Debates of March 22nd, 2007

Opposition motion—Equalization

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Mr. Speaker, it was stated in this House on October 26, 2004 by the leader of the official opposition at the time, who is our current Prime Minister, that the Government of Canada had a moral obligation to keep its promises to the people of Newfoundland and Labrador, no caps, no clawbacks, no limitations, no conditions, no big exceptions in the fine print.

Does my colleague feel that the Prime Minister, through this budget, has shunned his moral obligation to the people of Newfoundland and Labrador and Nova Scotia?

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, the premiers of Nova Scotia and Newfoundland and Labrador, both Progressive Conservative premiers, have been clear that this is a betrayal of their provinces. This is the breaking of a solemn promise by the Prime Minister, the same Prime Minister who destroyed the Kelowna accord, who ripped up agreements with all provinces and territories for early learning and child care, and who on a consistent basis does not seem to believe either in keeping his promises or respecting treaties and accords.

This is an accord between the federal government and the provincial governments of Newfoundland and Labrador and Nova Scotia. It is an accord that the provinces were counting on. It was going to make a fundamental change in the future of the region. In fact the member for Central Nova said:

This issue is of historic proportions for Atlantic Canada. In the past, we have seen attempts made to put forward what I would describe as “election amnesia”.

It would seem that this is what the Prime Minister is suffering from right now, a bad case of election amnesia, to quote the member for Central Nova.

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, it is a pleasure to rise in support of the motion by the member for Bonavista—Gander—Grand Falls—Windsor. It is a great motion that illustrates very well the concerns that we have in Atlantic Canada.

Canadian seniors particularly saw $25 billion to $30 billion being ripped off from their savings by a broken promise on income trusts. Atlantic Canadians are seeing hundreds of millions, if not billions, more being stolen from their provincial treasuries by breaking this promise on the Atlantic accord.

It is a calculated manoeuvre that comes out of a sense of entitlement by the leader of the Conservative Party, an entitlement to be Prime Minister in a government that would have a majority so that he could bring forward an agenda that would be much more right wing than anything we have seen in decades in this country. That is what he is attempting here. If he wanted to build a nation rather than a majority, he would be looking at assisting the weakest so that they could meet their potential and bring the country up in all regions.

He could have looked at lowering taxes for those with a lower income, lowering the taxes that he increased in the last budget. He could have increased the child tax benefit, helping all Canadians of low and modest income. He could have assisted single seniors, who are among the hardest hit in our country, from the rising cost of fuel and other problems that make the basic cost of living go up quite a lot. He could have assisted on child poverty. There are still a million children living in poverty.

Next year he intends in his budget, according to past promises, to reduce the GST again by another per cent, which would be roughly $6 billion. That would bring a million children out of poverty, but there is none of that.

He could have assisted students, but when he sees the plight of the students, it is a little like Marie Antoinette before the French revolution who said, “Let them eat cake”. Now the minister says “Let them buy steaks”.

Some investments and calculations are based on “who we can get to vote for us”. There is a ring around Toronto where people are quite affluent and another ring of people around Montreal, so he goes after those people. As for the rest of the country, it does not matter too much. Alberta will do fine. It gets some money. Provinces such as Nova Scotia, Newfoundland and Labrador and British Columbia get zero, not one penny more.

The Prime Minister has often said that Atlantic Canada has a culture of defeatism. He wants to make sure that by doing this, we are completely defeated.

The Atlantic accord was a hard fought victory for Atlantic Canada. A lot of people carried a lot of weight. Dr. Hamm is to be commended on the work he did. The then minister, the member for Halifax West, the members from Newfoundland, all the Atlantic caucus worked with the government. We could not always get what we wanted. It took a long time. It was a battle of many years, but finally we did get it. Premier Williams of Newfoundland joined that battle. He did a lot of work on it.

The situation at that time was that the offshore revenues would go to the federal government. The federal government would return 100% of those revenues to the provincial governments, but a large part of that would be calculated against equalization. The ability of the provinces to use these resources, which are finite in nature and very expensive to extract, was quite limited in improving their overall economy.

Those provinces made the argument successfully that they should get all of those revenues and that they should be able to invest that in their provinces and that it should not be calculated against future considerations, changes in equalization programs or anything else. It should be above and beyond what they would normally get.

In the last budget by the Liberal government there was an increase in equalization and it did not reduce the money for the accord. There was no question of making choices. The money was above and beyond. The provinces had the right to expect that it would be like that in the future.

What do we see this year? We have a province like Nova Scotia with a lot of requirements for highway infrastructure, for investments in education, health care, social services, productivity, research and development, the modern economy. It was hoping that equalization would give it a few dollars more.

They knew that the Prime Minister would be putting a lot of money in the equalization formula to appease those votes he is trying to get in the more populous provinces so they could expect to get that money by election day. “No, Russian roulette is what you are going to have to play, Williams; Russian roulette, MacDonald. You choose now. Take a few dollars more this year and forgo billions of dollars for your province in the future years”.

That is a very difficult situation. It is a very difficult thing for those premiers to do, to look at the natural heritage, that oil and gas that is in the ground that can buy their citizens a better future, and say that has to be traded away against a few dollars now. We know that is what he wants them to do. We saw it in his budget last year where he said in his budget that he did not like the offshore agreement that had been negotiated, so he found a way to get rid of it.

Whom do we have to defend Atlantic Canada? The Minister of Fisheries, who as a Progressive Conservative and as a Conservative was very adamant on fighting for it. He was very adamant that it had to be 100%. Now I hear him say that the premier of Newfoundland is lying. I think he thinks that a few flights in the Challenger jet gives them much better capacity to analyze the fiscal capacity of Newfoundland than anybody else can, but that cannot be done from St. John's. One has to come to Ottawa. One has to sit next to the Prime Minister a few days and then one can do that.

He did not get in the budget what he had promised us. Money for small craft harbours, when he was on the fisheries committee he always talked about more money for small craft harbours. We did not see that. There was a reduction to the tune of some $30 million annually. Custodial management was not mentioned. We have not seen that anywhere and he remains an apologist.

While in opposition, the member for Central Nova was a fierce fighter for the rights of Nova Scotia and now he is a lapdog for the Prime Minister. He watches our money, the money for which the premiers fought so hard, being taken away, being eroded by force. I am forced to make a very difficult decision. I would like to be at Tim Hortons in Pictou if he dares to go back there. I would assume that the coffee and the reception would be very cool. He may need the company of Condoleezza Rice as somebody to sit with him.

I listened to the Minister of Finance when he was reading his budget speech. He said that the long days of bickering between the federal and provincial governments were over. I have not heard a quote like that since I read about Neville Chamberlain talking about peace in our times right before the second world war.

Now the premiers are speaking out. Rodney MacDonald, the premier of Nova Scotia, does not attack the Prime Minister very easily. He was the only cabinet minister in the John Hamm government to get on the leadership team of the Prime Minister when he was seeking the leadership. He has been very loyal to him. He was one of the three co-chairs in Nova Scotia of his campaign. He was very mad about the way they were being played, like a fiddle I think is the way that it was mentioned in a Nova Scotia newspaper.

Jane Purves, chief of staff to the premier of Nova Scotia during the time of John Hamm, a cabinet minister herself, minister of education, knows how difficult it is to make ends meet in the Nova Scotia budget. She was planning to run in Halifax for the Conservatives and today she is not so sure. I was reading those things. I do not know that she wants to go around defending the budget. What she and the premier, and Liberal MPs and MLAs had for many years argued and fought for and finally got, with one stroke of a pen the premier and the minister of finance of Nova Scotia were put in a position where they have to play Russian roulette, a few dollars more this year and maybe billions of dollars less.

If there is no oil and gas industry, it is an easy decision. If there is no expansion, if the second field or future fields do not go on stream, take the money, get the new equalization money. But if it happens in the future, it could be the wrong decision, like premier Buchanan made in his agreements with a Conservative government previously.

I think the minister of finance was Greg Kerr. He ran against me last time and will run again. He will be much more happy because this is his type of management. This is a type of management that, under his tutelage, got Nova Scotia a billion dollars in debt, and it is a small province.

Premier Hamm and a lot of other people worked hard with the former prime minister, the member for LaSalle—Émard to get the Nova Scotia, Newfoundland and Canada accord which gives opportunity and hope. The Conservatives want to see defeat for Atlantic Canadians.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I appreciate the presentation from my colleague across the way. I also sit on the finance committee with him and I appreciate his comments.

In general, I think, there is some confusion among the public. In my latest householder, for example, I indicated the difference between a fiscal payment and an equalization payment. In this budget, the actual equalization payments have gone up by over $1.5 billion in total, I believe, and I think the total is around $12.5 billion.

The fiscal payments, the actual payments that are tied to actual spending in terms of health care, post-secondary education and social services, are a much bigger chunk of what we spend. If I recall correctly, last year we sent the provinces a little over $50 billion.

We can see that there is a significant difference. We have to keep in mind that equalization is an issue that was identified in our Constitution. It is a constitutional item and it is not geared to each province in terms of how it is spent. We may see different provinces spending differently.

I appreciate having a discussion on this topic because I think it is important. I do not agree with the motion that is in front of us because I think it is disingenuous.

I would tell the member who spoke that we relied on changing the formula or at least giving an option for the formula to Newfoundland and Labrador, for example. We gave that province an option based on a report that was done by Mr. O'Brien--

[Todd Russell]

A goose egg.

[Mike Wallace, Conservative, Burlington, ON]

Your goose is going to be cooked in the next election.

I want to ask the member if he agrees with the O'Brien recommendations or not.

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, rather than take the few remaining minutes that I have to talk about all the questions of fiscal transfers and equalization transfers, I would like to take the member to Halifax this evening, where we would sit with Michael Baker, the minister of finance, who has to write the Nova Scotia budget for tomorrow.

What he has been expecting through the years is that increases in equalization would be above and beyond the money that he is getting from the offshore accord. He learned on Monday that this was no longer the case. It was an either-or decision, in which he could take the old formula but not participate in the new equalization scheme, so there would be no more money, or he could take a few more dollars, which would be a help this year, and it would be welcome money in Nova Scotia, let me assure the member, but he would be putting at risk and jeopardizing the future prosperity of Nova Scotians.

This is a very tough decision for a gentleman who is also going through a very difficult personal time. I wish Minister Baker good health and good luck.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I want to congratulate my colleague from West Nova for his very articulate and impassioned debate and speech.

One of the things that I would like the member to expand on is the fact that the motion calls upon the government not to abandon the principles of equalization. One of those main principles, of course, is that provinces that have necessary resources are able to balance those resources with the provinces that do not have the necessary resources so that services and programs are roughly equivalent across this country.

If we look at Atlantic Canada, we can see that there are many challenges there. If we look at the province of Quebec, of course, it is a have not province now because of the policies of the separatists, but I am wondering about this. I know that technically the province of Quebec can take the $693 million that it got out of the increase in equalization and can do whatever it wants with that money. Does it not seem a bit strange, though, that Quebec would take that money to reduce taxes after the provinces have complained bitterly to the federal government that they need the resources to provide health care and education to their citizens?

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, I will speak about the way the money was being used in Nova Scotia. The premier of Nova Scotia took the advance payments that came under the Canada-Nova Scotia offshore agreement and put them against the debt, the debt created by Premier Buchanan and Greg Kerr and the group, and reduced the fiscal payouts on interest by $40 million a year. That was a very responsible thing to do.

Fiscally, Nova Scotians are having a hard time this year. The difficulty would be $40 million or $50 million worse had that decision not been taken. Nova Scotians also would have liked to have a tax break, but I think the more responsible thing was done by Premier Hamm. I congratulate him on doing that and I implore the federal government, the Minister of Finance and the Prime Minister to restore the full Atlantic accord so that such decisions can be continued in the future.

[Peter MacKay, Conservative, Minister of Foreign Affairs and Minister of the Atlantic Canada Opportunities Agency]

Mr. Speaker, I am very pleased to take part in this debate and speak to the motion by the member for Bonavista—Gander—Grand Falls—Windsor.

I am eager to tell Canadians, constituents back in Central Nova and all Nova Scotians just what this new budget is going to do for them and just what the consequences are of this way the government has taken to restore the fiscal balance that is required in a nation as grand and as diverse as our own.

While the members of the previous government, the Liberal Party opposite, stand in this House and preach from on high about what they would like to do, let us not forget that they were there for 13 years. There was nothing stopping them from addressing this issue of the fiscal balance. Instead, what they actually did, and the record is very clear on this, was gut $25 billion out of the equalization program. They took away money that provinces were using for health care, for infrastructure and for important projects and important investments throughout Canada.

What this government is doing is exercising fiscal fairness. We are exercising the type of federalist flexibility required to bring a country together and to recognize that there are disparities in this country.

I want to point out two very specific things in my remarks.

Number one is that the province of Nova Scotia is getting an increase this year, an increase, even under the old formula, of almost $200 million. In fact, it is getting $2.44 billion from the federal government this year. That number is staggering when we start to think about how that is invested in various things throughout the entire province of Nova Scotia. That figure, in fact, would include a $95 million increase if they were to opt into this new modified O'Brien program for the province, so let us keep that in mind.

With respect to the allegation that somehow we are taking something away from the province of Nova Scotia, nothing could be further from the truth. The Atlantic accord remains fully intact, 100% respected by this government if the province of Nova Scotia opts to stay in that program.

When that program was put forward, members of this party, my colleague from South Shore—St. Margaret's and my colleague from Cumberland—Colchester, fought long and hard to see that the Atlantic accord was achieved. People have already spoken about the merits of the Atlantic accord, in terms of John Hamm, the premier at that time, working long and hard to bring the government of the day, the Liberal Party opposite, kicking and screaming to the point where finally it had to sign on to the Atlantic accord.

When that happened, we all celebrated. That was a good day for Nova Scotia.

That was a great deal for Nova Scotia, so what we are saying today is that Nova Scotia can keep that great deal or it can take an even better deal, one that gives Nova Scotia an additional $95 million. So it is door number one, good deal, or door number two, better deal.

We have heard about the requirement of Nova Scotia, about the budget they are about to draft tomorrow and the requirement for more money. That option is there for them. The option is clearly there. And I will go one better. If that is to happen and Nova Scotia decides that it is going to opt for this new proposal, which will give them more money, they have the flexibility to go back. They have the flexibility to use the Atlantic accord. It is a choice they have.

Speaking of choices, the members opposite, in the withering windsock that is the Liberal Party, speak of principles. What we know is that they do have principles, but if people do not like those principles or if polls change, they have other principles. That is the way they have operated for so many years.

We are all aware of the current Liberal leader's position. He denies the existence of a fiscal imbalance. In fact, in January of this year, the newly minted Liberal leader pronounced,“I don't think there is a fiscal imbalance”. He said that each province, every time, each and every way, is arguing that it gets shortchanged by Ottawa and that it would be difficult to make all the provinces smile. Yet that is exactly what the Prime Minister tried to do.

That is exactly what he tried to do. This motion is the calculation of another flip-flop on behalf of a weak Liberal leader who has not been upfront with Atlantic Canadians about his own position. The usual criticisms that come from the opposite side never come with a solution. They never come with “this is how we would do it differently”. They just castigate, criticize and tear down without describing what they would do as an alternative.

The truth of the matter is that Premier Williams in fact got exactly what he asked for. We honoured the Atlantic accord and we did it while restoring fiscal balance to the federation, and we did it by keeping our promise to exclude 100% of natural resources. He is caught between a rock and a better place. That is where the Premier of Newfoundland and Labrador finds himself.

Back in May of 2006, the Leader of the Opposition was very much in favour of a principled approach to reforming the equalization program and supported Premier McGuinty's call for fairness campaign, but now, once again, he has flipped. He said, “I think you need to have a clause that says whatever is the formula of equalization payments, a province that received equalization payments cannot see its fiscal capacity going above the fiscal capacity of a province that does not receive equalization payments”.

He is now saying exactly what we are saying: that there has to be fairness. There has to be a recognition that an equalization formula is for everyone.

The member for Kings—Hants knows a lot about flip-flops. He flipped to one side of the House. He flopped back to the other side of the House. He has changed his position on everything from ACOA to tax cuts. Name the position and he has tried it. He has turned himself inside out. He is an Olympic back-flipper. Here is what he had to say: “I find that Atlantic Canadian politicians”, so he is speaking about himself, “by and large, are too parochial”. This was part of his pithy and partisan commentary.

He went on to say:

Someone's angry in Halifax because Moncton got something. Someone is upset in Moncton because Charlottetown got something. In our four provinces, there's a great sense of competitive angst as opposed to vision, and I think the future of the region will be shaped by politicians who can play a role nationally and not just bring home the bacon.

That is what he had to say back then. He is firmly on record on so many other subjects about ACOA. He was an MP, he boasted in 2003, “who had the guts to say ACOA isn't working for Atlantic Canada, and (to urge) getting rid of it and replacing it with dramatic tax reform for Atlantic Canada...”.

He went on to say, “I believe we need to replace failed regional economic development programs and corporate welfare with dramatic corporate-tax reductions, because the market can pick winners and losers better than bureaucrats”.

That was then and this is now. Each and every day we see that hypocrisy knows no bounds.

This particular attempt, plain and simple, is about fairness: it is about giving Nova Scotians an option. It is about giving Premier MacDonald the opportunity to bring forward a budget that speaks to the needs of Nova Scotia just the way our budget does the same.

I want to turn our attention back to the offshore accord itself. Nova Scotia, I repeat, may continue to operate under the previous equalization system until its existing offshore agreement expires. This fulfills and builds upon the government's commitment to respect the offshore accords. It also ensures that the province will continue to receive the full benefit it is entitled to under the previous system, if it so chooses.

But the beauty of this is that there is another option. There is an option to opt in to the new formula, a new formula that has been calculated in fairness with all of the provinces and that gives Nova Scotia more. It gives the province of Nova Scotia an additional $95 million, so it is take the deal that is good for Nova Scotia now, take a deal that will provide Nova Scotia with more money, and the option to move if at the end of the year there is a decision that Nova Scotia feels that might be advantageous to it. That is what is being offered.

We are willing to work with the province of Nova Scotia the way we always have and the way we will continue to, to see that the province of Nova Scotia is treated fairly and with the same level of respect it has always been afforded by this government. That is why we have the Canada health transfer, which this year will provide our province, the province of Nova Scotia, with $21.3 billion, our portion being $636 million for the province of Nova Scotia. The same can be said of the Canada social transfer of $270 million for the province.

With respect to our infrastructure, there is an enormous opportunity called the Atlantic gateway. Our portion of that particular set-aside, that $2.2 billion fund that would see Nova Scotia tap into the container traffic that is coming from Asia, coming from the Orient, will give our province a chance to make a major breakthrough. I would suggest that this in fact is bigger than the potential of the offshore if we can capture that traffic and that type of business and economic growth; that again is an opportunity and this government wants to work with the province.

The money is there. The negotiations that will lead to greater money under health care, under infrastructure and under other programs are available to Nova Scotia. We will continue to represent its interests and continue to work with it for the betterment of all people in our province.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Mr. Speaker, in terms of net advantage the hon. member, the Minister of Foreign Affairs and Minister of the Atlantic Canada Opportunities Agency said that this would provide a net benefit deal for all provinces. Unfortunately, to opt into the new equalization strategy formula, as proposed by the government under budget 2007, the province of Newfoundland and Labrador would have to agree to lose $238 million in the upcoming fiscal year. Also we would lose $101 million this past fiscal year and an additional $25 million next year.

However, the province of Nova Scotia would gain $95 million, according to the minister, if it were to opt into the new equalization formula, a formula that basically has two decision points in it, either a full exemption of non-renewables or a 50% exemption of non-renewables.

Is the minister saying, because this is a very interesting point, that it could gain $95 million this year? We know that in years to come, under the new formula, it could lose more money relative to what it would achieve under the Atlantic accord. Could it move back to the old Atlantic accord should that be a more beneficial circumstance for the province of Nova Scotia?

[Peter MacKay, Conservative, Central Nova, NS]

Mr. Speaker, yes, at a point in time should it make that decision. That is the option, but it has to decide. It cannot opt in, opt out, opt in, opt out. It has to make a decision.

However, again, the choice is clear. I want to point out, as my hon. friend did, that the province of Newfoundland and Labrador is a different situation. In fact, it has garnered a great deal more from the Atlantic accord. Because of the reserves that exist in its offshore, it has been a much larger beneficiary of the agreement with the federal government.

The province of Nova Scotia has yet to realize the full potential. It has Sable I and II. The Deep Panuke project has yet to live up to the billing, but we remain hopeful.

Therefore, that choice exists for Nova Scotia. I suggest it is beneficial to our province, and it is one that will be made. That is also in addition to other deals yet to be worked out around infrastructure spending, the Atlantic gateway initiative and issues related to health, and let us not forget the environment.

There are huge dollars available to Nova Scotia.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I will follow up on the question that my hon. colleague, the member for Humber—St. Barbe—Baie Verte asked.

On that technical question, I want to know if that is on what the Minister of Foreign Affairs has based his decision to support this budget. It concerns me because I am looking at one of the budget documents, which says, “Restoring Fiscal Balance for a Stronger Federation”. It states on page 16, “These provinces can permanently opt into the new Equalization system at any point in the future”. It does not talk about opting in and then opting out. It simply says that they “can permanently opt into” that system.

Why is the word “permanently” there? Does it have no meaning whatsoever? If what he is saying is true, should this not say these provinces can opt into or out of the equalization system at any point in the future?

[Peter MacKay, Conservative, Central Nova, NS]

Mr. Speaker, they have to make a decision at some point in time is the short answer to that. That is what happens with decisions. There has to be a choice at some point.

When the choice is made, when they decide which is in their best interest, and they will have before them those figures in their budget documents, they will have to decide if they want to take this more beneficial system or if they want to remain under the Atlantic accord. Those discussions are taking place.

Clearly there is a benefit in both. The province of Nova Scotia, just like Newfoundland and Labrador, will have to calculate those figures. There is an infrastructure advantage. They can look at those figures and decide which is best for the people of Nova Scotia.

I should have added, Mr. Speaker, that I am splitting my time with member for Avalon, who is taking the second part of this speaking time.

[Bill Casey, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Speaker, there is a lot of misunderstanding I find. In fact, I had a media reporter ask me today why the equalization payments were cut off from Nova Scotia.

Could the minister tell us what would have happened had the government not brought in the new equalization formula? What could it have expected in the equalization payments and the Atlantic accord? What would it have had with no new plan?

[Peter MacKay, Conservative, Central Nova, NS]

Mr. Speaker, that is a very astute question from the member for Cumberland—Colchester—Musquodoboit Valley. What they would have received is less under the old system. According to their own figures, they would have received an increase of approximately $57 million. Under this new option, the so-called modified O'Brien option, they will receive $95 million, so that is the difference.

If no new equalization formula had been struck, which would have been the case under any other government, because they would not have pursued this equalization formula, and had we not taken the initiative to try to re-balance the fiscal framework of the country, this option would not have been available. Nova Scotia would have received $57 million under the old equation. Now it has the option to take that or, under the new fiscal formula, receive $95 million, more money for this year's budget.

[The Acting Speaker, Andrew Scheer]

Order, please. 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 hon. member for Notre-Dame-de-Grâce—Lachine, Minister of Citizenship and Immigration; the hon. member for Vancouver Island North, Democratic Reform; the hon. member for Gatineau, Official Languages.

[Fabian Manning, Conservative, Avalon, NL]

Mr. Speaker, it is indeed a great opportunity to stand today to make a few comments on the motion put forward by my colleague from across the House.

I will talk about the day I was in Newfoundland and Labrador. In fact, I was a member of the Williams government the day the Atlantic accord was signed and brought home. It was a great and very proud day in my province. I will speak about that in a few moments.

It was a hard fought campaign by everyone, including the present Minister of Fisheries and Oceans and other members from Newfoundland and Labrador on all sides of the House. They fought long and hard to have the Atlantic accord brought home. It was a great day and a credit to everybody involved, including people on that side of the House.

There are a few facts about the Atlantic accord, and I have a concern with the motion as it is worded. To remind everybody who may have forgot the wording of the motion, part of the of the motion states:

That this House regret that the party now forming the government has abandoned the principles respecting the Atlantic Accords...

The Conservatives have not abandoned the principles respecting the Atlantic accord, and I will explain why. During the campaign, and in discussions in the past couple of months, the decision was made that we would try to come together across the country to fix the fiscal imbalance. For two decades, parties on all sides had been talking about it, but the party on this side of the House said that it would try to do something about it.

We opted to take into consideration the recommendations by an independent panel, referred to by most as the O'Brien report. If we remember, that report called for a cap to be put on the payments of revenues going to each province. In budget 2007 there is no cap on the revenues coming from the Atlantic accord. I do not know how many times we have to say it on this side of the House. A cap does not exist on the Atlantic accord.

For the next number of years, there will be no clawback in any way on the Atlantic accord in Newfoundland and Labrador. One hundred per cent of the revenues that are generated from its oil and gas offshore will go into the coffers of Newfoundland and Labrador.

If in 2010-11 or 2011-12 Newfoundland and Labrador is still on equalization, the Atlantic accord then extends out to 2020. This is the concern that we raised as members on this side of the House. I was very surprised, knowing full well that this debate was ongoing in my province and in Canada with regard to the fiscal imbalance, that not a question was raised by the members from Newfoundland and Labrador in the House, regarding what the plan was or if a solution would be put forward to the concerns raised in our province.

On this side of the House, myself and my two colleagues continuously raised the concern about the issue with the Atlantic accord. We made sure that a cap was not put in place and that the benefits of the Atlantic accord would continue to the people of Newfoundland and Labrador.

Let me talk for a minute about the concerns of fiscal imbalance. The Liberals and the Leader of the Opposition do not even recognize that there was and still is a fiscal imbalance in the country. I will read a couple of statements made by the Leader of the Opposition.

First, on January 22, the Leader of the Opposition said:

I don't think there is a fiscal imbalance...Every province...is arguing it gets shortchanged by Ottawa in one way or another, and it would be difficult to make “all the premiers smile”.

There is no doubt about that.

On January 17, in the Canadian Press he said:

Don't ask me to pretend there is a fiscal imbalance and elect me and (hope) I will fix it. I don't want to create these kinds of expectations.

He also said, “We should say that a province that does not receive equalization payments should not see, with its money, another province become richer than it. You need to have a ceiling, a kind of safety net that will protect Ontario”.

These are not my words. They are the words of the Leader of the Opposition.

The government decided against the recommendation in the O'Brien report to put a cap on the Atlantic accords and we gave Newfoundland and Labrador another option that the rest of the country would not have under this new equalization program. That option is to stay with the Atlantic accord, receive no clawback and that could extend until 2020. That is the concern we have on this side of the House.

I just want to go back and talk about the Atlantic accord once again. When the accord offset agreement was negotiated, the province and the federal government agreed to an expiry date, which will come, as I mentioned earlier, as soon as 2011-12 or as late as 2020, depending on whether Newfoundland and Labrador is still entitled to receive equalization in 2011-12. That is my concern and the bone of contention I guess that has been raised, and it concerns the level of equalization payment we receive.

I was in a hotel ballroom in 1985 when the original Atlantic accord was signed. It was a proud day in the history of Newfoundland and Labrador. As I said earlier, I was also involved and part of the government of Newfoundland and Labrador when the Atlantic accord was signed, another proud day in the history of Newfoundland and Labrador.

However, I say with all sincerity that I will be prouder than I have ever been before if I could stand in this House here or stand anywhere in Newfoundland and Labrador and say that we are off equalization, that our province does not need equalization anymore, and that Ottawa can keep the cheque.

That is the goal that we should all be working toward, not creating the divisions that we are creating here, but working toward the fact that Newfoundland and Labrador and Nova Scotia, and any other province that receives equalization can stand up someday, sooner than later, and say they do not need the cheque from Ottawa.

We have the opportunity to do that in Newfoundland and Labrador. We have the opportunity to do that through developments like: the Lower Churchill, Hebron, Hibernia extensions, a second oil refinery, the fishery, major mineral potential throughout Newfoundland and Labrador, and untapped tourism.

In order for these to work, in order for these industries to grow, so that we can take in the revenue from them and not be dependent on equalization, we need cooperation between the federal government and the provincial government. We need cost share programs that get these projects off the ground, that put the money into Newfoundland and Labrador, so we can reap the benefit from it, so that the sons and the daughters of Newfoundlanders and Labradorians are not on planes going to Fort McMurray and other parts of this country. We need them to stay in Newfoundland, continue to work in Newfoundland, and continue to generate the revenue that we need in Newfoundland and Labrador. That is what we should all be working toward.

We have many opportunities here. I would like to be able to stand in this House and be proud of the fact that we can tell Ottawa that we do not need its cheques anymore. The reason why Newfoundland and Labrador and many of the other provinces are still living in the world of a fiscal imbalance is because for a decade or more, the transfers to Newfoundland and Labrador were gutted by the former government. Health care, education, social assistance, all of these were gutted. Therefore, it created a fiscal imbalance in our province from which we are still trying to crawl out.

We have the opportunity here through the Atlantic accord to continue taking 100% of our oil and gas revenues and putting them into the coffers of Newfoundland and Labrador. By doing that until 2011-12, or until 2020, we will have a day in Newfoundland and Labrador when we can say to Ottawa, “Keep the cheque, we do not need it, we are off the equalization, standing on our own two feet. We are proud Newfoundlanders and Labradorians and we do not need the help anymore”.

That is the goal that all members on both sides of this House and in both levels of government, whether it is here in Ottawa or it is Newfoundland and Labrador, should be working toward because then the whole question is answered because then we are standing on our own two feet.

I hope that by working together with all members here that we can continue to do that and then equalization cheques can stay in Ottawa. We can stand on our own two feet in Newfoundland and Labrador and be the proud Newfoundlanders and Labradorians that we continue to be.

[Todd Russell, Liberal, Labrador, NL]

Mr. Speaker, I cannot believe that the member for Avalon would get up in the House and defend a broken promise, that he would defend a shaft that was given to the people of Newfoundland and Labrador, Nova Scotia and Saskatchewan, and that he would defend a knife in the back of the premier and a knife in the back of the people of Newfoundland and Labrador.

He had the gall only a few years ago to criticize the Liberals who lived up to a promise, and now he defends his own government that broke a promise to the people of Newfoundland and Labrador.

He talks about a deal that will last till 2020 when the Finance Minister just said a few minutes ago that it will be there till 2012, and then take it or leave it and then it is over. Take it or leave it and then there will be no more benefits for anybody in the province of Newfoundland and Labrador.

He talks about how we are going to move ahead: Lower Churchill, a big goose egg, we already said that; Trans-Labrador Highway, a big goose egg. The Prime Minister says to the people of Newfoundland and Labrador, “You can have one big goose egg or a bigger goose egg”. That is all he said to the people of Newfoundland and Labrador.

Any member who would get up in the House and defend a broken promise would believe that black is white. They would believe that cats are dogs. They would believe that war is peace. The only ones who believe that in the House are the Conservatives across the way.

I say to him, stand up for his people. Will he stand up for his people tonight and vote for the motion as put before the House by my hon. friend from Bonavista? Will he vote in favour of the motion and declare his loyalties? Either he is for the people of Newfoundland and Labrador or against the people of Newfoundland and Labrador, and his vote will determine that tonight. I ask him.

[Fabian Manning, Conservative, Avalon, NL]

Mr. Speaker, we never have to worry about the egg when it is in the shell. It is when it is cracked, we have to be concerned.

I say in all honesty that I stand up for the people of Newfoundland and Labrador. With the Atlantic accord there was a misrepresentation. There is a misrepresentation happening here today because the Atlantic Accord is safe. The Atlantic accord is solid. The Atlantic accord will continue to reap benefits for Newfoundland and Labrador.

Are the members opposite afraid that Newfoundland and Labrador will reap benefits under the Atlantic accord and be able to say to Ottawa to keep its equalization cheque? That is the question I ask the members opposite. Are they afraid that we can stand on our own two feet, or do they want us to be crawling to Ottawa all the time?

I do not want to be crawling all the time to Ottawa. That is why I hope at the end--

[The Acting Speaker, Royal Galipeau]

Order, please. I want to congratulate all members of the House who are attentive to other members of the House when they are being recognized by the Chair. Actually, I noticed that during the time of the question. I would have liked to have noticed that during the time of the answer.

I now recognize the hon. member for South Shore—St. Margaret's.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, certainly, this is an interesting debate and it is one in which all Atlantic members want to participate. Beyond the huffing, puffing and blowing their straw houses down by the members of the Liberal Party, there are some questions here that need to be defined.

I say to the member for Avalon, Nova Scotia has a different situation than Newfoundland. I appreciate his explanation that the Atlantic accord is there for Newfoundland and will remain there for Newfoundland. If at some time Newfoundland decides to opt in to the new equalization formula, it would have every ability to do that.

However, if Nova Scotia stays in the old formula and if it stays in the Atlantic accord, it will reap a benefit of $57 million. If it opts into the new plan, it will reap a benefit of $95 million. Nova Scotia has a different offshore reserve than Newfoundland and Labrador. It is a totally different situation.

If the people of Nova Scotia had two choices and one choice was better, would they not take the choice on the new equalization program?

[Fabian Manning, Conservative, Avalon, NL]

Mr. Speaker, Newfoundland and Labrador has two choices. In fact, we have three. The choice that we have now is to stay with the Atlantic accord that is honoured by the government, that has received no cap, and that we can continue to receive 100% of our oil and gas revenues from the offshore reserves.

The member for Bonavista—Gander—Grand Falls—Windsor, when he spoke this morning in the House, said that the Prime Minister said that we will have no more side deals. Then he said that there is a side deal with Newfoundland and Labrador under this new agreement, and there is a side deal with Nova Scotia under this new presentation that came forward in the budget.

I ask the member for Bonavista—Gander—Grand Falls—Windsor, is he upset that the Prime Minister and the Minister of Finance and the government gave Newfoundland and Labrador a third option? Is he upset about that? I am not. I am pleased to have a third option, so we can get on our own two feet.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Mr. Speaker, I will be sharing my time with the member for Labrador.

We are here today talking about the great injustice that has been done this week by the Prime Minister and the Atlantic Conservative MPs.

There were a lot of good comments made on this side of the House by my colleagues about how Atlantic Canada got shafted here this week. I would like to make some comments and observations of my own to sum up what has really taken place.

First, because of the good fiscal management the previous Liberal government and the hard work of Canadians, we have roughly $10 billion extra to spend on our budget. So what happened at the cabinet table? Why do we lose money instead of gaining money when the budget was done? What does it mean when equalization payments are cut and regions in our province have to do with less?

In terms of money, what do we lose? The provinces have less money for roads. They have less money for social assistance, funds for schools, hospitals, and also for farmers. It means that our people are not given the tools and the resources to live dignified lives.

Not only have we been left out of meaningful amounts of transfer payments in the Atlantic provinces but we also noticed, over the last year and a half, all the cuts that were made on our social payments. It is unbelievable.

Where is the money for the Atlantic Canada gateway initiative? The hon. member for Central Nova talked about it. It is not in the budget. We do not see the money. We do not see the announcement of that money.

He talks about the future of oil and gas. That is unknown. We want to see the money now. We want to see the $10 billion share.

Where is the money for the small craft harbours? It is not mentioned in the budget. Something happened at that cabinet table. The Atlantic cabinet ministers must have been left out.

Let me recap. The taxpayers of Canada have given the Conservative government $10 billion more to work with and the government never gave a cent to Atlantic Canada. Why are the Conservatives entrusted with this money? Why are they neglecting Atlantic Canada?

Let me be clear. The Conservative Atlantic MPs over there, on the opposite side, should do the honourable thing and vote against this budget and stand up for Atlantic Canadians.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, the reality is that every province in Canada gets more money under this budget. The reality is that Nova Scotia has a choice to make. It can take the old system, which was a good system in its day, and receive $57 million. It can opt into the new system and receive $95 million, plus $112 million of tax relief. I know the hon. member is not that good in math, but would he sooner have $200 million in his pocket or $57 million in his pocket?