Yvan Loubier

[Tobacco Act, February 21st, 1997]

Indeed, here we are.

[The Budget, February 20th, 1997]

Mr. Speaker, I accept the invitation of my colleague for Guelph-Wellington.

If she really wants us to, we will go to her riding to meet the people, the researchers, the people affected by poverty or unemployment, and we will explain to them as follows: in the past three years and a half, the Liberal government has cut $4.5 billion in transfer payments to the provinces to assist with their welfare, education and health programs. Her government has also jeopardized the income security system in Canada, the health system, and part of the research activities.

Yes, we accept her invitation, and we will go and tell her constituents in Guelph-Wellington the truth, no offence meant to my colleague, as I do respect her abilities.

I would also like to challenge what she has said about the $800 million foundation. Let them stop treating us like imbeciles. The $800 million is $800 million for the foundation, but new R & D investments represent $180 million yearly, and $180 million is very little in damage control by the federal government, after it has made hundreds of millions of dollars in cuts, $500 million in R & D alone. Part of the $4.5 billion in the Canada social transfer went for funding research activities and infrastructures.

They have made cuts here, and now they are offering a little treat, a little band-aid, a little ointment on the huge gaping wound they themselves have caused. And they are patting themselves on the back for it.

Yes, we will go to your riding to explain that to your fellow citizens, as we have been explaining it ever since you brought down this clown's budget.

[The Budget, February 20th, 1997]

Oh, oh.

[The Budget, February 19th, 1997]

Mr. Speaker, I am pleased to once again speak on behalf of my party regarding the fourth budget tabled by the Minister of Finance.

Yesterday, immediately after the presentation of this election minded and self-serving budget, I had an opportunity to give the official opposition's initial reaction.

We took a more thorough look at the budget last night. As you know, the official opposition works very hard. We are not lazy people.

However, when we look-and this will be the first part of my presentation-at the evolution of public finances over the last three years, and when we look at the track record of the Minister of Finance, we have no choice but to say that the minister is lazy. Why?

I now get to the first part of the presentation. Some may look at how public finances have evolved and think the Minister of Finance is an extraordinary manager. However, we can say, based on an assessment of his track record, that his reputation is overrated. Why? Because if we consider budgetary revenues from 1993 until today and what federal spending has been since the Liberals came to power, since the Minister of Finance has been the head of the Department of Finance, we see that if the minister had sat around twiddling his thumbs, the result would have been exactly the same as far as reducing the deficit is concerned. We could have put Youppi, the Expos' mascot, in his place, or Alcide, the mascot of the Granby Zoo, as suggested by the hon. member for Shefford, and the result would have been the same.

Why? Simply because the Minister of Finance was able to take advantage of an extraordinary rate of economic growth, that unfortunately is not reflected in job creation because of the minister's inertia, but that increased the federal government's tax revenues by $22 billion. Where did our wonderful manager of public moneys, our national mascot get those $22 billion? Not just anywhere. He got them from individual taxpayers, from middle income people whom he continued to bleed dry, exactly like the previous government, by maintaining high taxes, income tax and even premiums, including those for the unemployment insurance fund which generate a surplus of $5 billion annually. He generated

$22 billion in new revenue. It is easy to reduce the deficit with this kind of increase in tax revenue.

There is another very important item on the books of the Minister of Finance. He never dwells on his past achievements. He only talks about the present and the hoopla around his budget, but we should look at what he did before: he cut government spending by $14 billion. Where did he make those cuts? We should take those $14 billion and find out exactly where he cut most vigorously and effectively as a good public administrator.

Well, we see that more than 50 per cent, or to be more exact,52.1 per cent of those $14 billion in spending cuts over the past three years, when we look at the revised figures the Minister of Finance gave us yesterday, is the result of cuts made in transfers to the provinces. It is easy to be in debt: if I have debts, I will let my neighbour pay. Now that is good management. And that is what the Minister of Finance did. Since he became head of the Department of Finance, 52.1 per cent of the $14 billion that was cut was the result of cuts in transfer payments to the provinces. Meanwhile, he walks around saying: I am a good manager, but in Quebec, they are not, they cut all over the place and they downsize.

Of course, our Minister of Finance is too lazy to do the job himself and lets others do the work for him, while he goes around with a big smile, making theatrical gestures and exuding charm, as some people said, but he is the worst public administrator the federal government has ever known, because he lets others do the dirty work. Fifty-two per cent from downloading onto the provinces. It is easy to be a good manager.

The proportion of operating expenses in this $14 billion is 20 per cent. Twenty per cent of $14 billion comes under his control as manager and represents cuts in government operations. It is a small amount compared to the 52 per cent he left up to the provincial governments. And included in this figure is the despicable cut of $4.5 billion in social programs and in transfers to the provinces to cover post-secondary education, health and social welfare.

Actually, in the past three and a half years, the Minister of Finance has managed to reduce government operating expenses by only 6 per cent. I think people understand now that the reputation of the Minister of Finance is overblown and that he sitting there like an overpaid manager. He is sitting there watching events saying: "I am not going to do anything, because if I do, I might make a mistake". Every time the government rose to propose things, it made mistakes too.

We need only think of the promises on the GST and the promises of $720 million for the daycare system. We need only think of the bad decisions made in the implementation of employment insurance, which will, and I will come back to this, marginalize a whole lot of workers, who will be so discouraged by the eligibility criteria that they will simply withdraw from the labour market and swell the ranks of welfare recipients and be in the pay of the provinces.

From this alone, we can see that the government had only one thing in mind: to keep the system, maintain the unwarranted advantages of wealthy Canadian families-and we will have an opportunity to return to this shortly when we talk about the revision of the tax system-and continue to bleed middle income earners and the unemployed, as it has done since the start of its mandate.

The Minister of Finance has wasted an excellent opportunity to leave his true mark, not the false image of a good administrator who has reduced the deficit, the only one in Canada's recent history to have kept his promises. In the kind of economic situation that this minister has enjoyed, Michael Wilson, Don Mazankowski and John Crosbie could have done much better than he did.

He has lost an excellent opportunity. Why? Because he could have taken advantage of the relatively good economic situation to do the things we are entitled to expect from a true administrator of public finances.

First of all, he could have brought in tax reform. Our tax system has not been changed in 30 years. We have said this many times. We even made it one of our campaign commitments, just as the Liberals did. That is another red book promise that has not been kept. They talked about making our tax system more efficient, more in line with the reality of the 1990s and the next decade and more fair and equitable for all taxpayers, but they have not done it.

In the three and a half years he has been at the helm of the finance department, the Minister of Finance has lost an excellent opportunity to reform our tax system.

Last year, we did the job our lazy minister should have done. We formed a small task force. We sought advice from experts across Quebec and across Canada; we even used the briefs that were submitted at numerous meetings of the finance committee where tax experts were invited to talk about corporate and personal taxes.

Last year, with our small team from the official opposition, and with the full support of my colleagues, who were good enough to make suggestions for the reform of corporate taxation, we tabled a substantial, almost exhaustive analysis of all major tax expenditures that applied to Canadian businesses.

For the benefit of taxpayers in Quebec and in Canada, tax expenditures are all the exemptions, everything in tax legislation that applies to corporations, as well as to individuals-in this case I am talking about corporations-everything that lowers the taxes paid by corporations.

We reviewed twenty or so of these tax expenditures and found that things had changed in the last 30 years. Some small improvements, some cosmetic changes, had been made but, overall, things had been terribly neglected and a number of unfair advantages to large corporations for which there was no longer any justification had been left intact. And they continued on this course. Three and a half years of the Liberals in power, three and a half years of our super tough manager, our mascot, the Minister of Finance, and not a line written about the reform of corporate taxation.

The Bloc Quebecois' analysis showed how, through tightening the rules and abolishing outmoded tax expenditures, $3 billion could be saved, and we suggested to the Minister of Finance that he take this $3 billion and plow it back into the corporate tax system in order to support SMBs in their job creation efforts. People are looking for jobs, and the Liberals are telling us that jobs are their priority.

I recall that, when we tabled this report, the Minister of Finance rose to his feet and congratulated the Bloc Quebecois. Even the newspapers reported that the Minister of Finance had congratulated us on corporate taxation. But that was as far as it went. He congratulated us. We were very flattered, very pleased. My colleagues and I in the Bloc Quebecois were very pleased to be congratulated, but that was not why we did what we did. It was not so he could take this report and shelve it, like other reports by royal commissions of inquiry have been shelved by the federal government over the last 25 years.

We offered him these detailed, documented, very simple but highly logical suggestions so that he would do something, so that he would stop sitting back and watching the world go by, so that he would stop going with the flow and doing nothing to improve the tax system.

He did nothing. That would have been easy. We made a very simple suggestion in this report, which we repeated in our report on personal income tax published more than two weeks ago: we asked the minister to eliminate a tax provision that applies to corporations and wealthy Canadian families, and consists in taxing only75 per cent of capital gains. For instance, only 75 per cent of the value of equity holdings owned by a corporation or an individual would be taxable.

When a worker earns $300, the entire $300 is taxable, not just75 per cent. But the rich, wealthy Canadian families, the same ones who take advantage of almost perpetual tax referrals connected with family trusts and who transfer money abroad without paying income tax, the very same people who go around with powerful lobbyists, go to see the minister and say: "You must not touch that". Once again, the lobby of wealthy Canadian families has won.

I must say that when we look at the government team and the Prime Minister's office as well, we can see that the lobby of wealthy Canadian families is very close to the government. I think that explains much of this government's inertia. They were elected to preserve all these advantages, because the minute the government does anything about these tax provisions and revises the system as we suggested, to be fair to businesses that do pay taxes, especially small businesses, these undue advantages that accrue to the friends of the Prime Minister and the Minister of Finance will disappear.

I get the impression that is largely why the Minister of Finance has been so slow to act and did not write a single word about corporate tax reform. For the past year, and actually I am proud of this, the Minister of Finance has been waving three pages at us: "Look, I have three pages of measures with which I eliminated tax loopholes, three whole pages".

A week and a half ago we wisely asked the Minister of Finance to table the document he had been waving around for a whole year in this House.

We were right to do so, because it allowed us to analyze each of the measures the Minister of Finance claimed eliminated tax loopholes. He would rise and list them endlessly. Sometimes we did not quite understand. From this document we can see why we did not quite understand. Of all the measures listed on these three pages, only one quarter actually serve to eliminate tax loopholes.

Three quarters of the measures he waved in our face every question period each time we asked him about corporate and individual tax loopholes are erroneous, do not make sense, were never carried out, have nothing to do with loopholes or are duplicates. The repetitions go on for three pages. As if we could not figure out that they repeated the same measures two or three times over the three pages so they would appear to look like more, rather than the meagre showing they were compared to the 400 pages we gave him on corporate and individual taxes.

Really, this takes the cake. This is not being a little partisan or election oriented; this is electioneering in spades, despite an important responsibility to Quebec and Canadian taxpayers.

Since he came to this House, the Minister of Finance has been and is still hiding behind a smoke screen. He claimed he had done great things to deal with tax loopholes, but judging by what he presented, it does not seem to amount to much.

With regard to personal income tax, it would have been so easy for the minister and his team-I suppose it must be impressive, at least in terms of numbers and volume; I believe its total weight

must be around several million pounds. There are many brainy people at the finance department, they are all over the place, at the revenue department as well, experts who advise the Minister of Finance and who could have conducted in-depth analysis, far better than what we presented, with regard to the reform of the personal and corporate tax systems. Why was it not done? Why is it that in the last budget, as in the previous three, there was no measure to make personal taxes more equitable?

Another red book broken promise. In the red book, they talked about tax fairness, tax equity. You can go and see for yourself. They have been quoting it less often lately, perhaps because of the election, they know we are going to annotate it and rub their noses in it. Again, they said the tax system should be made fairer and more equitable, one more empty promise. Nothing, a big zero, is what they have done to change the personal income tax system.

Two weeks ago we presented a report suggesting a few possible measures. We were not asking the finance minister to implement them immediately in his budget. However, he could have announced that he was contemplating a reform of personal income tax for next year, or some mechanism to improve the equity and justice of the system. But no, this would have been too much to expect from the Minister of Fiance. He is used to sitting back and letting things happen. So he did nothing in these areas.

For example, if he had wanted to reduce poverty for families, and particularly single parent families with children, he could have replaced the income tax deductions for child care expenses, as provided in the Income Tax Act, with a refundable child tax credit, just as we had suggested.

He could have implemented measures so that even the single parent families without any taxable income on their return would have benefited from the refundable part of the credit. We have estimated that families, depending on their income and the number of children, would have saved an additional $600 to $1,000. The minister could have done that. But no, he did nothing of the sort.

In order to focus taxation on job creation, he could have adopted our suggestion and implemented a job creating RRSP similar to the home ownership RRSP. Like the people participating in the home buyers' plan, people could have withdrawn $25,000 out of their RRSP to start up a new business.

Last year, more than 60 per cent of new jobs were self-created, that is to say people created their own jobs. That is the way of the future. People are being told over and over again that it is the way of the future and that is the goal they should pursue. However, no government is willing to give them a hand. Yet, this is a new reality of the labour market that should be acknowledged, and the tax system should be adjusted accordingly. But there is nothing in the finance minister's budget in this regard.

We are not creating enough jobs and he is sorry for it. Here is an official in charge of managing public finances, making sure that the economy is sound and the labour market more productive, and he apologizes, like the Prime Minister. No, the Prime Minister does not apologize, because he never admitted that he can make mistakes. The Minister of Finance apologizes by saying: "We could do better, but we did not". Yes, he could have done better, much better.

For example, he could have restored the $5,000 ceiling on contributions to labour-sponsored investment funds, like the FTQ and CSN funds in Quebec and others in the rest of Canada, as we suggested. Last year, he reduced the ceiling to $3,500. He says that he is working to create jobs, but he is cutting off funding for one of the best job-creating vehicles in Quebec and Canada.

There again, they are short of ideas, they are short of means. I have a feeling that they lost their drive. Instead, they would rather wait until they have won another election to play dirty tricks once again, as they have been doing for the last three and a half years, and they will be at it again. This is the Liberal establishment: they continue to maintain undue advantages for rich families and rich corporations. This is the Liberal Party of Canada.

I would like to remind the House of one thing that became obvious to me when the analysis of corporate taxation was done. It is always under Liberal governments, the previous ones and this one, that tax deferrals by big corporations have consistently increased. Every time the Liberals have been in office, all of a sudden, there has been an increase in the number of tax loopholes and tax deferrals by big businesses, for a total of $36 billion until now.

The finance minister also did not think that this issue should be examined and that-for big corporations that will never pay a penny in taxes, because for them it is not a deferred tax but a scrapped tax-a mechanism should be put in place to get, like in the United States, at least a small minimum, minimorum as we say in Latin, the smallest minimum in taxes.

Once again, the finance minister has nothing to his credit. I find this is quite a bad way of completing a first mandate as finance minister. I think Canadians are starting to understand the game played by the finance minister and are starting-and we will see thisduring the election campaign-to question the ability and honesty of some of the people on the government side.

The finance minister, if he had been hard working, if he had been the kind of beaver that he says he represents, because it is Canada's emblem, could have taken advantage of exceptional circumstances

in terms of tax revenues, as I was mentioning earlier, and in terms of people's expectations.

Yesterday, the finance minister in his budget speech painted quite a picture when he talked about deficit forecasts for this year and next year. Our initial analysis of his statements is as follows: in the past-since the past is the key to the future-the finance minister has always somewhat underestimated his performance, so that six months later, the first actual figures are spectacular, exceeding forecasts by 30 per cent, and have a major political impact. This is all he thinks about. He gets up in the morning and only thinks about the way of looking like the best manager of the government. In fact, the finance minister is a comedian, a real comedian.

He tells us: "I must be careful. I cannot put in too much. I can allocate no more than so many millions-a pittance, crumbs here and there-to the fight against poverty". The fact of the matter is that the Minister of Finance is hiding the truth from the public. The fiscal flexibility he will benefit from, not because of his managerial skills-as I said earlier, Youppi and Alcide would have done better-but simply because of the economic situation, could total between $8 billion and $10 billion this year and the next.

What is this flexibility? It is the difference between last year's deficit forecasts for this year and next year and the actual results achieved because of the economic circumstances.

Even if he took $8 billion from his deficit reduction target, thanks to the economic situation, he could still achieve a zero deficit by the year 2000-achieving a zero deficit by the year 2000 is no small feat; the financial marketplace would be delighted to hear that-but he is not yet committed to a zero deficit by the year 2000. The Government of Quebec, on the other hand, made that commitment long before he did. Achieving a zero deficit by the year 2000 would be possible if he took the $8 billion or more at his disposal, and applied it to something else than deficit reduction.

The federal deficit could be eliminated by the year 2000 by allocating $8 billion to various other things, to alleviate the job crisis, to fight growing poverty, and so on. The Minister of Finance did not tell us that yesterday; he was silent on this issue. Do you know why? It will be very simple for him. Let me predict what will happen during the election campaign. Let me pretend I am Bernard Derome. I would say: At 3.55 p.m. this afternoon, I predict that, when the election campaign is in full swing, the Minister of Finance will release revised figures on deficit reduction. He will say: "This is wonderful. The Liberal Party of Canada and the Minister of Finance-because he really likes to be a star-managed to achieve results that greatly exceed all expectations, including the minister's own, when he tabled the budget".

We know that. One only has to make a simple calculation to see where the deficit reduction curve should be in the year 2000, based on the budget forecasts made last year by the minister, and to see that there is a margin of $8 billion to $10 billion for this year and next year.

So, there is some leeway with this $8 billion margin. This is a great opportunity for a government interested in doing something about job creation, about poverty. But the government is passing up the opportunity. The government could have added an extra $2.5 billion to this $8 billion, by committing to reform the personal tax system this year. It would have had that extra $2.5 billion by eliminating undue benefits for those who earn $150,000 or more, while giving back some of the money to low income earners, who have been bled dry with a tax burden of $22 billion over the last three and a half years. So, this additional $2.5 billion could have been added to the $8 billion margin, that is the money available to the minister to take some action.

To this amount, the minister could have added another $500 million, and we were hoping to see this in the budget, as stated in the document that we tabled last week, by saying yesterday that, being the good manager that he claims to be, he was going to fight the underground economy. Had he done so, he could have got another $500 million.

In 1994, Statistics Canada estimated the underground economy at $6 billion, so $500 million out of a total of $6 billion is not all that much. By trying a little bit harder, the minister could have generated those revenues. All things considered, in the first budget he tabled in the province of Quebec, Mr. Campeau was able to generate a lot of money by using the necessary resources. This additional $500 million would have given the minister more leeway.

In his last report, in the previous one and in the one before that, the auditor general kept pointing to $2 billion to $3 billion in inefficiencies and waste. Last time, besides that $3 billion, he indicated that the federal government is spending $1.2 billion more than needed to manage its inventory. That is $1.2 billion too much. As a good manager of our public finances, the minister could have promised, each and every year, to fight all that waste and try to give himself more leeway.

All in all, this year, if he had been willing to, he could have given himself a lot more leeway, in fact between $8 billion and $14 billion more-that is a lot of money-and still maintain his objective of eliminating the deficit by the year 2000. It is very sad indeed. He could have told us: "Look, I can do these two things at the same time." Instead, he stuck to his fight against the deficit, the only thing that matters to him, his only real achievement. He wants to show the people that he can not only reach his goal and completely eliminate the deficit by the year 2000, but that he can

also generate surpluses immediately and go for a third election campaign and maybe also run for the leadership of the Liberal Party of Canada, something he seems to be interested in.

He had a margin of $8 billion to $14 billion. What could he have done with that? He could have distributed it to his wealthy buddies. That would have been his natural reaction. He could have done things for all taxpayers in Quebec and Canada. He could have helped the real people, the people he claims to serve, the people the Bloc Quebecois actually does serve.

He could have said: "I will forget about the $4.5 billion cut in the Canada social transfer, the transfer payments to the provinces for welfare, post-secondary education and health care. I will give back to the provinces the $4.5 billion I took from them in my last budget".

Thus, with the established programs and resources in the provinces, especially in Quebec, we could have really fought poverty. Instead, the minister announced a program that was all show and only designed to get votes.

Thanks to the leeway he had, he could also have afforded to stop doing what he has been doing for the last two years, that is, using at least $5 billion of the unemployment insurance fund a year to reduce his deficit.

I want to digress about the first measure, which is to put $4.5 billion back into the Canada social transfer to the provinces. Yesterday, the minister announced that he would fight child poverty with determination. Over the past few months, he has made a show of being compassionate toward poor children. He wants us to forget that his $4.5 billion cut in social programs is the very thing that increased poverty for families, for the parents of poor children.

He indicates today that there will be a supplementary child benefit of $600 million. When you consider only that, it is fine. But do not forget that the cuts amounted to $4.5 billion and that the $600 million will only be implemented next year, after an election.

We must not forget the promises made during the 1993 election campaign. Everybody remembers the promises made by the Prime Minister and his ministers who were only candidates then: "We will create hundreds of thousands of jobs". Where are those jobs? "We will abolish GST". What happened to the GST? "We will invest $720 million in the day care program". Where is the $720 million?

And now they announce a new $600 million child benefit for 1998. We do not believe them. They are not believable. Nobody believes them. We have our doubts about what will happen after the election. It seems that they suddenly forget their promises once they have been elected. They ignore them. They dismiss them and act as if they had never existed.

There is a real national emergency in terms of child poverty. The Minister of Finance said it was. According to our analysis, it is more than an emergency. In fact, we should have done something in the past three years. We should not have cut $4.5 billion in social programs. On the contrary, we should have increased funding to help families, the most disadvantaged families, the parents of these children living in poverty.

Instead, this year, we will spend only $50 million to fight child poverty. Have you thought about what $50 million means? They cut $4.5 billion from social programs, which will worsen the problem of poverty. They will spend $600 million, but only next year, because this problem is not enough of an emergency for the government. They will spend $50 million this year to fight child poverty. This amount shows how compassionate the Minister of Finance is. We do not believe him either. He is not believable when he says that he is greatly concerned about child poverty.

When he places his hand on his heart, I think what he really has in mind is his wallet. Child poverty is the least of his concerns because, once again, if he did not have his mind set on merely partisan or crass electoral things, he would have put the money where it is needed, and at the levels that his margin of $8 to $14 billion a year allows. He would have put $4.5 billion in social programs instead of literally robbing the provinces of that amount. That is where he should have put the money.

Concerning the unemployment insurance fund, once again, the Minister of Finance could have been more shrewd, more hard working, less lazy. He could have said: "I will use part of the $5 billion surplus in the unemployment insurance fund to substantially reduce unemployment insurance, now called employment insurance, premiums". Not a reduction of a nickel or a dime, which is what he has accustomed us to. As a matter of fact, every analyst is saying today that, in this regard, the minister's budget is worthless, that it will not have any impact on corporate competitiveness and job creation.

He could have done three or four times better. And with the rest of the surplus, he could have given back the protection he took away from the unemployed with the introduction of the employment insurance program last January. He could have done that, but not this finance minister. We know him and we know how he is putting his fiscal house in order on the back of others, so we could not expect him to use this cushion that he is hiding from us to stimulate employment by reducing unemployment insurance premium rates, and especially by helping small and medium size businesses create jobs and by improving the situation of those who fall victim to unemployment. He has not done that. Absolutely not.

I remind the House also that he has not followed our suggestions on corporate income tax reform, which would have freed up $3 billion that could have been used to support employment in the small and medium size business sector. He applauded these

suggestions but he did not act on them. He applauded them just for show, for his image. Image is very important to our finance minister. He is paving the way to becoming the leader of the Liberal Party of Canada some day. He came to thank us. He was even quoted by a newspaper as congratulating the Bloc Quebecois, but he did not do anything in the area of employment. The same goes for our proposed employment RRSP. He applauded that suggestion but did not act on it.

Speaking about employment, do you know what new measures are contained in this budget to create jobs? I remind you that we are experiencing a shortage of jobs. There are 1.5 million people officially unemployed; there are another 1.5 million unofficially unemployed, people who are discouraged, marginalized, driven to welfare, who no longer show up as actively seeking work. This adds up to 3 million underemployed people in Canada. He has set aside $25 million in new money for job creation. This represents 90 cents for each Canadian. Direct assistance during the Great Depression was more generous. It is terrible, 90 cents.

It is cynical, laughable, but sad at the same time, because 3 million people are waiting for help, while with great fanfare the Minister of Finance is presenting his empty, ridiculous measures. It is unacceptable.

The only new measures in the budget are measures that will lead to confusion.

In addition to being partisan and despicably election oriented, these measures, when presented by the Minister of Finance, suggest that the public will swallow anything. Apart from that, there is the confusion that will result. The Minister of Finance is proposing, and for three and a half years that is all his government has been proposing when there is any reform, a wholesale invasion of provincial jurisdiction. This is all this budget is.

It talks about health programs. Under the 1867 and the 1982 Constitutions it is clear that health comes under provincial jurisdiction. The same clearly goes for education. Income security and social assistance are areas of provincial jurisdiction.

The government tells us it has no more money for social programs. It is cutting $4.5 billion, and all of a sudden we are seeing little programs with "Government of Canada" at the bottom and the Canadian flag at the top. It does not get much more partisan.

There is no longer any money for social programs provided jointly with the provinces. In particular, the government is cutting $1.3 billion from the Government of Quebec's social programs. And with a fraction of the amount it has stolen, it is setting up a child benefit program to fight poverty. If that is not confusing and inflammatory, I do not know what is. The Minister of Finance is playing with fire.

The same goes for the Foundation for Innovation. The purpose of the Foundation for Innovation, an $800 million dollar undertaking, is to fund research and infrastructure in the areas of biomedical research, post-graduate research and so on. Once again, this is an intrusion into health and education.

What the Minister of Finance does not tell us is that his fund is just a band-aid solution for a huge gaping wound, one he himself has caused with the various measures he has put in place in the past three years. When he cut $4.5 billion from social programs and health, part of that was going to biomedical infrastructure and research.

Moreover, people far smarter than those across the way came before us in the finance committee to say that the cuts imposed by Minister Martin in his first three budgets might compromise all biomedical research. We are talking about major cuts here. They slashed research budgets by 30 per cent, with the full knowledge that we are already trailing behind all other industrialized countries. A 30 per cent reduction is tantamount to a death sentence for biomedical research.

The Minister of Finance announces to us, with great fanfare: "are going to create an $800 million foundation to fund research". This budget is a total joke, a kind of vaudeville act. It is sad to see a minister of finance behaving in this way, when there are crying needs in the areas of poverty and job creation. He leaves the provinces scrambling to keep their heads above water. He cleans up his government's finances at their expense, and goes about patting himself on the back for being a good manager.

We need to know where the Minister of Finance is getting his $800 million to start up the Foundation for Innovation. It might have been expected that he would get it from the $8 billion available, plus all the items I have referred to, which could yield between $8 billion to $14 billion to work with. If he had been a good manager, if he had not had an exaggerated obsession with waging war on the deficit, with immediate, spectacular results, in order to bolster his image, to make him look like a Canadian leader in training for a leadership fight, one might well think that he would have taken the money from there. But no.

When we look at last year's budget, the 1996 budget-which I am not allowed to use as a prop, but I do have in my hand-when we look at his forecasts for overall transfers to the provinces, including the equalization payments, the Canada social transfer and so on, and when we compare them with the forecasts in yesterday's budget, we see that last year he projected $800 million more in transfers to the provinces than in this year's budget. Fascinating coincidence.

There is new spending totalling $800 million for the Canada Foundation for Innovation, and there is $800 million less available for transfers to provinces. What a coincidence: exactly $800 million. So this is a big coincidence, but it is rather odd, because we do not know why the minister deliberately decided to take away another $800 million from the provinces or it may be the economy or a combination of the two, but in any case, there is no new money here.

He did not take advantage of the flexibility he has to establish this kind of foundation. As I said before, this is just a band-aid on a gaping wound he opened in the course of the last three budgets by attacking provincial budgets for health care and education.

I would like to touch on one last point in this budget. I think this is a very important issue on which there is practically a consensus in Canada. I am referring to the harmonization of the GST with the Quebec sales tax.

As you know, in 1991, the Quebec government offered to harmonize its sales tax with the federal GST. It did so because it felt that with a harmonized system, the sales tax would be easier to manage by business and its administration would also be easier, since the Government of Quebec would administer both taxes on behalf of the federal government. It also wanted to improve Quebec's competitive position and trade balance. In fact, Quebec Finance Minister Bernard Landry made this clear when he started to demand compensation last April. He made it clear why the Government of Quebec decided to harmonize its sales tax with the GST.

We did so in good faith, and we did so with a view to improving the situation in 1991. What do we see six years later? That the federal government thought it was a such good idea that it suggested the same to the maritimes. However, to persuade the maritimes to go along with it, it offered them about $1 billion. That is $1 billion over the next three years to harmonize the sales taxes of the three small maritime provinces with the federal tax, the GST. One billion.

And now, the Minister of Finance says: "It is not the same thing, the harmonization is not being done the same way". Is that right? We harmonized in 1991, and they harmonized in 1997. They are entitled to $1 billion and we do not get a red cent.

The Minister of Finance in rejecting the demand of minister Landry for some $2 billion in compensation pushed arrogance to the point of saying: "We based our calculations on the formula we used in the maritimes. Unfortunately under the terms and the subtleties of the formula, you are not entitled to it". Oh, come on.

According to this logic, the government can exclude whomever it wants whenever it wants. This is exactly what the government wanted to do. In setting up the formula, it justified paying out $1 billion in the maritimes and denying Quebec any compensation.

I heard the minister say in question period: "We did the calculations. The Government of Quebec made money with harmonization". My eye. In terms of tobacco and gasoline alone, we lost something like $600 million in tax revenues, because we wanted to harmonize with the federal government and make things easier in terms of taxes on consumer goods. For these two items alone, $600 million.

The claim for $2 billion is justified. It is justified to such an extent that the government of Mike Harris, the Government of Ontario, I am pleased to say, as it does not happen often, is supporting Quebec's demand for $2 billion.

Even the Government of Alberta is supporting Quebec's demand. The Government of Manitoba is supporting Quebec's demand. British Columbia is supporting the Quebec government's demand for $2 billion. This is unheard of. The finance minister told us he owed us nothing. He gave $1 billion of our own tax dollars to the maritimes and told Quebec: "No, you are entitled to nothing. You went ahead, you did it all on your own, you spend money for the others, but you are not entitled to anything, only the maritimes are."

We would have expected to see in this budget an indication of a possible first payment, a first instalment to pay off the $2 billion debt the federal government owes the Government of Quebec, but nothing. A big fat zero.

There are many other things I could speak up against in this budget-my colleagues will have the opportunity to deal with specific elements of the budget over the three days set aside for the debate-but I would like to end on the following note. The finance minister wasted three and a half years he could have used to improve things. He could have used these three and a half years to make the tax system fairer and more equitable for everyone.

He could have taken steps to reduce the outrageous benefits for the richest Canadians, who are said to represent 2 or 3 per cent of the total population; I am not saying they should be eliminated, they could have been allowed to keep some of their benefits-one way or another we do have to keep them here-but at least they should have been reduced in scope and what is collected redistributed among middle and low income earners, who have borne the brunt of increased income tax and other tax hikes over the last 15 years, and who have been the victims, over the past three years, of a $22 billion tax grab.

With the manoeuvring room he had, thanks to the economic recovery, not thanks to him-because he, I have made up my mind on this, he is not the best manager I know-he could really have helped the poor and given back to the provinces the money he stole from them in the last two budgets, $4.5 billion.

He also could have helped the unemployed. Hew could have helped to create jobs. My overall assessment of this budget is that it is good for the shredder, the waste basket. If it was meant to be a pre-election budget, the Prime Minister should call an election tomorrow morning with the budget as a platform. Let me tell you, as the Prime Minister himself said, they will get clobbered.

We are ready for the election. We are ready to compare our record to theirs, our reality to theirs. Our reality is more in line with that of the grassroots, closer to what real people experience, more attuned to the circumstances of the have-nots who were ignored by this government over the last three and a half years.

I would like to move an amendment to the government's motion. I move, seconded by my colleague, the member for Anjou-Rivière-des-Prairies:

That the motion be amended by replacing all the words after the word "That" with the following:

"the budget statement by the Minister of Finance be rejected by the House of Commons because it:

unilaterally maintains major reductions in transfer payments to the provinces in the fields of postsecondary education, health, and social assistance, while intruding in areas of exclusive provincial jurisdiction, particularly by creating the Canada Foundation for Innovation from money earmarked for the provinces, introducing a national child tax benefit system, and setting up pilot projects filled with national unity propaganda in the field of health and social programs;

proposes no tangible job creation measures, does not substantially reduce Unemployment Insurance contribution rates, or improve protection for unemployed persons, which has been greatly reduced by Employment Insurance;

conceals its lack of action in creating jobs and fighting poverty, knowingly reducing effectiveness in these areas and distributing electoral gifts around Canada and Quebec;

does not include an in-depth reform of the tax treatment of businesses or individuals, for example, by maintaining benefits for large corporations and rich Canadians; and

introduces no measures to compensate the Quebec government for the 1991 harmonization of its sales tax with the federal GST, although Quebec would be eligible for this compensation in light of the $1 billion being paid to the maritime provinces."

[The Budget, February 19th, 1997]

Mr. Speaker, the Prime Minister forgot to add that this year we had a record number of bankruptcies in Canada. He forgot to say that.

My question is this: Why will the Prime Minister not admit that he failed on job creation? Why will he not admit that his slogan "jobs, jobs, jobs" was just that, like the other slogan on abolishing the GST: "scrap, scrap, scrap"? He no longer has any credibility.

[The Budget, February 19th, 1997]

Fortunately, Mr. Speaker, because if they were not, Quebec's deficit would be down by 60 per cent.

The Liberals, who were elected three and a half years ago to the shouts of jobs, jobs, jobs, have nothing to offer one million and a half unemployed workers in Canada today. Yesterday's budget had nothing better to offer than a paltry $25 million in new money for job creation measures for the coming year. This is an average of 90 cents per Canadian.

My question is directed to the Prime Minister. Now that he has given up doing anything about high unemployment, does the Prime Minister have anything to offer 1.5 million Quebecers and Canadians who are looking for jobs, besides wishing them a cynical good luck?

[Borrowing Authority Act, 1997-98, February 18th, 1997]

To get back on track, the budget tabled today by the Minister of Finance is not worth the paper it is printed on. It is despicably election oriented.

It is an election budget, because the Minister of Finance missed a golden opportunity to do extraordinary things, given the exceptional circumstances. He could have done extraordinary things in job creation, in really fighting poverty, in providing a real impetus to long term employment while continuing to aim for zero deficit in the year 2000.

Instead, the Minister of Finance presented measures that are blatantly election oriented and a sad reflection on this government.

Let us take taxation, for example. Last November, we suggested to the Minister of Finance, in a detailed analysis with respect to a review of corporate taxation, ways to tighten up fiscal spending, unfair advantages for large corporations. This would have allowed him to recover no less than $3 billion to plow back into SMBs in support of their job creation effort. What do we see in this budget? Nothing, in this regard. As for individual taxation, it is exactly the same thing.

He has been at the head of the federal finance department for three and a half years and he is unable to produce a single line of tax reform to make the system more equitable for low and middle income taxpayers. What they have done is to hang on to the unfair advantages for the very rich friends of the Liberal Party of Canada.

The Minister of Finance had extraordinary leeway. I will explain. If we compare the projected deficit when he brought down his last budget and the projections in the present budget together with the projections from the large Canadian firms that specialize in this sort of figures, the Minister of Finance had at least $8 billion to play with in 1997-98.

In other words, while continuing to focus on lowering the deficit, and eliminating it by the year 2000, as the Government of Quebec has undertaken to do, the Minister of Finance could have done extraordinary things. Eight billion dollars worth of leeway, of flexibility. And the Minister of Finance is not taking advantage of this.

As far as job creation is concerned, 1.5 million people in Canada who were officially unemployed, three million if we include those who stopped looking for work because they were discouraged or because measures like employment insurance have marginalized them, three million unemployed could have expected something tangible in the way of job creation. They were waiting for the Minister of Finance. They were waiting for the budget.

Instead, the only measure involving new money in this budget amounts to $25 million. Twenty five million dollars, when the Minister of Finance, with his $8 billion, could easily have used part of the surplus in the unemployment insurance fund to make a substantial reduction in premiums. Not 10 cents, which is peanuts, but a substantial reduction in premiums to give job creation a boost. He could have done that. This is something we have been asking him to do for almost a year and a half.

He could also have announced that this decision to put in place the employment insurance system, a name that is rather odious, which came into effect last January, he could have taken part of the surplus generated by the unemployment insurance fund to once again provide adequate protection for the unemployed.

Instead, the Minister of Finance acted like a manager who is hard as nails. Not just a zero deficit objective for the year 2000 but a sky high surplus. The unemployed would just have to wait. As the Prime Minister said not long ago to the unemployed: "Good luck". That is the Minister of Finance for you.

As for child poverty, a few weeks ago, the Minister of Finance and the Prime Minister were all of sudden filled with compassion for the children they made even poorer during the past three and a half years with their cuts in social programs totalling $4.5 billion. All of sudden, they feel compassion for poor children.

So what do they give to poor children? This year, $50 million. This year, $50 million more in new money for poor children. Next year, a program worth $600 million in new benefits. Sure, $600 million, but compare that with this government's past record. And this $600 million is new money that is supposed to come to us after the election. Suppose they change their minds, the way they did with the GST?

They have changed their mind as well, an unkept promise of $600 million for daycare; they could change their mind about the child benefit. A total of $600 million, while they have cut $4.5 billion from social programs. A total of $600 million, while they are going to take very close to $1.5 billion away from the unemployed, just by creating employment insurance. Impoverishing the parents of children living in poverty-is that what battling poverty is all about?

It is odious to present things to us under that light. They are the ones responsible for the rise in child poverty, and they are the ones who were calling for a campaign against poverty in the red book, where they decried the fact that there were a million poor children in Canada. Thanks to them, those numbers have risen to 1.5 million; the bulk of the blame lies with them.

This budget sets up a foundation, with all the hoopla, all the theatrics and window dressing the Minister of Finance is capable of. A foundation to fund research in areas that include health and higher education. Here again, an $800 million foundation. The first question that came to mind was where in the Minister of Finance's balance sheet did the $800 million fit. Once again, it boils down to one thing: the Minister of Finance has cut transfer payments to the provinces for funding post-secondary education and health.

As a result, as a Canadian coalition told us in the Finance Committee, the cuts the minister has made will mean, for instance, that in the years to come biomedical research will be cut 30 per cent. This is the disaster the Minister of Finance has wrought. Then they come along to tell us that a research foundation is being created. Yes, created in order to try to pick up the pieces, for they have realized that they made a mistake, but cannot face up to their mistakes.

And where, once again, are the $800 million going to come from? Looking at the forecasts for transfer payments to the provinces made public last year by the Minister of Finance, and comparing them with the revised transfers presented by the Minister of Finance this year, we see that there is a "slight" drop of $800 million in transfers to the provinces. And the research foundation costs precisely $800 million, so once again it is clear that the initial funding for this foundation will be created at the expense of the provinces. That is what the finance minister is up to, and that is what we should thank him for? This budget is why we should be telling him he did a fine job? It is a monumental disgrace.

I will point out, Mr. Speaker, that all these new measures announced with fanfare, every one of them, are in areas exclusively under provincial jurisdiction. They all deal with health, education, income security, which are areas identified in the Constitution as areas exclusively under provincial jurisdiction.

It is quite strange that the Minister of Finance was able to find money on the side to announce, and make a big production of it, federal programs identified by a big flag and the words Government of Canada underneath, but he cannot find a red cent to maintain the transfer payments that were normally made to the provinces for social programs. It is really quite strange. Could it be that he is taking over provincial jurisdictions by squeezing the provinces out and using the Canadian flag and the words Govern-

ment of Canada, prominently displayed, to score political points? The answer is yes.

The measures put forward by the Minister of Finance in this budget are an extension of the Deputy Prime Minister's flag policy, nothing more.

I would have had much to say about this budget; in fact, we will have the opportunity to do so in the days to come. Let me tell you about another important issue which is not mentioned in this budget: the compensation to which Quebec is entitled for harmonizing the GST.

Our province harmonized its sales tax with the GST as early as 1991. Today, it is presenting the federal government with a $1.9 billion bill. The federal government signed an harmonization deal with the maritime provinces, and a cheque was immediately issued. The maritime provinces got close to $1 billion in compensation for harmonizing the GST, while Quebec, which did the same in 1991, did not get anything. For reasons of fairness and justice to Quebec, we expected the budget to make mention of a first payment to the Government of Quebec for harmonizing the GST, but there is no such mention.

In closing, I would like to quote the Minister of Finance, who said in his budget in brief, and I quote: "What government does with scarce resources shows what its values are". This budget shows the government's cynicism, blatantly election oriented strategies and mockery of taxpayers in Quebec and Canada.

I would like to move the motion to adjourn the budget debate. I move, seconded by my colleague for Rimouski-Témiscouata:

That the debate be now adjourned.

(On motion of Mr. Loubier, debate adjourned.)

[Borrowing Authority Act, 1997-98, February 18th, 1997]

Mr. Speaker, before I get underway, I would like to acknowledge in the gallery Mr. Yves Duhaime, the next member for Saint-Maurice.

[Poverty, February 17th, 1997]

Mr. Speaker, the reality is that the Minister of Finance has cut $4.5 billion from social programs. There are 500,000 more poor children since he became finance minister. That is the reality.

How can he claim not to have money to give to the provinces through established social programs aimed at combatting poverty, and then announce tomorrow some stopgap measures, some campaign goodies?

[Poverty, February 17th, 1997]

If I were they, Mr. Speaker, I would hold my applause, for what is coming is not all that worthy of applause. Tomorrow, the minister intends to announce measures to combat child poverty and to improve the health care system.

Are we to understand that these measures the Minister of Finance is preparing to announce, in two areas of provincial jurisdiction, are intended to make us forget that the child poverty and health care situations have deteriorated as a result of his own cuts of $4.5 billion to social and health programs?