Debates of March 22nd, 2007

Opposition Motion--Equalization

[Geoff Regan, Liberal, Halifax West, NS]

He admits that he lobbied to preserve the Atlantic accord but lost. Now he is being bullied into submission by the Prime Minister and he has given up.

How about the member for St. John's South—Mount Pearl, now the Minister of Fisheries? Surely he who was so vociferous in opposition would not give up on Newfoundland and Labrador. He told CBC News:

Would I rather see what we clearly committed done? Absolutely. But...if it can't be delivered, you try to deliver the next best.

It cannot be delivered. The decisions are made.

So mighty then, so meek now.

Failure to do what one clearly committed to is not good enough. Breaking one's word is not good enough.

Tearing up signed agreements with two provinces is not good enough.

Why will Conservative members from Nova Scotia at least not have the honesty and the dignity to admit what their Newfoundland colleagues have admitted, which is that they too are afraid of the Prime Minister and they are afraid to stand up for their province? Their actions now do not stand up to their words then.

Here is what the member for South Shore—St. Margaret's said in 2004:

This is about fairness and the future of Nova Scotia...This is about honesty and about keeping promises.

What is he saying now? When ChronicleHerald reporter Steve Maher finally cornered him Tuesday, the member for South Shore—St. Margaret's said, “ if Nova Scotia has to give up the accord, it wouldn't be so bad”. How could he? When did he stop being a Nova Scotia member of Parliament and become a harpocrit?

Here is what the member for Cumberland—Colchester—Musquodoboit Valley said in 2004. He said:

I call on the government to stop the rhetoric, to stop talking about all these things it is talking about and just get down to the point and say, “We made a promise. Now we are going to keep it”.

What is he saying now? We do not know. He has suddenly developed a phobia of the media. We think he might be in the witness protection program. So mighty in words, so meek in action. It is so sad.

What about the biggest flip-flopper of them all? In 2004 the member for Central Nova said, “MPs will be left to explain why they chose to abandon the interests of their province and in doing so betrayed the future prosperity of the people of Nova Scotia”.

Last year when the finance minister said that the deal with Nova Scotia had made a mess of equalization, the member said nothing. The Prime Minister obviously agreed, as we can see from the budget.

The member who has to do a lot of explaining today is the member for Central Nova. He is the one left to explain why he allowed the Prime Minister to abandon the interests of his province.

Premier Williams says, “Conservative members from his province should reconsider their future with the party”. As Premier Williams says, “they have choices”. The same is true of Nova Scotia's Conservative members. They have choices. They can say no. They can stand up for Nova Scotia. They can demand the Prime Minister honour his commitment.

Here is how the now Prime Minister concluded his speech on the topic of the accords in 2004. He said:

What is at stake is the future of Atlantic Canada, an unprecedented and historic opportunity for those provinces to get out of the have not status...What is at issue is very simple. It is the honour of the Prime Minister, and all he has to do is keep his word.

I could not have said it better myself. The Prime Minister should honour his commitment.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I ask the same question of the hon. member as I did the first speaker. On the one hand the Liberals are saying that this is a betrayal of the people of Nova Scotia and Newfoundland and Labrador, but on the other hand they are saying we have the option to keep the same deal.

The Prime Minister unequivocally stated yesterday that there are no changes to the Atlantic accord. In other words, there is no cap on the deal that was previously signed. With the changes to the equalization formula, the rest of the provinces have an option, but the Atlantic accord remains fundamentally unchanged. There is no cap.

Will the member at least have the courtesy to stand in his place and say that he does not understand the deal that was cut because clearly he is mistaken? He is trying to portray the fact that his province of Nova Scotia is now burdened by a fiscal cap and that there has been some major change to the Atlantic accord that was signed three years ago, when in fact there is no change. The province retains 100% of its non-renewal natural resources.

Will the minister at least admit that is true or in his opinion it is not? I want to get him on the record.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, when the hon. member calls me a minister, I am sure he is thinking ahead and not just thinking behind.

It is interesting that the comments we are hearing from the opposition members are not those from members from Newfoundland and Labrador or Nova Scotia. The member claims he understands this. I do not think he understands the accords one bit. I was there. I took part in the negotiations. I had the honour of signing on behalf of the Government of Canada. I know what those accords said.

The accords said that these new agreements would apply, that these provisions would apply to any new equalization program, no matter how it changed. What the government has said in the budget is that the province can either have the accords or the new equalization, but not both. It will not apply the accords to the new equalization program. The government broke its commitment.

I am not surprised that members from Nova Scotia and Newfoundland and Labrador on that side of the House do not have the temerity to come in here and take part in this debate.

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

Mr. Speaker, the issue today is the enactment of a promise, keeping one's word. Very simply put, on January 4, 2006, the Prime Minister, then leader of the opposition of the Conservative Party of Canada, specifically wrote to the Premier of Newfoundland and Labrador saying, in unequivocal, unconditional language, that he would remove 100% of non-renewable natural resources.

During the election campaign, particularly during the heat and the debate of a campaign, sometimes when a position is put forward which seeks favour and enjoys favour with the electorate, it often results in votes. In many cases that is exactly what happened. In fact, the Newfoundland and Labrador seat count went up for the Conservative Party.

Now what we are finding today is that honour, that promise, that respect to the people of Newfoundland and Labrador is not being adhered to. This goes beyond the Atlantic accords. Anyone who understands anything about non-renewable natural resources will also conclude that the promise would have entailed and enacted and encompassed Voisey's Bay nickel, Labrador and Wabush iron ore. It would have taken into account Baie Verte gold. It would have taken in all non-renewable natural resources within the province of Newfoundland and Labrador and across Canada, including the provinces of Saskatchewan, Manitoba and others.

Does the federal budget 2007 enact the promise of the Prime Minister to exclude 100% of non-renewable natural resources for the benefit of those provinces that harvest them?

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, I wish the budget had done that. I wish the Conservatives had kept their commitments to Nova Scotia and to Newfoundland and Labrador in this budget, but they clearly did not. They promised that they would not cap those revenues, that they would not cap equalization for those two provinces, but they have done so.

My hon. colleague talks about the record and what was said and what was not said. I do not know if he heard my speech. I clearly quoted his own Conservative members from Newfoundland and Labrador who have acknowledged that they have broken their promise. They have acknowledged that they tried to convince the government to keep non-renewable resource revenues out, but they failed. The government's own members have acknowledged it, yet how can they possibly have the temerity to stand here and suggest these things now? It is unbelievable.

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

Mr. Speaker, it is very interesting to listen to the Liberals opposite try to create a parallel universe based on the facts as they would wish them to be for politicking purposes, but not on the facts as they are.

The members opposite rightly point out that their government signed Atlantic accords with the provinces of Newfoundland and Labrador and Nova Scotia. This was a problem for them because all of a sudden some provinces had side deals, which completely destroyed the fairness and the equality of this program. Nevertheless, the Liberal government, for political purposes, entered into these agreements and our government said that we would honour those agreements.

This is the crucial point, and I hope members opposite are listening to this, because this is a fact that may assist them as they continue to pontificate and mislead through the day. Here are the facts that they should be keeping in mind.

I read from the budget document, which any citizen of Newfoundland and Labrador, or any citizen of Nova Scotia, or any citizen of any province can look at it on the website. It is in black and white and in plain English and French.

This is what the budget says, “To respect the offshore accords”. The budget does respect the offshore accords. “Nova Scotia and Newfoundland and Labrador may continue to operate under the previous equalization system”. That is what the budget says. The budget also says:

This fulfills and builds upon the Government’s commitment to respect the Offshore Accords and ensures that these provinces will continue to receive the full benefit that they are entitled to under the previous system.

The accords are fully and completely respected by the government. There are no exceptions, no exclusion, no caps, no changes. That is the truth. That is it. There is no change.

For those provinces there is actually a happy choice. If they no longer like the Atlantic accords, they can have another choice. Again, by the previous government and finished by our government, the equalization system has been fixed.

In fact, the previous government put together a blue ribbon panel, the O'Brien panel, to examine the equalization system, which had been badly broken and bent by years of Liberal mismanagement. The previous finance minister, the member for Wascana, said:

There are so many arguments among the provinces about what the right formula ought to be, that we will engage an independent panel of experts—people who don't have a particular bias, don't have any kind of regional, vested interest—and have them come up with recommendations for how the distribution formula ought to be changed...

The former Liberal finance minister said, “The main focus of this panel will be how to address non-renewable resources”.

The panel did its work. The panel, set up by the Liberals, reported and our government fully accepted the recommendations of the O'Brien panel. We have now fixed the equalization system according to the recommendations of this independent, unbiased panel set up by Liberals.

Because of the fixing of the system, the equalization program has been somewhat enriched. Now Newfoundland and Labrador and Nova Scotia are saying that the accords gave them one thing but this new system might give them something better. That may be true. What did our government do? Our government told those provinces that they had a choice. They could continue to operate under the accords which they negotiated and signed and which we are fully honouring without any exceptions, or if they wished, they could move to the new system.

What could be fairer than that? What could possibly be fairer than saying they can get the agreement they fought for and signed, or they can move into the new system. It is up to them. They have a choice. I might add that other provinces do not have a choice, but those two provinces do have a choice.

Let us talk about the new system that has been set up. The new system actually gives a choice to the provinces that are in the new system, which Newfoundland and Labrador and Nova Scotia could be if they want to be. The new system says that for every year, two calculations will be made for the provinces. One calculation will be based on the O'Brien recommendations that 50% of non-renewable resources will be included in the formula. That is what O'Brien said was fair and reasonable and right, so we will calculate on that basis. Where a province wants to have 100% exclusion of non-renewable resources, we will make a calculation on that basis too. Provinces can choose which one they want. They will get the best of those two calculations.

Actually, the provinces of Newfoundland and Labrador and Nova Scotia get three choices. They can choose to have equalization under the Atlantic accords, which are fully respected and open to them and honoured by this government, or they can choose the O'Brien formula based on 50% inclusion of non-renewable resources, or they can choose the best, if it is the best, of 100% exclusion of non-renewable resources. Yet, dishonestly I say, members opposite are trying to say that somehow the provinces that are given not one choice, not two choices, but three full choices are somehow being unfairly treated. That is so untrue.

Not surprisingly, when provinces are given a formula, there is going to be some unhappiness. The leader of the Liberal Party himself said just in January of this year that every province is arguing about getting shortchanged by Ottawa in one way or another and it would be difficult to make “all the premiers smile”. Did he ever get that one right.

The leader of the Liberal Party also said that we 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. There we go. It is called a cap.

That is exactly what the O'Brien panel said and what the new equalization fix put in place by our government delivers. This is a program to make sure all Canadians get an equal level of services, but provinces that are not receiving equalization cannot have a lower ability to provide their citizens with services than provinces that do receive equalization. It has to be fair for everybody. It has to be the same standard for everybody, whether it is called a cap or a same standard, or whether it is called equality or fairness.

That is a principle that all Canadians get except a few members opposite. Even the Leader of the Opposition gets it. I will read again what he said, “cannot see its fiscal capacity going above the fiscal capacity of a province that does not receive equalization”.

The formula, the equalization program has a standard that all provinces honour because that is fair. Provinces that get money from the equalization program are not going to have a better ability to serve their citizens than those who do not get money from the equalization program. What is there about that that the members opposite who just spoke do not like? Even their leader gets that; even their leader affirms that.

We have fixed the equalization system. I might add that here we have a system that has been gerrymandered, skewed and torn up by the previous government that could not make up its mind, could not stick to principles, could not make a strong decision. The Liberals could not do it, so we did it and now they do not like it, even though it is fair, even though we fully honoured the Atlantic accords and even though the new system gives provinces the best-of choice of two calculations. Somehow the members opposite do not get it and they are making trouble simply for political purposes where no trouble should be given. That is completely and utterly unfair.

What do Newfoundland and Labrador and Nova Scotia get from this enriched equalization program? They get full respect, no changes whatsoever to the Atlantic accords.

The new equalization system makes every single province better off. In fact, we have been criticized for how rich the equalization system is under the new formula. Over $12 billion will now be distributed to the receiving provinces under this formula. If Nova Scotia and Newfoundland and Labrador decide they are better off under this new enriched equalization program, they can opt into it. It is their choice. What can be better than a fair choice? Any time they want to during the life of the accord they can move to the new enriched system.

I want people in Newfoundland and Labrador and Nova Scotia to remember two things out of this debate. One is that the Atlantic accords that were signed are fully honoured and are available to those two provinces with no change whatsoever. The second thing is that we have a new system, a richer system, a system that will allow any province to receive benefits under a calculation that fully excludes non-renewable resources, or under a system which O'Brien recommended, a calculation that will include half of the non-renewable resources.

That is justice. It is clear. It is fair. It gives the provinces some certainty going ahead as they calculate their budgets, as they decide how best to provide to their citizens important services like health care, education, infrastructure, child care and social support systems for the most vulnerable. That is what the fixing of the equalization system is all about.

There are two provinces, one with the highest fiscal capacity in Canada, Alberta, and one with the lowest fiscal capacity in Canada, Prince Edward Island. What do these two provinces have in common? Their premiers are reasonable people. They know a reasonable accommodation when they see it. The premiers of these two provinces, one the newest premier and one the longest serving premier, are very pleased with this budget because we kept our promise to fully preserve the Atlantic accords and we restored fairness and balance to a disjointed system that we inherited from the directionless, knee-jerk government that Canada suffered under previously.

On top of that, the Prime Minister, the finance minister and this government recognize that a national government has a duty to all of Canada, to every province, every territory and every citizen, to be fair, to be equal and to have the same standards for everybody. This is something the previous government did not get.

It is essential to fairness that the provinces receiving equalization do not have a higher fiscal capacity than non-receiving provinces. That is what the O'Brien panel, which was set up by the previous government, said. It is what Canadians know to be fair, and that is what this new system puts into place.

Regarding all the distortion, all the misrepresentation, all the trouble making on the other side, members of Parliament are supposed to make this country work well for everybody. They are supposed to be fair, honourable and upright in the way they disagree. If the members opposite do not like the equalization formula that the Conservatives put into place and think they could do better, though we notice they never said how they would change it, then that is a fair debate. However, to misrepresent what was done, to say that promises were somehow broken when they were kept is completely unfair and deceitful to the people of this country who depend on their members, because their constituents listen to them. They believe their members and trust them.

Trust should be placed on the basis of truth, honesty and putting forward the facts as they actually are, not as what members opposite might want them to be so that they can attack a government that has it right for a change, that is keeping its promises and giving provinces not one choice, not two choices, but three clear, unambiguous choices. I hope as the debate continues today that it will be based on the truth. I hope it will be based on what is actually in the budget. I hope it will be based on what is actually before the good people of Newfoundland and Labrador and Nova Scotia because they deserve to make their assessment on what is true and actual, not a distortion of it.

I have tried to be as clear as I can to the House and Canadians about what is really happening: fixing the equalization system, fully honouring the Atlantic accords if the two provinces want to stay with them, fully honouring the commitment to provinces who want to exclude 100% of non-renewable resources, but at the same time honouring the O'Brien panel which spent many months making the best accommodation that can be made for our country for fairness, equality in provision of services to citizens.

This is where we are. We have a good system. It is not a system everyone is going to like because that is not human nature, but it is a system that is true to our promises, true to the choices that we said would be made, and true to fairness and the same standard for everyone at the end of the day.

Citizens in Newfoundland and Labrador, citizens in Nova Scotia are good Canadians, Canadians who want a fair deal for themselves and their children and services that they can count on. They want certainty but also to be part of this great country where there is equality for all.

We are glad to honour the deals that were made by the previous government even though they skewed the system. We recognize that but we will still honour them or move into an enriched system that gives an even better deal. That is what we are providing for people in these two provinces and all Canadians. We are proud of it and we hope that it will be supported by everyone.

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

Mr. Speaker, I was part of a government, in fact part of a cabinet, that made the decision to negotiate and implement the Atlantic accord with the provinces of Newfoundland and Nova Scotia.

It was difficult because in fact the principle of the Atlantic accord was that Nova Scotia and Newfoundland would receive 100% of the benefits of their natural resource wealth above and beyond equalization. Yes, it was a difficult agreement; yes, it was difficult to attain; and yes, there was push-back in fact from the Department of Finance.

The principle of it was based on the equalization system continuing and this accord acting in addition to the equalization system. That was the principle of it. That is why it was difficult to effect that change.

However, the party that actually put it on the table in the first place, that demanded that there be no caps, was the Conservative Party. It was the one that demanded that our government take action on that file. In fact, we worked with provincial Progressive Conservative governments to do exactly that.

The member is saying that it is somehow a happy choice for provincial governments now to make. It is not a happy choice to have to trade off future prosperity, which is found in a solemn commitment and accord with the federal government, against getting more revenue now. That is not a happy choice.

In fact, the member said that our arguments were dishonest. Is she calling Premier Rodney MacDonald, a Progressive Conservative premier, dishonest? He said:

It's almost as if they want to continue giving handouts to Nova Scotians rather than us keeping our offshore accord, and that to me is fundamentally unfair.

Premier Rodney MacDonald said that he was blindsided by the federal budget's attack on the accord.

Is the member referring to Premier Danny Williams, a Progressive Conservative premier, as being dishonest when she said that he was arguing against her government's decision to axe the accord?

Furthermore, the potential federal Conservative candidate for Halifax, Jayne Purves, who was in fact the chief of staff to Premier Hamm during these negotiations had this to say:

I think it puts the province in a really difficult position...It puts them in an almost impossible position...I was part of that team--

She talked about the negotiating team:

--and that's what makes it difficult. I didn't do it, but I was part of it. It was Dr. Hamm that did it. I'm not in support of this particular aspect of the budget--

That is the potential federal Progressive Conservative candidate in Halifax who was part of the negotiating team for that accord. Is she being dishonest?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, I would point out that this whole issue arose because the former Prime Minister, during the 2004 election, went to Newfoundland and Labrador and Nova Scotia and promised them something that was outside the equalization. He promised them that.

We said to him that he needed to keep his promise. Therefore, as the member said, he got busy and negotiated the Atlantic accord. It was outside the equalization formula.

Now we are honouring that. We are fully honouring the Atlantic accord. Those two provinces will have every single benefit of the Atlantic accord that was negotiated and the member knows that.

Under the new formula, a province can still exclude 100% of its non-renewable resources and have a payment based on that.

What the members are really arguing against is to have the same standard for everyone, so that provinces that do not receive equalization payments do not have a worse position to provide their citizens with services than provinces that do receive equalization.

If the members opposite want to stand up and argue against fairness, equality and the same standard for all Canadians, let them do that.

The fact of the matter is that this accord allowed that and we are respecting that. Going forward we are putting the equalization program on the basis of fairness, equality and the same standard for all. That is important to all Canadians across this country.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I have some respect for the parliamentary secretary. I served on the finance committee with her and I appreciate her work, but she betrays a fundamental lack of understanding about Atlantic Canada.

One of the things that has most offended Atlantic Canadians in the last year goes back to last year's budget documents where the government made it clear how it felt about the Atlantic accord. It suggested that the February 2005 arrangements to provide Nova Scotia and Newfoundland and Labrador additional fiscal equalization offset payments sought to address the severe fiscal challenges faced by those two provinces as a result of their high public debt, but were widely criticized as undermining the principles in which the equalization program was based.

The member spoke about previous fiscal arrangements like the Atlantic accord as being gerrymandered. There were other terms that got by me before I could write them down. She later used the terms disjointed and knee-jerk arrangements. That offends Atlantic Canadians and it absolutely shows what the government thinks of the Atlantic accord.

Does the member believe that the Atlantic accord, negotiated between the former Prime Minister and the premiers of Nova Scotia and Newfoundland and Labrador, was a gerrymandered, disjointed, knee-jerk arrangement?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, the equalization program has a name that should show what should be honoured in this program, namely equalization. The side deals that were negotiated by the former Prime Minister, promised by the former Prime Minister and finally put into place under much pressure, destroyed the equal part of equalization. There is no question about that. The member knows that. It made the program not the same for everyone and removed the same standard for everyone. That was unfair to people right across this country.

Nevertheless, as I have said repeatedly, we will and do fully respect that because it was a deal that was made, a deal that was signed, and a deal that was fully respected. Now if the leaders in Newfoundland and Labrador and Nova Scotia can get a side deal, even though it could destroy the equality of a particular program, no one is going to criticize them for that.

However, it must be recognized that national leadership requires that there is no skewing of programs, that the equal in equalization is returned and reinstated because all Canadians depend on this kind of fairness and equality. That is what our government has done.

I ask the members opposite, are they against equal? Are they against fairness? Are they against the same standard for all? That is what they have to answer and they are not doing that.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I rise on this subject that does interest me because I have some very good friends in the Maritimes, people I have known for a long time. The same as any part of the country, as a member of Parliament, I want to see everyone treated right.

At this time I would compliment my colleague from Calgary—Nose Hill for her very obvious understanding of how this budget as it relates to equalization really does work.

I do not know whether it is the dull, dreary, rainy weather today that has affected the judgment of some of my colleagues across the way, particularly my good friend from Bonavista—Gander—Grand Falls—Windsor, who is out of the chamber right now, but in all due respect, I am trying to get it through my head.

First of all, I know that P.E.I., for example--

[The Deputy Speaker, Bill Blaikie]

Order, please. The hon. member should wrap up his comments, but he should also know that it is not within the rules to refer to the absence of a particular member.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

I did not do that deliberately, Mr. Speaker, my apologies.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Mr. Speaker, I am in my seat, thank you very much.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I know that in the equalization on a per capita basis P.E.I. finished first, New Brunswick a very close second, and Manitoba--

[The Deputy Speaker, Bill Blaikie]

Order, please. The hon. member has run out of time, but I would also say to hon. members that is the first time I have actually heard a cellphone ring in the House of Commons. Cellphones should be turned off or at least not be in a position where we have to listen to them.

The hon. Parliamentary Secretary to the Minister of Finance.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, it is important to recognize that leaders in some provinces pushed hard to get the best accommodation they could for the concerns and the situations in their provinces. We are happy about that, but at the same time we have a duty and responsibility for fairness for all Canadians.

Therefore, we will honour the accommodation that was reached with Newfoundland and Labrador and Nova Scotia, which fully, 100%, excludes non-renewable resource revenue. At the same time, we have moved to put this important program back on a basis of fairness and equality, the same standard for all. I hope that at the end of the day, politics aside, the members opposite will respect that, applaud that, and support that.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, before expressing the position of the Bloc Québécois, I would like to come back to the motion we are debating. It is the motion presented by the Liberal Party, which reads as follows:

That this House regret that the party now forming the government has abandoned the principles respecting the Atlantic Accords, equalization and non-renewable resource revenues as articulated in the motion it put before the House on Tuesday, March 22, 2005.

I must say that such a motion was indeed put forward by the Conservative Party in 2005. I completely understand that to some regions in Canada it may appear that the Conservative Party is going back on its promise, with what it has proposed regarding equalization in the budget speech, and that is cause for frustration.

I also understand that roughly 2.5 million Canadians, who believed the current Prime Minister's promise on income trusts, feel swindled by this government today. I want to remind the House that the Prime Minister promised during the election campaign not to change the tax rules as far as income trusts were concerned. He did not keep his promise. It is in the budget.

In this case, as with equalization, I understand the frustration of the people, whether they are from the Atlantic provinces or the western provinces. I also understand the frustration of the pensioners who believed the Prime Minister.

However, I must say that in the case of the moratorium—it is more than that, it prohibits the conversion of corporations into income trusts in future—we cannot disagree with the government. This caused a problem both in terms of economic development and of tax avoidance. That said, there could have been mitigation measures, as suggested in the Standing Committee on Finance.

As far as equalization is concerned, as I was saying, I can very well understand the frustrations of certain premiers, those from certain provinces in particular. But one fact remains: the equalization formula, even the one in the current budget, is not fair for Quebec. For that reason, the Bloc Québécois cannot support this motion. If we went back to the former principles of equalization, then Quebec would lose a great deal of money.

I would remind the House that the old formula would have given Quebec $5.202 billion for 2007-08, while the new formula, which we feel is incomplete, gives Quebec $7.16 billion, which is a difference of $1.958 billion. How could anyone think that the Bloc Québécois would masochistically support nearly $2 billion less in equalization for Quebec? Thus, it is entirely understandable that the Bloc Québécois will oppose this motion.

I would also remind the House that the government's proposal—we will see how the budget implementation bill will turn the budget announcements into reality—includes either 0% or 50% of natural resource revenues, to be decided by the receiving provinces. At least there is a choice.

I wonder why the government did not propose 100% of natural resource revenues, as the Bloc Québécois is calling for, and will continue to call for, and as the Quebec government, all parties of the National Assembly and the Séguin commission also called for. The provinces therefore have the choice.

The 10-province standard means the elimination of the floor and ceiling provisions, which we opposed in the old formula, because it seriously penalized Quebec. In that regard, there is some progress in terms of the fairness of the equalization formula.

The tax bases used in the calculation have been reduced in number from 33 to 5, which we find much more transparent. Quebec's argument was also accepted—and I imagine this is true for other provinces—that property values must be calculated at market rates.

As I mentioned, this is what budget 2007 proposes. This does not fully satisfy the demands of Quebec and the Bloc Québécois. While we now have an equalization formula that is headed in the right direction, it is not quite there yet, and therefore, it is entirely understandable that we will not lose ground or regress to a situation of inequity for Quebec.

What we want is to reform the equalization formula to take into account not only the ten provinces, but also 100% of revenues from natural resources, renewable or not, and to also take into account, as I already said, the true value of property taxes.

In our opinion, this would make it possible to increase the overall equalization envelope. In the budget, this overall envelope is currently valued at $12 billion. It would increase to $16 billion in 2007 and 2008. We have made some progress, and I had the opportunity to say so. My Bloc Québécois colleagues also had the opportunity to say so in our reaction to the budget speech. However, a definitive solution to the fiscal imbalance has still not been found. The formula proposed by the Bloc Québécois is the only one that enables equalization to meet its goal of providing recipient provinces with a per capita fiscal capacity equal to the Canadian average.

It does not make sense to have gone with only 50% of revenues from natural resources. One thing that explains the fiscal disparity between Canadian provinces, unfortunately still including Quebec, is the fact that some provinces have oil and natural gas in the ground. Of course I am thinking of Alberta, but also Newfoundland and Labrador. This geological accident explains why some provinces are richer.

Take Newfoundland and Labrador, for example. Last year and this year, growth was close to 11%. Why was this? It can be linked to the start of the Hibernia project.

If we do not take this reality into account, the equalization formula is biased, and we are preventing the equalization formula referred to in section 36(2) of the Constitution Act from working. The section states that equalization is meant:

—to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

By not including any revenue from natural resources, equalization does not play the role set out in the Canadian Constitution. I am often amused when I point out to Quebeckers and my colleagues from other parties that the Bloc Québécois is about the only party that strives to ensure that the Canadian Constitution is respected.

In this case, I would point out, equalization plays an extremely important role for the regions of Canada. However, in order for it to play this role, we must look at the whole picture and not just parts of it. The former formula, which the Liberal motion would reinstate, was based on a standard calculated using five provinces. The poorest and the richest were excluded, which had the effect of lowering the national standard or, rather, the pan-Canadian standard—since this House has recognized that Quebec is a nation, I must set the example. It was recognized that the pan-Canadian standard, based on the average of the five provinces, was lower than if all provinces were included.

I would also like to remind the House that, at that point, the real value of property tax was not reflected. This value was determined by rent paid or mortgages paid by owners which resulted in property values of certain provinces being underestimated. As I already mentioned, all this led to Quebec being penalized. It still is because 100% of natural resources are not included in the equalization formula.

A solution for the fiscal imbalance—one which is just beginning to emerge—must have several components. First, we need an equalization formula that works. We need not retrace our steps. We must continue to work towards truly attaining the objectives of the Canadian Constitution, that is transfer payments that will enable provinces that fall below the pan-Canadian standard to have access to revenues that will allow them to reach this pan-Canadian standard.

Second, we need transfer payments that meet the needs of the provinces and Quebec.

As we have said, the last budget did not keep these promises and did not meet the expectations of the education system, particularly with respect to post-secondary education. This is true everywhere in Canada and in Quebec. So there is some work to be done on increasing transfers to the provinces and to Quebec.

To ensure that we no longer run the risk of the federal government making unilateral decisions, we recommend transferring the federal tax base to the provinces and Quebec. The Séguin Commission, the Government of Quebec and all parties in the National Assembly have recommended the same thing. With access to guaranteed, permanent and predictable revenues, Quebec will be empowered to address responsibilities in its areas of jurisdiction independently. Obviously, this applies to these areas of jurisdiction.

There also has to be some control over federal spending power. During the last two question periods, the Prime Minister was asked to commit to negotiations. Unfortunately, I must emphasize that yesterday, the Prime Minister said there would only be negotiations with a federalist Quebec government. That sounds a lot like blackmail to me, and it is unacceptable. If the Parti Québécois comes to power next Monday, March 26, which seems likely, the government will give it the silent treatment. I find that totally irresponsible.

Let me review the facts. During question period, the leader of the Bloc Québécois asked the Prime Minister about the federal government's willingness to begin negotiations to limit federal spending power. This was the Prime Minister's answer:

We are still prepared to consider the possibilities. To have such fiscal relations with the provinces, it is necessary to have a federalist government in Quebec and a government here in Ottawa that respects provincial jurisdictions.

This is truly a departure from democracy. Surely the Prime Minister misspoke himself because this would be a totally anti-democratic attitude and disrespectful of the people of Quebec.

However, he did say what he said. I imagine that during question period today he will be asked to tell us exactly what he is thinking. He certainly did not hold back. In response to a question I asked him, he said:

This government is prepared to meet with the new provincial government—which I hope will be a federalist government—to control federal spending power.

Does that mean that the Prime Minister not only wants to select judges and people to be on the immigration board, but he also wants to select provincial premiers, in Quebec in particular? This is totally unacceptable.

That is why we have to be able to free up some of the federal tax room and transfer it to the provinces that want it—Quebec wants it—in order to avoid this type of blackmail.

The best illustration of the fiscal imbalance is that the federal budget was dragged into the Quebec election campaign. Imagine if Quebec's budget had been brought down during the federal election campaign. Would anyone have been concerned during the federal election that Quebec's budget would have an impact on election results in Quebec? No one would have cared.

We can barely balance the books. Last year, Minister Audet had to sell off $800 million of the Government of Quebec's assets in order to balance the budget. This finance minister is not seeking re-election: he must be tired from trying to balance his budget. The auditor general, Mr. Breton, said that there was some accounting sleight-of-hand and that the budget had probably not actually balanced. This had no impact, which shows that the federal government has too much money in relation to its responsibilities.

Accordingly, we would like taxpayers to pay just enough taxes to the federal government that it can handle its responsibilities, yet pay enough to Quebec that it can handle its responsibilities as well.

Earlier I quoted the Prime Minister's responses. He said that Quebec needed not only a federalist government, but also a government that wanted decentralized federalism, as the Conservative Party in Ottawa advocates.

I have watched governments come and go in Ottawa. I have sat in this House for seven years, but I have followed federal politics for a good 40 years now. My parents were very interested in politics.

In reviewing the budget, I noticed that the phrase job training kept coming up:

The Government is prepared to consider providing future growth in funding for labour market programs after consultations with provinces and territories on how best to make use of new investments in labour market training and ensure reporting and accountability to Canadians.

This is in the chapter or part that talks about the labour market program, which, as we know, falls under Quebec's jurisdiction.

What does it mean? This phrase can be found not only regarding education and job training, but also regarding post-secondary education, social programs and child care. It is repeated several times in the budget. These are not federal jurisdictions. The equalization formula is a federal jurisdiction. If the federal government wants to change it, it can. Naturally, we hope it would change the formula in a way that best serves the interest of all Canadians, and especially the best interest of Quebeckers. However, it does not need to ask for permission, as the Prime Minister and the Minister of Finance seemed to suggest for months and months.

Besides, the Liberal government changed the equalization formula a number of times, to the detriment of Quebec. Based on the wording, we can say that, when it comes to provincial jurisdictions, the Conservative government is reserving the right to spend in consultation with the provinces, but it is not giving them the right opt out from these programs unconditionally and with full compensation. Thus, we still have a centralizing government in Ottawa. Only the paint colour has changed. They talk of open federalism but the reality is, we are dealing with a government that advocates a centralizing federalism. Quebeckers need to know this. If we want to be able to stand up to this government, as we have stood up to other governments, we must have a government that stands up for itself. Next Monday, we must have a Parti Québécois government.

As we can see, the work required to resolve the imbalance is far from over. Negotiations must continue, not matter who is in power. The Bloc Québécois will continue to pester the Conservative government and all governments as long as it is in this place. We will remain here until we achieve sovereignty in order to ensure that certain principles are respected and that the Government of Quebec, and the governments of other provinces, will have the financial resources needed to provide viable programs. That is also our hope for the others who share the Canadian political space. This requires accountability. That is found in the quote I just read.

However, when the Conservative federal government speaks of accountability, as did the previous Liberal government, it is referring to the accountability of the provinces and of Quebec towards the federal government. That is not the accountability I have in mind. I am referring to the accountability of provincial governments, of the Government of Quebec, towards their citizens, their voters, in their areas of jurisdiction. In areas of federal jurisdiction, the federal government must be accountable to the citizens of Canadian and Quebec when elections are held. We are not at all talking about the same thing.

In addition, equalization payments must be predictable. We are still in a situation where, tomorrow, the government could change its mind and amend the equalization formula or even reduce transfer payments in the areas of health or education. There are no guarantees and, after the election of a majority government,—whether Liberal, Conservative or NDP, and I say this to please you, Mr. Speaker; one can dream, as I always say—such a government could decide to tear up everything we now have in front of us. The only way to ensure that this does not happen is for Quebec to have an independent fiscal capacity, to have control over its revenues, in its areas of jurisdiction, and that means the transfer of tax points to Quebec.

Finally, and I do not know why the Bloc Québécois has to constantly repeat this point, jurisdictions must be respected. What I just read from the budget does not respect jurisdictions. Once again, the new Conservative federal government, just like the former Liberal government, wants to control what is done by the provinces, particularly Quebec, including what happens at election time, and that is unacceptable.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I would like to congratulate my colleague from Joliette for his excellent speech, although there is much more to say.

We are talking about equalization. As a member representing a riding, I strongly believe in equalization, which is the distribution of wealth throughout this large country that is Canada.

However, I am surprised to see that non-renewable natural resources, which represent considerable wealth—such as the oil sands development in the west, which is so wealthy that there is a labour shortage—are included at only 50% in the distribution.

We are fortunate in Quebec to have renewable natural resources, but these resources are not included at their full value. Furthermore, the federal government has done nothing to support their development, unlike the development of the oil sands, which is still benefiting from the government's generosity.

I am even more surprised when I read newspapers from across Canada. For example, an excerpt from the Edmonton Sun states that, for decades, every Quebec premier has exploited the federal government to Quebec's advantage. I am surprised to see that Canadians who are benefiting from this fiscal generosity and from the wealth of natural resources still feel that Quebec is taking advantage of this system. I would like my colleague from Joliette, who has a good grasp of the entire tax system, to elaborate on this.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I would like to thank my colleague for his excellent question. In my excitement, I forgot to mention that. First of all, Quebec receives lower equalization payments per capita than most of the other provinces that receive equalization. It seems like a lot, but that is because our population is greater than that of other provinces. Seven million people now live in Quebec. Per capita equalization transfer payments are lower than what most other provinces are getting.

Federal government transfer payments to Quebec have risen by 55% from 1993 to 2007. Wow, that is a lot. However, taken together, the other provinces minus Quebec have received 66%. That means that we have received less than the others.

From 1993 to 2007, the federal government's revenues increased by 91%. The reasons for the fiscal imbalance are obvious. My colleague noted, quite rightly, that the oil and gas sector has received huge direct subsidies. From 1970 to 2000, Ottawa gave $66 billion in direct subsidies to the fossil fuels industry—coal, natural gas and oil—and a paltry $329 million to the renewable energy sector, not a penny of which went to hydroelectricity. This means that we paid for our hydroelectricity, we paid for the Hibernia oil sands development project, and now we are being asked to cover the cost of cleaning up the pollution these industries produce. Who do they think they are fooling? We want what we deserve, that is all.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I want to thank and congratulate my colleague from Joliette for his speech. I have two little questions for him.

First, he reminded us of the Prime Minister's comments about the “choice” Quebeckers should make, that according to him, they should choose a federalist party. Does my colleague agree that this very serious? The Prime Minister is quite simply questioning the legitimate choice of a population, a nation, the nation of Quebec.

My second question is similar to the question already raised by the hon. member for Alfred-Pellan. I will ask it in the following way. I would like to ask my colleague from Joliette whether he thinks Quebec is really in the process of being swindled for the second time, if not the third. The current government keeps giving rather remarkable tax breaks—to oil companies for example—and Quebec, as my colleague just mentioned, is penalized. With this formula option, this calculation of 50% of revenues, it is obviously being penalized on that front as well. As far as I am concerned, we can never say enough about the fact that Quebec is being swindled.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I wish to thank my colleague for her question.

Yes, indeed, the Conservatives’ attitude is not only disdainful of the intelligence of the Quebec electorate, but also it challenges the legitimacy of the sovereignist parties’ existence. Whether in Quebec City or here in Ottawa, we derive our legitimacy from the democratic process, not from a decision by the Prime Minister of Canada. So when Quebeckers send members of the Bloc Québécois to Ottawa, we are entitled to speak on their behalf, like any other member here.

This is not the first time the Minister of Labour has cast doubt on the legitimacy of our presence here. To my mind, this attitude is not only disdainful, but also anti-democratic. Yesterday we saw that the example came from above when we heard the comments made by the Conservative Prime Minister.

So, yes, I do not think that we have heard the end of the story. Unlike what the Prime Minister may have thought yesterday, his little blackmail game is going to have entirely the opposite effect, I can assure you. I have been in touch with some of my fellow citizens and they are up in arms. They will not be told what to do. Now that they have been told they have to vote federalist, a lot of them will choose to vote otherwise, I can assure you. When I say “otherwise,” I mean for the sovereignist parties. As you know we have two in Quebec. So this will have the opposite effect of the one he thought.

To my mind, going with 50% of natural resources is a poor compromise. It is as if there were a fork in the road ahead and, in the decision as to which direction to take, they headed right for the middle. That is exactly what they have done, but by shortchanging Quebeckers the equivalent of $2 billion this year.

I spoke of the $66 billion in direct subsidies. Of this amount, at least $10 billion came from the pockets of Quebec taxpayers. That they should be deprived in the end of developing these natural resources, which they paid for, is totally unfair in my opinion and we will continue the battle so that 100% of the revenue from natural resources is included in the equalization formula.

As they used to say when I was young: this is just the beginning, let us keep up the fight.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I would like to be able to say that I am very pleased to be participating in this debate, but I have to say that like many, many people in my province of Nova Scotia and I think it is fair to say throughout Atlantic Canada, and fair-minded people across the country who care about broken promises and care about narrowing prosperity gaps, it is absolutely infuriating that we are having to have this debate today because of what this debate is about. This debate is about broken promises and a government that has completely betrayed a commitment that the Conservatives made when in opposition, that they made here by voting in the House of Commons, and they made on the campaign trail.

For those who are trying to follow the debate, let me make it clear that what we are debating is the Conservative government's abandonment of principles respecting the Atlantic accords, equalization and non-renewable resource revenues as articulated in a motion put before the House on March 22, 2005.

Without taking too much time to go back, because we have to move forward on this, let me just refer to that motion that was introduced by the Conservatives in March 2005. What a difference an election can make. The motion asked that the House call upon the government, the then federal Liberal government, “to immediately extend the expanded benefits of the recent Atlantic accord to all of the provinces since the existing equalization clawback on non-renewable resource revenues severely curtails the future prosperity of Canada by punishing the regions where the economy is built on a non-renewable resource base”. Let me just pick up on the word “prosperity”.

Mr. Speaker, I want to indicate that if my colleague from Sackville—Eastern Shore can get here from committee on time, I will be dividing my time with him.

Let me just say what my colleague, the leader of the New Democratic Party in Nova Scotia said on hearing about the betrayal contained in this week's budget. The NDP leader of the official opposition, Darrell Dexter, said that Harper endorsed the offshore accord when he was the opposition--

[The Deputy Speaker, Bill Blaikie]

Order. The hon. member knows that even when quoting she should not be naming the Prime Minister by name. She should refer to him as the Prime Minister, even if she is quoting the leader of the NDP in Nova Scotia.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, you are quite right. I have been here long enough to know that I should not call the Prime Minister by name. It is just that my provincial counterpart did and I quoted him, but I understand your point.

The leader of the NDP in Nova Scotia said that the Prime Minister endorsed the offshore accord when he was the opposition leader and now the Conservatives are treating Nova Scotia, and indeed the Atlantic provinces, in a way that will enshrine regional disparity.

I can see that members on the Conservative benches are rolling their eyes and thinking would they not expect a New Democrat to say that, the New Democrats here in the House and New Democrats in opposition in Nova Scotia. Yes, we would expect them to say that.

Let me quote something else. This is from a motion that was passed in the Nova Scotia legislature in the aftermath of this incredible betrayal. Here is the motion that was passed in the Nova Scotia legislature:

Whereas the 2007-08 federal budget unfairly forces the Province of Nova Scotia to choose between economic development and sustaining its share of equalization to support the fundamental needs of the people of this province; and

Whereas this is a major blow to the efforts of Nova Scotia to become self-sufficient; and

Whereas the commitment to all citizens of Canada to restore the country's fiscal balance include a promise to “ensure that no province is adversely affected from changes to the equalization formula”;

Therefore be it resolved that all representatives of this House of Assembly stand together in calling on the federal government to recommit to the true intent of the Atlantic accord, to stand alone as an economic tool to support Nova Scotia's goal of self-sufficiency and remove what is, in fact, a discriminatory budgetary hammer on the people of Nova Scotia.

The member for Central Nova is best known to people as the foreign affairs minister, but he also serves and proudly does so as the political minister for Nova Scotia. I think he should go to Nova Scotia and explain how it is that he has been able to support this discriminatory budgetary hammer on the people of Nova Scotia. He wears the title and gets the perks that go with it. Therefore, he should give an accounting of that spectacular betrayal.

I admire the fact that across the board the members of the Nova Scotia legislature have stood together and stood up for Nova Scotians.

Let me also challenge the premier of Nova Scotia to go one step further. He will know that the premier of Newfoundland has seen fit to counsel the people of his province, particularly within his party, to not vote for the Conservative Party in the next election whenever it comes. I do not get to challenge the premier of Nova Scotia, but let me remind him what has been said by his provincial counterpart in Newfoundland. Danny Williams has suggested that the Prime Minister cannot be trusted. He is the same Prime Minister who basically reneged on money for women, for literacy groups, for volunteers, for students, for minority rights. He is a Prime Minister who has not lived up to the Kyoto accord and for aboriginal people.

There is a long list of people who have been hard done by the government in a minority situation. If the Conservatives were to get a majority government, I am quoting the Conservative Premier of Newfoundland who said that we have to be very concerned about what commitments they will deliver on.

This is a challenge to all members. The challenge is whether we are prepared to stand together around commitments made on the floor of this legislature, whether we are prepared to stand together for measures that reduce the prosperity gap. That is what is at the heart of this motion. Also, the challenge is whether we are prepared to stand together to say this is our vision for a better Canada and we are prepared to work together to put that vision into effect.