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House of Commons Hansard #133 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

National DefenceRequest for Emergency DebateRoutine Proceedings

3:20 p.m.

Liberal

The Speaker Liberal Peter Milliken

The Chair has received an application for an emergency debate from the hon. member for New Westminster—Coquitlam. I now call upon her to make her representations on this matter.

National DefenceRequest for Emergency DebateRoutine Proceedings

3:20 p.m.

NDP

Dawn Black NDP New Westminster—Coquitlam, BC

Mr. Speaker, I am asking for this emergency debate so that the House can discuss comments that were made by the Minister of National Defence yesterday. The comments effectively announced a new defence policy for the Government of Canada that would result in larger expenditures of public funds and basically a change in Canadian foreign policy.

I believe that the announcement made by the Minister of National Defence that Canada should expect to be involved in heavy combat with armour for the next 10 to 15 years in different parts of the world is actually momentous, historically significant and without precedent. The minister was talking about an undertaking three times longer than the great war or than World War II. This is something which clearly falls within the administrative responsibilities of government.

I cannot foresee, nor has the government proposed, a time for this issue to be debated in any other way. I felt it was my duty to raise this as quickly as possible with you, Mr. Speaker. I believe that Parliament should speak to this issue which affects the lives of tens of thousands of members of the Canadian Forces. Parliament must have a debate on this issue before the government makes commitments to conflicts over the next 15 years.

For Parliament not to debate this issue today would send the signal to the executive branch of government that it can pursue whatever policies it wishes and that Parliament is unconcerned with its plans or with its expenditures in the conduct of war.

I therefore believe that this matter meets the test of Standing Order 52(6).

Speaker's RulingRequest for Emergency DebateRoutine Proceedings

3:25 p.m.

Liberal

The Speaker Liberal Peter Milliken

The Chair appreciates the interest the hon. member for New Westminster—Coquitlam has shown in bringing this matter to the attention of the House today, but having reviewed the letter that she forwarded to me, the notice that she is required to give pursuant to the Standing Order, together with a copy of the interview, and having heard her remarks today, I must say that I am not satisfied that this request for an emergency debate meets the exigencies of the Standing Orders at this time. Accordingly, I am going to decline her request today.

The House resumed consideration of the motion that Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, be read the second time and referred to a committee, and of the motion that this question be now put.

Budget Implementation Act, 2007Government Orders

3:25 p.m.

Liberal

The Speaker Liberal Peter Milliken

When the matter was last before the House the hon. member for Yukon had the floor for questions and comments arising out of his remarks. I therefore call for questions or comments. The hon. member for Mississauga South.

Budget Implementation Act, 2007Government Orders

3:25 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I want to thank the member for his intervention in the debate on the budget implementation bill, Bill C-52. He is a member from the Yukon and travels a great deal to participate in this place. In fact, he is here as often as anyone doing his job. His constituents should be very pleased with that.

He spoke very eloquently about the impact of the budget on his constituency, about the impact on the needs for aboriginals and maybe the lack of support for the needs of the aboriginal community. His speech was so full of insight that I want the member to elaborate on the consequences of not having the kind of funding that would have been prescribed under the Kelowna accord but which the Conservative government has totally rejected and voted against. What would it mean to our first nations, Inuit and Métis to have the kind of supports that were proposed in the Kelowna accord represented in the budget?

Budget Implementation Act, 2007Government Orders

3:25 p.m.

Liberal

Larry Bagnell Liberal Yukon, YT

Mr. Speaker, before I answer the question, I want to mention two things I am in support of, but which I forgot to mention. One is the $300 million for cervical cancer immunization. That is excellent. The other is the registered disability savings plan. At least it gets disabled people on the agenda again.

With regard to the member's question, as I said in my speech, just over $400 million was added to the regular budget of $9 billion or $10 billion a year for aboriginal people, which is a totally insignificant amount in a very few areas and would not address the major issues. Fortunately we had the recent experience that the major issues were identified by the aboriginal people themselves in the historic Kelowna agreement. All the premiers, aboriginal leaders from across the country and the federal government got together to make this historic accord with the bottom up itemization of those issues. Instead of $400 million there was $5 billion that would have dealt with those issues, such as housing, economic opportunities, education and health care.

This morning the teachers' association visited me and talked about how aboriginal people in Nunavut actually sleep in shifts because there are so many people living in a house. How can people survive in school when they have to sleep in shifts in the bedroom because there are so many people living in a house?

There is an obvious need for economic opportunities in rural areas where aboriginal people are found. Compared with the rest of Canadians, the statistics in all these areas for aboriginal people are much lower. Canadians are generous people. They want to narrow the gap in educational achievements so aboriginal people can achieve more. In certain cases, special assistance is needed in the classroom and in health care. Why do more aboriginal mothers and babies die in childbirth than the average Canadian? These are critical issues. I imagine there are very few Canadians who would not want to reduce that disparity. The $5 billion in the Kelowna accord would have done that. Instead, we did not even get enough money in this budget to deal with inflation and the large increases in aboriginal people and other types of problems.

Budget Implementation Act, 2007Government Orders

3:30 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, one of the broken promises of the government is that it has failed to deliver on the health care wait times guarantee. There were five priority areas. As we know now, the government is working out deals with each province individually saying that if a province satisfies the wait times criteria in any one of the five areas, it will get the money. That makes it interesting considering the health difficulties and the challenges faced by aboriginal people in Canada.

What exactly does that mean in terms of providing the same kind of benefit to the Canadians in Yukon and the other territories? What negotiations are taking place? Where is the money going to go? Is Yukon going to get any money under the so-called broken promise of wait times guarantees?

Budget Implementation Act, 2007Government Orders

3:30 p.m.

Liberal

Larry Bagnell Liberal Yukon, YT

Mr. Speaker, that is a very interesting question because the government has, to its credit, seen that the issue is different in the north. The fact is that a lot of those surgeries do not occur in the north. In a lot of cases, people have to go south for them. The access is to primary health care, actually getting in at the primary stage, because of the long distances people have to travel. We have half of the area of Canada and only three full scale hospitals. People sometimes have to travel hundreds of miles. Primary health care access is a huge issue.

The government's energies in this area are going to be concentrated on reducing the wait times for that primary access and making sure that primary access occurs for all people in the north. That is good and I will certainly be watching to make sure that is implemented.

Budget Implementation Act, 2007Government Orders

3:30 p.m.

Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, it is my pleasure to rise in debate on the budget implementation bill, Bill C-52. As you know, from the moment the Minister of Finance delivered his budget speech, the Bloc Québécois has supported this budget, even though it is not perfect. This has to be made very clear. It does, however, have enough good stuff in it for us to be comfortable voting for it and, consequently, voting for Bill C-52.

Obviously, in the budget implementation bill, not all budget items are implemented. But the bill does contain items such as measures concerning corporate and personal income tax, fiscal arrangements with the provinces, particularly with respect to equalization, the Canada social transfer, and the Canada health transfer. This budget implementation bill also deals with trusts and new funds, the amount of such trusts, and direct payments to the provinces, territories and other entities. It also provides the legislative framework for using money saved in debt service from paying down the debt to lower taxes, and it contains a number of other measures I do not intend to get into in any great detail, except perhaps for one, and I will start with that one.

As I was saying, this bill has many items, some more interesting than others. I will primarily focus on the measures affecting fiscal arrangements with provinces and environmental issues.

Moreover, I want to start by bringing up an extremely sensitive point concerning income trusts. Obviously, the Bloc Québécois has supported the principle of preventing corporations from converting into income trusts as of the Minister of Finance's announcement on October 31, for a number of reasons based on various factors. Tax leakage was obviously brought up. While the committee was working on this issue, I realized that there were some revenue losses because of income trusts, but the department was unable to pinpoint to what extent. We were given an absolutely unbelievable figure, which included tax deferrals, since some shares in trusts are in registered retirement savings plans. This represented at least half of the figure presented, and, though I will not go as far as to call it dishonest, I think this method was completely biased.

There was tax leakage for the federal government and the Government of Quebec, but certainly not to the extent that the minister was talking about. Moreover, Minister Audet, who, up until the last election, was the Quebec finance minister—we will soon know who will replace him since, as you probably know, he decided not to run again—told me that the Government of Quebec was currently losing approximately $40 million a year because of income trusts. This is rather far from the figure provided by the Minister of Finance, which was in the billions of dollars over the next few years.

I believe that the government decided to put the brakes on income trust conversions primarily because they would have put pressure on a number of businesses. Take BCE, which did not necessarily want to convert to an income trust but was under pressure because a competitor, Telus, had announced that it intended to do so. It was therefore conceivable that in the future, some immature sectors needing investment would convert to income trusts, thereby causing problems for all of Canada and Quebec. I find this argument more convincing than the tax evasion argument.

Moreover, as I said, on October 31 we were in favour of no longer allowing corporations to convert to income trusts. However, that did not address the problem of existing income trusts. We would have been comfortable with changes to existing trusts that had taken advantage of the established rules for years. The Prime Minister's announcement during the election campaign that the rules were set in stone was irresponsible. It is clear that he promised not to change the rules for income trusts. He broke his promise, but as I said, it was an irresponsible promise anyway. I explained why a few minutes ago.

Nonetheless, the people who invested in existing income trusts did so in good faith, thinking they could trust the Prime Minister, who, as I said, promised not to touch income trusts.

We studied ways to minimize the impact on existing trusts. We would have been comfortable with keeping the 250 or so existing trusts and preventing more from being created. We could have agreed to that.

The government, however, decided to force them to convert back to corporations within four years or to pay the equivalent of the taxes paid by people who invest in regular stocks—which is not entirely true, as the committee found during its work.

As I said, the government decided to allow just four years for the transition. We think the government could easily have extended that period to eight or ten years to mitigate the impact of the October 31 announcement.

As I mentioned earlier, we are going to support the budget. However, when election time comes, the government, that is the Conservative Party, will have to explain to us why it did not heed the recommendations of the Standing Committee on Finance. The Liberals, like the Bloc Québécois, gave suggestions for minimizing the negative impact on the 2.5 million Canadians, including Quebeckers, who invested in good faith in these income trusts and who have since been swindled, despite the Prime Minister's promise during the election campaign.

These 2.5 million Canadians, including many Quebeckers, are not all millionaires or wealthy people. Many of them are even retired individuals who are now having a hard time making ends meet, because they have had a good portion of their income cut off. I understand why they are angry. The Standing Committee on Finance, the Bloc Québécois and the Liberal Party have made suggestions to the Minister of Finance. He did not consider those suggestions. Thus, it is up to the Conservatives, the Prime Minister and the Minister of Finance to explain, in an election campaign, why they did not consider the suggestions made to them, for example, by the Bloc Québécois.

That said, as I mentioned, we agreed with the approach in principle. We believe that the Conservative government, the Minister of Finance and the Prime Minister failed to show compassion for hundreds, if not hundreds of thousands of people who invested in good faith in income trusts.

I therefore wanted to send out this caveat—or update—because, clearly, many people who followed the work of the Standing Committee on Finance concerning income trusts are having a hard time understanding that, even though we disagree with how this measure is being implemented, we are nevertheless going to vote in favour of the budget.

We are going to support the budget because—as I have said many times—it represents a significant, yet largely insufficient, step towards correcting the fiscal imbalance. We are talking about money that Quebec desperately needs.

As we all know, the Prime Minister promised on December 19, 2005, to correct the fiscal imbalance. Thus, the Bloc Québécois supported the previous budget primarily, although not exclusively, because it promised to correct the fiscal imbalance in this budget.

The Bloc Québécois looked at what an appropriate solution would mean for Quebec and made a certain number of conditions. They may not have been met in their entirety but some have been partly met by this budget. In any event, the conditions have been met to the extent that the Bloc Québécois feels it can support Bill C-52 at this stage. However, this is not an indication of what will happen in future, especially when the next budget is tabled. If no other significant steps are taken towards the definitive resolution of the fiscal imbalance, we reserve judgment on future budgets.

I would like to say one thing. What was extremely important to the Bloc Québécois was that there first be an increase in transfers to Quebec and a change in the equalization formula to take some of Quebec's claims into account. When the amounts were announced, the financial imbalance caused by the Liberal government, the former Prime Minister and the former Minister of Finance in 1994-95 and 1995-96—when draconian cuts were made to provincial transfers to deal with the deficit—had to be corrected. At that time, the problem was simply dumped on the provinces.

What is very serious is that, beginning in 1997-98, large surpluses were routinely recorded and the situation was not resolved. The imbalance has yet to be corrected.

We calculated that $3.9 billion was needed to correct the fiscal imbalance. Because we are realistic, understanding and moderate in our approach, we proposed that this amount be disbursed over three years. Therefore, in this year's budget, there is the equivalent of an additional $1.7 million in equalization payments, the Canada social transfer and the Canada health transfer.

Unfortunately, I must subtract $270 million from this amount because the Conservative government unilaterally tore up the child care agreements it had with the provinces. Therefore, this year there is an additional $1.723 billion for Quebec, which is not bad in view of the fact that two years ago the Government of Quebec had to sell $800 million of its own assets in order to balance its budget. This money was needed.

For the next year, according to the 2007-08 budget, the government is already announcing an additional increase of $888 million and of $330 million for 2008-09. I know that this is very far from now, but this wish has been expressed and put down on paper. This comes to a total of $2.9 billion, or almost $3 billion. Adding a number of other things, we reach $3.3 billion, which is not far from the financial target of $3.9 billion that we had established.

This is a financial adjustment. The former Liberal prime minister said that the provinces were under financial pressure and this would have to be corrected at some point. That had never been done systematically. Some money was put into health and some into infrastructure programs, but, as a whole, the government had no approach and was unable to put a figure on the adjustment that had to be made to reach a fiscal balance.

However, the current Prime Minister promised us to redress the fiscal imbalance, not the financial imbalance. Now, all he has done is partially redressing the financial imbalance. As I was mentioning, the increases that would be necessary to correct the situation that was created in the middle of the 1990s were estimated at $3.9 billion in the third year, and he is at $3.3 billion. Let us say that, in the next few years, we force him to put in a little more, if we are all still here, of course. As we know, this Conservative government is in a minority position, and I hope it will keep that in mind.

So, we are currently at $3.3 billion. A little extra effort will be necessary to get closer to $4 billion. Still, that does not correct the fiscal imbalance because, as indicated by the word fiscal, this is a fiscal matter, something having to do with the level of fiscal autonomy that can be achieved by the provinces and Quebec. This means that the tax base will have to be renegotiated. But there is no indication in Bill C-52, or in the budget for that matter, that the federal government is prepared to open negotiations with the provinces to transfer the part of the tax base corresponding to the transfers for health, education and social programs. It makes absolutely no sense for Quebeckers to send money to Ottawa and then be forced to grovel on their knees to try and get their tax money back for programs that fall under the jurisdiction of the provinces, Quebec in this instance. We are talking about health, post-secondary education and social solidarity.

It is another ball game where equalization is concerned, because equalization is entrenched in the Canadian Constitution. As long as we are a part of Canada, the Constitution should continue to apply to us. Incidentally, I often like to joke about the Bloc Québécois being the only party in this House that really cares about enforcing the Constitution of 1867 and respecting the areas of responsibility of the provinces and the central government, which is much more than a federal government. That is what we will be working on in the coming months. My colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, who will be taking over as our finance critic, will therefore bring pressure to bear so that negotiations are opened with respect to transferring to those provinces that so desire the part of the tax base corresponding to the transfers for health, post-secondary education and social programs. Quebec so desires, and the Séguin commission was very clear in that regard.

As I have already mentioned, equalization will continue to be implemented. This program is not only enshrined in the Constitution, but it is a program that transfers revenues with no strings attached for the Government of Quebec to use as it sees fit, which is not the case with dedicated transfers. This is the first thing that is missing from Bill C-52 that we are working on.

The second thing is federal spending power. The government has not been silent about this, but it talks about it in a roundabout way and it simply pays lip service. The federal government and the Conservative Party are committed to limiting spending power. We do not want to limit it; we want it to be controlled. We are waiting for a very clear bill from the Minister of Finance to explain how he intends to control the federal government's power to spend in the jurisdictions of Quebec and the provinces. How can federal spending power be controlled in Quebec's jurisdictions? There is just one way: by giving the provinces who so desire the unconditional right to opt out with full financial compensation of a program implemented by the federal government in a shared jurisdiction or an exclusive jurisdiction of the provinces; and the province should be compensated.

Unfortunately, that is not exactly where things are headed. I will read a number of paragraphs from the 2007 Budget Plan for budget 2007-08. For example, I will read from page 120. In the objectives stated by the government, by the Minister of Finance, for renewing and strengthening the Canada Social Transfer, they talk about jurisdictions belonging to Quebec and the provinces. Among the concerns are: “The accountability and transparency of the CST—”.

As far as the accountability of the Canada Social Transfer is concerned, what are the Conservatives talking about? The provinces and Quebec are accountable to the federal government when it transfers their money to them.

We are far from the true approach to controlling or even limiting the federal government's spending power. The following sentence is smooth, “—Canadians are not informed of how much federal support is being provided to each of the three priority areas that the CST supports (post-secondary education, social assistance and social services, and support for children)”.

Not only does the Conservative government not have any intention of limiting or controlling the spending power, but it also wants to ensure that federal support—which is essentially the taxes of all Canadians and Quebeckers—will be more visible in the jurisdictions of Quebec and the provinces. It has absolutely no responsibility in this jurisdiction.

However, because of the fiscal imbalance, the federal government has more money than responsibilities. It is looking for responsibilities and is finding them in provincial areas of jurisdiction. So it adds money. Otherwise, what would it do with that money? It could lower taxes and transfer that money in the form of a tax base to the provinces that want it, as I already mentioned. It could also do useful things in its own jurisdiction. For example, what about the RCMP detachments that were closed? The Conservative Party promised to reopen RCMP detachments that had been closed, as was done in the Lanaudière region, where the Saint-Charles-Borromée detachment was closed. What about employment insurance, which falls under federal jurisdiction? It could at least ensure that the program meets the objectives for which it was created.

As we can see, it is a small step that is significant enough for us to be comfortable supporting Bill C-52, but not enough to talk about correcting the fiscal imbalance. I am sure that Quebeckers understand this very well. I am also sure that they will send back a majority of Bloc members to the House after the next election, to truly defend them. They will force the government—Liberal or Conservative—to genuinely correct the fiscal imbalance. The government cannot just go part way, as it is doing now, when it comes to restoring federal government transfers in areas of provincial jurisdiction.

Budget Implementation Act, 2007Government Orders

3:50 p.m.

Blackstrap Saskatchewan

Conservative

Lynne Yelich ConservativeParliamentary Secretary to the Minister of Human Resources and Social Development

Mr. Speaker, how important does the member think it is to pay down the national debt and does he agree with the tax back guarantee that the minister has decided to legislate?

Does he agree that the national debt should be paid down? Does he agree that Quebeckers would be quite happy to be a part of the benefits of the tax back legislation and guarantee?

Budget Implementation Act, 2007Government Orders

3:50 p.m.

Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, as far as we are concerned, paying down the federal debt is clearly not a priority. I am not saying it is not a good thing, but until we deal with the fiscal imbalance, the priority should be to transfer the tax base, the federal government's surpluses to the provinces, to help them assume their responsibilities in their jurisdictions.

Let us not forget that paying down the debt is not as effective as promoting economic growth. What will happen if we do not help the provinces assume their responsibilities in post-secondary education? Neither Quebec nor Canada will prosper.

Recently, there was an article in the Hill Times, if I am not mistaken, in which it was said that Canadian universities do twice as much research as universities in the other G-7 countries. Therefore, if we do not restore funding for post-secondary education, universities will no longer be able to do research. This is true for Quebec, but it is also true for the rest of Canada and we will shoot ourselves in the foot, because we will jeopardize the conditions that must prevail to ensure economic growth.

This is why I have nothing against paying down the debt when the issue comes up. Over the past eight or nine years, the Liberals have paid down the debt at the expense of conditions that promote economic growth. We are beginning to feel it very clearly considering that, for the month of February alone, 33,000 jobs were lost in Quebec's manufacturing sector. Why? Because research and development are insufficient. This is true in Quebec, but it is also true in the rest of Canada. There is not enough occupational training, because of a lack of funding.

There is nothing in the Budget Plan 2007 for post-secondary education. The document refers to an amount of $800 million, but it is for next year. We need the money now.

If we really want to reduce the debt, we must do so based on our collective wealth, which is measured by using the gross domestic product. The GDP increases with economic growth which, in turn, depends on our ability to innovate, be competitive and have adequate infrastructures. Unfortunately, our infrastructures are not only increasingly obsolete, but they also jeopardize our economic prosperity and even people's lives, as we saw with the overpass on Laval's Concorde boulevard, in Quebec.

In this sense, it would be better to correct the fiscal imbalance, to allow Quebec and the other provinces to assume their responsibilities in priority areas that are essential to economic growth.

Budget Implementation Act, 2007Government Orders

3:55 p.m.

NDP

Peter Stoffer NDP Sackville—Eastern Shore, NS

Mr. Speaker, the hon. member from the Bloc has been resonating the myth of the fiscal imbalance. It was ironic that Quebec received a tremendous amount of cash in the last budget and the Premier of Quebec right away offered tax cuts for people, not a program for investments in social, education, health, infrastructure or to help anybody. It was strictly to give tax cuts in order to buy votes.

What we have in Canada is a social and development imbalance, not a fiscal imbalance. Some of the things the hon. member talked about such as the reinstatement of the RCMP stations and a shipbuilding policy to help out the people of Levy, Quebec would be very important. However, those things are not done on tax cuts. Those things are done on investments.

Would he comment as to why his premier received this tremendous amount of cash and offered tax cuts during a provincial election?

Budget Implementation Act, 2007Government Orders

3:55 p.m.

Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, that is an excellent question and I thank my colleague for it.

First, I can assure you that I did not vote for the Liberals in the last Quebec election. Quebeckers democratically chose to elect a minority Liberal government headed by Jean Charest and an official opposition formed by the Action démocratique headed by Mario Dumont. The Parti Québécois ended up with less members even though its percentage of the votes was practically the same.

There will be a debate. To please voters, Jean Charest wants to use the transfers that were announced by the federal government to cut taxes, which he has a right to do. Once the money is transferred, discussions must take place. The fiscal imbalance is evident in various ways: not only is it difficult to invest in services and infrastructures, but taxes are being raised because the government must assume its responsibilities. As you know, Quebeckers are among those who pay the most taxes. In this sense, there is some legitimacy in wanting to cut taxes, but that is not my priority.

With regard to the debate that will take place in Quebec, I am convinced that the Parti Québécois will defend its position, which will be different from that announced by Mr. Charest. Even though Mr. Charest made that announcement, it will result in a good debate in the National Assembly and we shall see what comes of it. However, it is up to Quebeckers to debate this matter. It is not up to the federal government or the rest of Canada to tell us what to do with this money.

Having said that, if they are not satisfied with Jean Charest and his decisions, Quebeckers will vote for the Parti Québécois the next time and there will be a social democratic government in Quebec.

Budget Implementation Act, 2007Government Orders

3:55 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I was a little taken aback by the member's suggestion that paying down debt was not a priority. Even the member would understand that not paying down debt and transferring $3 billion to the provinces would represent an amount of money for which there would be no strings, no accountability and would in fact be a one time distribution because it is an absolute amount of money.

In the alternative, paying down the national debt in an orderly fashion saves interest. That interest is the real fiscal dividend to Canadians. It is ongoing savings year after year. It is there to support, for instance, the Canada health and social transfer, which goes for the benefit of all Canadians through the provincial transfers and has accountability provisions built into it.

Would the member like to reconsider his view of paying down debt as opposed to not paying down debt and simply transferring amounts for which there would be no accountability possibilities for the Government of Canada?

Budget Implementation Act, 2007Government Orders

4 p.m.

Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, what matters when we take on a debt is its amount in relation to our wealth. For example, if I have a $100,000 mortgage on a home worth $300,000, it is not the same as having a $100,000 mortgage on a $100,000 home. Everyone should understand that.

Since the Liberals began paying down the debt, it has decreased by 48% or perhaps 35% of GDP. I do not have the figures on hand, but the debt has been reduced significantly. 80% of this is due to economic growth and only 20% to debt repayment. If you use money to pay down the debt rather than investing in factors that contribute to growth, you shoot yourself in the foot, as I stated earlier. What is even worse is that the provinces are forced to go into debt. At present—with the exception of Alberta—all provinces are on roughly the same footing, with balanced budgets, or slight deficits, or very large deficits in some cases. Provincial debt is more costly for taxpayers. Does it make sense to pay down debt which costs less in terms of interest paid and to make provinces go into debt and then force them to borrow on the markets?

The Quebec debt increased by $11 billion when the Liberals were in power. I guess that they did try to prevent things from getting worse but they did not succeed, in part because of fiscal imbalance. The interest rate on that $11 billion is higher than that on the federal debt. As a taxpayer, I would prefer to see the federal debt increased by $11 billion because the interest rate on it is lower, than in the provinces that have to pay higher taxes. I think that that would be totally logical from an accounting and a financial point of view.

I am not against paying down the debt but I think it is not a priority for the present situation. Our priority should be allowing the provinces to ensure sufficient financing for their public services and their social programs. If there is money remaining after that, we could then lower taxes or make payments on the debt or a combination of both.

Right now, the fiscal imbalance has not been corrected and the dire financial situation of provincial governments is proof of that. I always find it funny to see in the documents on the financial situation of the provinces that there is a surplus of $X billion. Almost 90% of that surplus comes from Alberta. As for the others, one year things go well, the next they do not go as well. It is not helping the taxpayers to burden them with the debt that is the most expensive for them, when the federal government made a huge surplus of $13 billion last year. I think that this is simply a question of financial logic. It is not an ideological issue at all.

Budget Implementation Act, 2007Government Orders

4 p.m.

Liberal

Paul Zed Liberal Saint John, NB

Mr. Speaker, I rise today to talk about the federal budget and the impact of this budget not just on Atlantic Canada but on New Brunswick.

This federal budget, as many colleagues in the House know, is a major disappointment. Over and over again, the Prime Minister spoke about this budget representing his Canada. As a member of Parliament from New Brunswick, I can tell members that this budget does not look anything like the Canada I know and love.

The Prime Minister promised New Brunswickers and Canadians that he would fix the equalization program and respect the Atlantic accords. He has done just the opposite.

While Quebec received an increase of 29%, or $698 million in the next fiscal year, New Brunswick's share grew by a meanspirited 1.8%, and Atlantic Canada receives little more than 4% of this new money. New Brunswick's finance minister, Victor Boudreau, has stated this about the Conservative budget:

If [this budget] was to fix the fiscal imbalance, as far as New Brunswick is concerned, I wouldn't give it a passing mark.

Glaringly, this demonstrates that the Prime Minister does not care about Atlantic Canada and builds on his reputation as a divider pitting one region of the country against another. The Conservative government has squandered a golden opportunity to show Canadians that leadership is representing the rich and the poor, the east and the west, big cities and small towns. It has failed miserably.

Let us ask Premier Danny Williams of Newfoundland and Labrador. What did he have to say about this budget? He said:

Fairness...is about keeping your word. Fairness is about making a commitment and making a promise to the people of Newfoundland and Labrador and Saskatchewan and living up to that promise. If your government doesn't keep this promise to us, then how can the people of Canada in any province rely on any promises or commitments that you make to them in the future? And I would caution the people of Canada on a go-forward basis.

Let us ask Premier Rodney MacDonald of Nova Scotia or perhaps Premier Lorne Calvert of Saskatchewan why they are so outraged that this budget has divided Canadians.

One of the first things the Prime Minister did upon taking office was to increase income taxes for those in the lowest income tax brackets, hurting working New Brunswick families. The lowest income tax rate was raised from 15% in 2005 to 15.5% in 2007, hurting those who need it most.

Despite the spin of the Conservative government, this budget does nothing to fix this situation. The fact remains that tax relief for hard-working New Brunswickers averages a mere $80 per taxpayer and the tax hikes imposed by the Prime Minister cancel out the benefit of the new child tax credit, which does little for poor parents who pay little or no income tax.

John Williamson is someone whose name should be very familiar to some of the members opposite. He is president of the Canadian Taxpayers Federation and has said this about this Conservative budget:

The fellow working the line or anyone or anyone with a salary income and no children will receive no tax relief. That's disappointing. Ottawa is running huge surpluses. This is a good time to cut the rates for all taxpayers up and down the economic ladder. Government decided to broadly target, for example, seniors, not tax relief, in this document for all taxpayers.

When it comes to child care, the Conservative government has not created one single child care space despite promising to create 125,000 new spaces over the next five years. This promise was not worth the paper it was written on.

What is worse is that the so-called universal child care benefit is fully taxable. This is the Prime Minister's sleight of hand: giving parents $100 and taking back $99.

The Liberal government signed an early learning and child care agreement with the previous Liberal social development minister, the member for York Centre, and then premier Bernard Lord. That would have invested $146 million in our province of New Brunswick for New Brunswick kids. This would have created real and lasting child care spaces.

However, we do not have to ask the politicians about it. We can ask front line workers like the YM-YWCA's child advocate Janet Towers, who promotes child care and early learning to keep our New Brunswick children globally competitive. The Prime Minister killed this deal and took this money away from the province.

Budget 2007 allocates $6 million in child care funding for New Brunswick, with no money trickling to Saint John, New Brunswick. This will do nothing to create child care spaces.

The Prime Minister's approach to child care is to offer tax credits, not child care, and that is not our Canada. Never has a government done so little, with so much, for average working Canadians.

Just last year the previous Liberal government left a $13 billion surplus. Yet rather than investing in affordable housing, which was not in this budget, rather than investing in tax breaks for seniors, which was not in this budget, and rather than investing in literacy, which was not in this budget, the Prime Minister chose to make drastic ideological program cuts.

The Conservative government has not allocated any new money for affordable housing. This has huge implications for Saint John, New Brunswick, which has some of the oldest housing stock in Canada.

There is also nothing in the budget that corrects the inequities in the employment insurance program.

This budget does little or nothing to address poverty or child poverty, which is a national disgrace, and it does not stand up for working class families. This budget does nothing for them.

This budget fails to offer new support for students. It does not put a penny in the pockets of Canada's undergraduate students. It gives graduate students a little money while the vast majority get nothing at all. That is the kind of Canada the Prime Minister wants to create with this budget.

The Conservative government's budget fails to help Canadians safeguard their environment or fight climate change. It cuts back on our commitment to renewable energy. It reduces funding to New Brunswick by one-half. Without an overall plan for the environment, we cannot meet our Kyoto commitments. That is not our Canada.

The Prime Minister's budget does not provide the long term, predictable, stable funding for cities and communities that mayors across Canada have been begging for so they can meet their basic infrastructure and transit needs. A massive infrastructure deficit remains in Canada as a result of this budget's lack of support for cities and communities.

While there is some new money in the budget for recreational infrastructure through the Canada building fund, this money is being allocated on a per capita basis, which disadvantages smaller provinces like New Brunswick. While we may have a smaller population in New Brunswick, we still have very pressing recreational infrastructure needs and a smaller tax base to fund them.

I am currently working as part of Team Saint John toward the construction of a new multiplex facility. Letters to my office, conversations with community leaders and recent town hall meetings held throughout Saint John have all confirmed that there is both a pressing need and widespread support for a multiplex project in greater Saint John.

The recreational and health needs of our children are at risk as a result of the lack of current facilities available. As greater Saint John experiences growth, it is imperative that a viable solution to the current shortage in recreational facilities be resolved so that the quality of life in our community continues to advance.

With rising levels of obesity in Canada, the government needs to ensure programs are in place that provide funding to meet the recreational needs of our cities and our communities across Canada.

The feasibility study that has been commissioned by the recreational implementation committee of the city of Saint John recommends a multiplex facility. The cost of this facility is in the neighbourhood of $34 million. I urge the government to ensure that the allocation of money for recreational infrastructure takes into consideration the unique needs and challenges of smaller provinces.

The lack of infrastructure funding in the budget puts projects like the one-mile interchange in jeopardy. We need to have this interchange in New Brunswick completed by 2010 at the latest in order for our region to better leverage investments and opportunities in our industrial parks.

This interchange will take truck traffic off Saint John streets, which is vital for our tourism industry, and will also reduce the wear and tear on our downtown community. Taking this traffic directly to the industrial areas of our city will also promote growth for the industrial parks and help support new investments in the oil refinery, the LNG project and the proposed green industrial park on Bayside Drive.

The importance and significance of this one-mile interchange cannot be overstated. With an expected $5 billion to $7 billion reinvestment in a proposed second refinery being considered in the eastern part of our city, the largest single private investment in Atlantic Canada, and an anticipated completion date of 2012, we need to ensure that this key piece of infrastructure is in place.

There is nothing in the budget on forgiving the debt on another important issue in Saint John, the Saint John Harbour bridge. The bridge was built at a cost of $18 million. It is the only federal bridge in Canada that has a toll on it. The citizens of Saint John have paid approximately $23 million toward the bridge, yet we still owe $23 million.

There is something seriously flawed with that model. It is like a mortgage that is impossible to repay, and it keeps growing. Our community has more than paid for this bridge already. We cannot be expected to continue payments in perpetuity. It is just simply not fair. It is time for the government to do the right thing and forgive the debt on the Saint John Harbour bridge.

The Prime Minister's budget breaks more promises than can be counted. He has broken promises on equalization and on child care. He has broken his promise to seniors not to tax their income trusts. He simply cannot be trusted to protect the interests of our province, our region and our country.

A leader unites a country. The Prime Minister is a divider. He has shown his true colours and his colossal and shameful abandonment of New Brunswick and all Atlantic Canada.

We work hard. We pay our taxes. We contribute to the betterment of Canada. A government cannot pick favourites. It cannot pick winners. It cannot pit one region of the country against another. It cannot force the poor to subsidize the rich. It cannot ignore the plight of working families, of children, of aboriginals and of seniors. This may be the Prime Minister's Canada, but it is not ours.

Budget Implementation Act, 2007Government Orders

4:15 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Mr. Speaker, I listened with interest to the member's statements. I think the member is suffering from a bit of a long term memory loss. I am sure he remembers a time in government when there was a $60 billion infrastructure deficit presided over by the previous government. The largest growth between rich and poor in Canada's history was presided over by the previous government.

His comments with respect to the budget demonstrate to me that we maybe should have a bit of a tutorial on it so we can explain exactly what is in it. All Canadians benefited from this budget. All Canadians who rely on our health care system will benefit from significant investments into health care. All Canadians who rely on a good education system have to be very proud of the fact that this government saw fit to put an additional 40% into post-secondary education. All Canadians have to be very proud of a government that seeks to fix the infrastructure deficit in which the country unfortunately finds itself.

The fact is this budget puts our country in a good position to step forward to meet the challenge of tomorrow's economy and to succeed. I encourage the member to support it.

Budget Implementation Act, 2007Government Orders

4:20 p.m.

Liberal

Paul Zed Liberal Saint John, NB

Mr. Speaker, I could quote some very prominent Progressive Conservative leaders in the country, like Premier Danny Williams, who object to the promises that have been broken by this budget. If members do not like Premier Danny Williams, then let me suggest they listen to some of the comments made by Premier Rodney MacDonald. Both are Progressive Conservative premiers who are outraged at the breach of promises that have occurred in the budget.

However, I agree with one premise of the hon. member's point of view. Over the past fiscal imbalance period that they continue to allege exists, why then would the present government and the present Prime Minister not have paid attention to any of the independent reports that were prepared? Why have they turned their backs on New Brunswick, on Atlantic Canada and on the west? Why have they broken their promises to the people of our region?

Budget Implementation Act, 2007Government Orders

4:20 p.m.

NDP

Peter Stoffer NDP Sackville—Eastern Shore, NS

Mr. Speaker, not to belabour the point very much, but the member represents Saint John city, a great city in New Brunswick. He also knows very well what happened to the Saint John shipyard. Under the Liberal watch, that shipyard went down and it gave the Irving company $55 million of ACOA money to help shut it down.

A shipbuilding policy sat on his minister of industry's desk since 2001 and it was never acted upon. The current government has also failed to act upon it, which is a pox upon both those houses.

However, I want to give him a bit of a break. What was not in the budget was the issue of VIP services for widows of veterans.

We have a letter from the Prime Minister, signed by him when he was opposition, which said that the Conservatives would immediately extend VIP services for all widows and widowers of veterans regardless of time of death or application. He wrote that on June 20, 2005. The Parliamentary Secretary to the Minister of Veterans Affairs from Kamloops, when she was in opposition, said the exact same thing, that when they formed government they would immediately extend that program for all widows and widowers. We have asked since January 2006 when it would it happen.

My hon. colleague from New Brunswick has an awful lot of those widows of veterans living in his riding. Why does he think the government not only ignored a motion passed in the House, but with $14 billion worth of surplus why could it not come up with $280 million to help all widows of all veterans?

Budget Implementation Act, 2007Government Orders

4:20 p.m.

Liberal

Paul Zed Liberal Saint John, NB

Mr. Speaker, the hon. member for Sackville—Eastern Shore well knows that our views on shipbuilding are probably not much different. I regret and wish that the world labour markets would have made shipbuilding more progressive and more competitive for us in Atlantic Canada. I agree with my hon. colleague.

I also agree with my hon. colleague on the point he raises on veterans and widows. The minister is from New Brunswick. I believe the hon. minister will be given the opportunity over the course of the next weeks to hopefully fulfill the promise on which he and many members on the opposition side are working. I do not want to be in the position of defending the Minister of Veterans Affairs, but I know the hon. gentleman and I know he is listening to and watching very carefully the interventions today.

Hopefully in view of the tragedies that have occurred in Afghanistan over the last weeks and the media attention that has been paid to the families of these veterans, some of our senior veterans will start to get the attention they deserve. I agree with the hon. member on that very important point.

Budget Implementation Act, 2007Government Orders

4:25 p.m.

Conservative

Michael Chong Conservative Wellington—Halton Hills, ON

Mr. Speaker, I have to take issue with the member for Saint John and his comments with respect to fiscal federalism. He mentioned both the government's plan in this budget to address equalization and to address other major fiscal federal transfers, and I have to disagree with him on this.

When our government took power in February of last year, the previous government left us with a mess with respect to equalization. Equalization for decades had been run on a principle based approach until the previous government took power. That previous government completely took apart the equalization formula and we were left with the difficult job of trying to put together a new formula that would apply consistently across the country.

The previous government signed the Atlantic accord, with which we agree. It also signed the Canada-Ontario agreement in May 2005. The problem with those agreements is the way in which they were done. They were done in isolation from the rest of the other seven provinces that were not party to those agreements. As a result, the previous government created a situation where equalization was not done on a principle based approach and we were left with the difficult job of trying to disentangle that mess. That is exactly what the Prime Minister and the Minister of Finance have done in the present budget.

Budget Implementation Act, 2007Government Orders

4:25 p.m.

Liberal

Paul Zed Liberal Saint John, NB

Mr. Speaker, I really do not think we want to start looking too far back in history as to messes that were created by previous governments.

Most members of the House will remember 1993 when the mess was a $40 billion deficit. When I see the fiscal prudence that occurred with the Liberal government and the difficult choices that had to be made in the 1990s and then when I see the sheer abandonment that has occurred in housing, in literacy, in seniors and when I see a $13 billion surplus being given to the people of Canada and the equalization formula not being respected or followed in our province of New Brunswick, it is a bit disingenuous for the hon. member to try to allege that there has been a less than fair approach taken by the previous government.

The previous government tried to equalize some very serious inequities that occurred. Equality in the country is not about giving everything to Quebec and Ontario. We need to remember that the Atlantic provinces and Saskatchewan are provinces too.

As you think about inequity, I would appreciate you thinking about New Brunswick and the 1.8% increase that it received.

Budget Implementation Act, 2007Government Orders

4:25 p.m.

NDP

The Deputy Speaker NDP Bill Blaikie

I would appreciate it if the hon. member would not refer to other members in the second person.

The hon. member for Egmont.

Budget Implementation Act, 2007Government Orders

4:25 p.m.

Liberal

Joe McGuire Liberal Egmont, PE

Mr. Speaker, I want to compliment the member for Saint John for an excellent speech.

To follow up on the equalization question that was just posed, once upon a time equalization was based on need where the citizens in all provinces could expect basically the same level of service. Now that formula is based on per capita formula and not on need.

How would small provinces like Saskatchewan, Manitoba and the Atlantic ever have the ability to deliver programs approaching those services given to the richer provinces if this new formula, based on per capita, is followed through?