Yvan Loubier

[Minister of Finance, November 4th, 2003]

Mr. Speaker, it is important to know how much it cost, because if the minister paid $500 for a luxury vacation worth $15,000, there is a problem.

At the very least, there is an apparent conflict of interest. To be sailing in the Caribbean with the former president of the Brewers Association of Canada, who is still an adviser with the association, days after making a decision unfavourable to the microbreweries, reeks if not of apparent conflict of interest, then of plain conflict of interest.

[Minister of Finance, November 4th, 2003]

Mr. Speaker, when one holds an office like that of the minister, it is important to know how much the minister spent to vacation in the Caribbean for nearly one week on a sailboat chartered by the Brewers Association of Canada.

We want to know how much it cost him and we want him to produce receipts for this vacation in the Caribbean on a sailboat, a luxury sailboat chartered by the Brewers Association of Canada.

[Specific Claims Resolution Act, November 4th, 2003]

Madam Speaker, I thank my hon. colleague from Jonquière for her question and her kind words.

The only thing that saddens me today, on top of the motion for time allocation and the deaf ear the government is turning to first nations, is the fact that the first nations are not here today to debate their future directly with us.

What really irks me is that I should be the one to have to speak for the first nations. Inspired by my political commitment to voice the desires and aspirations of the nation of Quebec, I am in a good position to know that I would not like having someone from another nation to speak for me and not having full rights to defend myself in this place.

We have had this problem at the Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources. We were discussing the future of an entire nation, while members of this nation watched us non-aboriginals debate their future, and we were forced to defend the aboriginals. That is not right. In 2003, we cannot call ourselves a modern society if we have no legitimate forum where the first nations can express their rights, for instance.

They are not looking for a handout. The first nations have internationally recognized rights. Self-government processes are under way around the world. That is what is required: self-government.

The aboriginal people have the capacity to govern themselves. They are not children. They can have a government like ours. There is no better government than an aboriginal government to defend the future of aboriginal children.

We should be here today defending nations who are not here to defend themselves, to defend their future and that of their children. This makes no sense.

The role of the federal government is not to run them. It has a fiduciary responsibility toward first nations. It must abide by the long-standing treaties with the first nations. It must not force down their throats things they do not want.

They must be given every means to build themselves. This was referred to as a healing process in the Erasmus-Dussault report, the report of the Royal Commission on Aboriginal People.

It is a healing process. It concerns the redefinition of the nations that have been particularly damaged, because they were told that they were not real nations all though Canada's history. As for rebuilding these nations, they must have our help and our support in creating their own government and in governing themselves, and we must not impose anything on them. Most of all, we must respect them for who they are, these first nations. They each have a culture, a language, a form of government. In other words, it is none of our business.

When will the government and its representatives like the parliamentary secretary get it into their heads that the aboriginal nations are recognized as nations? Are we going to tell the Americans what to do? Are we going to tell the French what to do? Why do we take it upon ourselves to impose our choices on the aboriginal nations this way? What is this, anyway?

At the United Nations, the definition of a nation is the same for aboriginal nations as for any other nation, whether it is the Canadian nation, the Quebec nation, the French nation or the American nation. It is the right to self-government. There is also the respect for agreements made hundreds of years ago when the first Europeans arrived here.

Earlier in my speech I mentioned wampum. We should all know what wampum is. It is an almost sacred symbol that we have given our word, both the aboriginal people and the European nations, that we could live as neighbours, that we could live in harmony, but in complete independence.

That is what wampum symbolizes. Wampum is in the form of a beautiful belt. It should be shown around the world and copies distributed. On this belt we see a European ship of the era and a canoe, representing the aboriginal nations, sailing along together. The European ship does not encroach on the space of the first nations' canoe. They are moving together, in parallel, with respect, and in accordance with the terms and conditions agreed upon at the time.

Today, some people are trying to ignore all of that. They want to throw it away and say that the federal government, the Government of Canada—just as it was done 130 years ago with the Indian Act—can continue to park the first nations on reserves, treat them like children, impose whatever conditions it wishes, and slow down negotiations on self-government—the only true negotiations that should be going on in order to enable the first nations to develop and give them every opportunity to do so.

There are first nations communities that were given this opportunity. It is not an opportunity, but a right. Self-government agreements were reached, and look at how prosperous these first nations are today.

In Quebec, we have the example of the James Bay Cree. The first self-government agreement was signed there by Mr. Lévesque. Go see them today. This community is prosperous and has taken charge of its own destiny. Try to impose anything on them. They are a proud people, who insist on exercising their prerogatives as a nation. They are people who have developed, have the skill to do so and a true business sense.

We should stop taking the first nations for something they are not, but instead we keep on seeing bills as idiotic as this one. What sense is there in that? After having tabled the Erasmus-Dussault report a few years ago, after having given so much hope to first nations, what are we doing with bills like this and a policy of confrontation? That is not how we are going to move forward. That is not how we are going to create a peaceful future of coexistence where everyone can prosper and have the opportunity to do so. It is despicable to do things this way.

The new prime minister, who is hiding behind the curtain, said he was against the three bills concerning first nations, including Bill C-6. Where is the future prime minister? Where was he this morning when we voted on the time allocation motion? Where will he be when we vote on Bill C-6? Will he have the nerve to come here and vote in favour of this bill when, from behind the curtain, but publicly, a few months ago he said he was against the bill, as he was against the bill on self-government? I cannot wait to see that.

The Bloc Quebecois was created in the spirit of the first agreement with the James Bay Cree, signed at the time by Mr. Lévesque, the leader of the first Parti Quebecois government. We are motivated by equal opportunity and respect for long-standing treaties and the first nations' inherent right to self-government.

[Specific Claims Resolution Act, November 4th, 2003]

Mr. Speaker, I am pleased to speak to this government motion concerning the proposed amendments to Bill C-6.

First, I want to say that this is a sad day indeed for Parliament. This will be remembered as the day the Minister of Indian Affairs and Northern Development and most of the Liberal members voted on a time allocation motion in relation to Bill C-6 on specific claims, a very important piece of legislation.

It is a betrayal of our history, a willful and offensive repudiation of everything our ancestors agreed to with the first nations. It is a betrayal, because when we signed these long-standing treaties, we thought we would then be negotiating equal to equal, nation to nation.

With this morning's time allocation motion, the government is telling us that the spirit in which the Indian Act was implemented over the last 130 years will continue to prevail. We will continue with our paternalistic approach to impose our wishes on first nations.

Furthermore, despite the Erasmus-Dussault report tabled a few years ago, which gave the first nations and aboriginal children hope for their future, this future is once again becoming a dead-end, as it has been for 130 years with the infamous Indian Act. This betrays not only the spirit, but also the letter of what we had agreed upon for decades.

For several years now, this government has preferred confrontation over conciliation and healing in its relations with the first nations. Oddly enough, when the Prime Minister rose just now in the House, I felt ashamed. When the other ministers did likewise, I was doubly ashamed. When I saw most of the Liberal members vote in favour of time allocation, I was even more ashamed to see people deny history and misrepresent it like that.

For the past two days, the Samson Cree community has performed the drum ceremony in front of Parliament. The drums represent the voice and heart of Mother Earth. She is trying to help parliamentarians understand the significance of this bill.

Unfortunately, Mother Earth and the beating of the Cree drums in front of Parliament did not work their magic on the government. It has shut its eyes and ears to the unanimous calls of first nations and the opposition of all the parties to this bill, with the exception of the ruling party.

The minister claimed this morning that he had the support of the first nations. That is not true. I just came from the Assembly of First Nations meeting in Vancouver, which was unanimous in its opinion. All the chiefs are opposed this bill. Why? Because it betrays what is represented by wampum.

Wampum is a symbol of ancient treaties under which the parties negotiated as equals, nation to nation, where no nation was superior to another, but each side had rights. These rights, including the inherent right to self-government and rights under these ancestral treaties, should be respected.

Despite the fact that the first nations have appealed to the United Nations, and we here have been condemning Canada's treatment of the first nations for many years, our pleas fall on deaf ears in this government. We are dealing with a minister who, after a fifteen year career—I hope this is his last year, because he has wreaked enough havoc—is being hypocritical in presenting this bill and saying he has the first nations' support. This is despicable.

It is especially despicable to see the Prime Minister stand up and vote in favour of the time allocation motion. Yet, in 1993, he said, and this can be found in the red book, that given how slowly the first nations' specific claims are being addressed, an independent commission should be set up, not a commission that is entirely controlled by the government and is both judge and party. He talked about an independent commission with independent judges, who could assess the damages, specific claims and compensation with all the independence required for appropriate legal treatment.

This rings hollow because members of the two main institutions in Bill C-6, the first nations specific claims commission and tribunal, will be appointed by the governor in council, in other words cabinet, on the recommendation of the Minister of Indian Affairs and Northern Development, without input or suggestions from the first nations. It is the minister who will make recommendations to cabinet and who, in keeping with the paternalistic approach of the past, will continue to impose rules through people who are both judge and party.

We are far from the recommendations and numerous reports prepared since 1982 that called for an independent commission. We are also far from the 1993 red book promise of an independent commission, with people appointed by both parties, not just one that is both judge and party, but both the first nations and the government.

So we end up with a structure that is totally at the discretion of the minister. He is the one who will appoint people, so of course there will no biting of the hand that feeds. Obviously, then, the minister and the governor in council will have control over these two major institutions. They is being described as impartial, whereas they are totally partial. If people are appointed, it cannot be assumed that they will be torn between the interests of the first nations or the interests of the government, when it is the government that has appointed them. The first nations have nothing at all to say about these appointments.

It can take several years before specific claims are even made, because once again the decision on when to entertain them is the minister's. He is the one to decide whether they are acceptable or not. This is a mechanism put in place to slow things down, and God knows how slow the processing of specific claims is at present. There are still more than a thousand under consideration. Since the process was inaugurated 30 years ago, 230 specific claims have been settled. At that rate, it will take 150 years to get to the end of the process.

That is just the existing specific claims, not the ones that will be added later. As the first nations begin to inform themselves about their rights, carry out research and call upon the services of experts to find ancestral treaties, we are starting to discover treaties that give more and more rights to the first nations. What the government does not get, and what the Minister of Indian Affairs and Northern Deveopment does not get, because of his usual arrogance and cynicism, is that the first nations are not looking for charity; they are looking for respect of their rights.

They are seek redress for the numerous wrongs of the past, as well as for loss of part of their land, land that belongs to them. As long as the paternalistic and colonial mindset remains, one that appears to be shared by the minister, the parliamentary secretary and all his colleagues, nothing will be accomplished. The first step must be to recognize that there are rights, that there are treaties that confirm those rights, and that justice must be done.

The minister says that the process will be speeded up. How? No additional resources have been allocated to speed up the processing of these specific claims. There are no new resources. How can he say that the process will be speeded up? How can he say that there will finally be harmony between the parties, when he is ignoring the second party, when he is putting in place a system where he will decide, at his discretion, whether a specific claim is acceptable or not?

He will use his discretionary power to appoint the members of the commission and on the tribunals, but not in cooperation with the first nations.

How can he talk about harmony? I think we have to talk about confrontation instead. This minister is the minister of confrontation. All we can hope for is for this man to leave political life as fast as possible, so that someone else can take his place, someone with more competence, understanding and openness of mind. It takes an open mind to recognize that first nations have rights and that these rights must be respected.

It takes a open mind and also intelligence to know that justice must be done fully and not partially. It also takes intelligence to be sensitive to one's environment and to see that all first nations in Canada, without exception, from sea to sea to sea, as the Prime Minister likes to say, are against Bill C-6, as well as against Bill C-7 on governance. All first nations also had the opportunity to express their views on Bill C-19 a month ago. The great majority voted against Bill C-19.

What justification does the minister have, except to advance his personal agenda? This personal agenda is not the future of first nations, or the future of first nations children faced with educational and multiple addiction problems. What matters is not the future of the minister. We could not care less about his future. What matters to us is the future of first nations, and that of first nations children. The future of these children is not very bright. But the minister does not care.

What saddens me this morning it to see that, following the Erasmus-Dussault report, there was great hope. Since the negotiations on self-governance have gathered some speed a few years ago, there has been great hope. But this kind of bulldozer attitude, using time allocation to have a bill that on one wants passed, dashes hopes. That is wrong.

This bill contains not only this extraordinary discretionary power given to the minister but also a totally despicable principle that must be rejected. Since when, in a case that has yet to go before a court, are we already in a position to tell in advance that there is a ceiling on the claims and compensation, on the value of settlements for specific claims?

If that happened to us, if we were in court and a government tried to have legislation passed, whereby any non-aboriginal citizen going to court will be told that, unfortunately, even if he has a $25 million claim, the maximum value is set at $10 million, as provided by the Senate's amendment, I think that we would say that there is has been a miscarriage of justice somewhere. We would not have it.

Before a case is heard, claims are made, and the injury and the value of the granted lands or resources has been assessed, no ceiling can be imposed. Before even hearing a case, one cannot say what it is worth. Unless, of course, the case is settled in advance. I think that, in the mind of the minister and his government, all aboriginal cases are settled in advance. That is not improving their well-being, nor is it doing them justice; this is just controlling the expenditures of the Department of Indian Affairs and Northern Development.

I have some suggestions for the minister. If he wants to limit the expenditures of the Department of Indian Affairs and Northern Development, there is a good way to do that. Every year, for some years now, the present Auditor General and her predecessor said there was shameless waste in this department. The billions of dollars they claim they are spending on first nations go into the pockets of bureaucrats and go to wasteful projects. They go for travel abroad to see how other governments deal with their aboriginal peoples. That is where the money goes. There is a system in this department that operates something like the mafia, where public servants call the shots and do as they please.

You can try to get a breakdown of expenditures in contracts given by the Department of Indian Affairs and Northern Development Canada to communications agencies, for example, or management firms. You can try to find out who profits the most from the Department of Indian Affairs and Northern Development, besides the first nations. You will see it is not easy. In fact, it is impossible.

I tried to obtain the list of financial management firms who had co-management contracts with a number of reserves across Canada. It was impossible to get it. Why? Because things in this department are hidden. Someone is afraid, and rightly so, that the situation will be revealed, and we will see that it is not the first nations, nor their children, who benefit the most from the billions of dollars in the Department of Indian Affairs and Northern Development, but this is the system, the cronyism of this government.

So far, no one has convinced me that this is not true. I have made repeated calls requesting a breakdown of this department's expenditures and a breakdown of people who have contracts with this corrupt department—let us not mince words. Every time I made such a request, it was turned down.

I mentioned the ceiling that the minister had set at $9 million. The Senate, no more intelligently, set it at $10 million. Great work, great principle, Senate. The problem is the same; not a thing has changed. A ceiling should not be imposed before the case is heard.

If we look at the past 30 years and the 230 specific claims that have been settled, mostly in Saskatchewan, we see that the average is $18 million. And that is not direct compensation, what with all the time this takes at the Department of Indian Affairs and Northern Development with the current process, which is not going to change, because there are no supplementary resources. It takes several years before a case like that is settled. The $18 million also includes interest and legal fees, it is not the net amount given to first nations.

Consequently, justice is only partially done. Based on our legal system, this is a constitutional state. Either justice is done or it is not, it cannot be done partially.

Earlier, the minister said that we are the only country in the world to have this type of tribunal for specific claims. I can see why. There is not a civilized or industrialized country in the world, in 2003, that would want to implement a system where rights are denied to the first nations and where justice is done partially instead of fully. I can see why there are no such examples.

For the past several years, the United Nations have singled out Canada for its treatment of the first nations. UN envoys have toured the first nations communities in Canada for several years now, to verify the pitiful state of facilities and things like mildew in houses.

People are ill because the federal government is not doing its job. People are ill because the federal government is not investing sufficient resources to resolve problems related to unhealthy living conditions and unsafe drinking water. We are not talking about Africa, but Canada. Many communities have a problem with their drinking water.

Is it not strange to be dealing with a government in name only? The minister, who is a mere figurehead too, is saying that things will be fixed. At this rate, it will take 150 years to resolve currently pending specific claims. What kind of system is this? What will the outcome be? Hopefully, the minister will not be running in the next election, and we will do our best to see that he does not.

This morning, the minister made statements that were quite unintelligent, to avoid using other words that might cause the Chair to force me to withdraw my remarks, since I sincerely and honestly believe it. The minister said that if the first nations are not satisfied, they can go through the regular courts. Well. There is the Department of Indian Affairs and Northern Development, the minister's discretionary power, the discretionary power of the Minister of Justice, and a whole bunch of lawyers who will fight the first nations to ensure they are cannot resolve their specific claims.

For all these reasons, I am ashamed today to be here in Parliament with my colleagues opposite who voted to impose time allocation on this bill. This bill was unanimously rejected by the first nations, since it will lock us, over the next few decades, into legislation that is strangely reminiscent of the Indian Act. This is legislation harks back to colonial times, which does not make sense. This is 2003, not 1810.

[Specific Claims Resolution Act, November 4th, 2003]

Mr. Speaker, the minister just told us that he has been a parliamentarian for 15 years. It has been too long. He is now putting in place a process that will create systematic confrontation with first nations; this is exactly what he is doing. This process is not about conciliation, nor is it about understanding. He says that it will improve the situation.

Since when is justice done only partially? Either justice is done by assessing damages and determining adequate compensation without setting a limit beforehand, or justice is not done at all. Either we are in a constitutional state, or we are in a banana republic.

That is what is being done right now. Is it usual for damages to be assessed and a case settled even before it is heard? Do you know when that it supposed to happen? It is supposed to happen after the case has been heard. What we see here has nothing to do with justice. The government is just being paternalistic again, as it has been for 130 years with the infamous Indian Act.

Can the minister answer this question : is there anywhere in the world where limits are set on damages before a case is heard?

[Specific Claims Resolution Act, November 4th, 2003]

Mr. Speaker, I heard the minister say he was establishing an open system. It is not; it is a completely closed system. For example, it is closed, as far as the ceilings on claims is concerned. With the Senate amendment, the ceiling will be increased to $10 million. And yet, the average individual claim settlement in the past 30 years was over $18 million.

He says it is an open system. But it is closed, as far as accepting the first nations' individual claims is concerned. The minister will be the sole judge of whether or not such first nations claims will be accepted. He says it is an open system, because it allows court challenges if the commission does not work properly. Well, yes. Once again, he will decide on whether individual claims that are referred to the Department of Justice are acceptable.

We know very well what will happen with the Department of Justice. Technical evidence will be introduced. Things can be drawn out for 15 or 20 years. There are still 1,000 individual claims that have not been settled by the existing process. Things will not improve with the process proposed by Bill C-6. No additional resources are being allocated to settle the hundreds of individual claims that already exist.

The minister says that there are no systems in the world comparable to the one we are going to establish. Of course not. Apartheid ended in Africa some years ago, and he is recreating apartheid for the first nations.

Bill C-6 is goes against all the work that has been done since 1982. We are talking about a commission that is independent from the government, a government that is both judge and party. The first nations understand that. The minister must stop saying that he is speaking for the first nations and the chiefs of the first nations. Less than a month ago, in Vancouver, there was a first nations summit meeting. The chiefs present, including the grand chief, were unanimously opposed to Bills C-6 and C-7, and most of them were opposed to Bill C-19 as well.

[Specific Claims Resolution Act, November 4th, 2003]

Mr. Speaker, this motion reflects a confrontational strategy and is antidemocratic. It is a betrayal of history, a repudiation of the spirit and the letter of the long-standing treaties signed by our ancestors and the aboriginal nations. The government should be ashamed of itself. It should be ashamed to keep on trating the first nations like children, as it has been doing for 130 years with the infamous Indian Act.

I have a question for the Minister of Indian Affairs and Northern Development. How can he live with himself after doing this, after shoving a bill the first nations do not want down their throats?

[Minister of Finance, November 3rd, 2003]

Mr. Speaker, does the Minister of Finance not find it odd that, in March, he was in the Caribbean aboard the same boat as a member of the Brewers Association of Canada, when just one week earlier, his budget supported its recommendation at the expense of the microbreweries?

All we are asking the minister is to tell us how much it cost for him and his family to stay on the boat, and to produce all the receipts.

[Minister of Finance, November 3rd, 2003]

Mr. Speaker, last week, the Minister of Finance stated that he had paid for his trip to the Caribbean and his holiday aboard a sailboat with Sandy Morrison of the Brewers Association of Canada, whose counsel he had just followed in his budget at the expense of the microbreweries. The minister told the House that he had paid for his plane tickets.

Can the Minister of Finance tell the House how much it cost for him and his family to stay on this luxury boat, and in what amount the cheque in repayment was made out for?

[Federal-Provincial Fiscal Arrangements Act, October 31st, 2003]

Madam Speaker, I am pleased to speak on this important issue, the federal equalization program.

With this bill, the government wants the current five year equalization plan, which is to expire on March 31, 2004, to be extended for a year at the most, but perhaps just a few months. This would give the provinces and the federal government time to agree on a new five year equalization plan.

I can understand that the government wants to gain some certainty with respect to the equalization payments for 2004, given the completely unpredictable political context, which has been sending this government in two directions ever since the member for LaSalle—Émard decided to pull the strings from behind the curtain, and the outgoing Prime Minister lost any credibility in terms of leading the government and effecting the necessary changes, very quickly, to the equalization plan for the next five years.

Before explaining what needs to be done for the next five years in the equalization program, and the major changes that need to be made—because for this program and this governmental approach, it would take major changes—allow me to explain, for the public's benefit, what equalization is.

It is very complex and involves formulas that contain more than 300 variables. There are 33 tax bases to be considered in each of the Canadian provinces and in Quebec. It is very complicated.

Nonetheless, the equalization principle is simple and has been enshrined in the Constitution. Very few government programs are to be found in the Constitution. Nonetheless, the Constitution Act, 1982, recognizes equalization.

Why? Because it is a principle whereby each province in Canada, from east to west, can provide services such as health and education that are of equal quality, but not similar; in other words, equal quality from one province to the next. This applies to health and education.

To accomplish this, they came up with this equalization payment program, which uses complicated calculations to determine the fiscal capacity of each province, that is its capacity to collect taxes of various types from its taxpayers. Based on this capacity to generate funds for the provincial coffers in order to fund services, certain provinces are evaluated as disadvantaged compared to others, as far as providing quality services is concerned. As a result, there is a risk that service quality will not be uniform from one province to another. Briefly put, the equalization payment program works in favour of those provinces that would otherwise be the most disadvantaged, in order to establish, if not equal service quality, at least similar standards.

Toward the end of my speech I will address the payments per province. Federal government payments to the provinces are made on a per capita basis.

In other words, entitlement to compensation or equalization payments is based on the province's population. As a result, when we look at the advantages one province can gain compared to another as far as equalization payments are concerned, the amount per person is what must be compared, and not the total amount.

I will get back to this point. I have heard reference all through the debate about the extraordinary benefits Quebec draws from the equalization system. You will be surprised because Quebec is, out of all the provinces that receives such payments, the one that gets the least per capita. Such is the spirit of the system.

Obviously, the size of our population gives us a higher payment, but what needs to be looked at is the compensation for fiscal shortfall per capita, not the overall amount.

This equalization program is reviewed every five years. The last renewal was in 1999. Shortly before 1999, the federal government and the provinces tried to come to an agreement on a new, less complex, more efficient and less unpredictable formula. They were unsuccessful at the time.

This means that in 1999, the equalization program we still operate under today and which will be in effect until March 31, 2004, was basically the same as it was in 1994. It is extremely difficult for one province after the other to come to an agreement with the federal government on new data and a new framework for equalization.

There are major flaws in the present system. These are the same flaws that existed ten years or so ago. Allow me to list them because that is what is on the table for the federal government and the provinces to discuss in preparing the fiscal equalization program for the next five years.

One of theses flaws concerns the equalization standard. Briefly put, there is need in this program to establish a standard on the basis of which the federal government can provide assistance to a province under the equalization system. To do so, the capacity of each province to collect taxes per capita in order to finance services has to be determined.

The fiscal capacity of the provinces is determined based on five provinces instead of all ten. These provinces are Quebec, Ontario, Manitoba, Saskatchewan and British Columbia. An average capacity is calculated for each province. For those provinces that fall below the standard, equalization makes up the difference between their own fiscal capacity and the five province average.

Let me just give you one example. If the fiscal capacity per capita of Manitoba for 2001-02 was estimated at $4,834, this meant that each person in Manitoba was expected to pay $4,834 in taxes. But in the five standard provinces, the average fiscal capacity was $5,900.

In 2001-02, the shortfall for a province like Manitoba was approximately $1,000. This meant that Manitoba was not in a position to get the maximum tax contribution from its taxpayers to finance quality services comparable to those generally found in Canada. The fiscal capacity of each province is compared to the average for Quebec, Ontario, Manitoba, Saskatchewan and British Columbia.

The problem with using this benchmark that is calculated based on only five provinces is that the other five provinces and the territories are forgotten. Leaving out Alberta, for example, Canada's richest province, means that one ends up underestimating the standard, the average point at which intervention is required in some provinces to compensate for the incapacity to generate tax revenue, in order to provide comparable levels of public services.

If the standard were established on the basis of ten provinces, not five as is the case at present, we would be in a situation where the payments to reduce the gaps would be much higher. For example, if the average fiscal capacity of all ten provinces—that is, the capacity in each province to generate taxes, including income taxes, to finance their services—were considered, the average would have been $6,237. Some provinces would have found themselves with a fiscal undercapacity, that is the potential to seek more taxes up to $6,237. Interventions would fill in the per capita gap.

Let us take Quebec as an example. In 2000-01, it was calculated that each Quebecker could provide taxes and income taxes in the amount of $5,180 per person.

If the standard for all provinces were $6,237, we would have needed $1,100 in equalization payments per resident. But taking the average of five provinces that I mentioned earlier, this comes out to around $730 per capita.

This ten province standard is a much better reflection of reality than the five province standard. Each province should be included in the average and the amount needed should be calculated fairly. That would mean that the differences in wealth to finance reasonably comparable levels of public services between the provinces would be smaller than they are at present.

The five province average means that, despite the equalization payments received by Quebec—I was using it as an example, although I could have used other provinces, because many receive equalization—there is still a gap of 8% between the fiascal capacities of Ontario and Quebec, for example.

This means that the goal of reducing as far as possible, if not eliminating, differences in wealth and providing comparable levels of public services from province to province, is not achieved. Still, if we used the ten province average as the standard, we would have a gap much smaller than the 8% one we now see.

The second problem with the current equalization program—and we hope that, with regard to the new program, the federal government will be open to our comments—is that there is currently a ceiling on equalization payments. This ceiling was set arbitrarily, in 1999, at $10 billion indexed to inflation. However, when equalization payments exceed this amount, the federal government asks the provinces to repay that amount.

The problem concerns the repayment. There is a ceiling, which limits how far the gap between the provinces can be closed, which is the purpose of equalization. Furthermore, when repayment is requested, the amount is based on the proportion of equalization payments the province received several months earlier.

I want to use Quebec as an example. I mentioned earlier that payments are calculated on a per capita basis, but since Quebec has the second largest population in Canada, it receives 62% of all equalization payments.

When cuts are made, they are not done based on the amount per capita in excess of the ceiling, they are based on the proportion of equalization payments Quebec has received, which is 62%.

Since 1982, the ceiling has been exceeded five times. This cost the provinces $3 billion, although normally they should have received the full compensation amount.

The third problem is related to tax bases. To establish each province's capacity to impose taxes, a list of government sources of revenue is drawn up. This means municipal, provincial and any other government in the province.

However, the 33 sources of revenue are often poorly defined for each province. They are often approximate. An equalization payment is made one year, followed by numerous revisions that can be made within 30 monthsof the first equalization payment. As a result, there can be enormous variations.

The provinces are struggling to keep their heads above water because, often, they are asked to repay as much as $600 million to $800 million at one time, because their fiscal capacity was incorrectly estimated. Their fiscal capacity was underestimated. So they received a higher payment than they should have, and then the correction is made 30 months later. These corrections leave enormous holes in the revenues of the governments of Quebec and the provinces.

This needs to be corrected. The 33 types of taxes that are used for establishing the fiscal capacity of each province have to be reviewed. There has to be an end to the use of guesstimates, or approximations, simply because no one can be bothered to get the real figures.

Take property taxes for example. In calculating the equalization payment for each province, instead of finding out the real property taxes paid by taxpayers, the figure used is the average income per capita for each province. However, everyone knows that there is often a huge gap between the average income per capita and the property value of the homes which generate property tax.

Everyone knows that homes in Toronto, Vancouver, or Montreal do not have the same value and do not generate the same property tax revenue for their market value or median value. That is why the property tax base is not used for each province; income is used instead.

I will give a simple example. Using the real property tax value for Quebec in 2000-01 would not have resulted in a 22% difference in what was assessed as the capacity to generate revenue from property tax compared to the standard in the five provinces. The difference would have been closer to 35%.

This means that Quebec's fiscal capacity was overestimated because income was used rather than the proper criterion: property value. Had property value been used instead, we would have received a higher amount per capita. As far as property taxes are concerned, they would have seen that there is a large gap between Quebec and the five province standard.

This is just one of the problems, There are 33 sources of taxation revenue included in the highly complex equalization formula, and the whole process needs to be reviewed. Proposals for this have been made by the Government of Quebec and the provinces of Canada. Their purpose is to simplify administration of this program, to make it more predictable, and also to make it clearer as far as the variables selected are concerned, namely the various kinds of tax revenues used in calculating entitlement to equalization payments.

This great variability can have a variety of effects, and I will give a few examples of these. We are told that the equalization payments fluctuate because a lot of revisions are carried out and the approximations of variables used are poorly defined. Let us look at just one example.

In 1997-98, equalization payments increased by 3.1%. One year later, in 1998-99, they increased by 27.3%. The following year, they decreased dramatically to 18.5% and, in 2000-01, rose again to nearly 30%. Such a program is unmanageable. The difference in wealth between the provinces cannot be this huge over a period of five years. That is impossible. It is due to the volatility of the data used.

As I said, this is reviewed every 30 months and, in each province, equalization estimates are reviewed eight times a year to update each source of tax revenue. It makes no sense to have a program like that. Besides, it is causing problems for the provinces.

We hope that, by March 31, 2004, we will have a new equalization program, these problems will have been resolved and the program scheduled to end at that time will not be extended for too long. In fact, I think I heard the parliamentary secretary mention something about retroactivity to March 31, 2004, if the new five year program were implemented a few months after that date.