Mr. Speaker, the bill now before us is another example of the democratic deficit we are now experiencing and which is paralyzing the entire parliamentary machinery.
Bill C-54, in fact, was introduced in order to temporarily extend the current equalization program until March 31, 2005. Why? Because the current government is unable to do its job properly; because the current Prime Minister is living in the shadow of his successor; and because the Liberals do not have the courage to put an end to this scheme.
Why should we prolong the existing equalization program? Because the current Prime Minister is secretly planning to put a sudden end to our work in this House in order to avoid replying to our questions, and because his successor is working behind the curtains and staying out of sight in order to avoid answering our questions. It is so obvious that all the journalists are talking about it. Or maybe the Prime Minister is intending to slip his bill under the Christmas tree that already stands in the main hall of the Centre Block? In any case, I am not sure that the finance ministers from Quebec and the provinces will be pleased with this shopworn present.
Just in passing, let me note that it is not only the department stores that get their Christmas decorations out earlier and earlier. Canada's Parliament is doing it too, even though Hallowe'en has not yet come and gone.
As for the bill at hand, the government intends to get it passed quickly, before we rise, so that the provinces are not penalized. That argument does not hold water. For quite a while now, the provincial finance ministers have been calling for equalization reform. Need we recall that in June of this year, at a meeting in Halifax, the ministers unanimously agreed on the urgency of reforming Canada's equalization system. Clearly put, such a reform is expected to be one means of correcting the fiscal imbalance between Ottawa and the provinces.
For the benefit of people listening to the debate, we should explain what the equalization system is. The public is regularly subjected to volleys of figures and heated exchanges over the operation of the system, but is sometimes pretty much in the dark as to what it really is. I would like to take advantage of this debate, not only to help them understand a little better how the system works, but also to illustrate why an overhaul is long overdue.
The equalization system was put in place in 1957 to ensure that all Canadians and Quebeckers, no matter where they lived, would have access to government services of comparable quality. From west to east, some provinces are very rich whereas others are less fortunate. Provincial governments have to live with the decisions made by the Liberal government, which, under the direction of the member for LaSalle—Émard and future Liberal leader, has put a stranglehold on the provinces andstarved them out.
To bridge the gap between the rich provinces and the poor provinces, Ottawa gives the latter what is called equalization payments. These are cash payments, with no strings attached, which means that the provinces can use that money as they see fit.
Even if the Liberals opposite often talk about federal funding, it is actually our money. It comes from the federal taxes we all pay. That money belongs to all Canadian and Quebec taxpayers, which includes those from the poor provinces. In Quebec, it represents 60% of all our taxes.
It is true that the poor provinces send less money to Ottawa than the rich provinces do. However, the purpose of equalization is just that: to bridge or reduce the gap between the rich and the poor. Equalization is a measure for sharing wealth.
That being said, equalization must not be confused with the Canada health and social transfer, commonly referred to as CHST in our parliamentary jargon.
This transfer payment represents the federal contribution to health, education and social assistance. Since 1993, the year the Bloc Quebecois came to the House, it has constantly condemned the federal government for neglecting its responsibilities in this regard. The federal withdrawal from health has caused the collapse of the health system across the country. The current Liberal government, through its arbitrary decisions, and the future Liberal leader, the hon. member for LaSalle—Émard, pose the greatest threat to the universality of health care. We could talk about this for hours.
Now what about the equalization program and this bill? Over the years, the equalization program has been watered down. As Claude Picher, a columnist with La Presse , wrote, “There is a preposterous complicity underlying the calculations; the program is unstable and abstruse to the point of absurdity”. The dictionary defines abstruse as something bordering on folly.
Instead of immediately undertaking a serious reform of the system, the federal government has decided to spend more time, up to one year, negotiating and passing the equalization bill for 2004-09.
It is mental torture to try to decipher the calculation by which a province is or is not entitled to receive equalization payments. It is torture because entitlement is based on a list of 33 revenue sources, each subject to a series of complex calculations. The list includes sales tax, personal income tax, property taxes, fees and royalties, corporate income tax, taxes on gasoline, tobacco and alcohol, capital taxes and so on.
These complex calculations have numerous deficiencies, which led Mr. Picher to write that only a few rare specialists in all of Canada are able to find their way through this mathematical maze.
If that was Claude Picher's conclusion, it is not surprising that our constituents are totally in the dark.
Once we set aside the squabbling among those provinces not entitled to equalization, like wealthy Alberta, so longingly eyed by the hon. member for LaSalle—Émard, British Columbia and the others, we must focus on the work of federal officials. This is highly technical work, and endless hours are required to play this highly technical shell game. Then there are the endless discussions on how to interpret the mathematical formulas.
It is so complicated that, in 1999, Quebec finance minister Bernard Landry found out while preparing his budget that he could get more money with a technical adjustment. That adjustment would give him $1.4 billion more than expected in equalization payments.
But, oh horror, in 2002, Pauline Marois, the finance minister of the day, received a note indicating that an adjustment to property tax calculations would create a $500 million shortfall in her budget. A bit like a Monopoly game: one year you are high roller, get to pass Go and claim the jackpot, while the next time you have to pay it all back. One year, $1 billion more; the next, $500 million less. How can anyone expect the finance ministers to plan with any degree of certainty?
Moreover, the present Quebec finance minister, author of a report proving the existence of a fiscal imbalance in Canada, is one of those calling for a reform of the equalization payments. He says:
We are expecting a lot of changes... if the mechanism were standardized, the provinces would no longer be at the mercy of the good will of the federal government and of political games.
Instead of preparing to pack up and leave, thus avoiding having to answer our questions and evading political debate, the Liberal government needs to get down to real business. The Prime Minister is quicker at absolving his ministers of allegations of ethical misconduct than at solving real problems.
Do the provinces have to raise the Irving family flag on their legislative buildings before they can get the Prime Minister's attention? The Prime Minister has a mess in his ranks that he needs to clean up, but the mess in the equalization payment system also needs cleaning up.
Recently, the leader of the Bloc Quebecois said the following:
This can mean but one thing: the government does not feel that it possesses sufficient credibility at this time to respond to the provincial governments' call for negotiations. What an admission of weakness. We are being told, “Well now, we can give a year's extension, but that is all we can do”. The orders certainly appear to be coming from elsewhere, that is obvious.
He continued:
This is another example of how the government is completely paralyzed, powerless, and unable to address affairs of the state, because the real prime minister is behind the curtain and the one in power refuses to leave.
I saw something interesting on the news today. As a result of the debate on our motion calling on the Prime Minister to leave as soon as possible after November 14, 2003, we learn that the Prime Minister is believed to entered into talks with his likely successor with respect to leaving earlier. Our motion was defeated, but it has had an impact.
Let us come back to equalization. Currently, in order to establish the threshold for provincial entitlement to equalization, the fiscal capacity of five provinces is taken into account. They are British Columbia, Manitoba, Ontario, Quebec and Saskatchewan. Provinces with a fiscal capacity below the average of these five are entitled to equalization. This is not a representative system, since it excludes Alberta and the four Atlantic provinces and thereby disrupts the balance in determining the average.
The provinces are asking that the formula be changed to take into account the fiscal capacity of all ten provinces. In addition, the payment review mechanism is such that it is very difficult for the provinces to forecast the amount of equalization payment they will be entitled to. Therefore, the provinces are calling on Ottawa to make the payments more predictable.
We are proposing that the adjustments based on new statistics be automatically spread out over three or five years, rather than being required the year in which the statistics change, thereby reducing the volatility of the adjustments. This would avoid the type of situation, which occurred in Quebec and which I described earlier.
The provinces also want the calculations for the program, which has 3,000 variables, to be simplified to ensure greater transparency. They are also asking that all general revenues, not just some of them, be included to better reflect reality.
Along the same lines, they are asking that the calculation be reviewed for some of the 33 sources of revenue that are currently used to determine the provinces' fiscal capacity. All this clearly illustrates the work that needs to be done to clean up this mess.
The government's attitude, or rather the Liberals' stubborn insistence on making the wheels of government move exceedingly slow, is a dangerous nuisance. Instead of negotiating a reform of the equalization program with the provinces, the government is introducing a bill to maintain the status quo and shirk its responsibilities.
We have good grounds to believe that there will be a general election next spring, just when the current equalization agreement is supposed to come to an end. Since issues and interpersonal conflicts are making relations between the Prime Minister and his successor rather tense, the government has decided to play it safe, that is to extend the current agreement and avoid one of its responsibilities, which is to reform equalization.
Throughout this debate, we will have the opportunity to spotlight the report of the Séguin commission on fiscal imbalance. Need I remind the House that Mr. Séguin is the new Quebec finance minister. His report concluded, among other things, that we need to restore fiscal balance, improve equalization, put checks and balances on the federal spending power and prevent any future cause for imbalance.
In conclusion, let me add that if we were sovereign, if the taxes we pay in Quebec stayed in Quebec, we would not have to deal with this whole mess.
