Madam Speaker, earlier, I was listening to the Liberal member, the parliamentary secretary to the Minister of Finance, who talked about an almost historic agreement on equalization, about rediscovered harmony between the provinces and the federal government, and about how this would help avoid the numerous disputes that arise every year between the provinces, the Quebec government and the federal government as regards equalization payments and the formula itself.
It takes some nerve to present that agreement as a harmonious accord between the provinces and the federal government. Indeed, the Liberal member forgot to mention that this is not an harmonious agreement. It is an agreement that was shoved down the throats of the provinces and Quebec. The federal government told the Quebec government “Now that we have starved your province for the past ten years or so, have made cuts to the Canada social transfer for health, education and income support, have dipped into the employment insurance fund, have questioned consensus achieved in Quebec on many occasions on social and economic policies that could enable the province to move forward, improve the plight of the poor and create an environment that fosters investments and economic growth, you will take what we will give you. You will shut up. It is a take it or leave it deal”.
That is exactly what happened this past October 26. That was when the first meeting of the premiers on the subject of health was held here in Ottawa. The federal government's offer on equalization was tabled there for the first time and rejected unanimously by all provinces and most particularly by the Government of Quebec. A few weeks later, the government came back with exactly the same lousy agreement. This time they forced the Government of Quebec to accept, telling it “take it or leave it”. The sizable figures may seem all well and good when presented as one overall sum, but they do not match the total that would have been forthcoming to the Government of Quebec and the provinces of Canada if the equalization formula had been thoroughly reworked.
Making in-depth changes to this formula does not require a whole series of conferences to go over it with a fine toothed comb. We have been introducing the same arguments in favour of improvements for ten years now, such as making calculations based on all ten provinces and not five as at present. Why, in a system that is representative of the fiscal potential of the provinces, would only five of them be used to calculate an average, with all provinces under that average entitled to equalization payments and those above not entitled? According to the basic rules of mathematics, if comparisons are to be made, an average is calculated from the whole set.
It would have been easy for property taxes, too. It would have been very easy. All we have been asking for all these years is that Quebec's true property wealth be taken into account, and not estimates by economists and experts, using what they call proxies, which never succeed in adequately reflecting the property tax potential of Quebec, or the rest of Canada, either. These changes could have been made with just a little goodwill. But no, just as in all federal-provincial negotiations, the government is arrogant and imposes its will. Imagine that Ottawa believes it knows the provinces' needs better than the provinces themselves. Ottawa believes it knows health, education and income support better than the provinces, who were clearly given those powers in the Constitution.
Moreover, the Auditor General has just given us a good example of the federal government's good management of veterans' and first nations' hospitals. It is a fiasco. It is a catastrophe. If responsibility for the health and education systems were given to the federal government, there would be a disastrous situation in all provinces; but Ottawa knows best, as they say. And they dare to call this a “cooperative agreement”. People can only be laughed at for so long: there is a limit.
There is also a big problem with this agreement, and it is all the individual agreements. It has been arranged so that Saskatchewan and British Columbia come out ahead after this conference. Apparently, in order to avoid the shock of disparities between the equalization payments that are now planned and those foreseen in the 2004 budget, there would be a kind of formula, a special agreement with the provinces. Unfortunately, the base line is the 2004 budget.
Saskatchewan received that bad news that, for the period from 2001 to 2004, it was overpaid $590 million. To cushion the shock, in a side deal, on October 26, it was forecast that Saskatchewan might receive equalization. But in early October, it was told that it might lose.
Given that, in the last budget, Saskatchewan was told it might receive equalization, to cushion the shock, the federal government decided to let it keep the $590 million it should normally have had to pay back.
Unfortunately, in the case of Quebec, the bad news came before budget 2004. Quebec was told it owed $1.2 billion, if I remember correctly. Quebec will have to repay, because the federal government forecast that, in 2004-05, it would be paying a tad more than previously agreed to.
Quebec is forced to pay back this $1.2 billion. But just months later, to cushion the shock caused by the budget and the latest review, in early October—and because the budget is the basis for assessing transitional payments—Saskatchewan was told, “While we originally said, in budget 2004, that you could expect a fair amount in equalization, a review in early October showed that you were overpaid $590 million by the federal government, but because we do not want to cause a shock, you can keep the money”. This is a double standard.
Saskatchewan will not have to pay a $590 million debt back to the federal government. It will be paid the additional amount of $590 million for 2004-05, as planned. But it does not matter if Quebec's $1.2 billion overpayment causes an economic shock. It will have to pay it back over the next 10 years.
We know that equalization is established on a per capita basis. Given that the population of Saskatchewan is 1 million, this means that the side deal made with Saskatchewan, which Quebec cannot take advantage of, is providing on average $590 per person in Saskatchewan.
If we apply this $590 per person to the seven million Quebeckers, it follows that this adjustment could have been worth about $4.5 billion to Quebec. This is not peanuts. This amount is obtained by taking into consideration the per capita amount given to Saskatchewan, and the fact that we will continue to pay $1.2 billion over the next 10 years to repay last year's overpayments.
It is always sad to see that, whenever a federal-provincial conference ends, there are always people in Quebec who are entirely or partly unsatisfied. This time, the federal government starved the Quebec government so much over the past seven years by cutting payments to it, that the latter has no choice but to accept what is on the table. The Quebec government is very upset, but it will accept the proposed amounts.
It is always the same thing. There is not one federal-provincial conference on specific agreements at the end of which Quebec is not frustrated. Every consensus reached in Quebec is ignored whenever we ask the federal government to participate and to do so in a fair and equitable fashion.
Take the example of day care. Everyone in Canada and here in this Parliament agrees that the Quebec model is the example to follow. People like Quebec and they think it has a good program. It is well structured. day care spaces at $5 and then at $7 per day have been in place for five years in Quebec.
Because parents pay $5 and $7 per day, this government pocketed the federal tax credits or tax deductions that these parents used to get in the past, when they were paying $30 or $35 per day to put their children in a day care. No agreement could be reached, even though the Quebec day care program was presented as a great example. It is a progressive measure that is mentioned everywhere and that gets rave reviews here. It is nice to get praised and to be congratulated for our good initiatives, but in the meantime the federal government is not doing its share.
Last year alone, Quebec parents lost $250 million in federal tax deductions, precisely because there is in Quebec a progressive system that is the envy of everyone, a system that the rest of Canada wants to copy down to the fine details.
In the past five years Quebec families have saved the federal government $1 billion in tax credits and tax deductions, because it has not had to pay them out.
The same goes for parental leave. We have been pleading for it for years, while there is consensus in Quebec. The Employment Insurance Act allows for the transfer of roughly $600 million or $700 million to fund parental leave programs. The Government of Quebec parental leave policy is much more generous and consensual than the federal government policy, which can be extremely complicated. When a person becomes a parent they get a two-week penalty under the employment insurance system. You are so proud to be a parent and the federal government penalizes you.
If Quebec were sovereign we would have had a parental leave system a long time ago. We would have used our tax resources—the more than $40 billion in tax we have been paying to Ottawa all these years—a long time ago for our child care program, to increase the number of spaces in child care, rather than come here to beg for our share of the taxes we pay to the federal government to solidify the consensus in Quebec. It makes no sense.
It is the same thing in the agriculture sector. Do you think that if Quebec were sovereign, and $40 billion were paid to Quebec City in taxes, that we would let our farmers suffer as they are right now? Do they think we would not have come up with a way to help them? They are receiving roughly 20% of what they were getting for cull. They are also victims of U.S. subsidies on grain crops. When it comes to mad cow the federal government says it has tried and that it is still trying, but nothing works. We would have taken measures a long time ago to help farmers in Quebec.
Over the weekend, I read that Air Canada Jazz is moving out of Quebec City. Everybody was surprised and wondering why. Do you think that a sovereign Quebec would have let Air Canada Jazz leave? No, because the national capital of a sovereign Quebec would have been Quebec City. And unlike the federal government, a sovereign Quebec would not see Quebec City, its national capital, as just any other region of the country. Therefore, we would have ensured that the airport facilities in Quebec City were worthy of a national capital. I think Quebeckers are realizing that it does not make any sense for a people with such national pride to see the federal government use our tax money to stick it to us and frustrate us every time we negotiate agreements concerning the allocation of our own tax money.
To my fellow countrymen, I say that we have to realize it no longer makes any sense to live in such a system. Even at the international level, we are considered a nation and referred to as the Quebec state. We have a national assembly. We are being robbed by agreements like the one on equalization and the long-delayed parental leave accord. We have a highly praised day care system, but for the past five years, as Quebeckers, we have been working on a fund to develop a day care network outside Quebec.
According to the federal government, the first year of operation of this Canada-wide day care network would cost $1 billion. And guess what, these last five years, it has saved money from the tax credits and tax deductions it would give parents in Quebec, which is the money we, in Quebec, are investing in day care. What this means is that Quebeckers will be footing the $1 billion bill for the first year of operation of this Canadian child care network in Ontario, Prince Edward Island, New Brunswick, Saskatchewan, Alberta, etc.
So, we are being used as an example, but the federal government never offers any funding or truly harmonious arrangement. It always tries to impose things. It always makes us fight right to the bitter end to get the least cent, while we hand over $40 billion to the federal government in taxes every year without protest.
With the war on poverty, it is the same thing. How many years have we been demanding a real social housing policy? Despite the fact that the Government of Quebec has been struggling with public finances, falling behind, and will have problems in coming years because the federal government has cut its funding, the fact is that the Government of Quebec is the one investing heavily in social housing.
If we had the share that we send to Ottawa for it to waste and spend on their cronies—because with the sponsorship program there was real, systematic corruption—if we had all these resources, we would be able to build more social housing units. However, we must go begging to the federal government and buy into the policy of subjugation, because the federal government imposes its point of view and because it is not the federal government's priority. The same is true even if it is a priority for Quebec, even though parental leave is one of Quebec's priorities and responsibilities. There is an incredible consensus in everything to do with the work-family balance as it is called. Even in agriculture—we would give aid tomorrow morning if we could, in Quebec—we must always wait. Even when we ask the Minister of Agriculture and Agri-Food to set a floor price everywhere for cull cattle—it costs him nothing—he hesitates, he consults, he does not know if Alberta will agree, does not know if it is a good plan for all of Canada.
As for the mad cow in Alberta, the source of the problem, at one point the federal Minister of Agriculture and Agri-food was asked whether there was not some way to divide the country into specific regions as they do for trade disputes, so that Quebec, with its tracking and inspection systems, which are superior to those in all the rest of North America, might be considered a region, and the western and maritime provinces as two other regions. But no, the Minister of Agriculture and Agri-Food stood up and said “No, from east to west, we are all Canadians”. So the mad cow became the symbol of Canadian unity. It makes no sense to do things that way, particularly when we know that they are doing this with our money.
If Quebec acquires its status as a sovereign state, that will put an end to the squabbling, and to the bogus negotiations that end with Ottawa imposing its opinions on us regardless of the priorities and consensus we have defined for ourselves.
How long has fiscal imbalance been a topic? The Séguin report dates back three or three and a half years, if I remember correctly. Everything is totally clear. There is too much money in Ottawa for the federal government's mandate as set out in the Constitution and for the other mandates it has given itself in recent decades. There is, on the other hand, not enough in Quebec and in the provinces to fund such basic things as health and education, income support, highway construction, regional development and so on.
As far as fiscal imbalance is concerned, even if the government has agreed that there may be certain fiscal pressures, this is scarcely remedied at all by the equalization agreement. If we go by the revised calculations the Séguin Commission came up with three years ago, there would appear to still be a shortfall of close to $2.4 billion annually in the payments to Quebec that would be required to remedy the imbalance. This is even taking the agreement on health and equalization payments into consideration, the figure is $2.4 billion. The Government of Quebec may make it through this year all right, but next year there is nothing preventing it from ending up with a deficit.
There are huge surpluses at the federal level, and apparently in some provinces as well. The federal finance minister himself commissioned a study from the Conference Board a few months ago, to review the federal and provincial governments' financial situation for the next 10 years. He was surprised to learn that, over the next 10 years, a surplus of $160 billion would pile up in the federal government's coffers, while the provinces would run deficits of more than $60 billion. That makes no sense for the few, like the Minister of Finance and the Prime Minister, who believe in federalism. That is not how a federal system works, with some provinces lagging behind and running deficits, while the federal government has loads of money and invests in every area of provincial jurisdiction, not even bothering to respect the Constitution anymore.
That having been said, we have to say that this is not just a bad agreement, it is a very bad one. But to Quebec and the provinces in the rest of Canada, it is worth a few million dollars they desperately need because the federal government has starved them. It has cut transfers and forced the provinces into situations where the fiscal imbalance is creating an incredible number of victims. We saw what happened in Ontario this year. The same could happen in Quebec within a few years. Only Alberta, really, can manage pretty well thanks to its petroleum.
But where the others are concerned, we absolutely have to use this example as the basis for a serious debate on fiscal imbalance, so that it can be resolved once and for all. I hope that the subcommittee to be struck at the Standing Committee on Finance to address this issue of fiscal imbalance will produce a report that will effectively eliminate this imbalance for good and ensure that the members opposite stop saying that there is a harmonious agreement, when in fact agreements that the provinces do not want are forced down their throats.
