Debates of June 7th, 2007

Business of Supply

[The Acting Speaker, Conservative, Royal Galipeau]

I must inform the hon. member for Jeanne-Le Ber that he has less than one minute remaining for the question and answer.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I think what my hon. colleague is experiencing is the price of political dependence. The solution to dependence, as we all know, is independence.

I would like him to comment on the situation in Newfoundland compared to that of Iceland.

[Some hon. members]

Oh, oh!

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

As we know, around the same time that Newfoundland was joining Canada, Iceland was becoming independent. And Iceland is much more prosperous today than Newfoundland is. Perhaps the hon. member could comment on this.

[The Acting Speaker, Conservative, Royal Galipeau]

The hon. member for Acadie—Bathurst has 20 seconds to comment.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I will respond very quickly.

This is precisely why I invite the Bloc Québécois to join Canadians in order to work together to build a better country and put these Liberals and Conservatives in their place. Together, we could achieve this. I give you the opportunity to join the NDP.

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

Mr. Speaker, it is somewhat difficult to take part in this debate following my hon. colleague from Acadie—Bathurst. His passion and competence are very difficult to match.

First of all, I must congratulate my hon. colleagues from Atlantic Canada, and especially my hon. colleague from Acadie—Bathurst for his credibility and his principles.

It is also important today to again acknowledge the incredible valour of another member in the House, the member for Cumberland—Colchester—Musquodoboit Valley, who yesterday made a very difficult decision to stand up for a principle he believed in and to take the consequences despite being assured publicly by colleagues that he would never be shunned by his political party or forced to leave the Conservative Party because he stood on principle.

We know in the House that it is never easy to take that kind of principled position and to suffer those kinds of consequences. Obviously today, we salute the member and thank him for his courage, but we do not relish it or take glee in it because his act was a reflection on a failure by this place.

It marked a very black day in the history of this country because in fact what we are dealing with is a development that will feed and contribute to even more cynicism and skepticism on the part of Canadians everywhere.

Who can believe in their politicians, democratically elected institutions and governments, when promise after promise gets broken? How do we encourage voters to take an interest in politics and exercise their franchise, when it all becomes so meaningless after the fact?

Voters in this country have been through too much on that front, whether we are talking about the past 10 or 13 years of Liberal government, who broke so many promises that we cannot even begin to count them, or whether we are talking about this most egregious broken word by the Conservative government today in terms of the Atlantic accords and, I might add, the Saskatchewan agreement. It is unbelievable.

It is absolutely beyond the realm of comprehension to think that our system would have degenerated to this point, to the point where we cannot count on anybody anywhere these days. We do not know who to trust.

When it comes to something as fundamental as the future economy of our Atlantic provinces, which have suffered through many years of economic ups and downs, despair, gloom and lack of hope, it was so important in this case to find a way to keep a promise.

Let us not lose sight of what actually happened. We are talking about an agreement that was made back in January 2005. The provinces of Nova Scotia and Newfoundland and Labrador reached a deal with the federal government on January 28 of that year to keep 100% of their offshore energy revenues.

Regardless of what has happened since, no matter how many studies have been conducted to find out how equalization should work in the future, we have to remember that this was a written accord with a government now that promised when in opposition to abide by the accord. Members of the Conservative Party in this place clearly stood on the principle of keeping an accord and an agreement.

They have condemned others in this place for not abiding by their principles or appearing to be watering down their commitments. It is nothing short of absolute hypocrisy on the part of members on the government side.

Let us not lose sight of what in fact we are trying to do today, which is to at least ensure that the government's word is as good as the paper it is written on, that in fact a bond between the federal government and two provincial jurisdictions that is written in the form of a formal agreement is kept. That is what is fundamental today. It is not just a matter of what is written down as an agreement. It is also what is stated as a principle and as a fundamental word between two jurisdictions.

Therefore, I also want to include Saskatchewan which felt that it had a deal with the federal government. It felt that it had in fact won a concession from the Conservatives that it would be able to hold on to its resources, its revenues from the oil and gas natural resources while it developed its economy.

That is what we are talking about, provinces that have asked for resources to ensure they can develop their economies until such time as they have achieved a status of economic certainty and well-being for all of its citizens.

Finally, I want to say that this whole can of worms is a result of political expediency and lack of courage going through many terms of government.

Let us remember how this started. Let us go back to the Liberals in the year 2000 when the issue of equalization was front and centre, when it was absolutely imperative and recognized as such that we resolve the question about a proper formula for equalization.

The Liberals had a chance when they were in government to fix this problem forever, but in the interest of political expediency, in the interest of wanting to put all of their money against the debt as opposed to building the provinces of the country and the economic livelihoods of people everywhere in the country, they choose to work, to vote, to act against Canada.

I want to go back to that date in the history of Canada. The House will know that back in the year 2003 there was an agreement between the provinces and the federal government on an equalization formula. There was unanimity.

Every province had agreed with the federal government on a proper formula for equalization, but guess what? The federal Liberals under the finance minister at that time, who is now the House leader of the Liberal Party, decided it was too much money, as they put $80 billion against the debt without the extra billion that was required in terms of equalization. Here we have two parties acting exactly the same--

[David McGuinty, Liberal, Ottawa South, ON]

Don't pay off the mortgage.

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

There they go harping from their seats. We have a member from the Liberals yelling, “Don't pay off the mortgage”. Can we believe this?

In the House today we have members from the Atlantic provinces and the Liberals rising in their seats bellyaching about what the Conservatives have done and yet when push comes to shove they want to do exactly the same which is to ignore the wishes of Canadians, ignore the needs of the regions, and in fact put all the money against the debt as opposed to building this country.

That is the root of this problem. That is why we are in the mess we are today. I say, a pox on both their houses.

Let us get beyond political expediency. Let us for once get beyond this tit for tat and trying to score points, and decide among us all that we have to fix this problem. Let us agree now to keep the accords, keep the deal with Saskatchewan, and then get to applying a formula in terms of equalization that will hold us in good stead for many years to come.

What is fundamental to us all is the future of this country. What is at stake is the unity of this country.

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

Mr. Speaker, I went to the Calgary Stampede a couple of years ago and I watched the bull riding competition. After a rider was bucked off, the rodeo clown would come out. He would jump around, wave his arms, and make all kinds of motions to distract the bull. With the bull coming out of the corner there today, we might have to bring one of those rodeo clowns in.

To say that paying down debt is a bad use of taxpayers' money is totally ludicrous. When we were in government and cut the cheque for $800 million, and Premier Hamm at the time put that money on the debt, that loosened up $40 million to $50 million each year to put into hospitals and schools. Is that a bad thing?

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

Mr. Speaker, is it not interesting that we have a Cape Breton member standing today and defending the Conservative government and its whole agenda of ignoring the needs of the member's own region and choosing to put all of its money in one basket as opposed to dealing with some very pressing problems in the Atlantic region, especially in Cape Breton?

I find it absolutely incredible that the member from Cape Breton would stand in this House and name-call and get personally insulting by making innuendoes about someone's style of speaking. I happen to think it is far more important to speak with integrity and passion than to speak with two faces and talk double-cross. It shows that he has absolutely no interest in fixing this problem.

I want to mention to the member that his government had the chance to fix this problem but it chose to put $80 billion in surplus revenue against the debt, which hardly changed our debt to GDP ratio one iota. All the while, the people in his region and his province were suffering under high unemployment and economic despair.

All we are saying is that we should take a portion of that money, a couple of billion dollars, and put it toward fixing the equalization formulation as the Liberals had the chance to do in 2003.

I want to remind the member that in the 2003 negotiations we were compelled by the five year legislative review requirement. The provinces and territories brought a consensus position to the table calling for a return to the 10 province standard; the inclusion of provincial revenues, including user fees, in equalization calculations; the minimizing of unpredictable factors; the forgiveness of census related losses; and the taking into account of any dramatic changes to provincial and territorial tax bases. There was a consensus with Quebec, Nova Scotia, Newfoundland and Labrador, British Columbia and all the other provinces. His government refused to move on this because of what it would cost, which was a few million dollars extra that it said it could not afford. However, it did have $80 billion to put against the debt while the roof was leaking.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I hope I will still have a few moments to continue on with the question I was asking earlier, the question that caused a bit of excitement. Yes, everyone in the House shouted when I drew a comparison between Iceland and Newfoundland. Around the same time Newfoundland was joining Canada, Iceland achieved independence. Today, Iceland has a very high standard of living, higher than Canada's average, while Newfoundland's standard of living is lower than the Canadian average.

Perhaps my colleague could comment briefly on this, that is, the impact of dependence compared to independence, on the prosperity of a nation.

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

Mr. Speaker, I want to remind the member that we have always agreed with the Bloc when it came to recognizing the fiscal imbalance.

However, we were surprised today when the Bloc joined with the Conservatives in rejecting the Atlantic accords. We were surprised because these accords would give all regions the kind of independence they need to provide for themselves and their peoples and yet this member is suggesting this is about dependence. It is about the same as this government, which he supports, taking away the payments for literacy. Literacy helps people get the skills they need to get jobs to provide for themselves and to be independent. These accords are meant to help regions provide for themselves and to determine their own future. He ought to recognize that and change his position.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

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

I welcome the opportunity to speak today to this motion and, subsequently, to an issue that has been much misunderstood and often misrepresented.

Canada's government was the first government to recognize the existence of a fiscal imbalance with the provinces. We committed to respecting provincial jurisdiction and to clarifying roles and responsibilities. We also recognized the need for a comprehensive package of measures to restore the fiscal balance.

In budget 2006, and in other key pieces of legislation passed over the last year, we began to take concrete action. Finally, in budget 2007 we restored fiscal balance while living up to our commitments with respect to the equalization program and the Atlantic accord.

I will first speak about a better Canada. The first step to making Canada even better tomorrow is to restore fiscal balance in this country today. It is not in defending turf, not in engaging in parochial politics and not in confronting for the sake of confrontation, but acting in the best interests of Canadians in all parts of this country.

In the last few years there has been a lot of talk about fiscal balance but what is it really about? It is about better roads and renewed public transit, better health care, better equipped universities, cleaner oceans, rivers, lakes and air, and training to help Canadians get the skills they need. It is all about building a better future for our country. That means ensuring predictable long term funding to provincial and territorial governments.

Through budget 2007, we are delivering a historic plan worth over $39 billion in additional funding to restore fiscal balance in Canada. Restoring fiscal balance brings federal support for provinces and territories to an unprecedented level.

Unlike the previous Liberal government, which did not and still does not recognize the very existence of the fiscal imbalance, our plan is based on a clear set of principles: accountability through clarity of roles and responsibilities; fiscal responsibility and budgetary transparency; predictable long term fiscal arrangements; a competitive and efficient economic union; and effective collaborative management of the federation. Reflecting these principles, we have kept our commitments on equalization and on the Atlantic accord.

In coming to office, Canada's new government promised to protect the Atlantic accord. Budget 2007 does just that. It provides 100% protection for the Atlantic accord signed in 2005. In fact, we are returning to a principled, formula-based equalization program. As we promised, every province will be better off under the new system.

In moving to the new system, the budget took every action to fully protect the benefits of the Atlantic accord, consistent with our commitments and as requested by the Governments of Nova Scotia and Newfoundland and Labrador. I want to be clear that both Nova Scotia and Newfoundland and Labrador can continue to operate under the existing equalization system for the life of the Atlantic accord, exactly the same system today and in the future as before the 2007 budget.

As long as these provinces continue to operate under the existing equalization program, there is absolutely no change to either the accord or the equalization calculation on which it is based. What is more, both provinces have been given the right to opt permanently into a new improved Canada-wide equalization system.

In particular, while the new equalization system automatically applies to the other eight provinces, both Newfoundland and Labrador and Nova Scotia have a choice. They can keep their existing arrangements or opt permanently into the new principled and formula-based equalization system when and if it becomes more advantageous for them over the remaining life of their Atlantic accords.

Canada's new government went even further to facilitate that choice. The budget legislation also offers increased flexibility in making the transition to a new equalization system by giving both provinces a full year before deciding whether to opt permanently into the new system.

Simply put, we said that we would respect the Atlantic accord and we have taken every step to keep our word to the people of Nova Scotia and of Newfoundland and Labrador.

However, there is much more to restoring fiscal balance than just equalization. The actions taken in budget 2007 will restore fiscal balance, putting all major transfers back on a long term, fair and predictable basis. We are fulfilling our commitment to restoring equal per capita cash allocations in other major transfers to the provinces.

Starting in 2007-08, we will put the Canada social transfer payments on an equal per capita cash basis to ensure equal federal support to Canadians in all parts of the country for post-secondary education, social assistance and social services.

We are also committing to move the Canada health transfer to an equal per capita cash basis when the current arrangement expires in 2014.

We are keeping our commitment to building Canada's future by improving our infrastructure. In fact, the government's investment in infrastructure is by far the largest component of the fiscal balance package. We are making an unprecedented investment in Canada's infrastructure of $16.3 billion in new funding, for a total of $37 billion over the next seven years.

These investments will be of particular importance to the future economic vitality of Nova Scotia and Newfoundland and Labrador. Indeed, restoring fiscal balance brings federal support for Newfoundland and Labrador to more than $1.5 billion in 2007-08 and for Nova Scotia this totals more than $2.4 billion in those same years.

This includes equalization payments amounting to $477 million for Newfoundland and Labrador and over $1.3 billion for Nova Scotia, assuming these provinces choose to retain the previous equalization program on which their Atlantic accords are based.

Canada's new government is committed to abide by the principles it has set out and, in doing so, to demonstrate to Canadians and to their provincial and territorial governments that fiscal balance has not only been restored but that it will be maintained going forward.

It is important to be clear about what this means. It means a commitment by the Government of Canada to reducing the burden on taxpayers, not only in line with the tax back guarantee, but also if and when future government revenues again come to exceed its responsibility, and if future governments believe their responsibilities have come to exceed their revenues, it means they should be accountable to taxpayers for raising the additional revenues they may need to raise.

Maintaining fiscal balance over the long term also means maintaining the government's commitment to long term, predictable funding in all areas that continue to share priorities of governments in all parts of this country.

It also means upholding the equitable treatment of Canadians in all parts of the country by: maintaining a formula based equalization program that applies the same principle based approach in all parts of the country; ensuring equal access to funding support for shared priorities in areas where needs are Canada-wide in nature; and continuing to respond to the sometimes very different needs of Canadians in different parts of the country for programs in areas of clear federal responsibility, including infrastructure projects of national importance.

Having restored fiscal balance and put in place the principle based approach that will help maintain it, it is now time for Canadians in all parts of the country to do their part in moving the country forward by working together to secure and expand our advantages as set out by the Minister of Finance in the advantage Canada economic plan.

These advantages include a fiscal advantage grounded in the goal of eliminating Canada's total government net debt in less than a generation. It includes an infrastructure advantage based on modern, world-class infrastructure to ensure the seamless flow of people, goods and services within Canada and through our gateways and border crossings to the world beyond.

It is an entrepreneurial advantage freed up by the elimination of unnecessary regulation and a reduction in the burden of tax compliance and more competitive business. It is a knowledge advantage and a tax advantage.

In conclusion, I know that we can count on the provinces of Nova Scotia and Newfoundland and Labrador, and especially on the people of these great provinces to remain focused on building Canada's future prosperity and sustainable environment by expanding the many advantages we already possess as a nation.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Speaker, I would like to read for my colleague and for those who might be watching or listening to this debate the actual motion we are debating:

That, in the opinion of the House, the government has failed to live up to verbal and written commitments made to Premiers by the Prime Minister during the last election campaign with respect to the Equalization Program and the Atlantic Accords.

I would like to present a few facts to my colleague. The Minister of Finance said in March of this year, two and a half months ago, “I can say, as the Prime Minister has said, that we will respect the Atlantic accords”.

“It's signed, sealed, delivered, and it's something that the province need not have any fear” of, said another member of the Conservative caucus.

The Prime Minister, in a door to door flyer distributed to the entire province of Newfoundland and Labrador, wrote this:

The Conservative Party of Canada believes that offshore oil and gas revenues are the key to real economic growth in Atlantic Canada. That's why we would leave you with 100% of your oil and gas revenues.

The Prime Minister said that there was no small print, no excuses, no caps.

Can the member help Canadians who are watching understand to what extent the claims here, the comments made by the Minster of Finance and the Prime Minister before, during and after the election and in the budget of 2007, are not interpretable by average Canadians as a completely false set of circumstances and a great misleading of the Canadian people?

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Speaker, nothing could be further from the truth. Actually there is absolutely no change to the accord or the equalization program. What has changed is that the provinces mentioned now have a choice. They can take a balance of the two, provided they do not exceed. It is interesting that the member should talk about promises. I will not get into the negativity. I want to get into the positive messages to Nova Scotia in this budget.

Under the payments for Nova Scotia in millions of dollars, if we left it at the status quo it would mean a difference of about $95 million in this current budget and in 2008-09, an additional $59 million. Under budget 2007, under the O'Brien plan, equalization goes from $1.344 billion in 2005-06 to $1.465 billion in 2007-08. The total increase right across the board is millions and millions of dollars extra for both of those provinces. There are millions and millions of dollars more for Saskatchewan.

There are interpretations, but we are maintaining our commitment. We are maintaining the very commitment that the Prime Minister made. We are actually adding to it because of Canada's great economy at this time under the leadership of the Prime Minister and the Minister of Finance.

We need to concentrate on the great successes of this country. Canadians go to work every day and pay their taxes. We are reducing the debt burden on those Canadians. We are reducing their mortgage. The one reduction of $13 billion recently paid toward the debt will mean 600 and some millions of dollars that we will be able to return directly to Canadians in tax reductions through our tax back guarantee.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I rise in the House in response to the motion by the member for Labrador regarding the government's commitment to Nova Scotia's offshore accord and the treatment of natural resources in the equalization formula. The member doubts that the government has honoured its commitments. I can assure the House that nothing could be further from the truth.

Budget 2007 provides important benefits to the people of Nova Scotia as part of the Government of Canada's commitment to fair and equitable financial support for provincial and territorial health care, post-secondary education, child care, social programs and infrastructure.

Budget 2007 does even more. Nova Scotia will continue to receive 100% of offshore resource revenues, including royalties, as if these resources were on land. This fundamental aspect of Nova Scotia's relationship with its offshore resources, its ability to manage the resource, to tax and collect the royalties remains the same. This will help Nova Scotia to develop its economic potential and ensure its future prosperity.

Let me remind the House that it was a Conservative government that signed the 1986 Canada-Nova Scotia offshore petroleum resources accord, which facilitated the development of the oil and gas reserves off the coast of Nova Scotia.

In specific terms, budget 2007 will allow the governments of Nova Scotia and Newfoundland and Labrador to continue to enjoy the benefits of their 2005 offshore accords. Again, I remind the House that it was a Conservative opposition that forced the previous government to sign these agreements. The accords are unique in Canada in recognition of the provinces' unique economic and fiscal circumstances.

Budget 2007 offers Nova Scotia a positive choice for the future. It can operate under the existing equalization formula, or it can choose to opt into the new equalization formula based on the O'Brien report, if and when the province determines this as being most advantageous. By having this additional choice, Nova Scotia potentially stands to receive even higher benefits than under the existing formula while retaining its right to offset payments under the accords.

Of course, if the Nova Scotia government chooses the new equalization formula, it is only fair that the whole package would apply, including the fiscal capacity cap that is an integral part of the new equalization formula. It would not be fair to other provinces if only Nova Scotia were allowed to choose those parts of the new equalization program that benefit the province.

Finally, Nova Scotia has been given additional flexibility beyond what was set out in budget 2007. Bill C-52 would allow Nova Scotia to benefit from the new O'Brien formula for 2007-08 and provides more time to assess whether it wants to permanently opt into the new equalization formula. This option has given Nova Scotia an additional $95 million, for total benefits of $1.5 billion in 2007-08. Under this arrangement Nova Scotia will receive its full offset payments under the offshore accords.

One can begin to see the difference where it matters. In April 2007 Nova Scotia's labour force participation rate of 64% was close to a 30 year high and full time jobs have increased by 2.5% over a year ago. The economy is strong in Nova Scotia.

Canada is a sharing community. Nova Scotia's growing prosperity is in part due to strong federal support and is something to celebrate. With 100% protection of the Atlantic accords and a positive choice for the future, the province can make sustained improvements to its economic and fiscal situation for the benefit of individuals and families throughout Nova Scotia.

Here is what Charles Moore said in the Halifax Daily News:

With the federal budget having passed second reading in the House of Commons, one hopes — wistfully, perhaps — that the histrionics over the [Conservative] government's policy revision of the Atlantic Accord will die down. At least here in Nova Scotia where the new equalization deal the feds are offering amounts to a substantially more advantageous bird-in-the-hand as opposed to the pipe-dream of petro-royalty riches.

It is convenient for the opposition to isolate certain measures in the budget and, of course, with a healthy injection of partisanship, ignore the larger picture. Let us look at the benefits to Nova Scotians that the members opposite are voting against.

Restoring fiscal balance brings federal support for Nova Scotia to $2.4 billion in 2007-08 and it is more than just equalization payments. They oppose the $639 million under the Canada health transfer. They are opposed to $277 million for the Canada social transfer, including additional funding for post-secondary education and child care. The $73 million for infrastructure would be lost. The $24.2 million available to the Nova Scotia government through the patient wait times guarantee trust over the next three fiscal years would be lost. The $8.5 million available to the Nova Scotia government to implement the human papilloma virus immunization program to combat cervical cancer over the next three fiscal years potentially would be lost. The $23.2 million in gas tax funding for municipalities in Nova Scotia in 2007-08 would be potentially lost. The $2 million in corporate income tax relief from changes in capital cost allowances for buildings could be lost. The $7 million in additional corporate income tax relief from the temporary two year writeoff for manufacturing equipment over the next two years is threatened. Nova Scotia will receive $42.5 million from the Canada ecotrust for clean air and climate change.

Of course, if the budget continues to be delayed by the official opposition, many of these millions could be lost or are threatened to be lost.

We are delivering on our commitments to the people of Nova Scotia, more than any of the members opposite ever did when they were in power. They should start supporting Nova Scotians and support the budget.

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Speaker, my hon. colleague said that the government is maintaining its commitment.

I find it remarkable that members on that side and another one earlier from another province and another part of the country who have no real knowledge of the accord and have not really understood the history of it are making this claim that the government is keeping its promise, maintaining its commitment. We will not find one person in Atlantic Canada who actually believes that today, not even the government's own members.

We saw that this week when the member for Cumberland—Colchester—Musquodoboit Valley voted against the government, when he stood up for Nova Scotians, for Atlantic Canadians. Now he has been booted out of his own caucus.

My hon. colleague quoted a columnist from a daily newspaper. Here is what another columnist, Mr. David Rodenhiser, said in the Halifax Daily News:

We have a government that lies to us, steals from us, and aligns itself with a party bent on tearing the nation apart. These are not proud days for Canada.

When will the government understand that it has not kept its promise? Why will it not listen to the member for Cumberland—Colchester—Musquodoboit Valley who talked about the 12 clauses in the budget that deal with the accord because the Conservatives are changing it? Why are those 12 clauses there if they are in fact keeping their promise? Why are they fiddling with the accords or talking about the accords at all if they are keeping their promise and not touching them? How is that possible?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, it is amazing. The member said that we could not find a single person in Atlantic Canada who agrees with what is happening here. It completely baffles me, because in order to have any credibility to represent our people, we have to be following a leader who bases decisions on principle and integrity.

The member, as a member of the Liberal Party, seems to think, through his leader, that there is no fiscal imbalance. For him to even get up and ask a question in regard to the fact that the Conservative government is dealing with the fiscal imbalance is completely hypocritical.

The Liberals have no credibility when it comes to talking about this. As a matter of fact, the leader of the Liberal Party said when he was intergovernmental affairs minister that some provinces want special treatment to maintain their incoming benefits, even as their fiscal capacities increase. He said he disagrees, but he did an about-face in an attempt to do nothing but smear the Government of Canada, which is trying to restore fiscal balance between all the provinces.

It is a fair treatment for all of the provinces in this country. The cap is in place to make sure that provinces receiving equalization do not have greater fiscal capacity than non-receiving provinces. That is only fair and reasonable.

The province of Nova Scotia has been given a choice. The province has got, as a matter of fact, an extra year to even figure out what choice it wants to make. It will try, I believe, the new formula right now with the new equalization. That is a wise choice. It is a bird in the hand and it can make a decision after that first year as to whether or not it wants to continue on with that.

I think we have been more than gracious. The Government of Canada is listening to the people of Nova Scotia. My colleagues from Nova Scotia and Atlantic Canada have stood up and have voted on principle for the budget. They are doing fine work on behalf of their constituents and I fully support them.

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

Mr. Speaker, the member could probably seek clarification from some of those Atlantic members if he could find them.

Some of the things the member is saying in his address are not wrong. The government is not changing the accord and we can opt into the equalization. The key point is the choice, and that was never part of the deal. It was the clawback provision that was taken out of the accord. What the government has done is pulled the rug out from under the clawback provision.

If it was such a great deal, I will ask the member to answer me this. Why are the ministers from Atlantic Canada now working so hard to try to ratify? Why are some media outlets saying there is an imminent fix in place that we will hear of soon?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I will not respond to media allegations. Certainly, I will not think that the Government of Canada will put its finger up in the air, test the wind and see which way the media is blowing on any particular day.

All I can say for the members opposite is this is what is in the budget and this is what they will lose. This is what they are voting against for the people of Nova Scotia. They are voting against $1.3 billion under the new equalization system, $130 million in the offshore accord offsets, $639 million—

[The Acting Speaker, Conservative, Royal Galipeau]

Resuming debate, the hon. member for Wascana.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, this is a very important debate. I think it helps to explain why the Conservatives gave up on their plans earlier this year to engineer a premature spring election in Canada. They very much wanted to call one. They doled out more than $12 billion for pre-election government spending to buy votes through January, February and into March. They added another $4 million for some very abusive attack advertising. Their budget was delayed to suit their election timing. They thought they would use it to launch a campaign about the middle of March. However, then everything began to fall apart.

The budget, instead of launching, landed with a dull thud. It confirmed increases in personal income taxes, and that was not popular with Canadians. It slashed things like student summer jobs, which has been debated extensively in the House about the disappointment across the country among both the employers and the employees. The budget mangled the funding for aboriginal people, for foreign aid, in Africa especially, for the fight against climate change and, quite surprisingly, it reduced federal help for farmers.

The budget demonstrated utter Conservative incompetence on issues like the hollowing out of Canadian enterprise, and it broke promises left, right and centre. For example, the Conservatives drove a stake through the heart of the Prime Minister's promise on income trusts.

Let me quote one particular journalist who has written a lot on this topic. John Ibbitson, writing in the Globe and Mail, stated:

The Conservatives deserve every bit of grief they are subjected to on this file. [The Prime Minister] promised over and over again that his government would never attack the “hard-earned” savings of seniors by taxing trusts....Then he broke his word.

On the issue of broken promises and broken trusts, the same is true on equalization and the Atlantic accords, especially betraying Saskatchewan, Nova Scotia and Newfoundland and Labrador. These provinces were given explicit and written promises by the leader of the Conservative Party, now the Prime Minister, and incidentally by every Conservative candidate.

In Atlantic Canada, the Conservative promise was to respect the spirit and the letter of the Atlantic accords as they were signed in February 2005.

In Saskatchewan, the promise was to calculate the province's entitlement to equalization, as if Saskatchewan had no provincial revenue whatsoever from oil and gas. The Conservatives were good enough to calculate exactly what that promise to Saskatchewan would mean. They promised an extra $800 million in equalization benefits to Saskatchewan every year.

I point out that when the finance committee made the opportunity available for the Premier of Saskatchewan to be heard on this matter, he read into the record chapter and verse of the Conservative speeches, the Conservative pamphlets, the Conservative promises that made the point absolutely crystal clear. There were no ifs, ands or buts. It was absolutely unmistakable, absolutely unequivocal. It was in writing and in every Conservative speech about Saskatchewan for more than two full years. Then out of the blue, on budget day 2007, it all came to a crashing halt. Saskatchewan was sucker punched.

I should point out that these promises, which had been accumulating on the part of the Conservatives, have been accumulating, as I said a moment ago, over a period of two years. When the election came and went and the Conservatives were elected in January 2006, Saskatchewan people anticipated that this would be, that is the promise to Saskatchewan, one of the very first things with which the newly elected government would be dealing.

It did not appear in the throne speech. It did not appear in its first budget. The government said that it would have to wait for first ministers meetings and for other negotiations. Therefore, Saskatchewan put its expectations on hold. It thought for sure it would come in the fall of 2006, but the first ministers meetings were cancelled.

Therefore, there was no action in the fall of 2006, so Saskatchewan put its expectations on hold again and deferred its waiting period until the budget of 2007. When March 19th came and went, it all came to a crashing halt. Saskatchewan was sucker punched. There was no $800 million more to go to Saskatchewan from equalization every year, not even close. Why?

The problem is very much the same as the problem that afflicted the promise to Atlantic Canada with the Atlantic accords. A never before mentioned Conservative cap on how much Saskatchewan could gain was suddenly imposed in the budget of 2007. That cap effectively guts the entire promise to Saskatchewan.

My province will get about $226 million once this year and this year only, then it is over. There will be nothing thereafter. We must remember that the promise was $800 million per year ongoing. The promise was clearly broken and it was broken by the cap.

The process of reforming equalization began much more successfully for Saskatchewan under the previous Liberal government. Between 2004 and 2005, Liberal changes to how equalization works brought in to Saskatchewan an extra $799 million in direct equalization benefits over those two years. That was the biggest equalization bonus in history.

We also increased other federal transfers to the provinces to an all time record high level, and Saskatchewan, like all provinces, benefited from that. We invested and put into the financial projections of the Government of Canada another $100 billion in steadily increasing federal transfers over the coming decade, particularly for health care and equalization, but also for a number of other things like child care, for example.

When the Conservatives arrived in office, they reduced or cancelled a broad range of federal transfers, programs and services for Saskatchewan and its citizens. We lost funding for child care, for student aid, for workplace training, for rural roads, for farmers and for aboriginal people. The net loss, after we add in the few trinkets and bells and whistles invented by the Conservative government, after we add in all the puts and takes, is $250 million per year.

The Conservatives have made what they call the fiscal imbalance worse for Saskatchewan, not better. The net result is to take money away. However, that, of course, was all to be fixed by this new hypothetical equalization formula that they were working on and that would be forthcoming in the budget of 2007, except whatever new formula is used, the Conservative cap still applies and that cap effectively cuts Saskatchewan off at the knees.

The Premier of Saskatchewan and the provincial leader of the opposition, who is a Conservative I would point out, and the news media and the people of Saskatchewan generally all feel that they have been betrayed and misled. The Conservative government's feeble defence is now to say that it never promised not to slap a cap on Saskatchewan.

In fact, the finance minister, his parliamentary secretary and Conservative Saskatchewan MPs now claim that it was really always their intention to have such a cap. Anyone with half a brain they said would have been able to figure that out, but they forgot to mention it in the run up to an election. That means that they knew exactly what they were going to do. They knew exactly that they were going to break their word. They knew exactly that they were going to have a cap. That was always a part of their planning, so their deception was calculated and premeditated.

The member for Regina—Lumsden—Lake Centre told the CanWest news service in Saskatchewan on April 3 this: “If you want to say we didn't fulfill the commitment or keep our promise, fair enough.” It is not “fair enough”.

As the Saskatchewan Conservative caucus chair, the member for Prince Albert wrote a letter to the Prime Minister on July 25, 2006, when I think he was beginning to suspect that a broken promise about equalization in Saskatchewan was just about to be shoved down his throat. In a very candid moment, he wrote:

—anything less than substantial compliance with our commitment will cause us no end of political difficulty during the next election...there is very little “wiggle room” for the Conservative government and its Saskatchewan MPs on this issue--

Of course, when we apply a cap that totally negates the promise, there is something that is very substantially less than compliance with the commitment.

The Prince Albert MP was right in forecasting a lot of political difficulty. But rather than stand and fight, he simply decided not to run for re-election.

There is a stark contrast between Saskatchewan's Conservative MPs and the Nova Scotia member for Cumberland—Colchester—Musquodoboit Valley. The latter member had such devotion to his duty as he saw it, and to his constituency and constituents who have been loyal to him, that he suffered expulsion from his party rather than vote for a budget that was filled in his view, and in the view of thousands, indeed millions of Canadians, with incompetence and dishonesty on an issue like equalization.

In an editorial yesterday, the Saskatoon StarPhoenix described Saskatchewan's 12 Conservative members as:

—a group of political sycophants willing to bend the truth with constituents and try to convince them that black is white, instead of standing up for what they know to be true.

As a diversionary tactic, the Conservatives have concocted a rather wild yarn lately that their budget is in fact investing $878 million in what they call new money in Saskatchewan. When we look at the figures, that assertion is absolute nonsense. Every expert and every analyst in Saskatchewan that has looked at that figure takes it apart with great derision.

This is not annual, new funding. It is a wild conglomeration of bits and pieces of this and that, spread over several years into the future, but all added together now to make it sound big. It is not big.

Some of it is recycled from money that Conservatives previously took away over the last year and a half. Some of it is totally speculative, for unapproved projects which may never happen. Some of it is in fact private projected benefits from tax cuts, which have absolutely nothing to do with equalization.

Most of what is in this Conservative package is simply normal federal funding that is always available to all provinces on an equitable basis across the country. There is nothing unique for Saskatchewan in this package in lieu of equalization or to make up for the broken promise.

Murray Mandryk, the political columnist who writes for the Regina Leader-Post, summed up the situation as follows:

What we've got from Saskatchewan [Conservative MPs] on their equalization commitment is unadulterated dishonesty--a calculated, political effort to deceive the Saskatchewan people into believing their rehashed annual spending or one-time commitments in the federal budget are equivalent to the equalization commitment by their party.

The facts are these. The Conservatives have in fact failed to tell the truth about equalization from the very beginning, from 2004 when they first began to talk about the subject. Members remember very well that we had a number of debates in this House, not just question period and the back and forth during that sometimes rather hostile period in the House of Commons, but full opposition day debates and other debates about the future of equalization. The position of the Conservative Party was always clear: take non-renewable natural resources 100% out of the formula. It never once mentioned a cap.

The Conservatives have, it seems to me, taken a page out of the Karl Rove playbook for the republican party in the United States. If we tell a big enough falsehood loudly enough and long enough, without showing an ounce of conscience, we just might get away with it, but no one believes the Conservatives anymore, and that is why this equalization issue is changed.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Exactly what you are doing now. Nobody believes you.

[Ralph Goodale, Liberal, Wascana, SK]

I hear the bravado from across the way. It is nice to have a little chutzpah, but the fact of the matter is their behaviour on this issue has changed the issue.

It is no longer some narrow technical argument about which complicated equalization formula is better. It is not a clash of various types of arithmetic and mathematics. That is past. The issue is now a character issue. It is a trust issue. It is an honesty issue.

It is an issue that goes directly to the government's integrity, or, as most Saskatchewan people now see it, the government's obvious lack of integrity. Saskatchewan has been used and abused on this issue. Saskatchewan has been taken for granted and so have the people of Newfoundland and Labrador and Nova Scotia.

A very telling exchange with respect to the Atlantic accords just took place a few moments ago in the course of the question and answer period before I began my remarks.

One of the members on our side asked the government member who was speaking that if everything was so perfect, if the member for Cumberland—Colchester—Musquodoboit Valley had no valid reason for crossing the floor, if the government was doing everything right on equalization and the Atlantic accords, why then is there this flurry of activity for the government now trying to change the rules yet again? If the Conservatives have it so right, why are they still trying to change it? Why did they offer, with one minute to go on Tuesday night, some deathbed deal to try to keep the member for Cumberland—Colchester—Musquodoboit Valley from doing what he intended to do and cross the floor?

I think all members of this House have an enormous respect for the member for Cumberland—Colchester—Musquodoboit Valley and for the courage that he demonstrated on Tuesday night. It is clear that his constituents have a very huge regard for him. It is clear that the public and the media in Atlantic Canada are praising his actions.

What is equally clear is that there are observers and media commentators across this country who are praising the member, including in my province of Saskatchewan, where they are asking why there was not a Saskatchewan Conservative who was willing to demonstrate that kind of backbone.

The people of Newfoundland and Labrador, Nova Scotia and Saskatchewan have been betrayed, and so have a great many other Canadians in many ways by this budget.

There is one common theme that underlies all of this concern. It is a sense among a great many Canadians that they have not been told the truth, a sense that they have been betrayed at the hands of a dishonest government. The depth of that feeling, which exists in this country today and which is growing, is something that the Conservatives will not be able to cap.