Tony Valeri

[Supply, October 21st, 1997]

Madam Speaker, let me start by saying that today's motion has more to do with some obsolete NDP theology than it does with any of today's economic realities. It seems to be almost an article of faith to the hon. member that our government is “blind to the human tragedy of 1.4 million unemployed Canadians” and the supposed proof of our sin is that we have succeeded in meeting our target for dramatic deficit reduction and consistent inflation control.

I remind the hon. member of an old saying that there are none so blind as those who will not see. It is very clear that this opposition party cannot see or understand some of the fundamental facts of life about jobs, about deficits, about inflation and about responsible government.

Members of the government and members in this House are concerned about the opportunity that Canadians have for employment. Another fact to put on the table is governments cannot create jobs for every Canadian in this country. It is only the marketplace that can do that through the work of the entrepreneurs and their companies creating the products and services that people need and can pay for.

Two of the worst barriers that government can put forward are to let deficits rise and inflation get out of control. High deficits and inflation are a guaranteed recipe for economic weakness and job loss and most Canadians understand that. They have seen destructive dynamics at work in the past and they are finally seeing government turning the corner and starting to see the reduction of deficit and low interest rates.

Deficits mean nothing more than higher taxes tomorrow to pay for the money the government has borrowed. It is the prospect of high inflation that pushes interest rates up.

It is not an ideology. This is a matter of hard economic reality. Letting deficits and inflation rise pushes up taxes and interest rates and puts conditions in place that drive down growth and job creation. That is irresponsible government.

The hon. member for Cumberland—Colchester went on about the success of the Mulroney government and how Canadians are bowing down to the great policies of that government. The past administration had no political will to reduce the deficit, to put conditions in place to encourage jobs and growth.

I would go as far as to say that the prior administration could not hit the side of a barn as a target. It proved that in all the years it was in office.

When we came to office the government committed itself to breaking the vicious cycle of deficits, debt and inflation. We knew that it was the best and surest way to spur the economic growth which produces jobs, good jobs, sustainable jobs. It was the best and surest way to make it possible for government to stop raising taxes and ultimately, as our finances improved, be in a position to reinvest in Canadian priorities.

The finance minister told Canadians in last week's economic and fiscal update that the plan is working. We have achieved a dramatic turnaround in our national deficit burden, with the lowest deficit in 20 years. With the commitment of the government and the Bank of Canada to firm targets, inflation is at its lowest sustained level in 30 years.

These are not abstract achievements. There is no plot by bankers and bureaucrats to oppress workers and worsen employment, as the hon. member's motion implies. The proof is clear and concrete.

In 1995 we began hitting and beating our deficit targets. As inflation remains stable, short term interest rates have dropped 5 percentage points. That means falling below and staying below U.S. rates.

More important, long term 10 year bond rates are down nearly 4 percentage points over the same period. They have been below U.S. rates since February. That is performance which is unprecedented in Canada's post-war history.

What makes this so important? It involves more of the facts which today's motion does not understand.

While the Bank of Canada has some influence on short term interest rates, it is the market and only the market that sets the long term rates. What the marketplace is saying about Canada's long term rates today is that our prospects for continued growth and stable inflation are among the best in the world.

Private sector economists are now saying that Canada's growth over the next two years will be at its strongest level in decades. In fact, they predict we will have the strongest back to back growth of any of the group of seven leading industrial economies, better than Japan, larger than Germany and stronger than America.

We are seeing some of the benefits of low interest rates being delivered now. Five year mortgage rates are at their lowest level in decades. Housing starts are up 24% over 1996 because of those interest rates. People are buying new houses. That means new jobs in construction and manufacturing.

Low rates have also helped to increase business investment. It has surged over 25% from last year. That means plants being built and people being hired.

Consumer confidence is the highest it has been in over eight years. Again, that means people buying cars and other goods, creating more jobs.

Since the beginning of this year 279,000 new jobs have been created. That is the economic plan at work.

I know that members have heard of this outstanding outlook before in the House, but I want to say that it will be repeated in the coming months. It will be repeated because these are the facts that the various opposition parties want Canadians to forget and ignore. They want to blind Canadians to these facts, or at least denigrate and downplay them. These facts prove that our balanced, consistent approach to growth and job creation is working.

Let me be specific about a couple of issues which are tied to today's motion. The hon. member goes on to condemn this government about being obsessed with future inflation. Inflation takes time to build a head of steam. The Bank of Canada eased off the gas pedal to avoid having to jam on the brakes later on. That is the best way to avoid the painful boom-bust cycle which Canadians saw in the 1970s and 1980s.

Hon. members talk about pain and suffering. What about the pain and suffering that Canadians felt when they came crashing down through these boom-bust cycles because the monetary policy was not flattening out those cycles and ensuring they stayed consistent so that Canadians would not suffer through them?

This week a Canadian auto workers union economist said that economic growth and lower interest rates alone would have allowed us to meet our deficit targets. In other words, we did not need to cut any government spending. In fact, just freezing it would have allowed us to meet our targets and that would have been good enough. There are some real problems with this myopic and partisan analysis.

The finance minister always made it clear that our deficit targets were never intended as the most we could do but were the least we could do. It is always hoped that we would do better. It is absurd to suggest that meeting deficit targets is good enough and that there is no benefit in doing better than that.

The minister announced an $8.9 billion deficit, down from the projected $24 billion. That means there is $15 billion less borrowing than we originally forecasted. That means that $15 billion is not being added to the debt and that $15 billion will not be costing taxpayers hundreds of millions of dollars of interest charges. That is a real bottom line benefit to beating our targets.

A private senior economist said earlier in the week that interest rates would not have fallen to 30 year lows had financial markets not been convinced the federal government truly had spending under its control.

We recognize that unemployment remains tragically high and that we have to do more. It is a commitment of the government. It was an important part of the finance minister's update last week.

We live in a dramatically evolving world economy, an environment where the foundations for employment are changing. It presents new challenges and responsibilities for government.

Let me close by saying that the government can make a difference in some key areas. First, a sound economic framework is essential for ensuring sustained prosperity that creates more and better jobs. Second, promoting knowledge and innovation in the economy is key to ensuring a more positive economic future. Third, the government has a responsibility to ensure that Canadians not only survive in an evolving economy but are well equipped to survive.

All Canadians need and deserve a government that is truly committed to economic progress, to growth that creates real jobs and generates new revenues which can help us preserve valued programs such as health care and to creating conditions for economic growth.

That is what we are committed to do. That is the road we are constructing. That is the destination we will help Canadians reach. As a result, more jobs will be created and there will be greater security for today's citizens and for our children.

[Canada Pension Plan Investment Board, October 6th, 1997]

Mr. Speaker, today it is my privilege to begin debate on Bill C-2, legislation that will secure the Canada pension plan for Canadians now and in the future.

This legislation will enact the joint federal-provincial agreement reached last February. It reflects a consensus for change and a shared commitment to ensure that the CPP is there, that it is sustainable and affordable for today's working Canadians and for our children.

As joint stewards of the Canada pension plan, the federal government and the provinces are squarely facing up to our collective responsibilities to deal now with an issue facing us down the road when the baby boom generation starts to retire.

In his February 1995 report, the chief actuary clearly showed that without modifications to the Canada pension plan, the CPP fund would be exhausted by 2015 and that contribution rates would have to soar to over 14 percent to cover the rapid growth in cost.

In public consultations held in every province and territory across this country last year, Canadians told their governments they want to be able to count on their CPP pensions. They told us they want the CPP fixed now and they want it fixed right. They did not want it privatized and they certainly did not want it scrapped. They told us to do this in a way that does not pass on an insupportable cost burden to younger generations.

A full report on the consultations was made public last year and Canadians were clear. They told their governments to preserve the CPP by strengthening its financing, by improving its investment practices and by moderating the growing costs of benefits.

The changes reflect just that. This legislation demonstrates that we are acting decisively to fulfil our commitment to secure this pillar of Canada's retirement income system.

What have we done to strengthen the plan's financing? When CPP was introduced in 1966 it was financed essentially on a pay as you go basis.

At that time, the prospects of rapid growth and real wages and labour force participation promised that the CPP could be sustained and remain affordable.

With low interest rates there was little value to be gained from building up large reserve funds. The pay as you go system made sense given these circumstances. Since then, the slowdown in wage and workforce growth and higher real interest rates have completely changed the circumstances in which the CPP must be financed.

The pay as you go financing is no longer fair and no longer appropriate. Building up a larger fund, or what has been recently called and referred to as fuller funding, and earning a higher rate of return through investment in the market are now necessary to help pay for the rapidly growing costs that will occur once the baby boomers begin to retire.

Accordingly, we have made a fundamental change in the financing of the Canada pension plan. The CPP will move from pay as you go financing with a small contingency reserve to fuller funding to build a substantially larger reserve fund.

The fund will grow in value from about two years of benefits currently to about four to five years of benefits. To do this beginning this year we will start accelerating the pace of contribution rate increases beyond what is currently legislated so that people begin to cover the cost of their own benefits and stop passing increasing shortfalls on to the next generation.

CPP contribution rates will increase in steps over the next six years until 2003, from the current legislated rate of 5.85 percent to 9.9 percent of contributory earnings, and then will remain there steady.

This 9.9 percent rate is projected to be sufficient to sustain the CPP with no further rate increases. It will pay for an individual's own benefits plus the unfunded liability. It is the fairest way to honour our commitments. The costs of pensions will be spread evenly and fairly across generations.

In 1997 the combined contribution rate for employees will increase from 5.85 percent of covered earnings to 6 percent. The increase for a worker at the average range will total no more than $24.

We have all read the papers and watched the news so let me take this opportunity to address some of these erroneous headlines and some erroneous statements by some hon. members, some that I heard a few moments ago.

They claim that this is the biggest tax grab in history and that CPP rates will jump by 73 percent. We hear it here and I would ask that the hon. members would come very soon to provide the accurate information Canadians are asking for.

This is not a tax grab. Contributions to the Canada pension plan are a component of Canadians savings toward pensions.

I know it is difficult for members of the opposition to understand that. They go into a separate fund, not government revenues, and because of recent changes the Canadian people have suggested will now be invested like other pension plans.

Let us get the facts straight. Contributions will rise 73 percent over the next six years to 9.9 percent but they will not rise to the 14.2 percent that the chief actuary indicated would be necessary if we did not fix the Canada pension plan.

This 9.9 percent rate is also substantially lower than the Reform Party proposal to replace the CPP by a system of mandatory RRSPs. Under the Reform proposal, the next generation or two of Canadians would have to pay twice, once for their own pensions and again for pensions of those who are already retired.

Yes, 9.9 percent is a real cost and no one denies it. By paying that cost now we will save ourselves and our children from larger, more expensive hikes in the future. By moving now, premiums will not have to exceed 9.9 percent.

Under the existing legislation CPP contribution rates are already slated to go beyond 9.9 percent. They are scheduled to reach 10.1 percent in 2016.

The chief actuary has shown that if we do not move fast the CPP will be bankrupt in 2015 and the rates will have to soar to 14.2 percent by 2030. That is a 240 percent increase. Only if we act responsibly now can we avoid bankruptcy and truly intolerable CPP rates later; a 73 percent increase now when a number of generations are sharing the burden or a 240 percent increase for our children's generation. I submit that we have made the right choice. Let us start paying our way. We owe it to our children and we owe it to our grandchildren.

Let me point out that the problems we are facing with our pension system are not unique to Canada. Many OECD countries are also making changes so that their pension systems are more sustainable. Some international organizations have recommended moving toward the increased funding of public plans and that is exactly what we are doing.

With this new fuller funding approach the CPP fund will grow substantially over the next two decades. A new investment policy therefore was necessary to improve the way CPP funds are invested and to secure the best possible return for plan members.

Up until now CPP contributions not needed to pay for benefits have been loaned mainly to the provinces at the federal government's interest rate on long term bonds. In this legislation, CPP funds will now be invested in a diversified portfolio of securities, prudently and at arm's length from government. This means that CPP funds could be invested in stocks, in bonds, including provincial bonds, and also in mortgages. Instead of being loaned in their entirety to the provinces, we are now in a position with the passing of this legislation to take our investment philosophy of the CPP and make it more market oriented. It is consistent with investment policies in most public and private pension plans in Canada.

Based on prudent assumptions the CPP can secure an average long run return of almost 4 percent a year above the rate of inflation. That compares with only 2.5 per cent assumed under the current policy by the chief actuary. These higher returns will be an important plus since members on this side of the House and on the other side clearly acknowledge that every dollar that is not earned in investment requires a contribution from Canadians. The higher returns will be an important plus since we know that working Canadians want to ensure that they contribute to a plan that provides an effective and efficient rate of return and is sustainable in the long run.

During the cross-Canada consultations Canadians told us they wanted the Canada pension plan to run like a private pension plan. Accordingly, the fund will be managed independently from government by a 12 member investment board. This investment board is accountable to Canadians and their governments through regular reports.

The board will be subject to investment rules similar to other public and private funds in Canada. Therefore the transparency for Canada pension plan of the future is that same transparency that is in private plans throughout the rest of Canada.

The foreign property limit for pension funds will strictly apply to the Canada pension plan, but there are some transitional issues that need to be addressed. To ensure the fund's smooth entry into the market, all of the board's domestic equity investments will be selected passively, mirroring broad market indices. This passive approach will be re-evaluated at the next Canada pension plan review scheduled to begin in 1999.

From now on—I am sure the members of the opposition will agree with this—whenever provincial governments borrow from the Canada pension plan they will pay the same rate of interest as they do on their market borrowings.

As a transitional measure reflecting historical arrangements, provinces will have the option of rolling over their existing CPP borrowings at maturity, and at market rates, for another 20-year term. For the first three years provinces will also have access to 50 percent of the new CPP funds that the board chooses to invest in bonds. But after this initial period new Canada pension plan funds offered to provinces at market rates will be in line with the proportion of provincial bonds held by pension funds in general. This will ensure that the funds invested in provincial securities is consistent with market practice.

In order to moderate rising CPP costs we have tightened the administration of benefits and changed the way some benefits are calculated. First, let me tell you what remains the same.

Anyone currently receiving Canada pension plan benefits, be it retirement pensions, disability benefits, or survivor benefits, can rest assured that they will not see these benefits affected in any way. All benefits, now and in the future, will remain fully indexed to inflation. The ages of early retirement, normal retirement, or late retirement all remain unchanged.

What has changed? Let me describe them.

Effective January 1, 1998 retirement pensions will be based on the average of the year's maximum pensionable earnings in the last five years prior to starting the pension. In the past they were based on a three-year average. The amount of the pension will continue to be dependent on how much and for how long a person contributes to the plan.

The administration of disability benefits will be further improved. The appeal process will be streamlined and the legislation will be applied more consistently.

The administration of disability benefits and the changes I have just proposed address concerns that have been raised about the rapidly escalating costs of the disability benefits.

To be eligible for disability benefits workers must show a greater attachment to the labour force. They must have made CPP contributions in four of the last six years prior to becoming disabled. At present a person needs to make as little as two CPP contributions during the course of the three years prior to applying and qualifying for disability benefits.

During the consultation there was discussion—and Canadians have provided guidance to the government—that disability benefits should be removed from the Canada pension plan. That is not what Canadians have told their governments over the consultation period. They have said the government must keep disability as a part of the Canada pension plan, but they did call for consistency across the board in the administration of disability benefits and that in fact is what this legislation is proposing.

When disability benefits are converted into retirement pensions at age 65 in the future, they will be based on the year's maximum pensionable earnings at the time of disablement with subsequent price indexing rather than on the YMPE at age 65. This measure is consistent with how other CPP benefits are calculated and will apply only to people not yet age 65.

The rules for combining the survivor and disability benefits and the survivor and retirement benefits will be largely the same as those in existence before 1987. Changes will limit the extent to which these benefits can be added together.

As part of the CPP consultations and review there were discussions about eliminating the death benefit. The death benefit will continue to be equal to six months of retirement benefits, but up to a maximum of $2,500 rather than the current $3,580. The option to eliminate the death benefit was rejected by the federal and provincial governments. There are those who would purport to eliminate that benefit.

We listened to Canadians, we ensured fairness and balance in the review of the Canada pension plan and the legislation that is being put forward. I submit that the changes I have outlined propose moderate and balanced changes. We have minimized the impact of these changes on vulnerable Canadians. There is no one group that has been singled out or forced to shoulder an undue burden.

During the national consultations on the CPP, Canadians told their governments to go easy on changes to the benefits. There are those who would gut the benefits. That is not what Canadians have told us.

We have reduced the contribution rate to 9.9 percent from 14.2 percent. There are those in the House who would argue that 9.9 percent is too high. They are arguing in a vacuum. The chief actuary who has the responsibility of reviewing the Canada pension plan has clearly stated that we need to act now to ensure that the plan remains sustainable and affordable for future generations. We could sit back and do nothing and watch the premiums escalate as per the legislative timetable until we get to a point where we would experience a 240 percent increase. That is not tolerable. That is certainly not what the government is prepared to do for future generations.

We will ensure that the Canada pension plan is there for future generations, that it is there at an affordable premium and that the benefits are guaranteed for those future generations. The result is that some 75 percent of the reduction has been made on the financing side and only 25 percent is on the benefit side.

I am quite positive the members in this House are very aware that consultation on the Canada pension plan has been ongoing for well over a year. Canadians have had input. They have given guidance to the government on this legislation. They have said very clearly to fix the Canada pension plan, ensure that it is sustainable and ensure that you do not gut the benefits at all costs.

What has been done? We have reflected on what Canadians have said. We have put forward legislation which breaks down like this: 75 percent is on the financing side and 25 percent is on the benefit side.

We are also acting to improve the stewardship of the Canada pension plan and to enhance public accountability. Once again Canadians have been consulted and Canadians have spoken.

Members across the way always talk about the transparency and the accountability that is required in legislation. I look forward to the interventions of the official opposition and other parties. I hope they will point to the fact that this legislation had input from Canadians. This legislation speaks to public accountability and transparency. It is what Canadians have asked for and it is what Canadians are getting. Let me make it perfectly clear that members of the government are determined that the Canada pension plan will not be put at risk again.

The changes in the legislation have been put forward so that Canadians do not have to suffer the uncertainty which has been purported by opposition members. Canadians will not have to ask the question “Will the Canada pension plan be there for me?” The Canada pension plan will be there for members of the House, for young people, for young workers, for my children, for my children's children.

The changes reflect what Canadians have asked for. We have not made those changes for the sake of making changes. We have made them to sustain the plan to ensure it will be there for future generations.

Let us talk about the accountability and transparency which will be part of the new legislation.

Canadians will start to receive regular statements on the pensions they are earning. We intend to provide annual statements to all contributors as soon as it is feasible. Canadians will receive an annual statement which will show how the Canada pension plan is progressing.

Federal-provincial reviews will take place every three years, instead of every five. In fact, 1999 will be the beginning of the next set of consultations and review. The point of this change is to ensure that the Canada pension plan will be closely scrutinized. Canadians will have an opportunity to continue to monitor what is going on with their Canada pension plan.

The Canada pension plan investment board will provide quarterly financial statements and annual reports on the performance of the fund. I am sure that when the members of the official opposition speak they will point to this change and note that it is reflective of what Canadians have said and that it is a positive change.

Let me say this slowly. It is what Canadians have said. The CPP investment board will provide quarterly financial statements. It will hold public meetings at least every two years in each participating province: transparency and accountability. Members of the opposition, members of Parliament and Canadians at large will have opportunity to speak at those public meetings.

Annual reports will provide a more complete information package and will explain how administrative problems are being addressed. As with all plans, public and private plans, there are always administrative challenges. The annual report will list the challenge and state how the challenge is being dealt with: again transparency and accountability.

Canadians told us quite frankly to treat them like members of the pension plan. There is no denying that in the past Canadians have not been part of the changes to the Canada pension plan the way they will be in the future. We are doing exactly that. We are treating Canadians like members of the pension plan. The stewardship of the plan will be improved and public accountability will be strengthened.

There is no doubt Bill C-2 provides a strong and balanced package of changes that will restore the sustainability of the Canada pension plan and make it fairer and more affordable for future generations of Canadians. It will make it more affordable, sustainable and fairer not just for workers when they retire but equally for working Canadians and their families.

Without diminishing what we have achieved with the legislation I would like to point out some other ideas the federal and provincial governments will look at to ensure the structure of the Canada pension plan keeps up with changing times. It will evolve the way our society evolves. These particular issues were either beyond the scope of the latest CPP statutory review, or they may have been raised too late or after consultations were complete. It is our intention to examine these issues over the course of the next two years.

What are the issues? It is important to get them on record so that Canadians know the consultation with respect to the CPP is just beginning and will be ongoing. As issues come forward and develop the consultation and the input of Canadians will be reflected in future legislation.

Some issues are reviewing survivor benefits to make sure they reflect changing realities in the needs of today's families and considering the mandatory splitting of pension credits between spouses during marriage. This is very interesting. It looks at the work to retirement transition including the possibility of providing partial CPP pensions to Canadians wanting to make a gradual transition to retirement. These issues are coming from Canadians, issues they want dealt with in the Canadian pension plan.

We will continue to examine the way in which people are receiving retirement income and employment insurance benefits. I am sure members of the official opposition will appreciate, given the fact that most of them are from the beautiful province of British Columbia, the review of the British Columbia proposal, which was actually made after the CPP consultations were complete. The proposal is to extend CPP coverage up the income scale by raising the limit on pensionable earnings.

I emphasize and hope for concurrence from the official opposition that any change to the Canada pension plan that needs to be considered will only be considered so that an increase in the steady rate of 9.9 percent will not be required.

Let me go further than that and state that any future benefit improvements to the Canada pension plan will be fully funded. I will repeat this very slowly. They will be fully funded. It is what Canadians asked for and it is what we will do.

Last February in the House of Commons the Minister of Finance tabled the first draft of the CPP legislation. In response to the comments received, further refinements were made to the legislation and revised draft legislation was released in July for further comment.

The measures proposed in the bill today will become law once the legislation is passed by parliament and supporting orders in council are received from the provinces that are party to last February's agreement. This will permit the changes to take effect on January 1, 1998.

It is an important milestone for Canadians. The changes to the plan will allow every Canadian to feel confident about the Canada pension plan once again. I continue to repeat that because it is important for Canadians in the galleries, for Canadians watching on TV and for Canadians in our constituencies. I encourage members of the House to communicate the message that the Canada pension plan is here and will be here when Canadians need it.

Let me assure hon. members the changes contained in Bill C-2 tackle the problems facing the Canada pension plan. In order to accomplish this, federal and provincial governments consulted extensively with Canadians from coast to coast to coast. It is legislation that reflects what Canadians said during the consultations and it is legislation that will ensure the continuity of the Canada pension plan.

I would also like to add that the federal government is currently engaged in broad based dialogue with a number of groups on other aspects of Canada's retirement income system. Not only are we listening to Canadians but we are also acting to ensure that our policy reflects their concerns.

With respect to the broad based dialogue, as I have been out talking with constituents in my riding and with Canadians right across the country the one message that continues to come back as a result of their experience with the broad based consultation on the Canada pension plan is that they want a broad based dialogue on the pillars of the retirement income system.

They no longer want to see government reacting. They want to see government engaging Canadians with respect to the retirement income system. They want to see governments reflecting in their legislation what Canadians are saying through a consultation process. The first example is the Canada pension plan changes in Bill C-2 which is at second reading and will go to the Standing Committee on Finance.

Securing Canada's retirement income system is a priority. It is a priority for Canadians. It is a priority for all members of the House. It is a priority for members of the official opposition, members of other opposition parties and members of government.

Our approach was different. It was one where we consulted Canadians. We are taking a very balanced approach to ensure we are not just gutting the benefits for the sake of trying to achieve some objective out there that is sometimes reflected in the House. It is a priority of the government.

Let me say clearly to members of the opposition, to Canadians in the galleries and to Canadians watching TV that Canada's retirement income system remains at the top of the government's agenda.

[Supply, September 30th, 1997]

Madam Speaker, I listened with some interest to the comments made by the hon. member. He talked about the performance of the government with respect to the debt. It is important to again state very clearly for the record that it is because of the actions of the government that the debt is on a downward track. The government is committed to reducing the debt to GDP ratio. It will eliminate the deficit in 1998-99.

The member is speaking as if the government has just put the country into a big black hole. We are moving out. We are moving into the next century, but the member wants to continue to talk about the misspending of the government.

I want to draw an analogy on which I invite the hon. member to comment. If a person pays off a mortgage but never fixes the plumbing or the roof, I am not sure that person will have a house to live in at the end of 25 years. It is the same with a country. We need to reinvest in the priorities. We have set what those priorities are and we will continue to adhere to our plan.

I want the member to acknowledge that we are on a more prosperous track.

[Supply, September 30th, 1997]

Mr. Speaker, I would also like to thank the member for his comments and for the time I was able to spend in working with the member on the industry committee. There was a lot of good work that we were able to put forward through that committee. It was through the interventions of the hon. member that some of that work was possible. I am thankful for that experience.

With respect to the comments that the hon. member has made, we said before and continue to say that certainly the retirement income system of this country is an issue which we are very committed to improving. We know that through the new seniors benefit, when that proposal comes to the House, nine out of ten elderly women will be better off. The hon. member made reference to an elderly lady in his constituency. We know lower income Canadians will be better off through the proposed seniors benefit. Therefore there is commitment by this government to deal with the retirement income system. I am sure that the hon. member will be able to participate in that debate and add very articulately to it.

With respect to small business, there are many members on this side of the House who are certainly very committed to the small business sector and believe that the small business sector is the engine of growth in the Canadian economy. I myself have had the opportunity to work on a number of task forces supporting members of the small business community and ensuring that their voice is heard with respect to ministers responsible for that portfolio.

Regarding higher taxes, there is no question, and the Minister of Finance has said it before, that this government will deal with the burden of taxes for low and middle income Canadians. We have said it before and we will continue to say it. We stand behind that commitment. As I said in my speech, Canadians want a balanced approach. That approach means dealing with the debt, dealing with taxes, dealing with opportunities to invest in the future of Canadians. That is the approach we are going to take.

With respect to letting them suffer, that was a reference to the laissez-faire approach the Reform Party seems to be adhering to.

[Supply, September 30th, 1997]

Mr. Speaker, the one point I would like to make is a point which I made during my speech.

We have an opportunity in the House to debate where we are going in this country based on the mandate we were given in June by Canadians. The hon. member however seems to want to continue to live in the past with the highest interest rates in history.

Today we have the lowest interest rates in 30 years. Canadians are benefiting because of lower interest rates. The economy is benefiting because of low interest rates. The debt is on a downward track and the government has made a commitment to reduce the debt as a ratio to the GDP.

If we want to start talking about the past, the member is certainly able to do that. However I would like to continue to demonstrate that this government has made commitments, has established priorities and will continue to meet those priorities.

With respect to the harmonization of the GST, Quebec has benefited from that. There has been no reduction in revenue to the provincial government as a result of harmonization of the GST. The member knows that yet he continues to stand in the House claiming that the government owes Quebeckers a payment. I disagree. The member should clarify his remarks. I look forward to the continuing debate.

[Supply, September 30th, 1997]

Mr. Speaker, this past June nearly 13 million Canadians voted in the federal election which established this 36th Parliament and our government, and that is a fact. It is one of those facts that today's opposition motion strangely ignores.

In that election our government looked to the day when, thanks to the foundation we put in place with four years of consistent effort and tough decisions, the federal government will no longer need deficit financing. That will be the day when we do not have to borrow to cover the cost of federal spending and debt charges.

The prospect of that tremendous turnaround raised an obvious issue. What should the federal government do when tax revenues begin to exceed our costs? As the prime minister said, and he proposed a very clear and concrete answer, one-half of the surplus should go to a combination of reducing taxes and national debt. He proposed that the other half be invested in addressing the social and economic needs of Canadians.

That proposal was made in the first week of the campaign. It allowed for weeks of debate and discussion by candidates and by commentators. Mr. Speaker, I am sure that you and other members of this House were out there debating at local debates in your constituencies. Most important, this issue was debated by Canadians themselves. The single largest group of Canadians said that is the approach they want.

Yet today the hon. member for Medicine Hat seeks to condemn this government for making that 50:50 pledge without adequate debate. Did he not engage in that debate during the campaign? Where was he during that debate in his campaign? I am sure the issue came up. I am sure he debated with other candidates who were seeking election. I am at a loss to explain why he now seeks to condemn the government for this proposal.

Perhaps he did not read our platform. Maybe that was it, I am not sure. Perhaps he just did not want to debate it. Maybe that is it. Perhaps he only has ears for his own rhetoric, but I have a higher regard for Canadian voters.

Our government has been addressing these issues, the size of government, taxes, debt, from the first day that we came to office. That is why we have cut the size of government and federal program spending by more than any other government in 50 years. That is in absolute terms, real bottom line dollars. That is why we have not increased tax rates in three consecutive budgets, because we know the tax burden Canadians carry is too high. That is also why we have lowered employment insurance contributions in each of our four budgets, and that is why we have introduced selective tax measures for those most in need, to help disadvantaged children and to assist charities.

And then there is the debt, a topic that has not escaped the notice of this House and our government no matter what the opposition would like Canadians to believe. We have made clear in budget after budget that deficit elimination is not the end of our fiscal journey. We also have to bring down Canada's debt as a share of our economy. We had to deal with the deficit. We have dealt with the deficit as we have said we would. We will be balancing the budget in 1998-99. The debt is still much too large as a percentage of GDP and we will continue to bring down Canada's debt as a share of our economy.

These actions and positions are a matter of record, just the fiscal turnaround we have worked so hard to put in place. They have been analysed, debated and critiqued for four years. After all that, Canadian voters decided last June that this record of achievement and commitment deserved a new mandate, the mandate they gave to this government.

This motion should fool no one. It is not about adequate debate. It is not about how the 50:50 pledge should be applied. It is not even about irresponsible spending. Instead it is really an attack on a concept of balanced government. It is an attack on the idea that government does have a role to play in investing in a stronger, more innovative economy, and it is an attack on the belief that government does have an obligation to help those in need and at risk.

We know that market forces alone will not do the job. There was reference earlier by previous speakers about the fact that Alberta is now out there consulting with Albertans on what to do.

The Reform Party should also acknowledge that for the first time Premier Klein is actually saying that there is a role for government and that government needs to invest in the future of Albertans, in his particular case. We as a government have always believed and will continue to believe that we need to invest in the future of Canadians and ensure that the investments pay dividends.

We have made clear that our government will reduce taxes when it is affordable, when a fiscal surplus is certain and secure, because we will never jeopardize the progress that we have made on the deficit. We will not jeopardize the rewards that this progress is delivering and the achievements that we have made over the last number of years.

One of those benefits is the low interest rates, the lowest rates in 30 years. It is as a result of the fact that this government has been successful in reducing the deficit and gaining a handle on the fiscal management of this country.

Clearly that is not good enough for the opposition. The motion obviously implies that any new spending is bad spending. It raises the spectre of the return to surging deficits, a staggering debt and renewed taxation. Let me say that this reform motion is wrong and it is misguided.

The official opposition may worship at the altar of laissez-faire, but we and the majority of Canadians know that laissez-faire economics can too often become the let them suffer public policy.

We are not prepared to nor do we accept that proposition by the opposition. That is why we have set out in the last budget, during the election and in last week's Speech from the Throne concrete priorities where a share of the fiscal dividend should go.

Members of the opposition say that is why we have such a big problem in this country. Members of the opposition can continue along that track and can continue to keep their heads buried in the sand and talk about the way it was. We are talking about the way it is going to be. The progress that we have made, the benefits that progress is bringing to this country and how we are going to bring this country into the next millennium, that is the discussion we will have.

There is ample opportunity for discussion in this House and there will be ample opportunity for continued discussion outside of this House, as every member of the government will be out in their constituencies consulting with their constituents, consulting with Canadians about the priorities and whether we have these priorities right and what we should be doing with our fiscal dividend when that dividend appears.

We established concrete priorities in the throne speech last week to children through further increasing the child tax benefit. Our goal here is working with the provinces to allow low income families to get off the welfare trap that creates a disincentive for work and that punishes children most of all.

On investing in quality health care and good health, our health care system has become a vital part of our national fabric, providing the security that represents both a social and an economic benefit.

We pledged to invest in measures to help Canadians respond to the expanding need for home care and community care and to improve the quality and effectiveness of health services and delivery.

We have placed the priority on creating opportunities for young Canadians. We have placed the priority and are demonstrating that priority through investing in knowledge and creativity.

It reflects the fundamental fact that in today's fast evolving, global economy there are initiatives that must be taken on a national scale. It is incumbent on a national government to take on that role. We cannot rely only on pockets of success in the face of tidal waves of international competition. We have to mobilize on a Canada-wide basis, drawing on all the stakeholders, the private sector, governments and community groups. We need to engage and we are engaging Canadians at all levels in ensuring we mobilize together.

An example of that is the Canada foundation for innovation. It is an $800 million investment that has been applauded right across this country. We have been able to make that investment because of the fiscal progress that we have made in this country. It is about having a vision. It is about investing in Canadians in ensuring that the future of Canadians is bright. That is the role of the government.

More recently the prime minister has pledged the scholarship initiative, an even greater investment in what is the ultimate natural resource in this country, our young people. This is just one initiative, the scholarship fund, but there are many others that we have engaged in through the ministers of human resources and finance who have put forward a youth strategy to assist the youth of this country. It is not just members of the government. It is members across the floor as well. Youth are an issue that is important to every Canadian and every member of this House.

By working with members across, with Canadians, with the private sector and with all levels of government, we are beginning to deal with the issue. It has not been solved. It is still an issue. Unemployment for young people in this country is still too high. Canadians have said that to members across and to members of government. We know that but we are making progress and are taking initiatives to deal with the youth unemployment issue.

We will continue to do that and as the government continues to improve and balance the budget and as funds become available for strategic investments, one of the priorities we have set forth is youth and we will continue to deal with that issue.

I go back to today's opposition motion. It essentially implies that such investments in youth and in the Canada foundation for innovation will be a threat to our nation's fiscal future and long term economic prosperity. I disagree. The Canada foundation for innovation will add to the long term economic prosperity for this country. Investment in youth strategy and youth initiatives will add to the long term economic prosperity of this country.

I do not think we will find Canadians anywhere who will disagree with investing in youth, investing in innovation and ensuring we are equipped to move into the next millennium, ensuring this country is equipped and able to compete with companies and other countries around the world. I am confident that the majority of Canadians will see them as vital investments in our national growth and security.

We have worked hard for four years to bring Canada's finances to the point where we can begin to plan new initiatives. We will never jeopardize that achievement and the benefits that it has brought, low interest rates, impressive economic growth, hundreds of thousands of new jobs.

As the throne speech stated, we will continue to be vigilant and responsible about keeping the financial affairs of the country in order. We will implement tax reductions and lower the debt. However we have never lost sight of the companion obligation to use the resources that we do have in intelligent and effective ways to strengthen our society and advance our economy.

It reflects what Canadians across the country continue to support. I submit that a balanced approach is the best approach. It is the approach that Canadians have consistently said they support and will continue to support. That is why the House must reject this motion and the philosophy that it represents.

In the remaining moments I have, it would be incumbent on me to address some of the points that were made earlier today by the member for Medicine Hat. He stated that the government is playing games. Let us talk about the games the government is playing.

We have announced that we will balance the budget in 1998-99. The debt is on a downward track. We are committed to reducing the debt to GDP ratio. The economy is growing and we are leading the G-7. I submit that we are winning this game. To use the words of the hon. member for Medicine Hat that the government is playing games, we are winning the game. The member should read again what we accomplished in our past mandate and what we intend to do in the future.

The core issue which is raised continually is that there is no consultation with Canadians. Let me also say that Reform has no monopoly on consultation. For Reform to make that statement and think that other members of the House are not speaking with Canadians I submit is unfair. We all speak with our constituents and consult with Canadians. I do not understand it.

We began prebudget consultations back in 1993. And we are not speaking to Canadians? Was he in the same place he was during the election campaign? Did he miss out on what was going on or is this just an opportunity to put something forward without any real thought?

The member talked about irresponsible spending. What about our priorities on health care, education, youth and children? This is not irresponsible spending. These are the priorities of Canadians. They want to see a strong national government making investments in priorities. However, the Reform Party apparently disagrees.

Reform members disagree with the fact that there has been $1.5 billion put back into the Canada health and social transfers. They disagree with that reinvestment in the health care system and with investments in scholarships for young Canadians. I am at a loss. They apparently disagree with the concept of youth internship and lifelong learning.

Let me close by saying that as the fiscal situation has allowed, the government has pursued new spending initiatives in priority areas, health initiatives, R and D support, tourism. It is the essence of good management. The bottom line is that Canada is now on a track toward eliminating the deficit with a smaller and better government.

[Supply, September 30th, 1997]

Mr. Speaker, I want to pick up on the last point the hon. member put forward with respect to internal trade barriers.

The hon. member should acknowledge that the government introduced a measure to eliminate internal trade barriers. I had the opportunity of sitting with one of his colleagues who contributed to that discussion quite effectively.

If the member wants to have an impact on internal trade barriers I encourage him to continue his dialogue. At the same time he should make sure he speaks to the provinces that are standing in the way of eliminating trade barriers that contribute to $6 billion or $7 billion of GDP. This is very important for the country and the jobs that need to be created.

The federal government is not standing in the way of internal trade barriers. I encourage the member to be very clear when he communicates with the constituents of his riding and other Canadians across the country. I am sure he supports the initiative, as do I and other members of the government.

However I want to make the point that the provinces are standing in the way. I certainly welcome any support he could provide in that instance.

[Le Courrier Of Saint-Hyacinthe, April 23rd, 1997]

Mr. Speaker, many of my constituents in Lincoln rely on herbal remedies for their health and wellness needs. Lately they have been concerned that their access to herbal and botanical preparations is being denied by the health protection branch.

To their surprise, herbal remedies, many of which have been used for hundreds of years, are increasingly being classified as drugs, banned for regular use.

Perhaps the time has come to create a new legislative regime which would respect the special role that herbal remedies play in the health industry. The benefits would be clear, more protection for consumers, stronger recognition of the importance of preventive medicine and an enhancement of the health and wellness of many Canadians.

This new step can only be taken if the health protection branch and the natural medicine industry work closely together to define an approach to natural health products that will capture their unique uses and properties.

[Petitions, April 22nd, 1997]

Madam Speaker, pursuant to Standing Order 36 it is my honour to table a petition on behalf of my constituents in Lincoln.

The petitioners would like to draw to the attention of the House that charitable organizations are being called upon to provide an increasing number of services for individuals in need.

Therefore the petitioners request that Parliament change the taxation formula so that an equal percentage of political and charitable donations are deductible.

[Committees Of The House, April 10th, 1997]

Mr. Speaker, pursuant to Standing Order 108(2), I have the honour to present, in both official languages, the second report of the Standing Committee on Government Operations dealing with government contracting.

In response to concerns expressed by representatives from the public and private sectors, our committee sought to ensure more effective parliamentary oversight of government contracting, particularly with regard to the open bidding service. We have made a number of recommendations with a view toward making the contracting process more transparent, accessible and competitive, thus ensuring more effective management of the process by the government itself.

Pursuant to Standing Order 109, we are requesting a comprehensive government response.