Guy Côté

[Supply, October 28th, 2004]

Mr. Speaker, once again we have a situation where the Liberal government seems to be the only one who is right. It has a habit of presenting itself in that light.

I know that our daily agenda is very full. I would simply like to draw your attention to an article in today's issue of Le Devoir under the byline of Jean-Robert Sansfaçon. I will not read the complete article, just a little extract:

An entire day of discussions turns out to be pointless: the Prime Minister has not changed his decision to distribute $10 billion in equalization payments for this fiscal year. That is an increase of $800 million over the forecast in the last budget—that is agreed—but the amount is still almost $1 billion less than the $10.95 billion transferred in 2001-02.

For Quebec, this unilateral decision by Ottawa adds $400 million to the province's revenues this year but that is still less than two years ago and much less than the $2.8 billion in finance minister Yves Séguin's dream budget.

But considering Prime Minister Martin's priorities, most of which invade provincial jurisdictions--chances are very slim that anyone will convince the government that such a fiscal imbalance exists. In short, the September health agreement was likely the first and last manifestation of this mysterious asymmetrical federalism that some were so proud of just a month ago.

I do not have as much experience as others in this House, but it seems to me that the current Prime Minister's attitude is the same as that of the former prime minister—just take it or leave it.

[Supply, October 28th, 2004]

Mr. Speaker, as you can easily imagine, the impacts are many and varied. I think in particular of two categories of citizens in my riding, namely youth and farm producers. I think of them for various reasons.

The cutbacks in transfers for education, health and social services have resulted in fewer services for the young people in my riding. My riding being primarily a rural riding with very few large commercial plants, a number of them sometimes have difficulty finding a job that is both rewarding and a quality job. Thankfully, many are successful.

As a result of the cutbacks, the Government of Quebec, like others, made cuts in health, as we know. This means that cuts were made in areas like drug and sexually transmitted disease prevention. It is much more difficult for the Government of Quebec to carry out its mandate because the federal government has made cuts.

Once again, the government is boasting about its good management. I would remind them that, while surplus forecast may not be an exact science, there are still ways to come up with figures that resemble reality. I will not go back too far, and I take this opportunity to commend the excellent work of my colleague from Saint-Hyacinthe—Bagot.

In 1999-2000, when the Liberal government predicted a surplus of approximately $3 billion, we figured it would be closer to $11.5 billion. What was it in fact? It was $12.7 billion. The following year, in 2000-01, the Liberal government predicted a surplus of $4 billion, while the Bloc Québécois estimated it at $18.2 billion. The real number was $18.1 billion. I could go on like this all the way to the current year, but I will stop here. This is no accident, but it keeps happening year after year. That is a shame.

If I were to go back to my economics teachers today and ask them to give me a better grade because my answer was off by only $7 billion, but at least I was in the black, I am not sure they would agree.

[Supply, October 28th, 2004]

That is correct, the Prime Minister was finance minister at that time.

Our Liberal colleagues opposite boast about their sound fiscal management and about extricating Canada from a very difficult budgetary situation. Our Liberal colleagues did not do this on their own. They did it by having the unemployed pay the deficit, by cutting benefits. They had sick people pay the deficit, by cutting health transfers. They had the provinces pay, by cutting equalization payments. They reduced it at the expense of the poorest, by cutting social transfers.

In the meantime, this government, which boasts about its sound management increases its operating expenses by 38%. All that we ask the federal government to do is manage the federal government and let the provinces manage their areas of jurisdiction. Let it mind its own business. That's not complicated.

[Supply, October 28th, 2004]

Mr. Speaker, I thank the member for his excellent questions. Let me point out that we are not talking about a mistake in one year. I can understand that budgetary forecasting is not an exact science and that, in a given year, there be a discrepancy of so much. That is perfectly understandable and, unfortunately, it is almost a given.

In this case, however, we are talking of systematic errors, year after year. Indeed, for seven years in a row, there have been unexpected surpluses much higher that the budgetary forecasts made by various finance ministers.

[Supply, October 28th, 2004]

Quality indeed, thank you for that.

The thrust of my speech is that we need a system that is more transparent and more democratic. It was incredible to hear the Minister of Finance, this morning, tell us, “Yes, indeed, estimates are not an exact science and there may be errors. A small error of 2% may have an impact of $300 million”.

Since I see that I have six minutes left, I think that I will start to speak much more slowly. It has often been said that experience is the sum of our errors. I will tell you that I am getting a lot of experience at this time.

Indeed, if estimates are not an exact science, we are still seeing a systematic underestimation of revenues by the government. If, during the 1970s and 1980s, we saw most optimistic forecasts that brought repeated deficits, year after year, this government has taken exactly the opposite direction by both constantly underestimating its revenues and overestimating its spending.

There is only one taxpayer. This taxpayer must know what will be his contribution to the various services that the state will provide him. For example, we talked about employment insurance. This is incredible. Employment insurance has become a hidden tax, an employment tax.

The employment insurance fund has huge surpluses year after year, while these surpluses should go to workers, to people who contribute to this fund and who need it when they go through much more difficult times.

Through accounting gymnastics, the Liberal government manages to get these surpluses and to use them, among other things, to reduce the debt. This is outrageous. It is attacking people who are at a disadvantage and in a crisis situation, who have families and children, who have mortgages, and it tells them, “You have not asked for employment insurance for a number of years, because things were going rather well. You had a job, you do not meet the requirement of 910 hours and, thus, you will not get an income”. The government has huge surpluses. It does not know what to do with them anymore.

The federal government must take care of its own jurisdictions, and not intrude in Quebec and provincial jurisdictions. We see this again here in this House. In the last couple of days, we have heard a lot about the Canadian armed forces, and many parliamentarians have talked about the shortfalls in their financing. I am telling you that if the government was taking care of its own jurisdiction without intruding in the jurisdictions of Quebec and the provinces, the armed forces would probably be much better equipped and the Liberal government would focus on solving the problems that are truly Canadian instead of intruding in Quebec and provincial jurisdictions.

We attended a federal provincial conference on equalization yesterday, and I must say that we were quite disappointed with the Prime Minister's attitude. Under the guise of openness and cooperation, the Prime Minister made a speech in which he is not giving one more cent to equalization compared with the figures given at the last conference on health held in September. There is no change in the calculation formula, which penalizes Quebec and prevents it from making consistent forecasts and knowing exactly what its budget will be in one, two or three years. This forces the Quebec government to beg the federal government for money, and this is not healthy.

Quebec, like the other provinces, must be able to manage the areas under its jurisdiction and tell its fellow citizens “this is what we have to offer in the areas of health, education, social assistance and early childhood services.”

We are talking about a national child care program. For seven years, two of them as chairman, I sat on the board of a day care in Quebec. It was a fantastic experience. It is a fantastic model. I will never stress enough how afraid I am that the Liberal government across the way might barge in with a one size fits all program that will undo all the progress we have made in Quebec since 1995, if my memory serves me right.

Not only it is planning a one size fits all daycare program, but if we go back a few years, when the $5 dollar a day daycare program was introduced in Quebec, Quebec families lost their federal tax deduction. Since 1995, around one billion dollars has been taken out of Quebec tax payers' pockets. The Liberal government is aware of the fact. Nevertheless it has done nothing to address the problem. It would not take much though. If the government really cared and wanted to cooperate and help, it would help those people get back the money owed to them.

I understand I have about one minute left. Let me conclude by reminding the House that the fiscal imbalance is not only about money, it is also about democracy and accountability. People must know how their tax dollars are spent.

[Supply, October 28th, 2004]

Mr. Speaker, this morning, in the Standing Committee on Finance, we hosted the Finance Minister. I heard our Liberal friends rejoicing, naturally, over budgetary surpluses. They were rejoicing particularly over the unexpected surpluses.

It is my intention, soon, to pay a brief visit to Laval University to meet with some of my former professors. Indeed, I feel that I could ask for a revision of some of my marks, because some of my mistakes were on the positive side, not on the negative side. I don't know, though, whether that will be allowed.

Fiscal imbalance has very significant consequences, on both democracy and accountability. What are the effects of fiscal imbalance? One of them, among others, is to put us in a situation where the federal government no longer knows what to do with its money. We are looking at more than $60 billion since 1997-1998. These are numbers often repeated in this House, but I think it is important to repeat them. I hope that one day, our colleagues in government will finally understand them.

The Conference Board talks about $166 billion over the next 10 years. If they were to be revised today, these numbers would continue to increase in light of the unexpected surpluses, which we had in the last budget year.

I spoke about democracy and accountability. The federal government has so much money that it does not know what to do with it. Instead of fully assuming its responsibilities in its own jurisdictions, the federal government invests in jurisdictions that come under Quebec and the provinces.

What is the result of this? During the years 1995-96, the federal government was making cuts everywhere in joint programs, with the result that all the provincial governments, and particularly the Quebec government, were blamed by their population, because they lacked money for health, municipalities and infrastructures.

To a large extent, the problems were not caused by how the Quebec and provincial governments were managing things; they were caused by the drastic cuts made by the federal government. This is really a lack of democracy. It was mentioned earlier that the taxpayer is the same one at every level. Our fellow citizens should know who deserves to be praised and who should be blamed. This is important.

The fiscal imbalance has a significant impact on the provinces' shortfall, particularly Quebec's. The most recent evaluation of the shortfall caused by the fiscal imbalance, and Quebec's most recent demands are presented, along with the dollar figures, in a document entitled “Correcting Fiscal Imbalance”. That document was released when Quebec's most recent budget was presented, in March 2004.

The demands relating to equalization or social transfers are quite similar to those of the Séguin commission. However, while advocating the transfer of tax fields as a basic solution to the fiscal imbalance, the Quebec finance department proposed, as an interim measure, to significantly increase transfer payments for health and education, and equalization payments. In total, the Quebec finance department proposed a $7.2 billion increase in federal transfers across Canada.

As regards equalization alone, the federal government should invest over $5 billion. This is taking into consideration the restoring of the 10 province rule, and a number of other amendments to the formula, to restore some tax fairness between Quebec and the provinces.

For Quebec, these proposals would amount to an additional $3.3 billion for 2004-05 alone. This is, in essence, the shortfall caused by the fiscal imbalance in Quebec, as calculated by its government.

What we are proposing is relatively simple. We did not reinvent the wheel. First, as the Quebec government is requesting, there has to be a significant increase in funding, in the CHST, for example. It is indeed an option, but it is a short term one and it is far from perfect.

The best solution would be to stop the transfer of tax points to the Quebec government. This would give us a much better choice. Such a solution would enable the Quebec government to better predict in it budget planning, because it would have its own revenues. This formula would help to balance the ability to generate revenues for the two levels of government.

These propositions would result in a global return of 26.7 tax points on the personal income tax. Quebec would then have an effective hold on the personal income tax field. The Quebec government would control 57.5% of personal income tax rather than the 42% it is controlling now. It is a very nice solution, but additional measures complement that.

We continue to say that it would be important to adjust the equalization payments calculations. Transfer of tax points alone would not do any good for some provinces, particularly for the Atlantic provinces. This is why we suggest that the increase in the ability to generate revenues created by a transfer of tax points not penalize the provinces by reducing the equalization payments. Those provinces have to have access to additional revenues to be in a better position to meet the challenge of growth and increase in the public expenses.

Myths about equalization abound. Unfortunately, it is often said that Quebec is the one benefiting the most from this program. True enough, Quebec gets 31.5% of federal transfers to the provinces, 43.7% of equalization payments and 24% of transfers for health, higher education and welfare, but when you figure out the per capita payment, it is about $500, which is, as mentioned this morning by Michel Vastel, much less than what the Atlantic provinces, Manitoba and Saskatchewan are getting.

Although 24% of total federal spending is in Quebec, which reflects Quebec's demographic weight in Canada, we are not as elated when we look at the nature of this spending. Quebec does not get its share of job and wealth creating spending. For example, it does not get its share of grants to businesses. It is far from getting its share of federal spending on goods and services. Research and development spending generates jobs and knowledge and brings quality jobs and wealth to the communities. I will not even mention federal jobs, which are concentrated in the Ottawa and Ontario area.

Those policies have made Quebec poorer, and we are now receiving more equalization. If the federal government had implemented other policies, Quebec would not be getting as much equalization and I, for one, would be very pleased.

For instance, if the number of federal public servants in Quebec were in accordance with its demographic weight, $812 million more in salary would be paid to about 15,500 civil servants in Quebec. Those are good jobs. I would not call equalization what is grudgingly granted to us at a conference where such figures are used despite important consensus in Quebec on this issue.

In research and development, the federal government has set up 57.7% of its research centres in Ontario, compared with a mere 19.6% for Quebec. The difference is $800 million. Ottawa needs to change those policies if it truly wants to be fair to Quebec and the provinces.

Quebec companies are receiving 18.5% of federal assistance to businesses, that is $3 billion less than what is granted to Ontario companies. We are not talking about peanuts here—and I am sorry if that expression is unparliamentary—but about $3 billion. So, it comes down to a $200 million shortfall for Quebec also.

These policies have to change. Quebec must gain control over all its economic and fiscal policies and its programs to help businesses and constituents alike.

Tax point transfers were mentioned earlier, and I said that we had not reinvented the wheel. Canada faced a similar situation at the end of the second world war. At the time, the fiscal imbalance issue on which Ottawa and the provinces disagreed led to the 1956 report of the Tremblay commission. It is nothing new.

That commission proposed to the federal and provincial authorities that it agree to a new division of tax fields better suited to the present needs of the public and the public administration, and more respectful of the spirit of federalism and the Constitution. That was 48 years ago.

Unfortunately, even then the government did not always heed commission recommendations. For a number of years, rather than follow that direction, the government began to set up a number of cost-shared programs. It did not take long to realize that the solution did not lie in injecting funding on a cost-shared basis.

This led to the 1964 federal-provincial conference, where at the insistence of Quebec, which once again—with the credit going to Jean Lesage—demanded more access to income tax, tax points were indeed transferred. This solved the problem for thirty years or so. Now for the situation we find ourselves in today.

I believe that one of the major causes of fiscal imbalance is the federal spending power. The government has used that power for several decades to interfere in jurisdictions belonging to Quebec and the provinces. For evidence of this, one need look no further than the Speech from the Throne.

Where do the priorities of the representatives of this government lie? They tell us often enough, and delight in doing so. I do not delight in hearing them; they are a disappointment to me, but not to them. These are all areas over which Quebec has jurisdiction: municipalities, early childhood services, health, education. Even without our signature on the Constitution it seems to me that, if there is one area of jurisdiction that clearly belongs to Quebec and the provinces, it is education.

This federal government absolutely must take action on the fiscal imbalance, must start transferring tax points so that Quebec and the provinces are able to properly administer the services for which they are responsible and properly serve their citizens, within a system that is both more transparent and more democratic, one where people can see whom to praise and whom to blame. Unfortunately, that is not the case at present.

I am not at all used to giving 20 minute speeches in the House, so I must admit that I have rather lost track of time. I have no idea how much time I have left. I believe I may have quite a lot.

[Taxation, October 22nd, 2004]

Mr. Speaker, on September 16, the Prime Minister acknowledged that Quebec and the provinces were experiencing financial pressure and that it would be discussed at the October 26 meeting. They expect more than that. They want concrete and lasting solutions to eliminate the fiscal imbalance.

Is the government prepared to make proposals to that effect at the October 26 meeting?

[Taxation, October 22nd, 2004]

Mr. Speaker, I would remind the government that the solution to the fiscal imbalance is not limited to transferring tax fields to Quebec and the provinces.

Does the government intend to accept the proposal by the Séguin commission, which recommends transferring the GST to Quebec and the provinces as a lasting solution to the fiscal imbalance?

[Petro-Canada, October 18th, 2004]

Mr. Speaker, among the 22 firms that were retained, some are small and specialized in bond financing.

Will the Prime Minister, who has yet to reply to the letter of Alban D'Amours, president of the Mouvement Desjardins, asking him for an explanation, provide such explanation to us, here in this House today?

[Petro-Canada, October 18th, 2004]

Mr. Speaker, Valeurs mobilières Desjardins, which is a subsidiary of Quebec's largest financial institution, has been excluded from the most important public share issue in Canadian history, that of Petro-Canada, to the tune of $3.2 billion. No justification was given for the fact that Desjardins is not among the 22 firms retained by the federal government.

Could the Prime Minister provide some explanation regarding this mysterious decision which, to this day, remains unexplained?