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, during a meeting on the budget process there was a discussion on what was happening with the GST cut in the tourism area. The hon. member was the minister of revenue a number of years ago. The question was asked, when did the department know about the problems with that program. Sure enough, the member admitted that he was the minister of revenue at the time when he knew about it.

When he was minister why did he not inform those directly affected that there was a problem with that program and make a move to fix it or get rid of it?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I would be happy to talk to the member afterward but I am at a loss to understand his point.

It is true when I was minister of national revenue as I recall the department proposed that we abandon the program that would provide a GST rebate to foreign visitors and I said no at the time. I only wish the government had been as wise because we heard from all of these witnesses from the tourism industry about the high economic cost that the government decision had imposed on it, an industry suffering from many other problems, such as the high value of the dollar.

I was very pleased to maintain that program because it was effective and it was working. It was instrumental in bringing package groups for conventions and things of that nature. We heard that from many witnesses from the tourism industry, so I am not quite sure what the member is talking about.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I believe the debate we are having is extremely important. The indications we must give to the Minister of Finance and to the government as far as the next budget is concerned are particularly important in a minority government situation. For the Liberals and the New Democrats there are a certain number of things that are essential. The same is true for the Bloc Québécois.

I want to first point out that we were extremely disappointed by the general direction of the report submitted by the Standing Committee on Finance. We certainly agree with some of the recommendations. However, in our opinion, others could have been better worded. And there are others still with which we completely disagree.

Two things are particularly disappointing. The first is the lack of willingness by the members of the Standing Committee on Finance, from all parties, to respect the constitutional jurisdictions of the provinces and the Canadian Constitution. That has always struck me ever since I arrived here in 2000. It would seem that the only people who have read Canada's Constitution are the members of the Bloc Québécois. The only people who want to respect the jurisdictions under the Canadian Constitution, are the members of the Bloc Québécois. I think we are the last representatives of this agreement reached in 1867 between two nations around the creation of Confederation. Apparently, across Canada and in the other political parties, there is no willingness to respect the constitutional jurisdictions of the provinces.

Over the years—particularly since the second world war—the government has taken a series of initiatives that interfere in these jurisdictions. It has used a taxation power it claimed during the two world wars. It has also refused to give back the part of the tax base it should return to the provinces to allow them to assume their responsibilities preferring to implement transfer programs for health, post-secondary education and social programs and a certain number of other programs affecting areas that clearly come under the jurisdiction of the provinces and Quebec.

The members of the committee thus ignored the Bloc's and Quebec's desire for respect for the province's jurisdictions. This was the Bloc's first major disappointment with the committee report.

The second great disappointment was the blatant refusal to recommend to the Minister of Finance, to the Prime Minister and to the government any specific measure to resolve the fiscal imbalance. It remains a matter of some importance for the Conservatives. I remind them once again, as I have in committee, that on December 19, in Quebec City—almost a year ago, now—the Prime Minister made a commitment during the election campaign to resolve the fiscal imbalance. It is already a step in the right direction to acknowledge it. The federal Liberals have a hard time doing so. It seems that a resolution was passed in this regard at their convention. However, at the end of the convention, their new leader contended still that the fiscal imbalance was a myth.

It is a good thing to recognize the fiscal imbalance, but it is a better thing to propose solutions to resolving it than to simply just acknowledge its existence. The members of the committee, with the exception of the Bloc members, refused to propose avenues for a solution to the Minister of Finance. I point out, and cannot say so enough before the budget is tabled, that our support for the budget is conditional upon a resolution of the fiscal imbalance.

As I have said and will say again, we do not expect everything to be resolved in the next budget. We do, however, expect that the people of Quebec will at least know whether the Prime Minister and the Conservative Party have honoured the promise made last December 19, reiterated in the throne speech and reaffirmed in the most recent budget. Next February or March probably, when the next budget is tabled, we will know the solutions proposed by the Conservative government. Once again, we are not expecting a solution to be put in place immediately, but we expect to at least know the scope of the corrective action needed to resolve the fiscal imbalance.

We have made known our estimates, which come to approximately $12 billion for the provinces overall and $3.9 billion for Quebec specifically. We want to know how large a correction the government is going to make.

As well, a schedule for making this correction needs to be agreed on. We have proposed that, within three years, the government correct the fiscal imbalance to the tune of $12 billion for the provinces overall and $3.9 billion for Quebec. This would restore Canada's fiscal balance.

We also want to know the government's timetable and the measures it will take to correct the fiscal imbalance and inject the equivalent of $12 billion into the transfers to the provinces and Quebec.

We have made proposals. My colleague from Jeanne-Le Ber and I presented these solutions in committee. Unfortunately, they were rejected. Sometimes, it was strange, disturbing and distressing to see the committee reject, for example, solutions pertaining to transfers for social programs and post-secondary education, proposals that meet with approval across Canada from rectors of universities, professors' associations and unions and students' associations. The same figures came up in Halifax, in western Canada, in Toronto and in Quebec CIty.

We are the only ones who made this proposal, and all the other parties except the NDP voted against this recommendation, which represents part of the solution to the fiscal imbalance. It is not the whole solution, but it is part of the solution and it meets with approval across Canada. In this case, the Bloc Québécois was the only party that defended the interests of students, not only in Quebec but across Canada. The Bloc Québécois was the only party that defended the interests of university professors, not only in Quebec but across Canada. The Bloc Québécois was the only party that listened to rectors, not only from Quebec, but from across Canada.

I am astonished that there is a consensus throughout the university and post-secondary system—including the colleges—and yet it is being ignored. There is a consensus across Canada, including in Quebec, but the representatives of the party in power and the Liberal Party of Canada are not paying any attention to it.

For these two reasons, we were unable to support the general direction of the report, even though, as I mentioned, it contains some extremely interesting proposals. I will come back to this.

The first thing that we found especially disappointing was the failure to respect the jurisdictions of Quebec and the provinces.This was not in just one particular area, or it might have seemed merely inadvertent, that my colleagues forgot how the fathers of Confederation divided the areas of responsibility. One could have believed it was a small oversight or lack of historical and constitutional knowledge. This was not the case, because it occurred in all areas of jurisdiction.

Consider education. Is there any area of jurisdiction that is more exclusive to the provinces and Quebec than education? The government wanted to establish national standards, to put conditions on the transfer payments.

The government wants to create transfer payments exclusively for post-secondary education. This limits even further the choices that existed at the time of the Canada social transfer, when the provinces could decide how to balance their spending between health, post-secondary education and social programs.

We now have transfer payments for health. We therefore do not have a choice. The transfer payment must go towards health. I must say, the needs in that area are enormous.

That left post-secondary education and social programs. Thus, Quebec or any province could choose the balance that most suited its situation. However, now the government wants to introduce a transfer payment exclusively for post-secondary education and a new transfer for social programs, thus limiting the autonomy of the provinces and Quebec.

And the government goes even further. Mr. Speaker, if you read the committee's recommendations, consider recommendation number 8, at the end. It reads:

Once the Canada Post-Secondary Education Transfer has been created, the government should introduce guidelines, principles, responsibilities and accountabilities with respect to post-secondary education.

These are jurisdictions of Quebec and the provinces. They want to establish guidelines and, eventually of course, conditions for transfers of money under the guidelines dictated by the federal government. That is encroaching on the jurisdictions of Quebec and all the provinces and territories. That should result in an outcry from not only all the provincial and territorial governments, but also those in this Chamber who believe that we should respect the Canadian Constitution.

I will give another example, that of health. As you know, this is not the first time that there has been interference in this area. There is a recommendation dealing with mental health. Unfortunately, I cannot find it right now. What is proposed is the establishment of a Canadian mental health commission. Yet, health— whether mental health or all components of health— is a provincial jurisdiction.

Once again, these are new programs, new encroachments, new conditions for federal transfers for health. They are pushing the envelope in this area just as they are in education. However, we were able to prevent the establishment of a federal department of education, as provided for in the initial bill.

Municipalities are also touched on. The Minister of Finance mentions them in the economic statement. He wants to promote private-public partnerships. If Quebec is to have a choice, it is in the implementation of infrastructure programs. In the slate of items previously negotiated, Quebec retained control over its infrastructure programs. However, they wish to promote a formula which does not even seek to have the consensus of the Quebec public. Thus, they are interfering directly in the decisions that should be made by Quebec.

I have found Recommendation 2 which proposes the creation of a Canadian mental health commission.

They also propose the establishment of a pan-Canadian securities regulator. Recommendation 37 reads as follows:

The federal government conclude an agreement with the provincial/territorial governments on a single securities regulator no later than 31 March 2007. The regulator should begin operations no later than 30 June 2007.

The Constitution clearly states that the area of securities is a jurisdiction of the provinces and of Quebec. Furthermore, in Quebec, as you know, we have the Civil Code. How would a pan-Canadian securities commission be able to deal with this reality specific to Quebec?

As Bernard Landry said, the securities commission is so important that everyone agreed there should be two of them—one for Quebec and another for the rest of Canada. However, I also know that some other provincial governments do not want the federal government to get involved in this sector.

The government did not respect constitutional jurisdictions. We tried, quite constructively, to change the report to take into account the motion that was passed almost unanimously in this House recognizing the existence of the Quebec nation. What do they mean by a “national program”? The Quebec nation? The Canadian nation? It would have been better to clarify whether it was a federal program, a pan-Canadian program, or a program for all of the provinces. But no, this government ignored the democratic vote held in this House. As my friend Gérald Larose said, some people seem to think this is purely symbolic. Rest assured that the Bloc Québécois, along with the Quebec nation and the Government of Quebec, regardless of who is in power, will continue pushing to ensure that recognition of the Quebec nation is accompanied by specific tools to facilitate its development even within Canada.

This first aspect is extremely disappointing. The second, the fiscal imbalance, is utterly stupefying. Imagine if the only thing the committee had recommended was the last recommendation in the report. I simply must quote it because I find it so astounding. We are talking about a major issue that could potentially set off an election in the coming months. Here is what the committee produced:

Recommendation 43:

The federal government meet with the provincial/territorial governments with a view to assessing their relative fiscal capacity and the extent to which they are able to fulfill their constitutional responsibilities.

We know there is a fiscal imbalance, so we do not need to meet with the provinces to find out if there is one. We know there is. What the committee should have done was recommend action, as I said. We proposed one measure. We proposed several, but as I said before, we proposed one specific measure: increasing transfer payments for post-secondary education and social programs to bring them up to where they were in 1994-95 before the member for LaSalle—Émard started making his draconian cuts to provincial transfer payments.

That represents some $5 billion for Canada as a whole—$4.9 billion, more accurately—and $1.2 billion for Quebec.

Then it could have easily been proposed, as the Romanow commission recommended, that a quarter of the cost of health care to the provinces and Quebec be assumed by the federal government. The current figure is 23%. A little more effort would do it. Commitments have already been made. It has not been easy, but some progress has been made in this area. In all, in order to reach 25%, it would take some $400 million for Quebec.

Two proposals have already been made and they are far from revolutionary. The first is to roll transfer payments for post-secondary education and social programs back to their levels prior to the cuts. Then it is a matter of the federal government assuming 25% of provincial health care spending.

A third proposal was also possible. It would concern equalization payments, a highly contentious area. This subject is a matter of debate. However the Prime Minister was aware of it when he was campaigning to be Prime Minister and promised last December 19 to resolve the problem. He knew of it. Equalization must involve the ten provinces and all of their revenues.

Some want to exclude oil royalties from the calculation of equalization payments. That is totally absurd.

What is one of the sources of the disparity in fiscal capacity in Canada? It is the layers of oil and natural gas in Alberta.

Newfoundland is an interesting case. Suddenly an 11% growth rate is predicted for it this year. One of the provinces with the highest level of poverty has an 11% rate of growth. Why? Because the Hibernia platform was set up and Newfoundland is now developing a series of businesses in the industrial sector around this oil. This is therefore a significant element of disparity. Failure to take it into account is like hiding one's head in the sand.

The implementation of these recommendations was supported by the Séguin commission in Quebec and the Government of Quebec—federalist and sovereignist. The bottom line is an increase in equalization payments of some $5 billion and of $2.1 billion for Quebec, if the proportion it currently receives is taken into account.

We can add to that compensation for the Conservative government's unilateral decision to eliminate the national child care program, for which Quebec is receiving $270 million this year. We therefore feel that the money was promised and must now be delivered. Perhaps the Conservative government does not want to go ahead with this plan, but it must compensate Quebec, at least , which already has its own child care network that must be adequately funded. We are talking about some $270 million.

If we add up those four amounts—$1.9 billion for post-secondary education and social programs, $2.1 billion for equalization, $400 million for health and $270 million in compensation for the unilateral decision to eliminate the national child care program—the total is nearly $3.9 billion.

Clearly, this sum can be easily broken down and the committee could have made recommendations based on this information, but some people chose to shut their eyes instead.

As a final point, we are very pleased that the committee recommended re-establishing the programs cut by the Conservative government on September 25, 2006. Those programs affect literacy, associations, women's groups, the social economy, support for museums and open diplomacy. This is good news.

We are also pleased with the recommendation to increase the Canada Council for the Arts budget to $300 million. We are also glad to see that the committee recommended the reinstatement of some of the environmental programs that the Conservative government had cut or was about to cut.

I hope the Minister of Finance listened to my speech, or will at least read it, and act on the recommendations. I will not call these recommendations extremely conservative, for this could cause confusion. They are very moderate and cautious, and they allow the Bloc Québécois to support the budget. Otherwise, we might have to go into an election, and then I would wish the Conservatives good luck, in advance.

[Denise Savoie, NDP, Victoria, BC]

Mr. Speaker, my colleague talked about the importance of respecting provincial jurisdictions. I completely agree, gone are the days of the federal government sticking its nose in provincial business and imposing programs without consultation or collaoperation.

However, in many of his examples, it seems there was agreement with the Government of Quebec. My colleague will agree, I hope, that a country is more than the division of federal-provincial jurisdictions and that it is built on collaboration and consultation.

Something puzzles me about his comments. Given his sensitiveness toward provincial jurisdictions, how does he explain his support for the softwood lumber agreement, in which the federal government is requiring the provinces to consult a foreign government, in Washington, on truly provincial forestry policies? This puzzles me somewhat, given the Bloc's sensitiveness on this issue.

Given the comments made this afternoon, how could the members of the Bloc Québécois have supported this agreement—a very bad one at that—which gives up Canadian sovereignty in an area of provincial jurisdiction?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, the Bloc Québécois never said that the softwood lumber agreement was a good deal. In fact, it contains a great many weaknesses. Moreover, when I was the international trade critic, I had written to the Minister of International Trade to suggest that a number of things be corrected.

However, the people in the industry and the Government of Quebec have asked us to support the agreement because they are hamstrung because of the countervailing duties that are currently in American hands. Sure, we can win a decisive victory in a few months, but if our companies are closed and our jobs are gone forever, the victory will be hollow. An agreement can be renegotiated. I worked in organized labour for a long time. Sometimes, you get a collective agreement that you are not very proud of, so you make up for it in the next round of negotiations. That is what we are hoping for in the case of the softwood lumber agreement. What we want is a return to free trade.

I would like to take this opportunity to respond to something the member said. When the federal government provides financial support for the provinces in their jurisdictions, that is the best illustration of fiscal imbalance, in my view. If the federal government has money not only to assume its responsibilities, but also to transfer money to the provinces for their own responsibilities, then the tax room that corresponds to those transfers should be transferred to the provinces. That is what the Bloc Québécois is asking the government to do: restore transfers to the levels they were at before the cuts, then negotiate a way to transfer the tax base so that Quebec has freedom of choice in its jurisdictions. That is what we are suggesting, and that is what we are going to insist on.

We also want the federal government to limit its spending authority and allow provinces that want to opt out of a program to be fully compensated. Unfortunately, we did not find any mention of this with respect to the loans and bursaries program in the report of the Standing Committee on Finance. At least, it is not stated in that way.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I want to thank my colleague across the way who joined us on the committee. He did a decent job in terms of representing his constituents.

My concern is this. I listened to his speech and I read what the Bloc likes to call its minority position, which contains a number of recommendations. A number of recommendations we agreed on, and they are in the main body of the report.

One thing is missing in its position. The Bloc does not attempt to tell us what it would cancel. Would it cancel the fitness tax credit or the transit tax credit? Would it roll back the GST to 7%? It has a lot of spending in its report, but it does not tell us how we can afford it without cutting back on a number of items, which, in my recollection, the Bloc supported in budget 2006.

Does the member opposite have any ideas on how the Bloc would pay for all these things it wants rolled back, including some of the cuts that were made?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for his question. On this, the Conservatives and the Bloc can come to an understanding.

The Bloc proposed a reduction in federal government operating expenditures over three years, representing $15 billion. I passed this proposal on to the Minister of Finance.

I think the Conservatives will agree with us. We noted that operating expenditures increased on average by 8% annually in the past seven years, I believe. I am not referring to either programs or transfers to individuals or the provinces, but to bureaucracy and computers. The figure, then, is 8%. We think it is too high. There is a recommendation to reduce the spending growth rate.

Without cutting any program—especially not like what was done on September 25—without laying off anyone, only through attrition, hiring people, but at a more reasonable rate, by cutting certain outsourced professional services that could be provided by the public service, we think that, in three years, some $15 billion could be saved.

In the most recent election, I saw that the Conservative platform proposed freeing up some $22 billion in five years. In terms of reducing operating costs, it is perhaps not such an undertaking to come up with the manoeuvring room to resolve the fiscal imbalance. Still I would remind the member that, last year, the federal government had a surplus of $13 billion and will this year have some $6 billion or $7 billion in surplus.

Therefore, by reducing operating expenditures and using the flexibility the surplus gives us, there is plenty of room to resolve the fiscal imbalance problem once and for all.

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

Mr. Speaker, this is an important discussion for this place. Committee members have spent many months engaging Canadians in prebudget consultations. We have met with hundreds of individuals and organizations. On behalf of the Parliament of Canada, we have brought before the House a complete synopsis of options and views that must be taken into consideration in the budget preparation.

Canadians are watching today with a great deal of cynicism and skepticism. Based on past experience and the record of the previous Liberal government, there has hardly been an occasion when governments of the day have listened to what Canadians have said. Expectations have been raised and Canadians have invariably been disappointed. It has been the case over the last five or six budgets under the previous Liberal government. I certainly hope it is not the case today.

Given statements made by the government and announcements delivered by the finance minister, I do not hold out great hope that the government is listening to Canadians any more than the previous government did, but we need to try. We need to remind the government what Canadians have said.

I want to give a few impressions of the hearings. However, before I do that, I want to indicate that the committee functioned well and was active. I thank all my colleagues on it, including the chair, the member for Portage—Lisgar, as well as the research staff, the clerk of the committee, the translators, the interpreters and the logistics personnel, all of whom made it possible for us to travel to many parts of the country to hear from so many Canadians.

The first impression from the hearings is one of cynicism in the face of the knowledge that the government has basically used up the surplus capacity it has had and has provided us with almost a bare cupboard. By all indications, the surplus dollars we have seen over the years will not necessarily be there in the next several years. The great surpluses that we have seen, especially for the last fiscal year, have been unceremoniously put toward the debt without due regard for balance or the concerns of Canadians.

If there was one thing the committee heard over and over from Canadians, it was that the present government and the one before it had not offered a balanced approach, and it was high time it did so. For years Canadians were told the government had to get rid of the deficit and then it would be their turn. When the deficit was eliminated through huge cuts, the Liberals said that it was not the turn of Canadians yet, that they had to give big corporate breaks and tax reductions to wealthy individuals. When that was done, the Liberals turned to Canadians and said that it was still not their turn, that they had to put every penny of available money toward the debt.

Then came the end of the Liberals and Canadians looked to the Conservatives with some hope, I would not say with a lot of hope, that they might be prepared to balance the equation. It is not really a radical concept. It is not a social democratic approach by any means. It is a compromise position to put some money against the debt, some money toward tax cuts and some money toward program spending.

Let us start to repair the damage that has been done to Canadians over the last decade or two. Let us look at the increasing gap between the rich and the poor, the increasing desperation on the part of working mothers, and the growing frustration on the part of low wage earners in this country who never seem to get ahead and never get a wage increase. They never get a raise.

That was one of the most important messages we heard right across this country, that it is time for Canadians, but instead of government actually listening to those concerns, we listened to the finance minister give his economic update in which he said the government was going to do even more in terms of getting rid of the debt and even more in terms of spending cuts.

Since my time is almost halfway up already, I want to note that I am splitting my time with the member for Victoria.

The second important message we heard from Canadians was that competitiveness is not something we deal with just in economic terms. It is not just about the bottom line for corporations. It is about how we build a society that can be competitive on a global scale in economic and human terms.

Over and over, people rejected the notion that all we had to do was reduce corporate taxes and give more tax incentives to big corporations, the trickle-down would happen, and Canadians would benefit sometime, somewhere, somehow, even though by then, by cutting so deeply into programs and using all available revenue for tax breaks for corporations, we really kill medicare, universal education, public housing, and sustainable environmental programs.

In fact, Canadians want the government to understand that the most competitive nations in the world are those that have been responsible not only in terms of fiscal planning and debt reduction, and not only in terms of a fair, progressive taxation policy, but also in terms of major public investment. The countries that do the best competitively and economically around the world are those that invest in a universal child care program, in health care, in housing, in environmental and sustainable programs, and in the most vulnerable people, in women, people with disabilities and aboriginal peoples.

There is a lesson around the world for all of us. I do not know if members on the Conservative side have heard this or if the Minister of Finance is going to ever grasp it.

That is what we have to do today: we have to make them understand that when we look at the future we have to invest in those programs that do both, programs that ensure economic prosperity but also raise the level of the human condition. We have to ensure that we address some of the most embarrassing and shameful circumstances and statistics ever faced in this country. It is absolutely unacceptable that a country as rich as Canada has the kind of homelessness and poverty that we have seen in this winter weather.

The committee heard from a homeless person. I am sure my colleagues on committee will recall him. His name is Dri. His full name is Rainer Driemeyer. He said, “Taxation is the cost of living in a civil society”. He was reminding us that taxation is not bad per se, but that it must be done in a balanced context and it must ensure that we have the resources to pay for the things that we cherish as a country.

We heard from child care workers who showed us smiling faces of children who had been through the most progressive child care facilities anywhere in the world and who want to see that kind of program encouraged and continued.

We heard from Canadians who felt that we have what it takes. We have the resources. We have the knowledge. We have the abilities. We just need a government that is willing to let us put those talents to the use of this great country and for the future of our children.

[The Acting Speaker, Conservative, Royal Galipeau]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the member for Nanaimo—Cowichan, Aboriginal Affairs; the member for Madawaska—Restigouche, Regional Economic Development of Canada; the member for Hamilton Mountain, Pensions.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I appreciate the comments from my fellow member on the committee, the member from the New Democrats who came to most of the meetings. I appreciate her work on the committee while we were travelling the country.

I have two questions for her. First, just about everyone who came to committee said that if we spend more we will make more. Based on that theory, we could spend a zillion dollars and make a zillion dollars. The member talked about that a little. I want to know if she actually agrees with that concept.

Second, we are spending $13.2 billion to pay down debt. We are trying to get this country's debt down. She seemed to be opposed at the time. Would she prefer that the taxpayer paid interest on debt? What is her view of what the role of interest is on debt and the role of debt in the upcoming budget? What are her party's views on that matter?

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

Mr. Speaker, I appreciate the question from my colleague, the member for Burlington, who sits on the finance committee. I appreciated all of his participation in the committee over the last number of months as well.

In the context of the issue of spending, I think the theory is that if we spend more we will make more. No, I do not agree with that. I do not think anybody who came to the committee agreed with that.

In fact, the opposite was said. People said that when the government keeps spending on things like tax breaks for corporations they do not necessarily see the benefit. Over and over, people reported to us that over the last number of years we have seen millions of dollars in tax breaks for corporations and that has not resulted in increased investment.

In fact, the contrary has happened. Investment has declined as tax breaks have grown and profits have risen. Over and over again, those who thought this through said that if we are going to do anything in terms of more public spending in the form of tax breaks, then we have to apply a cost benefit analysis.

I found it very interesting to go to some of the big business folks around our table, especially the business tax reform group, and ask them if they did not think there should be some sort of a cost benefit analysis in terms of more tax breaks. Do members know what the answer was? It was no. It was a simple no, in that they said no, they do not need any accountability, and no, there does not need to be any kind of transparency, and we just need to take from the public purse and take, take, take and never give, give, give.

That is what we object to. Public spending in certain strategic areas can produce jobs, create good working conditions, deal with some very difficult social and environmental issues and actually build a better society while bringing down the debt.

Finally, let me answer the question about debt, because in fact the member and others on those benches like to present the myth that the NDP does not believe in paying down the debt. Nothing could be further from the truth. We have always said that a portion of our surplus should go against the debt. We have recommended that it be decided by Parliament, something that the Conservatives used to support when they were in opposition, but not now, and we recommend that there at least be--

[The Acting Speaker, Conservative, Royal Galipeau]

The hon. member for Mississauga South.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am always curious when people suggest that somehow there was an option left. The year end of March 31, 2006 was over and six months later the Auditor General's report said there was a $13.2 billion surplus.

In fact, there is no option other than to have it applied against the debt and recorded in the accounts. It does not mean that the savings from the paydown in debt are not there, but governments do have an opportunity during the fiscal period, during the year when they get progress reports, to adjust their programs to assist.

I think the member is bang on. We are talking about differences in ideology and in the view or the vision of Canada. The Conservatives seem to think that tax cuts are the solution to all problems and that people should fend for themselves. The literacy cuts, the women's programs cuts and the whole range of them all affect people.

Does the member feel that we need to call to Canadians more strongly to give the government a signal that it is not acceptable to leave Canadians who are unable to help themselves to fend for themselves?